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Exhibit 10.14
COMMERCIAL SECURITY AGREEMENT
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Principal
Loan Date
Maturity Loan
No.
$150,000.00
06-23-2008
06-09-2009
930610000
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Call / Coll
Account
Officer
Initials
RK
/s/ RK
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References in the boxes above are for Lender's use only and
do not limit the applicability of this document
to any particular loan or item. Any item above
containing "***" has been omitted due to text
length
limitations.
Borrower:
Lender:
Amexdrug Corporation; Dermagen,
Inc.; National Bank of
California
Biorx Pharmaceuticals, Inc.;
Royal
Corporate Banking Department
Health Care, Inc.; and Allied Med
Inc. 145 South Fairfax Avenue
8909 West Olympic Boulevard, Suite
208 Los Angeles, CA 90036
Beverly Hills, CA 90211
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THIS COMMERCIAL SECURITY AGREEMENT dated
June 23, 2008, is made and executed
among Amexdrug Corporation; Dermagen, Inc.; Biorx
Pharmaceuticals, Inc. Royal
Health Care, Inc.; and Allied Med
Inc. ("Grantor") and National Bank of
California ("Lender").
GRANT OF SECURITY INTEREST. For valuable consideration, Grantor
grants to Lender
a security interest in the Collateral to secure the Indebtedness
and agrees that
Lender shall have the rights stated in
this Agreement with respect to the
Collateral, in addition to all other rights which Lender may have
by law.
COLLATERAL DESCRIPTION. The word "Collateral" as
used in this Agreement means
the following described property, whether
now owned or hereafter acquired,
whether now existing or hereafter arising,
and wherever located, in which
Grantor is giving to Lender a
security interest for the payment of
the
Indebtedness and performance of all other
obligations under the Note and this
Agreement:
All
inventory, equipment, accounts (including but not
limited to all
health-care-insurance
receivables), chattel
paper, instruments
(including but not
limited to all promissory notes), letter-of-credit
rights,
letters of credit, documents, deposit
accounts, investment
property,
money, other rights to payment and performance, and
general
intangibles
(including but not limited to all software and all
payment
intangibles); all
oil, gas and other minerals before extraction;
all
oil, gas,
other minerals and accounts
constituting as-extracted
collateral;
all fixtures; all timber to be
cut; all attachments,
accessions,
accessories, fittings, increases, tools, parts,
repairs,
supplies, and
commingled goods relating to the foregoing property, and
all additions,
replacements of and substitutions for all or any part of
the foregoing
property; all insurance refunds relating to the foregoing
property; all good
will relating to the foregoing property; all records
and data and embedded
software relating to the foregoing property, and
all equipment,
inventory and software to utilize, create, maintain and
process any
such records and data on
electronic media; and all
supporting
obligations relating to the foregoing property; all
whether
now existing
or hereafter arising, whether now owned
or hereafter
acquired or
whether now or hereafter subject to
any rights in the
foregoing
property; and all products and proceeds
(including but not
limited to all
insurance payments) of or relating to
the foregoing
property.
In addition, the word "Collateral" also includes all the
following, whether now
owned or hereafter acquired, whether now existing
or hereafter arising, and
wherever located:
(A) All
accessions, attachments, accessories, tools, parts,
supplies,
replacements
of and additions to any of the
collateral described
herein, whether
added now or later.
(B) All
products and produce of any of the property described
in this
Collateral
section.
(C) All
accounts, general intangibles, instruments,
rents, monies,
payments,
and all other rights, arising
out of a sale, lease,
consignment or
other disposition of any of the property
described in
this Collateral
section.
(D)
All proceeds (including insurance
proceeds) from the sale,
destruction,
loss, or other disposition of
any of the property
-described in this
Collateral section, and sums due from a third party
who has
damaged or destroyed the Collateral
or from that party's
insurer, whether
due to judgment, settlement or other process.
(E) All records
and data relating to any of the property described
in
this Collateral
section, whether in the form of a writing, photograph,
microfilm,
microfiche, or electronic media,
together with all of
Grantor's
right, title, and interest in and to all computer
software
required to
utilize, create, maintain, and process any such records
or
data on electronic
media.
