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EXHIBIT 99.10
ACAC SECURITY AGREEMENT DATED AS OF NOVEMBER 30,
1995 BETWEEN AUTOMOBILE CREDIT ACCEPTANCE CORP.
AND HALL FINANCIAL GROUP, INC.
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EXHIBIT 99.10
ACAC SECURITY AGREEMENT
This SECURITY AGREEMENT (the "AGREEMENT") is made and entered into as
of the 30th day of November, 1995, by and between Automobile Credit Acceptance
Corp., a Texas corporation (hereinafter sometimes called "GRANTOR") and Hall
Financial Group, Inc. (hereinafter called "SECURED PARTY").
W I T N E S S E T H:
1. Concurrently herewith, Search Capital Group, Inc.. ("SEARCH")
and Search Funding Corp. ("SFC") have delivered to Secured Party those three
certain Promissory Notes (the "NOTES") as described in the Funding Agreement
entered into on November 30, 1995, ("FUNDING AGREEMENT") by and among Secured
Party, Grantor, Search, SFC, Newsearch, Inc. ("NEWSEARCH"), and Automobile
Credit Holdings, Inc.. ("ACHI").
2. In order to induce Secured Party to provide financial
accommodations to Grantor and in order to secure the payment and performance of
all indebtedness and obligations now or hereafter owing to Secured Party
pursuant to the Notes or any future note or other Obligation payable from
Grantor, Search, SFC, Newsearch, or ACHI ("SEARCH PARTIES") to Secured Party,
this Agreement, the Funding Agreement dated November 30, 1995 ("FUNDING
AGREEMENT") between the Search Parties and Secured Party, and all other
agreements, documents and instruments executed and delivered to Secured Party
in connection therewith (as the same shall be renewed, extended, amended,
increased or replaced from time to time, herein collectively called the "LOAN
DOCUMENTS"), Grantor has agreed to grant to Secured Party a security interest
in the property hereinafter described.
3. Grantor and Secured Party acknowledge that certain of Search's
subsidiaries ("CHAPTER SUBSIDIARIES") filed consolidated bankruptcy proceedings
on August 14, 1995, when each of the Chapter Subsidiaries filed a petition for
reorganization under chapter 11 of the Bankruptcy Code, pending in the U.S.
Bankruptcy Court for the Northern District of Texas, Dallas Division, as In re
Automobile Credit Fund 1991-III, Inc., et al, case nos. 395-34981-RCM-11
through 395-34988-SAF-11, jointly administered under case no. 000-00000-00
("BANKRUPTCY PROCEEDINGS"). The Chapter Subsidiaries are identified in the
Funding Agreement.
For good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
COLLATERAL AND SECURED INDEBTEDNESS
1.1 To secure the payment and performance in full of all
Obligations, Grantor hereby grants to Secured Party a continuing security
interest in and lien upon, and a right of setoff against, and Grantor hereby
assigns and pledges to Secured Party, all of the Collateral.
ACAC SECURITY AGREEMENT - PAGE 1
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1.2 "OBLIGATIONS" shall mean:
(a) all principal, interest, fees and other amounts
payable to Secured Party pursuant to the terms and provisions of the
Loan Documents, including, without limitation, the Notes;
(b) all covenants, conditions and agreements to be
performed pursuant to the terms of the Loan Documents; and
(c) all sums expended or advanced by Secured Party
pursuant to any term or provision of any Loan Documents, and all other
sums now or hereafter loaned or advanced by Secured Party to the
Search Parties, for the account of the Search Parties, or otherwise
owing by the Search Parties to Secured Party pursuant to the
Loan Documents.
