snfc8k081308ex10-2.htm


    
      

      

    

     

    


    REINSURANCE
AGREEMENT

    


    dated
as of August 13, 2008

    


    by
and among

    


    


    SECURITY
NATIONAL LIFE INSURANCE COMPANY,

    


    


    SOUTHERN
SECURITY LIFE INSURANCE COMPANY

    


    and

    


    THE
SHAREHOLDERS OF

    SOUTHERN
SECURITY LIFE INSURANCE COMPANY

     

     

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    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

            	
               6

            
	 
      	 
      	 
      
	
              VI.

            	
              ARBITRATION

            	
               7

            
	 
      	 
      	 
      
	
              VII.

            	
              INSOLVENCY

            	
               7

            
	 
      	 
      	 
      
	
              VIII.

            	
              DAC TAX PROVISION

            	
               8

            
	 
      	 
      	 
      
	
              IX.

            	
              SHAREHOLDER OBLIGATIONS

            	
               9

            
	 
      	 
      	 
      
	
              X.

            	
              MISCELLANEOUS PROVISIONS

            	
              10

            
	 
      	 
      	 
      
	
              XI

            	
              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
13th
day of August, 2008 (the “Effective Date”), by and among SECURITY NATIONAL LIFE
INSURANCE COMPANY, a Utah domiciled insurance company (hereinafter referred to
as the “Reinsurer”), SOUTHERN SECURITY LIFE INSURANCE COMPANY, a Mississippi
domiciled insurance company (hereinafter referred to as the “Company”), and the
SHAREHOLDERS OF SOUTHERN SECURITY LIFE INSURANCE COMPANY that have executed this
Agreement (hereinafter referred to as the “Shareholders”).

    


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

    


    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 also 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 (the “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 pursuant to the Trust Agreement 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 or should have
been reported by the Company on its NAIC Convention Blank as of June 30, 2008,
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 June 30, 2008, 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 June 30, 2008, 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 June 30, 2008, 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, files,
computer systems, and other materials including computer programs, processes,
knowledge, or otherwise needed in such administration.  In addition,
Reinsurer shall have the right to transfer or move such records, files, computer
systems, and other materials to other offices or locations in which Security
National transacts business

    


    8.           Inspection.   At
any reasonable time, the Reinsurer may inspect, during normal business hours, at
the principal office of the Company or at such other place as determined by the
Reinsurer, 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 or at such other place as determined by 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 written 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 the Reinsurer
notifies the Company 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.  The Company has no right to terminate
this Agreement or any renewal term and has no right whatsoever to prevent any
renewal by the Reinsurer, except in the event that the Stock Purchase Agreement,
executed contemporaneously between the Parties is terminated according to its
terms, the Company has the right to prevent the renewal period of this Agreement
by providing ninety (90) days written notice to the Reinsurer of the Company’s
intent not to renew, subject to the repayment of the entire Ceding
Commission.

    


    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 pursuant to the terms of the Trust Agreement
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, less the amount of the Ceding Allowance,
as defined below, which the Company shall retain as its Ceding
Allowance.  Reinsurer shall have the sole right to determine which of
the Company’s assets shall be transferred to Reinsurer.  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 net 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 five
hundred thousand dollars ($1,500,000), which shall be paid to the Company by
means of the Company retaining said amount from the reserves transferred to
Reinsurer as set forth in Article III, paragraph 1.

     

    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 and its
Shareholders hereby make representations and warrants that they will make all
reasonable efforts to keep the reinsured business in force.

    


    4.           Control Over
Assets.  Upon payment to Reinsurer of the reserve transfer set forth
in Article III, paragraph 1, the Reinsurer shall have full ownership of and
control over the transferred assets, subject only to the terms of the Trust
Agreement.  The Reinsurer shall be vested with full power and
authority to direct the trustee of the Trust Agreement to sell, trade,
liquidate, exchange, reinvest, and otherwise dispose of and deal with the
transferred assets, as it determines in its sole discretion, subject to any
applicable state law.

    
 

    
      
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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
express written 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.

     

    


    
      
        
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    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 contracts 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.

    


    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 Utah
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.

    


    


    
      
        
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    ARTICLE VI

    


    ARBITRATION

    


    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

    


    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 any
applicable state law.  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 Mississippi, 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.

    


    


    


    
      
        
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    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.

    


    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.