CROSS-COLLATERALIZATION. In addition to the Note, this
Agreement secures 'all
obligations, debts and liabilities, plus interest thereon, of
Grantor to Lender,
or any one or more of them, as well as all claims by Lender
against Grantor or
any one or more of them, whether now existing or
hereafter arising, whether
related or unrelated to the purpose of the Note, whether voluntary
or otherwise,
whether due or not due, direct or indirect, determined or
undetermined, absolute
or contingent, liquidated or
unliquidated, whether Grantor may be
liable
individually or jointly with others, whether
obligated as guarantor, surety,
accommodation party or otherwise, and whether recovery upon
such amounts may be
or hereafter may become barred by any statute of
limitations, and whether the
obligation to repay such amounts may be or
hereafter may become otherwise
unenforceable.
FUTURE ADVANCES. In addition to the Note,
this Agreement secures all future
advances made by Lender to Grantor regardless of
whether the advances are made
a) pursuant to a commitment or b) for the same purposes.
RIGHT OF SETOFF. To the extent permitted by
applicable law, Lender reserves a
right of setoff in all Grantor's
accounts with Lender (whether checking,
savings, or some other account). This
includes all accounts Grantor holds
jointly with someone else and all
accounts Grantor may open in the future.
However, this does not include any IRA or Keogh accounts, or
any trust accounts
for which setoff would be prohibited by law. Grantor
authorizes Lender, to the
extent permitted by applicable law, to charge or
setoff all sums owing on the
Indebtedness against any and all such accounts.
GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT
TO THE COLLATERAL. With
respect to the Collateral, Grantor represents and promises to
Lender that:
Organization. Amexdrug Corporation is a
corporation for profit which
is, and at all
times shall be, duly organized, validly existing, and in
good
standing under and by virtue of the laws of the State of
Nevada.
Amexdrug
Corporation is duly authorized to transact
business in all
other states in
which Amexdrug Corporation is doing business,
having
obtained all
necessary filings, governmental licenses and approvals for
each
state in which Amexdrug
Corporation is doing business.
Specifically, Amexdrug Corporation is, and at all times shall
be, duly
qualified as a
foreign corporation in all states in which the
failure
to so qualify
would have a material adverse effect on its business
or
financial
condition. Amexdrug Corporation has the
full power and
authority to own
its properties and to transact the business in
which
it is
presently engaged or presently proposes to
engage. Amexdrug
Corporation
maintains an office at 8909 West Olympic Boulevard, Suite
208,
Beverly Hills, CA 90211. Unless
Amexdrug Corporation has
designated
otherwise in writing, the principal office is the office at
which
Amexdrug Corporation keeps its books and records
including its
records
concerning the Collateral. Amexdrug Corporation
will notify
1
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COMMERCIAL SECURITY AGREEMENT
Loan No:
930610000
(Continued)
Page 2
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Lender prior
to any change in the location of Amesdrug
Corporation's
state of
organization or any change in Amexdrug
Corporation's name.
Amexdrug
Corporation shall do all things necessary to preserve and
to
keep in full force
and effect its existence, rights and privileges, and
shall comply with
all regulations, rules, ordinances, statutes, orders
and decrees of
any governmental or quasi-governmental
authority or
court
applicable to Amexdrug Corporation and Amexdrug
Corporation's
business
activities.
Dermagen,
Inc. is a corporation for profit which is, and at all
times
shall be, duly
organized, validly existing, and in good standing under
and by virtue of
the laws of the State of California. Dermagen, Inc. is
duly
authorized to transact business in all
other states in which
Dermagen,
Inc. is doing business, having
obtained all necessary
filings,
governmental licenses and approvals for each state in
which
Dermagen, Inc. is
doing business, Specifically, Dermagen, Inc. is, and
at all times shall
be, duly qualified as a foreign corporation in all
states in which
the failure to so qualify would have a material adverse
effect on its
business or financial condition. Dermagen, Inc. has
the
full power
and authority to own its properties and to
transact the
business in
which it is presently engaged or presently
proposes to
engage.
