EXECUTION COPY
THIRD AMENDED AND RESTATED SECURITY AGREEMENT
THIS THIRD AMENDED AND RESTATED SECURITY AGREEMENT (the "Agreement") dated
as of February 7, 2006, is entered into by and between Credit Acceptance
Corporation, a Michigan corporation (the "Company"), the Subsidiaries of the
Company from time to time parties hereto (collectively, with the Company, and
either or any of them, the "Debtors" and individually, each a "Debtor") and
Comerica Bank, a Michigan banking corporation ("Comerica"), as agent for the
benefit of the "Lenders" and the "Future Debt Holders" (each as referred to
below) (in such capacity, the "Collateral Agent"). The addresses for the Debtors
and Collateral Agent are set forth on the signature pages.
RECITALS
A. The Company, Comerica (individually, and in the capacities referred to
below) and the other financial institutions signatory thereto, each as "Banks"
thereunder (and, in the case of Comerica, in its capacity as Agent for the
Lenders and in its separate additional capacities as "Issuing Bank" thereunder)
(together with any Successor Lenders (as hereinafter defined) party thereto from
time to time, collectively the "Lenders"), entered into that certain Fourth
Amended and Restated Credit Agreement dated as of February 7, 2006 (amending and
restating the Prior Credit Agreement), (said credit agreement, as further
amended, restated or otherwise modified from time to time, the "Credit
Agreement").
B. Each of the Debtors (other than the Company) have guaranteed payment
and performance of the obligations of the Company under the Credit Agreement
(pursuant to the Domestic Guaranty, the obligations of each such Debtor
thereunder constituting additional Credit Obligations) and will be required to
guarantee the payment and performance of the Company under the Future Debt
Documents (and such guaranties, when executed and delivered, will constitute
additional Future Debt Obligations).
C. Pursuant to the Credit Agreement (and under the Prior Credit
Agreement), the Lenders have required that the Debtors grant (or cause to be
granted) certain liens and security interests to Comerica, as agent for the
benefit of the Lenders and the Future Debt Holders, all to secure the
obligations of the Company under the Credit Documents and the obligations of the
Company under the Future Debt Documents.
D. The Lenders have consented to the transactions contemplated hereby, and
by the Security Documents, and the Lenders have agreed that the Debtors'
obligations under the Credit Documents and the Future Debt Documents (as defined
below) shall be equally and ratably secured pursuant to this Agreement and the
other Security Documents.
E. The Debtors have directly and indirectly benefited and will directly
and indirectly benefit from the transactions evidenced by and contemplated in
the Credit Agreement and other Credit Documents and the Future Debt Documents
(defined below) and consented to the execution and delivery of that certain
Intercreditor Agreement among Comerica, as Collateral
Agent, the Lenders (including Comerica), certain other parties no longer
providing financing to the Company (referred to therein as the Noteholders) and,
upon the issuance of Future Debt, the Future Debt Holders, dated as of December
15, 1998, as amended by First Amendment to Intercreditor Agreement dated as of
March 30, 2001 and Second Amendment to Intercreditor Agreement dated as of June
10, 2002 (as so amended, and as further amended, restated or otherwise modified
from time to time according to the terms thereof, the "Intercreditor
Agreement").
F. The Lenders and the Collateral Agent have entered into the
Intercreditor Agreement (and, if applicable, the Future Debt Holders shall enter
into the Intercreditor Agreement) to define the rights, duties, authority and
responsibilities of the Collateral Agent, acting on behalf of such parties
regarding the Collateral (as defined below), and the relationship among the
parties regarding their equal and ratable interests in the Collateral.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Agreement (including the
recitals), capitalized terms not otherwise defined herein or expressly
referenced as being defined in the Credit Agreement have the meanings provided
for such terms in the Intercreditor Agreement. References to "Sections,"
"subsections," "Exhibits" and "Schedules" shall be to Sections, subsections,
Exhibits and Schedules, respectively, of this Agreement unless otherwise
specifically provided. All references to statutes and regulations shall include
any amendments of the same and any successor statutes and regulations.
References to particular sections of the UCC should be read to refer also to
parallel sections of the Uniform Commercial Code as enacted in each state or
other jurisdiction where any portion of the Collateral is or may be located.
The following terms have the meanings indicated below, all such
definitions to be equally applicable to the singular and plural forms of the
terms defined:
"Account" means any "account," as such term is defined in Article or
Chapter 9 of the UCC, now owned or hereafter acquired by an applicable Debtor,
and, in any event, shall include, without limitation, each of the following,
whether now owned or hereafter acquired by such Debtor: (a) all rights of such
Debtor to payment for goods sold or leased or services rendered, whether or not
earned by performance, (b) all accounts receivable of such Debtor, (c) all
rights of such Debtor to receive any payment of money or other form of
consideration, (d) all security pledged, assigned or granted to or held by such
Debtor to secure any of the foregoing, (e) all guaranties of, or
indemnifications with respect to, any of the foregoing, and (f) all rights of
such Debtor as an unpaid seller of goods or services, including, but not limited
to, all rights of stoppage in transit, replevin, reclamation and resale.
"Assignation" is defined in Section 2.1(i) of this Agreement.
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"Benefited Obligations" has the meaning specified in the Intercreditor
Agreement.
"Benefited Parties" has the meaning specified in the Intercreditor
Agreement.
"CAC Reinsurance" shall mean CAC Reinsurance Ltd. CAC Reinsurance shall be
considered and deemed to be, solely for purposes of the grant of a security
interest and lien over all of its property described in Sections 2.1(i) and
2.1(k) of this Agreement and the maintenance of the Receiving Account
established under Section 4.14(c) of this Agreement, a Debtor under this
Agreement.
"CAC South Dakota" shall mean Credit Acceptance Corporation of South
Dakota, Inc.
"Chattel Paper" means any "chattel paper," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by an
applicable Debtor.
"Collateral" has the meaning specified in Section 2.1 of this Agreement.
"Computer Records" has the meaning specified in Section 2.1(g) of this
Agreement.
"Dealer(s)" shall mean a Person engaged in the business of the retail sale
or lease of motor vehicles, whether new or used, including any such Person which
constitutes an Affiliate of Debtor.
"Dealer Agreement(s)" shall mean the sales and/or servicing agreements
between an applicable Debtor or its Subsidiaries and a participating Dealer
which sets forth the terms and conditions under which the Company or its
Subsidiaries (i) accepts, as nominee for such Dealer, the assignment of
Installment Contracts for purposes of administration, servicing and collection
and under which the Company or its Subsidiary may make loans or advances to such
Dealers included in Dealer Loans and (ii) accepts outright assignments of
Installments Contracts from Dealers or funds Installments Contracts originated
by such Dealer in the name of Company or any of its Subsidiaries, in each case
as such agreements may be in effect from time to time.
"Dealer Loan(s)" shall mean the advances of cash made by an applicable
Debtor or any of its Subsidiaries to a Dealer at the time an Installment
Contract is approved, accepted by and assigned to the Company or any of its
Subsidiaries under a Dealer Agreement described in clause (i) of the definition
of Dealer Agreements, against anticipated future collections on Installment
Contracts serviced for such Dealer, as outstanding from time to time.
"Document" means any "document," as such term is defined in Article or
Chapter 9 of the UCC, now owned or hereafter acquired by an applicable Debtor,
including, without limitation, all documents of title and all receipts covering,
evidencing or representing goods now owned or hereafter acquired by the Debtor.
"Domestic Guaranty" has the meaning specified in the Credit Agreement.
"Election" is defined in Section 6.4 of this Agreement.
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"Equipment" means any "equipment," as such term is defined in Article or
Chapter 9 of the UCC, now owned or hereafter acquired by an applicable the
Debtor and, in any event, shall include, without limitation, all machinery,
equipment, furniture, trade fixtures, tractors, trailers, rolling stock,
vessels, aircraft and vehicles now owned or hereafter acquired by such Debtor
and any and all additions, substitutions and replacements of any of the
foregoing, wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.
"Event of Default" has the meaning specified in the Intercreditor
Agreement.
"Financing Agreements" has the meaning specified in the Intercreditor
Agreement.
"Future Debt" has the meaning specified in the Intercreditor Agreement.
"Future Debt Documents" has the meaning specified in the Intercreditor
Agreement.
"Future Debt Holders" has the meaning specified in the Intercreditor
Agreement.
"General Intangibles" means any "general intangibles," as such term is
defined in Article or Chapter 9 of the UCC, now owned or hereafter acquired by
an applicable Debtor and, in any event, shall include, without limitation, each
of the following, whether now owned or hereafter acquired by such Debtor: (a)
all of such Debtor's service marks, trade names, trade secrets, registrations,
goodwill, franchises, licenses, permits, proprietary information, customer
lists, designs and inventions; (b) all of such Debtor's books, records, data,
plans, manuals, computer software, computer tapes, computer disks, computer
programs, source codes, object codes and all rights of such Debtor to retrieve
data and other information from third parties; (c) all of such Debtor's
commercial tort claims, contract rights, partnership interests, membership
interests, joint venture interests, securities and other investment property,
deposit accounts, investment accounts and certificates of deposit; (d) all
rights of such Debtor to payment under letters of credit and similar agreements;
(e) all tax refunds and tax refund claims of such Debtor; (f) all choses in
action and causes of action of such Debtor (whether arising in contract, tort or
otherwise and whether or not currently in litigation) and all judgments in favor
of such Debtor; (g) all rights and claims of such Debtor under warranties and
indemnities; and (h) all rights of such Debtor under any insurance, surety or
similar contract or arrangement.
"Installment Contract(s)" shall mean retail installment contracts for the
sale of new or used motor vehicles assigned outright by Dealers to an applicable
Debtor or written by Dealers in the name of such Debtor or a Subsidiary of such
Debtor (and funded by Debtor or such Subsidiary) or assigned by Dealers to
Debtor or a Subsidiary of Debtor, as nominee for the Dealer, for administration,
servicing, and collection and/or for collateral purposes to secure Dealer Loans,
in each case pursuant to an applicable Dealer Agreement; provided, however, that
to the extent such Debtor or any Subsidiary transfers or encumbers its interest
in any Installment Contracts (or any Dealer Loans related thereto) pursuant to a
Permitted Securitization, such Installment Contracts shall, from and after the
date of such transfer or encumbrance, cease to be considered Installment
Contracts under this Agreement (reducing the aggregate amount of Dealer Loans by
the outstanding amount of such loans, if any, attributable to such Installment
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Contracts) unless and until such Installment Contracts are reassigned to such
Debtor or a Subsidiary of such Debtor or such encumbrances are discharged.
"Instrument" means any "instrument," as such term is defined in Article or
Chapter 9 of the UCC, now owned or hereafter acquired by an applicable Debtor,
and, in any event, shall include all promissory notes, drafts, bills of exchange
and trade acceptances of such Debtor, whether now owned or hereafter acquired.
"Intercompany Notes" shall mean the promissory notes, substantially in the
form of Exhibit N to the Credit Agreement, issued or to be issued by a Debtor or
any Subsidiary to evidence any loan or advance in the nature of a loan by a
Debtor to any other Debtor, or by a Debtor to any other Subsidiary.
"Inventory" means any "inventory," as such term is defined in Article or
Chapter 9 of the UCC, now owned or hereafter acquired by an applicable Debtor,
and, in any event, shall include, without limitation, each of the following,
whether now owned or hereafter acquired by such Debtor: (a) all goods and other
personal property of such Debtor that are held for sale or lease or to be
furnished under any contract of service; (b) all raw materials, work-in-process,
finished goods, supplies and materials of such Debtor; (c) all wrapping,
packaging, advertising and shipping materials of such Debtor; (d) all goods that
have been returned to, repossessed by or stopped in transit by such Debtor; and
(e) all Documents evidencing any of the foregoing.
"Leases" shall mean all retail agreements for the lease of motor vehicles
in which Debtor has an interest, whether as assignee, lessor, pledgee, servicer
or otherwise;
"Lenders" has the meaning specified in the preamble to this Intercreditor
Agreement.
"Majority Benefited Parties" has the meaning specified in the
Intercreditor Agreement.
"Permitted Liens" has the meaning specified in Section 3.1 of this
Agreement.
"Permitted Securitization" shall mean a "Permitted Securitization" under
each of the applicable Financing Agreements.
"Pledged Shares" means the shares of capital stock or other equity,
partnership or membership interests described on Schedule D attached hereto and
incorporated herein by reference, as such schedule may be amended, modified or
replaced from time to time.
"Prior Security Agreement(s)" is defined in Section 7.16 of this
Agreement.
"Proceeds" means any "proceeds," as such term is defined in Article or
Chapter 9 of the UCC and, in any event, shall include, but not be limited to,
(a) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to an applicable Debtor from time to time with respect to any of the
Collateral, (b) any and all payments (in any form whatsoever) made or due and
payable to such Debtor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any Person acting, or purporting to
act, for or on behalf of any
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governmental authority), and (c) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.
