EXHIBIT 10.35
SECURITY AGREEMENT
This Security Agreement (the "Agreement") is dated as of December 15,
1997, between NATIONAL HEALTH BENEFIT & CASUALTY CORPORATION, a Nevada
corporation (the "Debtor"), with its mailing address as set forth in Section
12(b) hereof, and ▇▇▇▇▇▇ TRUST AND SAVINGS BANK, an Illinois banking corporation
(the "Secured Party"), with its mailing address as set forth in Section 12(b)
hereof.
PRELIMINARY STATEMENT
A. The Champion Financial Corporation, a Utah corporation (the
"Borrower"), has requested that the Secured Party extend credit or otherwise
make financial accommodations available to or for the account of the Borrower.
B. As a condition to extending credit or otherwise making financial
accommodations available to or for the account of the Borrower, the Secured
Party requires, among other things, that the Debtor guarantee all of the
indebtedness, obligations, and liabilities of the Borrower to the Bank and grant
the Secured Party a security interest in the Debtor's personal property
described herein subject to the terms and conditions hereof.
C. The Borrower owns, directly or indirectly, all or substantially all
of the equity interests in the Debtor and the Borrower provides the Debtor with
financial, management, administrative, and technical support which enables the
Debtor to conduct its business in an orderly and efficient manner in the
ordinary course.
D. The Debtor will benefit, directly or indirectly, from credit and
other financial accommodations extended by the Bank to the Borrower.
NOW, THEREFORE, in consideration of the benefits accruing to the
Debtor, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Grant of Security Interest. The Debtor hereby grants to the
Secured Party a lien on and security interest in, and acknowledges and agrees
that the Secured Party has and
shall continue to have a continuing lien on and security interest in, any and
all right, title and interest of the Debtor, whether now owned or existing or
hereafter created, acquired or arising, in and to the following:
(a) Receivables. All Receivables, whether now owned or
existing or hereafter created, acquired or arising, and however
evidenced or acquired, or in which the Debtor now has or hereafter
acquires any rights (the term "Receivables" means and includes all
accounts, accounts receivable, contract rights, instruments, notes,
drafts, acceptances, documents, chattel paper, and all other forms of
obligations owing to the Debtor, any right of the Debtor to payment for
goods sold or leased or for services rendered, whether or not earned by
performance, and all of the Debtor's rights to any merchandise and
other goods (including, without limitation, any returned or repossessed
goods and the right of stoppage in transit) which is represented by,
arises from or is related to any of the foregoing);
(b) General Intangibles. All General Intangibles, whether now
owned or existing or hereafter created, acquired or arising, or in
which the Debtor now has or hereafter acquires any rights (the term
"General Intangibles" means and includes all general intangibles,
patents, patent applications, patent licenses, trademarks, trademark
registrations, trademark licenses, trade styles, trade names,
copyrights, copyright registrations, copyright licenses and other
licenses and similar intangibles, all customer, client and supplier
lists (in whatever form maintained), all rights in leases and other
agreements relating to real or personal property, all causes of action
and tax refunds of every kind and nature, all privileges, franchises,
immunities, licenses, permits and similar intangibles, all rights to
receive payments in connection with the termination of any pension plan
or employee stock ownership plan or trust established for the benefit
of employees of the Debtor, and all other personal property (including
things in action) not otherwise covered by this Agreement);
(c) Inventory. All Inventory, whether now owned or existing or
hereafter created, acquired or arising, or in which the Debtor now has
or hereafter acquires any rights, and all documents of title at any
time evidencing or representing any part thereof (the term "Inventory"
means and includes all inventory and any other goods which are held for
sale or lease or are to be furnished under contracts of service or
consumed in the Debtor's business, all goods which are raw materials,
work-in-process or finished goods, all goods which are returned or
repossessed goods, and all materials and supplies of every kind and
nature used or usable in connection with the acquisition, manufacture,
processing, supply, servicing, storing, packing, shipping, advertising,
selling, leasing or furnishing of the foregoing, and any constituents
or ingredients thereof;
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(d) Equipment. All Equipment, whether now owned or existing or
hereafter created, acquired or arising, or in which the Debtor now has
or hereafter acquires any rights (the term "Equipment" means and
includes all equipment and any other machinery, tools, fixtures, trade
fixtures, furniture, furnishings, office equipment, vehicles (including
vehicles subject to a certificate of title law), and all other goods
now or hereafter used or usable in connection with the Debtor's
business, together with all parts, accessories and attachments relating
to any of the foregoing);
(e) Investment Property. All Investment Property, whether now
owned or existing or hereafter created, acquired or arising, or in
which the Debtor now has or hereafter acquires any rights (the term
"Investment Property" means and includes all investment property and
any other securities (whether certificated or uncertificated), security
entitlements, securities accounts, commodity contracts and commodity
accounts, including all substitutions and additions thereto, all
dividends, distributions and sums distributable or payable from, upon,
or in respect of such property, and all rights and privileges incident
to such property);
(f) Deposits and Property in Possession. All deposit accounts
(whether general, special or otherwise) of the Debtor maintained with
the Secured Party and all sums now or hereafter on deposit therein or
payable thereon, and all other personal property and interests in
personal property of the Debtor of any kind or description now held by
the Secured Party or at any time hereafter transferred or delivered to,
or coming into the possession, custody or control of, the Secured
Party, or any agent or affiliate of the Secured Party, whether
expressly as collateral security or for any other purpose (whether for
safekeeping, custody, collection or otherwise), and all dividends and
distributions on or other rights in connection with any such property,
in each case whether now owned or existing or hereafter created,
acquired or arising;
(g) Records. All supporting evidence and documents relating to
any of the above-described property, whether now owned or existing or
hereafter created, acquired or arising, including, without limitation,
computer programs, disks, tapes and related electronic data processing
media, and all rights of the Debtor to retrieve the same from third
parties, written applications, credit information, account cards,
payment records, correspondence, delivery and installation
certificates, invoice copies, delivery receipts, notes and other
evidences of indebtedness, insurance certificates and the like,
together with all books of account, ledgers and cabinets in which the
same are reflected or maintained;
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(h) Accessions and Additions. All accessions and additions to,
and substitutions and replacements of, any and all of the foregoing,
whether now owned or existing or hereafter created, acquired or
arising; and
(i) Proceeds and Products. All proceeds and products of the
foregoing and all insurance of the foregoing and proceeds thereof,
whether now owned or existing or hereafter created, acquired or
arising;
all of the foregoing being herein sometimes referred to as the "Collateral". All
terms which are used in this Agreement which are defined in the Uniform
Commercial Code of the State of Illinois ("UCC") shall have the same meanings
herein as such terms are defined in the UCC, unless this Agreement shall
otherwise specifically provide.
