EXHIBIT (c)(17)
SECURITY AGREEMENT
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THIS SECURITY AGREEMENT (the "Agreement") is entered into as of the
16th day of September, 1997, by and among The Cross Country Group, L.L.C. (the
"Secured Party"), Homeowners Association of America, Inc., HAA of Arizona, Inc.,
HAA of Georgia, Inc., HAA of Utah, Inc., HAA Home Protection of California, Inc.
and HAA of Virginia, Inc. (collectively, the "HAA Entities").
RECITALS
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WHEREAS, Secured Party has acquired from Acceleration National
Insurance Company all of its rights under that certain judgment in consolidated
cases styled Acceleration National Insurance Company v. Homeowners Marketing
Services, Inc., et al, in the Court of Common Pleas, Franklin County, Ohio, Case
No. 9 1 CVHI 1-9404 and 94CVlD5-3083 (the "Judgment");
WHEREAS, Secured Party, Homeowners Group, Inc. and Homeowners Marketing
Services, Inc. ("HMS") have entered into an Agreement for Satisfaction of
Judgment, dated as of October 31, 1996, as amended, with respect to the Judgment
to, among other things, extend the date by which amounts payable by HMS must be
paid (the "Settlement Agreement");
WHEREAS, Secured Party, Homeowners Group, Inc. and HMS have,
contemporaneously with execution of this Security Agreement, entered into a
Third Amendment to the Settlement Agreement, which among other things, further
extends the date by which amounts payable by HMS must be paid;
WHEREAS, CC Acquisition Corporation, an affiliate of the Secured Party,
has confirmed its intent to consummate the transactions described in that
certain Agreement and Plan of Merger dated as of May 14, 1996 among CC
Acquisition Corporation, Homeowners Group, Inc. and The Cross Country Group,
Inc., as amended by amendments dated as of October 31, 1996, January 31, 1997
and July 31, 1997, and by a further amendment of even date herewith;
WHEREAS, Secured Party has required that the HAA Entities enter into
this Security Agreement as a condition to the Secured Party entering into the
Third Amendment to the Settlement Agreement;
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein and other good and valuable consideration, the parties hereto
agree as follows:
1. Guaranty of HAA Entities. In consideration of Secured Party's
execution of the Third Amendment to the Settlement Agreement, each of the HAA
Entities absolutely, unconditionally and jointly and severally guarantees the
performance by HMS of its obligations under the Judgment and the Settlement
Agreement, as amended (collectively, the "Obligations").
2. Security Interest. In consideration of and as an inducement for the
Secured Party's execution of the Third Amendment to the Settlement Agreement,
each of the HAA Entities hereby
grants to the Secured Party a security interest (the "Security Interest") in
each of their respective assets (the "Collateral") to secure HMS's Obligations
and the HAA Entities' guaranty thereof.
3. Representations and Warranties of the HAA Entities. Each of the HAA
Entities hereby individually represents and warrants, and so long as the
Judgment remains unpaid shall be deemed continuously to represent and warrant,
that:
(a) It is the owner of its respective Collateral free of all
security interests or other encumbrances except for the security interest in
favor of Secured Party and except as may be disposed of added in the ordinary
course of business,
(b) This Security Agreement is being executed on behalf of it
by one or more properly authorized officers and all necessary actions have been
taken by it to authorize such execution.
(c) It is engaged in business operations which are carried on
at the following address: 000 Xxxxxxxx Xxxxxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxx
00000.
4. Covenants of the HAA Entities. So long as the Obligations of HMS
under the Settlement Agreement, as amended, and/or the Judgment remain
outstanding, each of the HAA Entities: (a) will defend its respective Collateral
against the claims and demands of all other parties and will keep the Collateral
free from all security interests or other encumbrances except the Security
Interest; (b) will keep accurate and complete records concerning its respective
Collateral and at the Secured Party's request will xxxx any such records and its
respective Collateral to give notice of the Security Interest; (c) will, upon
demand, deliver to Secured Party any documents relating to its respective
Collateral or any part thereof, and any and all other schedules, documents and
statements which the Secured party may from time to time request; (d) will
notify the Secured Party promptly in writing of any change in its address
specified above; and (e) in connection herewith will execute and deliver to the
Secured Party such financing statements and other documents, pay all costs of
and file such financing statements and other documents in all public offices
requested by the Secured Party and do such other things as the Secured Party may
reasonably request to protect the Collateral and Secured Party's Security
Interest.