    


    


    
      
        
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    ARTICLE IX

    


    SHAREHOLDER
OBLIGATIONS

    


    1.           Shareholder
Obligations.  Each of the Shareholders agrees as
follows:

    


     
(i)  not to induce or attempt to induce, or to cause or aid in any
manner whatsoever any other person to induce or attempt to induce, any
policyholder to terminate any policy issued by Southern Security;

    


     
(ii)  that all policyholder lists, applications for insurance,
policyholder information, knowledge of business operations and sales methods,
and all other materials of Southern Security, are the property of Southern
Security only, that Shareholders’ or Officers’ access to all such information
and property has been in a fiduciary capacity, and that all such information and
property shall not be used by any of the Shareholders without specific written
authorization by Security National;

    


     
(iii)  that the protection of such information and property is
necessary to provide Security National with the value of the benefits and rights
being purchased by it pursuant to this  Agreement; and

    


     
(iv)  provided, however, that nothing in this Agreement shall preclude
Russ Nowell from engaging in the insurance business, utilizing any lines of
authority and/or company affiliations to sell, solicit or negotiate new policies
on behalf of any competitor of Southern Security or Security National, including
new policies to existing policy holders provided no twisting or replacement of
the in-force policies occurs, so long as he does not solicit existing Southern
Security policyholders regarding in-force policies or utilize information gained
as an officer of Southern Security to solicit existing policyholders regarding
in-force business.

    


    2.           Shareholders Liable for
Liquidated Damages.  Each of the Shareholders agrees that any
engagement in activities described in Article IX, paragraph 1 above will result
in irreparable injury to Security National, for which there is no adequate
remedy at law.  Thus, in the event of breach of  Article IX,
paragraph 1 by any respective Shareholder, Security National may apply for and
obtain immediate and continuing injunctive relief prohibiting further or
continued breach of such obligations hereunder against such Shareholder
committing the said breach.  The said Shareholder(s) committing the
breach further agrees that he or she will be liable for liquidated damages in
the amount of two years’ annual premium for all policies that are terminated as
a result of such Shareholders’ activities.  The other Shareholders
shall have no liability or responsibility for liquidated damages arising out of
the activities or actions of such Shareholder(s) committing the
breach.

    


    


    


    
      
        
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    ARTICLE X

    


    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.

    


    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 Lewisville
City, Mississippi.

    


    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.

    


    ARTICLE XI

    


    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.

    


    


    


    


    [The rest
of this page is left blank intentionally]

     

     

    


    
      
        
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    IN
WITNESS of the above, this Agreement is executed effective as of this __ day of
August, 2008.

    


    
      	 
      	
              “Company”

            
	 
      	 
      
	 
      	
              SOUTHERN
      SECURITY LIFE INSURANCE COMPANY

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:   /s/ Janet Nowell
      Massey

            
	 
      	
              Its:  Executive
      vice President

            
	 
      	 
      
	 
      	
              “Reinsurer”

            
	 
      	 
      
	 
      	
              SECURITY
      NATIONAL LIFE INSURANCE COMPANY

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:
      /s/ Scott M.
      Quist

            
	 
      	
              Its:
      President

            
	 
      	 
      
	 
      	
              “Shareholders”

            
	 
      	 
      
	 
      	 
      
	 
      	
               /s/
      Russell C. Nowell

            
	 
      	
              Russell
      C. Nowell

            
	 
      	 
      
	 
      	 
      
	 
      	
               /s/ Janet Nowell
      Massey, Jr.

            
	 
      	
              Janet
      Nowell Massey, Jr.

            
	 
      	 
      
	 
      	 
      
	 
      	
               /s/ Michael
      Pierce

            
	 	
              Michael
      Pierce, Temporary Administrator of

            
	 
      	
                  the
      Estate of Genece Nowell

            
	 
      	 
      
	 
      	 
      
	 
      	
               /s/ Harold B.
      Nowell, Sr.

            
	 
      	
              Harold
      B. Nowell, Sr.

            
	 
      	 
      
	 
      	 
      
	 
      	
               /s/ Harold
      Nowell, III

            
	 
      	
              Harold
      Nowell, III, Executor of the Estate

            
	 
      	
                  of
      H. Bernard Nowell, Jr.

            


    

    


    


    
      
        
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    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, “Southern Security
Reinsured Policies 8/___/08.”

    


    
      
        
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    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 earned 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.

    


    


    
      
        
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    SCHEDULE C

    


    COMMISSIONS AND EXPENSE
ALLOWANCE

    


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

    


    Plan Description Commission
Fee

    


    


    


    


    Calculation of Commission
Fee

    


    
      	 
      	 	
              Premium

            	 	
              Reserve
      Amount

            
	
              Total
      Collected Premium

            	
              $

            	
               

            	
               $

            	
               

            
	 
      	 	 
      	 	 
      
	
              Percentage
      Reinsured

            	
              $

            	
              100%

            	
               $

            	
              100%

            
	
              Reinsured
      Collected Premiums

            	
              $

            	
               

            	
               $

            	
               

            
	 
      	 	
               
      

            	 	 
      
	
              Commission
      Fee Percentage

            	
              $

            	
              0%

            	
               $

            	
               0%

            
	 
      	 	 
      	 	 
      
	
              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.

