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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 5)*
MERIDIAN INSURANCE GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, NO PAR VALUE
- --------------------------------------------------------------------------------
(Title of Class of Securities)
589644-10-3
- --------------------------------------------------------------------------------
(CUSIP Number)
GREGORY M. SHEPARD
15 Country Club Place
Bloomington, Illinois 61701
(309) 829-1061
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
June 29, 1999
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
/ /.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
SCHEDULE 13D
CUSIP NO. 589644-10-3
---------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Gregory M. Shepard
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
1,371,700
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
1,371,700
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,371,700
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.9
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
2
<PAGE> 3
SCHEDULE 13D
CUSIP NO. 589644-10-3
---------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
American Union Financial Corporation
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
0
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
0
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.0
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
HC
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
3
<PAGE> 4
ITEM 1. SECURITY AND ISSUER.
This statement amends the statement on Schedule 13D dated August 31,
1998 ("Schedule 13D"), previously filed by Gregory M. Shepard ("Shepard"), and
amended by Amendment No. 1 to Schedule 13D dated October 31, 1998, Amendment No.
2 to Schedule 13D dated March 31, 1999, Amendment No. 3 to Schedule 13D dated
May 19, 1999, and Amendment No. 4 to Schedule 13D dated June 18, 1999, relating
to the common stock, no par value per share (the "Common Stock" or the "Shares")
of Meridian Insurance Group, Inc. (the "Company"). The principal executive
offices of the Company are located at 2955 North Meridian Street, P.0. Box 1980,
Indianapolis, Indiana 46206.
Each capitalized term used in this statement which is defined in the
Schedule 13D shall have the meaning ascribed in the Schedule 13D.
ITEM 2. IDENTITY AND BACKGROUND.
This amendment is being jointly filed by Shepard and American Union
Financial Corporation ("AUFC"), pursuant to the agreement which was attached to
Amendment No. 3 as Exhibit 1. Shepard and AUFC are sometimes collectively
referred to herein as the "Reporting Persons."
This amendment is filed to report AUFC's sale of Shares to Shepard on
June 29, 1999. Shepard owns 50% of the common stock of AUFC. The remaining 50%
of the common stock is owned by Mr. Tracy M. Shepard, who is Executive Vice
President and a director of AUFC, and is the brother of Shepard. The joint
filing by the Reporting Persons of this amendment should not be deemed an
admission by the Reporting Persons that either of them possesses any voting or
investment power over the Shares held by the other. Notwithstanding any
connection between the Reporting Persons, at this time each of the Reporting
Persons disclaims beneficial ownership of the Shares held by the other.
Shepard. Shepard's address is 15 Country Club Place, Bloomington,
Illinois 61701. His principal occupation is President of AUFC and President of
two subsidiaries of AUFC, American Union Insurance Company, an Illinois property
and casualty insurance company ("AUIC"), American Union Life Insurance Company,
an Illinois life, accident and health insurance company ("AULIC") (collectively,
the "AUFC Companies"). Shepard is also a director of AUFC. In addition, Shepard
is the Chief Executive Officer of Illinois HealthCare Insurance Company, an
Illinois life, accident and health insurance company, with health maintenance
organization authority ("Illinois HealthCare"). The AUFC Companies and Illinois
HealthCare are located at 303 East Washington Street, Bloomington, Illinois
61701. Shepard is a United States citizen.
AUFC. AUFC is an Illinois business corporation whose principal business
has been to serve as a holding company for the insurance company subsidiaries
stated above. AUFC's office and principal business address is 303 East
Washington Street, Bloomington, Illinois 61701. The directors and executive
officers of AUFC are Shepard and Tracy M. Shepard. Tracy M. Shepard's address is
310 West Virginia Avenue, Normal, Illinois 61761. His principal occupation is
developing real estate, which he does as President of Country Acres Land
Corporation, a real-estate development company located at 303 East Washington
Street, Bloomington, Illinois 61701.
On June 30, 1999 AUFC is being merged with and into AUIC in a
statutory merger that was approved by the Illinois Department of Insurance.
