snfc8k122007ex10-2.htm


    
      

      

    

     

    
      INDEMNIFICATION
        AGREEMENT

      


      


      THIS
        INDEMNIFICATION AGREEMENT (the
        "Agreement") is made and entered into this 17th day of December, 2007, by
        and
        among SECURITY NATIONAL LIFE INSURANCE COMPANY, a Utah corporation ("Security
        National"), CAPITAL RESERVE LIFE INSURANCE COMPANY, a Missouri corporation
        ("Capital Reserve"), and the shareholders of Capital Reserve that have executed
        the Agreement by Shareholders of Capital Reserve Life Insurance
        Company  to Sell Shares in Stock Purchase Transaction (the
        "Shareholders") (each of the foregoing parties is referred to singly,
        as  a "Party" and collectively, as the "Parties").

      


      WITNESSETH:

      


      WHEREAS,
        on October 9, 2007, Security
        National, Capital Reserve, and the Shareholders entered into a stock purchase
        agreement (the "Stock Purchase Agreement") in which the Shareholders agreed
        to
        sell to Security National and Security National agreed to purchase from the
        Shareholders all of the issued and outstanding shares of stock of Capital
        Reserve in consideration for purchase consideration payable to the Shareholders
        on a pro rata basis in an amount equal to the Capital and Surplus of Capital
        Reserve as of September 30, 2007, plus the interest maintenance reserve and
        the
        asset valuation reserve as set forth on the September 30, 2007 Statutory
        Quarterly Statement of Capital Reserve, plus $1,037,967, less certain
        adjustments set forth in Section 1.2 of the Stock Purchase Agreement (the
        "Purchase Consideration"); and

      


      WHEREAS,
        the Parties amended the Stock
        Purchase Agreement, effective November 26, 2007; and

      


      WHEREAS,
        in Section 1.2 of the Stock
        Purchase Agreement, the Shareholders acknowledge that on June 8, 2007, Darlene
        Russell ("Russell"), a former employee of Capital Reserve, filed an action
        against Capital Reserve in the Circuit Court of Cole County, Missouri (Case
        No.
        07ALCC00513) (the "Russell Litigation") for unpaid bonuses allegedly due
        her in
        the total amount of $1,486,045, plus interest at the statutory rate of 9%
        per
        annum until the judgment is paid in full; and

      


      WHEREAS,
        if the Russell Litigation is
        not completely resolved prior to the closing (the "Closing") of the transaction
        relating to the Stock Purchase Agreement, the Shareholders agree to deposit
        at
        Closing $2,100,000 of the Purchase Consideration into an escrow
        account  (the "Escrow Account") until the Russell Litigation has been
        completely resolved; and

      


      WHEREAS,
        the Shareholders agree to
        deliver a signed indemnification agreement to Capital Reserve and Security
        National at Closing, in which the Shareholders each agree to indemnify and
        hold
        harmless Capital Reserve and Security National for any payments made, and
        any
        damages or losses incurred, by Capital Reserve following the Closing relating
        to
        a judgment or settlement in the Russell Litigation and for the amount in
        which
        the Adjusted Capital and Surplus on September 30, 2007 exceeds the Adjusted
        Capital and Surplus on the closing date to the extent that such payments
        have
        not been previously made or such damages or losses have not been previously
        satisfied by means of an adjustment in the Purchase Consideration at Closing
        or
        from funds in the Escrow Agreement;

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      NOW,
        THEREFORE, in consideration of the
        mutual promises, agreements and covenants contained herein, and other good
        and
        valuable consideration, the receipt and sufficiency of which is hereby
        acknowledged, the Parties hereto hereby agree as follows:

      


      
        	
                 

              	
                1.

              	
                Indemnification.
                  

              


      

      


      (a)  Russell
        Litigation.  The Shareholders agree, jointly, severally and
        individually, to be liable for and to pay to or reimburse Capital Reserve
        and
        Security National for any and all payments made, and any and all damages,
        obligations, expenses, or losses incurred, by Capital Reserve or Security
        National following the Closing by reason of or in any way arising out of
        a
        judgment or settlement in the Russell Litigation, including any attorney's
        fees
        and related expenses paid or incurred by Capital Reserve in defending itself
        in
        the Russell Litigation, provided that such payments have not been previously
        reimbursed or such damages, obligations, expenses, or losses have not been
        previously paid or satisfied from funds in the Escrow Account.

