Document:

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                                                                    EXHIBIT 10.2

                                PLEDGE AGREEMENT

         PLEDGE AGREEMENT dated November 13, 2003, by and between STANDARD
MANAGEMENT CORPORATION, an Indiana corporation (hereinafter called "Pledgor")
and THE CIT GROUP/EQUIPMENT FINANCING, INC., a Delaware corporation (hereinafter
called "Pledgee").

         WHEREAS, Pledgor is entering into a Senior Secured Credit Agreement of
even date herewith (the "Credit Agreement") with Pledgee pursuant to which
Pledgee has agreed to extend certain credit accommodations on the condition,
inter alia, that all the issued and outstanding capital stock of STANDARD LIFE
INSURANCE COMPANY OF INDIANA (the "Company"), an Indiana corporation, be pledged
to Pledgee;

         WHEREAS, Pledgor is the owner of 100% of the issued and outstanding
capital stock of the Company; and

         WHEREAS, Pledgor has determined that its execution, delivery and
performance of this Pledge Agreement directly benefit and are within the
corporate purposes and in the best interests of Pledgor.

         NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:

         1.       All terms used in this Pledge Agreement which are defined in
the Credit Agreement and not otherwise defined herein, shall have the same
meanings as set forth in the Credit Agreement.

         2.       As security for the due and punctual payment of all
indebtedness and obligations of Pledgor under the Credit Agreement, the Notes
and the Loan Documents and for all of Pledgor's Obligations (all such
indebtedness and obligations being hereinafter collectively referred to as the
"Secured Obligations"), Pledgor hereby pledges to Pledgee and grants to Pledgee
a security interest in all of the issued and outstanding shares of common stock
of the Company and in the proceeds thereof. The shares hereby pledged, together
with any shares hereafter issued by the Company by way of a stock dividend,
split or other distribution or reclassification, are hereinafter referred to as
"Pledged Shares". Pledgor is herewith delivering to Pledgee the certificates
representing the Pledged Shares accompanied by stock powers duly executed in
blank, with signatures guaranteed.

         3.       Pledgor hereby represents, warrants and covenants as follows:

                  (a)      The Pledged Shares are, and shall be at all times,
duly authorized, validly issued, fully paid and nonassessable shares and shall
at all times constitute not less than 100% of the issued and outstanding shares
of each class of stock of the Company.

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                  (b)      The Pledged Shares shall at all times be free and
clear of any security interests, mortgages, pledges, liens, encumbrances and
restrictions on the transfer thereof other than those created by this Pledge
Agreement or that exist under the applicable insurance laws of the States of
Indiana and Mississippi, as appliable; and Pledgor will not suffer or permit any
security interests, mortgages, pledges, liens, encumbrances or restrictions to
attach to the Pledged Shares or transfer or attempt to transfer any interest in
the Pledged Shares without the written consent of Pledgee.

                  (c)      Pledgor will not permit the Company to issue any
additional shares of capital stock of any class, or to reclassify any of its
issued and outstanding shares of capital stock unless all such shares shall
forthwith be delivered to Pledgee accompanied by stock powers duly executed in
blank with signatures guaranteed to be held by Pledgee as part of the Pledged
Shares in accordance with the terms hereof.

                  (d)      Without affecting the rights of Pledgee hereunder,
any collateral security for the Secured Obligations, and any guarantee or surety
therefor, may be exchanged, sold, surrendered, released, modified or otherwise
dealt with in accordance with the terms of any present or future agreement
between Pledgee and Pledgor or any guarantor or surety, including any agreement
permitting Pledgee to take unilateral action with respect thereto.

                  (e)      The execution, delivery and performance by the
Pledgor of this Agreement does not require any authorization, consent or
approval by, or registration, declaration or filing with, or notice to, any
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or any third party, except (i) such authorization, consent,
approval, registration, declaration, filing or notice as has been obtained,
accomplished or given prior to the date hereof or (ii) as contemplated by the
proviso contained in paragraph 5 below.

         4.       Unless an Event of Default shall has occurred and is
continuing under the Credit Agreement, Pledgor shall be entitled to vote or
consent with respect to the Pledged Shares, to receive cash dividends thereon,
and to have and exercise all other rights as a holder of the Pledged Shares in
any manner not inconsistent with or in violation of the terms of the Credit
Agreement or this Pledge Agreement.

