Exhibit 10.3

 

Amended and Restated 2014 Director Stock Option Plan

--------------------------------------------------------------------------------

 

SECURITY NATIONAL FINANCIAL CORPORATION 

 

AMENDED AND RESTATED 2014 DIRECTOR STOCK OPTION PLAN 

 

1.Purpose of the Plan.  The purpose of this Amended and Restated 2014 Director
Stock Option Plan is to attract and retain the best available personnel to serve
as Outside Directors of Security National Financial Corporation. 

 

All options granted hereunder shall be “non-statutory stock options.”

 

2.Definitions. A used herein, the following definitions shall apply: 

 

(a)“Board” means the Board of Directors of the Company. 

 

(b)“Change in Control” means (i) the acquisition, directly or indirectly, by any
person or group (within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended) of the beneficial ownership of more than fifty
percent (50%) of the outstanding securities of the Company; (ii) a merger or
consolidation in which the Company is not the surviving entity except for a
transaction the principal purpose of which is to change the state in which the
Company is incorporated; (iii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company; (iv) a complete liquidation or
dissolution of the Company; or (v) any reverse merger in which the Company is
the surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Company’s outstanding securities
are transferred to a person or persons different from the persons holding those
securities immediately prior to such a merger. 

 

(c)“Code” means the Internal Revenue Code of 1986, as amended. 

 

(d)“Common Stock” means the Class A Common Stock of the Company. 

 

(e)“Company” means Security National Financial Corporation, a Utah corporation. 

 

(f)“Continuous Status as a Director” means the absence of any interruption or
termination of service as a Director. 

 

(g)“Director” means a member of the Board. 

 

(h)“Employee” means any person, including an officer and Director, employed by
the Company or any Parent or Subsidiary of the Company. The payment of a
Director’s fee by the Company shall not be sufficient in and of itself to
constitute “employment” by the Company. 

 

(i)“Exchange Act” means the Securities Exchange Act of 1934, as amended. 

 

(j)“Fair Market Value” means, as of any date, the value of Common Stock
determined as follows: 

--------------------------------------------------------------------------------

2

--------------------------------------------------------------------------------

(i) If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation, The NASDAQ National Market
(“NASDAQ”), the Fair Market Value of a Share of Common Stock shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in Common Stock) on the last market trading day prior
to the day of determination, as reported by the Wall Street Journal or such
other source as the Board deems reliable;

 

(ii) If the Common Stock is quoted on NASDAQ (but not on the National Market
System thereof) or regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value of a Share of Common
Stock shall be the mean between the high bid and low asked price for the Common
Stock on the last market trading day prior to the day of determination, as
reported in the Wall Street Journal or such other source as the Board deems
reliable; or

 

(iii)  In the absence of an established market for the Common Stock, the Fair
Market Value thereof shall be determined in good faith by the Board.

 

(k)“Option” means a stock option granted pursuant to the Plan. 

 

(l)“Optioned Stock” means the Common Stock subject to an Option. 

 

(m)“Optionee” means an Outside Director who receives an Option. 

 

(n)“Outside Director” means a Director who is not an Employee. 

 

(o)“Parent” means a “parent corporation”, whether now or hereafter existing, as
defined in Section 424(e) of the Code. 

 

(p)“Plan” means this Amended and Restated 2014 Director Stock Option Plan. 

 

(q)“Pool” means the maximum aggregate number of Shares which may be optioned and
sold under the Plan. 

 

(r)“Share” means a share of the Common Stock, as adjusted in accordance with
Section 10 of the Plan. 

 

(s) “Subsidiary” means a “subsidiary corporation”, whether now or hereafter
existing, as defined in Section 424(f) of the Code. 

 

3.Stock Subject to the Plan.  The initial amount of the Pool shall be 150,000
Shares. Additional Shares may be added to the Pool with Board and stockholder
approval. The Shares may be authorized but unissued, or reacquired Common Stock.
 All Shares issued under the Plan shall be subject to the provisions of Section
10 of the Plan. 

 

If an Option should expire or become un-exercisable for any reason without
having been exercised in full, the un-exercised Options which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan.

--------------------------------------------------------------------------------

3

--------------------------------------------------------------------------------

 

4.Administration of and Grants of Options Under the Plan. 