      


      (b)  Capital
        and
        Surplus.  The Shareholders additionally agree, jointly,
        severally and individually, to be liable for and to pay to or reimburse Capital
        Reserve and Security National for any and all payments made, and any and
        all
        damages, obligations, expenses, or losses incurred, by Capital Reserve or
        Security National following the Closing by reason of or in any way arising
        out
        of the Shareholders' required payment to Security National under Section
        1.2 of
        the Stock Purchase Agreement equal to the amount in which the Adjusted Capital
        and Surplus of Capital Reserve on September 30, 2007 exceeds the Adjusted
        Capital and Surplus at Closing, provided that such payments have not been
        previously made or such damages, obligations, expenses, or losses have not
        been
        previously satisfied through an adjustment in the amount of the Purchase
        Consideration at Closing or by means of payments or reimbursements to Security
        National or Capital Reserve from funds in the Escrow Account.

      


      
        	
                 

              	
                2

              	
                Indemnification
                  Procedure. 

              


      

      


      (a)  Notice.  Capital
        Reserve and Security National shall, as a condition precedent to their right
        to
        be indemnified by the Shareholders under this Agreement, give the Shareholders
        notice in writing as soon as practicable pursuant to the notice provision
        in
        Section 4 of this Agreement of any claim made against the Shareholders for
        which
        indemnification will or could be sought under this Agreement.  In
        addition, Capital Reserve and Security National shall give the Shareholders
        such
        information and cooperation as such Shareholders may reasonably require and
        as
        shall be within Capital Reserve's and Security National's power.

      


      (b)  Procedure.  Any
        indemnification and advances provided for in Section 1 hereof shall be made
        no
        later than forty-five (45) days after receipt of written notice of Capital
        Reserve or Security National.  If a claim under this Agreement for
        indemnification is not paid in full by the Shareholders, Capital Reserve
        and
        Security National may at any time thereafter bring an action against the
        Shareholders to recover the unpaid amount of the claim and, subject to Section
        10 of this Agreement, Capital Reserve and Security National shall also be
        entitled to be paid for the expense (including attorneys' fees) of bringing
        such
        action.

      



      
        
          
          

        

        
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                3.

              	
                Additional
                  Indemnification Rights.

              


      

      


      (a)  Scope.  Notwithstanding
        any other provision of this Agreement, the Shareholders hereby agree to
        indemnify Capital Reserve and Security National to the fullest extent permitted
        by law, notwithstanding that such indemnification is not specifically authorized
        by the other provisions of this Agreement or by statute.  In the event
        of any change, after the date of this Agreement, in any applicable law, statute,
        or rule which expands the rights of a Utah corporation or a Missouri corporation
        to be indemnified, such changes shall be within the purview of Capital Reserve's
        and Security National's rights and the Shareholders' obligations under this
        Agreement.  In the event of any change in the applicable law, statute
        or rule which narrows the right of a Utah corporation or a Missouri corporation
        to be indemnified, such changes, to the extent not otherwise required by
        such
        law, statute, or rule to be applied to this Agreement shall have no affect
        on
        this Agreement or the Parties' rights and obligations hereunder.

      


      (b)  Nonexclusivity.  The
        indemnification provided by this Agreement shall not be deemed exclusive
        of any
        rights to which Capital Reserve and Security National may be entitled under
        any
        agreement, any vote of stockholders or disinterested directors, Utah or Missouri
        law, or otherwise.