2. Obligations Hereby Secured. The lien and security interest herein
granted and provided for is made and given to secure, and shall secure, the
payment and performance of (a) any and all indebtedness, obligations and
liabilities of whatsoever kind and nature of the Debtor to the Secured Party
(whether arising before or after the filing of a petition in bankruptcy),
whether direct or indirect, absolute or contingent, due or to become due, and
whether now existing or hereafter arising and howsoever held, evidenced or
acquired, and whether several, joint or joint and several, (b) any and all
indebtedness, obligations and liabilities of whatsoever kind and nature of the
Borrower to the Secured Party (whether arising before or after the filing of a
petition in bankruptcy), whether direct or indirect, absolute or contingent, due
or to become due, and whether now existing or hereafter arising and howsoever
held, evidenced or acquired, and whether several, joint or joint and several and
(c) any and all expenses and charges, legal or otherwise, suffered or incurred
by the Secured Party in collecting or enforcing any of such indebtedness,
obligations or liabilities or in realizing on or protecting or preserving any
security therefor, including, without limitation, the lien and security interest
granted hereby (all of the foregoing being hereinafter referred to as the
"Obligations"). Notwithstanding anything herein to the contrary, the right of
recovery hereunder against the Debtor with respect to the Obligations shall be
limited to $1 less than the amount of the lowest claim hereunder against the
Collateral which would render this Agreement void or voidable under applicable
law.
3. Covenants, Agreements, Representations and Warranties. The Debtor
hereby covenants and agrees with, and represents and warrants to, the Secured
Party that:
(a) The Debtor is a corporation duly organized and validly existing in
good standing under the laws of the State of Nevada, is the sole and lawful
owner of the Collateral, and has full right, power and authority to enter into
this Agreement and to perform each and all of the matters and things herein
provided for. The execution and delivery of this Agreement, and the observance
and performance of each of the matters and things herein set forth, will not
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(i) contravene or constitute a default under any provision of law or any
judgment, injunction, order or decree binding upon the Debtor or any provision
of the Debtor's articles of incorporation or by-laws or any covenant, indenture
or agreement of or affecting the Debtor or any of its property or (ii) result in
the creation or imposition of any lien or encumbrance on any property of the
Debtor except for the lien and security interest granted to the Secured Party
hereunder. The Debtor's Federal tax identification number is ▇▇-▇▇▇▇▇▇▇.
(b) The Debtor's chief executive office and principal place of business
is at, and the Debtor keeps and shall keep all of its books and records relating
to Receivables only at, ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇;
and the Debtor has no other executive offices or places of business other than
those listed under Item 1 on Schedule A. The Collateral is and shall remain in
the Debtor's possession or control at the locations listed under Item 2 on
Schedule A attached hereto (collectively, the "Permitted Collateral Locations").
If for any reason any Collateral is at any time kept or located at a location
other than a Permitted Collateral Location, the Secured Party shall nevertheless
have and retain a lien on and security interest therein. The Debtor owns and
shall at all times own all Permitted Collateral Locations, except to the extent
otherwise disclosed under Item 2 on Schedule A. The Debtor shall not move its
chief executive office or maintain a place of business at a location other than
those specified under Item 1 on Schedule A or permit the Collateral to be
located at a location other than those specified under Item 2 on Schedule A, in
each case without first providing the Secured Party 30 days' prior written
notice of the Debtor's intent to do so; provided that the Debtor shall at all
times maintain its chief executive office and, unless otherwise specifically
agreed to in writing by the Secured Party, Permitted Collateral Locations in the
United States of America and, with respect to any new chief executive office or
place of business or location of Collateral, the Debtor shall have taken all
action requested by the Secured Party to maintain the lien and security interest
of the Secured Party in the Collateral at all times fully perfected and in full
force and effect.
(c) The Debtor has not invoiced Receivables or otherwise transacted
business at any time during the immediately preceding five-year period, and does
not currently invoice Receivables or otherwise transact business, under any
trade names other than the Debtor's name set forth in the introductory paragraph
of this Agreement. The Debtor shall not change its name or transact business
under any other trade name without first giving 30 days' prior written notice of
its intent to do so to the Secured Party.
(d) The Collateral and every part thereof is and shall be free and
clear of all security interests, liens (including, without limitation,
mechanics', laborers' and statutory liens), attachments, levies and encumbrances
of every kind, nature and description, whether voluntary or involuntary, except
for the lien and security interest of the Secured Party therein and as otherwise
permitted by Section 8.10 of that certain Credit Agreement dated as of even date
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herewith between the Borrower and the Secured Party, as the same may be amended
or modified from time to time, including amendments and restatements of the same
in its entirety (hereinafter, the "Credit Agreement"). The Debtor shall warrant
and defend the Collateral against any claims and demands of all persons at any
time claiming the same or any interest in the Collateral adverse to the Secured
Party.
(e) The Debtor shall promptly pay when due all taxes, assessments and
governmental charges and levies upon or against the Debtor or any of the
Collateral, in each case before the same become delinquent and before penalties
accrue thereon, unless and to the extent that the same are being contested in
good faith by appropriate proceedings which prevent foreclosure or other
realization upon any of the Collateral and preclude interference with the
operation of the Debtor's business in the ordinary course, and the Debtor shall
have established adequate reserves therefor.
(f) The Debtor shall not use, manufacture, sell or distribute any
Collateral in violation of any statute, ordinance or other governmental
requirement. The Debtor shall not waste or destroy the Collateral or any part
thereof or be negligent in the care or use of any Collateral. The Debtor shall
perform in all material respects its obligations under any contract or other
agreement constituting part of the Collateral, it being understood and agreed
that the Secured Party has no responsibility to perform such obligations.
(g) Subject to Sections 4(b), 6(b), 6(c), and 7(c) hereof, the Debtor
shall not, without the Secured Party's prior written consent, sell, assign,
mortgage, lease or otherwise dispose of the Collateral or any interest therein.