"Records" is defined in Section 4.9 of this Agreement.
"Security Documents" has the meaning specified in the Intercreditor
Agreement.
"Significant Domestic Subsidiary" shall mean any Significant Domestic
Subsidiary under the Credit Agreement or the Future Debt Documents, as in effect
from time to time.
"Software" has the meaning specified in Section 2.1(g) of this Agreement.
"Special Account" is defined in Section 6.3 of this Agreement.
"Subsidiary" shall mean any Subsidiary under the Credit Agreement or under
the Future Debt Documents, as in effect from time to time.
"T & C Subsidiary" shall mean CAC (TCI) Ltd., a company established under
the laws of the Turks and Caicos Islands. The T& C Subsidiary shall be
considered and deemed to be, solely for purposes of the grant of a security
interest and lien over all of its property described in Sections 2.1(i) and
2.1(k) of this Agreement and the maintenance of the Receiving Account
established under Section 4.14(c) of this Agreement, a Debtor under this
Agreement.
"UCC" means the Uniform Commercial Code as in effect in the State of
Michigan; provided, that if, by applicable law, the perfection or effect of
perfection or non-perfection of the security interest created hereunder in any
Collateral is governed by the Uniform Commercial Code as in effect on or after
the date hereof in any other jurisdiction, "UCC" means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such perfection or the effect of perfection or
non-perfection.
ARTICLE II
SECURITY INTEREST
SECTION 2.1 SECURITY INTEREST. As collateral security for the prompt
payment and performance in full when due of the Benefited Obligations (whether
at stated maturity, by acceleration or otherwise), each Debtor hereby pledges
and assigns (as collateral) to the Collateral Agent, and grants the Collateral
Agent a continuing lien on and security interest in, all of such Debtor's right,
title and interest in and to the following, whether now owned or hereafter
arising or acquired and wherever located (collectively, the "Collateral"):
(a) all Accounts;
(b) all Chattel Paper, Documents and Instruments;
(c) all Leases;
(d) all General Intangibles;
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(e) all Equipment;
(f) all Inventory;
(g) all Dealer Loans, Dealer Agreements (and any amounts advanced
to or liens granted by Dealers thereunder), and the Installment
Contracts or Leases securing the repayment of such Dealer Loans,
(and other indebtedness of Dealers to such Debtor) and related
financial assets (the security interest granted hereby in such
Dealer Agreements, Dealer Loans, Installment Contracts and
Leases, and the Accounts, Chattel Paper, General Intangibles and
proceeds therefrom relating to such Dealer Agreements, Dealer
Loans, Installment Contracts and Leases being subject to the
rights of Dealers under Dealer Agreements);
(h) all trademarks, tradenames, patents, copyrights and other
intellectual property, including without limitation any such
property identified on Schedule F hereto, and all computer
records ("Computer Records") and software ("Software"), whether
relating to the foregoing Collateral or otherwise, but in the
case of such Software, subject to the rights of any
non-affiliated licensee of software;
(i) all shares of stock, and other equity, partnership or membership
interests constituting ownership interests (or evidence thereof)
or other securities, of the Significant Domestic Subsidiaries of
Debtor from time to time owned or acquired by such Debtor in any
manner (including without limitation, as applicable, the Pledged
Shares) and any certificates at any time evidencing the same,
and all dividends, cash, instruments, rights and other property
from time to time received, receivable or otherwise distributed
or distributable in respect of or in exchange for any or all of
such shares; and any monies and other property from time to time
received, receivable or otherwise distributed or distributable
in respect of or in exchange CAC South Dakota's partnership
interest in CAC Scotland to the extent such partnership interest
has been pledged and assigned, for collateral purposes, to the
Collateral Agent, for and on behalf of the Benefited Parties
pursuant to that certain Assignation in Security by and among
CAC South Dakota, the Collateral Agent, CAC International
Holdings, L.L.C. and CAC Scotland (as amended from time to time,
the "Assignation");
(j) all Intercompany Notes issued in favor of such Debtor; and
(k) the Proceeds, in cash or otherwise, of any of the property
described in the foregoing clauses (a) through (k) and all
liens, security, rights, remedies and claims of such Debtor with
respect thereto, including without limitation any such Proceeds
deposited from time to time in the Special Account or in any
other cash collateral account maintained by a Debtor with the
Collateral Agent under, or in connection with, this Agreement or
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any other Financing Agreement and all such Debtor's
rights in each such account;
provided, however, that "Collateral" shall not include rights under or with
respect to any General Intangible, license, permit or authorization to the
extent any such General Intangible, license, permit or authorization, by its
terms or by law, prohibits the assignment of, or the granting of a security
interest in, the rights of a Grantor thereunder or which would be invalid or
enforceable upon any such assignment or grant (the "Restricted Assets");
provided further that (A) the Proceeds of any Restricted Asset shall be continue
to be deemed to be "Collateral", and (B) this provision shall not limit the
grant of any Lien on or assignment of any Restricted Asset to the extent that
the UCC or any other applicable law provides that such grant of Lien or
assignment is effective irrespective of any prohibitions to such grant provided
in any Restricted Asset (or the underlying documents related thereto).
Concurrently with any such Restricted Asset being entered into or arising after
the date hereof, the applicable Debtor shall be obligated to obtain any waiver
or consent (in form and substance acceptable to the Agent) necessary to allow
such Restricted Asset to constitute Collateral hereunder if the failure of such
Debtor to have such Restricted Asset would have a Material Adverse Effect.; and
provided further that "Collateral" shall not include any (i) Dealer Loans,
Installment Contracts, Leases, rights or interests under Dealer Agreements and
related financial assets transferred by an applicable Debtor prior to the date
hereof pursuant to a Permitted Securitization, except to the extent any such
property is re-transferred to such Debtor according to the terms of such
Permitted Securitization or (ii) any equity interests in Foreign Subsidiaries
except to the extent described in Section 2.1(i) of the Security Agreement.
SECTION 2.2 DEBTORS REMAINS LIABLE. Notwithstanding anything to the
contrary contained herein, (a) each Debtor shall remain liable under the
contracts, agreements, documents and instruments included in the Collateral
(including without limitation Dealer Agreements, Dealer Loans, Installment
Contracts and Leases) to the extent set forth therein to perform all of its
duties and obligations thereunder to the same extent as if this Agreement had
not been executed and pay when due any taxes, including without limitation, any
sales taxes payable in connection with the Dealer Agreements, Dealer Loans,
Installment Contracts or Leases and their creation and satisfaction, (b) the
exercise by the Collateral Agent or any of the Benefited Parties of any of their
respective rights or remedies hereunder shall not release any Debtor from any of
its duties or obligations under the contracts, agreements, documents and
instruments included in the Collateral, and (c) subject to the rights of Dealers
under Dealer Agreements to the extent of collections on Installment Contracts or
Leases for the account of such Dealers received by the Collateral Agent or any
Benefited Party, neither the Collateral Agent nor any of the Benefited Parties
shall have any indebtedness, liability or obligation (by assumption or
otherwise) under any of the contracts, agreements, documents and instruments
included in the Collateral (including without limitation any Dealer Agreement,
Installment Contract or Lease) by reason of this Agreement, and none of such
parties shall be obligated to perform any of the obligations or duties of any
Debtor thereunder (including without limitation any obligation to make future
advances to or on behalf of any Dealer or other obligor) or to take any action
to collect or enforce any claim for payment assigned hereunder.
SECTION 2.3 DELIVERY OF COLLATERAL. (a) All certificates or other
instruments representing or evidencing the Pledged Shares, promptly upon an
applicable Debtor gaining any
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rights therein, shall be delivered to and held by or on behalf of the Collateral
Agent pursuant hereto in suitable form for transfer by delivery, or accompanied
by duly executed stock powers or instruments of transfer or assignments in
blank, all in form and substance reasonably satisfactory to the Collateral
Agent.
(b) Each of the Intercompany Notes, promptly upon an applicable Debtor
gaining any rights therein, shall be delivered to and held by or on behalf of
the Collateral Agent pursuant hereto, endorsed to the Collateral Agent without
representation, warranty or recourse (except as provided herein) for security
purposes, or accompanied by separate assignments to Collateral Agent (on
comparable terms), all in form and substance reasonably satisfactory to the
Collateral Agent.
SECTION 2.4 MARKING COMPUTER FILES. In connection with the security
interest and lien established hereby, each Debtor hereby agrees, at its sole
expense, to indicate clearly and unambiguously in its computer files with
respect to the Dealer Agreements, Dealer Loans, Installment Contracts and Leases
encumbered hereby, that such Debtor's rights to payment under such Dealer
Agreements, Dealer Loans, Installment Contracts and Leases have been pledged to
the Collateral Agent pursuant to this Agreement for the benefit of the Benefited
Parties.
SECTION 2.5 AFFIXING LEGENDS. Each Debtor shall, within thirty (30) days
from the date hereof with respect to each Dealer Agreement which constitutes
Collateral on the date hereof and, with respect to each Dealer Agreement which
subsequently becomes Collateral hereunder, within five (5) days of such Debtor's
entering into any such agreement, clearly xxxx each such Dealer Agreement
encumbered hereby with the following legend: "THIS AGREEMENT HAS BEEN PLEDGED TO
COMERICA BANK, AS COLLATERAL AGENT FOR THE BENEFIT OF CERTAIN BENEFITED
PARTIES". Such legend shall be in bold, in type face at least as large as 12
point and shall be entirely in capital letters.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Collateral Agent to enter into this Agreement and the
Intercreditor Agreement, and to induce the Lenders and the Future Debt Holders
to enter into the Financing Agreements, each of the Debtors represents and
warrants to the Collateral Agent and to each Lender that as of the date hereof:
SECTION 3.1 TITLE. The applicable Debtor is, and with respect to
Collateral acquired after the date hereof such Debtor will be, the legal and
beneficial owner of the Collateral free and clear of any Lien or other
encumbrance, except for (a) Liens which constitute both (x) Liens which are
permitted under Section 8.6 of the Credit Agreement and (y) Liens which are not
prohibited by the terms of the Future Debt Documents (hereinafter, "Permitted
Liens"), provided that, other than the Lien established hereby, no Lien on the
Collateral described in clauses (i) or (j) of Section 2.1 shall constitute a
Permitted Lien, (b) with respect to Dealer Agreements and Dealer Loans, and the
Installment Contracts, Accounts, Chattel Paper, Leases and General Intangibles
(and proceeds therefrom) relating to such Dealer Agreements and Dealer Loans,
the rights of Dealers under such Dealer Agreements and (c) with respect to
Installment Contracts or Leases (other than those owned outright by Debtor),
Dealers' interests in financed vehicles and
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in the proceeds of such Installment Contracts or Leases and Dealers' interests,
and the security interest and lien granted by Dealers to Debtor to secure
repayment of Dealer Loans (and all other indebtedness of Dealers to Debtor)
pursuant to the applicable Dealer Agreement.
SECTION 3.2 FINANCING STATEMENTS. No financing statement, security
agreement or other Lien instrument covering all or any part of the Collateral is
on file in any public office with respect to any outstanding obligation of the
Debtors except (i) as may have been filed in favor of the Collateral Agent
pursuant to this Agreement, (ii) financing statements filed to perfect Permitted
Liens, and (iii) Liens described in Section 3.1(c) hereof. As of the date
hereof, and to the best of the applicable Debtor's knowledge, except as
otherwise disclosed on Schedule E hereto, such Debtor does not do business and
has not done business within the past five (5) years under a trade name or any
name other than its legal name set forth at the beginning of this Agreement.
SECTION 3.3 PRINCIPAL PLACE OF BUSINESS. The principal place of business
and chief executive office of the applicable Debtor, and the office where such
Debtor keeps its books and records, is located at the address of such Debtor
shown on Schedule A hereto.
SECTION 3.4 LOCATION OF COLLATERAL. All Inventory (except Inventory in
transit) and Equipment (other than vehicles) of the applicable Debtor in the
possession of such Debtor are located at the places specified on Schedule A
hereto. If any such location is leased by such Debtor as of the date hereof, the
name and address of the landlord leasing such location is identified on Schedule
A hereto. None of the Inventory or Equipment of such Debtor (other than
trailers, rolling stock, vessels, aircraft and vehicles) is evidenced by a
Document (including, without limitation, a negotiable document of title). All
certificates or other instruments owned by such Debtor representing shares of
stock or other ownership interests of any Significant Domestic Subsidiary
(including, without limitation, the Pledged Shares) will be delivered to the
Collateral Agent, accompanied by duly executed stock powers or instruments of
transfer or assignments in blank with respect thereto.
