EXHIBIT 10.28
SECURITY AGREEMENT
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THIS SECURITY AGREEMENT is made and entered into effective as of
the 20th day of January, 1998, by EQUITY UNDERWRITING GROUP, INC., a
Kentucky corporation, with address of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as "Debtor"); and
BANK ONE, KENTUCKY, NA, a national banking association, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as
"Secured Party").
IT IS AGREED BY THE PARTIES AS FOLLOWS:
I. For value received, Debtor does hereby grant unto Secured Party a
security interest in and to all the collateral described in
numerical Paragraph two (2) hereof to secure all the indebtedness
referred to in numerical Paragraph three (3) hereof.
II. The collateral covered by this Security Agreement is (a) all of
Debtor's property described in Schedule A hereto and any
supplemental exhibits thereto, and (b) all proceeds and products
thereof (all of which collateral is hereinafter collectively
referred to as the "Collateral").
III. This Security Agreement is made as collateral security for:
A. The payment of all sums due to Secured Party from Debtor and
the other maker under the terms of that certain
$1,250,000.00 Term Note dated as of January 20, 1998 (the
"Note"); and
B. All other liabilities and obligations of whatever kind or
type of Debtor to Secured Party, including any guarantees of
the Debtor to Secured Party, whether created directly or
acquired by Secured Party by assignment or otherwise,
whether now existing or hereafter created, arising or
acquired, absolute or contingent, joint or several, due or
to become due (the foregoing obligations are herein
collectively referred to as "Indebtedness").
IV. Debtor represents and warrants to Secured Party that:
A. All of the Collateral is used or will be used for business.
B. Debtor is the absolute owner of the legal and beneficial
title to the Collateral, (exclusive of hereafter acquired,
replacement or hereafter created items), and is in full
possession thereof.
C. Except as previously disclosed in writing, the Collateral is
free and clear of all liens, encumbrances and adverse claims
whatsoever;
D. Debtor has the right to enter into this Security Agreement.
V. Debtor covenants and agrees that:
A. Debtor shall defend the Collateral against the claims and
demands of all persons.
B. Debtor shall not:
1. permit any loan or security interest (other than
Secured Party's security interest granted herein and
those liens previously disclosed in writing) to attach
to any of the Collateral;
2. permit any of the Collateral to be levied upon under
any legal process; or
3. dispose of or enter or agree to enter into any sale of
any of the Collateral, which is in excess of
$50,000.00 per sale and $100,000.00 in the aggregate
on an annual basis, whether or not inventory, without
prior written consent of Secured Party.
C. Debtor shall insure or have insured the tangible Collateral
for the benefit of Secured Party (who shall be the loss
payee) in such amounts, for such risks and with such company
as Secured Party may request, and promptly deliver all
policies with respect thereto to Secured Party, or in the
event Debtor at any time has not maintained and delivered to
Secured Party such requested policies of insurance, Secured
Party shall, in its sole and absolute discretion, whether or
not any Event of Default, as defined in this Security
Agreement, has occurred, have the right to place and effect
such insurance as Secured Party deems appropriate at the
Debtor's expense and in the event Secured Party elects to
pay for such insurance coverage, Debtor shall reimburse
Secured Party for the amount(s) so paid plus interest
thereon at the default rate of interest due under the Note.-
D. Debtor shall keep the Collateral consisting of tangible
property in good condition.
E. Debtor shall advise Secured Party in writing, at least
thirty (30) days prior thereto, of any change in Debtor's
place of business or mailing address.
F. Debtor shall not conduct business under any other name than
that given above nor change or reorganize the type of
business entity under which it does business except upon
prior written approval of Secured Party. If such approval
is given, Debtor agrees that all documents, instruments and
agreements demanded by Secured Party shall be prepared and
filed at Debtor's expense before such change of name or
business entity occurs.
G. Debtor shall execute and deliver to Secured Party upon
request new UCC-1 Financing Statements describing the same
Collateral specified herein for recordation where necessary
in Secured Party's sole discretion to perfect Secured
Party's security interest in the Collateral, and Debtor
shall pay all filing and recording fees and filing and
recording taxes in connection with the filing and/or
recordation of such Statements, and, if paid by the Secured
Party, Debtors will reimburse Secured Party therefor upon
demand of Secured Party.