 

(a)Administrator. Except as otherwise required herein, the Plan shall be
administered by the Board. The Board has the right in its discretion to grant
Options to Outside Board members, provided that such grants shall be made and
approved in accordance with the provisions of this Plan.  Except for the Annual
Grant as defined in Section 4(b)(i) below, all grants of Options hereunder shall
be discretionary. 

 

(b)Procedure for Grants. The provisions set forth in this Section 4(b) shall not
be amended more than once every six months, other than to comply with changes in
the Code, the Employee Retirement Income Security Act of 1974, as amended, or
the rules promulgated thereunder. All grants of Options hereunder shall be made
in accordance with the following provisions: 

 

(i) Effective as of December 7, 2014 (the “Effective Date”) and annually each
year thereafter during the term of this Plan on a day as determined each year by
the Board of Directors, each Outside Director shall automatically receive an
Option to purchase 1,000 Shares (an “Annual Grant”). In addition, each new
Outside Director who shall first join the Board on or after the Effective Date
shall automatically be granted an Option to purchase 1,000 Shares upon the date
on which such person first becomes an Outside Director, whether through election
by the shareholders of the Company, appointment by the Board to fill a vacancy,
or termination of employment by the Company while remaining as a Director (a
“One-time Grant”), and an Annual Grant of an option to purchase 1,000 Shares
each year thereafter during the term of this Plan on a day as determined each
year by the Board of Directors.

 

(ii)  The terms of each Option granted hereunder shall be as follows:

 

(A)  the term of the Option shall have ten (10) years:

 

(B)  the Option shall be exercisable while the Outside Director remains an
Outside Director of the Company and for a period of six months from the date
Optionee’s continuous status as an Outside Director terminates, as set forth in
Section 8 hereof;

 

(C)  the exercise price per Share shall be 100% of the Fair Market Value per
Share on the date of grant of the Option; and

 

(D)  assuming Continuous Status as an Outside Director, Options shall vest in
four equal quarterly installments, such that all Options shall become fully
vested one year after the date of the grant of the Options.

 

(iii)  In the event that any Option granted under the Plan would cause the
number of Shares subject to outstanding Options plus the number of Shares
previously purchased upon exercise of Options to exceed the Pool, vesting of
such Option shall be deferred as necessary until Shares become available for
issuance under the Plan through action of the stockholders to increase the
number of Shares which may be issued under the Plan or through cancellation or
expiration of Options previously granted hereunder.

--------------------------------------------------------------------------------

4

--------------------------------------------------------------------------------

(iv)  The Board, in its discretion, may grant Options to Outside Directors in
addition to those provided for in Section 4(b)(i).

 

(c)Powers of the Board. Subject to the provisions and restrictions of the Plan,
the Board shall have the authority, in its discretion: (i) to grant Options to
Outside Directors; (ii) to determine, upon review of relevant information and in
accordance with Section 2(i) of the Plan, the Fair Market Value of the Common
Stock; (iii) to interpret the Plan; (iv) to prescribe, amend and rescind rules
and regulations relating to the Plan; (v) to authorize any person to execute on
behalf of the Company and instrument required to effectuate the grant of an
Option previously granted hereunder; and (vi) to make all other determinations
deemed necessary or advisable for the administration of the Plan. 

 

(d)Effect of Board’s Decision. All decisions, determinations and interpretations
of the Board shall be final. 

 

5.Eligibility.  Options may be granted only to Outside Directors.  All Options
shall be granted in accordance with the terms set forth in Section 4(b) hereof.
An Outside Director who has been granted an option may, if he or she is
otherwise eligible, be granted an additional Option or Options in accordance
with such section. 

 

The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.

 

6. Term of Plan.  The plan shall become effective as of May 16, 2014 and shall
continue in effect until the tenth anniversary of the Effective Date, unless
sooner terminated under Section 12 of the plan. 