SECTION 3.5 PERFECTION. Upon (a) the filing of Uniform Commercial Code
financing statements in the jurisdictions listed on Schedule B attached hereto,
(b) the recording of this Agreement in the United States Patent and Trademark
Office and the United States Copyright Office; and (c) upon the Collateral
Agent's obtaining possession of the certificates evidencing the Pledged Shares,
accompanied by duly executed stock powers or instruments of transfer or
assignments in blank and of the Intercompany Notes (duly endorsed, as
aforesaid), the security interest in favor of the Collateral Agent created
herein will constitute a valid and perfected Lien upon and security interest in
the Collateral which may be created and perfected under the UCC by filing
financing statements, obtaining an acknowledgment of lien from an issuer or
obtaining possession of the Collateral, subject to no junior, equal or prior
Liens except for those (if any) which constitute Permitted Liens.
SECTION 3.6 PRIMARY COMPUTER SYSTEMS AND SOFTWARE; COMPUTER RECORDS AND
INTELLECTUAL PROPERTY. The only material service and computer systems and
related Software utilized by the applicable Debtor to service Dealer Agreements,
Dealer Loans, Installment Contracts and Leases (whether or not encumbered
hereby) are (a) the Application and Contract System which is used from the time
a dealer faxes an application to such Debtor until the
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relevant Installment Contract or Lease is received and funded, (b) the Loan
Servicing System which contains all payment information and is the primary
source for management information reporting, and (c) the Collection System which
is used by such Debtor's collections personnel to track and service all active
customer accounts. Such computer systems and software are defined (and described
in greater detail) on Schedule C, attached hereto.
SECTION 3.7 PLEDGED SHARES.
(a) The Pledged Shares that are shares of a corporation have been duly
authorized and validly issued and are fully paid and non-assessable, and the
Pledged Shares which are membership, partnership or other similar ownership
interests have been validly granted, under the laws of the jurisdiction of
organization of the issuers thereof, and, to the extent applicable, are fully
paid and nonassessable.
(b) The applicable Debtor is the legal and beneficial owner of the Pledged
Shares, free and clear of any Lien (other than the Liens created by this
Agreement and the Permitted Liens) and no issuer of Pledged Shares is a party to
any agreement granting "control" (as defined in Section 8-106 of the UCC) of
such Debtor's Pledged Shares to any third party. All such shares are held by
each Debtor directly and not through any securities intermediary.
(c) On the date hereof, the Pledged Shares constitute the percentage of
the issued and outstanding shares of stock, partnership units or membership or
other ownership interests of the Issuers thereof indicated on Schedule D, if
applicable, and such schedule contains a description of all shares of capital
stock, partnership units, membership interests and other ownership interests of
or in the Significant Domestic Subsidiaries owned by the applicable Debtor (as
such Schedule D may from time to time be supplemented, amended or modified in
accordance with the terms of this Agreement).
SECTION 3.8 INTELLECTUAL PROPERTY.
Each Debtor owns the United States registered copyrights, letters patent
and trademarks and intellectual property license agreements set forth on the
attached Schedule F, together with the applications for registration of
copyrights, trademarks or patents, and such mask works set forth on the attached
Schedule F, together with such additional intellectual property as such Debtor
may disclose to the Collateral Agent from time to time, and all such property
rights are valid, subsisting and enforceable, except where the failure to be so
could not reasonably be expected to have a Material Adverse Effect. Each Debtor
has made all necessary filings and recordations to protect and maintain its
interest in the foregoing trademarks, patents and copyrights set forth on
Schedule F (as the same may be amended from time to time), including, without
limitation, all necessary filings and recordings, and payments of all
maintenance fees, in the United States Patent and Trademark Office and United
States Copyright Office to the extent such Trademarks, Patents and Copyrights
are material to such Debtor's business
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ARTICLE IV
COVENANTS
Each of the Debtors covenants and agrees with the Collateral Agent that
until the Benefited Obligations are paid and performed in full and all
commitments to lend or provide other credit accommodations under the Credit
Agreement have been terminated:
SECTION 4.1 ENCUMBRANCES. The applicable Debtor shall not create, permit
or suffer to exist, and shall defend the Collateral against, any Lien or other
encumbrance (other than the Liens created by this Agreement and the Permitted
Liens) or any restriction upon the pledge or other transfer thereof (other than
as provided in the Financing Agreements), and shall, subject to the Permitted
Liens, defend such Debtor's title to and other rights in the Collateral and the
Collateral Agent's pledge and collateral assignment of and security interest in
the Collateral against the claims and demands of all Persons. Except to the
extent permitted by the Financing Agreements or in connection with any release
of Collateral under Section 7.13 hereof (but only to the extent of any
Collateral so released), such Debtor shall do nothing to impair the rights of
the Collateral Agent in the Collateral.
SECTION 4.2 COLLECTION OF ACCOUNTS AND CONTRACTS; NO COMMINGLING. The
applicable Debtor shall, in accordance with its usual business practices,
endeavor to collect or cause to be collected from each account debtor under its
Accounts, as and when due, any and all amounts owing under such Accounts and
from any Dealer or from any obligor under an Installment Contract or Lease, as
the case may be, any Dealer Loans or other amounts owing under a Dealer
Agreement, Installment Contract or Lease, as applicable. The applicable Debtor
shall take the steps required under the documents relating to Permitted
Securitizations to segregate any Collateral transferred, encumbered or otherwise
affected by a Permitted Securitization from the Collateral encumbered under this
Agreement and all proceeds or other sums received in respect thereof (provided
that Dealer Agreements which cover Dealer Loans which have been transferred
pursuant to a Permitted Securitization, but which also cover Dealer Loans
encumbered hereby, may contain the legend affixed in connection with the
applicable Permitted Securitization, so long as such Dealer Agreements also
contain the legend required under Section 2.5 hereof).
SECTION 4.3 DISPOSITION OF COLLATERAL. To the extent prohibited by the
terms of the Financing Agreements, the applicable Debtor shall not enter into or
consummate any transfer or other disposition of assets without the prior written
consent of the applicable Benefited Parties, according to the terms of the
applicable Financing Agreements.
SECTION 4.4 FURTHER ASSURANCES. At any time and from time to time, upon
the request of the Collateral Agent, and at the sole expense of the Debtors, the
applicable Debtor shall promptly execute and deliver all such further
agreements, documents and instruments and take such further action as the
Collateral Agent may reasonably deem necessary or appropriate to preserve and
perfect its security interest in and pledge and collateral assignment of the
Collateral and carry out the provisions and purposes of this Agreement or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any of the Collateral; provided, however, that nothing
contained in this Section 4.4 shall require such Debtor to affix legends to the
Dealer Agreements, Installment Contracts or Leases (or folders containing the
same) prior to the times set forth in Sections 2.5 and 6.4, respectively. Except
as otherwise expressly permitted by the terms of the Financing Agreements
relating to disposition of assets, including without limitation any Permitted
Securitization and except for Permitted Liens, the
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applicable Debtor agrees to maintain and preserve the Collateral Agent's
security interest in and pledge and collateral assignment of the Collateral
hereunder. Without limiting the generality of the foregoing, the applicable
Debtor shall (a) execute and deliver to the Collateral Agent such financing
statements as the Collateral Agent may from time to time require; and (b)
execute and deliver to the Collateral Agent, or cause to be so executed and
delivered, such other agreements, acknowledgments, documents and instruments,
including without limitation stock powers, as the Collateral Agent may require
to perfect and maintain the validity, effectiveness and priority of the Liens
intended to be created by the Security Documents. The applicable Debtor
authorizes the Collateral Agent to file one or more financing or continuation
statements, and amendments thereto, relating to all or any part of the
Collateral without the signature of such Debtor unless otherwise prohibited by
law.
SECTION 4.5 INSURANCE. The applicable Debtor shall maintain insurance of
the types and in amounts, and under the terms and conditions, specified in the
Financing Agreements and shall cause the Collateral Agent to be named as "lender
loss payee" thereunder to the full extent required to perfect and/or protect the
Lien established hereby. Recoveries under any such policy of insurance shall be
paid as provided in the Financing Agreements and Intercreditor Agreement.
SECTION 4.6 BAILEES. If any of the Collateral is at any time in the
possession or control of any warehouseman, bailee or any of the applicable
Debtor's agents or processors, the applicable Debtor shall, at the request of
the Collateral Agent (as directed by the Majority Benefited Parties), notify
such warehouseman, bailee, agent or processor of the security interest created
hereunder and shall instruct such Person to hold such Collateral for the
Collateral Agent's account subject to the Collateral Agent's instructions, and
shall obtain such acknowledgments and/or undertakings from such Persons as
reasonably requested by Collateral Agent (as directed by the Majority Benefited
Parties).
SECTION 4.7 FURNISHING OF INFORMATION AND INSPECTION RIGHTS. (a) Pursuant
to the Prior Security Agreements, the applicable Debtors thereunder delivered to
the Collateral Agent, on a confidential and proprietary basis, one or more
computer files or microfiche lists containing true and complete (and updated to
the most recent month end) lists of all Dealer Agreements and Dealer Loans, and
all Installment Contracts or Leases, as applicable, securing all such Dealer
Loans or owned outright by such Debtor, identified by account number, dealer
number (if not owned outright by such Debtor) , and pool number and the
outstanding balance as of the date of such file or list.
(a) From and after the date of this Agreement,
(i) so long as no Event of Default has occurred and is continuing,
upon the written request of the Collateral Agent (as directed by the
Majority Benefited Parties), each applicable Debtor shall be obligated,
but not more frequently than monthly; and
(ii) upon the occurrence and during the continuance of an Event of
Default, each applicable Debtor shall be obligated, on a monthly basis
whether or not Collateral Agent shall so request, and more frequently upon
the written request of the Collateral Agent (as directed by the Majority
Benefited Parties);
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to furnish to the Collateral Agent, a computer file, microfiche list or other
list identifying each of the Dealer Agreements, Dealer Loans, Installment
Contracts and Leases encumbered hereby by pool number, account number and dealer
number (if not owned outright by such Debtor) and by the outstanding balance
thereof and identifying the obligor on the relevant Installment Contract or
Lease, and such Debtor shall also furnish to the Collateral Agent from time to
time such other information with respect to Dealer Agreements, Dealer Loans,
Installment Contracts and Leases encumbered hereby as the Collateral Agent may
reasonably request. Without impairing the rights of any Benefited Party to
obtain information from such Debtor under any of the other Financing Agreements,
as applicable, the Collateral Agent shall furnish copies of the foregoing to any
Lender or Future Debt Holder upon its request following the occurrence and
during the continuance of any Default or Event of Default, and each Debtor
hereby authorizes and approves such release. Each Debtor will, at any time and
from time to time during regular business hours, upon 5 days prior notice
(except if any Event of Default has occurred and is continuing, when no prior
notice shall be required), permit the Collateral Agent, or its agents or
representatives, to examine and make copies of and abstracts from all Records,
to visit the offices and properties of such Debtor for the purpose of examining
such Records, and to discuss matters relating to the Dealer Loans, Installment
Contracts, Leases or such Debtor's performance hereunder and under the other
Financing Documents with any of the officers, directors, employees or
independent public accountants of such Debtor having knowledge of such matters;
provided, however, that the Collateral Agent acknowledges that, in exercising
the rights and privileges conferred in this Section 4.7, it or its agents and
representatives may, from time to time, obtain knowledge of information,
practices, books, correspondence and records of a confidential nature and in
which such Debtor has a proprietary interest. The Collateral Agent agrees that
all such information, practices, books, correspondence and records are to be
regarded as confidential information and agrees that it shall retain in strict
confidence and shall use its reasonable efforts to ensure that its agents and
representatives retain in strict confidence, and will not disclose without the
prior written consent of the applicable Debtor, any such information, practices,
books, correspondence and records furnished to them except that the Collateral
Agent may disclose such information (i) to its officers, directors, employees,
agents, counsel, accountants, auditors, affiliates, advisors or representatives
(provided that such Persons are informed of the confidential nature of such
information), (ii) to the extent such information has become available to the
public other than as a result of a disclosure by or through the Collateral Agent
or its officers, directors, employees, agents, counsel, accountants, auditors,
affiliates, advisors or representatives, (iii) to the extent such information
was available to the Collateral Agent on a nonconfidential basis prior to its
disclosure to the Collateral Agent hereunder, (iv) to the extent the Collateral
Agent is (A) required in connection with any legal or regulatory proceeding or
(B) requested by any bank or other regulatory authority to disclose such
information, (v) to any prospective assignee of any note or other instrument
evidencing a Benefited Obligation; provided, that the Collateral Agent shall
notify such assignee of the confidentiality provisions of this Section 4.7 and
such assignee shall agree to be bound thereby, or (vi) to any Benefited Party,
subject to the confidentiality provisions contained in this Agreement and any
other Financing Agreement to which it is a party, upon the request of such party
following the occurrence and during the continuance of such Default or Event of
Default (but with no obligation on the part of any such Benefited Party
hereunder to return such information to Collateral Agent or the applicable
Debtor if any such Default or Event of Default is subsequently cured or waived).
