by this Pledge Agreement, and such delivery, filing and pledge of
the Collateral pursuant to this Pledge Agreement will create a valid and
perfected first priority security interest in the Collateral securing the
payment of the Secured Obligations pursuant to the UCC in effect in each
applicable jurisdiction, including, without limitation, the States of Illinois
and Delaware.
SECTION 2.3
DISTRIBUTIONS; ETC.
SO LONG AS
NO EVENT OF DEFAULT SHALL HAVE OCCURRED, PLEDGOR SHALL BE ENTITLED TO RECEIVE
AND RETAIN, AND TO UTILIZE FREE AND CLEAR OF THE LIEN OF THIS PLEDGE AGREEMENT
AND ALL DISTRIBUTIONS OF INTEREST OR OTHER FUNDS IN RESPECT OF THE SURPLUS NOTES
TO THE EXTENT MADE IN ACCORDANCE WITH THE PROVISIONS OF THE SURPLUS NOTE
PURCHASE AGREEMENT; PROVIDED, HOWEVER, THAT ANY AND ALL SUCH DISTRIBUTIONS
CONSISTING OF RIGHTS OR INTERESTS IN THE FORM OF SECURITIES SHALL BE, AND SHALL
BE FORTHWITH DELIVERED TO THE SECURED PARTY TO HOLD AS ADDITIONAL COLLATERAL AND
SHALL, IF RECEIVED BY PLEDGOR, BE RECEIVED IN TRUST FOR THE BENEFIT OF THE
SECURED PARTY, BE SEGREGATED FROM THE OTHER PROPERTY OR FUNDS OF PLEDGOR, AND
SHALL BE FORTHWITH DELIVERED TO THE SECURED PARTY AS COLLATERAL IN THE SAME FORM
AS SO RECEIVED (WITH ANY NECESSARY ENDORSEMENT).
SECTION 2.4
TRANSFERS AND OTHER LIENS.
PLEDGOR SHALL NOT (I) SELL, CONVEY, ASSIGN OR OTHERWISE DISPOSE OF, OR GRANT ANY
OPTION OR RIGHT WITH RESPECT TO, ANY OF THE COLLATERAL EXCEPT AS PERMITTED BY
THE SURPLUS NOTE PURCHASE AGREEMENT OR (II) CREATE OR PERMIT TO EXIST ANY LIEN
OR ENCUMBRANCE UPON OR WITH RESPECT TO ANY COLLATERAL, OTHER THAN THE LIEN AND
SECURITY INTEREST GRANTED TO THE SECURED PARTY PURSUANT TO THIS PLEDGE
AGREEMENT.
ARTICLE III
EVENTS OF DEFAULT; REMEDIES
SECTION 3.1
EVENTS OF DEFAULT.
EACH OF THE
FOLLOWING EVENTS SHALL CONSTITUTE AN EVENT OF DEFAULT (EACH, AN "EVENT OF
DEFAULT") UNDER THIS PLEDGE AGREEMENT: (I) ANY MATERIAL BREACH BY THE PLEDGOR OF
ANY TERM, PROVISION OR COVENANT OF THE SURPLUS NOTE PURCHASE AGREEMENT; (II) ANY
MATERIAL BREACH BY THE PLEDGOR OF ANY TERM, PROVISION OR COVENANT OF THIS PLEDGE
AGREEMENT; (III) THE SECURED PARTY CEASES TO HAVE A PERFECTED FIRST PRIORITY
LIEN ON, AND SECURITY INTEREST IN, THE COLLATERAL; OR (IV) THE PLEDGOR BECOMES
SUBJECT TO BANKRUPTCY, INSOLVENCY, REORGANIZATION, LIQUIDATION, CONSERVATION,
REHABILITATION OR OTHER SIMILAR PROCEEDINGS.
SECTION 3.2
REMEDIES UPON DEFAULT.
(A)
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT,
ALL RIGHTS OF PLEDGOR TO RECEIVE DISTRIBUTIONS WHICH IT WOULD OTHERWISE BE
AUTHORIZED TO RECEIVE AND RETAIN PURSUANT TO SECTION 2.3 HEREOF SHALL CEASE AND
ALL SUCH RIGHTS SHALL THEREUPON BECOME VESTED IN THE SECURED PARTY, WHICH SHALL
THEREUPON HAVE THE SOLE RIGHT TO RECEIVE AND HOLD AS COLLATERAL SUCH
DISTRIBUTIONS.
(B)
ALL DISTRIBUTIONS WHICH ARE RECEIVED BY
PLEDGOR CONTRARY TO THE PROVISIONS OF PARAGRAPH (A) OF THIS SECTION 3.2 SHALL BE
RECEIVED IN TRUST FOR THE BENEFIT OF THE SECURED PARTY,
4
SHALL BE SEGREGATED FROM OTHER FUNDS OF PLEDGOR AND SHALL IMMEDIATELY BE PAID
OVER TO THE SECURED PARTY AS COLLATERAL IN