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snfc8k081308ex10-1.htm

    
      

      

    

    

      
        	
                 

                 

                 

                 

                 

                 

                 

                STOCK
      PURCHASE AGREEMENT

                 

                dated
      as of August 13, 2008

                 

                by
      and among

                 

                 

                 

                SECURITY
      NATIONAL LIFE INSURANCE COMPANY,

                 

                SOUTHERN
      SECURITY LIFE INSURANCE COMPANY, INC.

                 

                and

                 

                THE
      SHAREHOLDERS THAT HAVE EXECUTED

                AGREEMENT
      BY SHAREHOLDERS OF

                SOUTHERN
      SECURITY LIFE INSURANCE COMPANY

                TO  SELL
      SHARES IN STOCK PURCHASE TRANSACTION

                IN
      THE FORM ATTACHED AS ANNEX I

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    
      TABLE OF CONTENTS

       

      
        	 
      	 
      	 
      	
                Page

              
	 
      	 
      	 
      	 
      
	
                ARTICLE I - PURCHASE AND SALES OF SHARES

              	
                2

              
	 
      	 
      	 
      	 
      
	 
      	
                1.1

              	
                Sale
      and Purchase of the Shares

              	
                2

              
	 
      	
                1.2

              	
                Purchase
      Consideration

              	
                2

              
	 
      	
                1.3

              	
                Delivery
      of Shares

              	
                4

              
	 
      	
                1.4

              	
                Administrative
      Control of Operations

              	
                4

              
	 
      	 
      	 
      	
                 
      

              
	
                ARTICLE II – CLOSING

              	
                5

              
	 
      	 
      	 
      	
                 
      

              
	 
      	
                2.1

              	
                Closing

              	
                5

              
	 
      	 
      	 
      	
                 
      

              
	
                ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SOUTHERN
      SECURITY

              	
                5

              
	 
      	 
      	 
      	
                 
      

              
	 
      	
                3.1

              	
                Organization,
      Good Standing and Power

              	
                5

              
	 
      	
                3.2

              	
                Capital
      Structure

              	
                6

              
	 
      	
                3.3

              	
                Authority

              	
                7

              
	 
      	
                3.4

              	
                Dividends,
      Stock Purchases, Etc.

              	
                8

              
	 
      	
                3.5

              	
                Financial
      Statements

              	
                8

              
	 
      	
                3.6

              	
                Annual
      Insurance Statements

              	
                8

              
	 
      	
                3.7

              	
                Insurance
      Business

              	
                9

              
	 
      	
                3.8

              	
                Compliance
      With Law

              	
                10

              
	 
      	
                3.9

              	
                No
      Defaults

              	
                10

              
	 
      	
                3.10

              	
                Litigation

              	
                10

              
	 
      	
                3.11

              	
                No
      Material Adverse Change

              	
                11

              
	 
      	
                3.12

              	
                No
      Material Adverse Change in Capital and Surplus

              	
                12

              
	 
      	
                3.13

              	
                Absence
      of Undisclosed Liabilities

              	
                12

              
	 
      	
                3.14

              	
                Information
      Supplied

              	
                13

              
	 
      	
                3.15

              	
                Certain
      Agreements

              	
                13

              
	 
      	
                3.16

              	
                Plans;
      Benefits; Employment Claims

              	
                13

              
	 
      	
                3.17

              	
                Major
      Contracts

              	
                14

              
	 
      	
                3.18

              	
                Taxes

              	
                16

              
	 
      	
                3.19

              	
                Interests
      of Officers and Directors

              	
                18

              
	 
      	
                3.20

              	
                Intellectual
      Property

              	
                18

              
	 
      	
                3.21

              	
                Restrictions
      on Business Activities

              	
                18

              
	 
      	
                3.22

              	
                Title
      to Properties; Absence of Liens and Encumbrances; Conditions of
      Equipment

              	
                19

              
	 
      	
                3.23

              	
                Governmental
      Authorization and Licenses

              	
                19

              
	 
      	
                3.24

              	
                Environmental
      Matters

              	
                20

              
	 
      	
                3.25

              	
                Insurance

              	
                20

              
	 
      	      
                3.26

              	      
                Labor
      Matters

              	
                 
      21

              
	 
      	      
                3.27

              	      
                Agents;
      Customers and Complaints

              	
                 
      21

              
	 
      	      
                3.28

              	      
                Questionable
      Payments

              	
                 
      21

              

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      TABLE
OF CONTENTS

      (continued)

       

      
        	 
      	 
      	 
      	
                Page

              
	 
      	 
      	 
      	 
      
	
                ARTICLE IV - COVENANTS OF SHAREHOLDERS

              	
                21

              
	 
      	 
      	 
      	
                 
      

              
	 
      	
                4.1

              	
                Shareholders
      to Sell Shares in Transaction

              	
                21

              
	 
      	
                4.2

              	
                Continuing
      Shareholder Obligations

              	
                22

              
	 
      	
                4.3

              	
                Shareholders
      Liable for Liquidated Damages21

              	
                22

              
	 
      	 
      	 
      	
                 
      

              
	
                ARTICLE V - REPRESENTATIONS AND WARRANTIES OF SECURITY
      NATIONAL

              	
                23

              
	 
      	 
      	 
      	
                 
      

              
	 
      	
                5.1

              	
                Organization,
      Good Standing and Power

              	
                23

              
	 
      	
                5.2

              	
                Authority

              	
                23

              
	 
      	
                5.3

              	
                Board
      Authorization

              	
                23

              
	 
      	 
      	 
      	
                 
      

              
	
                ARTICLE VI - CONDUCT AND TRANSACTIONS PRIOR TO CLOSING DATE;
      ADDITIONAL AGREEMENT

              	
                24

              
	 
      	 
      	 
      	
                 
      

              
	 
      	
                6.1

              	
                Conduct
      of Business of Southern Security

              	
                24

              
	 
      	 
      	 
      	
                 
      

              
	
                ARTICLE VII - CONDITIONS PRECEDENT

              	
                27

              
	 
      	 
      	 
      	
                 
      

              
	 
      	
                7.1

              	
                Conditions
      to Each Party's Obligation to Effect this Transaction

              	
                27

              
	 
      	
                7.2

              	
                Conditions
      to Obligations of Security National

              	
                28

              
	 
      	
                7.3

              	
                Conditions
      to Obligations of Southern Security and Shareholders

              	
                30

              
	 
      	 
      	 
      	
                 
      

              
	
                ARTICLE VIII – TERMINATION

              	
                31

              
	 
      	 
      	 
      	
                 
      

              
	 
      	
                8.1

              	
                Termination

              	
                31

              
	 
      	 
      	 
      	
                 
      

              
	
                ARTICLE IX – INDEMNIFICATION

              	
                32

              
	 
      	 
      	 
      	
                 
      

              
	 
      	
                9.1

              	
                Obligation
      of Shareholders to Indemnify

              	
                32

              
	 
      	
                9.2

              	
                Notice
      and Opportunity to Defend

              	
                32

              

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      TABLE
OF CONTENTS

      (continued)

      

      
        	 	
                Page

              
	 	 
	
                ARTICLE X - GENERAL PROVISIONS

              	
                34

              
	 
      	 
      	 
      	
                 
      

              
	 
      	
                10.1

              	
                Survival
      of Representations, Warranties, Covenants and Agreements

              	
                34

              
	 
      	
                10.2

              	
                Amendment

              	
                34

              
	 
      	
                10.3

              	
                Extension;
      Waiver

              	
                34

              
	 
      	
                10.4

              	
                Notices

              	
                34

              
	 
      	
                10.5

              	
                Interpretation

              	
                36

              
	 
      	
                10.6

              	
                Counterparts

              	
                36

              
	 
      	
                10.7

              	
                Entire
      Agreement

              	
                36

              
	 
      	
                10.8

              	
                No
      Transfer

              	
                36

              
	 
      	
                10.9

              	
                Severability

              	
                36

              
	 
      	
                10.10

              	
                Other
      Remedies

              	
                37

              
	 
      	
                10.11

              	
                Further
      Assurances

              	
                37

              
	 
      	
                10.12

              	
                No
      Third Party Beneficiary Rights

              	
                37

              
	 
      	
                10.13

              	
                Mutual
      Drafting

              	
                37

              
	 
      	
                10.14

              	
                Expenses

              	
                37

              
	 
      	
                10.15

              	
                Brokers
      or Finders

              	
                37

              
	 
      	
                10.16

              	
                Public
      Announcements

              	
                37

              
	 
      	
                10.17

              	
                Confidentiality

              	
                38

              
	 
      	
                10.18

              	
                Attorney’s
      Fees

              	
                38

              
	 
      	 
      	 
      	 
      
	
                ANNEX I

              	
                42

              

      

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      
        	
                EXHIBITS

              
	 
      	 
      	 
      
	 
      	
                Exhibit
      1

              	
                Southern
      Security Disclosure Schedule

              
	 
      	 
      	 
      
	 
      	
                Exhibit
      2

              	
                Security
      National Disclosure Schedule

              

      

      

      

      
        
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      STOCK
PURCHASE AGREEMENT

      

      

      THIS
STOCK PURCHASE AGREEMENT (the "Agreement") is dated effective as of August 13,
2008, and entered into by and among SECURITY NATIONAL LIFE INSURANCE COMPANY, a
Utah corporation (“Security National”), SOUTHERN SECURITY LIFE INSURANCE
COMPANY, INC., a Mississippi corporation (“Southern Security”), and the
shareholders of Southern Security that have executed the AGREEMENT BY
SHAREHOLDERS OF SOUTHERN SECURITY LIFE INSURANCE COMPANY TO SELL SHARES IN STOCK
PURCHASE TRANSACTION in the form attached as Annex I (the
“Shareholders”).

      

      NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
herein, Security National, Southern Security, and the Shareholders hereby agree
as follows:

      

      

      ARTICLE I

      

      PURCHASE
AND SALE OF SHARES

      

      1.1       Sale and
Purchase of the Shares.  At the Closing, as hereinafter
defined, upon and subject to the terms and conditions set forth in this
Agreement, the Shareholders shall sell, transfer, assign and deliver to Security
National, and Security National shall purchase from the Shareholders, 50,000
shares of voting Class A common stock and 450,000 shares of non-voting Class B
common stock of Southern Security (the "Southern Security Common Stock”),
representing all of the issued and outstanding stock and securities of Southern
Security, free and clear of all liens, claims, options, proxies, voting
agreements, charges and encumbrances.  Security National, Southern
Security, and the Shareholders hereby acknowledge and agree that regulatory
approval from the Utah and Mississippi insurance departments for the transaction
described in this Section 1.1 must be obtained prior to Closing, as defined in
Section 2.1 below.

      

      1.2       Purchase
Consideration.  Subject to the terms and conditions of this
Agreement, in reliance upon Southern Security’s representations, warranties,
agreements and covenants contained herein, and in consideration of the sale,
transfer, assignment and delivery of the Southern Security Common Stock as
herein provided, Security National agrees to provide the following purchase
consideration (the "Purchase Consideration") to the Shareholders:

      

      (a)           Cash
in U.S. dollars by certified funds or wire transfer payable to the Shareholders
on a pro rata basis to the number of shares of Southern Security Common Stock
held by the Shareholders in an amount equal to (i) the Capital and Surplus of
Southern Security as of the date that Security National assumes Administrative
Control over Southern Security, as defined in Section 1.4 below (as set forth on
page 3, line 38, column 1 of the Statutory Statement, which shall include any
capital contributions that were made subsequent to June 30, 2008, including the
July subsequent event of $70,380 as an admissible asset), plus (ii) the
Interest Maintenance Reserve as of the Administrative Control Date (as set forth
on page 3, line 9.4, column 1 of the Statutory Statement), plus (iii) the Asset
Valuation Reserve as of the Administrative Control Date (as set forth on page 3,
line 24.1, column 1 of the Statutory Statement), plus (iv) the amount
of the adjustment in Section 1.2(b), less the amount of
the adjustments in Sections 1.2(c), (d), (e) and (f) below.  (It
should be noted for purposes of illustration that the Capital and Surplus,
Interest Maintenance Reserve, and Asset Valuation Reserve of Southern Security
as of June 30, 2008 was $1,154,418.00.  Additionally, assuming the
payment to Southern Security of the ceding commission pursuant to the
Reinsurance Agreement, as required under Section 1.4 below, the Capital and
Surplus would increase by approximately $1,500,000.  Accordingly, the
Capital and Surplus, Interest Maintenance Reserve, and Asset Valuation Reserve
of Southern Security at the Administrative Control Date could be approximately
$2,655,418.00.  This illustration is not intended to be binding upon
the parties to this Agreement  and is to be used only as an
example.  Thus, there can be no assurance that the actual payments
under this Section 1.2(a) will be equal to the amounts set forth in this
illustration.);

