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 TOSELL SHARES IN STOCK PURCHASE TRANSACTION IN THE FORM ATTACHED AS ANNEX I

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

 

			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

 

			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

			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

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:

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.);

 

 

3.2       Capital Structure.

3.3       Authority.

3.7       Insurance Business.

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.

(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.

(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:

3.18     Taxes.

(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.

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.

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.

3.26     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.

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.

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.

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.

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;

 

 

 

 

 

 

(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.

(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.

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.

(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.

(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.

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.

 

 

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.

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.

(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.

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):

(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.:   ###-###-####

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.:   ###-###-####

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

With a copy to:

Julie M. McPeak, Esquire

Burr & Forman, LLP

700 Two American Center

3102 West End Avenue

Nashville, TN  37203

Facsimile No.:   ###-###-####

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.

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.

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

Exhibit 1               Southern Security Disclosure Schedule

Exhibit 2               Security National Disclosure Schedule

 

 

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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