Dermagen, Inc. maintains an office at 2500 East Fender Avenue,
Suite J,
Fullerton, CA 92831. Unless Dermagen, Inc.
has designated
otherwise
in writing, the principal office is
the office at which
Dermagen,
Inc. keeps its books and records
including its records
concerning the
Collateral. Dermagen, Inc. will notify Lender prior
to
any change in the
location of Dermagen, Inc.'s state of organization or
any change in
Dermagen, Inc.'s name. Dermagen, Inc. shall do all things
necessary
to preserve and to keep in full
force and effect its
existence, rights and
privileges, and shall comply
with all
regulations,
rules, ordinances, statutes, orders and decrees
of any
governmental
or quasi-governmental authority or court
applicable to
Dermagen, Inc. and
Dermagen, Inc.'s business activities.
Biorx
Pharmaceuticals, Inc. is a corporation for profit which is,
and
at all times shall
be, duly organized, validly existing, and in
good
standing under and
by virtue of the laws of the State of Nevada. Biorx
Pharmaceuticals, Inc. is duly authorized to
transact business in all
other states in
which Biorx Pharmaceuticals, Inc. is doing
business,
having
obtained all necessary filings,
governmental licenses and
approvals for each
state in which Biorx Pharmaceuticals, Inc. is doing
business.
Specifically, Biorx Pharmaceuticals, Inc.
is, and at all
times shall be,
duly qualified as a foreign corporation in all
states
in which the
failure to so qualify would have a material adverse effect
on its business or
financial condition. Biorx Pharmaceuticals, Inc. has
the full power and
authority to own its properties and to transact the
business in
which it is presently engaged or presently
proposes to
engage.
Biorx Pharmaceuticals, Inc. maintains an office at 318
North
Carson #208,
Carson City, NV 89701. Unless Biorx Pharmaceuticals, Inc.
has designated
otherwise in writing, the principal office is the office
at which
Biorx Pharmaceuticals, Inc. keeps its
books and records
including its
records concerning the Collateral. Biorx Pharmaceuticals,
Inc. will
notify Lender prior to any change in the location of
Biorx
Pharmaceuticals, Inc.'s state of organization or
any change in Biorx
Pharmaceuticals, Inc.'s name. Biorx Pharmaceuticals, Inc.
shall do all
things
necessary to preserve and to keep in full force and effect
its
existence, rights and
privileges, and shall comply
with all
regulations,
rules, ordinances, statutes, orders and decrees
of any
governmental
or quasi-governmental authority or court
applicable to
Biorx
Pharmaceuticals, Inc. and Biorx Pharmaceuticals, Inc.'s
business
activities.
Royal Health
Care, Inc. is a corporation for profit which is,
and at
all times
shall be, duly organized, validly
existing, and in good
standing under and
by virtue of the laws of the State of Nevada. Royal
Health Care, Inc.
is duly authorized to transact business in all other
states in
which Royal Health Care, Inc. is
doing business, having
obtained all
necessary filings, governmental licenses and approvals for
each
state in which Royal Health Care,
Inc. is doing business.
Specifically, Royal Health Care, Inc. is, and at
all times shall be,
duly
qualified as a foreign corporation in all
states in which the
failure to
so qualify would have a material
adverse effect on its
business or
financial condition. Royal Health Care, Inc. has the
full
power and
authority to own its properties and to transact the
business
in which it is
presently engaged or presently proposes to engage. Royal
Health Care,
Inc. maintains an office at 318 North Carson #208, Carson
City, NV 89701.
Unless Royal Health Care, Inc. has designated otherwise
in writing,
the principal office is the office at which Royal
Health
Care, Inc. keeps
its books and records including its records concerning
the Collateral.
Royal Health Care, Inc. will notify Lender prior to any
change
in the location of Royal Health
Care, Inc.'s state of
organization
or any change in Royal Health Care, Inc.'s name.
Royal
Health Care, Inc.
shall do all things necessary to preserve and to keep
in full force
and effect its existence, rights and
privileges, and
shall comply with
all regulations, rules, ordinances, statutes, orders
and decrees of
any governmental or quasi-governmental
authority or
court
applicable to Royal Health Care, Inc. and
Royal Health Care,
Inc.'s business
activities.