5. Defaults and Remedies. (a) In the event that HMS shall default in
the performance of its Obligations under the Settlement Agreement, as amended,
and/or the Judgment beyond any grace or cure period provided therein, and the
HAA Entities shall have failed within five (5) days of notice of such default
and expiration of any applicable cure period from Secured Party to cure the same
(such default and failure to cure, an "Event of Default"), Secured Party shall
have all rights with respect to the Collateral as shall be provided to Secured
Party under the Uniform Commercial Code as then in effect in the State of
Florida.
(b) Each of the HAA Entities agree that any notice by the
Secured Party of the sale or disposition of its respective Collateral or any
other intended action hereunder, whether required by the Uniform Commercial Code
or otherwise, shall constitute reasonable notice to any of the HAA Entities if
the notice is sent by a recognized overnight delivery service at least ten (10)
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days before the action to the HAA Entities' address as specified in this
Agreement (Attention: C. Xxxxxxx Xxxxxx) or to any other address which any of
the HAA Entities shall have specified in writing to the Secured Party as the
address or addresses to which notices shall be given to all of the HAA Entities.
6. Miscellaneous.
(a) Each of the HAA Entities authorizes the Secured Party at
the expense of each HAA Entity to file any financing statement or other
documents or statements relating to its respective Collateral (without the HAA
Entity's signature thereon) which the Secured Party deems appropriate, and each
of the HAA Entities appoints the Secured Party as each HAA Entity's
attorney-in-fact to execute any such financing statement or statements in the
name of the HAA Entities and to perform all other acts which the Secured Party
deems appropriate to perfect and to continue perfection of the Security
Interest.
(b) After any Event of Default, the Secured Party may notify
any party obligated to pay proceeds of the existence of the obligation under the
Settlement Agreement, as amended, and may direct them to make payments of all
proceeds to the Secured Party.
(c) No delay or omission by the Secured Party in exercising
any right hereunder or with respect to the Judgment and/or the Settlement
Agreement, as amended, shall operate as a waiver of that or any other right, and
no single or partial exercise of any right shall preclude the Secured Party from
any other or future exercise of the right or the exercise of any other right or
remedy. All rights and remedies of the Secured Party under this Agreement and
under the Uniform Commercial Code shall be deemed cumulative.
(d) The terms "Secured Party" and "HAA Entities" as used in
this Agreement include the successors or assigns of those parties.
(e) This Agreement may not be modified or amended nor shall
any provision of it be waived except in a writing signed by each of the HAA
Entities and by an authorized officer of the Secured Party.
(f) This Agreement shall be construed under the Florida
Uniform Commercial Code and any other applicable Florida laws in effect from
time to time.
(g) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of the remaining
provisions.
(h) All sections and descriptive headings in this Agreement
are inserted for convenience only, and shall not affect the construction or
interpretation hereof.
(i) This Security Agreement is a continuing agreement which
shall remain in force and effect until all obligations under the Settlement
Agreement, as amended, have been satisfied in full.
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(j) This Security Agreement may be signed in one or more
counterparts.
IN WITNESS WHEREOF, each party has executed this Agreement by its duly
authorized representative as of the date set forth above.
HOMEOWNERS ASSOCIATION OF AMERICA, INC.
By: /s/ C. Xxxxxxx Xxxxxx
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HAA OF ARIZONA, INC.
By: /s/ C. Xxxxxxx Xxxxxx
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HAA OF GEORGIA, INC.
By: /s/ C. Xxxxxxx Xxxxxx
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HAA OF UTAH, INC.
By: /s/ C. Xxxxxxx Xxxxxx
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HAA HOME PROTECTION OF CALIFORNIA, INC.
By: /s/ C. Xxxxxxx Xxxxxx
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HAA OF VIRGINIA, INC.
By: /s/ C. Xxxxxxx Xxxxxx
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THE CROSS COUNTRY GROUP, L.L.C.
By: /s/ Xxxxxx X. Xxxx
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