-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RIcIhGncB7I53UVguKtDTotDEWsUnLnWO4q7Lm+6Lp01TtXoLxOkyjIBzx4Y/k5m wPav2xYc6NVSVpW6T4yC/g== 0000950134-96-006064.txt : 19961115 0000950134-96-006064.hdr.sgml : 19961115 ACCESSION NUMBER: 0000950134-96-006064 CONFORMED SUBMISSION TYPE: 8-K CONFIRMING COPY: PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19951130 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEARCH CAPITAL GROUP INC CENTRAL INDEX KEY: 0000318672 STANDARD INDUSTRIAL CLASSIFICATION: SHORT-TERM BUSINESS CREDIT INSTITUTIONS [6153] IRS NUMBER: 411356819 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-09539 FILM NUMBER: 00000000 BUSINESS ADDRESS: STREET 1: 700 N PEARL ST STE 400 STREET 2: PLZ OF THE AMERICAS NORTH TOWER CITY: DALLAS STATE: TX ZIP: 75201-7490 BUSINESS PHONE: 2149656000 MAIL ADDRESS: STREET 1: 700 N PEARL STE 400,NORH TOWER STREET 2: PLAZA OF THE AMERICAS CITY: DALLAS STATE: TX ZIP: 75201-7490 FORMER COMPANY: FORMER CONFORMED NAME: SEARCH NATURAL RESOURCES INC DATE OF NAME CHANGE: 19920703 8-K 1 FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) NOVEMBER 30, 1995 ------------------------------- SEARCH CAPITAL GROUP, INC. - ------------------------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) TEXAS 0-9539 41-1356819 - -------------------------------- ---------------- -------------------- (State or other jurisdiction (Commission File (I.R.S. Employer of incorporation) Number) Identification No.) 700 N. PEARL STREET SUITE 400, L.B. 401 DALLAS, TEXAS 75201-7490 - ------------------------------------------------------ --------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (214) 965-6000 ---------------------------- NOT APPLICABLE - ------------------------------------------------------------------------------- (Former name or former address, if changed since last report) 2 ITEM 5. OTHER EVENTS. Hall Financial Group, Inc. ("HFG") has entered into a Funding Agreement (the "Agreement") with Search Capital Group, Inc. (the "Company"). Under the Agreement, HFG (i) has loaned certain funds to the Company and (ii) has committed, subject to the satisfaction of certain conditions, to loan certain funds to the eight subsidiaries of the Company that have filed for protection under Chapter 11 of the Federal Bankruptcy Code (the "Bankrupt Subsidiaries"). The Bankrupt Subsidiaries have filed petitions for reorganization that are 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. 395-3498-1-RCM-11 (the "Bankruptcy Proceedings"). The Company itself has not filed a petition for reorganization under the Bankruptcy Code. A joint plan of reorganization (the "Plan") for the Bankrupt Subsidiaries has been proposed in the Bankruptcy Proceedings by the Company and the Bankrupt Subsidiaries but has not yet been voted upon or approved by creditors or confirmed by the bankruptcy court. WORKING CAPITAL LOANS Under the Agreement, the Company can borrow an aggregate of $3,000,000 from HFG pursuant to three separate promissory notes (the "Notes"). On November 30, 1995, the Company borrowed $1,784,487 pursuant to two of the Notes. All of the Notes are secured by the grant of security interests by the Company, and each of its subsidiaries that are not subject to the Bankruptcy Proceedings (the "Non-Bankrupt Subsidiaries), on essentially all of the assets of the Company and the Non-Bankrupt Subsidiaries. These assets include all of the outstanding stock of the Non-Bankrupt Subsidiaries, 2,250,000 shares of the Company's Common Stock held by one of the Non-Bankrupt Subsidiaries and all of the motor vehicle receivables and repossessed vehicles owned by the Company and its Non-Bankrupt Subsidiaries. Two of the Notes, having a total principal amount of $2,000,000, bear interest at 12% per annum and mature on the earlier of the effective date of the Plan or 90 days after the execution of the Notes. The Company may extend the 90-day period for up to 60 days and pay interest at 14% per annum during the extension period. The third Note bears interest at 6% per annum and matures on November 29, 1996. Pursuant to one of the Notes, having a total principal amount of $715,513, which is equal to the principal amount owing by the Company, as of November 30, 1995, to General Electric Credit Corporation ("GECC") under a loan agreement dated June 17, 1994, HFG will advance sufficient funds to pay the balance of the GECC loan. Such advance will be made after notice by GECC of a default by the Company under the loan agreement other than any defaults that were disclosed to HFG prior to closing and of GECC's intention to resort to the collateral security of the GECC loan, or at such earlier time as HFG shall elect. HFG shall not be required to fund this note if the GECC loan is in monetary default other than as a result of acceleration of maturity from a non-monetary default or if the Company cannot meet the collateral coverage ratio specified in the Agreement. Two of the Notes, having a total principal amount of $2,284,487.28, are convertible into shares of the Company's Common Stock after confirmation of the Plan or after a specified period following the execution of the Notes if confirmation has not occurred during that period. During the first 30 trading days after confirmation of the Plan, the conversion price for these Notes will be the lesser of $.93 per share or 65% of the price determined using the same formula used to determine the number of shares issued to creditors of the Bankrupt Subsidiaries under the Plan. If the Plan is not confirmed or following the first 30 trading days after the Plan's confirmation, the conversion price will be a price per share equal to 60% of the average bid price for the previous -2- 3 30 trading days. One of these two Notes, in the original principal balance of $1,000,000, may be prepaid by the Company on the 31st trading day after the Plan's confirmation by issuing to HFG shares of the Company's Common Stock in number equal to the Note balance divided by 60% of the average bid price for the Common Stock for the prior 30 trading days. HFG has to date only loaned $500,000 under this Note, but has committed to loan the remaining $500,000 not less than 10 days after the entry of an order in the Bankruptcy Proceedings approving the Disclosure Statement for the Plan. The shares issued with respect to the $1,000,000 Note will be restricted from resale for a period of 12 months except that 25,000 shares may be resold per month on a cumulative basis during such 12 month period. The conversion option with respect to the other of these Notes, having a principal amount of $1,284,487.28, is limited to 2,500,000 shares of the Company's Common Stock less the shares required to satisfy the conversion option or the stock prepayment feature of the $1,000,000 Note. WARRANT ISSUANCE Pursuant to the Agreement, the Company has issued to HFG a warrant (the "Warrant") to purchase 3,000,000 shares of Common Stock at an exercise price of $2.00 per share. The Warrant expires on November 30, 2000. Under the Warrant, HFG has the right to require the Company to effect the registration under the Securities Act of 1933 (the "1933 Act") of the shares purchasable by HFG under the Warrant as well as the shares that HFG may obtain upon conversion of the Notes or pursuant to its commitment to fund the Plan under the Agreement. HFG will also have the right to require the Company to register such shares if the Company proposes to register any of its securities under the 1933 Act. In the event of the registration of HFG's shares under the 1933 Act, the Company will be obligated to indemnify HFG and its affiliates from losses or liabilities arising out of untrue statements of material fact contained in the registration statement or related prospectus. COMMITMENT TO FUND PLAN If the Plan is confirmed, HFG has committed, subject to certain conditions, to make a loan to each of the Bankrupt Subsidiaries at the time of final effectiveness of the Plan. The amount of the loan to each Bankrupt Subsidiary would be limited to 8% of the Bankrupt Subsidiary's discounted future net cash flow, as defined in the Plan. The loan proceeds had originally been intended to be used by the Bankrupt Subsidiaries to cash-out creditors who elect to be paid cash upon consummation of the Plan ("Cash-out Option"). Recent amendments to the Plan have eliminated the Cash-out Option. As discussed below under "Pending Modification of Funding Agreement", the Company, HFG and the official Creditors Committee of the Bankrupt Subsidiaries are negotiating amendments to the Agreement to allow HFG to purchase equity securities in Search in lieu of making the loans to the Bankrupt Subsidiaries. COVENANTS Pursuant to the Agreement, the Company is obligated to amend it Articles of Incorporation to assure that HFG has the right to elect one director to the Company's Board if HFG converts the $1,000,000 Note into Common Stock. The Company is also obligated to maintain a collateral coverage ratio of pledged automobile receivables(excluding receivables with delinquencies exceeding 60 days) to debts evidenced by the Notes of not less than 1.5 to 1. Without HFG's prior express written consent, the Agreement prohibits the Company from issuing additional shares of Common Stock (except to comply with the Plan and for certain other planned share issuances), issue additional warrants or rights to acquire shares of Common Stock, amend its Articles of Incorporation, modify its current loan agreement with General Electric Capital Corporation, transfer any property -3- 4 among the Company or its Non-Bankrupt Subsidiaries for less than fair value, transfer any of the collateral securing the Notes, grant any junior security interest in such collateral or file any voluntary petition under the Bankruptcy Code. PENDING MODIFICATION OF AGREEMENT HFG is negotiating an amendment with the Company and with the official Creditors Committee for the Bankrupt Subsidiaries to modify the Agreement. The amendments would eliminate HFG's loans to the Bankrupt Subsidiaries. Instead, HFG would be entitled to purchase from the Company under the Plan the same amount of Common Stock, convertible preferred stock and warrants that creditors of the Bankrupt Subsidiaries elect to receive under the Plan. The purchase price would be equal to 80% of the discounted future net cash flows, as defined in the Plan, attributable to such securities for purpose of their issuance to creditors under the Plan, less the pro rata share of dividends that would have accrued on HFG's preferred stock from July 1, 1995 through the effective date of the Plan. HFG would be allowed to purchase, at its sole discretion, Common Stock, convertible preferred stock and warrants in amounts up to a maximum of $6,000,000 in discounted future net cash flows. The foregoing discussion represents only a summary of some of the terms of the Agreement, the Notes, the Warrant and the pledge and security agreements securing the Notes. For more detailed information regarding the terms and conditions of these agreements, reference is made to the agreements which are filed as exhibits to this Form 8-K Current Report. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (A) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. Not Applicable (B) PRO FORMA FINANCIAL INFORMATION. Not Applicable -4- 5 (C) EXHIBITS.