1.3 "COLLATERAL" shall mean all of the following property of
Grantor:
All of the following now existing or hereafter arising and wherever
located: chattel paper; leases; installment sale contracts; installment loan
contracts; payments from chattel paper obligors; security deposits; motor
vehicles (including but not limited to cars, trucks and motorcycles);
certificates of title; contract purchase discounts; accounts; general
intangibles (including, but not limited to, tax and duty refunds, registered
and unregistered patents, trademarks, service marks, copyrights, trade names,
applications for the foregoing, trade secrets, goodwill, processes, drawings,
blueprints, customer lists, licenses, whether as licensor or licensee, choses
in action and other claims, and existing and future leasehold interests in
equipment, real estate and fixtures); security interests; collateral securing
chattel paper; dealer agreements; dealer reserves and rate participation;
rights of Grantor related to chattel paper, installment contracts, motor
vehicles, and collateral securing chattel paper; documents related to the
foregoing collateral; instruments; deposit accounts; electronic funds
transfers; equipment; inventory; parts and accessories for motor vehicles;
payments from account debtor bank accounts; reserve accounts; insurance
policies, and benefits and rights under insurance policies, which Grantor is
solely or jointly the owner of, insured under, the lienholder or loss payee
under, or the beneficiary of, all payments and property of any kind, now or at
any time or times hereafter, in the possession or under the control of Secured
Party, or a bailee of Secured Party; and all books and records (including,
without limitation, customer lists, credit files, credit investigation forms,
disbursement listings, computer data, print-outs and other computer records) of
Grantor pertaining to the foregoing collateral. All accessions to,
substitutions for and all replacements, products and proceeds of all of the
foregoing Collateral, including, without limitation, proceeds of insurance
policies insuring the Collateral;
All security agreements, certificates of title, or other documents or
agreements securing chattel paper;
All now owned and hereafter acquired right, title and interest of
Grantor in, to and in respect of goods, including, but not limited to:
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All inventory, wherever located, whether now owned or hereafter
acquired, of whatever kind, nature or description, including all raw materials,
work-in-process, finished goods, and materials to be used or consumed in
Grantor's business; and all names or marks affixed to or to be affixed thereto
for purposes of selling same by the seller, manufacturer, lessor or licensor
thereof;
All equipment and fixtures, wherever located, whether now owned or
hereafter acquired, including, without limitation, all machinery, equipment,
motor vehicles, furniture and fixtures, and any and all additions,
substitutions, replacements (including spare parts), and accessions thereof and
thereto;
All consumer goods, farm products, crops, timber, minerals or the like
(including oil and gas), wherever located, whether now owned or hereafter
acquired, of whatever kind, nature or description;
All now owned and hereafter acquired right, title and interests of
Grantor in, to and in respect of any real or other personal property in or upon
which Secured Party has or may hereafter have a security interest, lien or
right of setoff;
All present and future books and records relating to any of the above
including, without limitation, all computer programs, printed output and
computer readable data in the possession or control of the Grantor, any
computer service bureau or other third party;
All products and proceeds of the forgoing in whatever form and
wherever located, including, without limitation, all insurance proceeds and all
claims against third parties for loss or destruction of or damage to any of the
foregoing.
ARTICLE II
COLLECTION AND ADMINISTRATION
2.1 Grantor is authorized to collect the accounts and any other
proceeds of Collateral, on behalf of and in trust for Secured Party, at
Grantor's expense, but such authority shall automatically terminate upon an
Event of Default. Secured Party may modify or terminate such authority at any
time after the occurrence of an Event of Default and directly collect the
accounts and other monetary obligations included in the Collateral. After the
occurrence of an Event of Default, Grantor shall, at Grantor's expense and in
the manner requested by Secured Party from time to time, direct that
remittances and all other proceeds of accounts and other Collateral shall be
(a) sent to a post office box designated by and/or in the name of Secured Party
or in the name of Grantor, but as to which access is limited to Secured Party
and/or (b) deposited into a bank account maintained in the name of Secured
Party and/or a blocked bank account under arrangements with the depository bank
under which all funds deposited to such blocked bank account are required to be
transferred solely to Secured Party. Regardless whether such account is
maintained in the name of Grantor or the Secured Party, Grantor shall bear the
risk of loss of all funds
ACAC SECURITY AGREEMENT - PAGE 3
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in such account. In connection therewith, Grantor shall execute such post
office box and/or blocked bank account agreements as Secured Party shall
reasonably specify.
2.2 All Obligations shall be payable at Secured Party's office set
forth below or at Secured Party's bank as Secured Party may expressly designate
from time to time for purposes of this Section. Secured Party shall apply all
proceeds of accounts or other Collateral received by Secured Party and all
other payments in respect of the Obligations to the Notes whether or not then
due or to any other Obligations then due, in whatever order or manner Secured
Party shall determine. Secured Party shall have the continuing and exclusive
right to apply and reverse and reapply any and all such proceeds and payments
to any portion of the Obligations.