      

      
        
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      (b)           The
Purchase Consideration shall also include an allowance not to exceed $100,000
(the “Allowance”) that Security National agrees to provide toward Southern
Security’s expected losses in the second quarter ended June 30,
2008.  This Allowance to be provided by Security National shall in
nowise exceed $100,000 even if the actual losses experienced by Southern
Security in the second quarter, or in any subsequent quarter, are in excess of
$100,000;

      

      (c)           The
Shareholders agree at Closing to deposit $175,000 (the "Deposit Amount") of the
Purchase Consideration into an interest bearing escrow account (the "Escrow
Account") with an escrow agent (the “Escrow Agent”) mutually acceptable to
Security National and the Shareholders.  The Deposit Amount shall be
used to pay the amount of any adjustments required under the terms of this
Agreement.  The Escrow Agent shall be instructed to pay any remaining
amount from the Deposit Amount to the Shareholders on a pro rata basis following
the payment of any adjustments;

      

      (d)           The
Shareholders further agree at Closing to deposit $537,000 of the Purchase
Consideration (the "Real Estate Deposit Amount") into the interest bearing
Escrow Account.  This amount represents approximately 50% of the total
outstanding balances on the promissory notes (the “Notes”) that Southern
Security has entered into with Ray-Nowell Funeral Home, Inc. and Wade Nowell
Funeral Homes, Inc., which Notes are secured by funeral home properties in
Senatobia, Mississippi and Collins, Mississippi, respectively.  The
Shareholders agree to grant to Security National a security interest in the Real
Estate Deposit Amount to secure payment of these Notes.  Except as set
forth below, beginning on September 1, 2009, and continuing on the same date of
each year thereafter, Security National shall instruct the Escrow Agent to
release to the Shareholders on a pro rata basis an amount equal to the combined
principal reduction of said Notes that has occurred during the preceding August
1 through July 31 period, until such time as the Real Estate Deposit Amount,
including any accrued interest thereon, has been paid to the
Shareholders.  However, no payments shall be made to the Shareholders
from the Real Estate Deposit Amount if either of the Notes is in
default.  In addition, in order for any funds to be released to the
Shareholders as a result of any prepayment of either of the Notes, both Notes
must be prepaid by an equal percentage, in which event the Escrow Agent shall be
instructed to release to the Shareholders on a pro rata basis, an amount equal
to the combined principal reduction of said Notes resulting from such
prepayments.  In the event there is a default in the payment of either
of the Notes, Security National shall have the right to foreclose on the Note in
default pursuant to the terms thereunder and shall be entitled to receive
payment from the Real Estate Deposit Amount in an amount equal to the full
amount of any losses and expenses incurred by Security National as a result of
such default and the enforcement of its rights pursuant thereto.  The
Shareholders and Security National agree that the Shareholders have the right,
but not the obligation, to refinance the existing debt on the
notes.  The Shareholders have informed Security National that they
contemplate a refinance of the notes by providing a $750,000 first mortgage and
satisfying the remaining debt on the notes through a second mortgage to be
funded through the sale proceeds to be paid to the Shareholders, as part of the
purchase consideration paid to the Shareholders at closing;

      

      
        
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      (e)           Part
of the Purchase Consideration shall be paid to the Shareholders in the form of
the Nowell Legacy Trust, which is listed as an asset on the financial statements
of Southern Security.  Southern Security agrees to transfer its
interest in the Nowell Legacy Trust (as set forth on page 2, line 2302, column
3, of the Statutory Statements) to the Shareholders at Closing and the Purchase
Consideration to be paid by Security National shall be reduced by the admitted
value of the Nowell Legacy Trust as reflected on the financial statements of
Southern Security as of the date that Security National assumes “Administrative
Control”, as defined in Section 1.4 below; and

      

      (f)           Shareholders
warrant that properties shown on the annual statement are owned free and clear,
and that the loans shown in the annual statement conform with the rules and
regulations of Mississippi for admissibility.  Shareholders shall
furnish all usual and customary documentation to Security National in support of
this warranty.

      

      1.3       Delivery
of Shares.  At the Closing Date, the Shareholders shall deliver
to Security National certificates with stock power executed in blank
representing the outstanding shares of Southern Security Common Stock required
by Section 1.1 hereof.

      

      1.4       Administrative
Control of Operations.  Contemporaneous
with the execution of this Agreement, Security National and Southern Security
each agree to enter into a Reinsurance Agreement, wherein Security National
shall reinsure all of the in-force and future insurance liabilities of Southern
Security.  In addition, Security National shall assume complete and
total administrative control of all of the then current and future insurance
related business operations of Southern Security at such time as Security
National notifies Southern Security, in writing, that it is capable of assuming
control of those functions (hereinafter, “Administrative
Control”).  The determination of when Security National is capable of
assuming Administrative Control over the insurance related business operations
of Southern Security shall be made by Security National in its sole discretion,
no later than September 1st.  Security National shall take
Administrative Control as soon as practicable and Southern Security shall fully
cooperate to assure an efficient and effective transfer of
control.  Administrative Control shall include, but is not limited to,
control over all day-to-day business expenses, trade debt, locations of business
operations, employees, employee compensation, compensation, if any, to officers
and directors, cash flow, deposits, and bank accounts.  Upon assuming
Administrative Control, Security National shall not only be given access to the
records, files, and computer systems of Southern Security, but shall also have
the right to transfer or move such records, files, and computer systems to other
offices or locations in which Security National transacts
business.  The transfer of Administrative Control to Security National
shall not relieve Southern Security of its duties to prepare and file, at its
own expense, its tax returns, periodic reports and related statements with the
Mississippi Insurance Department, and all other governmental reports and filings
until the date of Closing.  Security National will provide information
within its control to Southern Security to assist with these
filings.

       

       

      
        
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      ARTICLE II

      

      THE
CLOSING

      

      2.1       Closing.  The
closing of the transaction (the "Closing") will take place at the offices of
Southern Security Life Insurance Company, 211 Ball Drive, Louisville,
Mississippi, unless a different date or place is agreed to in writing by the
parties hereto.  Each party hereto shall use its best efforts to cause
the Closing to occur on or before October 1, 2008, or within seven (7) days from
the date the required regulatory approvals are obtained as set forth in Section
1.1 above, unless this date is extended as provided herein (the "Closing
Date").

      

      

      ARTICLE III

      

      REPRESENTATIONS
AND WARRANTIES OF SOUTHERN SECURITY

      

      Except as
disclosed in a document to be prepared by Southern Security and delivered to
Security National prior to the Closing Date (the "Southern Security Disclosure
Schedule") referring specifically to the applicable representation and warranty
in this Agreement that identifies the basis for an exception to a representation
and warranty in this Agreement and that is delivered by Southern Security to
Security National and approved by Security National by execution of this
Agreement, Southern Security represents and warrants to Security National as set
forth below, and such representations and warranties shall be true and correct
as of the date hereof and at all times thereafter including, without limitation,
the Closing Date, as if made at all such times.  As used in this
Agreement (i) "Business Condition" with respect to any corporate entity or group
of corporate entities shall mean the business and financial condition and
prospects of such entity or entities taken as a whole and (ii) "material adverse
effect" on the Business Condition shall be deemed to include, without
limitation, (x) any inaccuracy in the capitalization representation set forth in
Section 3.2 below and (y) any material liability not reflected on the Southern
Security Financial Statements (as defined in Section 3.5 below) or Annual
Insurance Statements (defined in Section 3.6 below).

      

      3.1       Organization,
Good Standing and Power.  Southern Security is a corporation,
duly organized, validly existing and in good standing under the laws of its
state of incorporation and has all requisite power and authority to own, operate
and lease its properties and to carry on its businesses as now being
conducted.  Schedule 3.1 of the Southern Security Disclosure Schedule
contains a true and correct listing of all states in which Southern Security is
registered, licensed and authorized to engage in the insurance
business.  Southern Security is not aware of any threatened or pending
action or inaction that could result in the loss of or an adverse change in any
such registration or license.  Southern Security is in good standing
under all such registrations and licenses.  Southern Security is duly
qualified as foreign corporations and is in good standing in each jurisdiction
in which the failure to so qualify would have a material adverse effect on its
individual Business Condition.  The Southern Security Disclosure
Schedule also sets forth a true and complete list of the states where Southern
Security is qualified as a foreign corporation.  Southern Security has
no subsidiaries.  Southern Security has no other direct or indirect
equity interest in or loans to any partnership, corporation, joint venture,
business association or other entity.  Southern Security has delivered
to Security National complete and correct copies of its Articles of
Incorporation and Bylaws, in each case as amended to the date hereof, and has
delivered or made available minutes of all of Southern Security's directors' and
stockholders' meetings, and stock certificate books correctly setting forth the
record ownership of all outstanding shares of Southern Security Common
Stock.

      

      
        
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      3.2       Capital
Structure.

      

      (a)           The
authorized capital structure of Southern Security consists of 100,000 shares of
Voting Class A Common Stock and 1,000,000 shares of Non-Voting Class B Common
Stock.  There are 50,000 shares of Voting Class A Common Stock and
450,000 shares of Non-Voting Class B Common Stock issued and outstanding, all of
which are owned by the Shareholders.  Except as disclosed on Schedule
3.2 of the Southern Security Disclosure Schedule, there are no other debt,
equity or hybrid debt or equity interests or securities of Southern Security
issued and outstanding.

      

      (b)           All
outstanding shares of Southern Security Common Stock and other Southern Security
securities, if any, are validly issued, fully paid and non-assessable and,
except as disclosed on the Southern Security Disclosure Schedule, are not
subject to any liens, claims, encumbrances or charges of any kind or nature or
any preemptive rights created by statute, Southern Security's Articles of
Incorporation or Bylaws or any agreement to which Southern Security is a party
or by which Southern Security may be bound.  There are no options,
warrants, calls, conversion rights, commitments or agreements of any character
to which Southern Security is a party or by which Southern Security may be bound
that do or may obligate Southern Security to issue securities of any kind or
nature or to grant, extend or enter into any such option, warrant, call,
conversion right, commitment or agreement or which relate to the voting of the
Southern Security Common Stock or other Southern Security securities, if
any.

      

      
        
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      3.3       Authority.

      

      (a)           Southern
Security has all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby.  The
execution and delivery of this Agreement, the performance by Southern Security
of its obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of Southern Security,
including approval by its Boards of Directors and the shareholders. This
Agreement shall constitute legal, valid and binding obligations of Southern
Security enforceable against Southern Security in accordance with their
respective terms, except as enforcement may be limited by bankruptcy, insolvency
or other similar laws affecting the enforcement of creditors' rights generally
and except that the availability of equitable remedies is subject to the
discretion of the court before which any proceeding therefore may be
brought.

      

      (b)           To
the best knowledge of Southern Security, the execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated hereby
and thereby, will not, conflict with or result in any violation of any material
statute, law, rule, regulation, judgment, order, decree or ordinance applicable
to Southern Security or its properties or assets, nor will it conflict with or
result in any breach or default (with or without the giving of notice or the
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any material obligation or to the loss of any
material benefit under, or result in the creation of a material lien, charge or
encumbrance on any of the properties or assets of Southern Security pursuant to
(i) any provision of the Articles of Incorporation or Bylaws of Southern
Security or (ii) any material agreement, contract, note, mortgage, indenture,
lease instrument, permit, concession, franchise, registration or license to
which Southern Security is a party or by which Southern Security or any of its
properties or assets may be bound or affected.

      

      (c)           To
the best knowledge of Southern Security, no consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency, commission, regulatory authority or other governmental
authority or instrumentality, whether domestic or foreign (collectively, a
"Governmental Entity"), is required by or with respect to Southern Security in
connection with the execution and delivery of this Agreement and by Southern
Security or the consummation by Southern Security of the transactions
contemplated hereby or thereby, except for (i) filing required documents with
the relevant authorities of states in which Southern Security is qualified to do
business, (ii) such consents, approvals, authorizations, registrations or
qualifications as may be required under state insurance laws as identified in
the Southern Security Disclosure Schedule and (iii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under the laws of any foreign country, which, if not obtained or made,
would not have a material adverse effect on the Business Condition of Southern
Security.  All approvals of Southern Security's Board of Directors and
Shareholders as required by applicable law have been obtained and are in force
and effect and no dissenters' rights have been exercised under applicable
law.