    


    
      
        
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    SCHEDULE D

    


    MONTHLY
SETTLEMENT

    


    FROM

    SECURITY
NATIONAL LIFE INSURANCE COMPANY

    TO
SOUTHERN SECURITY LIFE INSURANCE COMPANY

    AND
FROM

    SOUTHERN
SECURITY 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) =

            	 
      	 
      	
               

            


    

    


    
      
        
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    SCHEDULE
D CONTINUED

    


    
      	Supplemental
      Information	 	 	 	 	 
	 	 	 	 	 	 
	Direct	 	 	 	 	 
	 
      	 
      	 
      	
              Policy

            	 
      	 
      
	 
      	
              # of
      Policies

            	 
      	
              Reserves

            	 
      	
              Face
    Amount

            
	
              Beg.
      of Period

            	
               

            	 
      	
               

            	 
      	
               

            
	
              +Additions

            	
               

            	 
      	
               

            	 
      	
               

            
	
              -Terminations

            	
               

            	 
      	
               

            	 
      	
               

            
	
              End
      of Period

            	
               

            	 
      	
               

            	 
      	
               

            
	 
      	 
      	 
      	 
      	 
      	 
      
	
              Reinsurance
      Ceded

            	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              Policy

            	 
      	 
      
	 
      	
              # of Policies

            	 
      	
              Reserves

            	 
      	
              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:

            	 
      	 
      	 
      	 
      	
               

            


    

    


    
      
        
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    EXHIBIT 1

    


    TRUST
AGREEMENT

    effective
as of August 13, 2008, among

    SOUTHERN
SECURITY LIFE INSURANCE COMPANY, as Grantor,

    


    SECURITY
NATIONAL LIFE INSURANCE COMPANY, as Beneficiary, and

    


    ZIONS
BANCORPORATION, as Trustee

     

     

     

     

    


    
      
        
          Table of Contents

        

        
           


          
            

          

        

        
           

        

      

    

     

    TABLE OF CONTENTS

     

    


    
      	      
              Page
      Parties And Recitals

            	 
	 	 
	
              Section 1. Deposit of Assets to the Trust
      Account

            	
              1

            
	 
      	 
      
	
              Section 2. Withdrawal of Assets from the Trust
      Account

            	
              3

            
	 
      	 
      
	
              Section 3. Redemption, Investment and Substitution of
      Assets

            	
              4

            
	 
      	 
      
	
              Section 4. The Income Account

            	
              4

            
	 
      	 
      
	
              Section 5. Right to Vote Assets

            	
              4

            
	 
      	 
      
	
              Section 6. Additional Rights and Duties of
      Trustee

            	
              5

            
	 
      	 
      
	
              Section 7. Trustee's
      Compensation, Expenses and Indemnification

            	
              6

            
	 
      	 
      
	
              Section 8. Resignation of Trustee

            	
              7

            
	 
      	 
      
	
              Section 9. Termination of the Trust Account

            	
              7

            
	 
      	 
      
	
              Section 10. Tax Returns

            	
              7

            
	 
      	 
      
	
              Section 11.  Definitions

            	
               8

            
	 
      	 
      
	
              Section 12. Governing Law

            	
              8

            
	 
      	 
      
	
              Section 13. Assignment

            	
              9

            
	 
      	 
      
	
              Section 14. Severability

            	
              9

            
	 
      	 
      
	
              Section 15. Entire Agreement

            	
              9

            
	 
      	 
      
	
              Section 16. Amendments

            	
              9

            
	 
      	 
      
	
              Section 17. Notices, Etc.

            	
              9

            
	 
      	 
      
	
              Section 18. Headings

            	
              10

            
	 
      	 
      
	
              Section 19. Counterparts

            	
              10

            


    

    


    
      	 	
              Exhibit A

            	
              Reinsurance Agreement

            
	 	
              Exhibit B

            	
              List of Assets Deposited to the Trust
      Account

            
	 	
              Exhibit C

            	
              Information to be Provided to
  Reinsurer

            


    

    


    
      
        
           

        

        
           


          
            

          

        

        
           

        

      

    

     

    TRUST
AGREEMENT

    


    THIS
TRUST AGREEMENT is made and entered into, effective this ___ day of August, 2008
(the "Agreement"),
by and among SOUTHERN SECURITY LIFE INSURANCE COMPANY, a Mississippi domiciled
insurance company, together with any successor thereof, including, without
limitation, any liquidator, rehabilitator, receiver or conservator (the "Grantor"),
SECURITY NATIONAL LIFE INSURANCE COMPANY, a Utah domiciled insurance company
(the "Beneficiary"), and ZIONS BANCORPORATION, a banking corporation (the "Trustee")
(Grantor, Beneficiary and Trustee are each hereinafter sometimes referred to,
individually, as a "Party"and,
collectively, as the "Parties").