2.3 Secured Party may, at any time, during the existence of an
Event of Default, without notice to or assent of Grantor, (a) notify any
account debtor that the accounts and other Collateral which includes a monetary
obligation have been assigned to Secured Party by Grantor and that payment
thereof is to be made to the order of and directly to Secured Party, (b) send,
or cause to be sent by its designee, requests (which may identify the sender by
a pseudonym) for verification of accounts and other Collateral directly to any
account debtor or any other obligor or any bailee with respect thereto, and (c)
demand, collect or enforce payment of any accounts or such other Collateral,
but without any duty to do so, and Secured Party shall not be liable for any
failure to collect or enforce payment thereof. At Secured Party's request
during the existence of an Event of Default, all invoices and statements sent
to any account debtor, other obligor or bailee, shall state that the accounts
and such other Collateral have been assigned to Secured Party and are payable
directly and only to Secured Party.
2.4 Grantor hereby appoints Secured Party and any designee of
Secured Party as Grantor's attorney-in-fact and authorizes Secured Party or
such designee, at Grantor's sole expense, to exercise during the existence of
an Event of Default in Secured Party's or such designee's discretion all or any
of the following powers, which powers of attorney, being coupled with an
interest, shall be irrevocable until all Obligations have been paid in full:
(a) receive, take, endorse, assign, deliver, accept and deposit, in the name of
Secured Party or Grantor, any and all cash, checks, commercial paper, drafts,
remittances and other instruments and documents relating to the Collateral or
the proceeds thereof, (b) transmit to account debtors, other obligors or any
bailees notice of the interest of Secured Party in the Collateral or request
from account debtors or such other obligors or bailees at any time, in the name
of Grantor or Secured Party or any designee of Secured Party, information
concerning the Collateral and any amounts owing with respect thereto, (c)
notify account debtors or other obligors to make payment directly to Secured
Party, or notify bailees as to the disposition of Collateral, (d) take or
bring, in the name of Secured Party or Grantor, all steps, actions, suits or
proceedings deemed by Secured Party necessary or desirable to effect collection
of or other action upon the accounts and other Collateral, (e) after an Event
of Default, change the address for delivery of mail to Grantor and to receive
and open mail addressed to Grantor, (f) after an Event of Default, extend the
time of payment of, compromise or settle for cash, credit, return of
merchandise, and upon any terms or conditions, any and all accounts or other
Collateral which includes a monetary obligation
ACAC SECURITY AGREEMENT - PAGE 4
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and discharge or release the account debtor or other obligor, without affecting
any of the Obligations, and (g) execute in the name of Grantor and file against
Grantor in favor of Secured Party financing statements or amendments with
respect to the Collateral.
2.5 Grantor hereby releases and exculpates Secured Party, its
officers, employees and designees, from any liability arising from any acts
under this Agreement or in furtherance thereof, whether as attorney-in-fact or
otherwise, whether of omission or commission, and whether based upon any error
of judgment or mistake of law or fact, except for willful misconduct. In no
event will Secured Party have any liability to Grantor for lost profits or
other special or consequential damages.
2.6 After an Event of Default, Grantor shall not, without the
prior written consent of Secured Party in each instance, (a) grant any
extension of time of payment of any of the accounts or any other Collateral
which includes a monetary obligation, (b) compromise or settle any of the
accounts or any such other Collateral for less than the full amount thereof,
(c) release in whole or in part any account debtor or other person liable for
the payment of any of the accounts or any such other Collateral, or (d) grant
any credits, discounts, allowances, deductions, return authorizations or the
like with respect to any of the accounts or any such other Collateral.
2.7 At such times as Secured Party may request and in the manner
specified by Secured Party, Grantor shall deliver to Secured Party or Secured
Party's representative original invoices, agreements, proofs of rendition of
services and delivery of goods and other documents evidencing or relating to
the transactions which gave rise to accounts or other Collateral, together with
customer statements, schedules describing the accounts or other Collateral
and/or statements of account and confirmatory assignments to Secured Party of
the accounts or other Collateral, in form and substance satisfactory to Secured
Party and duly executed by Grantor. Without limiting the provisions of Section
2.6, Grantor's granting of credits, discounts, allowances, deductions, return
authorizations or the like will be promptly reported to Secured Party in
writing. In no event shall any such schedule or confirmatory assignment (or
the absence thereof or omission of any of the accounts or other Collateral
therefrom) limit or in any way be construed as a waiver, limitation or
modification of the security interests or rights of Secured Party or the
warranties, representations and covenants of Grantor under this Agreement. Any
documents, schedules, invoices or other paper delivered to Secured Party by
Grantor may be destroyed or otherwise disposed of by Secured Party six (6)
months after receipt by Secured Party, unless Grantor requests their return in
writing in advance, and makes prior arrangements for their return, at Grantor's
expense.