      

      
        
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      3.4       Dividends,
Stock Purchases, Etc.  Since December 31, 2007, Southern
Security has not (i) declared or paid any dividends (either in cash, property or
its stock of any class) upon, or made or become committed to make any other
distribution with respect to, or purchased, redeemed or otherwise beneficially
acquired any of its outstanding capital stock of any class, or become committed
so to do; (ii) split up, combined or reclassified any of its outstanding capital
stock of any class, or become committed so to do; or (iii) issued or become
committed to issue any additional capital stock of any class (whether or not
from treasury stock, heretofore authorized but unissued stock, or newly
authorized stock) or any options, rights or warrants to acquire, or securities
convertible into or exchangeable for, or which otherwise confer upon the holder
or holders thereof any right to acquire, any shares of capital stock of any
class or any other security or debt of Southern Security.  In
addition, Southern Security shall not, without Security National’s written
consent, take or attempt to take any of the actions described in this Section
3.4.

      

      3.5       Financial
Statements.  Southern Security has furnished or made available
to Security National or will furnish or make available to Security National
within ten days from the date of this Agreement Southern Security's audited
financial statements for the fiscal years ended December 31, 2005, 2006, and
2007, including balance sheets and the related audited statements of income,
cash flow and stockholders' equity, and the related management letters
(collectively, the “Audited Financial Statements”).  Additionally,
Southern Security has furnished or made available to Security National or will
furnish or make available to Security National within ten days from the date of
this Agreement Southern Security's unaudited financial statement as of and for
the quarter ended June 30, 2008, including the unaudited balance sheet of
Southern Security as at June 30, 2008, and the related unaudited statements of
income, cash flow and stockholders' equity (collectively, the "Unaudited
Financial Statements").  The Audited Financial Statements and the
Unaudited Financial Statements provided previously to Security National are
listed in Schedule 3.5 of the Southern Security Disclosure
Schedule.  The Audited Financial Statements and the Unaudited
Financial Statements, are, collectively, referred to as the "Southern Security
Financial Statements."  The Southern Security Financial Statements
have been or will be prepared in accordance with statutory accounting principles
(STAT) consistently applied and fairly present the financial position of
Southern Security as at the dates thereof and the results of its operations and
cash flows for the periods then ended.  In preparing the Unaudited
Financial Statements, there have been no changes in Southern Security's STAT or
statutory accounting policies or procedures used in preparing the December 31,
2007 audited financial statements.

      

      3.6       Annual
Insurance Statements.

      

      (a)           Southern
Security has provided Security National with (i) all annual statements,
certificates and applications to the Mississippi or any other insurance
commissioner or other Governmental Entity, which Southern Security has filed
with or submitted with respect to years ending on or after December 31, 2004,
and such documentation provided previously is listed in Schedule 3.6 of the
Southern Security Disclosure Schedule, and (ii) all reports of examination
issued by such insurance commissioners, regulatory authorities or other
Governmental Entity regarding Southern Security on or after December 31, 2004,
and such documentation provided previously is listed also in Schedule
3.6.

      

      
        
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      (b)           Such
filings or submissions in 3.6 (a) were in substantial compliance with applicable
law when filed and, as of their respective dates, did not contain any materially
false statements of fact or omit to state any material fact necessary to make
the statements set forth therein not misleading in light of the circumstances
under which such statements were made; no material deficiencies have been
asserted by any insurance commissioner, insurance department or other
Governmental Entity with respect to such statements; Southern Security has
provided Security National with copies of all material written responses with
respect to comments from any Governmental Entity concerning such filings,
submissions or reports of examination since December 31, 2004 and such written
responses are described in Schedule 3.6 of the Southern Security Disclosure
Schedule, and prior to the date of this Agreement, no fines or penalties have
been imposed on Southern Security by any Governmental Entity; and no deposits
(other than in the ordinary course of business) have been made by Southern
Security with any Governmental Entity.

      

      (c)           The
statutory financial statements for Southern Security as of and for the years
ended December 31, 2005, 2006 and 2007 (i) fairly present the statutory
financial condition of Southern Security at such dates and (ii) have been
prepared in accordance with the required or permitted statutory insurance
accounting requirements or practices under the insurance laws of Mississippi,
except as expressly set forth or disclosed in the notes, exhibits or schedules
thereto.  The amounts shown in such statements of account on aggregate
reserves for life or annuity policies and contracts, aggregate reserves for
accident and health policies, net deferred and uncollected premiums and all
policy and contract claims liability as of the end of each such year, are
computed in accordance with accepted actuarial and industry practices, are
fairly stated in accordance with those called for in applicable insurance policy
provisions, meet the requirements of the insurance laws of Mississippi, make a
sufficient provision for all unmatured obligations of Southern Security provided
for under the terms of its policies and are consistent with the assumptions
previously employed.  Adequate provision has been made for all
actuarial reserves and related statement items which ought to be
established.

      

      3.7       Insurance
Business.

      

      (a)           Security
National has been provided true and complete copies of all contracts,
arrangements, treaties, understandings and agreements of (or related to)
Southern Security with any party with respect to reinsurance currently in force
and such documents and information are listed in Schedule 3.7 of the Southern
Security Disclosure Schedule attached hereto.  All policies assumed by
Southern Security were assumed under agreements submitted to and approved by all
relevant regulatory authorities and are valid, in force, and not subject to
recapture (except at Southern Security's option), and are fairly reflected on
the Southern Security Financial Statements.  No party thereto is in
material default with respect to any provision thereof and no such agreement
contains any provision providing that the other party thereto may terminate same
by reason of the transactions contemplated by this Agreement or any other
provisions which would be altered or otherwise become applicable by reason of
such transactions.

      

      (b)           All
policies of insurance issued or assumed by Southern Security as now in force
are, to the extent required under applicable law, on forms submitted to and
approved by the applicable jurisdiction's insurance commissioner.  No
policy holder or related group of policy holders which, singularly or in the
aggregate, accounted for 5% of the gross revenues of Southern Security
considered as a whole for the year ended December 31, 2007 has, after December
31, 2007, terminated or, to the best knowledge of the Southern Security,
threatened to terminate its relationship with Southern Security.  The
contracts between Southern Security and its agents, managers or brokers are
valid, binding and in full force and effect in accordance with their
terms.  Southern Security is not in material default with respect
thereto and no such contract contains any provision providing that the other
party thereto may terminate the same by reason of the transactions contemplated
by this Agreement or any other provision which would be altered or otherwise
become applicable by reason of such transactions.

      

      
        
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      3.8       Compliance
with Law.  To the best knowledge of Southern Security, Southern
Security is in compliance with and has conducted its business so as to comply
with all laws, rules, regulations, judgments, decrees or orders of any
Governmental Entity applicable to their operations or with respect to which
compliance is a condition of engaging in the business thereof, except to the
extent that failure to comply could, individually or in the aggregate, not have
had and is not reasonably expected to have, a material adverse effect on the
Business Condition of Southern Security.  There are no material
judgments, orders, injunctions, decrees, stipulations or awards (whether
rendered by a court or administrative agency or by arbitration) against Southern
Security or against any of its properties or businesses.  Schedule 3.8
of the Southern Security Disclosure Schedule contains a summary of all material
violations of, or conflicts with, any applicable statute, law, rule, regulation,
ruling, order, judgment or decree, listed by each such Governmental Entity,
including any of the foregoing relating to any environmental or health
laws.

      

      3.9       No
Defaults.  To the best knowledge of Southern Security, Southern
Security is not, nor has it received notice that it is or would be with the
passage of time or the giving of notice, or both, (a) in violation of any
provision of its Articles of Incorporation or Bylaws or (b) in default or
violation of any term, condition or provision of (i) any judgment, decree,
order, injunction or stipulation applicable to Southern Security or (ii) any
agreement, note, mortgage, indenture, contract, lease, instrument, permit,
registration, concession, franchise or license to which Southern Security is a
party or by which Southern Security or any of its properties or assets may be
bound, which violation or default could, individually or in the aggregate, have
a material adverse effect on the Business Condition of Southern
Security.

      

      3.10     Litigation.  There
is no action, suit, proceeding, claim, arbitration or investigation pending or,
to the best knowledge of Southern Security, threatened, against Southern
Security that, individually or in the aggregate, could be reasonably expected to
have a material adverse effect on the Business Condition of Southern Security,
or which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay any of the transactions contemplated
hereby.  Schedule 3.10 of the Southern Security Disclosure Schedule
sets forth with respect to each pending action, suit, proceeding, claim,
arbitration or investigation to which Southern Security is a party, the forum,
the parties thereto, a brief description of the subject matter thereof and the
amount of damages claimed.  Southern Security is not aware of any
reasonable basis for any other such action, suit, proceeding, claim, arbitration
or investigation.  Southern Security has delivered or made available
to Security National correct and complete copies of all correspondence prepared
by its counsel for Southern Security's independent public accountants in
connection with any audits or reviews completed by Southern Security's
independent public accountants.

      

      
        
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      3.11     No
Material Adverse Change.  Since December 31, 2007, Southern
Security has conducted its business in the ordinary course and there has not
occurred:

      

      (a)           Any
material adverse change in the Business Condition of Southern
Security;

      

      (b)           Any
amendments or changes in the Articles of Incorporation or Bylaws of Southern
Security;

      

      (c)           Any
damage, destruction or loss, whether covered by insurance or not, materially and
adversely affecting any of the properties or businesses of Southern
Security;

      

      (d)           Any
issuance, redemption, repurchase or other acquisition of the shares of capital
stock of Southern Security or any declaration, setting aside payment of any
dividend or other distribution (whether in cash, stock or property) with respect
to the capital stock of Southern Security;

      

      (e)           Any
increase in or modification of the compensation or benefits payable or to become
payable by Southern Security to any of its directors, officers or employees,
except in the ordinary course of business consistent with past
practice;

      

      (f)           Any
material increase in or modification of any bonus, pension, insurance or other
employee benefit plan, payment or arrangement, including, but not limited to,
the granting of stock options, restricted stock awards or stock appreciation
rights made to, for or with any of its employees, except in the ordinary course
of business consistent with past practice;

      

      (g)           Any
sale of the property or assets of Southern Security individually in excess of
$1,000 or in the aggregate in excess of $2,500;

      

      (h)           Any
alteration in any term of any outstanding security of Southern
Security;

      

      (i)           Any
(a) incurrence, assumption or guarantee by Southern Security of any debt for
borrowed money; (b) issuance or sale of any securities convertible into or
exchangeable for debt securities of Southern Security; (c) issuance or sale of
options or other rights to acquire from Southern Security, directly or
indirectly, debt securities or any securities convertible into or exchangeable
for any such debt securities; or (d) any material premium refunds;

      

      (j)           Any
creation or assumption by Southern Security of any mortgage, pledge, security
interest, lien or other encumbrance on any of its assets or
properties;

      

      (k)           Any
making of any loan, advance or capital contribution to, or investment in, any
person other than (a) travel loans or advances made in the ordinary course of
business of Southern Security and (b) other loans and advances in an aggregate
amount that does not exceed $1,000 outstanding at any time;

      

      
        
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      (l)           Any
entry into or any amendment or relinquishment of or any termination or renewal
by Southern Security of any contract, lease transaction, commitment or other
right or obligation, except in the ordinary course of business consistent with
past practice;

      

      (m)           Any
transfer or grant of a right under the Southern Security Intellectual Property
Rights (as defined in Section 3.20 below) other than those transferred or
granted in the ordinary course of business consistent with past
practice;

      

      (n)           Any
labor dispute, other than routine individual grievances, or any activity or
proceeding by a labor union or representative thereof to organize any employees
of Southern Security;

      

      (o)           Any
violation of or conflict with any applicable laws, statutes, orders, rules or
regulations promulgated, or judgment entered by any Governmental Entity, that,
individually or in the aggregate, materially and adversely affects (or, insofar
as Southern Security knows, might reasonably be expected to materially and
adversely affect) the Business Condition of Southern Security;

      

      (p)           Any
agreement or arrangement made by Southern Security to take any action that, if
taken prior to the date hereof, would have made any representation or warranty
set forth in this Section 3 untrue or incorrect as of the date when made;
or

      

      (q)           Any
payment of amounts owing under Southern Security issued insurance policies
materially at variance with the Company's policy provisions and policy payment
history.

      

      (r)           Any
decrease in insurance premiums greater than 5%;

      

      3.12     No
Material Adverse Change in Adjusted Capital and Surplus.  Since December
31, 2007, there has not been a reduction in the Adjusted Capital and Surplus of
Southern Security that has not been previously disclosed to Security
National.  Security National acknowledges receipt of financial
statements illustrating the financial condition of Security National as of March
31 and June 30, 2008.