During the last five years, neither Shepard nor AUFC, nor, to the best
of their knowledge, any director or officer of AUFC, has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
been a party to a proceeding of a judicial or administrative body of competent
jurisdiction resulting in them becoming subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to federal or state securities laws or finding any violation with
respect to such laws.
4
<PAGE> 5
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
As of the date of this amendment, Shepard owns 1,371,700 Shares.
Shepard's purchase of 995,000 shares, and the source and amount of consideration
used therefor, was reported on a Schedule 13D filed with the Securities and
Exchange Commission on August 31, 1998. On January 6, 1999, Shepard received
99,500 Shares from the Company as a result of a stock dividend. On June 29, 1999
Shepard issued a personal note to AUFC, attached an Exhibit 1, in order to
purchase an additional 277,200 shares from AUFC for $4,583,892.
As of the date of this amendment, AUFC owned 0 Shares.
ITEM 4. PURPOSE OF TRANSACTION.
Shepard acquired the Shares for the purpose of investment because he
believed the Shares represented a favorable investment opportunity. Shepard is
evaluating and expects to continue to evaluate the investment potential of the
Shares. Depending on various factors, including the results of such evaluation,
the Company's business prospects and financial position, other developments
concerning the Company, the price level of the Shares, available opportunities
to acquire or dispose of Shares or realize trading profits, conditions in the
securities markets and general economic and industry conditions, reinvestment
opportunities and developments relating to its business, Shepard may in the
future take such actions with respect to such holdings in the Company as he
deems appropriate in light of circumstances existing from time to time. Such
actions may include the purchase of additional Shares in the open market,
through privately negotiated transactions with third parties or otherwise, or
the sale at any time, in the open market, through privately negotiated
transactions with third parties or otherwise, of all or a portion of the Shares
now owned or hereafter acquired.
Except as set forth above, Shepard has no present plans or proposals
which would result in or relate to any of the transactions described in (a)
through (j) of Item 4 of Schedule 13D. In the future, however, Shepard reserves
the right to adopt such plans or proposals subject to applicable regulatory
requirements, if any.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) (i) Shepard. On the date of this amendment, the aggregate number of
Shares of which Shepard may be deemed the beneficial owner is 1,371,700
(approximately 18.90% of the Shares outstanding), all of which are held by
Shepard as an individual. Shepard may have been deemed the beneficial owner of
the Shares held by AUFC previously. Shepard disclaimed beneficial ownership of
the Shares previously held by AUFC.
(ii) AUFC. On the date of this statement, the aggregate number of
Shares of which AUFC may be deemed the beneficial owner is 0 (approximately
0.00% of the Common Stock outstanding), all of which are held by AUFC. AUFC
disclaims beneficial ownership of the Shares held by Shepard. Tracy M. Shepard
owns no Shares.
5
<PAGE> 6
(b)(i) Shepard. Shepard has sole power to vote and sole power to
dispose or direct the disposition of the 1,371,700 Shares he holds as an
individual. Shepard does not have shared power to vote or direct the vote or
dispose or direct the disposition of any Shares. Shepard disclaimed any power to
vote or direct the disposition of the Shares held by AUFC.
(ii) AUFC. AUFC has sole power to vote and sole power to dispose or
direct the disposition of the 0 Shares held by AUFC. AUFC does not have shared
power to vote or shared power to direct the disposition of any Shares. Tracy M.
Shepard does not have sole or shared power to vote or direct the disposition of
any Shares.
(c)(i) Shepard. On June 29, 1999 AUFC sold 277,200 Shares to Shepard
at a price of $16.5364 per share.
(ii) AUFC. On June 29, 1999 AUFC sold 277,200 Shares to Shepard
at a price of $16.5364 per share.
Tracy M. Shepard has not engaged in any transactions in the Shares
during the 60 days preceding the date of this amendment.
(d) No other person has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the Shares
disclosed herein as being beneficially owned by each of the Reporting Persons.
(e) Not applicable.