2.8 From time to time as requested by Secured Party, at the sole
expense of Grantor, Secured Party or its designee shall have access, prior to
an Event of Default during reasonable business hours and on or after an Event
of Default at any time, to all of the premises where Collateral is located for
the purposes of inspecting the Collateral, and to all of Grantor's books and
records, and Grantor shall permit Secured Party or its designee to make such
copies of such books and records or extracts therefrom as Secured Party may
request. Without expense to Secured Party, Secured Party may use such of
Grantor's
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personnel, equipment, including computer equipment, programs, printed output
and computer readable media, supplies and premises for the obtainment of copies
of such books and records. Grantor hereby irrevocably authorizes all
accountants and third parties to disclose and deliver to Secured Party at
Grantor's expense all financial information, books and records, work papers,
management reports and other information in their possession regarding Grantor.
2.9 If after receipt of any payment of, or proceeds applied to the
payment of, all or any part of the Obligations, the Secured Party is for any
reason required to surrender such payment or proceeds because such payment or
proceeds is invalidated, declared fraudulent, set aside, determined to be void
or voidable as a preference, or a diversion of trust funds, or for any other
reason, then: the Obligations or any part thereof intended to be satisfied
shall be revived and continue and this Agreement shall continue in full force
as if such payment or proceeds had not been received by the Secured Party, and
the Grantor shall be liable to pay to the Secured Party, and hereby does
indemnify the Secured Party and hold the Secured Party harmless for, the amount
of such payment or proceeds surrendered. The provisions of this Section 2.9
shall be and remain effective notwithstanding any contrary action which may
have been taken by the Secured Party in reliance upon such payment or proceeds,
and any such contrary action so taken shall be without prejudice to the Secured
Party's rights under this Agreement and shall be deemed to have been
conditioned upon such payment or proceeds having become final and irrevocable.
The provisions of this Section 2.9 shall survive the termination of this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES INCORPORATED
FROM FUNDING AGREEMENT
The representations of Grantor made in the Funding Agreement are
incorporated fully by reference the same as if fully set forth in this
Agreement, and Grantor hereby affirms and adopts all such representations and
warranties for purposes of this Agreement.
ARTICLE IV
ADDITIONAL REPRESENTATIONS WARRANTIES AND COVENANTS
4.1 Grantor hereby represents, warrants and covenants to Secured
Party the following, the truth and accuracy of which, and compliance with
which, shall be continuing conditions of the making of loans or other credit
accommodations by Secured Party to Grantor:
4.2 Grantor shall keep and maintain its books and records in
accordance with generally accepted accounting principles, consistently applied.
Grantor shall, at its sole expense deliver to Secured Party true and complete:
(i) monthly agings of its accounts receivable and accounts and notes payable,
monthly inventory reports, monthly internally
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prepared interim financial statements, trial balance of contracts, contract
delinquency reports, paid off contract reports, charged-off contract reports,
recovery reports, repossession reports, title tracking reports, vehicle
inventory reports, and new contract reports on or before the twentieth (20th)
day of each month and (ii) agings of its accounts receivable and accounts and
notes payable and cash transactions reports on a weekly basis, all in such
form, and together with such other information with respect to the business of
Grantor or any guarantor, as Secured Party may request.
4.3 Grantor may from time to time render invoices to account
debtors under its trade names after Secured Party has received prior written
notice from Grantor of the use of such trade names and as to which, Grantor
agrees that: (a) each trade name does not refer to another corporation or other
legal entity, (b) all accounts and proceeds thereof (including any returned
merchandise) invoiced under any such trade names are owned exclusively by
Grantor and are subject to the security interest of Secured Party and the other
terms of this Agreement, and (c) all schedules of accounts and confirmatory
assignments including any sales made or services rendered using the trade name
shall show Grantor's name as assignor and Secured Party is authorized to
receive, endorse and deposit to any loan account of Grantor maintained by
Secured Party all checks or other remittances made payable to any trade name of
Grantor representing payment with respect to such sales or services.
4.4 Grantor shall promptly notify Secured Party in writing of any
loss, damage, investigation, action, suit, proceeding or claim relating to a
material portion of the Collateral or which may result in any material adverse
change in Grantor's business, assets, liabilities or condition, financial or
otherwise.