(h) The Debtor shall at all times insure the Collateral consisting of
tangible personal property against such risks and hazards as other persons
similarly situated insure against, and including in any event loss or damage by
fire, theft, burglary, pilferage, loss in transit and such other hazards as the
Secured Party may specify. All insurance required hereby shall be maintained in
amounts and under policies and with insurers reasonably acceptable to the
Secured Party, and all such policies shall contain loss payable clauses naming
the Secured Party as loss payee as its interest may appear (and, if the Secured
Party requests, naming the Secured Party as an additional insured therein) in a
form acceptable to the Secured Party. All premiums on such insurance shall be
paid by the Debtor. Certificates of insurance evidencing compliance with the
foregoing and, at the Secured Party's request, the policies of such insurance
shall be delivered by the Debtor to the Secured Party. All insurance required
hereby shall provide that any loss shall be payable to the Secured Party
notwithstanding any act or negligence of the Debtor, shall provide that no
cancellation thereof shall be effective until at least 30 days after receipt by
the Debtor and the Secured Party of written notice thereof, and shall be
satisfactory to the Secured Party in all other respects. In case of any material
loss, damage to or destruction of the Collateral
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or any part thereof, the Debtor shall promptly give written notice thereof to
the Secured Party generally describing the nature and extent of such damage or
destruction. In case of any loss, damage to or destruction of the Collateral or
any part thereof, the Debtor, whether or not the insurance proceeds, if any,
received on account of such damage or destruction shall be sufficient for that
purpose, at the Debtor's cost and expense, shall promptly repair or replace the
Collateral so lost, damaged or destroyed, except to the extent such Collateral,
prior to its loss, damage or destruction, had become uneconomical, obsolete or
worn out and is not necessary for or of importance to the proper conduct of the
Debtor's business in the ordinary course. In the event the Debtor shall receive
any proceeds of such insurance, the Debtor shall immediately pay over such
proceeds to the Secured Party. The Debtor hereby authorizes the Secured Party,
at the Secured Party's option, to adjust, compromise and settle any losses under
any insurance afforded at any time during the existence of any Event of Default
or any other event or condition which with the lapse of time or the giving of
notice, or both, would constitute an Event of Default, and the Debtor does
hereby irrevocably constitute the Secured Party, and each of its nominees,
officers, agents, attorneys, and any other person whom the Secured Party may
designate, as the Debtor's attorneys-in-fact, with full power and authority to
effect such adjustment, compromise and/or settlement and to endorse any drafts
drawn by an insurer of the Collateral or any part thereof and to do everything
necessary to carry out such purposes and to receive and receipt for any unearned
premiums due under policies of such insurance. Unless the Secured Party elects
to adjust, compromise or settle losses as aforesaid, any adjustment, compromise
and/or settlement of any losses under any insurance shall be made by the Debtor
subject to final approval of the Secured Party (regardless of whether or not an
Event of Default shall have occurred) in the case of losses exceeding $100,000.
Net insurance proceeds received by the Secured Party under the provisions hereof
or under any policy of insurance covering the Collateral or any part thereof
shall be applied to the reduction of the Obligations (whether or not then due);
provided, however, that the Secured Party may in its sole discretion release any
or all such insurance proceeds to the Debtor. All insurance proceeds shall be
subject to the lien and security interest of the Secured Party hereunder.
UNLESS THE DEBTOR PROVIDES THE SECURED PARTY WITH EVIDENCE OF THE
INSURANCE COVERAGE REQUIRED BY THIS AGREEMENT, THE SECURED PARTY MAY PURCHASE
INSURANCE AT THE DEBTOR'S EXPENSE TO PROTECT THE SECURED PARTY'S INTERESTS IN
THE COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT THE DEBTOR'S INTERESTS
IN THE COLLATERAL. THE COVERAGE PURCHASED BY THE SECURED PARTY MAY NOT PAY ANY
CLAIMS THAT THE DEBTOR MAKES OR ANY CLAIM THAT IS MADE AGAINST THE DEBTOR IN
CONNECTION WITH THE COLLATERAL. THE DEBTOR MAY LATER CANCEL ANY SUCH INSURANCE
PURCHASED BY THE SECURED PARTY, BUT ONLY AFTER PROVIDING THE SECURED PARTY WITH
EVIDENCE THAT THE DEBTOR HAS OBTAINED INSURANCE AS REQUIRED BY THIS AGREEMENT.
IF THE SECURED PARTY PURCHASES INSURANCE FOR THE COLLATERAL, THE DEBTOR WILL BE
RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING INTEREST
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AND ANY OTHER CHARGES THAT THE SECURED PARTY MAY IMPOSE IN CONNECTION WITH THE
PLACEMENT OF THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR
EXPIRATION OF THE INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO THE
OBLIGATIONS SECURED HEREBY. THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST
OF INSURANCE THE DEBTOR MAY BE ABLE TO OBTAIN ON ITS OWN.
(i) The Debtor shall at all times allow the Secured Party and its
representatives free access to and right of inspection of the Collateral.
(j) If any Collateral is in the possession or control of any of the
Debtor's agents or processors and the Secured Party so requests, the Debtor
agrees to notify such agents or processors in writing of the Secured Party's
security interest therein and instruct them to hold all such Collateral for the
Secured Party's account and subject to the Secured Party's instructions. The
Debtor shall, upon the request of the Secured Party, authorize and instruct all
bailees and other parties, if any, at any time processing, labeling, packaging,
holding, storing, shipping or transferring all or any part of the Collateral to
permit the Secured Party and its representatives to examine and inspect any of
the Collateral then in such party's possession and to verify from such party's
own books and records any information concerning the Collateral or any part
thereof which the Secured Party or its representatives may seek to verify. As to
any premises not owned by the Debtor wherein any of the Collateral is located,
the Debtor shall, unless the Secured Party requests otherwise, cause each party
having any right, title or interest in, or lien on, any of such premises to
enter into an agreement (any such agreement to contain a legal description of
such premises) whereby such party disclaims any right, title and interest in,
and lien on, the Collateral and allows the removal of such Collateral by the
Secured Party and is otherwise in form and substance acceptable to the Secured
Party; provided, however, that no such agreement need be obtained with respect
to any one location wherein the value of the Collateral as to which such
agreement has not been obtained aggregates less than $100,000 at any one time.
(k) The Debtor agrees from time to time to deliver to the Secured Party
such evidence of the existence, identity and location of the Collateral and of
its availability as collateral security pursuant hereto (including, without
limitation, schedules describing all Receivables created or acquired by the
Debtor, copies of customer invoices or the equivalent and original shipping or
delivery receipts for all merchandise and other goods sold or leased or services
rendered, together with the Debtor's warranty of the genuineness thereof, and
reports stating the book value of Inventory and Equipment by major category and
location), in each case as the Secured Party may reasonably request. The Secured
Party shall have the right to verify all or any part of the Collateral in any
manner, and through any medium, which the Secured Party considers appropriate
(including, without limitation, the verification of Collateral by use of a
fictitious name), and the Debtor agrees to furnish all assistance and
information, and perform any acts, which the Secured Party may require in
connection therewith. The Debtor shall promptly notify
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the Secured Party of any Collateral which the Debtor has determined to have been
rendered obsolete, stating the prior book value of such Collateral, its type and
location.