Allied Med Inc. is
a corporation for profit which is, and at all times
shall be, duly
organized, validly existing, and in good standing under
and by virtue of
the laws of the State of Oregon. Allied Med Inc.
is
duly
authorized to transact business in all
other states in which
Allied Med
Inc. is doing business, having
obtained all necessary
filings,
governmental licenses and approvals for each state in
which
Allied Med Inc. is
doing business. Specifically, Allied Med Inc.
is,
and at all times
shall be, duly qualified as a foreign corporation
in
all states in
which the failure to so qualify would have
a material
adverse effect on
its business or financial condition. Allied Med Inc.
has the full power
and authority to own its properties and to transact
the business in
which it is presently engaged or presently proposes to
engage.
Allied Med Inc. maintains an office at 6312 SW Capitol Highway
#226,
Portland, OR 97201. Unless Allied Med
Inc. has designated
otherwise
in writing, the principal office is
the office at which
Allied Med
Inc. keeps its books and records including
its records
concerning the
Collateral. Allied Med Inc. will notify Lender prior to
any change in the
location of Allied Med Inc.'s state of organization
or any change in
Allied Med Inc.'s name. Allied Med Inc. shall do
all
things
necessary to preserve and to keep in full force and effect
its
existence, rights and
privileges, and shall comply
with all
regulations,
rules, ordinances, statutes, orders and decrees
of any
governmental
or quasi-governmental authority or court
applicable to
Allied Med Inc.
and Allied Med Inc.'s business activities.
Authorization. Grantor's execution, delivery, and
performance of this
Agreement and all
the Related Documents have been duly authorized
by
all necessary
action by Grantor, do not require the consent or approval
of any other
person, regulatory authority, or governmental body, and do
not conflict
with, result in a violation of, or constitute a
default
under (1) any
provision of (a) Grantor's articles of incorporation
or
organization, or bylaws, or (b) any
agreement or other instrument
binding upon
Grantor or (2) any law, governmental regulation,
court
decree, or
order applicable to Grantor or to Grantor's
properties.
Grantor has
the power and authority to enter into the
Note and the
Related Documents and to grant
collateral as security for the
Indebtedness.
Grantor has the further power and authority to own and to
hold all of
Grantor's assets and properties, and to carry on
Grantor's
business as
presently conducted.
Perfection
of Security Interest. Grantor agrees
to take whatever
actions
are requested by Lender to perfect
and continue Lender's
security
interest in the Collateral. Upon request of Lender,
Grantor
will
deliver to Lender any and all of the
documents evidencing or
constituting the
Collateral, and 'Grantor will note Lender's
interest
upon any and all
chattel paper and instruments if not
delivered to
Lender
for possession by Lender. This
is a continuing Security
Agreement
and will continue in effect even though all or any part
of
the
Indebtedness is paid in full and even though for a period of
time
Grantor may not be
indebted to Lender.
Notices to
Lender. Grantor will promptly notify Lender in
writing at
Lender's
address shown above or such other addresses
as Lender may
designate from
time to time) prior to any (1) change in Grantor's name;
(2) change in
Grantor's assumed business name(s); (3)
change in the
management of
any Corporation Grantor; (4) change in the
authorized
signer(s); (5)
change in Grantor's principal office address; (6) change
in Grantor's state
of organization; (7) conversion of Grantor to a new
or different type
of business entity; or (8) change in any other aspect
of Grantor
that directly or indirectly relates
to any agreements
between
Grantor and Lender. No change in Grantor's name
or state of
organization
will take effect until after Lender has received notice.
Grantor
represents and warrants to Lender that Grantor
has provided
Lender with
Grantor's correct Employer Identification Number.
Grantor
promptly
shall notify Lender should Grantor apply for or obtain a
new
Employer
Identification Number.
2
<PAGE>
COMMERCIAL SECURITY AGREEMENT
Loan No:
930610000
(Continued)
Page 3
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No
Violation. The execution and delivery of this
Agreement will not
violate any law or
agreement governing Grantor or to which Grantor is a
party, and its
certificate or articles of incorporation and bylaws
do
not prohibit any
term or condition of this Agreement.