4.5 Grantor's books and records concerning accounts and its chief
executive office are and shall be maintained only at the address set forth
below. Grantor's only other places of business and the only other locations of
Collateral, if any, are and shall be the addresses set forth in Section 6.7
hereof, except Grantor may change such locations or open a new place of
business after thirty (30) days prior written notice to Secured Party. Prior
to any change in location or opening of any new place of business, Grantor
shall execute and deliver or cause to be executed and delivered to Secured
Party such financing statements, financing documents, mortgages, and security
and other agreements as Secured Party may reasonably require.
4.6 Grantor has and at all times will continue to have good and
marketable title to all of the Collateral, free and clear of all liens,
security interests, claims or encumbrances of any kind, except, if any, those
set forth on Exhibit "A" attached hereto.
4.7 Grantor shall not directly or indirectly: (a) sell, lease,
transfer, assign, abandon or otherwise dispose of any part of the Collateral or
any material portion of its other assets (other than sales of inventory to
buyers in the ordinary course of business) or (b) consolidate with or merge
with or into any other entity, or permit any other entity to consolidate with
or merge with or into Borrower or (c) form or acquire any interest in any firm,
corporation or other entity.
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4.8 Grantor shall at all times maintain, with financially sound
and reputable insurers, casualty insurance with respect to the Collateral and
other assets and shall have Secured Party named as an additional insured on
such insurance. Provided, however, that Grantor shall not be required to
maintain casualty insurance with respect to vehicles other than such coverage
as is currently in place. All such insurance policies shall be in such form,
substance, amounts and coverage as may be satisfactory to Secured Party and
shall provide for thirty (30) days prior written notice to Secured Party of
cancellation or reduction of coverage. Grantor hereby irrevocably appoints
Secured Party and any designee of Secured Party as, attorney-in-fact for
Grantor to obtain at Grantor's expense any such insurance should Grantor fail
to do so and, after an Event of Default, to adjust or settle any claim or other
matter under or arising pursuant to such insurance or to amend or cancel such
insurance. Grantor shall deliver to Secured Party evidence of such insurance
and a Secured Party's loss payable endorsement satisfactory to Secured Party as
to all existing and future insurance policies with respect to the Collateral.
Grantor shall deliver to Secured Party, in kind, all instruments representing
proceeds of insurance received by Grantor. Secured Party may apply any
insurance proceeds received at any time to the cost of repairs to or
replacement of any portion of the Collateral and/or, at Secured Party's option,
to payment of or as security for any of the Obligations, whether or not due, in
any order or manner as Secured Party determines.
4.9 Grantor is and at all times will continue to be in material
compliance with all laws, rules, regulations and orders of any governmental
authority relating to its business (including laws, rules, regulations and
orders relating to taxes, payment and withholding of payroll taxes, employer
and employee contributions and similar items, securities, employee retirement
and welfare benefits, employee health and safety, or environmental matters) and
all material agreements or other instruments, binding on Grantor or its
property. Grantor shall pay and discharge all taxes, assessments and
governmental charges against Grantor or any Collateral prior to the date on
which penalties are imposed or liens attach with respect thereto, unless the
same are being contested in good faith and, at Secured Party's option, reserves
are established for the amount contested and penalties which may accrue
thereon.
4.10 With respect to Grantor's equipment, Grantor shall keep the
equipment in good order and repair, and in running and marketable condition,
ordinary wear and tear excepted.
4.11 Grantor will not, directly or indirectly: (a) other than in
the ordinary course of business, lend or advance money or property to,
guarantee or assume indebtedness of, or invest (by capital contribution or
otherwise) in any person, firm, corporation or other entity; or (b) declare,
pay or make any dividend, redemption or other distribution on account of any
shares of any class of stock of Grantor now or hereafter outstanding except the
dividend payment due in January, 1996 on outstanding convertible preferred
stock; or (c) make any payment of the principal amount of or Interest on any
indebtedness owing to any officer, director, shareholder, or affiliate of
Grantor except travel advances; or (d) make any loans or advances to any
officer, director, employee, shareholder or affiliate of Grantor except travel
advances; or (e) enter into any sale or lease or other transaction with any
officer, director, employee, shareholder or affiliate of Grantor on terms that
are less
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favorable to Grantor than those which might be obtained at the time from
persons who are not an officer, director, employee, shareholder or affiliate of
Grantor.