Notwithstanding anything to the contrary in this Agreement, the Collateral Agent
may reply to a request from any Person for a list
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of Dealer Loans, Dealer Agreements, Installment Contracts, Leases or other
information related to any Collateral referred to in any financing statement
filed or acknowledgment obtained to perfect the security interest and liens
established hereby, to the extent necessary to maintain the perfection or
priority of such security interests or liens, or otherwise required under
applicable law. The Collateral Agent agrees (at Debtors' sole cost and expense)
to take such measures as shall be reasonably requested by the Debtors to protect
and maintain the security and confidentiality of such information. The
Collateral Agent shall exercise good faith and make diligent efforts to provide
the Debtors with written notice at least five (5) Business Days prior to any
disclosure pursuant to this Subsection 4.7(b).
(c) Furthermore, each Debtor shall permit the Collateral Agent and its
representatives to examine, inspect and audit the Collateral and to examine,
inspect and audit such Debtor's books and Records as otherwise provided under
the Financing Agreements.
SECTION 4.8 CORPORATE CHANGES. None of the Debtors shall change its name,
identity or corporate structure in any manner that might make any financing
statement filed in connection with this Agreement seriously misleading within
the meaning of Section 9-402(8) of the UCC unless such Debtor shall have given
the Collateral Agent thirty (30) days prior written notice thereof and shall
have taken all action deemed necessary or desirable by the Collateral Agent to
protect its Liens and the perfection and priority thereof. None of the Debtors
shall change its principal place of business, chief executive office or the
place where it keeps its books and records unless it shall have given the
Collateral Agent thirty (30) days prior written notice thereof and shall have
taken all action deemed necessary or desirable by the Collateral Agent to cause
its security interest in the Collateral to be perfected with the priority
required by this Agreement.
SECTION 4.9 BOOKS AND RECORDS; INFORMATION. Each Debtor shall keep
accurate and complete books and records (the "Records") of the Collateral and
such Debtor's business and financial condition in accordance with the Financing
Agreements. Subject to Section 4.7, each Debtor shall from time to time at the
request of the Collateral Agent deliver to the Collateral Agent such information
regarding the Collateral and such Debtor as the Collateral Agent may reasonably
request, including, without limitation, lists and descriptions of the Collateral
and evidence of the identity and existence of the Collateral. Each Debtor shall
xxxx its books and records to reflect the security interest of the Collateral
Agent under this Agreement; provided, however, that with respect to its computer
files, such Debtor's compliance with Section 2.4 hereof shall be deemed to
satisfy its obligations under this sentence.
SECTION 4.10 ADMINISTRATIVE AND OPERATING PROCEDURES. Each Debtor will
maintain and implement administrative and operating procedures (including
without limitation an ability to recreate records relating to the Dealer
Agreements, Dealer Loans, Installment Contracts and Leases encumbered hereby in
the event of the destruction of the originals thereof), and keep and maintain,
or obtain, as and when required, all documents, books, records and other
information reasonably necessary or advisable for the collection of all amounts
due under the Dealer Agreements, Dealer Loans, Installment Contracts and Leases
encumbered hereby (including without limitation records adequate to permit
adjustments to amounts due under each of such Dealer Agreements, Dealer Loans,
Installment Contracts and Leases). Each Debtor will give the Collateral Agent
notice of any material change in the administrative and operating procedures of
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such Debtor referred to in the previous sentence. Notwithstanding the foregoing,
the Debtors shall not be required to make or retain duplicate copies of
Installment Contracts or Leases.
SECTION 4.11 EQUIPMENT AND INVENTORY.
(a) Each Debtor shall keep the Equipment (other than vehicles) and
Inventory (other than Inventory in transit) which is in such Debtor's possession
at any of the locations specified on Schedule A hereto or, upon thirty (30) days
prior written notice to the Collateral Agent, at such other places within the
United States of America or Canada where all action required to perfect the
Collateral Agent's security interest in the Equipment and Inventory with the
priority required by this Agreement shall have been taken.
(b) Each Debtor shall maintain the Equipment and Inventory in accordance
with the terms of the Financing Agreements.
SECTION 4.12 NOTIFICATION. Each Debtor shall promptly notify the
Collateral Agent in writing of any Lien, encumbrance or claim (other than a
Permitted Lien) that has attached to or been made or asserted against any of the
Collateral upon becoming aware of the existence of such Lien, encumbrance or
claim.
SECTION 4.13 COLLECTION OF ACCOUNTS. So long as no Event of Default has
occurred and is continuing and except as otherwise provided in this Section 4.13
and in Section 5.1, the applicable Debtor shall have the right to collect and
receive payments on the Accounts, Dealer Agreements, Dealer Loans, Installment
Contracts, Leases and other financial assets, and to use and expend the same in
its operations, in each case in compliance with the terms of each of the
Financing Agreements. In connection with such collections, the applicable Debtor
may take (and, at the Collateral Agent's direction following the occurrence and
during the continuance of an Event of Default, shall take) such actions as such
Debtor or the Collateral Agent may deem necessary or advisable to enforce
collection of the Accounts, Dealer Agreements, Dealer Loans, Installment
Contracts and other financial assets.
SECTION 4.14 VOTING RIGHTS; DISTRIBUTIONS, ETC.
(a) So long as no Event of Default shall have occurred and be continuing
(both before and after giving effect to any of the actions or other matters
described in clauses (i) or (ii) of this subparagraph):
(i) Each Debtor shall be entitled to exercise any and all
voting and other consensual rights (including, without limitation,
the right to give consents, waivers and ratifications) pertaining to
any of the Pledged Shares or any part thereof; provided, however,
that no vote shall be cast or consent, waiver or ratification given
or action taken without the prior written consent of the Collateral
Agent which would violate any provision of this Agreement or any
other Financing Agreement; and
(ii) Except as otherwise provided in this Agreement or any of
the other Financing Agreements, each Debtor shall be entitled to
receive and retain any and
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all dividends, distributions and interest paid in respect to any of
the Pledged Shares.
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) The Collateral Agent may, at the direction or with the
concurrence of the Majority Benefited Parties as required under the
Intercreditor Agreement, (without notice to the Debtors), transfer
or register in the name of the Collateral Agent or any of its
nominees, for the equal and ratable benefit of the Lenders and the
Future Debt Holders, any or all of the Pledged Shares, and the
Proceeds thereof (in cash or otherwise) held by the Collateral Agent
hereunder, and the Collateral Agent or its nominee may thereafter,
at the direction or with the concurrence of the Majority Benefited
Parties as required under the Intercreditor Agreement, after
delivery of notice to the applicable Debtor, exercise all voting and
corporate or similar rights at any meeting of any corporation or
other entity issuing any of the Pledged Shares, and any and all
rights of conversion, exchange, subscription, distribution or any
other rights, privileges or options pertaining to any of the Pledged
Shares as if the Collateral Agent were the absolute owner thereof,
including, without limitation, the right to exchange, at its
discretion, any and all of the Pledged Shares upon the merger,
consolidation, reorganization, recapitalization or other
readjustment of any corporation or other entity issuing any of such
Pledged Shares, or upon the exercise by any such issuer or the
Collateral Agent of any right, privilege or option pertaining to any
of the Pledged Shares, and in connection therewith, to deposit and
deliver any and all of the Pledged Shares with any committee,
depositary, transfer agent, registrar or other designated agency
upon such terms and conditions as the Collateral Agent may
determine, all without liability except to account for property
actually received by it, but the Collateral Agent shall have no duty
to exercise any of the aforesaid rights, privileges or options, and
the Collateral Agent shall not be responsible for any failure to do
so or delay in so doing.
(ii) All rights of the Debtors to exercise the voting and
other consensual rights which it would otherwise be entitled to
exercise pursuant to Subsection 4.14(a)(i) and to receive the
dividends, interest and other distributions which it would otherwise
be authorized to receive and retain pursuant to Subsection
4.14(a)(ii) shall be suspended until such Event of Default shall no
longer exist, and all such rights shall, until such Event of Default
shall no longer exist, thereupon become vested in the Collateral
Agent which shall thereupon have the sole right, at the direction or
with the concurrence of the Majority Benefited Parties as required
under the Intercreditor Agreement, to exercise such voting and other
consensual rights and to receive, hold and dispose of as Pledged
Shares, as the case may be, such dividends, interest and other
distributions.
(iii) All dividends, interest and other distributions which
are received by the Debtors contrary to the provisions of this
Subsection 4.14(b) shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds and property
of the Debtors and shall be forthwith paid over to the
17
Collateral Agent as Collateral in the same form as so received (with
any necessary endorsement).
(iv) The Debtors shall execute and deliver (or cause to be
executed and delivered) to the Collateral Agent all such proxies and
other instruments as the Collateral Agent may reasonably request for
the purpose of enabling the Collateral Agent to exercise the voting
and other rights which it is entitled to exercise pursuant to this
Subsection 4.14(b) and to receive the dividends, interest and other
distributions which it is entitled to receive and retain pursuant to
this Subsection 4.14(b). The foregoing shall not in any way limit
the Collateral Agent's power and authority granted pursuant to
Section 5.1.
(c) The Collateral Agent shall establish, for the benefit of the Benefited
Parties in the name of the Collateral Agent, a segregated non-interest bearing
blocked account (the "Receiving Account") under which CAC South Dakota and the
other Debtors shall have no withdrawal or other rights (whether or not a Default
or Event of Default has occurred and is continuing), such account being subject
to the security interest and lien established by this Agreement. All dividends,
distributions and other sums paid (or payable) in respect of CAC South Dakota's
partnership interest in CAC Scotland assigned, for collateral purposes, to the
Collateral Agent, for and on behalf of the Benefited Parties pursuant to the
Assignation, shall be received and held by Collateral Agent for the benefit of
the Benefited Parties, and thereafter promptly deposited by Collateral Agent to
the Receiving Account established under this clause (c). So long as no Default
or Event of Default has occurred and is continuing, the Collateral Agent shall
promptly transfer all such sums on deposit in the Receiving Account to another
account, as specified from time to time in writing by CAC South Dakota. Upon the
occurrence and during the continuance of any Default or Event of Default, all
such sums on deposit in the Receiving Account shall be retained in the Receiving
Account for disposition in accordance with this Agreement. Furthermore, CAC
South Dakota shall cause all dividends, distributions and other sums paid (or
payable) in respect of its partnership interest in CAC Scotland assigned for
collateral purposes, to the Collateral Agent, for and on behalf of the Benefited
Parties pursuant to the Assignation, to be paid directly by CAC Scotland to the
Collateral Agent in accordance with the terms of the Assignation, and shall
cause any such dividends, distributions or other sums received by any other
Person, including without limitation any Debtor, to be promptly delivered and
paid over to the Collateral Agent for disposition according to the terms hereof.
SECTION 4.15 TRANSFERS AND OTHER LIENS; ADDITIONAL INVESTMENTS. Each
Debtor agrees that, (a) except with the written consent of the Collateral Agent,
it will not permit any Significant Domestic Subsidiary to issue to it or any of
its other Subsidiaries any shares of stock, membership interests, partnership
units, notes or other securities or instruments (including without limitation
the Pledged Shares) in addition to or in substitution for any of the Collateral,
unless, concurrently with each issuance thereof, any and all such shares of
stock, membership interests, partnership units, notes or instruments are
encumbered in favor of the Collateral Agent under this Agreement or otherwise
(it being understood and agreed that all such shares of stock, membership
interests, partnership units, notes or instruments issued to such Debtor shall,
without further action by such Debtor or Collateral Agent, be automatically
encumbered by this Agreement as Pledged Shares) and (b) it will promptly upon
the written request of Collateral Agent following the issuance thereof (and in
any event within three Business Days following
18
such request) deliver to the Collateral Agent (i) an amendment, duly executed by
the applicable Debtor, in substantially the form of Exhibit A hereto (an
"Amendment"), in respect of such shares of stock, membership interests,
partnership units, notes or instruments issued to such Debtor or (ii) a new
stock pledge, duly executed by the applicable Subsidiary, in substantially the
form of this Agreement (a "New Pledge"), in respect of such shares of stock,
membership interests, partnership units, notes or instruments issued to any
Subsidiary granting to Collateral Agent, for the benefit of the Benefited
Parties, a first priority security interest, pledge and lien thereon, together
in each case with all certificates, notes or other instruments representing or
evidencing the same, and the acknowledgment of any issuer necessary or
appropriate to perfect such pledge, security interest and lien on any membership
or similar ownership interest. Each Debtor hereby (x) authorizes the Collateral
Agent to attach each Amendment to this Agreement, (y) agrees that all such
shares of stock, membership interests, partnership units, notes or instruments
listed in any Amendment delivered to the Collateral Agent shall for all purposes
hereunder constitute Pledged Shares, and (z) is deemed to have made, upon the
delivery of each such Amendment, the representations and warranties contained in
Sections 3.1, 3.2, 3.4, 3.5 and 3.7 of this Agreement with respect to the
Collateral covered thereby.