6
<PAGE> 7
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SECURITIES OF THE ISSUER.
There are no contracts, arrangements, understandings or relationships
among the Reporting Persons or between such persons and any other person with
respect to any securities of the Company other than the personal note, referred
to in Item 3 above, issued by Shepard to AUFC for $4,583,892 at the call money
rate with a $4,583,892 principal payment scheduled for June 30, 2001.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit No. 1
7
<PAGE> 8
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
June 30, 1999
Gregory M. Shepard
/s/ Gregory M. Shepard
------------------------------------
American Union Financial Corporation
/s/ Gregory M. Shepard
------------------------------------
By: Gregory M. Shepard
Its: President
8
<PAGE> 9
EXHIBIT INDEX
Exhibit No. Description
Exhibit 1. Joint Filing Agreement.
9
<PAGE> 1
EXHIBIT 99.1
LOAN AGREEMENT
DATED: June 29, 1999
Borrower's Name: Gregory M. Shepard
Address: 303 E. Washington Street
Bloomington, IL 61701
Lender's Name: American Union Financial Corporation
Address: 303 E. Washington Street
Bloomington, IL 61701
INCEPTION DATE: June 29, 1999
EXPIRATION DATE: June 30, 2001
LOAN AMOUNT: $4,583,892
INTEREST RATE: 6.50% subject to change to
be equal to the call money rate
Borrower agrees as follows:
1. To execute a promissory note and security agreement acceptable
and payable to Lender for the amount of the loan made available
hereunder, together with such other documents as may be required.
Borrower's liability for the principal amount of such loan shall
not exceed the amount of the outstanding principal balance shown
above.
2. To pay interest on the sum loaned from the date of such loan to
the date of repayment.
3. All sums made available hereunder shall be used for the following
business purposes:
Borrower will use the proceeds of this loan to purchase 277,200
common shares of Meridian Insurance Group, Inc. from Lender.
<PAGE> 2
Lender agrees as follows:
1. To grant a loan to the undersigned borrower in the amount stated
above and in accordance with the terms and conditions of this
agreement.
AGREED TO BY LENDER:
AMERICAN UNION FINANCIAL CORPORATION
BY /s/ Gregory M. Shepard, President
-----------------------------------
Gregory M. Shepard, President
AGREED TO BY BORROWER:
Gregory M. Shepard
BY /s/ Gregory M. Shepard
-----------------------------------
Gregory M. Shepard
<PAGE> 3
PROMISSORY NOTE
Borrower Gregory M. Shepard
Name & 303 E. Washington St.
Address Bloomington, IL 61701
Lender's American Union Financial Corporation
Name & 303 E. Washington St.
Address Bloomington, IL 61701
Inception Date June 29, 1999
Maturity Date June 30, 2001
Loan Amt. $4,583,892
The undersigned Borrower promises to pay to the order of the above-named Lender
(at the Lender's address shown above) the Principal Sum of Four Million Five
Hundred Eighty Three Thousand Eight Hundred Ninety Two Dollars ($4,583,892) plus
interest from June 29, 1999 until final maturity on June 30, 2001 at the rate of
6.50% per cent per annum, payable in installments in accordance with the
enclosed payment schedule.
The interest rate on this note is subject to change from the above so as to be
equal to the call money rate calculated quarterly on January 1, April 1, July 1
and October 1 of each year.
The amounts of all payments scheduled above will be adjusted to reflect changes
in the effective interest rate.
Notwithstanding anything to the contrary contained herein, the interest rate on
this note shall at no time exceed the highest contract rate permitted by law.
INTEREST: All payments, whenever made, shall apply first toward accrued
interest, with the remainder of any payment applying toward principal. Any
accrued interest not paid when due (whether due by reason of a schedule of
payments or due because of Lender's demand) shall become part of the principal
thereafter, and shall itself bear interest at the applicable interest rate.
PREPAYMENT: Borrower may prepay this Note at any time prior to maturity without
penalty. Any partial prepayments shall not relieve or diminish any scheduled
subsequent payments of principal or interest until all obligations are paid in
full.