      


      4.        
        Notices.  All
        notices and other communications hereunder shall be in writing and shall
        be
        deemed given if delivered personally or by courier, or mailed by registered
        or
        certified mail (return receipt requested) or if sent by facsimile, confirmation
        received, to the respective party at the following addresses and/or facsimile
        numbers, with the original thereof being mailed by registered or certified
        mail,
        return receipt requested (or at such other address or facsimile number for
        the
        parties hereto as shall be specified by like notice):

      


      
        	
                 

              	
                (a)

              	
                If
                  to Security National, to: 

              


      

      


      Security
        National Life Insurance Company

      5300
        South 360 West, Suite 250

      Salt
        Lake
        City, Utah 84123

      Attn:  Scott
        M. Quist, President

      Facsimile
        No.: (801) 264-1060

      Telephone
        No.: (801) 265-9882

      


      With
        a
        copy to:

      


      Mackey
        Price Thompson & Ostler

      57
        West
        200 South, Suite 350

      Salt
        Lake
        City, Utah 84101

      Attn:  Randall
        A. Mackey, Esq.

      Facsimile
        No.: (801) 575-5006

      Telephone
        No.:  (801) 575-5000

      



      
        
          
          

        

        
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                (b)

              	
                If
                  to Capital Reserve, to: 

              


      

      


      Capital
        Reserve Life Insurance Company

      812
        Madison Street

      P.O.
        Box
        896

      Jefferson
        City, Missouri 65102

      Attn:  Tony
        Hutchinson, Vice President

      Facsimile
        No.:  (573) 636-3751

      Telephone
        No.:  (573) 636-3913

      


      
        	
                 

              	
                (c)

              	
                If
                  to Shareholders, to: 

              


      

      


      Shareholders
        of Capital Reserve Life Insurance Company

      812
        Madison Street

      P.O.
        Box
        896

      Jefferson
        City, Missouri 65102

      Attn:  Jean
        Warden

      Facsimile
        No.:  (573) 636-3751

      Telephone
        No.:  (573) 636-3913

      


      With
        a
        copy to:

      


      J.
        Randy
        Snodgrass, CPA

      1620
        Southridge, Suite A

      Jefferson
        City, Missouri 65109

      Facsimile
        No.:  (573) 893-2872

      Telephone
        No.:  (573) 635-0754

      


      5.        
        Costs.  Each
        of the Parties to this Agreement agrees to bear its own costs, expenses and
        attorney's fees incurred in connection with or relating to this
        Agreement.  No Party, therefore, has any claim against another Party
        hereto for costs, expenses and attorney's fees incurred in connection with
        or
        relating to the preparation and negotiation of this Agreement.

      


      6.        
        No Admission of
        Liability.  This Agreement is not intended to be, and shall not
        be deemed, construed or treated in any respect as an admission of liability
        by
        any Party or entity for any purpose.

      


      7.        
        Authorized
        Representatives.  Each Party that has signed this Agreement in
        a representative capacity for such Party hereby represents and warrants to
        the
        Parties hereto that such Party is duly authorized and empowered to bind the
        Party under this Agreement and to execute and enter into this Agreement on
        behalf of the Party.

      



      
        
          
          

        

        
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      8.         Successors
        and
        Assigns.  This Agreement shall be binding upon the Shareholders
        and their heirs, legal representatives and assigns, and shall inure to benefit
        of Capital Reserve and Security National and their successors and
        assigns.

      


      9.         Severability.  If
        any term or provision of this Agreement shall, to any extent, be determined
        by a
        court of competent jurisdiction to be invalid or unenforceable, the remainder
        of
        the Agreement shall not be affected thereby, and each term and provision
        of this
        Agreement shall be valid and be enforceable to the fullest extent permitted
        by
        law.

      


      10.       Attorney's
        Fees.  In the event any Party hereto commences a legal action
        or other proceeding for the enforcement of this Agreement or because of an
        alleged dispute, breach, default or misrepresentation in connection with
        any of
        the provisions of this Agreement, the successful or prevailing Party shall
        be
        entitled to recover reasonable attorney's fees and other costs and expenses
        incurred in the action or proceeding from the other Party, in addition to
        any
        other relief to which such Party may be entitled.