    


    WITNESSETH:

    


    WHEREAS,
Grantor and Beneficiary have entered into a certain reinsurance agreement,
effective as of August __, 2008, a copy of which is attached hereto as Exhibit
"A", and by this reference made a part hereof (the "Reinsurance
Agreement") concerning certain insurance policies (the "Reinsured Policies");
and

    


    WHEREAS,
Grantor desires, pursuant to the terms of the Reinsurance Agreement, to transfer
to Trustee for deposit into a trust account (the "Trust
Account") assets equal in amount to the statutory reserves subject to the
Reinsurance Agreement in order to secure payments to be made pursuant to the
terms of the Reinsurance Agreement; and

    


    WHEREAS,
Trustee has agreed to act as the trustee hereunder, and to hold such assets in
trust in the Trust Account and the Income Account, as defined in Section 4
below, for the sole use and benefit of Beneficiary pursuant to the terms of the
Reinsurance Agreement;

    


    NOW,
THEREFORE, for and in consideration of the promises and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the Parties
hereby agree as follows:

    


    Section 1

    Deposit
of Assets to the Trust Account

    


    (a)  Grantor
shall establish the Trust Account and Trustee shall administer the Trust Account
in its name as the trustee for Beneficiary. The Trust Account shall be subject
to withdrawal by Beneficiary as provided herein.

    


    (b)  Grantor
shall transfer to Trustee, for deposit into the Trust Account, the assets listed
in Exhibit "B" hereto, and may transfer to Trustee, for deposit into the Trust
Account, such other assets as may be required or as Beneficiary may from time to
time desire pursuant to the terms of the Reinsurance Agreement (all such assets
actually received in the Trust Account are herein referred to as the
"Assets"). The
Assets shall consist of cash and Eligible Securities as defined
below.  Beneficiary shall have the sole right to determine which of
Grantor's assets shall be transferred to Beneficiary.

    


    


    
      
        
          Exhibit 1 Table of
Contents

        

        
          1

          
            

          

        

        
           

        

      

    

    


    (c)  The amounts deposited by
Grantor in the Trust Account shall be in such amount that the aggregate market
value of the Trust Account at the inception of this Trust equals or exceeds the
statutory reserves on the reinsurance ceded under the Reinsurance Agreement as
of the same date. For purposes of this section, aggregate market value shall be
determined by Trustee, and the Assets that are in default according to their
terms shall have a market value of $0 (zero dollars). For purposes of this
Agreement, statutory reserves, whenever used, shall mean the gross statutory
reserves held by Grantor, or as should be held by Grantor, on its NAIC
Convention Blank with respect to the policies reinsured hereunder. Grantor
certifies, to the best of its knowledge and belief to Beneficiary, the actuarial
accuracy of the reserves based upon the appropriate mortality table, interest
assumptions, and method of calculation relating to each of the policies
reinsured hereunder, and the accuracy of the outstanding balances of the policy
loans, dividend deposits and coupon deposits, if any, applicable to each of the
policies reinsured hereunder; provided, however, that in the event of a breach
of these certificates or the discovery by Grantor or Beneficiary of an error in
calculation, any such breach or error may be cured by Grantor or Beneficiary
making a cash payment to the other, as the case may be, of the amount of any
such error in calculation or actuarial inaccuracy.

    


    (d)  Grantor hereby
represents and warrants (i) that any Assets transferred by Grantor to Trustee
for deposit into the Trust Account shall be in such form that Beneficiary may
request and Trustee shall, upon direction by Beneficiary, negotiate any such
Assets without consent or signature from Grantor or any other person in
accordance with the terms of this Agreement; and (ii) that all Assets
transferred by Grantor to Trustee for deposit into the Trust Account shall
consist only of cash and Eligible Securities.

    


    (e)  Trustee shall have no
responsibility to determine whether the Assets in the Trust Account are
sufficient to secure Grantor's liabilities under the Reinsurance Agreement or
whether such assets are equal to the Statutory Reserves.

    


    (f)  This Agreement is a
security agreement under the Utah Uniform Commercial Code ("Utah
UCC"), as
enacted and in effect in the State of Utah, and creates a security interest in
the Assets in favor of Trustee, for the benefit of Beneficiary. Upon
Beneficiary's request, financing statements shall be executed by the necessary
party or parties and filed by Trustee in the manner required by law to perfect
such security interest. Compliance with Utah UCC requirements shall not alter
any rights under this Agreement or under any other laws of the State of Utah,
nor shall it relieve Trustee of any obligation. Compliance with the Utah UCC is
solely to preserve the priority of Beneficiary's security interest in the
Assets.

    


    (g)  Grantor shall deliver
the Assets listed in Exhibit B hereto to Trustee with appropriate assignments,
bond powers, or powers of attorney that authorize Trustee to transfer the Assets
to its name and hold them for the benefit of Beneficiary. In the event
additional Assets are added to or are substituted for the Assets already in the
fund, appropriate assignments, bond powers or powers of attorney authorizing
Trustee to transfer the additional Assets to its name shall also be delivered to
Trustee.

    


    (h) Grantor warrants that it will not
create any other security interest in or otherwise encumber the Assets. In the
event any lien or claim is made against any Assets, which asserts an interest
superior to that of Beneficiary, Grantor will promptly take steps satisfactory
to Beneficiary to discharge the claim or lien or shall substitute other assets
for those encumbered.