SECTION 4.16 POSSESSION; REASONABLE CARE. Regardless of whether an Event
of Default has occurred or is continuing, the Collateral Agent shall have the
right to hold in its possession all Pledged Shares pledged, assigned or
transferred hereunder and from time to time constituting a portion of the
Collateral. The Collateral Agent may appoint one or more agents (which in no
case shall be a Debtor or an affiliate of a Debtor) to hold physical custody,
for the account of the Collateral Agent, of any or all of the Collateral. The
Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which the Collateral Agent
accords its own property, it being understood that the Collateral Agent shall
not have any responsibility for (a) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders, distribution or other
matters relative to any Collateral, whether or not the Collateral Agent has or
is deemed to have knowledge of such matters, or (b) taking any necessary steps
to preserve rights against any parties with respect to any Collateral, except,
subject to the terms hereof, upon the written instructions of the Majority
Benefited Parties. Following the occurrence and continuance (beyond any
applicable grace or cure period) of an Event of Default, the Collateral Agent
shall be entitled to take possession of the Collateral in accordance with the
UCC.
SECTION 4.17 FUTURE SIGNIFICANT DOMESTIC SUBSIDIARIES. (a) With respect to
each Person which becomes a Significant Domestic Subsidiary subsequent to the
date hereof, on the date such Person is created, acquired or otherwise becomes a
Significant Domestic Subsidiary (whichever first occurs), the Company shall
cause such Subsidiary to execute and deliver, to the Collateral Agent a joinder
agreement, substantially in the form of Exhibit B hereto, by which such
Subsidiary shall become obligated as Debtor hereunder, as fully as though an
original signatory hereto.
(b) Furthermore, promptly following the effective date of each acquisition
or creation of a Significant Domestic Subsidiary, the Company from time to time
shall revise Schedule D hereto and deliver a copy thereto to the Collateral
Agent, adding to Schedule D the name of each such Significant Domestic
Subsidiary so acquired or created (and supplying the other
19
information required on such schedule including ownership information), and upon
such revision the Company and/or the applicable Debtor shall be deemed to have
pledged 100% of the capital stock, partnership interests, membership interests
or other ownership interests (to the extent owned by the Company and/or such
Debtor) of each such Significant Domestic Subsidiary so acquired or created to
Collateral Agent, for and on behalf of Benefited Parties.
SECTION 4.18 PRESERVATION OF INTELLECTUAL PROPERTY.
(a) Each Debtor agrees to take all necessary steps, including, without
limitation, in the United States Copyright Office or the United States Patent
and Trademark Office or in any court, to defend, enforce, and preserve the
validity and ownership of the intellectual property identified on Schedule F
hereto and all such additional registered intellectual property as may be
acquired or held by each Debtor, except in each case in which the Debtors have
determined, using their commercially reasonable judgment, that any of the
foregoing is not of material economic value to them.
(b) Each Debtor shall not abandon any registered intellectual property
registrations or applications therefor without the written consent of the
Collateral Agent, unless the Debtors shall have previously determined, using
their commercially reasonable judgment, that such use or pursuit or maintenance
of such intellectual property registrations or applications, is not of material
economic value to them.
(c) In the event that a Debtor becomes aware that any item of the
intellectual property which such Debtor has determined, using its commercially
reasonable judgment, to be material to its business (either singly or when taken
as a whole together with other such intellectual property rights then being
infringed against or misappropriated) is infringed or misappropriated by a third
party, such Debtor shall notify the Collateral Agent promptly and in writing, in
reasonable detail, and shall take such actions as such Debtor or the Collateral
Agent deems necessary or appropriate (using its reasonable commercial judgment)
including, without limitation, suing for infringement or misappropriation and
for an injunction against such infringement or misappropriation. Any expense
incurred in connection with such activities shall be borne by the Debtors. Each
Debtor will advise the Collateral Agent promptly and in writing and in
reasonable detail, of any adverse determination or the institution of any
proceeding (including, without limitation, the institution of any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any court) regarding any material item of the intellectual property
collateral.
(d) Promptly following application for registration, registration or
acquisition by a Debtor of any trademark, patent or copyright, such Debtor shall
provide notice to the Collateral Agent of such application, registration or
acquisition so that the Collateral Agent may make such filings as it may deem
necessary or desirable to perfect its interest in such intellectual property,
and such Debtor shall execute an amendment to the Security Agreement in
substantially the form of Exhibit C in order to for the Collateral Agent to
perfect its interests in any intellectual property held by such Debtor.
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ARTICLE V
RIGHTS OF THE COLLATERAL AGENT
SECTION 5.1 POWER OF ATTORNEY. Each Debtor hereby irrevocably constitutes
and appoints the Collateral Agent and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the name of such Debtor or in its own name,
to take, after the occurrence and during the continuance of an Event of Default,
any and all actions, and to execute any and all documents and instruments which
the Collateral Agent at any time and from time to time deems necessary or
desirable, to accomplish the purposes of this Agreement and, without limiting
the generality of the foregoing, each Debtor hereby gives the Collateral Agent
the power and right on behalf of such Debtor and in its own name to do any of
the following after the occurrence and during the continuance of an Event of
Default, without notice to or the consent of the Debtors:
(i) to demand, xxx for, collect or receive, in the name of the
Debtors or in its own name, any money or property at any time
payable or receivable on account of or in exchange for any of the
Collateral and, in connection therewith, endorse checks, notes,
drafts, acceptances, money orders, documents of title or any other
instruments for the payment of money under the Collateral or any
policy of insurance;
(ii) to pay or discharge taxes, Liens or other encumbrances
levied or placed on or threatened against the Collateral;
(iii) (A) to direct account debtors, Dealers, any obligors
under Installment Contracts or Leases, as applicable, and any other
parties liable for any payment under any of the Collateral to make
payment of any and all monies due and to become due thereunder
directly to the Collateral Agent or as the Collateral Agent shall
direct; (B) to receive payment of and receipt for any and all
monies, claims and other amounts due and to become due at any time
in respect of or arising out of any Collateral; (c) to sign and
endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
proxies, stock powers, verifications and notices in connection with
accounts and other documents relating to the Collateral; (D) to
commence and prosecute any suit, action or proceeding at law or in
equity in any court of competent jurisdiction to collect the
Collateral or any part thereof and to enforce any other right in
respect of any Collateral; (E) to defend any suit, action or
proceeding brought against the Debtors with respect to any
Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described above and, in connection therewith, to give
such discharges or releases as the Collateral Agent may deem
appropriate; (G) to exchange any of the Collateral for other
property upon any merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof and, in
connection therewith, deposit any of the Collateral with any
committee, depositary, transfer agent, registrar or other designated
agency upon such terms as the Collateral Agent may determine; (H) to
add or release any guarantor, indorser, surety or other party to any
of the Collateral; (i) to renew, extend or otherwise change the
terms and conditions of any of the Collateral; (J) to make, settle,
compromise or adjust any claim under or pertaining to any of the
Collateral (including claims under any policy of insurance); and (K)
to sell, transfer, pledge, convey, make any agreement with
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respect to, or otherwise deal with, any of the Collateral as fully
and completely as though the Collateral Agent were the absolute
owner thereof for all purposes, and to do, at the Collateral Agent's
option and the Debtors' sole expense, at any time, or from time to
time, all acts and things which the Collateral Agent deems necessary
to protect, preserve, maintain, or realize upon the Collateral and
the Collateral Agent's security interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable. The Collateral Agent shall be under no duty to exercise or withhold
the exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to the Collateral Agent in this Agreement, and shall not be
liable for any failure to do so or any delay in doing so. This power of attorney
is conferred on the Collateral Agent solely to protect, preserve, maintain and
realize upon its security interest in the Collateral. The Collateral Agent shall
not be responsible for any decline in the value of the Collateral and shall not
be required to take any steps to preserve rights against prior parties or to
protect, preserve or maintain any Lien given to secure the Collateral.
SECTION 5.2 SETOFF. In addition to and not in limitation of any rights of
any Benefited Party under applicable law, the Collateral Agent and each
Benefited Party shall, upon acceleration of any Benefited Obligation owing to
such party under the Credit Agreement or the Future Debt Documents, as the case
may be, or when and to the extent any such Benefited Obligation shall otherwise
be due and payable, and without notice or demand of any kind, have the right to
appropriate and apply to the payment of the Benefited Obligations owing to it
(whether or not then due) any and all balances, credits, deposits, accounts or
moneys of the Debtors then or thereafter on deposit with such Benefited Party;
provided, however, that any such amount so applied by any Benefited Party on any
of the Benefited Obligations owing to it shall be subject to the provisions of
Sections 5 and 10 of the Intercreditor Agreement.
SECTION 5.3 ASSIGNMENT BY THE COLLATERAL AGENT. The Collateral Agent may
at any time assign or otherwise transfer all or any portion of its rights and
obligations as Collateral Agent under this Agreement and the other Security
Documents (including, without limitation, the Benefited Obligations) to any
other Person, to the extent permitted by, and upon the conditions contained in,
the Intercreditor Agreement and the other Financing Agreements, as applicable,
and such Person shall thereupon become vested with all the benefits and
obligations thereof granted to the Collateral Agent herein or otherwise.
SECTION 5.4 PERFORMANCE BY THE COLLATERAL AGENT. If any Debtor shall fail
to perform any covenant or agreement contained in this Agreement, the Collateral
Agent may perform or attempt to perform such covenant or agreement on behalf of
such Debtor, in which case Collateral Agent shall exercise good faith and make
diligent efforts to give Debtors prompt prior written notice of such performance
or attempted performance. In such event, the Debtors shall, at the request of
the Collateral Agent, promptly pay any reasonable amount expended by the
Collateral Agent in connection with such performance or attempted performance to
the Collateral Agent, together with interest thereon at the interest rate set
forth in the Credit Agreement, from and including the date of such expenditure
to but excluding the date such expenditure is paid in full. Notwithstanding the
foregoing, it is expressly agreed that the Collateral Agent shall not have any
liability or responsibility for the performance of any obligation of the Debtors
under this Agreement.
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SECTION 5.5 RESTRICTIONS UNDER DEALER AGREEMENTS; NON-PETITION COVENANT.
In exercising the rights and remedies set forth in this Agreement, the
Collateral Agent shall take no action with regard to any Dealer which is
expressly prohibited by the related Dealer Agreement.
SECTION 5.6 CERTAIN COSTS AND EXPENSES. The Debtors shall pay or reimburse
the Collateral Agent within five (5) Business Days after demand for all
reasonable costs and expenses (including reasonable attorney's and paralegal
fees and expenses supported by an itemized billing) incurred by it in connection
with the enforcement, attempted enforcement, or preservation of any rights or
remedies under this Agreement or any other Security Document during the
existence of an Event of Default or after acceleration of any of the Benefited
Obligations (including in connection with any "workout" or restructuring
regarding the Benefited Obligations, and including in any insolvency proceeding
or appellate proceeding); provided, however, that the Debtors shall only be
required to pay or reimburse the Collateral Agent in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
under this Agreement or any other Security Document for the fees and expenses of
one law firm in each jurisdiction governing the establishment, perfection or
priority of any security interest or lien established hereby, or governing any
dispute, claim or other matter arising hereunder, at any given time, engaged on
behalf of the Collateral Agent. The agreements in this Section 5.6 shall survive
the payment in full of the Benefited Obligations. Notwithstanding the foregoing,
the reimbursement of any fees and expenses incurred by the Benefited Parties
shall be governed by the terms and conditions of the applicable Financing
Agreements.
SECTION 5.7 INDEMNIFICATION. The Debtors shall indemnify, defend and hold
the Collateral Agent and each Benefited Party and each of their respective
officers, directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including reasonable attorneys' and
paralegals' fees and expenses supported by an itemized billing) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Benefited Obligations and the termination, resignation or
replacement of the Collateral Agent or replacement of any Benefited Party) be
imposed on, incurred by or asserted against any such Indemnified Person in any
way relating to or arising out of this Agreement or any other Security Document
or any document contemplated by or referred to herein or therein, or the
transactions contemplated hereby, or any action taken or omitted by any such
Indemnified Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding (including any
"Bankruptcy Proceeding" (as defined in the Intercreditor Agreement) or appellate
proceeding) related to or arising out of this Agreement or the Benefited
Obligations or the use of the proceeds thereof, whether or not any Indemnified
Person is a party thereto (all the foregoing, collectively, the "Indemnified
Liabilities"); provided, that the Debtors shall have no obligation under this
Section 5.7 to any Indemnified Person (a) with respect to Indemnified
Liabilities to the extent resulting from the gross negligence or willful
misconduct of such Indemnified Person or (b) if, in the case of an action solely
among the Collateral Agent and/or the Benefited Parties (or any of
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them), neither any Debtor nor any of its Affiliates or employees or agents is
(or has been) finally determined, in a court of competent jurisdiction, to have
engaged in any wrongful conduct or in any breach of this Agreement or any of the
Financing Agreements or (c) if, in the case of an action solely as between or
among the Collateral Agent and/or the Benefited Parties (or any of them) on the
one hand and a Debtor, on the other hand, (i) such Debtor has obtained a final,
non-appealable judgment from a court of competent jurisdiction that neither it
nor any of its Affiliates, employees or agents has engaged in any wrongful
conduct or in any breach of this Agreement or any of the other Financing
Agreements or (ii) such Debtor by non-appealable judgment is the prevailing
party. The agreements in this Section 5.7 shall survive payment of all other
Benefited Obligations.