         5.       Upon the occurrence and during the continuance of any Event of
Default, the following provisions shall govern the right of Pledgee to realize
upon the Pledged Shares, in addition to any rights and remedies available in law
or equity, and in addition to the rights and remedies provided in the Credit
Agreement, provided however that Pledgee shall not have the right to vote, give
consents or waivers, sell, transfer or otherwise dispose of, or in any manner
exercise control over the Pledged Shares without obtaining, to the extent
required by law, the prior approval (including any hearing required by law) of
the Indiana Department of Insurance and any other applicable regulatory body or
agency (including the Mississippi Department of Insurance for as long as Dixie
is domesticated in that state):

                  (a)      Unless Pledgee agrees otherwise in writing, only
Pledgee shall be entitled to vote or consent or take any other action with
respect to the Pledged Shares, and Pledgor

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hereby irrevocably constitutes and appoints Pledgee its proxy and attorney in
fact, with full power of substitution to do so, and agrees, if so requested, to
execute or cause to be executed appropriate irrevocable proxies therefor in
addition to and separate from this Agreement.

                  (b)      Pledgee shall not be required to make any demand upon
or pursue or exhaust any of its rights or remedies against Pledgor or any other
person with respect to the payment of the Secured Obligations, or to pursue or
exhaust any of its rights or remedies with respect to the Pledged Shares or any
other collateral held in respect of the Secured Obligations, or any direct or
indirect guaranty thereof. Pledgee shall not be required to marshal the Pledged
Shares or any other collateral for or guaranty of the Secured Obligations or to
resort to the Pledged Shares or any such other collateral or guaranty in any
particular order and all of the rights granted to Pledgee hereunder and under
all other agreements relating to the Secured Obligations shall be cumulative. To
the extent not prohibited by applicable law, Pledgor hereby agrees to waive, and
does hereby absolutely and irrevocably waive and relinquish the benefit and
advantage of, and does hereby covenant not to assert against Pledgee, any
valuation, stay, appraisement, extension, or redemption laws now existing or
which may hereafter exist and which, but for this provision, might be applicable
to any sale made under the judgment, order or decree of any court, or privately
under the power of sale conferred by this Pledge Agreement or in respect of any
Pledged Shares. Without limiting the generality of the foregoing, Pledgor hereby
agrees that it will not invoke or utilize any law which might cause delay in, or
impede, the enforcement of the rights of Pledgee under this Pledge Agreement,
and hereby waives the same. IN ADDITION, TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW, PLEDGOR HEREBY WAIVES ANY RIGHT TO PRIOR NOTICE (EXCEPT TO THE
EXTENT EXPRESSLY PROVIDED IN THIS AGREEMENT) OR JUDICIAL HEARING IN CONNECTION
WITH THE TAKING POSSESSION OR THE DISPOSITION OF ANY OF THE PLEDGED SHARES,
INCLUDING, WITHOUT LIMITATION, ANY SUCH RIGHT WHICH PLEDGOR WOULD OTHERWISE
HAVE.

                  (c)      The Pledged Shares may be sold for cash or other
value in any manner of lots at brokers' board, public auction or private sale
without demand, advertisement or notice (excepting only that Pledgee shall give
Pledgor ten (10) days' prior written notice of the time and place of any public
sale or the time after which a private sale may be made, which notice Pledgor
and Pledgee hereby agree to be reasonable). At any sale or sales of the Pledged
Shares (except at private sale), Pledgee may bid for and purchase the whole or
any part of the property and rights so sold and upon compliance with the terms
of such sale may hold, exploit and dispose of such property and rights without
further accountability to Pledgor, except with respect to the proceeds of such
sale or sales. Pledgor will execute and deliver, or cause to be executed and to
be delivered, such instruments and documents and shall supply or cause to be
supplied such further information and take such further action as Pledgee shall
require in connection with such sale.

                  (d)      The proceeds of all sales and any other monies
received by Pledgee with respect to the disposition of Pledged Shares shall be
applied as follows:

                           i)       First, to the payment of the costs and
                  expenses of such sale or sales, and the reasonable attorneys'
                  fees incurred by Pledgee;

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                           ii)      Second, any surplus then remaining, to the
                  payment of the Secured Obligations; and

                           iii)     Third, any surplus then remaining shall be
                  paid to Pledgor.

                  (e)      Pledgor shall use its best efforts to cause the
issuer, transfer agent, or registrar of the Pledged Shares to take all such
actions and execute all such documents as may be necessary or appropriate, upon
the request of Pledgee, including, but not limited to the following:

                           i)       to remove any restrictive legends placed on
                  the Pledged Shares that are not required legally to appear on
                  the Pledged Shares held by Pledgee;

                           ii)      after an Event of Default, to effect any
                  sale or sales of Pledged Shares in accordance with Rule 144
                  and any other applicable rules under the Securities Act of
                  1933; and

                           iii)     after an Event of Default, to effect any
                  sale or other disposition of the Pledged Shares in any lawful
                  public or private sale or other disposition.