 

7.Means of Exercising Option.  An Option shall be exercised by giving written
notice to the Company at its principal office address. Such notice shall
identify the Option being exercised and specify the number of Shares as to which
such Option is being exercised, accompanied by full payment of the purchase
price therefor either (a) in United States dollars in cash or by check, or (b)
at the discretion of the Board, through delivery of Shares of Common Stock
having a Fair Market Value equal as of the date of the exercise to the cash
exercise price of the Option, or (c) at the discretion of the Board, through the
use of some of the Shares for which the Option is being exercised, or (d) at the
discretion of the Board, by any combination of (a) (b) and (c) above. If the
Board exercises its discretion to permit payment of the exercise price of an
Option by means of a method set forth in clause (b) (c) or (d) of the preceding
sentence, such discretion shall be exercised in writing at the time of the grant
of the Option in question. The holder of an Option shall not have the rights of
a shareholder with respect to the Shares covered by the Option until the date of
the issuance of a stock certificate to him (which may be in digital or
electronic format) for such Shares. 

 

 

 

8.Exercise of Option. 

--------------------------------------------------------------------------------

5

--------------------------------------------------------------------------------

(a)Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder
shall be exercisable at such times as are set forth in Section 4(b) hereof;
provided, however, that no Options shall be exercisable until stockholder
approval of the Plan in accordance with Section 17 hereof has been obtained. 

 

An Option may not be exercised for a fraction of a Share.

 

An Option shall be deemed to be exercised when written notice of such exercise
has been given to the Company in accordance with the terms of the Option by the
person entitled to exercise the Option and full payment for the Shares with
respect to which the Option is exercised has been received by the Company.  Full
payment may consist of any consideration and method of payment allocable under
Section 7 of the Plan. Until the issuance (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a stockholder shall exist with respect
to the Optioned stock, notwithstanding the exercise of the Option.  A share
certificate for the number of Shares so acquired shall be issued to the Optionee
as soon as practicable after exercise of the Option. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in Section 10 of the Plan.

 

Exercise of an Option in any manner shall result in a decrease in the number of
Shares which thereafter may be available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.

 

(b)  Termination of Continuous Status as an Outside Director.  In the event an
Optionee’s Continuous Status as an Outside Director terminates, the Optionee may
exercise his or her Option but only within six months from the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it at the date of such termination (but in no event later than the expiration of
its ten-year term). To the extent that the Optionee was not entitled to exercise
an Option at the date of such termination, and to the extent that the Optionee
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.

 

9.Non-Transferability of Options. The Option may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will, by
law of descent or distribution or pursuant to qualified domestic relations
order, and may be exercised during the lifetime of the Optionee only by the
Optionee or a permitted transferee. 

 

10.Adjustments 

 

(a)Changes in Capitalization. In the event that the stock of the Company is
changed by reason of any stock split, reverse stock split, recapitalization, or
other change in the capital structure of the Company, or converted into or
exchanged for other securities as a result of any merger, consolidation or
reorganization, or in the event that the outstanding number of shares of stock
of the Company is increased through payment of a stock dividend, appropriate
proportionate adjustments shall be made in the number and class of shares of
stock subject to the Plan, and the number and class of shares subject to any
outstanding Option; provided, however, that the Company shall not be required to
issue fractional shares as a result of any such adjustment.   

--------------------------------------------------------------------------------

6

--------------------------------------------------------------------------------

Any such adjustment shall be made upon approval by the Board, whose
determination shall be conclusive.  If there is any other change in the number
or type of the outstanding shares of stock of the Company, or of any other
security into which such stock shall have been changed or for which it shall
have been exchanged, and if the Board in its sole discretion determines that
such change equitably requires an adjustment shall be made in accordance with
the determination of the Board.  No adjustments shall be required by reason of
the issuance or sale by the Company for cash or other consideration of
additional shares of its stock or securities convertible into or exchangeable
for shares of its stock.

 

(b)Corporate Transactions. New Options (substantially equivalent to the Options)
may be substituted for the Options granted under the Plan, or the Company’s
duties as to Options outstanding under the Plan may be assumed, by an employer
corporation other than the Company or by a parent or subsidiary of such employer
corporation, in connection with any merger, consolidation, acquisition of assets
or stock, separation, reorganization, liquidation, or like occurrence in which
the Company is involved; provided, however, in the event such employer the
Options granted hereunder or substituted for such Options substantially
equivalent options, or if the Board determined, in its sole discretion, that
Options outstanding under the Plans should not then continue to be outstanding,
the Options granted hereunder shall terminate and thereupon become null and void
(i) upon dissolution or liquidation of the Company, acquisition, separation, or
similar occurrence, or (ii) upon any merger, consolidation or similar
occurrence; provided, however, that each Optionee shall be given notice of such
dissolution, liquidation, merger, consolidation or similar occurrence, and shall
have the right, at any time prior to, but contingent upon the consummation of
such transaction, to exercise (x) any unexpired Options granted hereunder to the
extent they are then exercisable, and (y) in the case of a merger, consolidation
or similar occurrence in which the Company is not the surviving corporation,
those Options which are not them; provided, further, that such exercise right
shall not in any event expire less than 30 days after the date that notice of
such transaction is sent to the Optionee. 