      

      3.13     Absence
of Undisclosed Liabilities.  Except as disclosed in Schedule
3.13 of the Southern Security Disclosure Schedule or as reflected in the
Southern Security Financial Statements and except for liabilities and
obligations arising after March 31, 2008, in the ordinary course of business
consistent with past practices that could not reasonably be expected to have a
material adverse effect on the Business Condition of Southern Security, Southern
Security has no liabilities or obligations (whether absolute, accrued or
contingent, and whether or not determined or determinable) of a character that,
under STAT, should be accrued, shown or disclosed on an audited balance sheet of
Southern Security (including the footnotes thereto) or should be described on an
Annual Insurance Statement filed with any state insurance commissioner having
jurisdiction over Southern Security or its business.

      

      
        
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      3.14     Information
Supplied.  None of the information supplied or to be supplied
by Southern Security pursuant to this Agreement and no representation or
warranty made herein or in any exhibit hereto or in any financial statement or
schedule attached hereto contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.

      

      3.15     Certain
Agreements.  Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby or
thereby will (a) result in any payment (including, without limitation,
severance, unemployment compensation, golden parachute, bonus or otherwise)
becoming due to any director or employee of Southern Security under any Plan (as
defined in Section 3.16 below) or otherwise, (b) materially increase any
benefits otherwise payable under any Plan or (c) result in the acceleration of
the time of payment or vesting of any such benefit.

      

      3.16     Plans; Benefits; Employment
Claims.

      

      (a)           All
employee benefit plans, programs, policies, commitments or other arrangements
(whether or not set forth in a written document) covering any active, former or
retired employee or consultant of Southern Security are listed in Schedule 3.16
of the Southern Security Disclosure Schedule (individually, a "Plan" and,
collectively, the "Plans").  To the extent applicable, the Plans
comply with the requirements of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and the Code, and any Plan intended to be qualified
under Section 401(a) of the Code has either obtained a favorable determination
letter as to its qualified status from the Internal Revenue Service (the "IRS")
or still has a remaining period of time under applicable Treasury Regulations or
IRS pronouncements in which to apply for such a determination letter and to make
any amendments necessary to obtain a favorable determination.  To the
extent any Plan with an existing determination letter from the IRS must be
amended to comply with the applicable requirement of the Tax Reform Act of 1986,
as amended, and subsequent legislation, the time period for effecting such
amendments will not expire prior to this transaction.  Southern
Security has furnished or made available to Southern Security copies of the most
recent IRS letters and IRS Form 5500 with respect to any such
Plan.  No Plan is covered by Title IV of ERISA or Section 412 of the
Code.  Neither Southern Security nor any officer or director of
Southern Security has incurred any liability or penalty under Section 4975
through Section 4980 of the Code or Title I of ERISA.  Each Plan has
been maintained and administered in all material respects in compliance with its
terms and with the requirements prescribed by and all applicable statutes, laws,
rules, orders, rules and regulations, including, but not limited to, ERISA and
the Code, that are applicable to such Plans.  No suit, action or other
litigation (excluding claims for benefits incurred in the ordinary course of
Plan activities) has been brought, or, to the best knowledge of Southern
Security, is threatened, against or with respect to any such
Plan.  All contributions, reserves and premium payments required to be
made or accrued as of the date hereof to the Plans have been made or
accrued.

      

      
        
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      (b)           Except
as described in Schedule 3.16 attached hereto, no present or former employee of
Southern Security has any claim against Southern Security (whether under federal
or state law, under any employment agreement, or otherwise) on account of or for
(i) overtime pay, other than overtime pay for work done in current payroll
period; (ii) wages or salary for any period other than the current payroll
period; (iii) vacation time off or pay in lieu of vacation time off, other than
(x) accumulated vacation pay as show in the schedule referred to above, and (y)
vacation time off (or pay in lieu thereof) earned in or in respect of the
current fiscal year; or (iv) any material violation of any statute, ordinance or
regulation relating to minimum wages or maximum hours of work.

      

      (c)           No
person or party (including, but not limited to governmental agencies of any
kind) has filed, or to the knowledge of Southern Security has threatened to
file, any claim against Southern Security under or rising out of any statute,
ordinance or regulation relating to discrimination in employment or employment
practices.  No person has any material claim under which Southern
Security has any material liability under any health, sickness, disability,
medical, surgical, hospital, or surgical, hospital, or similar benefit plan or
arrangement, or by virtue of his or her employment maintained by Southern
Security, or to or by which Southern Security is a party or is bound, or under
any workmen's compensation or similar law, which is not fully covered, subject
only to standard deductibles, by insurance maintained with reputable,
financially responsible insurers.  No person has any claim or has
filed any action or has threatened to file any action or bring a claim by virtue
of his or her employment by Southern Security including, without limiting the
generality of the foregoing, sexual harassment, wrongful termination, or other
actions.

      

      3.17     Major
Contracts.  Except as disclosed in Schedule 3.17 of the
Southern Security Disclosure Schedule, Southern Security is not a party to or
subject to:

      

      (a)           Any
union contract or any employment or consulting contract, agreement or
arrangement providing for future compensation, whether written or oral, with any
officer, consultant, director or employee that is not terminable by Southern
Security on thirty (30) days' or less notice without penalty or obligation to
make payments related to such termination;

      

      (b)           Any
plan, contract or arrangement, whether written or oral, providing for bonuses,
pensions, deferred compensation, severance pay or severance benefits, retirement
payments, profit-sharing payments or similar such payments;

      

      (c)           Any
joint venture contract, agreement or arrangement or any other agreement that has
involved or is expected to involve a sharing of profits with another person or
entity;

      

      (d)           Any
existing marketing, distribution, agency or brokerage agreement in which the
annual amount involved in fiscal 2007 exceeded $5,000 in aggregate amount or
pursuant to which Southern Security has granted or received most favored nation
pricing provisions or exclusive marketing rights related to any product, group
of products or territory;

      

      
        
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      (e)           Any
lease for realty or personal property in which the amount of payments that
Southern Security is required to make on an annual basis exceeds
$1,500;

      

      (f)       
    Any instrument evidencing or related in any way to
indebtedness incurred in the acquisition of companies or other entities or
indebtedness for borrowed money by way of direct loan, sale of debt securities,
purchase money obligation, conditional sale, guarantee, leasehold obligations or
otherwise;

      

      (g)           Any
material license agreement, either as licensor or licensee;

      

      (h)           Any
contract containing covenants purporting to limit the freedom of Southern
Security to compete in any line of business in any geographic area;

      

      (i)       
    Any insurance policy or fidelity or surety
bond;

      

      (j)         
  Any agreement of indemnification relating to Southern Security or
any of its officers, directors or employees;

      

      (k)           Any
agreement, contract or commitment relating to capital expenditures that involves
future payments individually in excess of $1,500 or in the aggregate in excess
of $5,000 by Southern Security;

      

      (l)       
    Any agreement, contract or commitment relating to
personal services to be rendered by any person to Southern Security requiring
the payment of more than $1,000 per month or the disposition or acquisition of
any assets by Southern Security; or

      

      (m)           Any
other agreement, contract or commitment that is material to Southern Security's
business.

      

      Each
agreement, contract, mortgage, indenture, plan, lease, instrument, permit,
concession, franchise, arrangement, license, regulations and commitment listed
on the Southern Security Disclosure Schedule pursuant to this Section 3.17 is
valid and binding on Southern Security, and is in full force and effect, and
neither Southern Security nor to the best knowledge of Southern Security, any
other party thereto has breached or is aware of any facts that would lead it to
believe that it has breached, any provision of, or is in default under the terms
of any such agreement, contract, mortgage, indenture, plan, lease, instrument,
permit, concession, franchise, arrangement, license, regulation or
commitment.  To the best knowledge of Southern Security, no such
agreement, contract, mortgage, indenture, plan, lease, instrument, permit,
concession, franchise, arrangement, license or commitment contains any material
liquidated damages, penalty or similar provision.  To the best
knowledge of Southern Security, no party to any such agreement contract,
mortgage, indenture, plan, lease, instrument, permit, registration, concession,
franchise, arrangement, license or commitment intends to cancel, withdraw,
modify or amend the same.

      

      
        
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      3.18     Taxes.

      

      (a)           All
tax returns, statements, reports and forms (including, but not limited to,
estimated Tax returns and reports and information returns and reports) required
to be filed with any Taxing Authority (as defined in Section 3.18(f) below) with
respect to any Taxable period ending on or before the Closing Date, by or on
behalf of Southern Security (collectively, the "Southern Security Returns"),
have been or will be filed when due (including any extensions of such due date),
and all amounts shown due thereon on or before the Closing Date have been or
will be paid on or before such date.  The balance sheets included in
the Southern Security Financial Statements (i) fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the Closing
Date and Southern Security has not and will not incur any Tax liability in
excess of the amount reflected on the Southern Security Financial Statements
with respect to such periods and (ii) properly accrues in accordance with STAT
all liabilities for Taxes.  All information set forth in the footnotes
to the Southern Security Financial Statements relating to Tax matters is true,
complete and accurate in all material respects.

      

      (b)           No
material Tax liability since December 31, 2007 has been incurred other than in
the ordinary course of business and adequate provision has been or will be made
for all Taxes since that date in accordance with STAT on at least a quarterly
basis.  Southern Security has withheld and paid to the applicable
financial institution or Taxing Authority all amounts required to be
withheld.  Neither Southern Security nor any member of any affiliated
or combined group of which Southern Security has been a member has granted any
extension or waiver of the limitation period applicable to any of the Southern
Security Returns.

      

      (c)           The
Shareholders shall be entitled to receive on a pro rata basis any tax refund
that Southern Security shall receive from any Taxing Authority (as defined in
Section 3.18(f) below) with respect to any Taxable period ending on or before
the Administrative Control Date.

      

      (d)           The
Shareholders agree to be jointly and severally liable for paying any premium tax
due and owing with respect to Southern Security’s operations ending on or before
the Administrative Control Date.  Security National agrees to be
liable for paying any premium tax due and owing with respect to Southern
Security’s operations following the Administrative Control Date.

      

      (e)           There
is no material claim, audit, action, suit, proceeding or investigation now
pending or (to the best knowledge of Southern Security) threatened against or
with respect to Southern Security in respect of any Tax or
assessment.  No notice of deficiency or similar document of any Tax
Authority has been received by Southern Security, and there are no liabilities
for Taxes (including liabilities for interest additions to tax and penalties
thereof and related expenses) with respect to the issues that have been raised
(and are currently pending) by any Tax Authority that could, if determined
adversely to Southern Security, materially and adversely affect the liability of
Southern Security for Taxes.  There are no liens for Taxes against the
assets of Southern Security except liens for current Taxes not yet
due.  Southern Security has not been and will not be required to
include any material adjustment in its Taxable income for any Tax period (or
portion thereof) pursuant to the Code or any comparable provision under state or
foreign Tax laws as a result of transactions, events or accounting methods
employed prior to the Closing.

      

      
        
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      (f)           There
is no contract, agreement, plan or arrangement, including, but not limited to,
the provisions of this Agreement, covering any employee or independent
contractor or former employee or independent contract of Southern Security that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to the Code.  Other than pursuant to
this Agreement, Southern Security is not a party to or bound by (nor will it,
prior to the Closing Date, become a party to or become bound by) any tax
indemnity, tax sharing or tax allocation agreement (whether written, oral or
arising under operation of federal law as a result of Southern Security being a
member of a group filing consolidated tax returns, under operation of certain
state law as a result of Southern Security being a member of a group filing
consolidated tax returns, under operation of certain state laws as a result of
Southern Security being a member of a unitary group or under comparable laws of
other states or foreign jurisdictions) that includes a party other than Southern
Security.  Southern Security has listed in Schedule 3.18 of the
Southern Security Disclosure Schedule all of Southern Security's material
federal and state tax returns for years ending December 31, 2004, 2005, 2006,
and 2007, information statements, reports work papers, Tax opinions, Tax
memoranda and other Tax data and documents of Southern Security that Southern
Security has furnished or made available to Security National or will furnish or
make available to Security National within ten (10) days from the date of this
Agreement.

      

      (g)           The
federal income tax returns of Southern Security have not been audited by the
Internal Revenue Service, (or a predecessor agency).  Southern
Security has not received any notice of assessment or proposed assessment of any
United States, State or other tax measured by its income, property or
transactions, and no issues have been raised by any taxing authority providing a
basis for any additional assessment of any such tax.  Southern
Security has not waived any law or regulation fixing, or consenting to the
extension of, any period of time for the assessment of any tax or other
governmental imposition, or become committed so to do, except as described in
Schedule 3.18 which is true, complete and correct in all material
respects.  The reserves for current taxes accrued on the books of
Southern Security are reasonable and adequate in amount.  The
Shareholders agree to indemnify Security National for any and all tax
assessments not accrued on the books of Southern Security and related to any
income, events, transactions, or time periods prior to the Closing, except for
any tax which may become due on income previously excluded from taxable income
and accumulated in the undistributed policyholders' surplus account ("Phase III
Tax").