    


    


    
      
        
          Exhibit 1 Table of
Contents

        

        
          2

          
            

          

        

        
           

        

      

    

    


    Section 2

    Withdrawal
of Assets from the Trust Account

    


    (a) Without notice to Grantor, but upon
written notice to Trustee (the "Withdrawal
Notice"), Beneficiary shall have the right, at any time and from time to time,
to withdraw from the Trust Account, such Assets as are specified in such
Withdrawal Notice for legitimate business purposes, including the purposes set
forth below. The Withdrawal Notice may designate a third party (the "Designee")
to whom the Assets specified therein shall be delivered and may condition
delivery of such Assets to such Designee upon receipt, and deposit to the Trust
Account, of other Assets specified in such Withdrawal Notice. Beneficiary need
present no statement or document other than a representation to be contained in
the Withdrawal Notice that the Assets, using statutory accounting principles as
required or allowed by the domiciliary state of Beneficiary, remaining in the
Trust Account are at least equal to the Statutory Reserves as of the preceding
quarterly statutory filing, nor is said right of withdrawal or any other
provision of this Agreement subject to any conditions or qualifications not
contained in this Agreement. At no time shall Beneficiary submit a withdrawal
notice to Trustee that would cause the Assets in this Trust to be less than the
Statutory Reserves, using statutory accounting principles as required or allowed
by the domiciliary state of Beneficiary, on the Reinsured Policies as of the
preceding quarterly statutory filing.

    


    (b)  Beneficiary shall have
the right to withdraw Assets from the Trust Account in accordance with this
Section 2 for the following purposes: (i) to make payment of any obligation of
Beneficiary under the Reinsurance Agreement; (ii) to fund Beneficiary's share of
non-forfeiture benefits returned to the owners of policies reinsured under the
Reinsurance Agreement on account of cancellations of such policies; (iii) to
fund Beneficiary's share of surrenders and benefits or losses paid pursuant to
the provisions of the policies reinsured under the Reinsurance Agreement; (iv)
to the extent the Assets in the Trust Account, using statutory accounting
principles as required or allowed by the domiciliary state of Beneficiary,
exceed the statutory reserves for the policies covered by the Reinsurance
Agreement, such excess amount of Assets may be withdrawn by Beneficiary in its
sole discretion. Beneficiary shall have sole ownership of any increases in the
amount of the Assets in the Trust Account, including, without limitation, any
income derived from such Assets.

    


    (c)  Upon receipt of a
Withdrawal Notice, Trustee shall immediately take any and all steps necessary to
transfer the Assets specified in such Withdrawal Notice and shall deliver such
Assets to or for the account of Beneficiary or such Designee as specified in
such Withdrawal Notice.

    


    (d)  Subject to paragraph (a)
of this Section 2 and to Section 4 of this Agreement, in the absence of a
Withdrawal Notice, Trustee shall allow no substitution or withdrawal of any of
the Assets from the Trust Account.

    


    (e)  Trustee shall have no
responsibility whatsoever to determine the manner in which any Assets withdrawn
from the Trust Account pursuant to this Section 2 will be used and/or
applied.

    


    


    
      
        
          Exhibit 1 Table of
Contents

        

        
          3

          
            

          

        

        
           

        

      

    

    


    Section 3

    Redemption, Investment and
Substitution of
Assets

    


    (a)  Trustee shall surrender
for payment all maturing Assets and all Assets called for redemption and deposit
the principal amount of the proceeds of any such payment to the Trust
Account.

    


    (b)  From time to time, at
the written order and direction of Beneficiary, Trustee shall invest Assets in
the Trust Account in Eligible Securities, as authorized by the insurance laws of
Utah, or laws of other controlling insurance authorities. Trustee is
specifically authorized to invest any cash balances in one or more money market
vehicles utilized by Trustee for fiduciary accounts without receiving prior
written direction or any further confirmation from Beneficiary. Trustee is
further permitted to utilize any such fund invested in its own bank's
deposits.

    


    (c)  From time to time,
Beneficiary may direct Trustee in writing to substitute Eligible Securities for
other Eligible Securities held in the Trust Account at such time. Trustee shall
have no responsibility whatsoever to determine the value of such substituted
securities or whether such substituted securities constitute Eligible
Securities. On an annual basis, Beneficiary shall send a written statement to
Trustee, certifying that all the securities in the Trust Account constitute
Eligible Securities.

    


    (d)  Trustee shall have no
responsibility whatsoever to determine that any Assets in the Trust Account are
or continue to be Eligible Securities. Trustee shall execute instructions or
orders concerning such investments or substitutions of securities (the
"Investment Orders") and settle securities transactions by itself or by means of
an agent or broker. Trustee shall not be responsible for any act or omission, or
for the solvency, of any such agent or broker unless said act or omission is the
result, in whole or in part, of Trustee's negligence, willful misconduct or lack
of good faith.

    


    (e)  Any loss incurred from
any investment pursuant to the terms of this Section 3 shall be borne
exclusively by Beneficiary. Trustee shall not be liable for any loss due to
changes in market rates or penalties for early redemption.

    


    Section 4

    The
Income Account

    


    All payments of interest and dividends
received from or relating to the Assets in the Trust Account shall be deposited
by Trustee into a separate income account that shall be administered by Trustee
(the "Income Account") for the benefit of Beneficiary. Trustee's compensation
and expenses shall be deducted from the Income Account, as provided in Section 7
of this Agreement.