4.12 Grantor shall pay, on Secured Party's demand, all reasonable
costs, expenses, filing fees and taxes payable in connection with the
preparation, execution, delivery, recording, administration, collection,
liquidation, enforcement and defense of the Obligations, Secured Party's rights
in the Collateral, this Agreement and all other existing and future agreements
or documents contemplated herein or related hereto, including any amendments,
waivers, supplements or consents which may hereafter be made or entered into in
respect hereof, or in any way involving claims or defense asserted by Secured
Party or claims or defense against Secured Party asserted by Grantor, any
guarantor or any third party directly or indirectly arising out of or related
to the relationship between Grantor and Secured Party or any guarantor and
Secured Party, including, but not limited to the following, whether incurred
before, during or after the initial or any renewal term or after the
commencement of any case with respect to Grantor or any guarantor under the
United States Bankruptcy Code or any similar statute: (a) all costs and
expenses of filing or recording (including Uniform Commercial Code financing
statement filing taxes and fees, documentary taxes, intangibles taxes and
mortgage recording taxes and fees, if applicable); (b) all fees relating to the
wire transfer of loan proceeds and other funds and fees for returned checks;
(c) all expenses and costs heretofore and from time to time here-after incurred
by Secured Party during the course of periodic field examinations of the
Collateral and Borrower's operations; and (d) the reasonable out-of-pocket
costs, fees and disbursements of outside counsel to Secured Party.
4.13 At the request of Secured Party, at any time and from time to
time at Grantor's sole expense, Grantor shall execute and deliver or cause to
be executed and delivered to Secured Party, such agreements, documents and
instruments, including waivers, consents and subordination agreements from
mortgagees or other holders of security interests or liens, landlords or
bailees, and do or cause to be done such further acts as Secured Party, in its
discretion, deems necessary or desirable to create, preserve, perfect or
validate any security interest of Secured Party or the priority thereof in the
Collateral and otherwise to effectuate the provisions and purposes of this
Agreement. Borrower hereby authorizes Secured Party to file financing
statements or amendments against Grantor in favor of Secured Party with respect
to the Collateral, without Grantor's signature and to file as financing
statements any carbon, photographic or other reproductions of this Agreement or
any financing statements signed by Grantor.
4.14 The Grantor assumes all responsibility and liability arising
from or relating to the use, sale, or other disposition of the Collateral.
Neither the Secured Party nor any of its officers, directors, employees, and
agents shall be liable or responsible in any way for the safekeeping of any of
the Collateral, or for any act or failure to act with respect to the
Collateral, or for any loss or damage thereto, or for any diminution in the
value thereof, or for any act of default by any warehouseman, carrier,
forwarding agency or other person whomsoever, all of which shall be at the
Grantor's sole risk. The Obligations shall not be affected by any failure of
the Secured Party to take any steps to perfect its security interest in or to
collect or realize upon the Collateral, nor shall loss of or damage to the
Collateral
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release the Grantor from any of the Obligations. Upon the occurrence of an
Event of Default, the Secured Party may (but shall not be required to), without
notice to or consent from the Grantor, xxx upon or otherwise collect, extend
the time for payment of, modify or amend the terms of, compromise or settle for
cash or credit, grant other indulgences, extensions, renewals, compositions, or
releases, and take or omit to take any other action with respect to the
Collateral, any security therefor, any agreement relating thereto, any
insurance applicable thereto, or any person liable directly or indirectly in
connection with any of the foregoing, without discharging or otherwise
affecting the liability of the Grantor for the Obligations.
4.15 The Grantor shall notify Secured Party in writing of the
following matters at the following times:
(a) Immediately after becoming aware of the existence of
any Event of Default.
(b) Immediately after becoming aware that the holder of
any capital stock of the Grantor has given notice or taken any action
with respect to a claimed default.
(c) Immediately after becoming aware of any material
adverse change in the Collateral or in Grantor's property, business,
operations, or condition (financial or otherwise).
(d) Immediately after becoming aware of any pending or
threatened action, proceeding, or counterclaim by any individual,
sole proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, Public Authority, or any other
entity, or any pending or threatened investigation by a Public
Authority, which may materially and adversely affect the Collateral,
the repayment of the Obligations, the Secured Party's rights under the
Loan Documents, or Secured Party's rights with respect to the
Collateral, or Grantors business, operations, or condition (financial
or otherwise).
(e) Immediately after becoming aware of any pending or
threatened strike, work stoppage, material unfair labor practice
claim, or other material labor dispute affecting the Grantor or any
of its subsidiaries.