Enforceability of
Collateral. To the extent the Collateral consists of
accounts,
chattel paper, or general intangibles, as
defined by the
Uniform
Commercial Code, the Collateral is enforceable in
accordance
with its terms, is
genuine, and fully complies with all applicable laws
and
regulations concerning form, content and manner of
preparation and
execution,
and all persons appearing to be obligated on the Collateral
have
authority and capacity to contract and are in fact
obligated as
they appear to be
on the Collateral. At the time any account
becomes
subject to a
security interest in favor of Lender, the account shall be
a good
and valid account representing an
undisputed, bona fide
indebtedness
incurred by the account debtor, for
merchandise held
subject to
delivery instructions or previously shipped
or delivered
pursuant to a
contract of sale, or for services previously performed by
Grantor
with or for the account debtor. So long as
this Agreement
remains in
effect, Grantor shall not, without Lender's prior
written
consent,
compromise, settle, adjust, or extend payment under or
with
regard to any such
Accounts. There shall be no setoffs or counterclaims
against any of
the Collateral, and no agreement shall have been
made
under which
any deductions or discounts may be claimed concerning
the
Collateral except
those disclosed to Lender in writing.
Location of the
Collateral. Except in the ordinary course of Grantor's
business,
Grantor agrees to keep the Collateral (or to the extent
the
Collateral
consists of intangible property such as accounts or general
intangibles,
the records concerning the
Collateral) at Grantor's
address shown
above or at such other locations .as are
acceptable to
Lender. Upon
Lender's request, Grantor will deliver to Lender in form
satisfactory
to Lender a schedule of real properties and
Collateral
locations relating to Grantor's
operations, including without
limitation
the following: (1) all real property
Grantor owns or is
purchasing;
(2) all real property Grantor is renting or leasing;
(3)
all storage
facilities Grantor owns, rents, leases, or uses; and
(4)
all other
properties where Collateral is or may be located.
Collateral
consisting of
inventory and other goods is not currently located
and,
as long as
this Agreement remains in effect,
will not be kept in a
field or
public warehouse or with a bailee, and shall be kept
only at
locations
approved by Lender. Grantor will not
permit any of the
Collateral to
be incorporated in or placed upon any real
(immovable)
property in
such a way that it becomes immobilized under
applicable
California
law. Upon Lender's request, Grantor shall cause
any owners
or mortgagees of the real property upon which any of of
the
Collateral
may be located to furnish to Lender waivers with respect to
any rights in or
to the Collateral.
Removal of
the Collateral. Except in the ordinary course of
Grantor's
business,
including the sales of inventory, Grantor shall not
remove
the
Collateral from its existing location
without Lender's prior
written
consent. To the extent that the
Collateral consists of
vehicles, or
other titled property, Grantor shall not take or
permit
any action which
would require application for certificates of
title
for the
vehicles outside the State of California,
without Lender's
prior
written consent. If Grantor moves from Grantor's
address shown
above to
another location within the same state, Grantor may
move the
Collateral to
Grantor's new address, but only if Grantor gives
Lender
the new address in
writing prior to Grantor's moving. In any
event,
Grantor
agrees to keep Lender informed at all
times of Grantor's
current
address. Grantor shall, whenever requested,
advise Lender of
the exact location
of the Collateral.
Transactions
Involving Collateral. Except for
inventory sold or
accounts collected
in the ordinary course of Grantor's business, or as
otherwise provided
for in this Agreement, Grantor shall not sell, offer
to sell,
or otherwise transfer or dispose of the
Collateral. While
Grantor is
not in default under this Agreement,
Grantor may sell
inventory,
but only in the ordinary course of its business and only to
buyers who qualify
as a buyer in the ordinary course of
business. A
sale in the
ordinary course of-Grantor's business does not
include a
transfer in
partial or total satisfaction of a debt or any bulk
sale.
Grantor shall not
pledge, mortgage, encumber or otherwise permit
the
Collateral to be
subject to any lien, security interest,
encumbrance,
or
charge, other than the security
interest provided for in this
Agreement,
without the prior written consent of Lender. This
includes
security
interests even if junior in right to the security
interests
granted under
this Agreement. Unless waived by Lender,
all proceeds
from any
disposition of the Collateral (for whatever reason)
shall be
held in trust
for Lender and shall not be commingled with
any other
funds;
provided however, this requirement shall not constitute consent
by Lender to any
sale or other disposition. Upon receipt, Grantor shall
immediately
deliver any such proceeds to Lender.