         6.       Upon the occurrence and during the continuance of any Event of
Default, Pledgee shall be entitled to receive all cash dividends and other
dividends or distributions on the Pledged Shares, and Pledgee at its option
shall have the right to transfer into its name or that of its nominee any and
all of the Pledged Shares, subject to the proviso set forth in paragraph 5
above.

         7.       Pledgor shall at any time and from time to time, execute and
deliver upon the written request of Pledgee further documents and do further
acts and things as Pledgee may reasonably request to effect the purposes of this
Agreement, including, without limitation, delivering to Pledgee upon the
occurrence of an Event of Default irrevocable proxies with respect to the
Pledged Shares in a form satisfactory to Pledgee, subject to the proviso set
forth in paragraph 5 above. Until receipt thereof, this Agreement shall
constitute Pledgor's proxy to Pledgee or its nominee to vote all of the Pledged
Shares then registered in Pledgor's name at any and all such times as Pledgee
has the right to vote such shares pursuant to the terms of this Pledge
Agreement, subject to the proviso set forth in paragraph 5 above. The power of
attorney granted hereby is coupled with an interest and is irrevocable.

         8.       No delay or omission on the part of Pledgee in exercising any
right under this Pledge Agreement, the Credit Agreement, and the other Loan
Documents shall operate as a waiver or relinquishment of such right and no such
waiver or relinquishment shall be effective except under the conditions set
forth in paragraph 12 of this Pledge Agreement.

         9.       Pledgee's sole duty with respect to the custody, safekeeping
and physical preservation of the Pledged Shares in its possession, under Section
9-207 of the Uniform Commercial Code or otherwise, shall be to deal with the
Pledged Shares in the same manner as Pledgee deals with similar securities for
its own account. Neither Pledgee nor any of its directors, officers, employees
or agents shall be liable for failure to demand, collect or realize upon any of
the Pledged Shares or for any delay in doing so nor shall Pledgee be under any

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obligation to sell or otherwise dispose of any Pledged Shares upon the request
of the Pledgor or otherwise.

         10.      This Pledge Agreement shall be binding upon and inure to the
benefit of the parties hereto, their respective successors and assigns, and
shall inure to the benefit of the holders from time to time of any evidence of
indebtedness created pursuant to the Credit Agreement.

         11.      All notices and other communications provided for hereunder
shall be effective if given in accordance with the provisions of the Credit
Agreement.

         12.      This Pledge Agreement shall be governed by and construed in
accordance with the internal laws of the State of Indiana without reference to
conflict of laws principles. Neither this Pledge Agreement nor any term hereof
may be amended, waived, discharged or terminated orally but only by an
instrument in writing signed by the party against which enforcement of the
amendment, waiver, discharge or termination is sought.

                           [SIGNATURE PAGE TO FOLLOW]

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         IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals the day and year first above written.

                                   STANDARD MANAGEMENT CORPORATION

                                   By: /s/ Stephen M. Coons      Corporate Seal)
                                      ---------------------------

                                   Title: Executive Vice President and Secretary

                                   THE CIT GROUP/EQUIPMENT
                                   FINANCING, INC.

                                   By: /s/ John Ikazaki
                                      ---------------------------

                                   Title: Vice President, Funding

                                       6<PAGE>

                                                                    EXHIBIT 10.3

                               SECURITY AGREEMENT

         This SECURITY AGREEMENT (the "Security Agreement"), dated November 13,
2003, is made by STANDARD MANAGEMENT CORPORATION, an Indiana corporation
("Borrower"), in favor of THE CIT GROUP/EQUIPMENT FINANCING, INC., a Delaware
corporation (the "Lender").

                                   BACKGROUND

         A.       Borrower and Lender have entered into a Senior Secured Credit
Agreement dated the date hereof (as amended, restated or otherwise modified from
time to time, the "Credit Agreement") pursuant to which Lender, subject to the
terms and conditions contained therein, is to make loans to the Borrower.

         B.       It is a condition precedent to the Lender making any loans to
the Borrower under the Credit Agreement that the Borrower execute and deliver to
the Lender this Security Agreement.

         C.       The Borrower wishes to grant security interests in favor of
the Lender, as herein provided.

         In consideration of any loans, extensions of credit, or other financial
accommodations made or to be made by the Lender to the Borrower, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, the Borrower hereby agrees as
follows:

         Section 1. Definitions.

                           (a)      Capitalized Terms. Reference is hereby made
to the Credit Agreement for a statement of the terms thereof. All terms used in
this Security Agreement which are defined in the Credit Agreement and not
defined herein shall have the respective meanings ascribed to such terms in the
Credit Agreement.