(f) Immediately after becoming aware of any violation of
any law, statute, regulation, or ordinance of a Public Authority
applicable to Grantor, which may materially and adversely affect the
Collateral, the repayment of the Obligations, the Secured Party's
rights under this Agreement, or Secured Party's rights with
respect to the Collateral, or Grantor's property, business,
operations, or condition (financial or otherwise).
(g) Immediately after becoming aware of any violation or
any investigation of a violation by the Grantor of environmental laws
which would adversely affect the
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Collateral, the Grantor's property, business, operation or condition
(financial or other-wise).
(h) Thirty (30) days prior to the Grantor changing its
name.
Each notice given under this Section shall describe the subject matter thereof
in reasonable detail and shall set forth the action that the Grantor has taken
or proposes to take with respect thereto. As used herein, the term ("Public
Authority") shall mean the government of any country or sovereign state, or of
any state, province, municipality, or other political subdivision thereof, or
any department, agency, public corporation or other instrumentality of any of
the foregoing.
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
5.1 For determination of an Event of Default, this Agreement
refers to and incorporates by reference the applicable provisions of the
Funding Agreement, as if fully set forth in this Agreement.
5.2 Upon the occurrence of an Event of Default and at any time
thereafter, Secured Party shall have all rights and remedies provided in this
Agreement, the Funding Agreement, any other agreements between Grantor and
Secured Party, the Uniform Commercial Code or other applicable law, all of
which rights and remedies may be exercised without notice to Grantor, all such
notices being hereby waived, except such notice as is expressly provided for
hereunder or is not waivable under applicable law. All rights and remedies of
Secured Party are cumulative and not exclusive and are enforceable, in Secured
Party's discretion, alternatively, successively, or concurrently on any one or
more occasions and in any order Secured Party may determine. Without limiting
the foregoing, Secured Party may (a) accelerate the payment of the Notes and
all Obligations and demand immediate payment thereof to Secured Party, (b) with
or without judicial process or the aid or assistance of others, enter upon any
premises on or in which any of the Collateral may be located and take
possession of the Collateral or complete processing, manufacturing and repair
of all or any portion of the Collateral, (c) require Grantor, at Grantor's
expense, to assemble and make available to Secured Party any part or all of the
Collateral at any place and time designated by Secured Party, (d) collect,
foreclose, receive, appropriate, setoff and realize upon any and all
Collateral, (e) extend the time of payment of, compromise or settle for cash,
credit, return of merchandise, and upon any terms or conditions, any and all
accounts or other Collateral which includes a monetary obligation and discharge
or release the account debtor or other obligor, without affecting any of the
Obligations, (f) sell, lease, transfer, assign, deliver or otherwise dispose of
any and all Collateral (including, without limitation, entering into contracts
with respect thereto, by public or private sales at any exchange, broker's
board, any office of Secured Party or elsewhere) at such prices or terms as
Secured Party may deem reasonable, for cash, upon credit or for future
delivery, with the Secured Party having the right to purchase the whole or any
part of the Collateral at any such public sale, all of the foregoing being free
from any right or equity of redemption of
ACAC SECURITY AGREEMENT - PAGE 11
13
Grantor which right or equity of redemption is hereby expressly waived and
released by Grantor. If any of the Collateral is sold or leased by Secured
Party upon credit terms or for future delivery, the Obligations shall not be
reduced as a result thereof until payment therefor is finally collected by
Secured Party. If notice of disposition of Collateral is required by law,
seven (7) days prior notice by Secured Party to Grantor designating the time
and place of any public sale or the time after which any private sale or other
intended disposition of Collateral is to be made, shall be deemed to be
reasonable notice thereof and Grantor waives any other notice. In the event
Secured Party institutes an action to recover any Collateral or seeks recovery
of any Collateral by way of prejudgment remedy, Grantor waives the posting of
any bond which might otherwise be required.
5.3 Secured Party may apply the cash proceeds of Collateral
actually received by Secured Party from any sale, lease, foreclosure or other
disposition of the Collateral to payment of any of the Notes or Obligations, in
whole or in part (including reasonable attorneys' fees and legal expenses
incurred by Secured Party with respect thereto or otherwise chargeable to
Grantor) and in such order as Secured Party may elect, when due. Grantor shall
remain liable to Secured Party for the payment of any deficiency together with
interest at the highest rate provided for herein and all costs and expenses of
collection or enforcement, including reasonable attorneys' fees and legal
expenses.
