Document:

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.

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                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

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (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.

      

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      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                                                          
                  

              

      

      

      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      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

              

      

       

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

       

       

      
        	 	 
	 	 
	 	
                /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

              

      

      

      

      

      

      

      

      

      

      

7snfc8k122007ex10-3.htm

    
      

      

    

     

    
      ESCROW
        AGREEMENT

      

      

      THIS
        ESCROW AGREEMENT (the "Escrow
        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"), 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"), and MACKEY PRICE THOMPSON & OSTLER, a Utah professional
        corporation (the "Escrow Agent") (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,
        Security National, Capital
        Reserve, and the Shareholders amended the Stock Purchase Agreement, effective
        November 26, 2007; and

      

      WHEREAS,
        Security National, Capital
        Reserve and the Shareholders desire to establish this escrow for the purpose
        of
        holding the funds to be deposited in an escrow account (the "Escrow Account")
        in
        accordance with the terms of the Stock Purchase Agreement and distributing
        such
        funds pursuant to the terms of such agreement; and

      

      WHEREAS,
        Escrow Agent is willing to
        receive the funds contemplated by the Stock Purchase Agreement and to hold
        and
        distribute the same in accordance with the terms of such agreement;

      

      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 have agreed to
        deposit $2,100,000 of the Purchase Consideration into the Escrow Account
        at
        Closing with such funds to be held and distributed pursuant to the terms
        of the
        Stock Purchase Agreement; and

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      WHEREAS,
        Security National, Capital
        Reserve, and the Shareholders have agreed that if Capital Reserve or any
        of its
        officers, directors, employees or agents is determined to be liable in the
        Russell Litigation or if Capital Reserve settles the Russell Litigation,
        funds
        from the Escrow Account are to be distributed to Russell in the amount of
        such
        judgment or settlement, including the costs of defending Capital Reserve
        in the
        Russell Litigation; and

      

      WHEREAS,
        Security National, Capital
        Reserve, and the Shareholders have additionally  agreed that funds
        from the Escrow Account are to be distributed to Security National in the
        amount
        in which the Adjusted Capital and Surplus of Capital Reserve on September
        30,
        2007, exceeds the Adjusted Capital and Surplus on the closing date (the "Closing
        Date") as defined in Section 2.1 of the Stock Purchase Agreement;
        and

      

      WHEREAS,
        Security National, Capital
        Reserve, and the Shareholders have further agreed that upon distribution
        of
        funds from the Escrow Account to Russell equal to the amount of any judgment
        or
        settlement in the Russell Litigation, including the cost of defending Capital
        Reserve in the litigation, and to Security National in the amount in which
        the
        Adjusted Capital and Surplus Capital Reserve on September 30, 2007 exceeds
        the
        Adjusted Capital and Surplus of Capital Reserve on the Closing Date, any
        funds
        remaining in the Escrow Account are to be distributed to the Shareholders
        on a
        pro rata basis;

      

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

      

      1.         Delivery
        of Documents into
        Escrow.  Security National and Capital Reserve herewith deliver
        the following documents to Escrow Agent to be held and disposed of by Escrow
        Agent strictly in accordance with the terms of this Escrow
        Agreement:

      

      
        	
                 

              	
                (a)

              	
                A
                  copy of the Stock Purchase Agreement.

              

      

      

      
        	
                 

              	
                (b)

              	
                A
                  certified shareholders list of Capital Reserve dated the Closing
                  Date (the
                  "Certified Shareholders List") with the names and addresses of
                  each of the
                  Shareholders and the number of shares held by each of the shareholders
                  as
                  of the Closing Date. 

              

      

      

      
        	
                 

              	
                (c)

              	
                A
                  copy of the September 30, 2007 Statutory Quarterly Statement of
                  Capital
                  Reserve. 

              

      

      

      
        	
                 

              	
                (d)

              	
                A
                  copy of the complaint filed by Russell in the Russell Litigation.
                  

              

      

      

      2.         Delivery
        of Cash into
        Escrow.  The Shareholders herewith deliver cash in the form of
        immediately available U.S. Dollars by bank wire transfer into the Escrow
        Agreement in the amount of Two Million One Hundred Thousand Dollars
        ($2,100,000).

      

      3.         Investment
        of Escrow
        Funds.  Any funds held in the Escrow Account shall be invested
        by the Escrow Agent, in the Escrow Agent's discretion, in an interest-bearing
        account held by the Escrow Agent.