COSTS OF COLLECTION: Except where prohibited by law, the Borrower promises to
pay all costs of collection, including but not limited to reasonable attorney's
fees, paid or incurred by the Lender on account of such collection, whether or
not suit is filed with respect thereto.
<PAGE> 4
WAIVER: Demand, presentment, protest, notice of non-payment and dishonor of this
Promissory Note are hereby waived. Lender may release any party or security,
make future loans to any party or contractually change its relationship to or
the obligation of any party without waiving or affecting the obligation of any
other party to this Note. A party to this Note is any maker, surety, endorser or
guarantor. Waiver by the Lender at any time of any right conferred by this Note
or any agreement securing same will not affect the Lender's future exercise of
said right or any other.
SET-OFF: Lender may at any time before or after Default exercise its right to
set off all or any portion of the indebtedness evidenced hereby against any
liability or indebtedness of the Lender to the Borrower (whether owned by the
Borrower alone or in conjunction with any other person or entity, provided that
the Borrower has a beneficial interest therein) without prior notice to the
Borrower.
DEFAULT AND ACCELERATION: The Borrower shall be in Default upon the occurrence
of any one or more of any of the following events: (1) the Borrower shall fail
to pay, when due, any amount required hereunder; (2) any warranty or
representation made by the Borrower shall prove to be false or misleading in any
respect; (3) the Borrower or any guarantor of this Promissory Note shall
liquidate, merge, dissolve, terminate its existence, suspend business
operations, have a receiver appointed for all or any part of its property, make
an assignment for the benefit of its creditors, or file or have filed against it
any petition under any existing or future bankruptcy or insolvency law; (4) any
change occurs in the condition or affairs (financial or otherwise) of the
Borrower or any guarantor of this Promissory Note which, in the opinion of the
Lender, impairs the Lender's security or increases its risk with respect to this
Promissory Note; (5) Borrower fails to keep any promise under any agreements
intended to secure the repayment of this Promissory Note; or (6) Lender
reasonably deems itself insecure. Unless prohibited by law, the Lender may, at
its option, declare the entire unpaid balance of principal and interest
immediately due and payable without notice or demand at any time after Default
as such term is defined in this paragraph.
Borrower authorizes any attorney to appear in a court of record and confess
judgment, without process, against Borrower, in favor of Lender, for any sum
unpaid and due Lender on this note, together with collection costs including
reasonable attorney's fees.
This Note is secured by the Security Agreement hereafter.
Until terminated in writing, this Security Agreement secures this Note, all
extensions and renewal thereof, and all prior, contemporaneous and future debts
owed to the Lender by Borrower, whether originally owned or transferred to
Lender, PROVIDER HOWEVER, that this Security Agreement shall not secure such
other indebtedness incurred primarily for personal, family, or household
purposes, and which is thereby within the regulatory scheme of Truth in Lending,
unless this Security Agreement is disclosed as required by Truth in Lending;
and, provided further, even though this Security Agreement is properly
<PAGE> 5
disclosed as required by Truth in Lending, it will not secure such other
indebtedness if the Borrower is entitled to a Right of Rescission, unless such
Right of Rescission is given as required and Borrower fails to elect to rescind
within the time provided by law.
Borrower warrants, represents and agrees that:
In the event of Default under the Terms and Conditions of this Note, Lender
shall have all the rights under the Uniform Commercial Code. Borrower and Lender
agree that as to any reasonable notice requirement under the Uniform Commercial
Code, that such reasonable notice requirements shall consist of seven days
written notice mailed to the last known address of the Borrower.
By signing below, the
Borrower signs this Note
and Security Agreement and
agrees to its terms and
conditions.