Exhibit No. Description ----------- ----------- 4.1 Warrant to purchase 3,000,000 shares of common stock of Search Capital Group, Inc. dated as of November 30, 1995 99.1 Funding Agreement dated November 30, 1995 among Search Capital Group, Inc., Search Funding Corp, Automobile Credit Acceptance Corp., Automobile Credit Holdings, Inc., Newsearch, Inc. and Hall Financial Group, Inc. 99.2 Convertible Promissory Note dated November 30, 1995 from Search Capital Group, Inc. and Search Funding Corp. payable to the order of Hall Financial Group, Inc. in the principal amount of $1,284,487.28 99.3 Promissory Note dated November 30, 1995 from Search Capital Group, Inc. and Search Funding Corp. payable to the order of Hall Financial Group, Inc. in the principal amount of $715,512.72 99.4 Convertible Note dated November 30, 1995 from Search Capital Group, Inc. and Search Funding Corp. payable to the order of Hall Financial Group, Inc. in the principal amount of $1,000,000.00 99.5 Newsearch Pledge Agreement dated as of November 30, 1995 between Newsearch, Inc. and Hall Financial Group, Inc. 99.6 Search Pledge Agreement dated as of November 30, 1995 between Search Capital Group, Inc. and Hall Financial Group, Inc. 99.7 ACHI Pledge Agreement dated as of November 30, 1995 between Automobile Credit Holdings, Inc. and Hall Financial Group, Inc. 99.8 Search Security Agreement dated as of November 30, 1995 between Search Capital Group, Inc. and Hall Financial Group, Inc. 99.9 SFC Security Agreement dated as of November 30, 1995 between Search Funding Corp. and Hall Financial Group, Inc. 99.10 ACAC Security Agreement dated as of November 30, 1995 between Automobile Credit Acceptance Corp. and Hall Financial Group, Inc.
-5- 6 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SEARCH CAPITAL GROUP, INC. By: /s/ George Evans ---------------------------------- George Evans, President Dated: December 13, 1995 -6- 7 EXHIBIT INDEX
Exhibit No. Description Page No. - ----------- ----------- -------- 4.1 Warrant to purchase 3,000,000 shares of common stock of Search Capital Group, Inc. dated as of November 30, 1995 99.1 Funding Agreement dated November 30, 1995 among Search Capital Group, Inc., Search Funding Corp, Automobile Credit Acceptance Corp., Automobile Credit Holdings, Inc., Newsearch, Inc. and Hall Financial Group, Inc. 99.2 Convertible Promissory Note dated November 30, 1995 from Search Capital Group, Inc. and Search Funding Corp. payable to the order of Hall Financial Group, Inc. in the principal amount of $1,284,487.28 99.3 Promissory Note dated November 30, 1995 from Search Capital Group, Inc. and Search Funding Corp. payable to the order of Hall Financial Group, Inc. in the principal amount of $715,512.72 99.4 Convertible Note dated November 30, 1995 from Search Capital Group, Inc. and Search Funding Corp. payable to the order of Hall Financial Group, Inc. in the principal amount of $1,000,000.00 99.5 Newsearch Pledge Agreement dated as of November 30, 1995 between Newsearch, Inc. and Hall Financial Group, Inc. 99.6 Search Pledge Agreement dated as of November 30, 1995 between Search Capital Group, Inc. and Hall Financial Group, Inc. 99.7 ACHI Pledge Agreement dated as of November 30, 1995 between Automobile Credit Holdings, Inc. and Hall Financial Group, Inc. 99.8 Search Security Agreement dated as of November 30, 1995 between Search Capital Group, Inc. and Hall Financial Group, Inc. 99.9 SFC Security Agreement dated as of November 30, 1995 between Search Funding Corp. and Hall Financial Group, Inc. 99.10 ACAC Security Agreement dated as of November 30, 1995 between Automobile Credit Acceptance Corp. and Hall Financial Group, Inc.
-7- EX-4.1 2 WARRANT TO PURCHASE 1 EXHIBIT 4.1 WARRANT TO PURCHASE 3,000,000 SHARES OF COMMON STOCK OF SEARCH CAPITAL GROUP, INC. DATED AS OF NOVEMBER 30, 1995 2 THE WARRANTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND NEITHER THE WARRANTS NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED, CONVEYED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION, OR AN EXEMPTION THEREFROM, UNDER SAID ACT AND THE RULES AND REGULATIONS THEREUNDER. CERTIFICATE NO. 300 WARRANT TO PURCHASE 3,000,000 SHARES OF COMMON STOCK OF SEARCH CAPITAL GROUP, INC. EXERCISE PRICE: $2.00 PER SHARE This certifies that, for value received, Hall Financial Group, Inc. or its registered assigns (each, a "Holder") is entitled to purchase, subject to the provisions of this Certificate, from Search Capital Group, Inc., a Delaware corporation ("Search"), until 5:00 p.m., Dallas, Texas time on November 30, 2000, up to an aggregate of 3,000,000 fully paid and nonassessable shares of the Common Stock, par value $0.01 each, of Search ("Common Stock") at a purchase price of $2.00 per share. The purchase price payable for each share of Common Stock is referred to herein as the "Warrant Price". This agreement (the "Warrant Agreement") is entered into in connection with the Funding Agreement between the Search Parties (Search, Search Funding Corp., Automobile Credit Acceptance Corp., Automobile Credit Holdings, Inc. and Newsearch, Inc.) and Hall Financial Group, Inc. dated November 30, 1995 (the "Funding Agreement"). Section 1. Exercise of Warrants. Subject to the provision hereof, the Warrants may be exercised in whole or in part for a period commencing on the date hereof and ending at 5:00 p.m. Dallas, Texas time on November 30, 2000, by presentation and surrender of this Certificate to Search at the office or agency of Search maintained for that purpose pursuant to Section 13 hereof (the "Warrant office or agency"), with the Purchase Form annexed accompanied by payment to Search of the aggregate Warrant Price for the number of shares specified in such Purchase Form. Payment of such aggregate Warrant Price may be made at the option of the Holder in cash, by certified or official bank check or by wire transfer. Upon presentation of this Certificate and the properly completed and executed Purchase Form and upon payment of the aggregate Warrant Price as aforesaid, Search shall, within five business days of such presentation and payment, cause to be issued and delivered to the Holder, or upon the written order of the Holder, to such person or persons (including all natural person, corporations, business trusts, associations, companies, partnerships, joint ventures and other entities and governments and agencies and political subdivisions, all referred to as "Person" or "Persons" herein) as the Holder may designate, Warrant to Purchase - Page 1 3 a certificate or certificates for the number of full shares of Common Stock specified in such Purchase Form. Upon receipt by Search of this Certificate, together with the completed Purchase Form and payment as aforesaid at the Warrant office or agency, the Holder or the Holder's assignee or designee shall be deemed to be the holder of record of the number of shares of Common Stock issuable upon exercise of the Warrants as specified in such Purchase Form, notwithstanding that certificates representing such shares of Common Stock shall not then have been actually delivered to the Holder. If the Warrants should be exercised in part only, Search shall, upon surrender of this Certificate for cancellation, execute and deliver a new Certificate evidencing the remaining Warrant or Warrants. All shares of Common Stock issued upon exercise of the Warrants shall be duly authorized and validly issued, fully paid and nonassessable but shall be subject to the same restrictions on transfer and will contain the same transfer legend found on the face of this Warrant. Section 2. Payment of Taxes. Search shall pay all expenses and any and all United States federal, state and local taxes and other charges (and all foreign taxes and other charges imposed by any jurisdiction otherwise than by reason of a connection between the Holder and such jurisdiction) that may be payable in connection with the preparation, issuance and delivery of Warrant certificates and stock or other certificates issuable upon exercise hereof, except that Search shall not be required to pay any tax based upon income of the Holder or which may be payable in respect of any transfer involved in the issuance and delivery of Warrant certificates or certificates for shares of Common Stock if such tax arises from a delivery of Warrant certificates or certificates for shares of Common Stock in a name other than that of the Holder of this Certificate. Section 3. Reservation of Shares; Preservation of Rights; Preservation of Rights of Holder. Search hereby agrees that at all times there shall be reserved for issuance and/or delivery upon exercise of the Warrants, free from preemptive rights, such number of shares of authorized but unissued or treasury shares of Common Stock as shall be required for issuance or delivery upon the exercise of the Warrants. Section 4. Fractional Shares. Search shall not be required to issue fractional shares of Common Stock upon exercise of the Warrants. Section 5. Investment Intent. The owner represents that he is acquiring this Warrant for his own account (and not for the account of others) for investment and not with a view to the distribution thereof. Section 6. Exchange, Transfer, Assignment or Loss of Certificate. This Certificate is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to Search at the Warrant office or agency, for other Certificates of different denominations entitling the Holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. Search shall keep at the Warrant office or agency a register for registration of Warrants and transfers of Warrants. Warrant to Purchase - Page 2 4 This Certificate is transferable in the same manner and with the same effect as in the case of a negotiable instrument payable to a specific Person, subject to compliance with applicable securities laws. Upon surrender of this Certificate to Search at the Warrant office or agency with the Assignment Form annexed hereto (the "Assignment Form") duly executed, funds sufficient to pay any transfer tax, as specified in Section 2 hereof (and in the event the transfer is to anyone other than an affiliate of the Holder, a legal opinion reasonably satisfactory to Search that such transfer will not violate any applicable securities laws), Search shall, without charge, promptly execute and deliver a new Certificate in the name of the assignee named in such Assignment Form and this Certificate shall promptly be canceled; provided, however, that upon any such assignment there shall be filed with Search the address of the registered owner of Warrants represented by each new Certificate delivered. If and when this Certificate is assigned in blank, Search shall treat the bearer hereof as the absolute owner of the Warrants represented hereby for all purposes and Search shall not be affected by any notice to the contrary. A Warrant, if properly assigned, may be exercised by an assignee without having a new Certificate issued. The Warrants represented by this Certificate may be divided or combined with other Warrants which carry the same rights upon presentation and surrender hereof to Search at the Warrant office or agency, together with a written notice specifying the denominations in which new Warrants are to be issued and signed by the Holder hereof. Upon presentation and surrender of any Warrant or Warrants for division or combination, together with such written notice, Search will issue a new Warrant or Warrants, at its own expense, in the denominations requested entitling the Holders