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      
        
          	
                	
                  4. 

                	
                  Distribution
                    of Escrow
                    Funds.

                

        

      

      

      (a)        Upon
        the complete resolution of the Russell Litigation by the court rendering
        a final
        judgment and the applicable appeal time having expired or the court dismissing
        the complaint with prejudice pursuant to a settlement, the Escrow Agent shall
        distribute to Russell from funds in the Escrow Account any amounts owing
        to
        Russell as a result of such judgment or settlement, including but not limited
        to, any interest, penalties, attorney's fees and related expenses as required
        by
        such judgment or settlement.

      

      (b)        The
        Escrow Agent shall also distribute from the funds in the Escrow Account the
        costs of defending Capital Reserve in the Russell Litigation, including any
        attorney's fees and related expenses, to the extent such costs have not been
        previously paid by the Shareholders. The Escrow Agent shall pay such costs
        directly to the attorneys that defended Capital Reserve in the Russell
        Litigation.

      

      (c)        Upon
        completion of the determination of the Adjusted Capital and Surplus of Capital
        Reserve as of the Closing Date, together with a statement from the Chief
        Financial Officer of Security National certifying the accuracy of such
        calculation, the Escrow Agent shall distribute to Security National from
        the
        funds in the Escrow Account the amount in which the Adjusted Capital and
        Surplus
        of Capital Reserve as of September 30, 2007, as defined in Section 1.2 of
        the
        Stock Purchase Agreement, exceeds the Adjusted Capital and Reserve of Capital
        Reserve on the Closing Date.

      

      (d)        Upon
        the completion and satisfaction of the required distributions set forth in
        Sections 4(a) - (c) above, the Escrow Agent shall distribute the remaining
        funds
        in the Escrow Account to the Shareholders on a pro rata basis to the number
        of
        shares of Capital Reserve common stock held by the Shareholders on the Closing
        Date, as set forth on the Certified Shareholders List. Such payments to the
        Shareholders shall be in the form of cashier's checks payable to the order
        of
        each of the Shareholders as named on the Certified Shareholders List. Such
        Shareholder checks shall be delivered to J. Randy Snodgrass, 1620 Southridge,
        Suite R, Jefferson City, Missouri 65109, for disbursement to the
        Shareholders.

      

      5.          Responsibility
        of the Escrow
        Agent.  The escrow Agent accepts the escrow arrangements set
        forth in this Escrow Agreement upon the terms and conditions hereof and
        undertakes to act solely as depository for the escrow funds, with no obligations
        to Security National, Capital Reserve, or the Shareholders except as
        specifically set forth herein.  The Parties hereto agree that the
        following terms and conditions shall govern and control with respect to the
        rights, duties, liabilities and immunities of the Escrow Agent
        hereunder.

      

      (a)        Until
        escrowed payments are distributed as provided herein, the Escrow Agent shall
        maintain such funds in an interest bearing account, as provided
        herein.

      

      (b)        The
        duties and obligations of the Escrow Agent shall be determined solely by
        the
        express provisions of this Escrow Agreement, and no implied covenants, duties
        or
        obligations shall be read into this Escrow Agreement against the Escrow Agent,
        nor shall it have, or be deemed to have, any duties or responsibilities under
        the provisions of any other agreements between the other Parties
        hereto.

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      (c)        The
        Escrow Agent shall not be liable for any error of judgment, or any actions
        taken, or omitted by it in good faith, or mistake of fact or law, or for
        anything it may do or refrain from doing in connection therewith, except
        its own
        gross negligence or willful misconduct.

      

      (d)        The
        Escrow Agent may rely and shall be protected from acting in good faith in
        reliance upon resolution, direction, certificate, statement, approval, notice,
        court order, or other document, not only unto its due execution and the validity
        and effectiveness of its provisions, but also as to the truth of any information
        therein contained, which it in good faith believes to be genuine and what
        purports to be.

      

      (e)        The
        Escrow Agent may consult with counsel or other experts of its own choice
        and any
        opinion of its own choice and any opinion of counsel or written opinion of
        such
        other experts shall be full and complete authorization and protection with
        respect to any action taken or omitted by the Escrow Agent hereunder in good
        faith and in accordance with such opinion of counsel or opinion of such other
        experts within the area of their respective expertise.

      

      (f)         The
        Escrow Agent may execute any of its powers or responsibilities hereunder
        and
        exercise any rights hereunder either directly or by or through its agent
        or
        attorneys.