H. Debtor hereby irrevocably appoints Secured Party as Debtor's
attorney-in-fact to do all acts and things which Secured
Party may deem necessary or appropriate to perfect and
continue perfected the security interest created by this
Security Agreement and to protect and, in case of an Event
of Default hereunder, sell the Collateral, including, but
not limited to, the execution in Debtor's name as Debtor's
irrevocable attorney-in-fact:
1. notifications and agreements to sell where sale is
permitted,
2. any documents or papers necessary or helpful to comply
with the terms of any agreements relative to any of
the Collateral, and
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3. UCC-1 (and other) Financing Statements covering the
Collateral and filing and recordation of same wherever
Secured Party deems appropriate, with Debtor to
reimburse Secured Party for all filing and recording
fees, taxes and other expenses in connection therewith
upon demand of Secured Party.
Provided, however, the power of attorney granted hereby shall
survive the disability of the principal but when all the Indebtedness is
fully paid and performed and Debtor has no obligation to or commitment
for loan(s) from Secured Party, this power of attorney shall become null
and void upon Secured Party's receipt of written notification from
Debtor to such effect.
I. The Indebtedness shall be paid to Secured Party in
accordance with the terms thereof.
J. Debtor shall comply in all respects with any other agreement
between Debtor and Secured Party.
K. Debtor shall permit Secured Party and/or its agents to
inspect and appraise the Collateral and inspect the books
and records of Debtor at all reasonable times and from time
to time, and shall pay all expenses Secured Party may incur
in connection with any such inspection(s) and appraisal(s).
VI. Upon the occurrence of any "Event of Default," which, for the
purposes of this Security Agreement means any default in, or
breach of, any covenant, agreement, representation or warranty by
Debtor under the provisions of any document evidencing any of the
Indebtedness or other obligations of Debtor to Secured Party or of
any other agreement regarding any of the Indebtedness, this
Security Agreement, the Note, and any mortgage(s) or other
security agreement(s) securing or otherwise relating to any of the
Indebtedness, Secured Party shall have all rights and remedies in
and against the Collateral and otherwise of a secured party under
the Uniform Commercial Code and the other applicable law of
Kentucky (and all such other states where any part of the
Collateral may be located, if applicable) and all other applicable
laws and all rights provided herein, in all other documents
evidencing, securing or related to any of the Indebtedness, or in
any other applicable security or loan agreement, all of which
rights and remedies shall, to the full extent permitted by law, be
cumulative. In addition, Secured Party may require Debtor, at
Debtor's sole expense, to assemble the Collateral and make it
available to Secured Party at the place or places to be designated
by Secured Party and Debtor. Secured Party shall have the right
to sell the Collateral at public or private sale. Debtor agrees
to pay to Secured Party, as part of the Indebtedness, all amounts
paid by Secured Party, including, but not limited to:
A. Secured Party's attorney's fees, to the extent not
prohibited by applicable law, in connection with the
enforcement of any of Debtor's obligations hereunder or
contained in the documents evidencing the Indebtedness, with
interest thereon at the highest rate provided for in any of
the Indebtedness;
B. taxes, levies and prior liens and insurance on, repairs to,
maintenance of, or transporting or otherwise caring for, the
Collateral; and
C. expenses incurred in taking possession of or preserving the
Collateral.
VII. The requirement of reasonable notice of the time and place of
disposition of Collateral by Secured Party shall be conclusively
deemed to have been met if such notice is mailed, postage prepaid,
to Debtor's address specified above at least ten (10) days before
the time of the sale or
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disposition. Secured Party may bid upon and purchase any or all
of the Collateral at any public sale thereof. Secured Party may
dispose of all or any part of the Collateral at one or more times
and from time to time and in one or more lots or parcels, and upon
such terms and conditions, including a credit sale, as Secured
Party determines in its sole discretion. Secured Party shall
apply the net proceeds of any such disposition of the Collateral
(after deducting therefrom all costs incurred in connection
therewith, or incidental to the holding, preparing for sale, in
whole or in part, of the Collateral, including Secured Party's
attorney's fees and court costs) to the Indebtedness and any other
obligations of Debtor to Secured Party in the order elected by
Secured Party in its sole discretion, and any remaining proceeds
shall be paid to the Debtor or such other party as is entitled
thereto.