thereof to purchase the same aggregate number of shares of Common Stock as the Warrant or Warrants so surrendered. Such new Warrant or Warrants will be registered in the name of the Holder submitting such request and delivered to such Holder, unless such Holder shall have submitted a properly executed Assignment Form, funds sufficient to pay any transfer tax, as specified in Section 2 hereof, and in the event the transfer is to anyone other than an affiliate of the Holder, a legal opinion reasonably satisfactory to Search that such transfer will not violate any applicable securities laws. In any such case, such of the new Warrants as shall have been assigned by the Holder shall be registered in the name of and delivered to the Holder's assignee or designee; provided, however, that upon any such assignment there shall be filed with Search the address of the registered owner of Warrants represented by each new Certificate delivered. Any Warrant surrendered for division or combination shall be canceled promptly upon the issuance of such new Warrant or Warrants. The term "Warrant" as used herein includes any Warrants into which this Warrant may be divided, combined or exchanged. Upon receipt by Search of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Certificate, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Certificate, if mutilated, Search will promptly execute and deliver a new Certificate of like tenor and date. The Warrants represented by any such new Certificate so executed and delivered shall constitute an additional contractual obligation on the part of Search, whether or not the Warrants represented by this Certificate so lost, stolen, destroyed or mutilated Warrant to Purchase - Page 3 5 shall be at any time enforceable by anyone. Section 7. Rights of the Holder. The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in Search, including, without limitation, any right to vote, give or withhold consent to any corporate action, receive notice of meetings of shareholders of receive dividends. Section 8. Effect of Stock Split, etc. If Search, by stock dividend, split, reverse split, reclassification of shares, or otherwise, changes as a whole the outstanding Common Stock into a different number or class of shares, then: (1) the number and class of shares so changed shall, for the purposes of this Warrant, replace the shares outstanding immediately prior to the change; and (2) the Warrant Price in effect, and the number of shares purchasable under this Warrant, immediately prior to the date upon which the change becomes effective, shall be proportionately adjusted (the price to the nearest cent). Irrespective of any adjustment or change in the Warrant Price or the number of shares purchasable under this or any other Warrants of like tenor, the Warrants theretofore and thereafter issued may continue to express the Warrant Price per share and the number of shares purchasable as the Warrant Price per share and the number of shares purchasable were expressed in the Warrants when initially issued. Section 9. Effect of Merger, etc. If Search consolidates with or merges into another corporation, the registered owner shall thereafter be entitled on exercise to purchase (with respect to each share of Common Stock purchasable hereunder immediately before the consolidation or merger becomes effective) the same securities or other consideration that a holder of one share of Common Stock would be entitled as a result of the consolidation or merger, so to assure that, following such merger or consolidation, all the provisions of this option shall be applicable as reasonably possible to any securities or other consideration so deliverable on exercise of this option. Search shall not consolidate or merge unless, prior to consummation, the successor corporation (if other than Search) assumes the obligations of this Section 9 by written instrument executed and mailed to the registered owner at the address of the owner on the books of Search. A sale or lease of all or substantially all the assets of Search for consideration (apart from the assumption of obligations) consisting primarily of securities is a consolidation or merger for the foregoing purposes. Section 10. Registration of Restricted Securities. 10.1 Registration on Request. 10.1.1 Request. Subject to the limitations provided herein, at any time after the date hereof, upon the written request (specifying that it is being made pursuant to this Section 10.1) of one or more Holders of the Common Stock issued pursuant to this Warrant Agreement ("Restricted Securities") representing 51% or more of the Restricted Warrant to Purchase - Page 4 6 Securities at the time outstanding, requesting that Search effect the registration under the Securities Act of 1933, or any similar Federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time (the "Securities Act") of all or part of the Registrable Securities (all Common Stock owned now or in the future by Hall Financial Group, Inc. whether obtained pursuant to this Warrant Agreement, pursuant to the Plan Funding Commitment contained in the Funding Agreement, or as shares convertible (the "Convertible Shares") pursuant to the Convertible Note ("Note III") dated November 27, 1995, executed in connection with the Funding Agreement and all Common Stock issued pursuant to this Warrant Agreement) (but in any event not less than the lesser of (i) 50% of the Registrable Securities and (ii)Registrable Securities the expected price to the public of which exceeds $5,000,000), and specifying (x) the intended method of disposition thereof, (y) whether or not such requested registration is to be an underwritten offering, and (z) the price range (net of underwriting discounts and commissions) acceptable to such Holder or Holders to be received for such Registrable Securities, Search will within 10 business days after Search receives such written request give written notice of such requested registration to all other Holders of Registrable Securities and thereupon Search will use reasonable efforts to effect the registration under the Securities Act of: 10.1.1.1 the Registrable Securities which Search has been so requested to register by such Holders, and 10.1.1.2 all other Registrable Securities which Search has been requested to register by the other Holders thereof by written request given to Search within 30 days after the giving of such written notice by Search (which request shall specify the same information called for by the original request to effect registration described above), all to the extent requisite to permit the disposition (in accordance with Section 10.1.2 hereof) of the Registrable Securities so to be registered. 10.1.1.3 If Search is required to effect a registration pursuant to this Section 10.1 and Search furnishes to the Holders of Registrable Securities requesting such registration a certificate signed by the President of Search stating that in the good faith judgment of the Board of Directors of Search it would be seriously detrimental to Search and its stockholders for such registration statement to be filed on or before the date such filing would otherwise be required hereunder and it is therefore necessary to defer the filing of such registration statement, Search shall have the right to defer such filing for a period of not more than 120 days after receipt of the request for such registration from the Holder or Holders of Registrable Securities requesting such registration; provided that during such time Search may not file a registration statement for securities to be issued and sold for its own account or that of anyone other than the Holder or Holders of Registrable Securities requesting such registration. 10.1.4 Search shall be olbigated to affect no more than two registrations pursuant to this Section 10.1. Warrant to Purchase - Page 5 7 10.1.2 Method of Distribution. The Holders of 51% of the Registrable Securities to be included in such registration statement shall determine the method of distribution of the Registrable Securities so included; provided, however, that if no agreement of Holders of 51% or more of the Registrable Securities to be included in such registration statement is obtained, then if Holders of more than 30% of the Registrable Securities to be included in such registration statement request an underwritten public offering, an underwritten public offering shall be the method of distribution with other methods permitted to the extent the managing underwriter for such offering, in its sole discretion, agrees to other methods of distribution being covered by such registration statement. 10.1.3 Registration of Other Securities. Whenever Search shall effect a registration pursuant to this Section 10.1 in connection with an underwritten offering, no securities other than Registrable Securities shall be included among the securities covered by such registration unless (a) the managing underwriter of such offering shall have advised each Holder of Registrable Securities to be covered by such registration in writing that the inclusion of such other securities would not adversely affect such offering or (b) the Holders of more than 51% or more of all Registrable Securities to be covered by such registration shall have consented in writing to the inclusion of such other securities. 10.1.4 Registration Statement Form. Registrations under this Section 10.1 shall be on such appropriate registration form of the Securities and Exchange Commission or any other Federal agency at the time administering the Securities Act (the "Commission") Commission (i) as shall be selected by Search and as shall be reasonably acceptable to the Holders of more than 50% of the Registrable Securities to be registered, and (ii) as shall permit the disposition of such Registrable Securities in accordance with the method or methods of disposition selected pursuant to Section 10.1.2 hereof. 10.1.5 Expenses. Except as otherwise provided in this Section 10.1.5 or in Section 10.1.9, all expenses incurred in connection with one effective registration pursuant to Section 10.1 hereof and each registration pursuant to Section 10.2 hereof (excluding in each case underwriting discounts and commissions applicable to Registrable Securities), including, without limitation, in each case, all registration, filing and National Association of Securities Dealer fees; all fees and expenses of complying with securities or blue sky laws; all word processing, duplicating and printing expenses, messenger, delivery and shipping expenses; fees and disbursements of the accountants and counsel for Search including the expenses of any special audits or "cold comfort" letters or opinions required by or incident to such registrations; any fees and disbursements of underwriters customarily paid by issuers or sellers of securities, but excluding underwriting discounts and commissions, if any, shall be borne by Search. In all cases, each Holder of Registrable Securities shall pay the underwriting discounts and commissions applicable to the securities sold by such Holder. 