                           (b)      Definitions. For purposes of this Agreement,
the following terms shall have the following definitions:

                  "Management Agreement" means that certain Management Service
Agreement between SLIC and Borrower, dated August 1, 1992, as amended by that
certain Amendment #1 effective January 1, 1995, as further amended by that
certain Amendment #2 effective January 1, 1997, as further amended by that
certain Amendment #3 effective January 1, 1999, and as may be further amended,
modified or restated from time to time.

                  "Secured Obligations" means all obligations and liabilities of
every nature of Borrower now or hereafter existing under or arising out of or in
connection with the Credit Agreement and the other Loan Documents and all
extensions or renewals thereof, whether for principal, interest (including,
without limitation, interest that, but for the filing of a petition in
bankruptcy with respect to any Borrower, would accrue on such obligations),
fees, expenses, indemnities or otherwise, whether voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated, whether
or not jointly owed with others, and whether or not from time to time decreased
or extinguished and later increased, created or incurred, and all or any portion
of such obligations or liabilities that are paid, to the extent all or any part
of such payment is avoided or recovered directly or indirectly from Lender as a
preference, fraudulent transfer or otherwise.

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                  "Security Agreement" means this Security Agreement, together
with all Schedules and Exhibits hereto and all amendments, modifications or
restatements as may from time to time be in effect with respect hereto.

                  "SLIC" means Standard Life Insurance Company of Indiana, an
Indiana corporation, and its successors and permitted assigns.

                  "Surplus Notes" means, collectively, (i) that certain Surplus
Debenture in the principal amount of $13,000,000 by SLIC in favor of Borrower
dated November 8, 1996; (ii) that certain Surplus Debenture in the principal
amount of $6,000,000 by SLIC in favor of Borrower dated December 31, 1998; and
(iii) that certain Surplus Debenture in the principal amount of $8,000,000 by
SLIC in favor of Borrower dated December 31, 1998, and all replacements,
amendments, substitutions and consolidations of the foregoing.

         Section 2. Grant of Security Interest. Borrower hereby grants to the
Lender, to secure the prompt payment and performance in full when due, whether
at stated maturity, by required prepayment, declaration, acceleration,
conversion, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 363(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a)) of all of the Secured
Obligations, a continuing security interest in and general lien upon, and
pledges and assigns to the Lender all of the Borrower's right, title and
interest in, the following properties and assets of the Borrower, wherever
located, whether now owned or hereafter acquired or arising, and all proceeds
and products thereof (all of the same being hereinafter called the
"Collateral"):

                           (i)      any and all amounts owed to Borrower
pursuant to the Management Agreement, whether constituting accounts, payment
intangibles, instruments, investment property, general intangibles or any other
category of collateral ("Management Agreement Receivables");

                           (ii)     Borrower's right, title and interest in the
Surplus Notes and the right to payments of principal, interest, fees or other
amounts thereunder;

                           (iii)    all general intangibles and books and
records relating to the foregoing.

         Section 3. Authorization to File Financing Statements. Borrower hereby
irrevocably authorizes the Lender at any time and from time to time prior to the
payment in full in cash of the Secured Obligations to file in any filing office
in any UCC jurisdiction any initial financing statements and amendments thereto
with respect to the security interest herein granted to Lender in the
Collateral.

         Section 4. Delivery of the Surplus Notes. To insure the attachment,
perfection and first priority of, and the ability of the Lender to enforce the
Lender's security interest in the Collateral, the Borrower agrees that on or
before the Effective Date the Borrower shall endorse (in form satisfactory to
the Lender in its sole and absolute discretion), assign and deliver the original
Surplus Notes to the Lender.

         Section 5. Other Actions as to any and all Collateral. The Borrower
further agrees, upon the request of the Lender and at the Lender's option, to
take any and all other actions as the Lender may determine to be necessary or
useful for the attachment, perfection and priority of, and the ability of the
Lender to enforce, the Lender's security interest in any and all of the
Collateral, including, without limitation:

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                           (a)      executing, delivering and, where
appropriate, filing financing statements and amendments relating thereto under
the UCC, to the extent, if any, that the Borrower's signature thereon is
required therefor;

                           (b)      complying with any provision of any statute,
regulation or treaty of the United States as to any Collateral if compliance
with such provision is a condition to attachment, perfection or priority of, or
ability of the Lender to enforce, the Lender's security interest in such
Collateral;

                           (c)      obtaining governmental and other third party
waivers, consents and approvals in form and substance reasonably satisfactory to
the Lender; and

                           (d)      taking all actions under any other law, as
determined by the Lender to be applicable in any relevant UCC or other
jurisdiction, including any foreign jurisdiction.