 

11.Change in Control.  In the event of a Change in Control, if such Change in
Control is not approved by a majority of the Directors, the Board shall cause
written notice of the proposed transaction to be given to all Optionees not less
than fifteen (15) days prior to the anticipated effective date of the proposed
transaction and, concurrent with the effective date of the proposed transaction,
all Options shall be accelerated and concurrent with such date the holders of
such Options shall have the right to exercise such Options in respect to any or
all shares subject thereto. The Board in its discretion may, at any time an
Option is granted, or at any time thereafter (regardless of its acceleration or
non-acceleration), take one or more of the following actions: (A) provide for
the purchase of each Option for an amount of cash or other property that could
have been received upon the exercise of the Option, (B) adjust the terms of the
Options in a manner determined by the Board to reflect the Change in Control,
(C) cause the Options to be continued or assumed, or new rights substitute
therefor, by the surviving or another entity, through the continuance of the
Plan and the continuation or assumption of outstanding Options or the
substitution for such Options of new options of comparable value covering shares
of a successor corporation, with appropriate adjustments as to the number and
kind of shares and exercise prices, in which event the Plan and such Options, or
the new options substituted therefor, shall continue in the manner and under the
terms so provided or (D) make such other provision as the Board may consider
equitable.  In the event of a Change in Control in which the Options are not
continued, assumed or substituted therefor by the surviving or another entity,
regardless of whether such Change in Control is approved by a majority of the
continuing Directors, the Options shall be  

--------------------------------------------------------------------------------

7

--------------------------------------------------------------------------------

accelerated and fully exercisable upon the effective date of the Change in
Control and the Board shall cause written notice of the proposed transaction to
be given to all Optionees not less than fifteen (15) days prior to the
anticipated effective date of the proposed transaction. The Board shall have the
right with respect to any specific Option granted under the Plan, to provide
that such Option shall be accelerated in any event upon the effective date of
the Change in Control.

 

12.Amendment and Termination of the Plan. 

 

(a)Amendment and Termination.  The Board may at any time amend, alter, suspend
or discontinue the plan, but no amendment, alteration, suspension or
discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent.  In addition, to
the extent necessary and desirable to comply with any applicable law or
regulation, the Company shall obtain stockholder approval of any Plan amendment
in such a manner and to such a degree as may be required. 

 

(b)Effect of Amendment or Termination.  Any such amendment or termination of the
Plan shall not affect Options already granted and such Options shall remain in
full force and effect as if this Plan had not been amended or terminated. 

 

13.Time of Granting Options.  The date of grant of an Option shall, for all
purposes, be the date determined in accordance with the Section 4(b) hereof.
Notice of the determination shall be given to each Outside Director to whom an
Option is so granted within a reasonable time after the date of such grant.  

 

14.Conditions Upon Issuance of Shares.  Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder,
state securities laws and the requirements of any stock exchange or market
system upon which the Shares may then be listed, and shall be further subject to
the approval of counsel for the Company with respect to such compliance. 

 

As a condition to the exercise of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment purposes and without any
present intention to sell or distribute such Shares, in the opinion of counsel
for the Company, such a representation is required by any of the aforementioned
relevant provisions of law.

 

Inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares
as to which such requisite authority shall not have been obtained.

 

15.Reservation of Shares.  The Company, during the term of this plan, will at
all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. 

--------------------------------------------------------------------------------

8

--------------------------------------------------------------------------------

16.Option Agreement.  Options shall be evidenced by written option agreements in
such form as the Board shall approve. 

 

17.Stockholder Approval.  Continuance of the Plan shall be subject to approval
by the stockholders of the Company at or prior to the first annual meeting of
stockholders held subsequent to the first granting of an Option hereunder.  Such
stockholder approval shall be obtained in the degree and manner appropriate
under applicable state and federal law. 

--------------------------------------------------------------------------------

9