(l) The Debtor shall comply in all material respects with the terms and
conditions of all leases, easements, right-of-way agreements and other similar
agreements binding upon the Debtor or affecting the Collateral or any part
thereof, and all orders, ordinances, laws and statutes of any city, state or
other governmental entity, department or agency having jurisdiction with respect
to the premises wherein such Collateral is located or the conduct of business
thereon.
(m) The Debtor agrees to execute and deliver to the Secured Party such
further agreements, assignments, instruments and documents and to do all such
other things as the Secured Party may deem necessary or appropriate to assure
the Secured Party its lien and security interest hereunder, including such
financing statements, and amendments thereof or supplements thereto, and such
other instruments and documents as the Secured Party may from time to time
require in order to comply with the UCC. The Debtor hereby agrees that a carbon,
photographic or other reproduction of this Agreement or any such financing
statement is sufficient for filing as a financing statement by the Secured Party
without notice thereof to the Debtor wherever the Secured Party in its sole
discretion desires to file the same. In the event for any reason the law of any
jurisdiction other than Illinois becomes or is applicable to the Collateral or
any part thereof, or to any of the Obligations, the Debtor agrees to execute and
deliver all such instruments and documents and to do all such other things as
the Secured Party in its sole discretion deems necessary or appropriate to
preserve, protect and enforce the lien and security interest of the Secured
Party under the law of such other jurisdiction. The Debtor agrees to ▇▇▇▇ its
books and records to reflect the lien and security interest of the Secured Party
in the Collateral.
(n) On failure of the Debtor to perform any of the covenants and
agreements herein contained, the Secured Party may, at its option, perform the
same and in so doing may expend such sums as the Secured Party may deem
advisable in the performance thereof, including, without limitation, the payment
of any insurance premiums, the payment of any taxes, liens and encumbrances,
expenditures made in defending against any adverse claims, and all other
expenditures which the Secured Party may be compelled to make by operation of
law or which the Secured Party may make by agreement or otherwise for the
protection of the security hereof. All such sums and amounts so expended shall
be repayable by the Debtor immediately without notice or demand, shall
constitute additional Obligations secured hereunder and shall bear interest from
the date said amounts are expended at the rate per annum (computed on the basis
of a 360-day year for the actual number of days elapsed) determined by adding 2%
to the rate per annum from time to time announced by ▇▇▇▇▇▇ Trust and Savings
Bank as its prime commercial rate with any change in such rate per annum as so
determined by reason of a change in such prime commercial rate to be effective
on the date of such change in said prime commercial rate
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(such rate per annum as so determined being hereinafter referred to as the
"Default Rate"). No such performance of any covenant or agreement by the Secured
Party on behalf of the Debtor, and no such advancement or expenditure therefor,
shall relieve the Debtor of any default under the terms of this Agreement or in
any way obligate the Secured Party to take any further or future action with
respect thereto. The Secured Party, in making any payment hereby authorized, may
do so according to any ▇▇▇▇, statement or estimate procured from the appropriate
public office or holder of the claim to be discharged without inquiry into the
accuracy of such ▇▇▇▇, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien or title or claim. The Secured Party, in
performing any act hereunder, shall be the sole judge of whether the Debtor is
required to perform same under the terms of this Agreement. The Secured Party is
hereby authorized to charge any depository or other account of the Debtor
maintained with the Secured Party for the amount of such sums and amounts so
expended.
4. Special Provisions Re: Receivables.
(a) As of the time any Receivable becomes subject to the security
interest provided for hereby, and at all times thereafter, the Debtor shall be
deemed to have warranted as to each and all of such Receivables that all
warranties of the Debtor set forth in this Agreement are true and correct with
respect to each such Receivable; that each Receivable and all papers and
documents relating thereto are genuine and in all respects what they purport to
be; that each Receivable is valid and subsisting and, if such Receivable is an
account, arises out of a bona fide sale of goods sold and delivered by the
Debtor to, or in the process of being delivered to, or out of and for services
theretofore actually rendered by the Debtor to, the account debtor named
therein; that no such Receivable is evidenced by any instrument or chattel paper
unless such instrument or chattel paper has theretofore been endorsed by the
Debtor and delivered to the Secured Party (except to the extent the Secured
Party specifically requests the Debtor not to do so with respect to any such
instrument or chattel paper); that no surety bond was required or given in
connection with such Receivable or the contracts or purchase orders out of which
the same arose; that the amount of the Receivable represented as owing is the
correct amount actually and unconditionally owing, except for normal cash
discounts on normal trade terms in the ordinary course of business if such
Receivable is an account; and that the amount of such Receivable represented as
owing is not disputed and is not subject to any set-offs, credits, deductions or
countercharges other than those arising in the ordinary course of the Debtor's
business which are disclosed to the Secured Party in writing promptly upon the
Debtor becoming aware thereof. Without limiting the foregoing, if any Receivable
arises out of a contract with the United States of America, or any state or
political subdivision thereof, or any department, agency or instrumentality of
any of the foregoing, the Debtor agrees to notify the Secured Party and execute
whatever instruments and documents are required by the Secured Party in order
that such Receivable shall be assigned to the Secured Party and that proper
notice of such assignment shall
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be given under the federal Assignment of Claims Act (or any successor statute)
or any similar state or local statute, as the case may be.
(b) Unless and until an Event of Default occurs, any merchandise or
other goods which are returned by a customer or account debtor or otherwise
recovered may be resold by the Debtor in the ordinary course of its business as
presently conducted in accordance with Section 6(b) hereof; and, during the
existence of any Event of Default, such merchandise and other goods shall be set
aside at the request of the Secured Party and held by the Debtor as trustee for
the Secured Party and shall remain part of the Secured Party's Collateral.
Unless and until an Event of Default occurs, the Debtor may settle and adjust
disputes and claims with its customers and account debtors, handle returns and
recoveries and grant discounts, credits and allowances in the ordinary course of
its business as presently conducted for amounts and on terms which the Debtor in
good faith considers advisable; and, during the existence of any Event of
Default, unless the Secured Party requests otherwise, the Debtor shall notify
the Secured Party promptly of all returns and recoveries and, on the Secured
Party's request, deliver any such merchandise or other goods to the Secured
Party. During the existence of any Event of Default, unless the Secured Party
requests otherwise, the Debtor shall also notify the Secured Party promptly of
all disputes and claims and settle or adjust them at no expense to the Secured
Party, but no discount, credit or allowance other than on normal trade terms in
the ordinary course of business as presently conducted shall be granted to any
customer or account debtor and no returns of merchandise or other goods shall be
accepted by the Debtor without the Secured Party's consent. The Secured Party
may, at all times during the existence of any Event of Default, settle or adjust
disputes and claims directly with customers or account debtors for amounts and
upon terms which the Secured Party considers advisable.