         Section 6. Borrower's Right to Use Collateral. Notwithstanding any
other provision of this Security Agreement, in the absence and continuance of an
Event of Default, Borrower shall have the right to collect and retain all
amounts owed to Borrower from SLIC under the Management Agreement and the
Surplus Notes.

         Section 7. Representations and Warranties.

                  7.1.     Representations and Warranties Concerning Borrower'
Legal Status. Borrower has previously delivered to the Lender a Perfection
Certificate signed by such Borrower and entitled "Perfection Certificate" a copy
of which is attached to this Security Agreement as Schedule 1. The Borrower
represents and warrants to the Lender as follows:

                           (a)      Borrower's exact legal name is that
indicated on the Perfection Certificate and on the signature page hereof;

                           (b)      the Borrower is an organization of the type,
and is organized in the jurisdiction, set forth in the Perfection Certificate;

                           (c)      the Perfection Certificate accurately sets
forth Borrower's organizational identification number (or accurately states that
Borrower has none);

                           (d)      the Perfection Certificate accurately sets
forth Borrower's place of business or, if more than one, its chief executive
office, as well as Borrower's mailing address, if different;

                           (e)      all other information set forth on the
Perfection Certificate is accurate and complete in all material respects; and

                           (f)      there has been no change in any of such
information since the date as of which the Perfection Certificate was signed by
the Borrower.

                  7.2.     Representations and Warranties Concerning Collateral,
Etc. The Borrower further represents and warrants to the Lender as follows:

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                           (a)      the Borrower is the owner of the Collateral,
free from any right or claim of any person or any adverse lien, security
interest or other encumbrance, except for the security interest granted to the
Lender, and other liens expressly permitted by the Credit Agreement;

                           (b)      this Security Agreement creates a valid and
enforceable security interest in the Collateral securing the payment of the
Secured Obligations, and upon the filing of a financing statement in the office
of the Secretary of State of the State of Indiana, such security interest will
be a perfected first priority security interest; and

                           (c)      other than the filing of a financing
statement set forth in subsection (b) above, no authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required either (i) for the grant by the Borrower of the
security interest granted hereby or for the execution, delivery or performance
of this Security Agreement by the Borrower, or (ii) for the perfection by the
Lender of its rights and interests hereunder.

         Section 8. Covenants.

                  8.1.     Concerning Borrower' Legal Status. Borrower covenants
and agrees with the Lender as follows for so long as the Credit Agreement is in
effect:

                           (a)      without providing Lender prior written
notice thereof, it will not change its name, its place of business or, if more
than one, chief executive office, or its mailing address or organizational
identification number if it has one;

                           (b)      if it does not have an organizational
identification number and later obtains one, it will forthwith notify the Lender
of such organizational identification number; and

                           (c)      it will not change its type of organization,
jurisdiction of organization or other legal structure.

                  8.2.     Covenants Concerning Collateral, Etc. The Borrower
further covenants and agrees with the Lender as follows for so long as the
Credit Agreement is in effect:

                           (a)      except for the security interest herein
granted and liens permitted by the Credit Agreement, the Borrower shall own the
Collateral free from any right or claim of any other person or any lien,
security interest or other encumbrance, and the Borrower shall, at its own
expense, defend the same against all claims and demands of all persons at any
time claiming the same or any interests therein adverse to the Lender;

                           (b)      the Borrower shall not pledge, mortgage or
create, or suffer to exist any right of any person in or claim by any person to
the Collateral, or any security interest, lien or other encumbrance in the
Collateral in favor of any person, other than the Lender, except for liens
expressly permitted by the Credit Agreement, and the Borrower shall not permit
any of the Collateral to be levied upon under any legal process;

                           (c)      the Borrower shall not file or authorize or
permit to be filed in any jurisdiction any financing statement relating to any
of the Collateral naming any secured party other than the Lender;

                           (d)      the Borrower will, at its own expense,
deliver and pledge to the Lender, endorsed or accompanied by instruments of
assignment or transfer satisfactory to the Lender,

                                      -4-
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any instruments or documents constituting or evidencing Collateral which the
Lender may reasonably specify;

                           (e)      the Borrower will, at its own expense, take
any action which the Lender may reasonably deem necessary or useful in order to
create, preserve, perfect, extend, modify, terminate or otherwise affect any
security interest granted pursuant to this Security Agreement or to enable the
Lender to exercise or enforce any of its rights hereunder;

                           (f)      the Borrower will, at its own expense, keep
and stamp or otherwise mark any of its documents or instruments and its books
and records relating to any of the Collateral in such manner as Lender may
reasonably require;