ARTICLE VI
DEFAULT
SECTION 6.1 RIGHTS AND REMEDIES. If an Event of Default shall have
occurred and be continuing, the Collateral Agent shall have the following rights
and remedies, subject to the direction and/or consent of the Majority Benefited
Parties as required under the Intercreditor Agreement:
(i) In addition to all other rights and remedies granted to
the Collateral Agent in this Agreement, the Intercreditor Agreement
or in any other Financing Agreement or by applicable law, the
Collateral Agent shall have all of the rights and remedies of a
secured party under the UCC (whether or not the UCC applies to the
affected Collateral) and the Collateral Agent may also, without
notice except as specified below or in the Intercreditor Agreement,
sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any exchange, broker's board or at any of
the Collateral Agent's offices or elsewhere, for cash, on credit or
for future delivery, and upon such other terms as the Collateral
Agent may, in its reasonable discretion, deem commercially
reasonable or otherwise as may be permitted by law. Without limiting
the generality of the foregoing, the Collateral Agent may (A)
without demand or notice to the Debtors (except as required under
the Financing Agreements or applicable law), collect, receive or
take possession of the Collateral or any part thereof, and for that
purpose the Collateral Agent (and/or its agents, servicers or other
independent contractors) may enter upon any premises on which the
Collateral is located and remove the Collateral therefrom or render
it inoperable, and/or (B) sell, lease or otherwise dispose of the
Collateral, or any part thereof, in one or more parcels at public or
private sale or sales, at the Collateral Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Collateral Agent may, in its reasonable
discretion, deem commercially reasonable or otherwise as may be
permitted by law. The Collateral Agent and, subject to the terms of
the Intercreditor Agreement, each of the Benefited Parties shall
have the right at any public sale or sales, and, to the extent
permitted by applicable law, at any private sale or sales, to bid
(which bid may be, in whole or in part, in the form of cancellation
of indebtedness) and become a purchaser of the Collateral or any
part thereof free of any right of redemption on the part of the
Debtors, which right of redemption is hereby expressly waived and
released by the Debtors to the extent permitted by applicable law.
Upon the request of the Collateral Agent, the applicable Debtor
shall assemble the Collateral and make it available to the
Collateral Agent at any place designated by the Collateral Agent
that is reasonably convenient to such Debtor and the Collateral
Agent. The Debtors
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agree that the Collateral Agent shall not be obligated to give more
than ten (10) days prior written notice of the time and place of any
public sale or of the time after which any private sale may take
place and that such notice shall constitute reasonable notice of
such matters. The Collateral Agent shall not be obligated to make
any sale of Collateral if, in the exercise of its reasonable
discretion, it shall determine not to do so, regardless of the fact
that notice of sale of Collateral may have been given. The
Collateral Agent may, without notice or publication (except as
required by applicable law), adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at
the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was
so adjourned. The Debtors shall be liable for all reasonable
expenses of retaking, holding, preparing for sale or the like, and
all reasonable attorneys' fees, legal expenses and other costs and
expenses incurred by the Collateral Agent in connection with the
collection of the Benefited Obligations and the enforcement of the
Collateral Agent's rights under this Agreement and the Intercreditor
Agreement. The Debtors shall, to the extent permitted by applicable
law, remain liable for any deficiency if the Proceeds of any such
sale or other disposition of the Collateral (conducted in conformity
with this clause (i) and applicable law) applied to the Benefited
Obligations are insufficient to pay the Benefited obligations in
full. The Collateral Agent shall apply the proceeds from the sale of
the Collateral hereunder against the Benefited Obligations in such
order and manner as is provided in the Intercreditor Agreement.
(ii) The Collateral Agent may cause any or all of the
Collateral held by it to be transferred into the name of the
Collateral Agent or the name or names of the Collateral Agent's
nominee or nominees.
(iii) The Collateral Agent may exercise any and all rights and
remedies of the Debtors under or in respect of the Collateral,
including, without limitation, any and all rights of the Debtors to
demand or otherwise require payment of any amount under, or
performance of any provision of any of the Collateral and any and
all voting rights and corporate powers in respect of the Collateral.
(iv) On any sale of the Collateral, the Collateral Agent is
hereby authorized to comply with any limitation or restriction with
which compliance is necessary (based on a reasoned opinion of the
Collateral Agent's counsel) in order to avoid any violation of
applicable law or in order to obtain any required approval of the
purchaser or purchasers by any applicable Governmental Authority.
(v) For purposes of enabling the Collateral Agent to exercise
its rights and remedies under this Section 6.1 and enabling the
Collateral Agent and its successors and assigns to enjoy the full
benefits of the Collateral, each Debtor hereby grants to the
Collateral Agent an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to such Debtor) to
use, assign, license or sublicense any of the Computer Records or
Software
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(including in such license reasonable access to all media in which
any of the licensed items may be recorded or stored and all computer
programs used for the completion or printout thereof), exercisable
upon the occurrence and during the continuance of an Event of
Default (and thereafter if Collateral Agent succeeds to any of the
Collateral pursuant to an enforcement proceeding or voluntary
arrangement such Debtor), except as may be prohibited by any
licensing agreement relating to such Computer Records or Software.
This license shall also inure to the benefit of all successors,
assigns, transferees of and purchasers from the Collateral Agent.
(vi) The following shall be the basis for any finder of fact's
determination of the value of any Collateral which is the subject
matter of a disposition giving rise to a calculation of any surplus
or deficiency under Section 9.615 (f) of the Uniform Commercial Code
(as in effect on or after July 1, 2001): (a) the Collateral which is
the subject matter of the disposition shall be valued in an "as is"
condition as of the date of the disposition, without any assumption
or expectation that such Collateral will be repaired or improved in
any manner; (b) the valuation shall be based upon an assumption that
the transferee of such Collateral desires a resale of the Collateral
for cash promptly (but no later than 30 days) following the
disposition; (c) all reasonable closing costs customarily borne by
the seller in commercial sales transactions relating to property
similar to such Collateral shall be deducted including, without
limitation, brokerage commissions, tax prorations, attorneys' fees,
whether inside or outside counsel is used, and marketing costs; (d)
the value of the Collateral which is the subject matter of the
disposition shall be further discounted to account for any estimated
holding costs associated with maintaining such Collateral pending
sale (to the extent not accounted for in (c) above), and other
maintenance, operational and ownership expenses; and (e) any expert
opinion testimony given or considered in connection with a
determination of the value of such Collateral must be given by
persons having at least 5 years experience in appraising property
similar to the Collateral and who have conducted and prepared a
complete written appraisal of such Collateral taking into
consideration the factors set forth above. The "value" of any such
Collateral shall be a factor in determining the amount of proceeds
which would have been realized in a disposition to a transferee
other than a secured party, a person related to a secured party or a
secondary obligor under Section 9-615(f).
SECTION 6.2 PRIVATE SALES.
(a) In view of the fact that applicable securities laws may impose certain
restrictions on the method by which a sale of the Pledged Shares may be effected
after an Event of Default, each Debtor agrees that upon the occurrence and
during the continuance of an Event of Default, Collateral Agent may from time to
time attempt to sell all or any part of the Pledged Shares by a private sale in
the nature of a private placement, restricting the bidders and prospective
purchasers to those who will represent and agree that they are "accredited
investors" within the meaning of Regulation D promulgated pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), and are purchasing
for investment only and not for distribution. In so doing,
26
Collateral Agent may solicit offers for the Pledged Shares, or any part thereof,
from a limited number of investors who might be interested in purchasing the
Pledged Shares. Without limiting the methods or manner of disposition which
could be determined to be commercially reasonable, if Collateral Agent hires a
firm of regional or national reputation that is engaged in the business of
rendering investment banking and brokerage services to solicit such offers and
facilitate the sale of the Pledged Shares, then Collateral Agent's acceptance of
the highest offer (including its own offer, or the offer of any of the Benefited
Parties at any such sale) obtained through such efforts of such firm shall be
deemed to be a commercially reasonable method of disposition of such Pledged
Shares. The Collateral Agent shall not be under any obligation to delay a sale
of any of the Pledged Shares (to the extent applicable) for the period of time
necessary to permit the issuer of such securities to register such securities
under the laws of any jurisdiction outside the United States, under the
Securities Act or under any applicable state securities laws, even if such
issuer would agree to do so.
(b) Each Debtor further agrees to do or cause to be done, to the extent
that such Debtor may do so under applicable law, all such other reasonable acts
and things as may be necessary to make such sales or resales of any portion or
all of the Collateral valid and binding and in compliance with any and all
applicable laws, regulations, orders, writs, injunctions, decrees or awards of
any and all courts, arbitrators or governmental instrumentalities, domestic or
foreign, having jurisdiction over any such sale or sales, all at the Debtors'
sole expense.
SECTION 6.3 ESTABLISHMENT OF SPECIAL ACCOUNT; AND LOCK BOX. Upon the
occurrence and during the continuance of any Event of Default, there shall be
established by the Debtors with Collateral Agent, for the benefit of the
Benefited Parties in the name of the Collateral Agent, a segregated non-interest
bearing cash collateral account ("Special Account") bearing a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Collateral Agent and the Benefited Parties; provided, however, that the
Special Account may be an interest-bearing account with a commercial bank
(including Comerica or any other Benefited Party which is a commercial bank) if
determined by the Collateral Agent, in its reasonable discretion, to be
practicable, invested by Collateral Agent in its sole discretion, but without
any liability for losses or the failure to achieve any particular rate of
return. Subject to the terms hereof and to the rights of Dealers under
applicable Dealer Agreement and to the rights of the applicable creditor in
respect of Permitted Securitizations, the Collateral Agent shall possess all
right, title and interest in and to all funds deposited from time to time in
such account. Furthermore, upon the occurrence and during the continuance of any
Event of Default, the Debtors agree, upon the written election of Collateral
Agent, to establish and maintain at Debtors' sole expense a United States Post
Office lock box (the "Lock Box"), to which Collateral Agent shall have exclusive
access and control. Each Debtor expressly authorizes Collateral Agent, from time
to time, to remove the contents from the Lock Box, for disposition in accordance
with this Agreement. Upon the occurrence and during the continuance of an Event
of Default, the applicable Debtor shall, upon Collateral Agent's request, notify
all account debtors, all Dealers under Dealer Agreements encumbered hereby, and
all obligors under Installment Contracts or Leases encumbered hereby that all
payments made to such Debtor (a) other than by electronic funds transfer, shall
be remitted, for the credit of such Debtor, to the Lock Box, and each Debtor
shall include a like statement on all invoices, and (b) by electronic funds
transfer, shall be remitted to the Special Account, and each Debtor shall
include a like statement on all invoices. The Debtors shall execute all
documents and authorizations as reasonably required by
27
the Collateral Agent to establish and maintain the Lock Box and the Special
Account. It is acknowledged by the parties hereto that any lockbox presently
maintained or subsequently established by the Debtors with Collateral Agent may
be used, subject to the terms hereof, to satisfy the requirements set forth in
the first sentence of this Section 6.3.
SECTION 6.4 LEGENDING INSTALLMENT CONTRACTS AND LEASES ON DEFAULT. Upon
the occurrence and during the continuance of any Event of Default, the Majority
Benefited Parties may elect (the "Election"), by directing the Collateral Agent
to notify the Debtors of such election, to affix to each Installment Contract
and Lease encumbered by this Agreement or securing Dealer Loans or otherwise
related to a Dealer Agreement encumbered hereby (or, at Debtors' option, to the
file folders containing such Installment Contracts or Leases) the following
legend: "THIS AGREEMENT HAS BEEN PLEDGED TO COMERICA BANK, AS COLLATERAL AGENT
FOR THE BENEFIT OF CERTAIN BENEFITED PARTIES". The Election, once made by the
Majority Benefited Parties, as aforesaid, shall remain in effect, and Debtors
shall remain obligated to comply with such Election, notwithstanding any
subsequent waiver or cure of the applicable Event of Default giving rise to such
election, unless the Election is withdrawn by the Majority Benefited Parties.