10.1.6 Effective Registration Statement. A registration requested pursuant to this Section 10.1 shall not be deemed to have been effected (i) unless a registration statement with respect thereto has become effective (unless a substantial cause Warrant to Purchase - Page 6 8 of the failure of such registration statement to become effective shall be attributable to one or more Holders of Registrable Securities whose Restricted Securities were to have been included in such registration statement), (ii) if after it has become effective, such registration is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court for any reason, resulting in a failure to consummate the offering of Registrable Securities offered thereby, (iii) if after a registration statement with respect thereto has become effective, the offering of Registrable Securities offered thereby is not consummated due to factors beyond the control of the Holders of such Registrable Securities, including without limitation in the context of a proposed firm commitment underwriting, the fact that the underwriters have advised the Holders of such Registrable Securities that such Registrable Securities cannot be sold at a net price equal to or above the net price anticipated at the time of filing of the preliminary prospectus, or (iv) if the conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied (unless a substantial cause of such conditions to closing not being satisfied shall be attributable to one or more Holders of Registrable Securities whose Registrable Securities were included in such registration statement). 10.1.7 Selection of Underwriters. If a requested registration pursuant to this Section 10.1 involves an underwritten offering, the underwriter or underwriters thereof shall be selected by Search with the approval of the Holders of more than 50% of the Registrable Securities to be so registered. 10.1.8 Priority in Requested Registrations. If a requested registration pursuant to this Section 10.1 involves an underwritten offering, and the managing underwriter shall advise Search in writing (with a copy to each Person requesting registration) that, in its opinion, the number of securities requested to be included in such registration exceeds the number which can be sold in such offering within a price range acceptable to the Holders of more than 50% of the Registrable Securities requested to be included in such registration, then the Registrable Securities requested to be registered pursuant to this Section 10.1 shall be reduced to the number of Registrable Securities which Search is so advised can be sold in (or during the time of) such offering by decreasing the Registrable Securities requested to be registered (pro rata among the Persons requesting such registration on the basis of the percentage of Registrable Securities held by such Person immediately prior to the filing of the registration statement with respect to such registration). In connection with any registration as to which the provisions of this clause apply, no securities other than Registrable Securities shall be covered by such registration. 10.2 Incidental Registration. 10.2.1 Right to Include Registrable Securities. If Search at any time proposes to register any of its securities under the Securities Act (other than by a registration on Form S-8, S-4 or any successor similar forms or any other form not available for registering the Registrable Securities for sale to the public and other than pursuant to Section 10.1 hereof), whether or not for sale for its own account, it will each such time, at Warrant to Purchase - Page 7 9 least 30 days prior to filing the registration statement, give written notice to all Holders of Registrable Securities of its intention to do so. Upon the written request of any such Holder made within 15 days after the receipt of any such notice (which request shall specify the Registrable Securities intended to be disposed of by such Holder and the intended method of disposition thereof), Search will use reasonable efforts to effect the registration under the Securities Act of all Registrable Securities which Search has been so requested to register by the Holders of such Registrable Securities, to the extent requisite to permit the disposition (determined pursuant to the provisions of Section 10.1.2 hereof) of the Registrable Securities so to be registered; and if prior to the effective date of the registration statement filed in connection with such registration, Search shall determine for any reason not to register or to delay registration of such securities, Search may, at its election, give written notice of such determination to each Holder of Registrable Securities and, thereupon, (i) in the case of a determination not to register, shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay expenses in accordance with Section 10.1.5 hereof), without prejudice, however, to the rights of any Holder or Holders of Registrable Securities entitled to do so to request that such registration be effected as a registration under Section 10.1 hereof, and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Registrable Securities being registered pursuant to this Section 10.2.1, for the same period as the delay in registering such other securities. No registration effected under this Section 10.2 shall relieve Search of its obligation to effect any registration upon request under Section 10.1 hereof. 10.2.2 Priority in Incidental Registrations. If (i) a registration pursuant to this Section 10.2 involves an underwritten offering of the securities so being registered, whether or not for sale for the account of Search, to be distributed (on a firm commitment basis) by or through one or more underwriters of recognized standing, whether or not the Registrable Securities so requested to be registered for sale for the account of Holders of Registrable Securities are also to be included in such underwritten offering, and (ii) the managing underwriter of such underwritten offering shall inform Search and the Holders of the Registrable Securities requesting such registration by letter of its belief that the number of securities requested to be included in such registration exceeds the number which can be sold in (or during the time of) such offering, then Search may include in such offering all securities proposed by Search to be sold for its own account and may decrease the number of Registrable Securities and other securities of Search that Persons have requested to be included in such registration by, to the extent necessary, decreasing the Registrable Securities requested to be registered (pro rata among the Persons requesting such registration on the basis of the percentage of Registrable Securities held by such Person immediately prior to the filing of the registration statement with respect to such registration). 10.3 Registration Procedures. If and whenever Search is required to use reasonable efforts to effect the registration of any Registrable Securities under the Securities Act as provided in Sections 10.1 and 10.2 hereof, Search will, subject to the limitations provided herein, as expeditiously as possible: Warrant to Purchase - Page 8 10 10.3.1 prepare and (as soon thereafter as possible or in any event no later than 60 days after the end of the period within which requests for registration may be given to Search or such longer period as Search shall in good faith require to produce the financial statements required in connection with such registration) file with the Commission the requisite registration statement to effect such registration and thereafter use reasonable efforts to cause such registration statement to become effective, provided that Search may discontinue any registration of its securities which are not Registrable Securities (and, under the circumstances specified in Section 10.2.1 hereof, its securities which are Registrable Securities) at any time prior to the effective date of the registration statement relating thereto; 10.3.2 prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement; provided, however, that Search shall not in any event be required to keep the registration statement effective for a period of more than nine months after such registration statement becomes effective; 10.3.3 furnish to each seller of Registrable Securities covered by such registration statement such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus and any summary prospectus) and any other prospectus filed under Rule 424 under the Securities Act, and such other documents, as such seller may reasonably request; 10.3.4 use its best efforts to register or qualify all Registrable Securities and other securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as each seller thereof shall reasonably request, to keep such registration or qualification in effect for so long as such registration statement remains in effect (provided, however, that Search shall not in any event be required to keep such registration or qualification in effect for a period of more than nine months after such registration or qualification becomes effective), and take any other action which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the securities owned by such seller, except that Search shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not but for the requirements of this subdivision 10.3.4 be obligated to be so qualified or to consent to general service of process in any such jurisdiction; 10.3.5 use its best efforts to cause all Registrable Securities covered by such registration statement to be registered with or approved by such other United States Federal or state governmental agencies or authorities as may be necessary to enable the Warrant to Purchase - Page 9 11 seller or sellers thereof to consummate the disposition of such Registrable Securities; 10.3.6 furnish to each seller of Registrable Securities a copy, or, upon request, a signed counterpart, addressed to such seller (and the underwriters, if any) of (x) an opinion of counsel for Search, dated the effective date of such registration statement (or, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), and (y) a "comfort" letter addressed to the underwriters, dated the effective date of such registration statement (or, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), signed by the independent public accountants who have audited Search's financial statements included in such registration statement, covering substantially the same matters with respect to such registration statement (and the prospectus included therein) and, in the case of the accountants' letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer's counsel and in accountants' letters delivered to the underwriters in underwritten public offerings of securities and, in the case of the accountants' letter, such other financial matters, and, in the case of the legal opinion such other legal matters, as such seller or such Holder (or the underwriters, if any) may reasonably request; 10.3.7 notify each seller of Registrable Securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the happening of any event as a result of which, the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made, and at the request of any such seller, prepare and furnish to such seller a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made; 10.3.8 otherwise use reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to its securityholders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first full calendar month after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act, and will furnish to each such seller, upon request of such seller, at least five days prior to the filing thereof a copy of any amendment or supplement to such registration statement or prospectus and shall not file any thereof to which any such seller shall have delivered to Search an opinion of counsel that such amendment or supplement Warrant to