      

      (g)        The
        Escrow Agent shall not be responsible for and shall not be under a duty to
        examine into or pass upon, the validity, binding effect, execution or
        sufficiency of this Escrow Agreement or of any agreement, amendment or
        supplement hereto nor shall the Escrow Agent be accountable for the source
        of
        the escrow funds.

      

      (h)        Except
        as otherwise specifically provided herein, the Escrow Agent may deal with
        Security National, its parent company or its affiliates, in the same manner
        and
        to the same extent and with like effect as if it were not the Escrow Agent
        hereunder.

      

      (i)         If
        any controversy or dispute arises between the Parties hereto or with any
        third
        party with respect to the subject matter of the escrow described herein,
        the
        Escrow Agent shall not be required to determine the same or take any action,
        but
        may await the settlement of any such controversy or dispute by final appropriate
        legal proceedings or otherwise as the Escrow Agent may require, and in such
        event the Escrow Agent shall not be liable for interest or damage, except
        that
        the Escrow Agent shall not deliver the escrow funds in any manner other than
        in
        accordance with Section 4 hereof. In addition, the Escrow Agent shall have
        the
        right to commence such interpleader or other legal proceedings or actions,
        or
        take or withhold any other actions, as are reasonably necessary or appropriate
        pending resolution of such controversy or dispute. The Escrow Agent shall
        be
        entitled to retain counsel to represent it in any controversy or dispute
        relating to this Escrow Agreement.

      

      6.         Termination.  This
        Escrow Agreement shall terminate upon distribution of all of the funds in
        the
        Escrow Account pursuant to Section 4 hereof.

      

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      7.         Manner of Notice.  All
        notices required by this Escrow Agreement or which one party desires to serve
        on
        another party, shall be in writing and shall be deemed given or made when
        delivered to such party personally, or three days after mailing to such party
        by
        bonded courier, by registered or certified mail, postage prepaid, return
        receipt
        requested, or by first-class mail, postage prepaid, to the addresses specified
        below:

      

      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

      

      or
        to
        such other address or addresses as Security National shall hereinafter designate
        by notice to the other parties as herein provided; and

      

      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

      

      or
        to
        such other address or addresses as Capital Reserve shall hereinafter designate
        by notice to the other parties as herein provided;

      

      If
        to
        Shareholders, to:

      

      J.
        Randy
        Snodgrass, CPA

      1620
        Southridge, Suite A

      Jefferson
        City, Missouri 65109

      Facsimile
        No.:  (573) 893-2872

      Telephone
        No.:  (573) 635-0754

      

      or
        to
        such other address or addresses as the Shareholders shall hereinafter designate
        by notice to the other parties as herein provided; and

      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      If to Escrow Agent, 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

      

      or
        to
        such other address or addresses as the Escrow Agent shall hereinafter designate
        by notice to the other parties as herein provided.

      

      8.         Governing Law.  This
        Escrow Agreement shall be enforced and construed in accordance with the laws
        of
        the State of Utah.

      

      9.         Counterparts.  This
        Escrow Agreement may be executed in one or more counterparts, each of which
        shall be deemed an original, but all of which shall constitute one and the
        same
        instrument.

      

      10.       Time.  Time
        is of the essence of this Escrow Agreement.

      

      11.       Headings.  The
        subject headings of the paragraphs contained in this Escrow Agreement are
        included for purposes of convenience only and shall not control or affect
        the
        meaning, construction or interpretation of any of the provisions of this
        Escrow
        Agreement.

      

      IN
        WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement 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                                                          
                  

              

      

      

      

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      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 J.
                  Warden                              
                                   
                  

              
	 	
                David
                  J. Warden

              
	 	 
	 	
                ETHEL
                  M. WARDEN TRUST

              
	 	 
	 	 
	 	 
	 	
                By:
                  /s/ Ehtel M.
                  Warden             
                                              
                  

              
	 	
                Ethel
                  M. Warden, Trustee

              

      

       

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

       

      
        	 	 
	 	 
	 	
                /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

              

      

      

        
          	 	
                  MACKEY
                    PRICE THOMPSON & OSTLER

                
	 	 
	 	 
	 	
                  By /s/
                    Randall A.
                    Mackey                                       
                    

                
	 	
                       Randall
                    A. Mackey, President

                

        

      

      

      

      

      

      

      

      

8

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