      

      (h)           For
purposes of this Agreement, the following terms have the following
meanings:  "Tax" (and, with correlative meaning, "Taxes" and
"Taxable") means (i) any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, privilege,
intangible, profits, license, withholding, payroll, employment, excise,
insurance, severance, stamp, occupation, premium, property, environmental or
windfall profit tax, custom, duty or other tax, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or any
penalty, addition to or additional amount imposed by any Governmental Entity (a
"Taxing Authority") responsible for the imposition of any such tax (whether
domestic or foreign), (ii) any liability for the payment of any amounts of the
type described in clause (i) above as a result of being a member of an
affiliated, consolidated, combined or unitary group for any Taxable period and
(iii) any liability for the payment of any amounts of the type described in
clause (i) or clause (ii) above as a result of any express or implied obligation
to indemnify any other person or entity.

      

      
        
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      3.19     Interests
of Officers and Directors.  Except as described in Schedule
3.19 of the Southern Security Disclosure Schedule, none of Southern Security's
officers or directors (or relatives of such persons living in the same
household) have any material interest in any property, whether real or personal,
tangible or intangible, used in or pertaining to Southern Security's
business.

      

      3.20     Intellectual
Property.

      

      (a)           Southern
Security owns or is licensed or otherwise entitled to exercise all rights under
or with respect to all intellectual property including without limitation,
patents, copyrights, trademarks or service marks owned or used in connection
with its business.  Schedule 3.20 of the Southern Security Disclosure
Schedule lists all patents, trademarks, works of authorship, registered and
unregistered copyrights, registered and unregistered trademarks, trade names and
service marks, and all applications therefor owned or licensed by Southern
Security (the "Intellectual Property Rights"), and further specifies the
jurisdictions in which each such matter and registration has been filed,
including the respective registration or application
numbers.  Schedule 3.20 of the Southern Security Disclosure Schedule
also lists all material licenses, sublicenses and other agreements (oral or
written) as to which Southern Security is a party and pursuant to which Southern
Security or any other person or entity owns or is licensed or otherwise
authorized or obligated with respect to any Intellectual Property Right and
includes the identity of all parties thereto.  Southern Security is
not, nor as a result of the execution and delivery of this Agreement or the
performance of Southern Security's obligations hereunder will be, in violation
of any license, sublicense or other agreement applicable to it, whether or not
described in the Southern Security Disclosure Schedule.  Except to the
extent clearly and conspicuously disclosed in Schedule 3.20 of the Southern
Security Disclosure Schedule, Southern Security is the sole and exclusive owner
or licensee of, with full right, title and interest in and to (free and clear of
any liens, claims or encumbrances), the Intellectual Property Rights, and has
the sole and exclusive right in respect thereof (and, except as set forth in
Schedule 3.20 of the Southern Security Disclosure Schedule is not contractually
obligated to pay any compensation to any third party with respect
thereto).

      

      3.21     Restrictions
on Business Activities.  There is no material agreement,
judgment, injunction, order or decree binding upon Southern Security that has or
could reasonably be expected to have the effect of prohibiting or materially
impairing any business practice of Southern Security, any acquisition of
property by Southern Security or the conduct of business by Southern Security as
currently conducted or as currently proposed to be conducted.

      
        
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      3.22     Title to
Properties; Absence of Liens and Encumbrances; Condition of
Equipment.

      

      (a)           Schedule
3.22 of the Southern Security Disclosure Schedule sets forth a true, complete
and accurate list of all real property owned or leased by Southern Security and
summarizes all material lease terms, including the aggregate annual rental or
other fees payable, the length of all leases and the number of extensions
available.

      

      (b)           Southern
Security has good and valid title to, or, in the case of leased properties and
assets, valid leasehold interests in, all of its tangible properties and assets,
whether real, personal or mixed, used in its business, free and clear of any
liens (other than liens for taxes that are not yet delinquent), claims, charges,
pledges, security interests or other encumbrances, except as reflected in the
Southern Security Financial Statements and except for such imperfections of
title and encumbrances, if any, that are not substantial or material in
character, amount or extent, and that do not materially detract from the value,
or interfere with the present use, of the property subject thereto or affected
thereby.

      

       (c)           The
machinery, equipment and other personal property (collectively, the "Equipment")
owned or leased by Southern Security is, taken as a whole (i) adequate for the
conduct of the business of Southern Security consistent with its past practice,
(ii) suitable for the uses to which it is currently employed, (iii) in good
operating condition, (iv) regularly and properly maintained and (v) free from
all defects, except, with respect to clauses (ii) through (iv) of this Section
3.22(c), as would not have a material adverse effect on the Business Condition
of Southern Security.

      

      3.23     Governmental
Authorizations and Licenses.  Southern Security is the holder
of all licenses, authorizations, permits, concessions, registrations,
certificates and other franchises of any Governmental Entity required to operate
its business (collectively, the "Licenses") and is in compliance with the terms,
conditions, limitations, restrictions, standards, prohibitions, requirements and
obligations of all of such Licenses, except where the failure to hold any such
License or to so comply would not have a material adverse effect on the Business
Condition of Southern Security.  The Licenses are in full force and
effect on the date hereof and will be in full force and effect on the Closing
Date, except as noted in Section 3.8 hereof.  There is not now
pending, nor to the best knowledge of Southern Security is there threatened, any
action, suit, investigation or proceeding against Southern Security before any
Governmental Entity with respect to the Licenses, nor is there any issued or
outstanding notice, order or complaint with respect to the violation by Southern
Security of the terms of any such License or any rule or regulation applicable
thereto.

      

      
        
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      3.24     Environmental
Matters.

      

      (a)           To
the best knowledge of Southern Security, no substance that is regulated by any
Governmental Entity or that has been designated by any Governmental Entity to be
radioactive, toxic, hazardous or otherwise a danger to health or the environment
(a "Hazardous Material") is present in, on or under any property that Southern
Security has at any time owned, operated, occupied or leased.

      

      (b)           To
the best knowledge of Southern Security, Southern Security has not transported,
stored, used, manufactured, released or exposed its employees or any other
person to any Hazardous Material in violation of any applicable statute, rule,
regulation, order or law, except where such violation would not have a material
adverse effect on the Business Condition of Southern Security.

      

      (c)           To
the best knowledge of Southern Security, Southern Security has obtained all
permits, consents, waivers, exemptions, licenses, approvals and other
authorizations (collectively, "Environmental Permits") required to be obtained
under the applicable statutes, rules, regulations, orders or  laws of
any Governmental Entity relating to land use, public and employee health and
safety, pollution or protection of the environment (collectively, "Environmental
Laws"), except where the failure to obtain such an Environmental Permit would
not have a material adverse effect on the Business Condition of Southern
Security.  Schedule 3.24 of the Southern Security Disclosure Schedule
sets forth a true, complete and accurate list of all such Environmental Permits,
each of which is in full force and effect on the date hereof and will be in full
force and effect on the Closing Date.  Southern Security (i) is in
full compliance in all of the material respects with all of the terms and
conditions of the Environmental Permits and (ii) is in compliance in all
material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws or contained in any regulation, code, plan,
order, decree, judgment, notice or demand letter issued, entered into,
promulgated by or approved thereunder.  Southern Security has not
received any notice nor is Southern Security aware of any past or present
condition or practice of the business conducted by Southern Security that forms
or that could be reasonably expected to form the basis of any material claim,
action, suit, proceeding, hearing or investigation against Southern Security,
arising out of the manufacture, processing, distribution, use, treatment,
storage, spill, disposal, transport or handling, or the emission, discharge,
release or threatened release into the environment, of any Hazardous Material by
Southern Security.

      

      3.25     Insurance.  Schedule
3.25 of the Southern Security Disclosure Schedule lists and summarizes all
insurance policies and fidelity or surety bonds covering the assets,
inventories, business, equipment, properties, operations, employees, officers
and directors of Southern Security, the amounts of coverage under each such
policy and bond of Southern Security.  Within the last four years,
Southern Security has not been refused any requested insurance or bond
coverage.  Except as disclosed on the Southern Security Disclosure
Schedule, all premiums payable under all of such policies and bonds have been
paid and Southern Security is otherwise in full compliance with the terms of all
of such policies and bonds (or other policies and bonds providing substantially
similar insurance coverage).  Such policies of insurance and bonds are
of the type and in amounts customarily carried by persons and entities
conducting businesses similar to that of Southern Security.  Southern
Security does not know of any threatened termination of or material premium
increase with respect to, any of such insurance policies or bonds.

      

      
        
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      3.26 
   Labor
Matters.  To the best knowledge of Southern Security, Southern
Security is in compliance in all material respects with all currently applicable
laws, rules and regulations respecting employment, discrimination in employment,
terms and conditions of employment, wages and hours and occupational safety and
health and employment practices, and has not and currently is not engaged in any
unfair labor practice.  Southern Security has not received any notice
from any Governmental Entity, and there has not been asserted before any
Governmental Entity, any claim, action or proceeding to which Southern Security
is a party or involving Southern Security, and there is neither pending nor, to
Southern Security's best knowledge, threatened, any investigation or hearing
concerning Southern Security arising out of or based upon any such law,
regulation or practice.

      

      3.27     Agents;
Customers and Complaints.  Schedule 3.27 of the Southern
Security Disclosure Schedule sets forth the names and addresses of the sales
agents or brokers of Southern Security as of June 30, 2008.  As of the
date hereof, Southern Security has no unresolved customer or agent complaints
filed with a Governmental Entity concerning its products and/or
services.

      

      3.28     Questionable
Payments.  Neither Southern Security nor, to Southern
Security's best knowledge, any director, officer or other employee of Southern
Security has:  (i) made any payments or provided services or other
favors in the United States or in any foreign country in order to obtain
preferential treatment or consideration by any Governmental Entity with respect
to any aspect of the business of Southern Security or any of its Subsidiaries or
(ii) made any political contributions that would not be lawful under the laws of
the United States and the foreign country in which such payments were
made.  Neither Southern Security nor, to Southern Security's best
knowledge, any director, officer or other employee of Southern Security nor, to
Southern Security's best knowledge, any customer or supplier of any of them, has
been the subject of any inquiry or investigation by any Governmental Entity in
connection with payments or benefits or other favors to or for the benefit of
any governmental or armed services official, agent, representative or employee
with respect to any aspect of the business of Southern Security or with respect
to any political contribution.

      

      

      ARTICLE IV

      

      COVENANTS
OF THE SHAREHOLDERS

      

      4.1     
 Shareholders
to Sell Shares in Transaction.  Each of the Shareholders agrees
to sell his or her respective shares of common stock in the
transaction.  Each of the Shareholders represents and warrants that
such agreement set forth in this Section 4.1 constitutes a valid and legally
binding obligation of the Shareholders, enforceable against the Shareholders in
accordance with its terms.

      

      
        
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      4.2       Continuing
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;

      

      (iv)  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 the Reinsurance Agreement referenced in Section 1.4 above;
and

      

      (v)  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 policyholders 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.

      

      4.3.   
 Shareholders
Liable for Liquidated Damages.  Each of the
Shareholders agrees that any engagement in activities described in Section
3.7(b) and Section 4.2 above will result in irreparable injury to Security
National, for which there is no adequate remedy at law.  Thus, in the
event of any breach of Section 3.7(b) or Section 4.2 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 year's 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 V

      

      REPRESENTATIONS
AND WARRANTIES OF SECURITY NATIONAL

      

      Except as
noted on the Security National Disclosure Schedule, Security National represents
and warrants as follows:

      

      5.1       Organization,
Good Standing and Power.  Security National is a corporation
validly existing and in good standing under the laws of the state of Utah and
each has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as it is now being
conducted.  Security National has delivered to the Shareholders
complete and correct copies of its Articles of Incorporation and Bylaws, as
amended to the date hereof.

      

      5.2       Authority.

      

      (a)           Security
National has all requisite corporate power and authority to enter into and
execute and deliver this Agreement and to consummate the transactions
contemplated hereby and thereby, subject to approval of the transactions by
applicable state insurance commissioners and other relevant Governmental
Entities having jurisdiction over its business.  This Agreement, when
executed and delivered by Security National, will constitute the valid and
binding obligation of Security National, enforceable in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and except
that the availability of equitable remedies is subject to the discretion of the
court before which any proceeding therefor may be brought.

      

      (b)           To
the best knowledge of Security National, the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
thereby, will not conflict with or result in any violation of any material
statute, law, rule, regulation, judgment, order, decree or ordinance applicable
to Security National or any of its Subsidiaries or their respective properties
or assets, nor will it conflict with or result in any breach or default (with or
without the giving of notice or the lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
the loss of any material benefit under (i) any provision of the Articles of
Incorporation or Bylaws of Security National or of any of its Subsidiaries or
(ii) any material agreement, contract, note, mortgage, indenture, lease,
instrument, permit, concession, franchise or license to which Security National
or any of its Subsidiaries is a party or by which Security National or any of
its Subsidiaries or their respective properties or assets may be bound or
affected.