SECTION 6.5 DEFAULT UNDER FINANCING AGREEMENTS. It shall constitute an
Event of Default under each of the Financing Agreements if (a) any
representation or warranty made or deemed made by the Debtors herein or in any
instrument submitted pursuant hereto proves untrue in any material adverse
respect when made or deemed made, or (b) the Debtors shall breach any covenant
or other provision hereof, and such breach shall continue for a period of three
(3) consecutive days, in the case of any failure to pay any money due hereunder,
and thirty (30) consecutive days, in the case of any other breach hereunder or
(c) this Agreement shall at any time for any reason (other than in accordance
with its terms or the terms of each of the Financing Agreements or with the
consent of the requisite Benefited Parties) cease to be valid and binding and
enforceable against the Debtors, or (d) the validity, binding effect or
enforceability hereof shall be contested by any Person, or (e) the Debtors shall
deny, prior to payment of the Benefited Obligations in full or the termination
of this Agreement according to its terms, that it has any further liability
hereunder, or (f) this Agreement (other than in accordance with its terms or the
terms of each of the Financing Agreements) shall be terminated, invalidated,
revoked or set aside or in any way cease to give or provide to the Collateral
Agent and the Benefited Parties the benefits purported to be created hereby.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of the
Collateral Agent to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.
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SECTION 7.2 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the Debtors and the Collateral Agent and their
respective heirs, successors and assigns, except that no Debtor may assign any
of its rights or obligations under this Agreement without the prior written
consent of the Collateral Agent.
SECTION 7.3 AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT (AND THE FINANCING
AGREEMENTS REFERRED TO HEREIN) EMBODIES THE FINAL, ENTIRE AGREEMENT AMONG THE
PARTIES HERETO AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.
The provisions of this Agreement may be amended or waived only by an instrument
in writing signed by the parties hereto.
SECTION 7.4 NOTICES. All notices, requests, consents, approvals, waivers
and other communications hereunder shall be in writing (including, by facsimile
transmission) and mailed, faxed or delivered to the address or facsimile number
specified for notices on signature pages hereto; or, as directed to the Debtors
or the Collateral Agent, to such other address or number as shall be designated
by such party in a written notice to the other. All such notices, requests and
communications shall, when sent by overnight delivery, or faxed, be effective
when delivered for overnight (next business day) delivery, or transmitted in
legible form by facsimile machine, respectively, or if mailed, upon the third
"Business Day" (as defined in the Credit Agreement) after the date deposited
into the U.S. mail, or if otherwise delivered, upon delivery; except that
notices to the Collateral Agent shall not be effective until actually received
by the Collateral Agent.
SECTION 7.5 GOVERNING LAW; SUBMISSION TO JURISDICTION; SERVICE OF PROCESS.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF MICHIGAN.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER SECURITY DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF MICHIGAN OR
OF THE UNITED STATES FOR THE EASTERN DISTRICT OF MICHIGAN, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE DEBTORS AND THE COLLATERAL AGENT
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE DEBTORS AND THE COLLATERAL AGENT
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY SECURITY DOCUMENT.
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SECTION 7.6 HEADINGS. The headings, captions, and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
SECTION 7.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by the Collateral Agent shall affect the
representations and warranties or the right of the Collateral Agent, the Lenders
or the Future Debt Holders to rely upon them.
SECTION 7.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 7.9 WAIVER OF BOND. In the event the Collateral Agent seeks to
take possession of any or all of the Collateral by judicial process, each Debtor
hereby irrevocably waives any bonds and any surety or security relating thereto
that may be required by applicable law as an incident to such possession, and
waives any demand for possession prior to the commencement of any such suit or
action.
SECTION 7.10 SEVERABILITY. Any provision of this Agreement which is
determined by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 7.11 CONSTRUCTION. Each Debtor and the Collateral Agent
acknowledge that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement with its
legal counsel and that this Agreement shall be construed as if jointly drafted
by the Debtors and the Collateral Agent.
SECTION 7.12 TERMINATION. If all of the Benefited Obligations (other than
contingent liabilities pursuant to any indemnity, including without limitation
Sections 5.6 and 5.7 hereof, for claims which have not been asserted, or which
have not yet accrued) shall have been paid and performed in full and all
commitments to extend credit or other credit accommodations under the Credit
Agreement have been terminated, the Collateral Agent shall, upon the written
request of the Debtors, execute and deliver to the Debtors a proper instrument
or instruments acknowledging the release and termination of the security
interests created by this Agreement, and shall duly assign and deliver to the
Debtors (without recourse and without any representation or warranty) such of
the Collateral as may be in the possession of the Collateral Agent and has not
previously been sold or otherwise applied pursuant to this Agreement.
SECTION 7.13 RELEASE OF COLLATERAL. The Collateral Agent shall, upon the
written request of the applicable Debtor, execute and deliver to such Debtor a
proper instrument or instruments acknowledging the release of the security
interest and liens established hereby (a) on any Collateral (other than the
Pledged Shares) (i) which is permitted to be sold or disposed of a Debtor or any
other grantor in connection with a Permitted Securitization, or (ii) the sale or
other
30
disposition of which is not otherwise prohibited under the terms of any of the
other Financing Agreements (or in the event any Financing Agreement prohibits
such sale or disposition, the applicable Benefited Parties under such Financing
Agreement shall have consented to such sale or disposition in accordance with
the terms thereof) and, at the time of such proposed release, both before and
after giving effect thereto, no Default or Event of Default has occurred and is
continuing, or (b) if such release has been approved by the requisite Benefited
Parties in accordance with Section 3(g) of the Intercreditor Agreement.
SECTION 7.14 WAIVER OF JURY TRIAL. THE DEBTORS AND THE COLLATERAL AGENT
EACH WAIVES ITS RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER SECURITY
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY EITHER SUCH PARTY AGAINST
THE OTHER, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
THE DEBTOR AND THE COLLATERAL AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, EACH SUCH PARTY FURTHER AGREES THAT ITS RIGHT TO A TRIAL BY JURY IS
WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER SECURITY DOCUMENTS OR ANY
PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
SECTION 7.15 CONSISTENT APPLICATION. The rights and duties created by this
Agreement shall, in all cases, be interpreted consistently with, and shall be in
addition to (and not in lieu of), the rights and duties created by the Financing
Agreements. In the event that any provision of this Agreement shall be
inconsistent with any provision of any other Financing Agreements, such
provision of this Agreement shall govern.
SECTION 7.16 AMENDMENT AND RESTATEMENT; REAFFIRMATION. This Agreement
shall be deemed to amend, restate, renew and replace, in its entirety the prior
amended and restated security agreement executed and delivered by the parties as
of June 11, 2001, which amended and restated the earlier security agreements
referred to therein (all such prior security agreements referred to herein as
the "Prior Security Agreements"). The Debtors further reaffirm their respective
obligations under the Intercreditor Agreement, to the extent and on the terms
set forth in the Acknowledgments attached thereto.
* * * *
31
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first written above.
DEBTORS:
CREDIT ACCEPTANCE CORPORATION
By:/s/ Xxxxxxx X. Xxxx
-------------------
Name: Xxxxxxx X. Xxxx
Title: Treasurer
Address for Notices:
Credit Acceptance Corporation
00000 X. 00 Xxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
Fax No.: 000-000-0000
Telephone No.: 000-000-0000
Attention: Xxxx Xxxx
32
AUTO FUNDING AMERICA OF NEVADA INC.
BUYERS VEHICLE PROTECTION PLAN, INC.
CAC LEASING, INC.
VEHICLE REMARKETING SERVICES, INC.
CREDIT ACCEPTANCE CORPORATION OF
NEVADA, INC.
CAC (TCI), LTD.
CREDIT ACCEPTANCE CORPORATION OF SOUTH DAKOTA, INC.
CAC REINSURANCE, LTD.
By:/s/ Xxxxxxx X. Xxxx
-------------------
Name: Xxxxxxx X. Xxxx
Title: Treasurer
Address for Notices:
c/o Credit Acceptance Corporation
00000 X. 00 Xxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
Fax No.: 000-000-0000
Telephone No.: 000-000-0000
Attention: Xxxx Xxxx
COLLATERAL AGENT:
COMERICA BANK as Collateral Agent
By:/s/ Xxxxx X. Light
------------------
Name: Xxxxx X. Light
Title:VP
Address for Notices:
Metropolitan Loans D
One Detroit Center, 6th Floor
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Fax No.: 313/000-0000
Telephone No.: 313/000-0000
Attention: Xxxxx X. Light
33
SCHEDULE A
TO
SECURITY AGREEMENT
Principal Place of Business, Locations of Equipment and Inventory
(including leased locations) in the Possession of Debtors
Credit Acceptance Corporation
00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
0000 Xxxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Auto Funding America of Nevada, Inc.
a. 00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
b. 00000 X. 0 Xxxx Xxxxxxxx, XX 00000
Buyers Vehicle Protection Plan, Inc.
00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
CAC Leasing, Inc.
00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Vehicle Remarketing Services, Inc.
a. 00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
b. 0000 Xxxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
CAC Reinsurance, Ltd.
00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
CAC (TCI), Ltd.
00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Credit Acceptance Corporation of Nevada, Inc.
a. 00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
b. 0000 Xxxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Credit Acceptance Corporation of South Dakota, Inc.
00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
2
SCHEDULE B
TO
SECURITY AGREEMENT
Jurisdictions for Filing
UCC-1 Financing Statements
Credit Acceptance Corporation
Michigan
Nevada
Auto Funding America of Nevada, Inc.
Michigan
Nevada
Buyers Vehicle Protection Plan, Inc.
Michigan
CAC Leasing, Inc.
Michigan
Vehicle Remarketing Services, Inc.
Michigan
Nevada
Credit Acceptance Corporation of Nevada, Inc.
Michigan
Nevada
Credit Acceptance Corporation of South Dakota, Inc.
South Dakota
CAC Reinsurance, Ltd.
(None.)
CAC (TCI), Ltd.
(None.)
SCHEDULE C
TO
SECURITY AGREEMENT
Primary Computer Systems and Software
Application and Contract System is software which utilizes the HP Unix
operating system and is resident on one of the Company's HP N4000 servers in a
failover cluster configuration. It was designed by in-house personnel and TUSC,
a consulting firm hired to assist with the project.
The Loan Servicing System is software which utilizes the HP Unix operating
system and is resident on one of the Company's HP N4000 servers in a failover
cluster configuration. It was designed by in-house personnel and TUSC.
The Collection System is software which utilizes the HP Unix operating
system and is resident on one of the Company's HP N4000 servers in a failover
cluster configuration. It was developed and is owned by Ontario Systems
Corporation and licensed to the Company under an agreement dated November 13,
2001.
Further information regarding these systems is contained in the following
excerpt from the Company's Form 10-K for the year ended December 31, 2004:
EXCERPTS FROM 2004 Form 10-K
CREDIT ACCEPTANCE CORPORATION
CAPS interfaces with the Company's Application and Contract System ("ACS").
Consumer Loan information included in CAPS is automatically entered into ACS
through a download from CAPS. Additional Consumer Loan information is entered
into ACS manually. ACS provides credit scoring capability as well as the ability
to process Consumer Loan packages. ACS compares Consumer Loan data against
information provided during the approval process and allows the funding analyst
to check that all stipulations have been met prior to funding. Consumer Loan
contracts are written on a contract form provided by the Company and the
Consumer Loan transaction typically is not completed until the dealer-partner
has received approval from the Company. The assignment of the Consumer Loan from
the dealer-partner to the Company occurs after both the customer and
dealer-partner sign the contract and the original contract is received and
approved by the Company. Although the dealer-partner is named in the Consumer
Loan contract, the dealer-partner does not have legal ownership of the Consumer
Loan for more than a moment and the Company, not the dealer-partner, is listed
as lien holder on the vehicle title. The customer's payment obligation is
directly to the Company. Payments are generally made by the customer directly to
the Company. The customer's failure to pay amounts due under the Consumer Loan
will result in collection action by the Company.
* * * * *
Collectors rely on two systems to service accounts, the Collection System
("CS") and the Loan Servicing System ("LSS"). The LSS and CS are connected
through a batch interface. The present CS has been in service since June 2002.
The CS interfaces with a predictive dialer and records all
activity on a Consumer Loan, including details of past phone conversations with
the customer, collection letters sent, promises to pay, broken promises,
repossession orders and collection attorney activity. The LSS maintains a record
of all transactions relating to Consumer Loans assigned after July 1990 and is
the primary source of management reporting including data utilized to:
(i) evaluate the Company's proprietary credit scoring system;
(ii) forecast future collections;
(iii) establish the amount of revenue recognized by the Company; and
(iv) analyze the profitability of the Company's program.
2
SCHEDULE D
TO
SECURITY AGREEMENT
Pledged Shares
Pledged Shares as %
Certificate No. of Pledged of Total Shares Issued Total Shares Issued
Issuer Owner No. Shares and Outstanding and Outstanding
----------------------- --------- ----------- -------------- ---------------------- -------------------
Auto Funding America of Company 1 1,000 100% 1,000
Nevada, Inc.
Buyers Vehicle Company 1 1,000 100% 1,000
Protection Plan, Inc.
CAC Leasing, Inc. Company 1 1,000 100% 1,000
Vehicle Remarketing Company 1 10 100% 10
Services, Inc.
Credit Acceptance Company 1 1,000 100% 1,000
Corporation of Nevada,
Inc.