                           (g)      the Borrower will, at its own expense, pay
or reimburse the Lender in the amount of all expenses (including without
limitation reasonable fees and expenses of attorneys and experts) incurred in
any way in connection with the exercise, defense or assertion of any rights or
interest of the Lender hereunder, the enforcement of any provisions hereof, or
the collection, possession, disposition or enforcement of any of the Collateral
(all such expenses to be Secured Obligations hereunder);

                           (h)      the Borrower will not sell, factor or
otherwise dispose, or offer to sell, factor or otherwise dispose, of any of the
Collateral; and

                           (i)      the Borrower will not in any way amend,
modify, restate or terminate the Management Agreement.

         Section 9. Collateral Protection Expenses; Preservation of Collateral.

                  9.1.     Expenses Incurred by Lender. In the Lender's sole
discretion, if the Borrower fails to do so, the Lender may discharge taxes and
other encumbrances at any time levied or placed on any of the Collateral, and
pay any necessary filing fees related thereto. The Borrower agrees to reimburse
the Lender on demand for all expenditures so made. The Lender shall have no
obligation to the Borrower to make any such expenditures, nor shall the making
thereof be construed as a waiver or cure any Default or Event of Default.

                  9.2.     Securities and Deposits. The Lender may at any time
following and during the continuance of an Event of Default, at its option,
transfer to itself or any nominee any securities constituting Collateral,
receive any income thereon and hold such income as additional Collateral or
apply it to the Secured Obligations. Whether or not any Secured Obligations are
due, the Lender may, following and during the continuance of an Event of
Default, demand, sue for, collect, or make any settlement or compromise which it
deems desirable with respect to the Collateral. Regardless of the adequacy of
Collateral or any other security for the Secured Obligations, any deposits or
other sums at any time credited by or due from the Lender to the Borrower may at
any time be applied to or set off against any of the Secured Obligations.

         Section 10. Notification to Other Persons Obligated on Collateral. The
Borrower shall, at the request of the Lender following the occurrence of an
Event of Default, notify other persons obligated on any of the Collateral of the
security interest of the Lender in any Collateral. The Lender may itself,
without notice to or demand upon the Borrower, upon the occurrence and during
the continuation of an Event of Default notify other persons obligated on
Collateral to make payment directly to Lender. After the making of such a
request or the giving of any such notification, if an Event of Default has
occurred

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<PAGE>

and is continuing, the Borrower shall hold any proceeds of collection of
Collateral received by the Borrower as trustee for the Lender without
commingling the same with other funds of the Borrower and shall turn the same
over to the Lender in the identical form received, together with any necessary
endorsements or assignments. The Lender shall apply the proceeds of collection
of Collateral received by the Lender to the Secured Obligations, such proceeds
to be immediately credited after final payment in cash or other immediately
available funds of the items giving rise to them.

         Section 11. Power of Attorney.

                  11.1.    Appointment and Powers of Lender. The Borrower hereby
irrevocably constitutes and appoints the Lender and any officer or Lender
thereof, with full power of substitution, as its true and lawful
attorneys-in-fact with full irrevocable power and authority in the place and
stead of the Borrower or in the Lender's own name, for the purpose of carrying
out the terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments that may be necessary or useful to
accomplish the purposes of this Security Agreement and, without limiting the
generality of the foregoing, hereby gives said attorneys the power and right,
for the benefit of the Borrower, without notice to or assent by the Borrower, to
do the following:

                           (a)      upon the occurrence and during the
continuance of an Event of Default, generally to collect upon the Collateral in
such manner as is consistent with the UCC and as fully and completely as though
the Lender were the absolute owner thereof for all purposes, and to do, at the
Borrower's expense, at any time, or from time to time, all acts and things which
the Lender reasonably deems necessary or useful to protect, preserve or collect
upon the Collateral and the Lender's security interest therein, in order to
effect the intent of this Security Agreement, all no less fully and effectively
as the Borrower might do; and

                           (b)      to the extent that the Borrower's
authorization given in Section 3 is not sufficient, to file such financing
statements with respect to the Collateral, with or without the Borrower's
signature, or a photocopy of this Security Agreement in substitution for a
financing statement, as the Lender may reasonably deem appropriate and to
execute in the Borrower's name such financing statement and amendments thereto
and continuation statements, if any, which may require the Borrower's signature.

                  11.2.    Ratification by Borrower. To the extent permitted by
law, the Borrower hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and is irrevocable.