      

      5.3       Board
Authorization.   Prior to the Closing, the Board of
Directors of Security National will have authorized the execution and delivery
of this Agreement and the performance by Security National of its obligations
under the Agreement.

      

      
        
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      ARTICLE VI

      

      CONDUCT
AND TRANSACTIONS PRIOR TO CLOSING

      DATE;
ADDITIONAL AGREEMENT

      

      6.1       Conduct
of Business of Southern Security.

      

      (a)           During
the period from the date that Security National assumes Administrative Control
as defined in Section 1.4 above, and continuing until the earlier of the
termination of this Agreement or the Closing Date, Security National shall have
complete control of the conduct of business of Southern Security, and Southern
Security shall expend no funds without the written consent of Security
National.  During the period from the date of this Agreement and
continuing until the earlier of (i) the termination of this Agreement, (ii) the
date that Security National assumes Administrative Control, or (iii) the Closing
Date, Southern Security shall carry on its business in the usual, regular and
ordinary course in substantially the same manner as conducted prior to the date
of this Agreement and, to the extent consistent with such businesses, use all
commercially reasonable efforts consistent with past practice and policies to
preserve intact its present business organizations, keep available the services
of its present officers and key employees and preserve its relationships with
customers, suppliers, distributors, agents, brokers, licensors, licensees,
Governmental Entities, and others having business dealings with them, to the end
that its good will and ongoing businesses shall be unimpaired at the Closing
Date.  Southern Security shall promptly notify Security National of
any event or occurrence not in the ordinary course of business of Southern
Security, and any event which could have a material and adverse effect on the
Business Condition of Southern Security.  Except as expressly
contemplated by this Agreement or disclosed in the Southern Security Disclosure
Schedule, Southern Security shall not, without the prior written consent of
Security National:

      

      (i)        
  Grant any options, warrants, or stock purchase rights;

      

      (ii)     
    Enter into any commitment or transaction to be performed
over a period longer than six months in duration, or to purchase fixed assets
with an aggregate purchase price exceeding $500, or sell or commit to sell any
products with an aggregate purchase price greater than $500 in any single month
if the expected profit margins are lower than those customarily obtained for
sales of similar products by Southern Security in the past;

      

      (iii)      
  Grant any severance or termination pay to any director, officer,
employee or consultant;

      

      (iv)     
   Transfer to any person title to any rights to Southern
Security Intellectual Property Rights except in the ordinary course of
business;

      

      (v)      
   Enter into or amend any agreements pursuant to which any other
party is granted marketing, agency or other similar rights of any type or scope
with respect to any products of Southern Security;

       

       

      
        
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      (vi)          Except
in the ordinary course of business with prior notice of Security National,
violate, amend or otherwise modify the terms of any of their material contracts
binding on Southern Security set forth on the Southern Security Disclosure
Schedule;

      

      (vii)         Commence
a lawsuit other than for the routine collection of bills or for a breach of this
Agreement;

      

      (viii)        Declare
or pay any dividends on or make any other distributions (whether in cash, stock
or property) in respect of any of its capital stock, or split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, lieu of or in substitution for shares of its
capital stock, or repurchase or otherwise acquire, directly or indirectly, any
shares of its capital stock except from former employees, directors and
consultants in accordance with agreements providing for the repurchase of shares
in connection with any termination of service to Southern Security;

      

      (ix)          Issue,
deliver or sell, authorize or propose the issuance, delivery or sale of, or
purchase or propose the purchase of, any shares of its capital stock or
securities convertible into, or subscriptions rights, warrants, or options to
acquire, or other agreements or commitments of any character obligating it to
issue any such shares or other convertible securities;

      

      (x)          Solicit
approval for and effect any amendments to Southern Security's Articles of
Incorporation or Bylaws (other than as contemplated by this
Agreement);

      

      (xi)          Acquire
or agree to acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof, or otherwise acquire or agree to acquire any assets which are
material, individually or in the aggregate, to the Business Condition of
Southern Security;

      

      (xii)         Sell,
lease, license or otherwise dispose of any of its properties or assets except in
the ordinary course of business and consistent with past practice;

      

      (xiii)        Incur
any indebtedness for borrowed money or guarantee any such indebtedness or issue
or sell any debt securities or guarantee any debt securities of others or loan
money to others;

      

      (xiv)        Adopt
or amend any Plan, or enter into any employment contract, pay any special bonus
or special remuneration to any director, employee or consultant, or increase the
salaries or wage rates of its employees other than pursuant to scheduled
employee reviews under Southern Security's normal employee review cycle, as the
case may be, or in connection with the hiring of employees other than officers
in the ordinary course of business, in all cases consistent with past
practice;

       

       

      
        
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      (xv)         Revalue
any of its assets, including without limitation, writing down the value of
inventory or writing off notes or accounts receivable other than in the ordinary
course of business and consistent with past practice;

      

      (xvi)        Pay,
discharge or satisfy in an amount in excess of $500 in any one case any claim,
liability or obligation (absolute, accrued, asserted or unasserted, contingent
or otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business of liabilities reflected or reserved against in Southern
Security's Financial Statements;

      

      (xvii)       Make
any material tax election other than in the ordinary course of business and
consistent with past practice, change any material tax election, adopt any
material tax accounting method practice, change any material tax accounting
method, file any material tax return (other than any estimate tax returns,
payroll tax returns or sale tax returns) or any amendment to a material tax
return, enter into any closing agreement, settle any tax claim or assessment, or
consent to any tax claim or assessment, without the prior written or unwritten
consent of Security National, which consent will not be reasonably withheld;
and

      

      (xviii)     
Engage in any activities or transactions that are outside the ordinary course of
its business consistent with past practice.

      

      (b)           Unless
and until this Agreement shall have been terminated by either party pursuant to
Article VIII, Southern Security shall not, directly or indirectly, through any
officer, director, agent or otherwise, (i) solicit, initiate or encourage
submission or proposals or offers from any person relating to any acquisition or
purchase of all or substantially all of the assets of, or any equity interest
in, Southern Security or any merger, consolidation, business combination or
similar transaction with Southern Security, or (ii) participate in any
discussions or negotiations regarding, furnish to any other person any
confidential information with respect to, or otherwise cooperate with any way
with, or participate in, facilitate or encourage, any effort or attempt by any
other person to do or seek any of the foregoing.

      

      (c)           Southern
Security shall not take, or fail to take, any action which from the date hereof
through the Closing would cause or constitute a breach of any of its
representations, warranties and covenants set forth in this Agreement or which
would from the date hereof through the Closing cause any of such representations
or warranties to be inaccurate.  In the event of, and promptly after
becoming aware of, the occurrence of or the pending or threatened occurrence of
any event which would cause or constitute such a breach of inaccuracy, Southern
Security shall give detailed notice thereof to the other parties and shall use
its best efforts to prevent or promptly remedy such breach or
inaccuracy.

      

      (d)           Southern
Security shall promptly apply for or otherwise seek, and use its commercially
reasonable efforts to obtain all consents and approvals required to be obtained
by it for the consummation of this transaction, and Southern Security shall use
its best efforts to obtain all necessary consents, waivers and approvals under
any of Southern Security's material agreements, contracts licenses or leases in
connection with this transaction, except such consents and approvals which
Security National and Southern Security agree Southern Security shall not seek
to obtain, as contemplated by the Southern Security Disclosure
Schedule.

      

      
        
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      (e)           Southern
Security shall use its best efforts to effectuate the transactions contemplated
hereby and to fulfill and cause to be fulfilled the conditions to closing under
this Agreement.

      

      (f)       
    Southern Security shall take all reasonable actions
necessary to comply promptly with all legal requirements which may be imposed on
Southern Security with respect to this transaction and will promptly cooperate
with and furnish information to Security National in connection with any such
requirements imposed upon Southern Security, Security National or any other
party in connection with this transaction.  Southern Security shall
take all reasonable actions to obtain (and to cooperate with Security National
and its subsidiaries in obtaining) a consent, authorization, order or approval
of, or any exception by, any Governmental Entity, required to be obtained or
made by Southern Security (or by Security National or its subsidiaries) in
connection with this transaction or the taking of any action contemplated, by
this Agreement, and to defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions contemplated
by this Agreement and to defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions contemplated
hereby, to lift or rescind any injunction or restraining order or other order
adversely affecting the ability or the parties to consummate the transactions
contemplated hereby, and to effect all necessary registrations and filings and
submissions or information required by any Governmental Entity, and to fulfill
all conditions to this Agreement.

      

      (g)           Southern
Security shall give Security National and its agents, full and complete access
to all books, records, personnel, properties, assets and facilities of Southern
Security for Security National's inspection and due diligence, in its discretion
and Security National may make copies of documents and information subject to
Section 10.19 below.

      

      

      ARTICLE VII

      

      CONDITIONS
PRECEDENT

      

      7.1       Conditions
to Each Party's Obligation to Effect This Transaction.  The
respective obligation of each party to effect this transaction shall be subject
to the satisfaction prior to the Closing of the following
conditions:

      

      (a)           Legal
Action.  No temporary restraining order, preliminary injunction
or permanent injunction or other order preventing the consummation of this
transaction shall have been issued by any Governmental Entity and remain in
effect, and no litigation seeking the issuance of such and order or injunction,
or seeking relief against Southern Security, or Security National if this
transaction is consummated, shall be pending which, in the good faith judgment
of Southern Security's or Security National's Board of Directors (acting upon
the written opinion of their respective outside counsel) has a reasonable
probability of resulting in such order, injunction or relief and such relief
would have a material adverse effect on the Business Condition of such
party.  In the event any such order or injunction shall have been
issued, each party agrees to use commercially reasonable efforts to have any
such injunction lifted.

      

      
        
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      (b)           Statutes.  No
action shall have been taken, and no statute, rule, regulation or order shall
have been enacted, promulgated or issued or deemed applicable to this
transaction by any Governmental Entity which would (i) make the consummation of
this transaction illegal, (ii) prohibit Security National's or Southern
Security's ownership or operation of all or a material portion of the business
or assets of Southern Security, or Security National and its subsidiaries taken
as a whole, or compel Security National or Southern Security to dispose of or
hold separate all or a material portion of the business or assets of Southern
Security, or Security National and its subsidiaries taken as a whole, as a
result of this transaction or (iii) render Security National or Southern
Security unable to consummate this transaction, except for any waiting period
provisions.

      

      7.2       Conditions
to Obligations of Security National.  The obligations of
Security National to effect this transaction are subject to the satisfaction of
the following conditions, unless waived by Security National:

      

      (a)           Representations
and Warranties.  The representations and warranties of Southern
Security set forth in this Agreement (determined without regard to any
materiality qualifiers, including without limitation "material adverse effect")
shall be true and correct in all respects as of the date of this Agreement and
as of the Closing Date, unless any failures to be true and correct, individually
or in the aggregate, do not have and could not reasonably be expected to have a
material adverse effect on the Business Condition of Southern Security; and
there shall have been no willful breach by Southern Security of any of its
representations or warranties made in this Agreement.  Security
National shall have received a certificate signed by the Chief Executive Officer
and the Chief Financial Officer of Southern Security to such effect on the
Closing Date.

      

      (b)           No
Material Adverse Change.  There shall have been no material
adverse change in the Business Condition of Southern Security from the date of
this Agreement through the Closing Date and Security National shall have
received a certificate signed by the Chief Executive Officer and the Chief
Financial Officer of Southern Security to such effect on the Closing
Date.

      

      (c)           Performance
of Obligations of Southern Security and Shareholders.  Southern Security
and the Shareholders shall have performed all obligations and covenants required
to be performed by it under this Agreement prior to the Closing Date, and
Security National shall have received a certificate signed by the Chief
Executive Officer and the Chief Financial Officer of Southern Security to such
effect on the Closing Date.

      

      (d)           Regulatory
Approvals.  All authorizations, consents, orders or approvals
of, or declarations of, or declarations or filing with, or expiration of waiting
periods imposed by, any Governmental Entity (including, without limitation, the
states of Utah and Mississippi) necessary for the consummation of the
transactions contemplated by this Agreement shall have been
obtained.

      

      
        
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      (e)        Consents.  Security
National shall have received duly executed copies of all material third-party
non-regulatory consents and approvals contemplated by this Agreement or the
Southern Security Disclosure Schedule in form and substance reasonably
satisfactory to Security National.