    


    Section 5

    Right
to Vote Assets

    


    Trustee shall forward all annual and
interim stockholder reports and all proxies and proxy materials relating to the
Assets in the Trust Account to Beneficiary. Beneficiary shall have the full and
unqualified right, where applicable, to vote any Assets in the Trust
Account.

    


    


    
      
        
          Exhibit 1 Table of
Contents

        

        
          4

          
            

          

        

        
           

        

      

    

    


    Section 6

    Additional
Rights and Duties of Trustee

    


    (a)  Beneficiary shall have
the right to direct the Trustee at any time in writing to sell, trade,
liquidate, exchange, reinvest, and otherwise dispose of and deal with the Assets
as Beneficiary determines in its sole discretion.

    


    (b)  Trustee shall notify
Grantor and Beneficiary in writing within ten (10) days following each deposit
to, or withdrawal from, the Trust Account.

    


    (c)  Before accepting any
Asset for deposit to the Trust Account, Trustee shall determine that such Asset
is in such form that Beneficiary whenever necessary may, or Trustee upon
direction by Beneficiary will, negotiate such Asset without consent or signature
from Grantor or any person or entity other than Trustee in accordance with the
terms of this Agreement.

    


    (d)  Trustee may deposit any
Assets in the Trust Account in a book-entry account maintained at a federally
chartered bank or in depositories such as the Depository Trust Company. Assets
may be held in the name of a nominee maintained by Trustee or by any such
depository.

    


    (e) Trustee shall accept and open all
mail directed to Grantor or Beneficiary in care of Trustee.

    


    (f)  Trustee shall furnish
Grantor and Beneficiary with a written statement of all the Assets in the Trust
Account upon the inception of the Trust Account and at the end of each calendar
quarter thereafter.

    


    (g)  Upon the request of
Grantor or Beneficiary, Trustee shall promptly permit the Grantor or
Beneficiary, their respective agents, employees or independent auditors to
examine, audit, excerpt, transcribe and copy, during Trustee's normal
business hours, any books, documents, papers and records relating to the Trust
Account or the Assets.

    


    (h)  Trustee is authorized to
follow and rely upon instructions consistent with the provisions of this
Agreement that may be given by officers named in incumbency certificates
furnished to Trustee from time to time by Beneficiary and by attorneys-in-fact
acting under written authority furnished to Trustee by Beneficiary, including,
without limitation, instructions given by letter, facsimile transmission,
telegram, teletype, cablegram or electronic media, if Trustee believes such
instructions to be genuine and to have been signed, sent or presented by the
proper party or parties. Trustee shall not incur any liability to anyone
resulting from actions taken by Trustee in reliance in good faith on such
instructions. Trustee shall not incur any liability in executing instructions
(i) from an attorney-in ­fact prior to receipt by it of notice of the
revocation of the written authority of the attorney-in-fact or (ii) from any
officer of Beneficiary named in an incumbency certificate delivered hereunder
prior to receipt by it of a more current certificate.

    


    


    
      
        
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    (i)  The duties and
obligations of Trustee shall only be such as are specifically set forth in this
Agreement, as it may from time to time be amended, and no implied duties or
obligations shall be read into this Agreement against Trustee. Trustee shall
only be liable for its own negligence, willful misconduct or lack of good
faith.

    (j)  No provision of this
Agreement shall require Trustee to take any action which, in Trustee's
reasonable judgment, would result in any violation of this Agreement or any
provision of law.

    


    (k)  Trustee may confer with
counsel of its own choice in relation to matters arising under this Agreement
and shall have full and complete authorization from the other Parties hereunder
for any action taken or suffered by it under this Agreement or under any
transaction contemplated hereby in good faith and in accordance with the opinion
of such counsel.

    


    Section 7

    Trustee's
Compensation, Expenses and Indemnification

    


    (a)  Trustee shall be paid
its compensation and expenses from the Income Account, as set forth in Paragraph
4, for its services as trustee under this Agreement, based upon a fee schedule
that will be mutually agreed upon by Trustee and Beneficiary. Beneficiary shall
have the right to review at any time the amount of compensation and expenses
paid to Trustee for serving as a trustee hereunder and, if necessary, to dispute
any such amounts that may be incorrectly or improperly determined. All of
Trustee's
expenses and disbursements in connection with its duties under this Agreement
(including reasonable attorney's fees and expenses) will be paid from the Income
Account, except any such expense or disbursement as may arise from Trustee's
negligence, willful misconduct or lack of good faith. Trustee shall be entitled
to deduct its compensation and expenses from payments of dividends, interest and
other income in respect of the Assets held in the Trust Account prior to the
deposit thereof to the Income Account as provided in Section 4 of this
Agreement, upon written notification to Beneficiary. Beneficiary and Grantor
also hereby indemnify Trustee for, and hold it harmless against, any loss,
liability, costs or expenses (including reasonable attorney's fees and expenses)
incurred or made without negligence, willful misconduct or lack. of good faith
on the part of Trustee, arising out of or in connection with the performance of
its obligations in accordance with the provisions of this Agreement, including
any loss, liability, costs or expenses arising out of or in connection with the
status of Trustee and its nominee as the holder of record of the Assets. Grantor
hereby acknowledges that the foregoing indemnities shall survive the resignation
of Trustee or the termination of this Agreement and hereby grants the Trustee a
lien, right of set-off and security interest in the funds in the Income Account
for the payment of any claim for compensation, reimbursement or indemnity
hereunder.