                  11.3.    No Duty on Lender. The powers conferred on the Lender
hereunder are solely to protect its interests in the Collateral and shall not
impose any duty upon it to exercise any such powers. The Lender shall be
accountable only for the amounts that it actually receives as a result of the
exercise of such powers, and the Borrower agrees to hold harmless and indemnify
Lender and its officers, directors, employees or Lender from and against any and
all claims, losses and liabilities arising out of or resulting from the Security
Agreement (including, without limitation, enforcement of this Security
Agreement) or the Lender's interest in the Collateral, except for claims, losses
or liabilities arising or resulting from the Lender's own gross negligence or
willful misconduct.

         Section 12. Rights and Remedies.

                  12.1.    Exercise of Rights and Remedies. If an Event of
Default shall have occurred and be continuing, the Lender, without any other
notice to or demand upon the Borrower, shall have in any jurisdiction in which
enforcement hereof is sought, in addition to all other rights and

                                      -6-
<PAGE>

remedies, the rights and remedies of a secured party under the UCC and any
additional rights and remedies as may be provided to a secured party in any
jurisdiction in which Collateral is located, including, without limitation, the
right to take possession of the Collateral, and for that purpose the Lender may,
so far as the Borrower can give authority therefor, enter upon any premises on
which the Collateral may be situated and remove the same therefrom. The Lender
may in its reasonable discretion require the Borrower to assemble all or any
part of the Collateral at such location or locations within the jurisdiction of
the Borrower's principal offices or at such other locations as the Lender may
reasonably designate. In addition, the Borrower waives any and all rights that
it may have to a judicial hearing in advance of the enforcement of any of the
Lender's rights and remedies hereunder, including, without limitation, its right
following an Event of Default to take immediate possession of the Collateral and
to exercise its rights and remedies with respect thereto.

                  12.2.    Standards for Exercising Rights and Remedies. To the
extent that applicable law imposes duties on the Lender to exercise remedies in
a commercially reasonable manner, the Borrower acknowledges and agrees that it
is not commercially unreasonable for the Lender:

                           (a)      to fail to incur expenses reasonably deemed
significant by the Lender to collect upon the Collateral;

                           (b)      to fail to exercise collection remedies
against persons obligated on the Collateral or to fail to remove liens or
encumbrances on or any adverse claims against the Collateral;

                           (c)      to exercise in accordance with applicable
law, collection remedies against persons obligated on the Collateral directly or
through the use of collection agencies and other collection specialists;

                           (d)      to disclaim disposition warranties; and

                           (e)      to the extent deemed appropriate by the
Lender, to obtain the services of other brokers, investment bankers, consultants
and other professionals to assist the Lender in the collection or disposition of
any of the Collateral.

                  12.3.    The Borrower acknowledges that the purpose of Section
12.2 is to provide non-exhaustive indications of what actions or omissions by
the Lender would fulfill the Lender's duties under the UCC or any other relevant
jurisdiction in the Lender's exercise of remedies against the Collateral and
that other actions or omissions by the Lender shall not be deemed to fail to
fulfill such duties solely on account of not being indicated in Section 12.2.
Without limitation upon the foregoing, nothing contained in Section 12.2 shall
be construed to grant any rights to the Borrower or to impose any duties on the
Lender that would not have been granted or imposed by this Security Agreement or
by applicable law in the absence of this Section 12.2.

         Section 13. Waiver by Lender, etc. Lender shall not be deemed to have
waived any of its rights and remedies in respect of the Secured Obligations or
the Collateral unless such waiver shall be in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right or remedy shall
operate as a waiver of such right or remedy or any other right or remedy. A
waiver on any one occasion shall not be construed as a bar to or waiver of any
right or remedy on any future occasion. All rights and remedies of the Lender
with respect to the Secured Obligations or the Collateral, whether evidenced
hereby or by any other instrument or papers, shall be cumulative and may be
exercised singularly, alternatively, successively or concurrently at such time
or at such times as the Lender reasonably deems expedient.

                                      -7-
<PAGE>

         Section 14. Suretyship Waivers by Borrower. The Borrower waives demand,
notice, protest, notice of acceptance of this Agreement, notice of loans made,
credit extended, Collateral received or delivered or other action taken in
reliance hereon and all other demands and notices of any description. With
respect to both the Secured Obligations and the Collateral, the Borrower assents
to any extension or postponement of the time of payment or any other indulgence,
to any substitution, exchange or release of or failure to perfect any security
interest in any Collateral, to the addition or release of any party or person
primarily or secondarily liable, to the acceptance of partial payment thereon
and the settlement, compromising or adjusting of any thereof, all in such manner
and at such time or times as the Lender may reasonably deem advisable. The
Lender shall have no duty as to the collection or protection of the Collateral
or any income therefrom, the preservation of rights against prior parties, or
the preservation of any rights pertaining thereto beyond the safe custody
thereof as set forth herein. The Borrower further waives any and all other
suretyship defenses.