      

      (f)         Resignation
of Directors.  The directors of Southern Security in office
immediately prior to the Closing Date shall have resigned as directors of the
Surviving Corporation effective as of the Closing Date.

      

      (g)        Legal
Opinion.  Security National shall have received an opinion of
Southern Security's legal counsel, in form and substance acceptable to Security
National, to the effect that:

      

      (i)        
   This Agreement has been duly authorized, executed and
delivered by Southern Security and constitutes the valid and binding obligations
of Southern Security and the Shareholders and all corporate action required by
Southern Security in order to effect the transactions contemplated hereby has
been taken;

      

      (ii)           Southern
Security is a corporation duly incorporated and validly existing in good
standing under the laws of the State of Mississippi and is duly authorized to
conduct its business as presently conducted;

      

      (iii)           Southern
Security is a corporation duly incorporated and validly existing in good
standing under the laws of the State of Mississippi and is duly licensed to
conduct the insurance business that it presently conducts under the Mississippi
insurance law;

      

      (iv)           The
authorized capital structure of Southern Security consists of 100,000 shares of
Voting Class A Common Stock and 1,000,000 shares of Non-Voting Class B Common
Stock and there are 50,000 shares of Voting Class A Common Stock and 450,000
shares of Non-Voting Class B Common Stock issued and outstanding, all of which
are owned by the Shareholders.  All issued and outstanding shares of
Common Stock have been duly authorized, validly issued and are fully-paid and
nonassessable and were not issued in violation of the pre-emptive rights of any
Shareholder;

      

      (v)           Upon
delivery to Security National of the stock certificates evidencing all of the
issued and outstanding shares of Common Stock, said Common Stock will be free
and clear of all liens, claims, encumbrances or other adverse interests;
and

      

      (vi)           Neither
the execution and delivery by Southern Security of this Agreement, nor the
compliance by Southern Security with the terms and provisions hereof, will
conflict with or result in a breach of (A) any of the terms, conditions or
provisions of the Articles of Incorporation, the Bylaws or any other governing
instrument with respect to Southern Security, or (B) with any judgment, order,
injunction, decree, law, statute, regulation or ruling with or of any court or
Governmental Entity known to such counsel to which Southern Security is subject,
or will constitute a default thereunder.

      

      In
rendering such opinion, such counsel may rely, to the extent such counsel deems
such reliance necessary or appropriate, upon certificates of public officials or
of any officer or officers of Southern Security, provided the extent of such
reliance is specified in such opinion and executed copies of such opinions and
certificates are furnished to Security National.

      

      
        
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      7.3       Conditions
to Obligations of Southern Security and Shareholders.  The obligation of
Southern Security and the Shareholders to effect this transaction is subject to
the satisfaction of the following conditions unless waived by Southern Security
and the Shareholders.

      

      (a)           Representations
and Warranties.  The representations and warranties of Security
National set forth in this Agreement shall be true and correct in all material
respects (except for such representations and warranties which are qualified by
their terms by a reference to materiality, which representations and warranties
as so qualified shall be true in all aspects) (i) as of the date of this
Agreement, and (ii) as of the Closing Date as though made on and as of each such
date, except as otherwise contemplated by this Agreement, and Southern Security
shall have received a certificate signed by the Chief Executive Officer and the
Chief Financial Officer of Security National to such effect.

      

      (b)           Performance
of Obligations of Security National.  Security National shall
have performed all obligations and covenants required to be performed by them
under this Agreement prior to the Closing Date, and Southern Security shall have
received a certificate signed by the Chief Executive Officer and the Chief
Financial Officer of Security National to such effect.

      

      (c)           Legal
Opinion.  Southern Security and the Shareholders shall have
received an opinion of Security National's legal counsel, in form and substance
satisfactory to the Southern Security, to the effect that:

      

      (i)           Security
National is a corporation duly organized, validly existing and in good standing
under the laws of the State of Utah with all requisite corporate power and
corporate authority to execute, deliver and perform this Agreement;

      

      (ii)           the
execution, delivery and performance of this Agreement by Security National will
not conflict with any of the terms, provisions or conditions of the Articles of
Incorporation or the Bylaws of Security National;

      

      (iii)           the
execution, delivery and performance of this Agreement has been duly authorized
by all necessary corporate action on the part of Security National and is
enforceable against Security National in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws or equitable principles relating to or limiting creditor's
rights generally.

      

      In
rendering such opinion such counsel may rely, to the extent such counsel deems
such reliance necessary or appropriate, upon certificates of public officials or
of any officer or officers of Security National, provided the extent of such
reliance is specified in such opinion and executed copies of such certificates
are furnished to Southern Security.

      

      (f)           Payment
of Purchase Consideration.  Security National shall pay the
Purchase Consideration as required in Section 1.2 of this
Agreement.

       

       

      
        
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      ARTICLE VIII

      

      TERMINATION

      

      8.1       Termination.

      

      (a)           This
Agreement may be terminated at any time prior to the Closing Date:

      

      (i)           by
mutual written agreement of Security National, Southern Security, and the
Shareholders;

      

      (ii)           by
Security National, if there has been a breach by Southern Security or the
Shareholders of any representation, warranty, covenant or agreement set forth in
this Agreement on the part of Southern Security or the Shareholders which is
material and which Southern Security or the Shareholders fails to cure within
five (5) business days after notice thereof is given by Security National
(except that no cure period shall be provided for a breach by Southern Security
or the Shareholders which by its nature cannot be cured);

      

      (iii)           by
Southern Security or the Shareholders, if there has been a breach by Security
National of any representation, warranty, covenant or agreement set forth in
this Agreement on the part of Security National which is material and which
Security National fails to cure within five (5) business days after notice
thereof is given by Southern Security (except that no cure period shall be
provided for a breach by Security National which by its nature cannot be
cured);

      

      (iv)           by
Security National or the Shareholders, if this transaction shall not have been
consummated on or before December 31, 2008; provided, however, that if the sole
reason this transaction has not been completed by such date results from delays
in the regulatory approval process, this Agreement may not be terminated but
rather shall remain in full force and effect for an additional sixty (60) days
beyond December 31, 2008.

      

      (v)           by
Security National or the Shareholders if any permanent injunction or other order
of a court or other competent authority preventing this transaction shall have
become final and nonappealable.

      

      (b)           Where
action is taken to terminate this Agreement pursuant to this Section 8.1 it
shall be sufficient for such action to be authorized by the Board of Directors
of the party taking such action.

      

      (c)           In
the event of termination of this Agreement as provided in this Section, the
provisions of this Agreement shall forthwith become void, except that the
agreements contained or referred to in Sections 10.16 (expenses), 10.17
(brokers, finders), 10.18 (public announcements) and 10.19 (confidentiality)
shall survive. Notwithstanding the foregoing, in the event of a breach of this
Agreement by any party hereto, nothing herein shall limit the remedies at law or
in equity of the other party with respect thereto.

      
        
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      ARTICLE IX

      

      INDEMNIFICATION

      

      9.1      
Obligation
of the Shareholders to Indemnify.  Subject to the time
limitations set forth in Section 10.1 below, the Shareholders agree to
indemnify, defend and hold harmless Security National and its respective
directors, officers, employees, agents, subsidiaries, affiliates, successors and
assigns, from and against all losses, liabilities, claims, damages,
deficiencies, costs and expenses, including without limitation interest,
penalties and attorneys' fees and disbursements (collectively, the "Losses" and
singularly, a "Loss"), based upon, arising out of or otherwise related to any
inaccuracy in or any breach of any representation, warranty, covenant or
agreement of Southern Security or the Shareholders contained in this Agreement
or in any document or other papers delivered pursuant to this Agreement,
including the Southern Security Financial Statements, and in respect of any
third party claim made based upon facts alleged which, if true, would have
constituted any such inaccuracy or breach.  For purposes of this
Agreement, Security National shall be deemed to have suffered a Loss if and to
the extent that such Loss has been suffered by Southern
Security.  Notwithstanding the foregoing, the time limitations set
forth in Section 10.1 below do not apply to the Shareholders’ tax obligations
set forth in Section 3.18 hereof.

      

      9.2       Notice
and Opportunity to Defend.

      

      (a)           Notice of
Asserted Liability.  Promptly after receipt by any person
entitled to indemnity under this Agreement (the "Indemnitee") of notice of any
demand, claim or circumstances which, with the lapse of time, would or might
give rise to a claim or the commencement or threatened commencement of any
action, proceeding or investigation (an "Asserted Liability") that may result in
a Loss, the Indemnitee may, at its option, give notice thereof (the "Claims
Notice") to the Shareholders (the "Indemnifying Party").  The Claims
Notice shall describe the Asserted Liability in reasonable detail, and shall
indicate the amount (estimate, if necessary and to the extent feasible) of the
Loss that has been or may be suffered by the Indemnitee.

      

      (b)           Opportunity
To Defend.  The Indemnifying Party may elect to compromise or
defend, at its own expense and by its own counsel, any Asserted
Liability.  If the Indemnifying Party elects to compromise or defend
such Asserted Liability, it shall within thirty (30) days after the Claims
Notice is given or sooner, if the nature of the Asserted Liability so requires,
notify the Indemnitee of its intent to do so, and the Indemnitee shall
cooperate, at the expense of the Indemnifying Party, in the compromise of, or
defense against, such Asserted Liability.  If the Indemnifying Party
elects not to compromise or defend the Asserted Liability, fails to notify the
Indemnitee of its election as herein provided or contests its obligation to
indemnify under this Agreement, the Indemnitee may pay, compromise or defend
such Asserted Liability.  Notwithstanding the foregoing, neither the
Indemnifying Party nor the Indemnitee may settle or compromise any claim over
the objection of the other, provided, however, that consent to settlement or
compromise shall not be unreasonably withheld.  In any event, the
Indemnitee and the Indemnifying Party may participate, at their own expense, in
the defense of such Asserted Liability.  If the Indemnifying Party
chooses to defend any claim, the Indemnitee shall make available to the
Indemnifying Party any books, records or other documents within its control that
are necessary or appropriate for such defense.

      

      
        
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      (c)           Disputes
with Third Parties.  Anything in this Section 9.2(c) to the
contrary notwithstanding, in the case of any Asserted Liability by any supplier,
distributor, agent, broker, shareholder, franchisee, customer or other third
party doing business with Southern Security prior to the Closing in connection
with which Security National may make a claim against the Shareholders for
indemnification pursuant to this Section 9.2(c), Security National may, at its
option, give a Claims Notice with respect thereto but, unless Security National
and the Indemnifying Party otherwise agree, Security National shall have the
exclusive right at its option to defend any such matter, subject to the duty of
Security National to consult with the Indemnifying Party and its attorneys in
connection with such defense and provided that no such matter shall be
compromised or settled by Security National without the prior consent of the
Indemnifying Party, which consent shall not be unreasonably
withheld.  The Indemnifying Party shall have the right to recommend in
good faith Security National proposals to compromise or settle claims brought by
a supplier, agent, or customer, and Security National agrees to present such
proposed compromises or settlements to such supplier, distributor, shareholder,
franchisee or customer.  All amounts required to be paid in connection
with any such Asserted Liability pursuant to the determination of any court,
governmental or regulatory body or arbitrator, and all amounts required to be
paid in connection with any such compromise or settlement consented to by the
Indemnifying Party, shall be borne and paid by the Indemnifying
Party.  The parties agree to cooperate fully with one another in the
defense, compromise or settlement of any Asserted Liability.  In the
event any compromise, settlement or judgment amount includes amounts resulting
from frivolous or groundless claims or defenses made by Indemnitee, the
Indemnifying Party shall not bear the portion of the amount to be paid relating
to such frivolous or groundless claims.

      

      
        
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      ARTICLE X

      

      GENERAL
PROVISIONS

      

      10.1     Survival
of Representations, Warranties, Covenants and Agreements
..  Except as provided below with regard to Section 3.18, all
representations, warranties, covenants and agreements in this Agreement or in
any document or instrument delivered pursuant to this Agreement shall be deemed
to be conditions to this transaction and shall survive the consummation of this
transaction for a period of twelve (12) months after the Closing Date.
Notwithstanding the foregoing, except as provided below with regard to Section
3.18, all representations, warranties, covenants and agreements shall survive
the Closing Date for forty-eight (48) months following the Closing Date if such
representations, warranties, covenants and agreements are breached due to fraud
or gross negligence.  Notwithstanding the foregoing, the tax
obligations set forth in Section 3.18 above shall survive the consummation of
this transaction and the Closing Date for an indefinite period of
time.

      

      10.2     Amendment.  This Agreement
may be amended by the parties hereto at any time before or after approval of
this transaction by the Shareholders; provided, however, that following approval
of this transaction by the Shareholders, no amendment hereto shall be made that
by law requires the further approval of the Shareholders without obtaining such
further approval.  This Agreement may not be amended except by an
instrument in writing signed on behalf of both of the parties
hereto.