5.4 Secured Party may, at its option, during the existence of an
Event of Default cure any default by Grantor under any agreement with a third
party or pay or bond on appeal any judgment entered against Grantor, discharge
taxes, liens, security interests or other encumbrances at any time levied on or
existing with respect to the Collateral and pay any amount, incur any expense,
or perform any act which, in Secured Party's sole judgment, is necessary or
appropriate to preserve, protect, insure, maintain or upon the Collateral.
Secured Party may charge Grantor's loan account for any amounts so expended,
such amounts to be repayable by Grantor on demand. Secured Party shall be
under no obligation to effect such cure, payment, bonding or discharge, and
shall not, by doing so, be deemed to have assumed any obligation or liability
of Grantor.
ARTICLE VI
MISCELLANEOUS
6.1. The Definitions and constructions set out in the Funding
Agreement shall apply to this Agreement.
6.2. The headings of paragraphs herein are inserted only for
convenience and shall in no way define, describe or limit the scope or intent
of any provisions of this Agreement.
6.3. No change, amendment, modification, cancellation or discharge
of any provision of this Agreement shall be valid unless consented to in
writing by Secured Party.
6.4. As and when used herein, the term "GRANTOR" shall mean and
include the Grantor herein named and its successors and permitted assigns, and
the term "SECURED
ACAC SECURITY AGREEMENT - PAGE 12
14
PARTY" shall mean and include the Secured Party herein named and its successors
and assigns, and all covenants and agreements herein shall be binding upon and
inure to the benefit of Grantor and Secured Party and their respective
successors and permitted assigns.
6.5. THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND ENFORCEABLE
UNDER AND PURSUANT TO THE LAWS OF THE STATE OF TEXAS.
6.6. If any provision of this Agreement is held to be invalid or
unenforceable, the validity or enforceability of the other provisions of this
Agreement shall remain unaffected.
6.7. All notices, demands, requests or other communications to any
party hereunder or referred to herein shall be in writing and shall be given to
such party at its address set forth below (or, with respect to any other party,
not specified below, at such party's business address) or at such other address
as such party may hereafter specify for the purpose of notice to Grantor or
Secured Party. Each such notice, demand, request or other communication shall
be effective seventy-two (72) hours after such communication is deposited in
the mail with first class postage prepaid, addressed as aforesaid, provided
that such mailing is by registered or certified mail, return receipt requested.
If to Secured Party: Hall Financial Group, Inc.
000 Xxxxx Xx. Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
With copy to: Xxxxx & Xxxxxx, P.C.
2900 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
If to Grantor: Automobile Credit Acceptance Corp.
000 X. Xxxxx
Xxxxx 000, X.X. 000
Xxxxxx, Xxxxx 00000-0000
Attn: General Counsel
With a copy to: Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxx, P.C.
6.8. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument, and in making proof of this
Agreement it shall not be necessary to produce or account for more than one
such counterpart.
ACAC SECURITY AGREEMENT - PAGE 13
15
6.9. Anything contained in this Agreement to the contrary
notwithstanding, in the event of an express conflict between the terms hereof
and the terms of the Funding Agreement, the terms and provisions of the Funding
Agreement shall govern and control. Terms defined in the Funding Agreement
shall have the same meaning in this Agreement.
IN WITNESS WHEREOF, Grantor and Secured Party have executed this
Agreement on the date and year first above written.
GRANTOR:
Automobile Credit Acceptance Corp.
By: /s/ XXXXXX X. XXXX
----------------------------------
Printed Name: Xxxxxx X. Xxxx
------------------------
Its: SVP & CFO
---------------------------------
SECURED PARTY:
Hall Financial Group, Inc.
By: /s/ XXXXX X. XXXXX
----------------------------------
Xxxxx X. Xxxxx
Senior Vice President
ACAC SECURITY AGREEMENT - PAGE 14
16
EXHIBIT "A"
PERMITTED LIENS
1. Any liens granted to Secured Party;
2. Liens for taxes, assessments and governmental charges or levies
imposed upon the Grantor, it's income, profits, or property, if
the same are not yet due and payable or if the same are being
contested in good faith and as to which adequate cash reserves
have been provided;
3. Any existing lien securing any interest or title of a lessor
of real property or equipment under any true lease entered into
by Grantor in the ordinary course of business; and,
4. Liens imposed by mandatory provisions of law such as for
materialmen's, mechanic's, warehouseman's and other like liens
arising in the ordinary course of business, securing indebtedness
whose payment is not yet due or which is being contested in good
faith and as to which adequate cash reserves have been provided.
ACAC SECURITY AGREEMENT - PAGE 15
