SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Security Agreement") is made and entered into
effective this 29th day of December, 2005, by and between MEMORIAL INSURANCE
COMPANY OF AMERICA, an Arkansas domiciled insurance company (the "Debtor"), and
SECURITY NATIONAL LIFE INSURANCE COMPANY, a Utah domiciled insurance company
(the "Secured Party").
1. Security Interest. Subject to the terms and provisions of this Security
Agreement, the Debtor grants to the Secured Party a security interest (the
"Security Interest") in the following collateral (the "Collateral"): All of
the Debtor's right, title and interest in, and to the proceeds received
from, all of the assets owned by the Debtor, as of the effective date of
this Agreement, as listed and described in Schedule "A", which is attached
hereto and by this reference made a part hereof.
2. Obligation. This Security Agreement and the Security Interest granted
hereby secure payment by the Debtor of its obligations (the "Obligation")
under that certain promissory note, of even date herewith, payable to the
Secured Party in the principal amount of Thirty Million Ninety-one Thousand
Dollars ($30,091,000) (the "Note").
3. Debtor's Warranties and Covenants. The Debtor hereby represents and
warrants as follows:
a. Financing Statements. No financing statement or other security
agreement covering the Collateral or any proceeds thereof exists or is
on file in any public office.
b. Ownership of Collateral. The Debtor is the absolute owner of the
Collateral and has the right to pledge, sell, assign or transfer the
same. The Debtor shall defend the Collateral against all claims and
demands of all persons at any time claiming the same or any interest
therein adverse to the Secured Party.
c. No Material Adverse Change. There has been no material adverse change
in the business, business prospects or financial condition of the
Debtor that has not been fully disclosed to Secured Party.
d. Maintenance. The Debtor shall keep the Collateral free from liens and
other security interests and shall not create or suffer to exist any
lien or security interest in the Collateral. The Debtor shall
immediately pay all costs necessary (including reasonable attorney's
fees) to obtain, preserve, defend and enforce the Security Interest,
collect the Note, and preserve, defend and collect the Collateral.
4. Rights and Powers of Secured Party. The Secured Party may, in its
discretion, upon the occurrence of an event of default under this Security
Agreement, including, without limitation, any breach of any covenant or
warranty hereunder or any event of default under the Note (an "Event of
Default").
a. Require the Debtor to give title, possession or control of the
Collateral to the Secured Party;
b. Sell the Collateral and use cash proceeds of sale or other funds
generated by the Collateral to reduce any part of the Obligation;
c. Take any action the Secured Party is permitted to take under this
Security Agreement to preserve and enforce this Security Agreement,
and maintain and preserve the Collateral, all without notice to the
Debtor; and
d. Add costs incurred in connection with each of the forgoing to the
Obligation (but the Secured Party is under no duty to take any such
action).
5. Remedies of Secured Party Upon Default. When an Event of Default occurs,
and at any time thereafter, the Secured Party may declare the Obligation
secured hereby immediately due and payable and may proceed to enforce
payment of the same and to exercise any and all of the rights and remedies
provided by the Arkansas Uniform Commercial Code (the "Code"), as well as
all other rights and remedies processed by the Secured Party under this
Security Agreement or otherwise.
6. General. In addition to the foregoing, the parties to this Security
Agreement also agree as follows:
a. Waiver. No delay on the part of the Secured Party in exercising any
power or right shall operate as a waiver hereof or thereof; nor shall
nay single or partial exercise of any power or right preclude other or
further exercise thereof or the exercise of any other power or right.
No waiver by the Secured Party of any right hereunder or of any
default by the Debtor shall be binding upon the Secured Party, unless
in writing, and no failure by the Secured Party to exercise any right
hereunder or waiver of any default of the Debtor shall operate as a
waiver of any other or further exercise of such right or of any
further default.
b. Parties Bound. The rights of the Secured Party hereunder shall inure
to the benefit of its successors and assigns and shall be assignable
by the Secured Party without notice to or the consent of the Debtor.
Notwithstanding any other provision of this Security Agreement or any
instrument or agreement referenced herein, the Debtor may not assign
this Security Agreement or any interest herein voluntarily,
involuntarily, by operation of law or otherwise, without the prior
written consent of the Secured Party, which consent may be withheld
for any reason whatsoever. The terms of this Security Agreement shall
be binding upon, without restriction, the successors and assigns of
the parties hereto. All representations, warranties and agreements of
the Debtor shall bind the Debtor's successors, and assigns.
c. Definitions. Unless the context indicates otherwise, definitions in
the Code apply to words and phrases in this Security Agreement; if the
Code definitions conflict, Article 9 of the Code definitions apply.
d. Notice. Notice mailed postage prepaid to Debtor's most recent address
as shown by notice of change on file with the Secured Party at least
five (5) days prior to the related action (or if the Code elsewhere
specifies a longer period, such longer period) shall be deemed
reasonable.
e. Modifications. No provision hereof shall be modified or limited except
by a written agreement signed by both parties to this Security
Agreement.
f. Severability. The unenforceability of any provision of this Security
Agreement shall not affect the unforceability or validity of any other
provision hereof.
g. Financing Statement. The Debtor hereby appoints the Secured Party as
the exclusive attorney-in-fact with sole authority to complete and
sign one or more financing statements on behalf of the Debtor with
respect to the Collateral and to file the same in the appropriate
office or place.
h. Governing Law. This Security Agreement shall be governed by and
construed in accordance with the laws of the State of Arkansas.
i. Further Assurances; Diligence. Each party agrees to execute and
deliver all documents and to perform all further act as may be
reasonably necessary to carry out the provisions of this Security
Agreement. The parties hereto agree to use reasonable diligence and to
exercise their best efforts to fulfill their respective obligations
under this Security Agreement at all times that this Security
Agreement is in effect.
IN WITNESS WHEREOF, this Security Agreement is executed and delivered as of
the date and year first above written.
DEBTOR: MEMORIAL INSURANCE COMPANY OF AMERICA
By: /s/ Larry N. Perrin
-------------------
Its: Treasurer
---------
SECURED PARTY: SECURITY NATIONAL LIFE INSURANCE COMPANY
By: /s/ Scott M. Quist
------------------
Its: President
---------
STATE OF ARKANSAS )
)ss.
COUNTY OF PULASKI )
-------
On the 29 day of December, 2005, personally appeared before me Larry N.
Perrin , who being by me duly sworn did say that he is the Treasurer of MEMORIAL
INSURANCE COMPANY OF AMERICA, and that he signed the within and foregoing
document on behalf of said corporation.
/s/ Erin Cristler
NOTARY PUBLIC
[SEAL]
STATE OF UTAH )
)ss.
COUNTY OF SALT LAKE )
On the 29 day of December, 2005, personally appeared before me Scott M.
Quist, who being by me duly sworn did say that he is the President of SECURITY
NATIONAL LIFE INSURANCE COMPANY, and that he signed the within and foregoing
document on behalf of said corporation.
/s/ DeAnn Theurer
-----------------
NOTARY PUBLIC [SEAL]