GREGORY M. SHEPARD
By /s/ Gregory M. Shepard
---------------------------------
Gregory M. Shepard
<PAGE> 6
PAYMENT SCHEDULE
AMERICAN UNION FINANCIAL CORPORATION LOAN
TO GREGORY M. SHEPARD
DATED JUNE 29, 1999
AMOUNT $4,583,892
INTEREST RATE: 6.50%
TYPE OF LOAN FIXED TERM
DATE OF LOAN 06/29/99
FIRST INSTALLMENT DATE 09/30/99
NUMBER OF INSTALLMENTS 8
INSTALLMENT FREQUENCY QUARTERLY
AMOUNT OF LOAN $4,583,892
INTEREST RATE 6.5000%
INTEREST HANDLING METHOD CHARGED AS INTEREST PAYMENT
<TABLE>
<CAPTION>
PAYMENT PAYMENT DATE OF AMOUNT PAYMENT PAYMENT BALANCE
NUMBER YEAR TRANSACTION OF PAYMENT ON INTEREST ON PRINCIPAL DUE ON LOAN
<S> <C> <C> <C> <C> <C> <C>
1 1 9/30/99 74,488.25 74,488.25 0.00 4,583,892
2 1 12/31/99 74,488.25 74,488.25 0.00 4,583,892
3 1 3/31/00 74,488.25 74,488.25 0.00 4,583,892
4 1 6/30/00 74,488.25 74,488.25 0.00 4,583,892
YEARLY 297,953.00 297,953.00
TOTALS
5 2 9/30/00 74,488.25 74,488.25 0.00 4,583,892
6 2 12/31/00 74,488.25 74,488.25 0.00 4,583,892
7 2 3/31/01 74,488.25 74,488.25 0.00 4,583,892
8 2 6/30/01 4,658,380.25 74,488.25 4,583,892.00 0.00
YEARLY 4,881,845.00 297,953.00
TOTALS
</TABLE>
<PAGE> 7
- -----------------------------------------------------------------------------
UNIFORM COMMERCIAL CODE -- SECURITY AGREEMENT
Gregory M. Shepard 303 E. Washington St., Bloomington, IL 61701
- ------------------------------, --------------------------------------------,
Name Address
- ------------------------------, --------------------------------------------,
Name Address
(hereinafter called "DEBTOR,"), FOR VALUE RECEIVED, hereby grants to
American Union
Financial Corporation 303 E. Washington St., Bloomington, IL 61701
- ------------------------------, --------------------------------------------,
Name Address
(hereinafter called "SECURED PARTY") a security interest in the following
described property and all additional and accessions thereto (herein
collectively called "the Collateral"):
404,800 common shares of Meridian Insurance Group, Inc.
This security interest is given to secure the payment of any and all
indebtednesses and liabilities whatsoever of the DEBTOR to the SECURED PARTY,
whether direct or indirect, absolute or contingent, or due or to become due,
and whether now existing or hereafter arising, and together with all costs,
attorney's fees, and expenses of SECURED PARTY in respect to the indebtedness
or the Collateral (all herein collectively called the "Obligations,") which
current indebtedness is in the amount of $4,583,892 and is evidenced by a NOTE
of even date herewith.
The DEBTOR hereby warrants, covenants and agrees for value received as follows:
1. That except for the security interest granted hereby, DEBTOR is, or to
the extent that this agreement states that the Collateral is to be acquired
after the date hereof, will be, the sole owner of the Collateral, free from any
other lien, encumbrance or security interest and that DEBTOR will defend the
collateral against all claims and demands of all persons at any time claiming
the same or any interest therein;
2. That if checked here [ ], the Collateral is used primarily for
personal, family, or household purposes; that if checked here [ ], the
Collateral is used primarily in farming operations;
3. The Collateral will be kept at the place where the DEBTOR resides
unless otherwise stated herein, and shall not be moved unless written consent is
first obtained from the SECURED PARTY.
4. That if any or all of the Collateral has been or is to be attached to
real estate, DEBTOR shall furnish SECURED PARTY with a disclaimer signed by all
persons having an interest in the real estate, disclaiming any interest in the
Collateral prior to the interest of the SECURED PARTY. The description of the
real estate is:
Not applicable
located in the of , County of , Illinois.