5. Collection of Receivables.
(a) Except as otherwise provided in this Agreement, the Debtor shall
make collection of all Receivables and may use the same to carry on its business
in accordance with sound business practice and otherwise subject to the terms
hereof.
(b) Upon the occurrence of any Event of Default or of any event or
condition which with the lapse of time or the giving of notice, or both, would
constitute an Event of Default, whether or not the Secured Party has exercised
any or all of its rights under other provisions of this Section 5, in the event
the Secured Party requests the Debtor to do so:
(i) all instruments and chattel paper at any time constituting
part of the Receivables or any other Collateral (including any
postdated checks) shall, upon receipt by the Debtor, be immediately
endorsed to and deposited with the Secured Party; and/or
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(ii) the Debtor shall instruct all customers and account
debtors to remit all payments in respect of Receivables or any other
Collateral to a lockbox or lockboxes under the sole custody and control
of the Secured Party and which are maintained at post office(s) in
Chicago, Illinois selected by the Secured Party.
(c) Upon the occurrence of any Event of Default or of any event or
condition which with the lapse of time or the giving of notice, or both, would
constitute an Event of Default, whether or not the Secured Party has exercised
any or all of its rights under other provisions of this Section 5, the Secured
Party or its designee may notify the Debtor's customers and account debtors at
any time that Receivables or any other Collateral have been assigned to the
Secured Party or of the Secured Party's security interest therein, and either in
its own name, or the Debtor's name, or both, demand, collect (including, without
limitation, through a lockbox analogous to that described in Section 5(b)(ii)
hereof), receive, receipt for, ▇▇▇ for, compound and give acquittance for any or
all amounts due or to become due on Receivables or any other Collateral, and in
the Secured Party's discretion file any claim or take any other action or
proceeding which the Secured Party may deem necessary or appropriate to protect
or realize upon the security interest of the Secured Party in the Receivables or
any other Collateral.
(d) Any proceeds of Receivables or other Collateral transmitted to or
otherwise received by the Secured Party pursuant to any of the provisions of
Sections 5(b) or 5(c) hereof may be handled and administered by the Secured
Party in and through a remittance account at the Secured Party, and the Debtor
acknowledges that the maintenance of such remittance account by the Secured
Party is solely for the Secured Party's convenience and that the Debtor does not
have any right, title or interest in such remittance account or any amounts at
any time standing to the credit thereof. The Secured Party may, after the
occurrence and during the continuation of any Event of Default or of any event
or condition which with the lapse of time or the giving of notice, or both,
would constitute an Event of Default, apply all or any part of any proceeds of
Receivables or other Collateral received by it from any source to the payment of
the Obligations (whether or not then due and payable), such applications to be
made in such amounts, in such manner and order and at such intervals as the
Secured Party may from time to time in its discretion determine, but not less
often than once each week. The Secured Party need not apply or give credit for
any item included in proceeds of Receivables or other Collateral until the
Secured Party has received final payment therefor at its office in cash or final
solvent credits current in Chicago, Illinois, acceptable to the Secured Party as
such. However, if the Secured Party does give credit for any item prior to
receiving final payment therefor and the Secured Party fails to receive such
final payment or an item is charged back to the Secured Party for any reason,
the Secured Party may at its election in either instance charge the amount of
such item back against the remittance account or any depository account of the
Debtor maintained with the Secured Party, together with interest thereon at the
Default Rate. Concurrently with each transmission of any proceeds of Receivables
or other Collateral to the remittance account, the
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Debtor shall furnish the Secured Party with a report in such form as the Secured
Party shall reasonably require identifying the particular Receivable or other
Collateral from which the same arises or relates. The Debtor hereby indemnifies
the Secured Party from and against all liabilities, damages, losses, actions,
claims, judgments, costs, expenses, charges and reasonable attorneys' fees
suffered or incurred by the Secured Party because of the maintenance of the
foregoing arrangements; provided, however, that the Debtor shall not be required
to indemnify the Secured Party for any of the foregoing to the extent they arise
solely from the gross negligence or willful misconduct of the Secured Party. The
Secured Party shall have no liability or responsibility to the Debtor for
accepting any check, draft or other order for payment of money bearing the
legend "payment in full" or words of similar import or any other restrictive
legend or endorsement whatsoever or be responsible for determining the
correctness of any remittance.
6. Special Provisions Re: Inventory and Equipment.
(a) The Debtor shall at its own cost and expense maintain, keep and
preserve the Inventory in good and merchantable condition and keep and preserve
the Equipment in good repair, working order and condition, ordinary wear and
tear excepted, and, without limiting the foregoing, make all necessary and
proper repairs, replacements and additions to the Equipment so that the
efficiency thereof shall be fully preserved and maintained.
(b) The Debtor may, until an Event of Default has occurred and is
continuing and thereafter until otherwise notified by the Secured Party, use,
consume and sell the Inventory in the ordinary course of its business, but a
sale in the ordinary course of business shall not under any circumstance include
any transfer or sale in satisfaction, partial or complete, of a debt owing by
the Debtor.
(c) The Debtor may, until an Event of Default has occurred and is
continuing and thereafter until otherwise notified by the Secured Party, sell
obsolete, worn out or unusable Equipment which is concurrently replaced with
similar Equipment at least equal in quality and condition to that sold and owned
by the Debtor free of any lien, charge or encumbrance other than the security
interest granted hereby.
(d) As of the time any Inventory or Equipment becomes subject to the
security interest provided for hereby and at all times thereafter, the Debtor
shall be deemed to have warranted as to any and all of such Inventory and
Equipment that all warranties of the Debtor set forth in this Agreement are true
and correct with respect to such Inventory and Equipment; that all of such
Inventory and Equipment is located at a location set forth pursuant to Section
3(b) hereof; and that, in the case of Inventory, such Inventory is new and
unused and in good and
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merchantable condition. The Debtor warrants and agrees that no Inventory is or
will be consigned to any other person without the Secured Party's prior written
consent.
(e) Upon the Secured Party's request, the Debtor shall at its own cost
and expense cause the lien of the Secured Party in and to any portion of the
Collateral subject to a certificate of title law to be duly noted on such
certificate of title or to be otherwise filed in such manner as is prescribed by
law in order to perfect such lien and shall cause all such certificates of title
and evidences of lien to be deposited with the Secured Party.
(f) Except for Equipment from time to time located on the real estate
described on Schedule B attached hereto and as otherwise disclosed to the
Secured Party in writing, none of the Equipment is or will be attached to real
estate in such a manner that the same may become a fixture.