         Section 15. Marshalling. The Lender shall not be required to marshal
any present or future collateral security (including but not limited to the
Collateral) for, or other assurances of payment of, the Secured Obligations or
any of them or to resort to such collateral security or other assurances of
payment in any particular order, and all of its rights and remedies hereunder
and in respect of such collateral security and other assurances of payment shall
be cumulative and in addition to all other rights and remedies, however existing
or arising. To the extent that it lawfully may, the Borrower hereby agrees that
it will not invoke any law relating to the marshalling of collateral which might
cause delay in or impede the enforcement of the Lender's rights and remedies
under this Security Agreement or under any other instrument creating or
evidencing any of the Secured Obligations or under which any of the Secured
Obligations is outstanding or by which any of the Secured Obligations is secured
or payment thereof is otherwise assured, and, to the extent that it lawfully
may, the Borrower hereby irrevocably waives the benefits of all such laws.

         Section 16. Proceeds of Dispositions; Expenses. The Borrower shall pay
to the Lender on demand any and all expenses, including reasonable attorneys'
fees and disbursements, incurred or paid by the Lender in protecting, preserving
or enforcing the Lender's rights and remedies under or in respect of any of the
Secured Obligations or any of the Collateral. After deducting all of said
expenses, the residue of any proceeds of collection of Collateral shall, to the
extent actually received in cash, be applied to the payment of the Secured
Obligations in such order or preference as set forth in the Credit Agreement.
Upon the final payment and satisfaction in full of all of the Secured
Obligations and after making any payments required by Sections 9-608(a)(1)(C) or
9-615(a)(3) of the UCC, any excess shall be returned to the Borrower. In the
absence of final payment and satisfaction in full of all of the Secured
Obligations, the Borrower shall remain liable for any deficiency.

         Section 17. Overdue Amounts. Until paid in full in cash, all amounts
due and payable by the Borrower hereunder shall be a debt secured by the
Collateral and shall bear, whether before or after judgment, interest at the
rate specified in the Credit Agreement.

         Section 18. Governing Law. THIS SECURITY AGREEMENT IS INTENDED TO TAKE
EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF INDIANA.

         Section 19. Waiver of Jury Trial to the Extent Permitted. THE BORROWER
BY EXECUTION HEREOF AND LENDER BY ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT, THE LOAN DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN
CONNECTION WITH THIS SECURITY AGREEMENT

                                      -8-
<PAGE>

OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT HERETO. THIS PROVISION IS A
MATERIAL INDUCEMENT TO THE LENDER TO ENTER INTO AND ACCEPT THIS SECURITY
AGREEMENT.

         Section 20. Notice. All notices and other communications provided for
hereunder shall be effective if given in accordance with the provisions of the
Credit Agreement.

         Section 21. Counterparts. This Security Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and shall be binding upon all parties, their successors and assigns, and all of
which taken together shall constitute one and the same agreement.

         Section 22. Release of Security Interest. At such time as Borrower
shall completely and finally satisfy all of the Secured Obligations secured
hereunder in full in cash, and there shall exist no continuing liability of
Borrower with respect to the Secured Obligations secured hereunder, and the
Revolving Credit Commitment under the Credit Agreement shall have been
irrevocably terminated, Lender shall release its security interest in the
Collateral and execute and deliver to Borrower all UCC-3 termination statements
or other instruments evidencing such release as may be reasonably requested by
Borrower.

         Section 23. Successors and Assigns. This Security Agreement shall be
binding upon and shall inure to the benefit of the successors or assigns of the
Borrower and the Lender and shall constitute a continuing agreement, applying to
all future as well as existing transactions between the Borrower and the Lender,
or their successors and assigns.

         Section 24. Miscellaneous. The headings of each section of this
Security Agreement are for convenience only and shall not define or limit the
provisions thereof. If any term of this Security Agreement shall be held to be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
in no way be affected thereby, and this Security Agreement shall be construed
and be enforceable as if such invalid, illegal or unenforceable term had not
been included herein. The Borrower acknowledges receipt of a copy of this
Security Agreement.

         IN WITNESS WHEREOF, intending to be legally bound, the Borrower has
caused this Security Agreement to be duly executed as of the date first above
written.

                                 STANDARD MANAGEMENT CORPORATION

                                 By: /s/ Stephen M. Coons
                                     ---------------------------------------
                                     Name: Stephen M. Coons
                                     Title: Executive Vice President & Secretary

                                      -9-

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