Purchase - Page 10 12 does not comply in all material respects with the requirements of the Securities Act or of the rules or regulations thereunder; 10.3.9 provide and cause to be maintained a transfer agent for all Registrable Securities covered by such registration statement from and after a date not later than the effective date of such registration statement; 10.3.10 use its best efforts to list all Registrable Securities covered by such registration statement on any securities exchange on which any of the Registrable Securities is then listed; and 10.3.11 refrain from making any sale or distribution of its stock or similar securities ("Equity Securities"), except pursuant to any employee stock option plan and any preexisting agreement for the sale of such securities, for at least ninety (90) days after the closing of the public offering pursuant to such registration. It shall be a condition precedent to the obligations of Search to take any action with respect to registering a Holder's Registrable Securities pursuant to this Section 10.3 that such seller of Registrable Securities as to which any registration is being effected furnish Search in writing such information regarding such seller, the Registrable Securities and other securities of Search held by such seller, and the distribution of such securities as Search may from time to time reasonably request in writing. If a Holder refuses to provide Search with any of such information on the grounds that it is not necessary to include such information in the registration statement, Search may exclude such Holder's Registrable Securities from the registration statement if Search provides such Holder with an opinion of counsel to the effect that such information must be included in the registration statement and such Holder thereafter continues to withhold such information. The deletion of such Holder's Registrable Securities from a registration statement shall not affect the registration of the other Registrable Securities to be included in such registration statement. Each Holder of Registrable Securities agrees by acquisition of such Registrable Securities that upon receipt of any notice from Search of the happening of any event of the kind described in subdivision 10.3.7 of this Section 10.3, such Holder will forthwith discontinue such Holder's disposition of Registrable Securities pursuant to the registration statement relating to such Registrable Securities until such Holder's receipt of the copies of the supplemented or amended prospectus contemplated by subdivision 10.3.7 of this Section 10.3 and, if so directed by Search, will deliver to Search (at Search's expense) all copies, other than permanent file copies then in such Holder's possession, of the prospectus relating to such Registrable Securities current at the time of receipt of such notice. 10.4 Underwritten Offerings. 10.4.1 Requested Underwritten Offerings. If requested by the underwriters for any underwritten offering of Registrable Securities pursuant to a Warrant to Purchase - Page 11 13 registration requested under Section 10.1 hereof, Search will enter into an underwriting agreement with such underwriters for such offering, such agreement to be satisfactory in substance and form to each Holder of Registrable Securities being registered and the underwriters and to contain such representations and warranties by Search and such other terms as are generally prevailing in agreements of this type, including, without limitation, indemnities to the effect and to the extent provided in Section 10.6 hereof. Each such Holder of Registrable Securities will cooperate with Search in the negotiation of the underwriting agreement and will give consideration to the reasonable requests of Search regarding the form thereof, provided that nothing herein contained shall diminish the foregoing obligations of Search. If requested by the underwriters of any underwritten offering pursuant to a registration under Section 10.1 hereof, each Holder of Restricted Securities agrees to enter into an agreement with such underwriters not to sell his or its shares of stock in Search for a period of time (not to exceed ninety days) after the effectiveness of a registration statement equal to the period of time which the sellers of Registrable Securities in such registration have agreed not to sell their shares after the effectiveness of such registration statement. The Holders of Registrable Securities to be distributed by such underwriters shall be parties to such underwriting agreement and may, at their option, require that any or all of the representations and warranties by, and the other agreements on the part of, Search to and for the benefit of such underwriters shall also be made to and for the benefit of such Holders and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to the obligations of such Holders. Any such Holder shall not be required to make any representations or warranties to or agreements with Search or the underwriters other than representations, warranties or agreements regarding such Holder, such Holder's Registrable Securities and other securities of Search, such Holder's intended method of distribution, and any representations, warranties or agreements required by law. 10.4.2 Incidental Underwritten Offerings. If Search at any time proposes to register any of its securities under the Securities Act as contemplated by Section 10.2 hereof and such securities are to be distributed by or through one or more underwriters, Search will, if requested by any Holder of Registrable Securities as provided in Section 10.2 hereof and subject to the provisions of Section 10.2.2 hereof, arrange for such underwriters to include all the Registrable Securities to be offered and sold by such Holder owning the securities to be distributed by such underwriters. In such event, the Holders of Registrable Securities to be distributed by such underwriters shall be parties to the underwriting agreement between Search and such underwriters and may, at their option, require that any or all of the representations and warranties by, and the other agreements on the part of, Search to and for the benefit of such underwriters shall also be made to and for the benefit of such Holders and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to the obligations of such Holders. Any such Holder shall not be required to make any representations or warranties to or agreements with Search or the underwriters other than representations, warranties or agreements regarding such Holder, such Holder's Registrable Securities or other securities of Search, such Holder's intended method of distribution and any representations, warranties or agreements required by law. Warrant to Purchase - Page 12 14 10.5 Preparation; Reasonable Investigation. In connection with the preparation and filing of each registration statement under the Securities Act pursuant to this Agreement, Search will give the Holders of Registrable Securities registered under such registration statement, their underwriters, if any, and one counsel or firm of counsel and one accountant or firm of accountants representing all the Holders of Registrable Securities to be registered under such registration statement, the opportunity to participate in the preparation of such registration statement, each prospectus included therein or filed with the Commission, and each amendment thereof or supplement thereto, and will give each of them such access to its books and records and such opportunities to discuss the business of Search with its officers and the independent public accountants who have certified its financial statements as shall be necessary, in the opinion of such Holders' and such underwriters' respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act. 10.6 Indemnification. 10.6.1 Indemnification by Search. In the event any Registrable Securities are included in a registration statement under this Section 10, to the extent permitted by law, Search will, and hereby does, indemnify and hold harmless the seller of any Registrable Securities covered by such registration statement, its directors and officers, each other Person who participates as an underwriter in the offering or sale of such securities and each other Person, if any, who controls such seller or any such underwriter within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such seller or any such director or officer or underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such securities were registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and Search will reimburse such seller and each such director, officer, underwriter and controlling person for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided that Search shall not be liable in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense Warrant to Purchase - Page 13 15 arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to Search by such seller expressly for use in the preparation thereof, and provided further that Search shall not be liable to any Person who participates as an underwriter in the offering or sale of Registrable Securities or any other Person, if any, who controls such underwriter within the meaning of the Securities Act, in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of such Person's failure to send or give a copy of the final prospectus, as the same may be then supplemented or amended, to the Person asserting an untrue statement or alleged untrue statement or omission or alleged omission at or prior to the written confirmation of the sale of Registrable Securities to such Person if such statement or omission was corrected in such final prospectus. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such seller or any such director, officer, underwriter or controlling person and shall survive the transfer of such securities by such seller. 10.6.2 Indemnification by the Sellers. Search may require, as a condition to including any Registrable Securities in any registration statement filed pursuant to Section 10.3 hereof, that Search shall have received an undertaking satisfactory to it from the prospective seller of such securities, to indemnify and hold harmless (in the same manner and to the same extent as set forth in subdivision (a) of this Section 10.6) each underwriter, each Person who controls such underwriter within the meaning of the Securities Act, Search, each director of Search, each officer of Search and each other Person, if any, who controls Search within the meaning of the Securities Act, with respect to any statement or alleged statement in or omission or alleged omission from such registration statement, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in strict conformity with written information furnished to Search by such seller expressly for use in the preparation of such registration statement, preliminary prospectus, final prospectus, summary prospectus, amendment or supplement; provided that such prospective seller shall not be liable to any Person who participates as an underwriter in the offering or sale of Registrable Securities or any other Person, if any, who controls such underwriter within the meaning of the Securities Act, in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of such Person's failure to send or give a copy of the final prospectus, as the same may be then supplemented or amended, to the Person asserting an untrue statement or alleged untrue statement or omission or alleged omission at or prior to the written confirmation of the sale of Registrable Securities to such Person if such statement or omission was corrected in such final prospectus. Such indemnity shall remain in full force and effect, regardless of any investigation made by or on behalf of any underwriter, Search or any such director, officer or controlling Person and shall survive the transfer of such securities by such seller. In no event shall the liability of any selling holder of Registrable Securities under this Section 10.6.2 be greater in amount than the dollar amount of the proceeds received by such holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. 