Title.
Grantor represents and warrants to Lender that
Grantor holds
good and
marketable title to the Collateral, free
and clear of all
liens
and encumbrances except for the lien of
this Agreement. No
financing
statement covering any of the Collateral is on file in
any
public
office other than those which reflect the
security interest
created
by this Agreement or to which
Lender has specifically
consented.
Grantor shall defend Lender's rights in
the Collateral
against the claims
and demands of all other persons.
Collateral
Schedules and Locations. As often as Lender shall
require,
and
insofar as the Collateral consists
of accounts and general
intangibles, Grantor shall deliver
to Lender schedules of such
Collateral,
including such information as Lender may require, including
without limitation
names and addresses of account debtors and agings of
accounts and
general intangibles. Insofar as the Collateral consists of
inventory and
equipment, Grantor shall deliver to Lender, as often
as
Lender shall
require, such lists, descriptions, and
designations of
such
Collateral as Lender may require to identify the nature,
extent,
and location of
such Collateral. Such information shall be
submitted
for Grantor and
each of its subsidiaries or related companies.
Inspection of Collateral.
Lender and
Lender's designated
representatives
and agents shall have the right at all reasonable times
to examine and
inspect the Collateral wherever located.
Taxes,
Assessments and Liens. Grantor will pay
when due all taxes,
assessments and
liens upon the Collateral, its use or operation,
upon
this
Agreement, upon any promissory note or
notes evidencing the
Indebtedness, or upon any of the other Related
Documents. Grantor may
withhold any
such payment or may elect to contest any lien if Grantor
is in good
faith conducting an appropriate proceeding to
contest the
obligation to pay
and so long as Lender's interest in the Collateral is
not
jeopardized in Lender's sole
opinion. If the Collateral is
subjected to a
lien which is not discharged within fifteen (15)
days,
Grantor shall
deposit with Lender cash, a sufficient corporate
surety
bond or other
security satisfactory to Lender in an amount adequate to
provide for
the discharge of the lien plus
any interest, costs,
attorneys'
fees or other charges that could
accrue as a result of
foreclosure
or sale of the Collateral. In any contest Grantor
shall
defend itself and
Lender and shall satisfy any final adverse judgment
before enforcement
against the Collateral. Grantor shall name Lender as
an
additional obligee under any surety bond
furnished in the contest
proceedings.
Repairs and
Maintenance. Grantor shall keep and
maintain and shall
cause others to
keep and maintain the Collateral in good order, repair
and merchantable
condition. Grantor shall further make and/or cause all
necessary
repairs to be made to the Collateral, including the
repair
and
restoration of any portion of the Collateral that may be
damaged,
lost or
destroyed. In addition, Grantor shall not,
without the prior
written consent of
Lender, make or permit to be made any alterations to
any of the
Collateral that may reduce or impair the Collateral's
use,
value or
marketability. Furthermore, Grantor shall
not, nor shall
Grantor
permit others to abandon, commit
waste, or destroy the
Collateral
or any part or parts thereof. Grantor
further agrees to
furnish
Lender with evidence that such
taxes, assessments, and
governmental
and other charges have been paid in full and in a timely
manner.
'Grantor may withhold any such payment or may elect to contest
any
lien if Grantor is in good
faith conducting an appropriate
proceeding
to contest the obligation to pay and so long as
Lender's
interest in the
Collateral is not jeopardized.
Compliance
with Governmental Requirements.
Grantor shall comply
promptly
with all laws, ordinances, rules and
regulations of all
governmental
authorities, now or hereafter in effect, applicable to the
ownership,
production, disposition, or use of the Collateral, including
all
laws or regulations
relating to the undue
erosion of
highly-erodible land or relating to the conversion of
wetlands for the
production of an
agricultural product or commodity. Grantor may contest
in good
faith any such law, ordinance or
regulation and withhold
compliance during
any proceeding, including appropriate
appeals, so
long as Lender's
interest in the. Collateral, in Lender's opinion,
is
not
jeopardized.