Credit Acceptance Company 2 4,500 90% 5,000
Corporation of South
Dakota, Inc.
Credit Acceptance CAC 3 500 10% 5,000
Corporation of South Reinsurance
Dakota, Inc.
CAC (TCI), Ltd. Company 1,2 4,500 90% 5,000
CAC (TCI), Ltd. CAC 3 500 10% 5,000
Reinsurance
SCHEDULE E
TO
SECURITY AGREEMENT
Trade and Other Names
Credit Acceptance Corporation
STATES
AL - ALABAMA NONE
AK - ALASKA NONE
AZ - ARIZONA NONE
AR - ARKANSAS AUTONET XXXXXXX.XXX, CAC AUTO LEASING
CA - CALIFORNIA LOS ANGELOS COUNTY ONLY - AUTONET XXXXXXX.XXX, CAC AUTO LEASING
CO - COLORADO AUTONET XXXXXXX.XXX, CAC AUTO LEASING
CT - CONNECTICUT TOWN OF GRANBY ONLY - AUTONET XXXXXXX.XXX, CAC AUTO LEASING
DE - DELAWARE NONE
DC - DIST. OF COL. NONE
FL - FLORIDA NONE
GA - XXXXXXX XXXXXX COUNTY ONLY - AUTONET XXXXXXX.XXX
HI - HAWAII AUTONET XXXXXXX.XXX, CAC AUTO LEASING
ID - IDAHO AUTONET XXXXXXX.XXX, CAC AUTO LEASING
IL - ILLINOIS AUTONET XXXXXXX.XXX, CAC AUTO LEASING
IN - INDIANA AUTONET XXXXXXX.XXX, CAC AUTO LEASING
IA - IOWA AUTONET XXXXXXX.XXX, CAC AUTO LEASING
KS - KANSAS NONE
KY - KENTUCKY AUTONET XXXXXXX.XXX, CAC AUTO LEASING
LA - LOUISIANA NONE
ME - MAINE AUTONET XXXXXXX.XXX, CAC AUTO LEASING
MD - MARYLAND NONE
MA - MASS. AUTONET XXXXXXX.XXX
MI - MICHIGAN AUTONET XXXXXXX.XXX, CAC AUTO LEASING
MN - MINNESOTA AUTONET XXXXXXX.XXX, CAC AUTO LEASING
MS - MISSISSIPPI NONE
MO - MISSOURI AUTONET XXXXXXX.XXX, CAC AUTO LEASING
MT - MONTANA NONE
NE - NEBRASKA NONE
NV - NEVADA NONE
NH - NEW HAMP. AUTONET XXXXXXX.XXX, CAC AUTO LEASING
NJ - NEW JERSEY AUTONET XXXXXXX.XXX, CAC AUTO LEASING
NM - NEW MEXICO AUTONET FINANCE XXXXXXX.XXX, INC.
NY - NEW YORK NONE
NC - NORTH CAR. AUTONET FINANCE XXXXXXX.XXX, INC., CAC LEASING, INC.CAC AUTO LELEASING, INC.
ND - NORTH DAK. AUTONET XXXXXXX.XXX
OH - OHIO AUTONET XXXXXXX.XXX, CAC AUTO LEASING
OK - OKLAHOMA AUTONET XXXXXXX.XXX, CAC AUTO LEASING
OR - OREGON NONE
PA - PENN. AUTONET XXXXXXX.XXX, CAC AUTO LEASING, CREDIT ACCEPTANCE FINANCIAL SERVICES, INC.
RI - RHODE ISLAND NONE
SC - SOUTH CAR. RICHAND COUNTY ONLY - AUTONET XXXXXXX.XXX
SD - SOUTH DAK. NONE
TN-TENNESSEE AUTONET XXXXXXX.XXX, CAC AUTO LEASING
TX - TEXAS AUTONET XXXXXXX.XXX, CAC AUTO LEASING
UT - UTAH NONE
VT - VERMONT AUTONET XXXXXXX.XXX, CAC AUTO LEASING
VA - VIRGINIA CITY OF VIRGINIA BEACH ONLY -AUTONET XXXXXXX.XXX, CAC AUTO LEASING
WA - WASHINGTON AUTONET XXXXXXX.XXX, CAC AUTO LEASING
WV - WEST VIR. AUTONET XXXXXXX.XXX, CAC AUTO LEASING
WI - WISCONSIN NONE
WY - WYOMING NONE
Auto Funding America of Nevada, Inc.
None
Buyers Vehicle Protection Plan, Inc.
None
CAC Leasing, Inc.
None
Vehicle Remarketing Services, Inc.
Oklahoma - Vehicle Remarketing Services of Michigan, Inc.
Credit Acceptance Corporation of Nevada, Inc.
None
Credit Acceptance Corporation of South Dakota, Inc.
None
CAC Reinsurance, Ltd.
None
CAC (TCI), Ltd.
None
2
SCHEDULE F
TO
SECURITY AGREEMENT
COPYRIGHT SCHEDULE
CREDIT ACCEPTANCE CORPORATION
COPYRIGHT REG. NO.
------------------------------------------------------------------------ ---------
CAC program review: 18 minutes that can change the profitability of your
dealership : ser. 100 TX3449287
CAC program review: 18 minutes that can change the profitability of your
dealership : ser. 200 TX3449289
CAC Sales and management video seminar TX3377499
CAC sales and management video seminar TX3395660
CAC Sales and management video seminar : owner's manual TX3395659
Century Club stock option plan for dealers TX3724334
Century Club stock option plan for dealers TX3770159
Credit Acceptance Corporation dealership procedures XX0000000
Credit Acceptance Corporation dealership procedures TX3572818
Credit Acceptance Corporation management conference XX0000000
Credit Acceptance Corporation management conference TX3439695
Credit Acceptance Corporation management conference manual. By Credit Acceptance
Corporation TX4348146
Credit Acceptance Corporation servicing agreement instructions TX3436544
Credit Acceptance Corporation: servicing agreement instructions TX3577877
Credit acceptance corporation's 100% plus plan TX4160147
Credit Acceptance corporation's value advance program (VAP) XX0000000
Xxx Xxxx/Credit Acceptance Corporation sales training tapes PA565492
Xxx Xxxx Credit Acceptance Corporation seminar TX3349797
Xxx Xxxx Credit Acceptance Corporation seminar TX3349798
Xxx Xxxx Credit Acceptance Corporation seminar; sales training manual. By Credit
Acceptance Corporation XX0000000
Get started video-easy steps to successful CAC selling TX3449288
Get started video-easy steps to successful CAC selling : ser. 200 TX3449286
Giving car dealers new avenues for profits : brochure series 100 TX3432531
Giving car dealers new avenues for profits, brochure series 100. By Credit
Acceptance Corporation XX0000000
Giving car dealers new avenues for profits : brochure series 200 and contents TX3431952
Giving car dealers new avenues for profits; brochure series 200 and contents. By
Credit Acceptance Corporation TX4182062
No-risk financing for high-risk buyers TX3432894
No-risk financing for high-risk buyers brochure. By Credit Acceptance Corporation TX4379523
The advantages and disadvantages of "buy here, pay here"/by TX3432530
Xxxxxxx Xxxxxxxxxx
The CAC sales and management video training seminar TX3360449
TRADEMARK SCHEDULE
CREDIT ACCEPTANCE CORPORATION
XXXX SERIAL/REGIS. NO.
----------------------------------------- -------------------
ASK XXXX 2,699,904
CAC CREDIT ACCEPTANCE CORPORATION 1,576,794
CREDIT ACCEPTANCE WE CHANGE LIVES! 2,644,387
MISCELLANEOUS DESIGN (checkmark in a box) 2,657,196
PROFIT PROTECTOR 2,451,702
WE CHANGE LIVES 2,660,738
XXXX (and Design) 2,887,186
CAPS CREDIT APPROVAL PROCESS 78/488984 (app. no.)
WE CHANGE LIVES! (European Trademark) 002455137
PATENT SCHEDULE
CREDIT ACCEPTANCE CORPORATION
PATENT APPLICATION NO.
-------------------------------------------------------- --------------
System and Method for Providing Financing (Patent) 10/037,055
Vehicle Leasing and Consumer Credit Rehabilitation System
and Method (AutoNet Patent) 20010034700
2
EXHIBIT A
TO
SECURITY AGREEMENT
FORM OF AMENDMENT
This Amendment, dated _____, 20__, is delivered pursuant to Section 4.15
of the Security Agreement referred to below. The undersigned hereby agrees that
this Amendment may be attached to the Second Amended and Restated Security
Agreement dated as of February 7, 2006, between the undersigned and Comerica
Bank, as the Collateral Agent for the benefit of the Banks and the Future Debt
Holders referred to therein (the "Security Agreement"), and that the shares of
stock, membership interests, partnership units, notes or other instruments
listed on Schedule 1 annexed hereto shall be and become part of the Collateral
referred to in the Security Agreement and shall secure payment and performance
of all Benefited Obligations as provided in the Security Agreement.
Capitalized terms used herein but not defined herein shall have the meanings
therefor provided in the Security Agreement.
CREDIT ACCEPTANCE CORPORATION
By:________________________________________________
Name:______________________________________________
Title:_____________________________________________
AUTO FUNDING AMERICA OF NEVADA INC.
BUYERS VEHICLE PROTECTION PLAN, INC.
CAC LEASING, INC.
VEHICLE REMARKETING SERVICES, INC.
CREDIT ACCEPTANCE CORPORATION OF NEVADA, INC.
CAC (TCI), LTD.
CREDIT ACCEPTANCE CORPORATION OF SOUTH DAKOTA, INC.
CAC REINSURANCE, LTD.
By:________________________________________________
Name:______________________________________________
Title:_____________________________________________
COMERICA BANK, as Collateral Agent
By:________________________________________________
Name:______________________________________________
Title:_____________________________________________
2
EXHIBIT B
TO
SECURITY AGREEMENT
JOINDER AGREEMENT
THIS JOINDER AGREEMENT is dated as of _____, by the undersigned
("New Debtor").
WHEREAS, pursuant to Section 4.17 of that certain Second Amended and
Restated Security Agreement dated as of February 7, 2006 as amended or otherwise
modified from time to time, the "Credit Agreement") executed and delivered by
the Debtors signatory thereto, in favor of Comerica Bank, as Collateral Agent
for the benefit of the Banks, and the Future Debt Holders referred to therein
(the "Security Agreement"), the New Debtor must execute and deliver a Joinder
Agreement so as to become obligated under the Security Agreement.
NOW THEREFORE, as a further inducement to the Banks to continue to provide
Credit accommodations to the Company, New Debtor hereby covenants and agrees as
follows:
1. All capitalized terms used herein shall have the meanings assigned
to them in the Credit Agreement unless expressly defined to the
contrary.
2. New Debtor hereby enters into this Joinder Agreement in order to
comply with Section 4.17 of the Security Agreement and does so in
consideration of the credit accommodations made or to be made by the
Banks and any Future Debt Holders.
3. New Debtor shall be considered, and deemed to be, for all purposes
of the Security Agreement, a Debtor under the Security Agreement as
fully as though New Debtor had executed and delivered the Security
Agreement at the time originally executed and delivered by the
existing debtors, and hereby ratifies and confirms its obligations
under the Security Agreement, all in accordance with the terms
thereof.
4. No Default or Event of Default (each such term being defined in the
Intercreditor Agreement) has occurred and is continuing.
5. This Joinder Agreement shall be governed by the laws of the State of
Michigan and shall be binding upon New Debtor and its successors and
assigns.
IN WITNESS WHEREOF, the undersigned New Debtor has executed and
delivered this Joinder Agreement as of the day and year first above written.
[NEW DEBTOR]
By:__________________________________________
Its:_________________________________________
Address for notices:
_____________________________________________
_____________________________________________
_____________________________________________
Filing Locations:
_____________________________________________
_____________________________________________
_____________________________________________
Tradenames:
_____________________________________________
_____________________________________________
_____________________________________________
2
EXHIBIT C
FORM OF AMENDMENT
This Amendment, dated ________, 20__, is delivered pursuant to
Section 4.18(d) of the Security Agreement referred to below. The undersigned
hereby agrees that this Amendment may be attached to the Second Amended and
Restated Security Agreement dated as of February 7, 2006, between the
undersigned and Comerica Bank, as the Collateral Agent, as the same may be
amended, restated or otherwise modified from time to time (the "Security
Agreement"), and that the intellectual property listed on Schedule F annexed
hereto shall be and become part of the Collateral referred to in the Security
Agreement and shall secure payment and performance of all Indebtedness as
provided in the Security Agreement.
Capitalized terms used herein but not defined herein shall have the
meanings therefor provided in the Security Agreement.
[DEBTORS]
By:____________________________________________
Name:__________________________________________
Title:_________________________________________
COMERICA BANK, as Collateral Agent
By:____________________________________________
Name:__________________________________________
Title:_________________________________________