10.6.3 Notices of Claims, etc. Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in the preceding subdivisions of this Section 10.6, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action; provided that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its Warrant to Purchase - Page 14 16 obligations under the preceding subdivisions of this Section 10.6, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an indemnified party, unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, the indemnifying party shall be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the consent of the indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. 10.6.4 Other Indemnification. Indemnification similar to that specified in the preceding subdivisions of this Section 10.6 (with appropriate modifications) shall be given by Search and each seller of Registrable Securities with respect to any required registration or other qualification of securities under any Federal or state law or regulation of any governmental authority other than the Securities Act. 10.6.5 Indemnification Payments. The indemnification required by this Section 10.6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred. 10.6.6 Contribution. If the indemnification provided for in this Section 10.6 from the indemnifying party is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue statement of material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 10.6.3 hereof, any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. Warrant to Purchase - Page 15 17 The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 10.6.6 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 10.6.6, no underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such underwriter has otherwise been required to pay by reason on such untrue or alleged untrue statement or omission or alleged omission, and no selling holder shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities of such selling holder were offered to the public exceeds the amount of any damages which such selling holder has otherwise been required to pay by reason of such untrue statement or omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. If indemnification is available under this Section 10.6, the indemnifying parties shall indemnify each indemnified party to the full extent provided in Section 10.6.1 through Section 10.6.5 hereof without regard to the relative fault of said indemnifying party or indemnified party or any other equitable consideration provided for in this Section 10.6.6. 10.7 Reporting Requirements Under Exchange Act. Search shall keep effective its registration under Section 12 of the Securities Exchange Act of 1934 or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time (the "Exchange Act") and shall timely file such information, documents and reports as the Commission may require or prescribe under Section 13 of the Exchange Act. From and after the effective date of the first registration statement filed by Search under the Securities Act, Search shall (whether or not it shall then be required to do so) timely file such information, documents and reports which a corporation, partnership or other entity subject to Section 13 or 15(d) (whichever is applicable) of the Exchange Act is required to file. Search shall, upon request, furnish any Holder of Registrable Securities (i) a written statement by Search that it has complied with such reporting requirements, (ii) a copy of the most recent annual or quarterly report of Search, and (iii) such other reports and documents filed by Search with the Commission as such Holder may reasonably request in availing itself of an exemption for the sale of Registrable Securities without registration under the Securities Act. Search acknowledges and agrees that the purposes of the requirements contained in this Section 10.7 are (a) to enable any such Holder to comply with the current public information requirement contained in Paragraph (c) of Rule 144 under the Securities Act should such Holder ever wish to dispose of any of the securities of Search acquired by it without registration under the Securities Act in reliance upon Rule 144 (or any other similar exemptive provision) and (b) to qualify Search for the use of registration statements on Form S-3. In addition, Search shall take such other measures and Warrant to Purchase - Page 16 18 file such other information, documents and reports, as shall hereafter be required by the Commission as a condition to the availability of Rule 144 under the Securities Act (or any similar exemptive provision hereafter in effect) and the use of Form S-3. Search also covenants to use its best efforts, to the extent that it is reasonably within its power to do so, to qualify for the use of Form S-3. 10.8 Stockholder Information. Search may require each Holder of Registrable Securities as to which any registration is to be effected pursuant to this Section 10 to furnish Search such information in writing with respect to such Holder and the distribution of such Registrable Securities as Search may from time to time reasonably request in writing and as shall be required by law or by the Commission in connection therewith. 10.9 Forms. All references in this Agreement to particular forms of registration statements are intended to include, and shall be deemed to include, references to all successor forms which are intended to replace, or to apply to similar transactions as, the forms herein referenced. 10.10 Transfer of Registration Rights. The registration rights granted the Holders of Registrable Securities under this Section 10 may not be transferred without the prior written consent of Search or the Holders of more than 50% of the then-outstanding shares of the Restricted Securities ("Holders of a Majority of the Restricted Securities"), respectively; provided that such registration rights may be transferred, in whole or in part, without such prior written consent upon written notice to Search in connection with the transfer of shares of Restricted Securities to (i) any Person which directly or indirectly controls, is controlled by, or is under common control with, Hall Financial Group, Inc. (an "Affiliate") (ii) to an immediate or remote transferee of Hall Financial Group, Inc. who after such transfer is the Holder of a number of shares of Restricted Securities not less than 50% of the number of such shares purchased by Hall Financial Group, Inc. hereunder including any Convertible Shares purchase pursuant to Note III (appropriately adjusted for subdivisions and combinations of shares of Common Stock and dividends on Common Stock payable in shares of Common Stock subsequent to the date of this Agreement). Section 11. Notice of Adjustment. On the happening of an event requiring an adjustment of the Warrant Price or the shares purchasable hereunder, Search shall forthwith give written notice to the registered owner stating the adjusted Warrant Price and the adjusted number and kind of securities or other property purchasable hereunder resulting from the event and setting forth in reasonable detail the method of calculation and the facts upon which the calculation is based. The board of directors of Search, acting in good faith, shall determine the calculation. Section 12. Notice and Effect of Dissolution, etc. In case a voluntary or involuntary dissolution, liquidation, or winding up of Search (other than in connection with a consolidation or merger covered by Section 9 above) is at any time proposed, Search shall give at least 10 days' written notice to the registered owner prior to the record date as of Warrant to Purchase - Page 17 19 which holders of Common Stock will be entitled to receive distributions as a result of the proposed transactions. Such notice shall contain: (1) the date on which the transaction is to take place; (2) the record date as of which holders of Common Stock will be entitled to receive distribution as a result of the transaction; (3) a brief description of the transaction; (4) a brief description of the distributions to be made to holders of Common Stock as a result of the transaction; (5) an estimate of the fair value of the distributions. On the date of the transaction, if it actually occurs, this option and all rights hereunder shall terminate. Section 13. Maintenance of Office or Agency. Search shall at all times maintain an office or agency in the United States, where this Certificate may be presented or surrendered for subdivision, combination, registration of transfer or exchange and where notices and demands may be served upon Search in respect of the Warrants. The registrar and transfer agent for this Certificate shall perform its duties as such hereunder promptly and in good faith. Such office or agency shall initially be located at 700 N. Pearl Street, Suite 400, L.B. 401, Dallas, Texas 75201. Search shall give the Holder prior written notice of any change in the address of such office or agency. Section 14. GOVERNING LAW. THIS CERTIFICATE SHALL BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO THE LAWS THEREOF RELATING TO CHOICE OF LAW. Section 15. Captions. The captions of the sections and paragraphs of this Certificate have been inserted for convenience only and shall have no substantive effect. Section 16. Notices. Any notice, request, demand, consent, or other communication pursuant to this Warrant shall be given when received and shall be given in writing, and delivered in person against receipt therefor, or sent by certified mail, postage prepaid as follows: (a) If to Search at: Search Capital Group, Inc. 700 N. Pearl Street, Suite 400 L.B. 401 Dallas, TX 75201 Attn.: Joe B. Dorman or at such other address as it shall hereafter furnish in writing to the Holder, or Warrant to Purchase - Page 18 20 (b) if to the Holder, the address of the Holder as it appears on the warrant ledger of Search. IN WITNESS WHEREOF, Search Capital Group, Inc. has caused this Certificate to be signed in its name by its President or Vice President and its corporate seal to be imprinted hereon and attested by its Secretary or Assistant Secretary. Dated: November 30, 1995 SEARCH CAPITAL GROUP, INC. By: /s/ ROBERT D. IDZI ------------------------ Name: Robert D. Idzi ---------------------- Title: SVP & CFO --------------------- Warrant to Purchase - Page 19 21 PURCHASE FORM (TO BE EXECUTED UPON EXERCISE OF WARRANT) The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate to which this Purchase Form is attached, to purchase Shares~ shares of Common Stock (the "Shares") and herewith tenders payment for such Shares to the order of Search Capital Group, Inc. in the amount of $_________________ in accordance with the terms hereof. The undersigned requests that a certificate for such Shares be registered in the name of Name~, whose address is __________________________________________. If said number of Shares __________________________________________________ is less than all of the shares of Search Capital Group, Inc. Common Stock purchasable under this Warrant Certificate, the undersigned requests that a new Warrant Certificate representing the remaining balance of the shares be issued to and registered in the name of the undersigned. Dated:________________ Signature: ________________________________ (Signature must confirm in all respects to name of holder as specified on the face of this Warrant Certificate to which this Purchase Form is attached.) Warrant to Purchase - Page 20 22 ASSIGNMENT FORM FOR VALUE RECEIVED, _________________________________________________ hereby sells, assigns and transfers unto: Name____________________________________________________________________________ (Please type or print in block letters) Address_________________________________________________________________________ the right to purchase Search Capital Group, Inc. Common Stock represented by the Warrant Certificate to which this Assignment Form is attached to the extent of Shares~ shares as to which such right is exercisable and does hereby irrevocably constitute and appoint ___________________________________, attorney, to transfer the same on the books of Search Capital Group, Inc. with full power of substitution in the premises. Dated:________________ Signature: ________________________________ (Signature must confirm in all respects to name of holder as specified on the face of this Warrant Certificate to which this Purchase Form is attached.) Warrant to Purchase - Page 21 EX-99.1 3 FUNDING AGREEMENT 1 EXHIBIT 99.1 FUNDING AGREEMENT DATED NOVEMBER 30, 1995 AMONG SEARCH CAPITAL GROUP, INC., SEARCH FUNDING CORP, AUTOMOBILE CREDIT ACCEPTANCE CORP., AUTOMOBILE CREDIT HOLDINGS, INC., NEWSEARCH, INC. AND HALL FINANCIAL GROUP, INC. 2 FUNDING AGREEMENT Dated November 30, 1995 among SEARCH CAPITAL GROUP, INC. SEARCH FUNDING CORP. AUTOMOBILE CREDIT ACCEPTANCE CORP. AUTOMOBILE CREDIT HOLDINGS, INC. and NEWSEARCH, INC. referred to collectively as THE SEARCH PARTIES and HALL FINANCIAL GROUP, INC. 3 TABLE OF CONTENTS 1.0 DATE AND PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.2 Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.0 RECITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.1 Search, Subsidiaries, Corporate Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.2 Bankruptcy Proceeding . . . . . . . . . . . . . . . . . . . . . . . 2 2.3 Funding Requirements . . . . . . . . . . . . . . . . . . . . . . . . 2 2.4 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.4 Interim Funding . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3.0 DEFINITIONS AND USAGE . . . . . . . . . . . . . . . . . . . . . . . . . 2 3.1 Primary Defined Terms . . . . . . . . . . . . . . . . . . . . . . . 2 Bankruptcy Proceeding . . . . . . . . . . . . . . . . . . . . . . . 2 Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Chapter Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 2 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Collateral Coverage Ratio . . . . . . . . . . . . . . . . . . . . . 3 Disclosure Statement . . . . . . . . . . . . . . . . . . . . . . . . 3 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Financing Statements . . . . . . . . . . . . . . . . . . . . . . . . 3 $500,000 Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 GECC Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 GECC Loan Agreement . . . . . . . . . . . . . . . . . . . . . . . . 4 GECC Pledged Collateral . . . . . . . . . . . . . . . . . . . . . . 4 Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Non-Chapter Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 4 Note I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Note II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Note III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Table of Contents i FUNDING AGREEMENT 4 Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Plan Funding Commitment . . . . . . . . . . . . . . . . . . . . . . 5 Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Search Collateral . . . . . . . . . . . . . . . . . . . . . . . . . 5 Search Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Security Agreements . . . . . . . . . . . . . . . . . . . . . . . . 5 SFC Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Share Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . 5 UCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3.2 Other Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . 6 3.2 Usages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 4.0 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 6 4.1 The Search Parties . . . . . . . . . . . . . . . . . . . . . . . . . 6 4.2 HFG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 5.0 COMMITMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 5.1 HFG Funding Commitment . . . . . . . . . . . . . . . . . . . . . . . 9 5.2 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 6.0 LOAN CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . 10 6.1 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 7.0 LOAN CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 7.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 7.2 Obligations at Closing . . . . . . . . . . . . . . . . . . . . . . . 12 A. Search . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 B. SFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 C. Newsearch . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 D. ACAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 E. ACHI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 F. Search Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 13 G. HFG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 7.3 Conditions for Funding under Note II . . . . . . . . . . . . . . . . 13 7.4 Conditions for Funding under Note III . . . . . . . . . . . . . . . 14
Table of Contents ii FUNDING AGREEMENT 5 7.5 Post-Closing Extensions of Maturities of Notes I and II . . . . . . 14 8.0 PLAN FUNDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 8.1 Plan Funding Commitment . . . . . . . . . . . . . . . . . . . . . . 14 8.2 Funding Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . 14 8.3 Conditions to Plan Funding . . . . . . . . . . . . . . . . . . . . . 14 8.4 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 8.5 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 8.6 Board Representation . . . . . . . . . . . . . . . . . . . . . . . . 16 8.7 Funding Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 16 9.0 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 16 9.1 Limitations on Changes in Search's Capital Structure . . . . . . . . 16 9.2 Limitations on Changes in GECC Loan Agreement . . . . . . . . . . . 16 9.3 Limitations on Transfers Among Entities . . . . . . . . . . . . . . 16 9.4 Limitations on Change of Principal Place of Business of Search and SFC . . . . . . . . . . . . . . . . . . . . . . . . . 16 9.5 Limitations on Sale or Transfer of Search and SFC Receivables . . . 17 9.6 Limitations on Junior Security Interests in Search and SFC Receivables . . . . . . . . . . . . . . . . . . . . . . . . 17 9.7 Limitations on Filing Voluntary Petitions under Bankruptcy Code . . 17 10.0 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 17 10.1 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . 17 10.2 Periodic Reports . . . . . . . . . . . . . . . . . . . . . . . . . 17 10.3 Subsequent Pledge of GECC Pledged Collateral . . . . . . . . . . . 17 10.4 Board Representation . . . . . . . . . . . . . . . . . . . . . . . 17 10.5 Collateral Coverage . . . . . . . . . . . . . . . . . . . . . . . . 17 11.0 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 11.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . 18 11.2 HFG Rights upon Occurrence of an Event of Default . . . . . . . . . 19 12.0 GUARANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 12.1 Search's Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . 19 12.2 SFC's Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . 20 12.3 ACAC's, ACHI's and Newsearch's Guaranty . . . . . . . . . . . . . . 20 12.4 General Provisions of All Guaranties . . . . . . . . . . . . . . . 20 12.5 Term of Guaranties . . . . . . . . . . . . . . . . . . . . . . . . 21
Table of Contents iii FUNDING AGREEMENT 6 12.6 Guarantors' Waivers . . . . . . . . . . . . . . . . . . . . . . . . 21 13.0 EXPENSE REIMBURSEMENT AND INDEMNITY . . . . . . . . . . . . . . . . . 21 13.1 Reimbursement of Expenses . . . . . . . . . . . . . . . . . . . . . 21 13.2 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 14.0 USURY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 14.1 Non-Usurious Intent . . . . . . . . . . . . . . . . . . . . . . . . 22 14.2 Construction to Avoid Usury . . . . . . . . . . . . . . . . . . . . 22 15.0 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 23 15.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . 23 15.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 15.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 15.4 HFG Reliance on Disclosure Statement . . . . . . . . . . . . . . . 23 15.5 Duty of HFG's Professionals . . . . . . . . . . . . . . . . . . . . 23 15.6 No Fiduciary Relationship . . . . . . . . . . . . . . . . . . . . . 24 15.7 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 A. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 24 B. Binding Agreement . . . . . . . . . . . . . . . . . . . . . . . . 24 C. Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 D. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 E. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 F. Resolution of Ambiguities . . . . . . . . . . . . . . . . . . . . 24 G. Limitation and Waiver of Remedies . . . . . . . . . . . . . . . . 24 H. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 I. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 25 J. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 15.8 Binding Agreement to Arbitrate Disputes . . . . . . . . . . . . . . 25 15.9 Limitation of Actions . . . . . . . . . . . . . . . . . . . . . . . 25
