July 11, 2005
Mr. Larry Perrin
Shareholders of Memorial Insurance Company of America
Memorial Insurance Company of America
PO Box 505
634 Main Street,
Blytheville, Arkansas 72316-0505
Dear Sirs:
By this letter Security National Financial Corporation, including its
subsidiaries, expresses its intention to acquire, as outlined below, Memorial
Insurance Company of America agrees to the transactions contemplated herein, and
the Shareholders, as evidenced by their signatures attached hereto, express
their intention to sell, redeem, exchange, or otherwise convey, all their stock
in Memorial Insurance Company of America under the following terms and
conditions.
The Shareholders shall receive $13,500,000 for 100% of the outstanding
common stock of Memorial, each shareholder to receive their pro-rata share of
the total amount. The Shareholders shall receive $13,500,000 which shall be made
by capital distribution, stock buy back, purchase of similar transactions with
Security National simultaneously contributing sufficient capital and surplus to
Memorial to maintain its status as an admitted insurer in good standing in the
State of Arkansas. The Shareholders shall make all reasonable efforts to keep
Memorial's business in force.
Simultaneous with the receipt of the above funds by the Shareholders,
conveyance of stock, and simultaneous recapitalization of Memorial, Memorial
will coinsure, on a permanent basis, substantially all its business to Security
National Life Insurance Company. This coinsurance agreement is to have terms
standard in the industry for such agreements, and shall include a tri- party
collateral provision regarding the assets funding the reserves, the parties of
the agreement are to be Memorial, Security National, and the Arkansas Insurance
Department. Future business to be written by Memorial shall be covered by this
coinsurance agreement.
Memorial, consistent with the intentions of this letter and the agreements
contemplated herein, shall make available for hire, to the extent possible, the
marketing force associated with its business. Security National hereby expresses
its intention to maintain the current office location of Memorial.
The parties agree that this Letter of Intent shall be used in preparing the
definitive documents needed to memorialize the agreements contemplated herein
and all needed regulatory filings. Such definitive documents shall contain
representations and warranties customary for such transactions to include that
its financial condition is accurately represented in its statements. Memorial
acknowledges that Security National has not completed its due diligence review
of the transactions and business to be acquired as contemplated herein. Memorial
agrees to make available all records, personnel, systems, or other items or
resources it has to Security National such that the due diligence can be
completed. Such due diligence shall be completed within three weeks of the
signing hereof of at least 80% of the outstanding shares. Each party will bear
its own costs.
Memorial Insurance Company of America Letter of Intent p.2 of 3
This letter of intent and the transactions contemplated herein are subject
to the approval of the respective Boards of Directors of Memorial and Security
National, which agreement the parties agree to use their best efforts to obtain.
Furthermore, the transactions contemplated herein are contingent upon obtaining
regulatory approval of the states of Arkansas and Utah, and any other regulatory
bodies that may have jurisdiction over the matters.
Please indicate your acceptance of the terms and conditions of this Letter
of Intent as provided herein by signing the signature lines below. Assuming your
acceptance of this letter, we hope to close no later than October 30, 2005, or
within 5 business days of this transaction receiving the needed regulatory
approvals. This letter shall be valid for 8 business days from the date hereof.
Very Truly Yours:
Security National Financial Corporation
By: Scott M. Quist, President
Accepted:
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Memorial Insurance Company of America
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Memorial Insurance Company of America Letter of Intent p.3 of 3
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