(g) If any of the Inventory is at any time evidenced by a document of
title, such document shall be promptly delivered by the Debtor to the Secured
Party except to the extent the Secured Party specifically requests the Debtor
not to do so with respect to any such document.
Section 7. Special Provisions Re: Investment Property.
(a) Unless and until an Event of Default has occurred and is continuing
and thereafter until notified to the contrary by the Secured Party pursuant to
Section 9(d) hereof:
(i) The Debtor shall be entitled to exercise all voting and/or
consensual powers pertaining to the Investment Property or any part
thereof, for all purposes not inconsistent with the terms of this
Agreement or any other document evidencing or otherwise relating to any
Obligations; and
(ii) The Debtor shall be entitled to receive and retain all
cash dividends paid upon or in respect of the Investment Property.
(b) At the Secured Party's request, certificates for all securities now
or at any time constituting Investment Property shall be promptly delivered by
the Debtor to the Secured Party duly endorsed in blank for transfer or
accompanied by an appropriate assignment or assignments or an appropriate
undated stock power or powers, in every case sufficient to transfer title
thereto including, without limitation, all stock received in respect of a stock
dividend or resulting from a split-up, revision or reclassification of the
Investment Property or any part thereof or received in addition to, in
substitution of or in exchange for the Investment Property or any part thereof
as a result of a merger, consolidation or otherwise. With respect to any
Investment Property held by a securities intermediary, commodity intermediary,
or other financial intermediary of any kind, at
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the Secured Party's request, the Debtor shall execute and deliver, and shall
cause any such intermediary to execute and deliver, an agreement among the
Debtor, the Secured Party, and such intermediary in form and substance
reasonably satisfactory to the Secured Party which provides, among other things,
for the intermediary's agreement that it shall comply with entitlement orders,
and apply any value distributed on account of any Investment Property maintained
in an account with such intermediary, as directed by the Secured Party without
further consent by the Debtor at any time after the occurrence and during the
continuation of any Event of Default. The Secured Party may at any time, after
the occurrence of an Event of Default or an event or condition which with the
lapse of time or the giving of notice, or both, would constitute an Event of
Default, cause to be transferred into its name or the name of its nominee or
nominees all or any part of the Investment Property hereunder.
(c) Unless and until an Event of Default has occurred and is
continuing, the Debtor may sell or otherwise dispose of any Investment Property,
provided that the Debtor shall not sell or otherwise dispose of any capital
stock of any direct or indirect subsidiary without the prior written consent of
the Secured Party. After the occurrence and during the continuation of any Event
of Default, the Debtor shall not sell all or any part of the Investment Property
without the prior written consent of the Secured Party.
(d) The Debtor represents that on the date of this Agreement, none of
the Investment Property consists of margin stock (as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve System) except to
the extent the Debtor has delivered to the Secured Party a duly executed and
completed Form U-1 with respect to such stock. If at any time the Investment
Property or any part thereof consists of margin stock, the Debtor shall promptly
so notify the Secured Party and deliver to the Secured Party a duly executed and
completed Form U-1 and such other instruments and documents reasonably requested
by the Secured Party in form and substance satisfactory to the Secured Party.
(e) Notwithstanding anything to the contrary contained herein, in the
event any Investment Property is subject to the terms of a separate security
agreement in favor of the Secured Party, the terms of such separate security
agreement shall govern and control unless otherwise agreed to in writing by the
Secured Party.
Section 8. Power of Attorney. In addition to any other powers of
attorney contained herein, the Debtor hereby appoints the Secured Party, its
nominee, and any other person whom the Secured Party may designate, as the
Debtor's attorney-in-fact, with full power to sign the Debtor's name on
verifications of accounts and other Collateral; to send requests for
verification of Collateral to the Debtor's customers, account debtors and other
obligors; to endorse the Debtor's name on any checks, notes, acceptances, money
orders, drafts and any other forms of payment or security that may come into the
Secured Party's possession or on any assignments, stock powers, or other
instruments of transfer relating to the Collateral or any part
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thereof; to sign the Debtor's name on any invoice or ▇▇▇▇ of lading relating to
any Collateral, on claims to enforce collection of any Collateral, on notices to
and drafts against customers and account debtors and other obligors, on
schedules and assignments of Collateral, on notices of assignment and on public
records; to notify the post office authorities to change the address for
delivery of the Debtor's mail to an address designated by the Secured Party; to
receive, open and dispose of all mail addressed to the Debtor; and to do all
things necessary to carry out this Agreement. The Debtor hereby ratifies and
approves all acts of any such attorney and agrees that neither the Secured Party
nor any such attorney will be liable for any acts or omissions nor for any error
of judgment or mistake of fact or law other than such person's gross negligence
or willful misconduct. The Secured Party may file one or more financing
statements disclosing its security interest in any or all of the Collateral
without the Debtor's signature appearing thereon. The Debtor also hereby grants
the Secured Party a power of attorney to execute any such financing statements,
or amendments and supplements to financing statements, on behalf of the Debtor
without notice thereof to the Debtor. The foregoing powers of attorney, being
coupled with an interest, are irrevocable until the Obligations have been fully
paid and satisfied and all agreements of the Secured Party to extend credit to
or for the account of the Borrower have expired or otherwise have been
terminated; provided, however, that the Secured Party agrees, as a personal
covenant to the Debtor, not to exercise the powers of attorney set forth in this
Section unless an Event of Default exists.
9. Defaults and Remedies.
(a) The occurrence of any one or more of the following events shall
constitute an "Event of Default" hereunder:
(i) default in the payment when due (whether by demand, lapse
of time, acceleration or otherwise) of the Obligations or any part
thereof; or
(ii) default in the observance or performance of any covenant
set forth in Sections 5(b), 5(c) or 7(b) hereof or of any provision
hereof requiring the maintenance of insurance on the Collateral or
dealing with the use or remittance of proceeds of Collateral; or
(iii) the occurrence of any event or the existence of any
condition which is specified as an "Event of Default" under the Credit
Agreement.