5. That if any or all of the Collateral is crops, the description of the
real estate upon which the crops are to be grown in:
Not applicable
in County, Illinois, And the names of the record owner and
of all persons having an interest in said real estate are:
6. That DEBTOR is the owner of the collateral free and clear of any lien,
security interest or encumbrance, except those which may have been previously
filed by or on behalf of secured party, of any nature, and that no Financing
Statement covering said Collateral or any proceeds thereof is on file in any
public office; that at the request of SECURED PARTY, DEBTOR will join with
SECURED PARTY in executing one or more Financing Statements pursuant to the
Uniform Commercial Code in form satisfactory to SECURED PARTY and will pay the
cost of filing the same in all public offices whenever filing is deemed by
SECURED PARTY to be necessary or desirable;
7. That DEBTOR will not sell or otherwise transfer the Collateral or any
interest therein and will not permit any other lien or security interest to be
attached thereto without the written consent of SECURED PARTY.
8. That DEBTOR shall keep the Collateral insured with a reputable
insurance company satisfactory to SECURED PARTY against physical damage for no
less than the total amount owed to SECURED PARTY. Insurance policies shall be
payable to SECURED PARTY as its interest may appear. SECURED PARTY may cancel
the insurance at any time and receive the return premium, if any. If DEBTOR
fails to procure insurance, SECURED PARTY has the option, but is not obligated,
to do so at DEBTOR's expense.
9. That DEBTOR shall promptly pay when due all taxes and assessments that
may be levied against the Collateral. If DEBTOR fails to do so, SECURED PARTY
has the option, but is not obligated, to make payment at DEBTOR's expense.
10. SECURED PARTY has the option, but is not obligated to pay and
discharge other liens, encumbrances or security interests upon the Collateral,
and costs of maintenance, repair and preservation of the collateral.
11. ALL OF THE ADDITIONAL TERMS AND PROVISIONS ON THE REVERSE SIDE HEREOF
ARE INCORPORATED HEREIN BY REFERENCE AND MADE A PART HEREOF AS THOUGH FULLY SET
FORTH ON THIS SIDE OF THIS PAGE.
-------------------------------------------------
18. No default shall be waived by SECURED PARTY except in writing and no
waiver of any default shall operate as a waiver of any other default or of the
same default on a future occasion. All rights of SECURED PARTY hereunder shall
be cumulative and shall inure to the benefit of itself, its successors and
assigns; and all obligations of DEBTOR shall bind DEBTOR's legal
representatives and successors.
19. If there is more than one DEBTOR, all undertakings, warranties and
covenants made by the DEBTOR and all rights, powers and authorities given to or
conferred on the SECURED PARTY shall be joint and several.
This Security Agreement has been executed and delivered by the DEBTOR on
the 29th day of June, A.D. 1999. (Secured party need sign only if agreement is
to be used as a financing statement).
---------------------------------------
Debtor
American Union
Financial Corporation Gregory M. Shepard
- ------------------------------------ ---------------------------------------
Secured Party Debtor
BY /s/ Gregory M. Shepard, President BY /s/ Gregory M. Shepard
- ------------------------------------ ---------------------------------------
<PAGE> 8
12. That any amounts paid by SECURED PARTY pursuant to paragraphs 8, 9, and 10
above shall become additional obligations secured by this security agreement,
and shall bear interest at the highest legal rate allowable by Illinois
Statutes from the dates of any such advances until repaid.
13. In case any of the following events shall happen or occur, DEBTOR shall be
in default:
(a) Failure or neglect to comply with any of the terms, provisions,
warranties or covenants of this Security Agreement; or
(b) Failure to pay any of the Obligations when due at any original or
renewed or extended maturity; or
(c) If the Collateral or any part thereof ceases to be personal property;
or
(d) Any warranty, representation or statement made or furnished to
SECURED PARTY by or on behalf or DEBTOR shall be or prove to have been false
when made or furnished; or
(e) Any loss, theft, substantial damage, destruction, or encumbrance to
or of any of the Collateral or the voluntary or Involuntary transfer of any of
the Collateral by way of sale, creation of a security interest, attachment,
levy, garnishment or other judicial process; or
(f) Death, dissolution, termination of existence, insolvency laws or laws
for the relief or debtors, by or against, DEBTOR (or if more than one, any of
them) or any guarantor or surety for any Debtor, or the appointment of a
receiver, trustee, court appointee, or otherwise, for any part of the property
of any of them; or
(g) If at any time SECURED PARTY feels insecure.