VIII. This is a continuing Security Agreement and all the rights, powers
and remedies hereunder shall apply to all past, present and future
indebtedness of Debtor to Secured Party, including any
indebtedness arising under subsequent transactions which shall
either continue the Indebtedness, increase or decrease it, or from
time to time create new indebtedness or additional indebtedness
whether or not all or any prior indebtedness has been satisfied,
and notwithstanding the death, incapacity or bankruptcy of Debtor,
or any other event or proceeding affecting Debtor.
IX. The rights, powers and remedies given to Secured Party by this
Security Agreement shall be in addition to all rights, powers and
remedies given to the Secured Party by virtue of any other
agreement now existing or subsequently entered into by and between
the parties hereto and any statute or rule of law. Secured Party
may exercise its right of set off with respect to the Indebtedness
in the same manner as if the Indebtedness were unsecured. Any
waiver, forbearance, failure or delay by Secured Party in
exercising any right, power or remedy hereunder shall not be
deemed to be a waiver of such right, power or remedy, and any
single or partial exercise of any right, power or remedy hereunder
shall not preclude the further exercise thereof; and every right,
power and remedy of Secured Party shall continue in full force and
effect until such right, power or remedy is specifically waived by
an instrument in writing executed by Secured Party.
X. DEBTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
SECURITY AGREEMENT OR ANY OTHER DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF SECURED PARTY, DEBTOR AND ANY GUARANTORS. DEBTOR
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT TO SECURED PARTY.
XI. The Debtor agrees that the sole proper venue for the determination
of any litigation commenced by either Debtor or Secured Party on
any basis shall be in a court of competent jurisdiction which is
located in Fayette County, Kentucky, and the parties hereby
expressly declare that any other venue shall be improper and
Debtor expressly waives any right to a determination of any such
litigation against Debtor by a court in any other venue. Debtor
further agrees that service of process by any judicial officer or
by registered or certified U.S. mail shall establish personal
jurisdiction over Debtor, and Debtor waives any rights under the
laws of any state to object to jurisdiction within the
Commonwealth of Kentucky. The aforesaid means of obtaining
personal jurisdiction and perfecting service of process are not
intended to be exclusive, but are cumulative and in addition to
all other means of obtaining personal jurisdiction and perfecting
service of process now or hereafter provided by the laws of the
Commonwealth of Kentucky or by any other state in an action
brought by Secured Party in such state.
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XII. The laws of the Commonwealth of Kentucky shall govern the
construction of this Security Agreement and the rights, remedies
and duties of the parties hereto, unless the laws of the state
where the Collateral or part thereof is situated dictate that the
laws of such other state shall govern with respect thereto.
XIII. This Security Agreement shall bind Debtor and Debtor's heirs,
successors and assigns and shall inure to the benefit of Security
Party and its successors and assigns.
XIV. Time shall be of the essence in the performance of each of the
Debtor's obligations under this Security Agreement.
XV. A judicial decree, order or judgment holding any provision herein
invalid or unenforceable shall not in any way impair or preclude
enforcement of the remaining provisions herein, and shall not in
any way impair or preclude enforcement of rights or remedies of
Secured Party under Chapter 355 of the Kentucky Revised Statutes,
or other applicable law.
XVI. This Security Agreement may, in the sole discretion of Secured
Party, be filed as a financing statement and Debtor agrees to also
execute any additional financing statements with respect hereto
which may be requested by Secured Party. Secured Party may, in
its sole discretion, attach this Security Agreement or any other
document executed pursuant hereto or in connection herewith with
any person or organization which registers, sells or is in any
manner involved with any or all of the Collateral. Secured Party
shall be entitled to notify the person in possession of the
Collateral, or any other person Secured Party deems appropriate of
the security interest herein granted and to notify such person or
entity to forward all documents with respect to the Collateral to
Secured Party and otherwise as Secured Party deems appropriate.
IN TESTIMONY WHEREOF, witness the signature of the parties hereto,
to be effective the day, month and year first above written.
EQUITY UNDERWRITING GROUP, INC.
BY: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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TITLE: President
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BANK ONE, KENTUCKY, NA
BY: /s/ ▇. ▇. ▇▇▇▇▇▇
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TITLE: Executive Vice President
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