      


      11.       Entire
        Agreement.  This Agreement constitutes the entire agreement
        among the Parties hereto and supersedes all prior agreements and understandings,
        oral and written, among the Parties hereto relating to the subject
        matter.  No modification or amendment of this Agreement shall be of
        any force or effect unless in writing and executed by the Party against whom
        enforcement is sought.

      


      12.       Governing
        Law.  This Agreement  shall be governed by and
        construed in accordance with the laws of the State of Utah.

      


      13.       Counterparts.  This
        Agreement may be executed in counterparts, either by original signature or
        by
        facsimile, and each such counterpart shall be deemed to be an original
        instrument, but all such counterparts together shall constitute one
        agreement.

      


      IN
        WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
        have
        duly executed this Agreement effective as of the day and year first above
        written.

      


      
        	 	
                SECURITY
                  NATIONAL LIFE INSURANCE COMPANY

              
	 	 
	 	 
	 	 
	 	
                By: /s/
                  Scott M.
                  Quist                                             
                  

              
	 	
                Scott
                  M. Quist, President

              
	 	 
	 	
                CAPITAL
                  RESERVE LIFE INSURANCE COMPANY

              
	 	 
	 	 
	 	 
	 	
                By: /s/
                  Jean P.
                  Warden                                           

              
	 	
                Its: President                                                          
                  

              


      

      


      



      
        
          
          

        

        
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      THE
        SHAREHOLDERS:

      


      


      


      
        	 	
                /s/
                  Leanne Warden
                  Cardwell                                   
                  

              
	 	
                Leanne
                  Warden Cardwell

              
	 	 
	 	 
	 	 
	 	
                /s/
                  Deborah J.
                  Miller                                         
                         

              
	 	
                Deborah
                  J. Miller

              
	 	 
	 	 
	 	 
	 	
                /s/
                  Kristy J.
                  Neff                                         
                              
                  

              
	 	
                Kristy
                  J. Neff

              
	 	 
	 	 
	 	 
	 	
                /s/
                  Laura Warden
                  Smith                                           
                  

              
	 	
                Laura
                  Warden Smith

              
	 	 
	 	 
	 	 
	 	
                /s/
                  David H.
                  Warden                    
                                             
                  

              
	 	
                David
                  H. Warden

              
	 	 
	 	 
	 	 
	 	
                /s/
                  David H.
                  Warden                            
                                     
                  

              
	 	
                David
                  H. Warden for

              
	 	
                David
                  A. Warden (Minor Child)

              
	 	 
	 	 
	 	 
	 	
                /s/
                  David H.
                  Warden                              
                                   
                  

              
	 	
                David
                  J. Warden

              
	 	 
	 	
                ETHEL
                  M. WARDEN TRUST

              
	 	 
	 	 
	 	 
	 	
                By:
                  /s/ Ehtel M.
                  Warden             
                                              
                  

              
	 	
                Ethel
                  M. Warden, Trustee

              


      

       

       

      
        
           

        

        
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                /s/
                  Franklin L.
                  Warden                             
                                 
                  

              
	 	
                Franklin
                  L. Warden

              
	 	 
	 	 
	 	
                Franklin
                  L. and Priscilla Ann Warden,

              
	 	
                Joint
                  Tenants

              
	 	 
	 	 
	 	
                By:
                  /s/ Franklin L.
                  Warden              
                                          
                  

              
	 	
                Franklin
                  L. Warden

              
	 	 
	 	 
	 	
                By:
                  /s/ Priscilla Ann
                  Warden                                   
                  

              
	 	
                Priscilla
                  Ann Warden

              
	 	 
	 	
                JEAN
                  P. WARDEN TRUST

              
	 	 
	 	 
	 	
                By:
                  /s/ Jean P.
                  Warden                      
                                       
                  

              
	 	
                Jean
                  P. Warden, Trustee

              
	 	 
	 	 
	 	
                /s/
                  Scott J.
                  Warden                                
                                   
                  

              
	 	
                Scott
                  J. Warden

              
	 	 
	 	 
	 	 
	 	
                /s/
                  Stephen T.
                  Warden                            
                                  
                  

              
	 	
                Stephen
                  T. Warden

              


      

      


      


      


      


      


      


      


      


      

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