    


    (b) No Assets, other than as related to
income, shall be withdrawn from the Trust Account or used in any manner for
paying compensation to, or reimbursement or indemnification of,
Trustee.

    


    


    
      
        
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    Section 8

    Resignation
of Trustee

    


    (a)  Trustee may resign at
any time by giving not less than ninety (90) days' written
notice thereof to Beneficiary and to Grantor, such resignation to become
effective on the acceptance of appointment by a successor trustee and the
transfer to such successor trustee of all Assets in the Trust Account in
accordance with paragraph (b) of this Section 8.

    


    (b)  Upon receipt of
Trustee's notice
of resignation, Beneficiary shall appoint a successor trustee. Any successor
trustee shall be a bank that is a member of Federal Reserve System or shall not
be a Parent, a Subsidiary or an Affiliate of Grantor or Beneficiary. Upon the
acceptance of the appointment as trustee hereunder by a successor trustee and
the transfer to such successor trustee of all Assets in the Trust Account, the
resignation of Trustee shall become effective. Thereupon, such successor trustee
shall succeed to and become vested with all the rights, powers, privileges and
duties of Trustee, and Trustee shall be discharged from any future duties and
obligations under this Agreement, but Trustee shall continue after its
resignation to be entitled to the benefits of the indemnities provided herein
for Trustee.

    


    Section 9

    Termination
of the Trust Account

    


    (a)  The Trust Account and
this Agreement, except for the indemnities provided herein, shall be terminated
at any time by Beneficiary after Beneficiary has given Trustee written notice of
its intention to terminate the Trust Account in accordance with the terms
thereof. Insolvency of Beneficiary shall also be considered to cause the
termination of this Trust Account.  Such notice shall specify the date
(the "Termination
Date") on
which Beneficiary intends the Trust Account to terminate, which date shall be at
least five (5) days subsequent to the date that the termination notice is
given.

    


    (b)  On the Termination Date,
upon receipt of written approval of Beneficiary, Trustee shall transfer to
Beneficiary all amounts remaining in the Trust Account.

    


    (c)  If the Reinsurance
Agreement is converted to an Assumption Agreement as a result of Grantor's
insolvency as set forth in Article VII of the Reinsurance Agreement, the Trust
Account shall terminate and all Assets in the Trust Account shall be distributed
to Beneficiary.

    


    Section 10

    Tax
Returns

    


    Beneficiary shall be responsible for
causing to be prepared and filed in a timely fashion all tax returns, if any, of
the Trust relating to the transactions contemplated by this Agreement or
otherwise contemplated hereby, and it shall send a copy of each such tax return
to Trustee and Beneficiary. Trustee, upon request, shall furnish Grantor with
all such information as it has in its possession and as may be reasonably
required in connection with the preparation of such tax returns and shall, upon
the request of Beneficiary, execute such returns if required to do so by the
applicable taxing authority. Trustee shall not be liable for any tax due and
payable in connection with this Trust Agreement except for any tax based on or
measured by the net income of Trustee resulting from the amounts paid to Trustee
as fees or compensation for acting as Trustee hereunder.

    


    


    
      
        
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    Section 11

    Definitions

    


    Except as the context shall otherwise
require, the following terms shall have the following meanings for all purposes
of this Agreement (the definitions to be applicable to both the singular and the
plural forms of each term defined if both such forms of such term are used in
this Agreement):

    


    The term "Affiliate" with respect to
any corporation shall mean a corporation which directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with, such corporation. The term "control" (including the related terms
"controlled
by" and "under
common control with") shall mean the ownership, directly or indirectly of more
than fifty percent (50%) of the voting stock of a corporation.

    


    The term "Business
Day" shall mean any day on which the offices of Trustee is open for
business.

    


    The term "Eligible
Securities" shall mean and include certificates of deposit issued by a United
States bank and payable in United States legal tender and obligations issued,
assumed or guaranteed by the United States, any state, territory or possession
thereof, or the District of Columbia or any money market vehicles utilized by
Trustee for fiduciary accounts, to include those invested in its own bank's
deposits, any other investment authorized under the relevant statutes and rules
of Beneficiary's domiciliary state; provided, however, that no such securities
shall have been issued by a Parent, a Subsidiary or an Affiliate of either
Grantor or Beneficiary.