3
<PAGE>
COMMERCIAL
SECURITY AGREEMENT
Loan No:
930610000
(Continued)
Page 4
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Hazardous
Substances. Grantor represents
and warrants that the
Collateral never
has been, and never will be so long as this Agreement
remains a lien on the
Collateral, used in violation of any Environmental
Laws or
for the generation, manufacture,
storage, transportation,
treatment,
disposal, release or threatened release of
any Hazardous
Substance. The
representations and warranties contained herein are based
on Grantor's due
diligence in investigating the Collateral for Hazardous
Substances.
Grantor hereby (1) releases and waives any future
claims
against
Lender for indemnity or contribution
in the event Grantor
becomes liable for
cleanup or other costs under any Environmental Laws,
and (2) agrees to
indemnify, defend, and hold harmless Lender
against
any and all claims and
losses resulting from a breach of this provision
of this Agreement. This
obligation to indemnify and defend shall survive
the payment of the
Indebtedness and the satisfaction of this Agreement.
Maintenance of
Casualty Insurance. Grantor shall procure and
maintain
all risks
insurance, including without limitation
fire, theft and
liability
coverage together with such other insurance
as Lender may
require with respect to
the Collateral, in form, amounts, coverages and
basis
reasonably acceptable to Lender and
issued by a company or
companies
reasonably acceptable to Lender. Grantor,
upon request of
Lender, will
deliver to Lender from time to time
the policies or
certificates of
insurance in form satisfactory to Lender,
including
stipulations that
coverages will not be cancelled or diminished without
at least ten (10) days'
prior written notice to Lender and not including
any
disclaimer of the insurer's liability for failure
to give such a
notice.
Each insurance policy also shall
include an endorsement
providing
that coverage in favor of Lender will not be impaired in
any
way by any act,
omission or default of Grantor or any other person. In
connection with all
policies covering assets in which Lender holds or is
offered a security
interest, Grantor will provide Lender with such loss
payable or other
endorsements as Lender may require. If Grantor at any
time fails to obtain or
maintain any insurance as required under this
Agreement,
Lender may (but shall not be obligated ,to)
obtain such
insurance as
Lender deems appropriate, including if Lender so
chooses
"single interest
insurance," which will cover only Lender's interest in
the Collateral.
Application of Insurance
Proceeds. Grantor shall promptly notify Lender
of any loss or damage to
the Collateral if the estimated cost of repair
or replacement
exceeds 10,000.00, whether or not such casualty or loss
is covered by
insurance. Lender may make proof of loss if Grantor fails
to do so within
fifteen (15) days of the casualty. All proceeds of any
insurance on the
Collateral, including accrued proceeds thereon,
shall
be held by Lender
as part of the Collateral. If Lender
consents to
repair or
replacement of the damaged or destroyed
Collateral, Lender
shall, upon satisfactory
proof of expenditure, pay or reimburse Grantor
from the proceeds for
the reasonable cost of repair or restoration. If
Lender does
not consent to repair or replacement of the
Collateral,
Lender shall
retain a sufficient amount of the proceeds to pay all
of
the
Indebtedness, and shall pay the balance to Grantor.
Any proceeds
which have not been
disbursed within six (6) months after their receipt
and which Grantor has
not committed to the repair or restoration of the
Collateral shall be used
to prepay the Indebtedness.
Required
Insurance. So long as this Agreement
remains in effect,
Grantor
shall, at its sole cost, keep and/or cause
others, at their
expense, to
keep the Collateral constantly insured
against loss by
fire, by hazards
included (degree)within the term "extended coverage,"
and by such other
hazards (including flood insurance where applicable)
as may be required
by Lender.
Insurance
Proceeds. Lender shall have the right to directly receive the
proceeds of all
insurance protecting the Collateral. In the event that
Grantor should
receive any such insurance proceeds, Grantor agrees
to
immediately turn
over and to pay such proceeds directly to tender. All
insurance
proceeds may be applied, at its sole option and
discretion,
and in such a
manner as Lender may determine (after
payment of all
reasonable costs,
expenses and attorneys' fees necessarily paid or fees
necessarily
paid or incurred by Lender in this 'connection), for
the
purpose of: (1)
repairing or restoring the lost, damaged or
destroyed
Collatera