14. Upon any default and at any time or from time to time thereafter, the
SECURED PARTY may at its option and without notice or demand declare any one or
more or all of the Obligations immediately due and payable, notwithstanding any
provisions in any thereof to the contrary and shall have all of the rights and
remedies of a secured party under the Uniform Commercial Code (Ill, Rev. Stat.
Ch. 26), and all other rights permitted by law, as well as the right to take and
may with or without judicial process enter upon any premises on which the
Collateral or any part thereof may be situated and remove the same therefrom,
and may hold, maintain, repair, preserve and prepare the Collateral for sale,
and may without removal render the Collateral nonusable, and may dispose of the
Collateral wherever situated, and unless the Collateral in perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, the SECURED PARTY will give the DEBTOR reasonable notice of
the time and place of any public sale thereof or of the time after which
intended disposition is to be made. The requirement of reasonable notice shall
be met if such notice is mailed, postage, prepaid, to the DEBTOR at the address
given herein or if none to any address in the SECURED PARTY's files, at least
five days before the time of sale or other disposition. Expenses of retaking,
holding, preparing for sale, selling or the like shall include SECURED PARTY's
reasonable attorneys' fees and legal.
15. The requirements of any notice to Debtor shall be met if such notice is
mailed, postage prepaid, to the address of Debtor listed at the beginning of
this agreement at least five days prior to the time of sale, disposition or
other event. The Secured Party may be the buyer at any public sale, and if the
Collateral is of a type customarily sold in a recognized market or is of a type
which is the subject of widely distributed standard price quotations, the
Secured Party may buy at private sale.
16. Debtor also agrees that after any default to promptly comply with any demand
by the Secured Party to assemble the Collateral and make it available to the
Secured Party at a place reasonably convenient to both parties.
17. All rights of the Secured Party in, to and under this agreement and in and
to the Collateral shall pass to and may be exercised by any assignee thereof.
The Debtor agrees that if the Secured Party gives notice to the Debtor of an
assignment of said rights, upon such notice the liability of the Debtor to the
assignee shall be immediate and absolute. The Debtor will not set up any claim
against the Secured Party as a defense, counterclaim or set-off to any action
brought by any such assignee for the unpaid balance owed hereunder or for
possession of the Collateral, provided that Debtor shall not waive hereby any
right of action to the extent that waiver thereof is expressly made
unenforceable under applicable law.
ASSIGNMENT WITHOUT RECOURSE
FOR VALUE RECEIVED, without recourse, the undersigned does hereby sell,
assign and transfer to _________________________________________________________
______________________________________ all right, title and interest in and to
the within Security Agreement and the property covered thereby and authorizes
the said Assignee to do every act and thing necessary to collect and discharge
the obligation secured thereby.
_______________________________________
Creditor
By:____________________________________
ASSIGNMENT WITH GUARANTY OF PAYMENT
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and transfer
to _____________________________________________________________________________
_____________________ all right, title and interest in and to the within
Security Agreement and the property covered thereby and authorizes the said
Assignee to do every act and thing necessary to collect and discharge the
obligation secured thereby.
In consideration of the purchase of the within Security Agreement, the
undersigned guarantees payment of the full amount remaining unpaid thereon and
covenants that if default be made in payment of any installment herein for a
period of ______________________ days to pay the full amount then unpaid to the
Assignee upon demand. The liability of the undersigned shall not be affected by
any settlement, extension of credit or variation of terms of the within
Security Agreement. The undersigned waives notice of acceptance of this
guaranty and notice of nonpayment and nonperformance.
_______________________________________
Creditor
By:____________________________________