(b) Upon the occurrence and during the continuation of any Event of
Default, the Secured Party shall have, in addition to all other rights provided
herein or by law, the rights and remedies of a secured party under the UCC
(regardless of whether the UCC is the law of the jurisdiction where the rights
or remedies are asserted and regardless of whether the UCC applies
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to the affected Collateral), and further the Secured Party may, without demand
and without advertisement, notice, hearing or process of law, all of which the
Debtor hereby waives, at any time or times, sell and deliver all or any part of
the Collateral (and any other property of the Debtor attached thereto or found
therein) held by or for it at public or private sale, for cash, upon credit or
otherwise, at such prices and upon such terms as the Secured Party deems
advisable, in its sole discretion. In addition to all other sums due the Secured
Party hereunder, the Debtor shall pay the Secured Party all costs and expenses
incurred by the Secured Party, including reasonable attorneys' fees and court
costs, in obtaining, liquidating or enforcing payment of Collateral or the
Obligations or in the prosecution or defense of any action or proceeding by or
against the Secured Party or the Debtor concerning any matter arising out of or
connected with this Agreement or the Collateral or the Obligations, including,
without limitation, any of the foregoing arising in, arising under or related to
a case under the United States Bankruptcy Code (or any successor statute). Any
requirement of reasonable notice shall be met if such notice is personally
served on or mailed, postage prepaid, to the Debtor in accordance with Section
12(b) hereof at least 10 days before the time of sale or other event giving rise
to the requirement of such notice; provided however, no notification need be
given to the Debtor if the Debtor has signed, after an Event of Default has
occurred, a statement renouncing any right to notification of sale or other
intended disposition. The Secured Party shall not be obligated to make any sale
or other disposition of the Collateral regardless of notice having been given.
The Secured Party may be the purchaser at any such sale. The Debtor hereby
waives all of its rights of redemption from any such sale. The Secured Party may
postpone or cause the postponement of the sale of all or any portion of the
Collateral by announcement at the time and place of such sale, and such sale
may, without further notice, be made at the time and place to which the sale was
postponed or the Secured Party may further postpone such sale by announcement
made at such time and place.
(c) Without in any way limiting the foregoing, upon the occurrence
and during the continuation of any Event of Default, the Secured Party shall
have the right, in addition to all other rights provided herein or by law, to
take physical possession of any and all of the Collateral and anything found
therein, the right for that purpose to enter without legal process any premises
where the Collateral may be found (provided such entry be done lawfully), and
the right to maintain such possession on the Debtor's premises (the Debtor
hereby agreeing to lease such premises without cost or expense to the Secured
Party or its designee if the Secured Party so requests) or to remove the
Collateral or any part thereof to such other places as the Secured Party may
desire. Upon the occurrence and during the continuation of any Event of Default,
the Secured Party shall have the right to exercise any and all rights with
respect to deposit accounts of the Debtor maintained with the Secured Party,
including, without limitation, the right to collect, withdraw and receive all
amounts due or to become due or payable under each such deposit account. Upon
the occurrence and during the continuation of any Event of Default, the Debtor
shall, upon the Secured Party's demand, assemble the Collateral and make it
available to
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the Secured Party at a place designated by the Secured Party. If the Secured
Party exercises its right to take possession of the Collateral, the Debtor shall
also at its expense perform any and all other steps requested by the Secured
Party to preserve and protect the security interest hereby granted in the
Collateral, such as placing and maintaining signs indicating the security
interest of the Secured Party, appointing overseers for the Collateral and
maintaining Collateral records.
(d) Without in any way limiting the foregoing, upon the occurrence and
during the continuation of any Event of Default, all rights of the Debtor to
exercise the voting and/or consensual powers which it is entitled to exercise
pursuant to Section 7(a)(i) hereof and/or to receive and retain the
distributions which it is entitled to receive and retain pursuant to Section
7(a)(ii) hereof, shall, at the option of the Secured Party, cease and thereupon
become vested in the Secured Party, which, in addition to all other rights
provided herein or by law, shall then be entitled solely and exclusively to
exercise all voting and other consensual powers pertaining to the Investment
Property and/or to receive and retain the distributions which the Debtor would
otherwise have been authorized to retain pursuant to Section 7(a)(ii) hereof and
shall then be entitled solely and exclusively to exercise any and all rights of
conversion, exchange or subscription or any other rights, privileges or options
pertaining to any Investment Property as if the Secured Party were the absolute
owner thereof. Without limiting the foregoing, the Secured Party shall have the
right to exchange, at its discretion, any and all of the Investment Property
upon the merger, consolidation, reorganization, recapitalization or other
readjustment of the respective issuer thereof or upon the exercise by or on
behalf of any such issuer or the Secured Party of any right, privilege or option
pertaining to any Investment Property and, in connection therewith, to deposit
and deliver any and all of the Investment Property with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as the Secured Party may determine. In the event the Secured
Party in good faith believes any of the Collateral constitutes restricted
securities within the meaning of any applicable securities laws, any disposition
thereof in compliance with such laws shall not render the disposition
commercially unreasonable.
(e) Without in any way limiting the foregoing, the Debtor hereby grants
to the Secured Party a royalty-free irrevocable license and right to use all of
the Debtor's patents, patent applications, patent licenses, trademarks,
trademark registrations, trademark licenses, trade names, trade styles,
copyrights, copyright applications, copyright licenses, and similar intangibles
in connection with any foreclosure or other realization by the Secured Party on
all or any part of the Collateral. The license and right granted the Secured
Party hereby shall be without any royalty or fee or charge whatsoever.
(f) The powers conferred upon the Secured Party hereunder are solely to
protect its interest in the Collateral and shall not impose on it any duty to
exercise such powers. The Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation
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of Investment Property in its possession if such Collateral is accorded
treatment substantially equivalent to that which the Secured Party accords its
own property, consisting of similar type assets, it being understood, however,
that the Secured Party shall have no responsibility for ascertaining or taking
any action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relating to any such Collateral, whether or not the Secured Party
has or is deemed to have knowledge of such matters. This Agreement constitutes
an assignment of rights only and not an assignment of any duties or obligations
of the Debtor in any way related to the Collateral, and the Secured Party shall
have no duty or obligation to discharge any such duty or obligation. The Secured
Party shall have no responsibility for taking any necessary steps to preserve
rights against any parties with respect to any Collateral or initiating any
action to protect the Collateral against the possibility of a decline in market
value. Neither the Secured Party nor any party acting as attorney for the
Secured Party shall be liable for any acts or omissions or for any error of
judgment or mistake of fact or law other than their gross negligence or willful
misconduct.
(g) Failure by the Secured Party to exercise any right, remedy or
option under this Agreement or any other agreement between the Debtor and the
Secured Party or provided by law, or delay by the Secured Party in exercising
the same, shall not operate as a waiver; and no waiver by the Secured Party
shall be effective unless it is in writing and then only to the extent
specifically stated. The rights and remedies of the Secured Party under this
Agreement shall be cumulative and not exclusive of any other right or remedy
which the Secured Party may have. For purposes of this Agreement, an Event of
Default shall be construed as continuing after its occurrence until the same is
waived in writing by the Secured Party.