      

      10.3     Extension;
Waiver.  At any time prior to the Closing Date, Southern
Security and Security National, by action taken by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other, (ii) waive any
inaccuracies in the representations and warranties made to it contained herein
or in any document or instrument delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions for the benefit of it
contained herein.  Any agreement on the part of either party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed by such party.

      

      10.4     Notices.  All
notices and other communications hereunder shall be in writing and shall be
deemed given if delivered personally 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):

      

      
        
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      (a)           If
to Security National, to:

      

      Security
National Financial Corporation

      5300
South 360 West, Suite 250

      Salt Lake
City, Utah  84123

      Attn:  Scott
M. Quist, President

      Facsimile
No.:  (801) 265-9882

      Telephone
No.: (801) 264-1060

      

      With a
copy to:

      

      Mackey
Price Thompson & Ostler

      350
American Plaza II

      57 West
200 South

      Salt Lake
City, Utah 84101-3663

      Attn:  Randall
A. Mackey, Esq.

      Facsimile
No.:  (801) 575-5006

      Telephone
No.: (801) 575-5000

      

      (b)           If
to Southern Security, to:

      

      Southern
Security Life Insurance Company

      211 Ball
Drive

      P.O. Box
924

      Louisville,
Mississippi  39339

      Attn:
Russ Nowell, President

      Facsimile
No.: (622) 779-4155

      Telephone
No.: (622) 779-4113

      

      (c)           If
to Shareholders, to:

      

      Shareholders
of Southern Security Life Insurance Co.

      211 Ball
Drive

      P.O. Box
924

      Louisville,
Mississippi  39339

      Facsimile
No.: (622) 779-4155

      Telephone
No.: (622) 779-4113

      

      
        
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      With a
copy to:

      

      Julie M.
McPeak, Esquire

      Burr
& Forman, LLP

      700 Two
American Center

      3102 West
End Avenue

      Nashville,
TN  37203

      Facsimile
No.:  (615) 724-3290

      Telephone
No.: (615) 724-3200

      

      

       10.5    Interpretation.  When
a reference is made in this Agreement to Sections or Exhibits, such references
shall be deemed to be to a Section or Exhibit to this Agreement, unless
otherwise indicated.  The words "include", "includes" and "including"
when used herein shall be deemed in each case to be followed by the words
"without limitation".  The Table of Contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.

      

      10.6     Counterparts.  This
Agreement may be executed in one or more counterparts, all of which, when taken
together, shall be considered one and the same agreement, and this Agreement
shall become effective when one or more counterparts have been signed by each of
the parties hereto and delivered to the other parties hereto.

      

      10.7     Entire
Agreement.  This Agreement and the documents and instruments
attached hereto as Exhibits and all other agreements between the parties hereto
delivered pursuant to this Agreement constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, between the parties hereto
with respect to the subject matter hereof and are not intended to confer upon
any other person or entity any rights or remedies hereunder except as otherwise
expressly provided herein.

      

      10.8     No
Transfer.  This Agreement and the rights and obligations set
forth herein may not be transferred or assigned by operation of law or otherwise
without the consent of both parties hereto.  This Agreement is binding
upon and will inure to the benefit of each party hereto and their respective
successors and permitted assigns.

      

      10.9     Severability.  If
any provision of this Agreement, or the application thereof, is for any reason
whatsoever and to any extent deemed to be invalid or unenforceable, the
remainder of this Agreement and the application thereof to other persons,
entities or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto.  The parties hereto further agree to
replace any such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of the void or unenforceable provision
hereof.

      

      
        
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      10.10   Other
Remedies.  Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party hereto will be deemed
cumulative with, and not exclusive of, any other remedy conferred hereby or by
law or equity on such party; and the exercise of any one remedy will not
preclude the exercise of any other remedy otherwise available at law or in
equity.

      

      10.11   Further
Assurances.  The parties hereto agree to cooperate fully with
other parties hereto and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by the other party hereto in order to evidence and reflect the
transactions described herein and contemplated hereby and to carry into effect
the intents and purposes of this Agreement.

      

      10.12   No Third
Party Beneficiary Rights.  No provision of this Agreement is
intended, nor will any provision hereof be interpreted, to provide or create any
third party beneficiary rights or any other rights of any kind whatsoever in any
client, customer, supplier affiliate, stockholder, employee, distributor,
partner of either party hereto or any other person or entity, and all of the
provisions hereof shall be deemed to be personal in nature and between the
parties to this Agreement.

      

      10.13   Mutual
Drafting.  This Agreement is the joint product of Security
National and Southern Security, and each provision hereof has been subject to
the mutual consultation, negotiation and agreement of Security National and
Southern Security, and shall not be construed for or against either party
hereto.

      

      10.14   Expenses.  All
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby and thereby shall be paid by the party
incurring such costs and expenses.  Those costs and expenses of
Southern Security will be paid immediately following this transaction by the
Shareholders.

      

      10.15   Brokers
or Finders.
Security National, Southern Security, and the Shareholders each
represent, as to itself and, to the extent applicable, its subsidiaries, that
except for Caldwell and Caldwell LLP (who is Security National's agent/broker
and Security National's responsibility to compensate), no agent, broker,
investment banker or other firm or person is, or will be, entitled to any
broker's or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement.

      

      10.16   Public
Announcements.  Each party hereto will consult in advance with
the other concerning the timing and content of any announcements, press releases
and public statements concerning this transaction and will not make any such
announcement, press release or public statement without the other's prior
consent; provided, however, that Security National may make any public statement
or announcement concerning this transaction without Southern Security's or the
Shareholders’ prior consent if, in the opinion of counsel for Security National,
such public statement or announcement is required or advisable to comply with
applicable law.

      

      
        
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      10.17   Confidentiality.  No
party hereto shall release, publish, reveal or disclose, directly or indirectly,
any business or technical information of the other party hereto or any of its
Subsidiaries considered by the other party as "confidential", "secret" or
"proprietary" (or words of similar meaning) including, but not limited to,
systems, processes, formulas, recipes, data, functional specifications, computer
programs, blue prints, know-how, improvements, discoveries, developments,
designs, inventions, techniques, new products, marketing and advertising
methods, distribution methods and programs, supplier agreements, customer or
distributor lists, pricing policies, financial information, projections,
forecasts, strategies, budgets or other information related to its business or
its distributors, suppliers or customers (collectively, "Confidential
Material"), except to the party's directors, officers, employees, financial
advisors, legal counsel, independent public accountants or other agents,
advisors or representatives who shall require access thereto on a "need-to-know"
basis for the purpose of the transactions contemplated by this Agreement and who
shall agree in writing to be bound by the terms of this Section
10.19.  The parties hereto agree to take all reasonable precautions to
safeguard the confidentiality of the other party's Confidential Material and to
exercise the same degree of care with respect to such other party's Confidential
Material that the party in possession of such Confidential Material exercises
with respect to its own confidential information.  Neither party
hereto shall make or permit to be made, except in furtherance of the
transactions contemplated by this Agreement, any copies, abstracts or summaries
of the other party's Confidential Material.  In addition, all
Confidential Material belonging to the other party hereto shall be used solely
for the purpose of the investigation and evaluation contemplated by this Section
10.19, and shall not be used for any other purpose, including any use that would
be to the detriment of the other party hereto or its Subsidiaries, nor shall
such Confidential Material be used in competition with the other party hereto or
its Subsidiaries.  The restrictions on disclosure of information
contained in this Section 10.19 do not extend to any information that (a) is
already known to the receiving party; (b) was or is independently developed by
the receiving party; (c) is now or hereafter becomes available to the public
other than as a consequence of a breach of obligations under this Section 10.19
or (d) is disclosed to third parties hereto outside of the receiving party in
accordance with terms approved by the disclosing party.  Upon written
request, the parties hereto shall return all writings, documents and materials
containing Confidential Material with a letter confirming that all copies,
abstracts and summaries of the Confidential Material have been returned or
destroyed.  In the event that either party hereto becomes legally
required to disclose the other party's Confidential Material, it shall provide
such other party with prompt written notice of such requirement prior to such
disclosure.  In the event that a protective order or other remedy is
not obtained, or such other party waives compliance with the provisions of this
Section 10.19 with respect to the Confidential Material subject to such
requirement, such party agrees to furnish only that portion of the Confidential
Material that it is legally required to furnish and, where appropriate, agrees
to use its best efforts to obtain assurances that such Confidential Material
will be accorded confidential treatment.

      

      10.18   Attorney’s
Fees.  In the event any legal action or arbitration or other
proceeding is brought for the enforcement of this Agreement or in connection
with any other provisions of this Agreement, the successful and prevailing party
or parties shall be entitled to reasonable attorney’s fees and other costs
incurred in such action or proceeding.

       

      
        
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      IN
WITNESS WHEREOF, Security National, Southern Security and the Shareholders have
each caused this Agreement to be signed effective as of the date first written
above.

      

      
        	 
      	
                SECURITY
      NATIONAL LIFE INSURANCE COMPANY

              
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
                By:    /s/ Scott
      M. Quist

              
	 
      	
                Its:  President

              
	 
      	 
      
	 
      	
                SOUTHERN
      SECURITY LIFE INSURANCE COMPANY

              
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
                By: /s/ Janet Nowell
      Massey

              
	 
      	
                Its:   Executive
      Vice President

              

      

      

      

      

      
        
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      EXHIBIT
INDEX

      

      

      

      Exhibit
1               Southern
Security Disclosure Schedule

      

      Exhibit
2               Security
National Disclosure Schedule

      

       

       

      

      

      
        
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      ANNEX
I

      

      AGREEMENT
BY SHAREHOLDERS

      OF
SOUTHERN SECURITY LIFE INSURANCE COMPANY

      TO
SELL SHARES IN STOCK PURCHASE TRANSACTION

      

      Pursuant
to the Stock Purchase Agreement (the "Agreement") by and among Security National
Life Insurance Company, Southern Security Life Insurance Company ("Southern
Security"), and the undersigned shareholders of Southern Security, dated as of
August __, 2008, the undersigned shareholders of Southern Security each hereby
joins in the Agreement for the purpose of agreeing to exchange, his or her
shares of Southern Security stock for the consideration described in Section 1.2
of the Agreement and for the purpose of making the representations and
warranties described in Articles II, III, IV, VI, IX, and X of the
Agreement.

      

      The
respective number of shares of Southern Security owned by the undersigned are
shown in parenthesis.

      

      This
instrument may be executed in any number of counterparts, each of which shall be
deemed an original, provided that all shareholders sign at least one such
counterpart.  All such counterparts shall be attached to the
Agreement.

      

      Executed
as of August 13, 2008.

      

      

      

      

      

      
        	
                /s/ Russell C. Nowell

              	
                Russell C.
      Nowell

              
	
                Russell
      C. Nowell, as Shareholder

              	
                Name
      Printed

              
	 
      	 
      
	 
      	 
      
	 
      	 
      
	
                /s/ Janet Nowell
    Massey

              	
                Janet Mowell
      Massey

              
	
                Janet
      Nowell Massey, as Shareholder

              	
                Name
      Printed

              
	 
      	 
      
	 
      	 
      
	 
      	 
      
	
                /s/ Michael
      Pierce

              	
                Michael
      Pierce

              
	
                Michael
      Pierce, Temporary Administrator of

              	
                Name
      Printed

              
	
                the
      Estate of Genece Nowell

              	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	
                /s/ Harold B. Nowell,
      Sr.

              	
                Harold B. Nowell,
      Sr.

              
	
                Harold
      B. Nowell, Sr., as Director

              	
                Name
      Printed

              
	
                Southern
      Security Life Insurance Company, Inc.

              	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	
                /s/ Harold B. Nowell,
      Sr.

              	
                Harold B. Nowell, Sr.

              
	
                Harold
      B. Nowell, Sr., as Shareholder

              	
                Name
      Printed

              
	 
      	 
      
	 
      	 
      
	 
      	 
      
	
                /s/ Harold Nowell,
    III

              	
                Harold Nowell,
      III

              
	
                Harold
      Nowell, III, as Executor of the Estate

              	
                Name
      Printed

              
	
                of
      H. Bernard Nowell, Jr.

              	 
      

      

      

      

      (The
total number of Voting Class A and Non-Voting Class B shares of Southern
Security owned by all Shareholders:  500,000)

       

      
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        42snfc8k081308ex10-2.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

     

     

     

     

    

    
      
        
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    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.

    

    

    
      
        
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    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.

    

    

    
      
        
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    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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of this page is left blank intentionally]

    
 

    

    

    

    
      
        
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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

     

     

     

    
      Exhibit 1 Table of Contents

      14

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