    


    The term "obligations"
shall mean, with respect to the Reinsurance Agreement, (a) losses, to include
policyholder benefits, and allocated loss expenses paid or payable by
Beneficiary, but not recovered from Grantor, (b) reserves for losses reported
and outstanding, (c) reserves for losses incurred but not reported, (d) reserves
for allocated loss expenses and (e) reserves for unearned premiums.

    


    The term "person"
shall mean and include an individual, a corporation, a partnership, an
association, a trust, an unincorporated organization or a government or
political subdivision thereof.

    


    The term "Parent"shall
mean an institution that, directly or indirectly, controls another
institution.

    


    The term "Subsidiary"
shall mean an institution controlled, directly or indirectly, by another
institution.

    


    Section 12

    Governing
Law

    


    This Agreement shall be subject to and
governed by the laws of the state of Beneficiary's domicile. Venue and
jurisdiction shall be in the State of Utah.

    


    


    
      
        
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    Section 13

    Assignment

    


    Beneficiary may assign this Agreement
or any of its rights or obligations hereunder at any time without the consent of
Grantor.

    


    Section 14

    Severability

    


    In the event that any provision of this
Agreement shall be declared invalid or unenforceable by any regulatory body or
court having jurisdiction, such invalidity or unenforceability shall not affect
the validity or enforceability of the remaining portions of this
Agreement.

    


    Section 15

    Entire
Agreement

    


    This Agreement constitutes the entire
agreement among the Parties, and there are no understandings or agreements,
conditions or qualifications relative to this Agreement which are not fully
expressed in this Agreement.

    


    Section 16

    Amendments

    


    This Agreement may be modified or
otherwise amended, and the observance of any term of this Agreement may be
waived, if such modification, amendment or waiver is in writing and signed by
all of the Parties.

    


    Section 17

    Notices

    


    Unless otherwise provided in this
Agreement, all notices, directions, requests, demands, acknowledgments and other
communications required or permitted to be given or made under the terms hereof
shall be in writing and shall be deemed to have been duly given or made (a) (i)
when delivered personally, (ii) when made or given by prepaid telex, telegraph
or telecopier, or (iii) in the case of mail delivery, upon the expiration of
three days after any such notice, direction, request, demand, acknowledgment or
other communication shall have been deposited in the United States mail for
transmission by first class mail, postage prepaid, or upon receipt thereof,
whichever shall first occur and (b) when addressed as follows:

    


    If to Grantor:

    


    Southern Security Life Insurance
Company

    211 Ball Drive

    P.O. Box 924

    Louisville, Mississippi
39339

    Attn:  Russell C. Nowell,
President

     

     

    
      
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    If to Beneficiary:

    


    Security National Life Insurance
Company

    5300 South 360 West, Suite
250

    Salt Lake City, Utah 84123

    Attn: Stephen Sill, Vice
President

    


    If to Trustee:

    Zions Bancorporation

    10 East South Temple, Suite
300

    Salt Lake City, Utah 84111

    Attn:
_______________________

    


    Each Party may from time to time
designate a different address for notices, directions, requests, demands,
acknowledgments and other communications by giving written notice of such change
to the other Parties. All notices, directions, requests, demands,
acknowledgments and other communications relating to the termination of the
Trust Account shall be in writing and may not be made or given by prepaid telex,
telegraph or telecopier.

    


    Section 18

    Headings

    


    The headings of the Sections and the
Table of Contents have been inserted for convenience of reference only, and
shall not be deemed to constitute a part of this Agreement.

    


    Section 19

    Counterparts

    


    This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall
constitute an original, but such counterparts together shall constitute one and
the same Agreement.

    


    


     

    
 

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    IN WITNESS WHEREOF, the Parties hereto
have caused this Agreement to be executed and delivered by their respective
officers thereunto duly authorized as of the date first above
written.

    


    
      	 
      	
              SOUTHERN
      SECURITY LIFE INSURANCE COMPANY,

            
	 
      	
                   as
      Grantor

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
              By:
      ____________________________________

            
	 
      	
              Title:
      ___________________________

            
	 
      	 
      
	 
      	 
      
	 
      	
              SECURITY
      NATIONAL LIFE INSURANCE COMPANY,

            
	 
      	
                    as
      Beneficiary

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
              By:
      ___________________________________

            
	 
      	
              Title:
      _________________________

            
	 
      	 
      
	 
      	 
      
	 
      	
              ZIONS
      BANCORPORATION, as Trustee

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
              By:
      _____________________________

            
	 
      	
              Title:____________________________

            
	 
      	 
      


    

    


    
      
        
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    EXHIBIT A

    


    Reinsurance Agreement between SOUTHERN
SECURITY LIFE INSURANCE COMPANY, a Mississippi domiciled insurance company and
SECURITY NATIONAL LIFE INSURANCE COMPANY, a Utah domiciled insurance company,
effective as of August __, 2008.

     

     

    


    
      
        
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    EXHIBIT B

    


    Assets Equal to Reserves as of the Date
of the Reinsurance Agreement.

     

     

    


    
      
        
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    EXHIBIT C

    


    Information
to Be Provided to Reinsurer

     

     

     

    
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