10. Application of Proceeds. The proceeds and avails of the Collateral
at any time received by the Secured Party after the occurrence and during the
continuation of any Event of Default shall, when received by the Secured Party
in cash or its equivalent, be applied by the Secured Party as follows:
(i) First, to the payment and satisfaction of all sums paid
and costs and expenses incurred by the Secured Party hereunder or
otherwise in connection herewith, including such monies paid or
incurred in connection with protecting, preserving or realizing upon
the Collateral or enforcing any of the terms hereof, including
reasonable attorneys' fees and court costs, together with any interest
thereon (but without preference or priority of principal over interest
or of interest over principal), to the extent the Secured Party is not
reimbursed therefor by the Debtor; and
(ii) Second, to the payment and satisfaction of the remaining
Obligations, whether or not then due (in whatever order the Secured
Party elects), both for interest and principal.
-▇▇-
▇▇▇ ▇▇▇▇▇▇ shall remain liable to the Secured Party for any deficiency. Any
surplus remaining after the full payment and satisfaction of the foregoing shall
be returned to the Debtor or to whomsoever the Secured Party reasonably
determines is lawfully entitled thereto.
11. Continuing Agreement. This Agreement shall be a continuing
agreement in every respect and shall remain in full force and effect until all
of the Obligations, both for principal and interest, have been fully paid and
satisfied and all agreements of the Secured Party to extend credit to or for the
account of the Borrower have expired or otherwise have been terminated. Upon
such termination of this Agreement, the Secured Party shall, upon the request
and at the expense of the Debtor, forthwith release its security interest
hereunder.
12. Miscellaneous.
(a) This Agreement cannot be changed or terminated orally. All of the
rights, privileges, remedies and options given to the Secured Party hereunder
shall inure to the benefit of its successors and assigns, and all the terms,
conditions, covenants, agreements, representations and warranties of and in this
Agreement shall bind the Debtor and its legal representatives, successors and
assigns, provided that the Debtor may not assign its rights or delegate its
duties hereunder without the Secured Party's prior written consent.
(b) Except as otherwise specified herein, all notices hereunder shall
be in writing (including, without limitation, notice by telecopy) and shall be
given to the relevant party at its address or telecopier number set forth below
(or, if no such address is set forth below, at the address of the Debtor as
shown on the records of the Secured Party), or such other address or telecopier
number as such party may hereafter specify by notice to the other given by
United States certified or registered mail, by telecopy or by other
telecommunication device capable of creating a written record of such notice and
its receipt. Notices hereunder shall be addressed:
to the Debtor at: to the Secured Party at:
National Health Benefit & ▇▇▇▇▇▇ Trust and Savings Bank
Casualty Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Tax-Exempt Institutions Division
Chief Financial Officer Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section and a
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confirmation of such telecopy has been received by the sender, (ii) if given by
mail, five (5) days after such communication is deposited in the mail, certified
or registered with return receipt requested, addressed as aforesaid or (iii) if
given by any other means, when delivered at the addresses specified in this
Section.
(c) The lien and security herein created and provided for stand as
direct and primary security for the Obligations. No application of any sums
received by the Bank in respect of the Collateral or any disposition thereof to
the reduction of the Obligations or any portion thereof shall in any manner
entitle the Debtor to any right, title or interest in or to the Obligations or
any collateral security therefor, whether by subrogation or otherwise, unless
and until all Obligations have been fully paid and satisfied and any commitment
of the Bank to extend credit to the Borrower shall have expired. The Debtor
acknowledges and agrees that the lien and security hereby created and provided
for are absolute and unconditional and shall not in any manner be affected or
impaired by any acts or omissions whatsoever of the Bank or any other holder of
any of the Obligations, and without limiting the generality of the foregoing,
the lien and security hereof shall not be impaired by any acceptance by the Bank
or any holder of any of the Obligations of any other security for or guarantors
upon any of the Obligations or by any failure, neglect or omission on the part
of the Bank or any other holder of any of the Obligations to realize upon or
protect any of the Obligations or any collateral security therefor. The lien and
security hereof shall not in any manner be impaired or affected by (and the
Bank, without notice to anyone, is hereby authorized to make from time to time)
any sale, pledge, surrender, compromise, settlement, release, renewal,
extension, indulgence, alteration, substitution, exchange, change in,
modification or disposition of any of the Obligations, or of any collateral
security therefor, or of any guaranty thereof or of any obligor thereon. The
Bank may at its discretion at any time grant credit to the Borrower without
notice to the Debtor in such amounts and on such terms as the Bank may elect
(all of such to constitute additional Obligations) without in any manner
impairing the lien and security hereby created and provided for. In order to
foreclose or otherwise realize hereon and to exercise the rights granted the
Bank hereunder and under applicable law, there shall be no obligation on the
part of the Bank or any other holder of any of the Obligations at any time to
first resort for payment to the Borrower or to any guaranty of the Obligations
or any portion thereof or to resort to any other collateral security, property,
liens or any other rights or remedies whatsoever, and the Bank shall have the
right to enforce this instrument irrespective of whether or not other
proceedings or steps are pending seeking resort to or realization upon or from
any of the foregoing.
(d) In the event and to the extent that any provision hereof shall be
deemed to be invalid or unenforceable by reason of the operation of any law or
by reason of the interpretation placed thereon by any court, this Agreement
shall to such extent be construed as not containing such provision, but only as
to such locations where such law or interpretation is operative, and the
invalidity or unenforceability of such provision shall not affect the validity
of any remaining
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provisions hereof, and any and all other provisions hereof which are otherwise
lawful and valid shall remain in full force and effect.
(e) This Agreement shall be deemed to have been made in the State of
Illinois and shall be governed by, and construed in accordance with, the laws of
the State of Illinois. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning of any
provision hereof.
(f) The Debtor acknowledges that this Agreement is and shall be
effective upon its execution and delivery by the Debtor to the Secured Party,
and it shall not be necessary for the Secured Party to execute this Agreement or
any other acceptance hereof or otherwise to signify or express its acceptance
hereof.
(g) The Debtor hereby submits to the non-exclusive jurisdiction of the
United States District Court for the Northern District of Illinois and of any
Illinois state court sitting in the City of Chicago for purposes of all legal
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. The Debtor irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
form. THE DEBTOR AND THE SECURED PARTY EACH HEREBY IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, the Debtor has caused this Agreement to be duly
executed and delivered as of this 15th day of December, 1997.
NATIONAL HEALTH BENEFIT &
CASUALTY CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇
Its Executive Vice President
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SCHEDULE A
LOCATIONS
Item 1. Places of Business (including Debtor's chief executive office and
principal place of business):
ADDRESS
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Item 2. Permitted Collateral Locations:
ADDRESS OWNER OF PREMISES
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Property
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Management, L.L.C.
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SCHEDULE B
REAL ESTATE LEGAL DESCRIPTIONS
NONE
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