SPECIAL DAC TAX
ADDENDUM
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to
ALL REINSURANCE AGREEMENTS
between
CENTURY LIFE OF AMERICA
Waverly, Iowa
and
FRANKONA AMERICA LIFE REASSURANCE COMPANY
Kansas City, Missouri
DAC TAX ARTICLE
---------------
Effective January 1, 1993, the attached DAC Tax Article, entitled Section
1.848-2{g)(8) Election, is hereby added to this agreement.
This amendment is attached to the above agreement and made part of it. All other
terms and conditions of that agreement, together with any amendments or addenda
attached to it, remain unchanged, and this amendment is subject to them except
for the changes it effects.
To witness our agreement we sign in duplicate on the dates indicated at the home
office of each company.
CENTURY LIFE OF AMERICA
Waverly, Iowa
Date: 6/30/93
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By /s/ Xxxxxx X. Xxxxxxxxxx Attest: /s/ Xxxxxxx X. Xxxxxx
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Title: V.P. Valuation Actuary Title: Secretary
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FRANKONA AMERICA LIFE REASSURANCE COMPANY
Kansas City, Missouri
Date: June 24, 1993
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By /s/ Xxxxxx Xxxx Attest: /s/ Signature
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Title: Assistant Vice President Title: Senior Vice President
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DAC TAX ARTICLE
Section 1.848-2(g)(8) Election
------------------------------
The Reinsured and the Reinsurer hereby agree to the following pursuant to
Section 1.848-2(g)(8) of the Income Tax Regulations issued December, 1992, under
Section 848 of the Internal Revenue Code of 1986, as amended. This election
shall be effective for 1992 and all subsequent taxable years for which this
agreement remains in effect.
1. The term "party" will refer to either the Reinsured or the Reinsurer as
appropriate.
2. The terms used in the Article are defined by reference to Regulation
Section 1.848-2 in effect December, 1992.
3. The party with the net positive consideration for this agreement for each
taxable year will capitalize specified policy acquisition expenses with
respect to this agreement without regard to the general deductions limitation
of Section 848(c)(1).
4. Both parties agree to exchange information pertaining to the amount of net
consideration under this agreement each year to ensure consistency or as
otherwise required by the Internal Revenue Service.
5. The Reinsured will submit a schedule to the Reinsurer by May 1 of each year
of 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 Reinsured stating that the Reinsured will report such net
consideration in its tax return for the preceding calendar year.
6. The Reinsurer may contest such calculation by providing an alternative
calculation to the Reinsured in writing within 30 days of the Reinsurer's
receipt of the Reinsured's calculation. If the Reinsurer does not so notify
the Reinsured, the Reinsurer will report the net consideration as determined
by the Reinsured in the Reinsurer's tax return for the previous calendar
year.
7. If the Reinsurer contests the Reinsured's calculation of the net
consideration, the parties will act in good faith to reach an agreement as to
the correct amount within thirty (30) days of the date the Reinsurer submits
its alternative calculation. If the Reinsured and the Reinsurer reach
agreement on an amount of net consideration, each party shall report such
amount in their respective tax returns for the previous calendar year.