Table of Contents iv FUNDING AGREEMENT 7 FUNDING AGREEMENT 1.0 DATE AND PARTIES 1.1 DATE. This funding agreement is dated and effective November 28, 1995. 1.2 PARTIES. The parties to this agreement are: A. Hall Financial Group, Inc. ("HFG") 750 N. St. Paul Suite 200 Dallas, TX 75201-3247 B. Search Capital Group, Inc. ("Search") 700 N. Pearl Suite 400, L.B. 401 Dallas, TX 75201-2809 C. Search Funding Corp. ("SFC") 700 N. Pearl Suite 400, L.B. 401 Dallas, TX 75201-2809 D. Automobile Credit Acceptance Corp. ("ACAC") 700 N. Pearl Suite 400, L.B. 401 Dallas, TX 75201-2809 E. Newsearch, Inc. ("Newsearch") 700 N. Pearl Suite 400, L.B. 401 Dallas, TX 75201-2809 F. Automobile Credit Holdings, Inc. ("ACHI") 700 N. Pearl Suite 400, L.B. 401 Dallas, TX 75201-2809 FUNDING AGREEMENT 1 8 2.0 RECITATIONS 2.1 SEARCH, SUBSIDIARIES, CORPORATE STRUCTURE. Search is the corporate parent of SFC, ACHI, and Newsearch, and of other incorporated entities, which are the Chapter Subsidiaries and the Non-Chapter Subsidiaries identified in 3.1. ACHI is ACAC's corporate parent. Search and its subsidiaries comprise an industry-specific financial services company specializing in the purchase, management, and securitization of used motor vehicle receivables, which are secured by medium-priced, used automobiles and light trucks which typically have been purchased by consumers with substandard credit histories. 2.2 BANKRUPTCY PROCEEDING. Each of the Chapter Subsidiaries on August 14, 1995, filed a petition for reorganization under chapter 11 of the Bankruptcy Code. All of them are now debtors in an administratively-consolidated Bankruptcy Proceeding. Search and the Chapter Subsidiaries have proposed the Plan in the Bankruptcy Proceeding. 2.3 FUNDING REQUIREMENTS. The Search Parties require funds for general corporate purposes, and for the purpose of assisting in the implementation of the Plan, all under the terms of this agreement. 2.4 OBJECTIVES. HFG has agreed to supply to the Search Parties the funding provided for under and in accordance with the conditions of this agreement. 2.5 INTERIM FUNDING. Previously the parties executed an Interim Funding Agreement dated November 21, 1995, pursuant to which a $500,000 Note was executed by Search and SFC payable to HFG. The $500,000 Note represented a partial funding of Note I and was secured by the Search Collateral and the SFC Collateral. Principal and interest accrued and unpaid on the $500,000 Note will be paid at Closing through delivery of Note I. 3.0 DEFINITIONS AND USAGE 3.1 PRIMARY DEFINED TERMS. When used in this agreement and capitalized, unless the context clearly indicates otherwise, these terms shall have these special meanings: BANKRUPTCY PROCEEDING: the consolidated bankruptcy proceedings of the Chapter Subsidiaries, begun on August 14, 1995, when each of the Chapter Subsidiaries filed a petition for reorganization under chapter 11 of the Bankruptcy Code, and 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. 395-34981-RCM-11. BANKRUPTCY CODE: the United States Bankruptcy Code, as amended from time to time. CHAPTER SUBSIDIARIES : these corporate subsidiaries of Search, each of which is a debtor in the Bankruptcy Proceeding: 1. Automobile Credit Fund 1991-III, Inc., a Texas corporation; FUNDING AGREEMENT 2 9 2. Automobile Credit Finance, Inc., a Texas corporation; 3. Automobile Credit Partners, Inc. ., a Delaware corporation; 4. Automobile Credit Finance 1992-II, Inc., a Texas corporation; 5. Automobile Credit Finance III, Inc., a Texas corporation; 6. Automobile Credit Finance IV, Inc., a Texas corporation; 7. Automobile Credit Finance V, Inc. ., a Texas corporation; and 8. Automobile Credit Finance VI, Inc., a Texas corporation. COLLATERAL: The Search Collateral, the SFC Collateral, the Share Collateral, and all other collateral subjected to security interests under the Security Agreements and the Pledge Agreement. COLLATERAL COVERAGE RATIO: the ratio of the automobile receivables pledged under the Security Agreements and the GECC Loan Agreement having a delinquency not exceeding 60 days as compared to the sum of the outstanding balances owed to HFG on Notes I and II and GECC at the time such ratio is determined with such ratio being not less than 1.5 to 1.0. DISCLOSURE STATEMENT: the Disclosure Statement proposed to be filed in the Bankruptcy Proceeding by all of the Chapter Subsidiaries and Search, as co-proponents of the Plan. EFFECTIVE DATE: the Effective Date as defined in the Plan. FINANCING STATEMENTS: UCC financing statements evidencing the security interests in the Collateral granted by the Security Agreements and the Pledge Agreements. $500,000 NOTE: The promissory note executed by Search and SFC on November 21, 1995, payable to HFG in the principal amount of $500,000, which note will be satisfied in full at closing upon the execution of Note I. GAAP: generally accepted accounting principles, applied on a consistent basis, as set forth in Opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants or in statements of the Financial Accounting Standards Board, or their respective successors, and which are applicable in the circumstances as of the relevant date. Accounting principles are applied on a consistent basis when the accounting principles applied in a current period are comparable in all material respects to those accounting principles applied in a preceding period. GECC LOAN: the loan made by General Electric Capital Corporation ("GECC") to SFC under the GECC Loan Agreement. FUNDING AGREEMENT 3 10 GECC LOAN AGREEMENT: the Motor Vehicle Installment Contract Loan and Security Agreement dated June 17, 1994, among GECC, SFC and Search, as amended and modified by the parties to such agreement. GECC PLEDGED COLLATERAL: the pledged chattel paper held at closing under this agreement by GECC in pledge under the GECC Loan Agreement, identified in Exhibit A. LOAN DOCUMENTS: Notes I, II and III, the Security Agreements, the Pledge Agreements, and all Financing Statements and other instruments, documents and agreements that may be executed and delivered by any of the Search Parties to HFG under or in connection with this agreement, as they may be amended renewed, extended or supplemented from time to time. NON-CHAPTER SUBSIDIARIES: these corporate subsidiaries of Search: 1. Automobile Credit Wholesaling, Inc., a Delaware corporation; 2. Consumer-Dealer Autocredit Corporation, a Texas corporation; and 3. Search Automobile Leasing Corporation, a Texas corporation. NOTE I: the convertible promissory note in the original principal amount by which (i) $2,000,000.00 exceeds (ii) the principal amount owing on the GECC Loan on the date of closing; in the form of Exhibit B, and with the option of the holder to convert up to $1,000,000.00 of the debt represented by Note I into common stock of Search on the terms and conditions contained in Exhibit B,to be executed and delivered to HFG by Search and SFC at closing; and all renewals, extensions, restructurings, modifications and substitutions for Note I. NOTE II: the promissory note in the original principal amount actually advanced, if any, not to exceed the lesser of (i) the principal amount owing on the GECC Loan on the date of closing, and (ii) the principal amount owing on the GECC Loan on the date, if any, of advancing of principal under Note II; in the form of Exhibit C, to be executed and delivered to HFG by Search and SFC at closing, with funds to be advanced on the conditions in 7.3; and all renewals, extensions, restructurings, modifications and substitutions for Note II. NOTE III: the convertible promissory note in the original principal amount of $1,000,000.00, or so much thereof actually advanced, under which $500,000.00 will be advanced at closing, and an additional $500,000.00 will be advanced as soon as practicable after (but not more than 10 days after) approval by the bankruptcy court in the Bankruptcy Proceeding of the Disclosure Statement; in the form of Exhibit D, and with the option in the holder to convert the debt represented by Note III into common stock of Search on the terms and conditions contained in Exhibit D, to be executed and delivered to HFG by Search and SFC at closing, with funds to be advanced on the conditions in 7.4; and all renewals, extensions, restructurings, modifications and substitutions for Note III. NOTES: Note I, Note II, and Note III. FUNDING AGREEMENT 4 11 OBLIGATIONS: all obligations, indebtedness and liabilities of the Search Parties and other Non-Chapter Subsidiaries to HFG, now existing or hereafter arising, whether direct, indirect, related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, including without limitation, all obligations, indebtedness and liabilities of the Search Parties to HFG under the Notes, the Security Agreements, the Pledge Agreements, and the other Loan Documents. PLAN: the Joint Plan of Reorganization proposed to be filed in the Bankruptcy Proceeding by all of the Chapter Subsidiaries and Search, as co-proponents. PLAN FUNDING COMMITMENT: HFG's commitment to provide funding under the Plan, under the terms and conditions of Section 8.0. PLEDGE AGREEMENTS: the pledge agreements to be executed and delivered to HFG at closing by Newsearch, in the form of Exhibit E, by Search, in the form of Exhibit F, and by ACHI in the form of Exhibit G, as amended, supplemented or modified from time to time, granting a security interest in the Share Collateral, to secure payment of the Notes and all other Obligations of the Search Parties hereunder. SEARCH COLLATERAL: the chattel paper held by Search, identified by schedule in Exhibit A, in which Search is at closing to grant a security interest, by executing and delivering the Search Security Agreement to HFG, and by pledging the chattel paper through delivery of the chattel paper to HFG, and the GECC Pledged Collateral owned by Search, identified in Exhibit A, which will at closing be subjected to a junior security interest under the Search Security Agreement, to secure the Notes and all other Obligations of the Search Parties hereunder. SEARCH PARTIES: Search, SFC, ACHI, ACAC, and Newsearch. SECURITY AGREEMENTS: the security agreements to be executed and delivered to HFG at closing by Search, SFC and ACAC, in the forms of Exhibits H (the "Search Security Agreement"), I (the "SFC Security Agreement") and J (the "ACAC Security Agreement"), as they may be amended, supplemented or modified from time to time, each granting a security interest in chattel paper held by the grantor of the security interest, to secure payment of the Notes and all other Obligations of the Search Parties hereunder. SFC COLLATERAL: the chattel paper held by SFC, identified by schedule in Exhibit A, in which SFC is at closing to grant a security interest, by executing and delivering the SFC Security Agreement to HFG, and by pledging the chattel paper through delivery of the chattel paper to HFG, and the GECC Pledged Collateral owned by SFC, identified in Exhibit A, which will at closing be subjected to a junior security interest under the SFC Security Agreement, to secure the Notes and all other Obligations of the Search Parties hereunder. SHARE COLLATERAL: (i) 2,250,000 common shares of Search held by Newsearch, (ii) 100% of the common stock of SFC, ACHI, and Newsearch held by Search, and (iii) 100% of the common stock of ACAC held by ACHI in which Newsearch, Search, and ACHI FUNDING AGREEMENT 5 12 respectively, will at closing grant and perfect a security interest to secure the Notes and all other Obligations of the Search Parties hereunder, by executing and delivering the Pledge Agreements to HFG, and by delivering the Share Collateral to HFG in pledge under the Pledge Agreements. UCC: The Texas Uniform Commercial Code, as amended from time to time. 3.2 OTHER DEFINED TERMS. Other terms are defined elsewhere in the agreement, with the defined term appearing in quotation marks within parentheses immediately following the defining term or phrase. When used in this agreement, unless the context clearly indicates otherwise, those defined terms shall have those limited meanings. When terms defined in the UCC are used in this agreement, those terms have their UCC meanings unless the context clearly indicates otherwise. Any accounting terms used in this agreement have the meanings given them in accordance with GAAP. 3.3 USAGES. Defined terms may be used in the singular or plural. When used in this agreement, the words "hereof," "herein," and "hereunder" always refer to this agreement as a whole, and never to a particular provision. Unless otherwise clearly indicate, section ("Section ") and paragraph ("Par.") references are to sections and paragraphs of this agreement. 4.0 REPRESENTATIONS AND WARRANTIES 4.1 THE SEARCH PARTIES. The Search Parties jointly and severally represent and warrant to HFG that: A. Search, ACHI, and Newsearch are duly incorporated, validly existing, and in good standing under the laws of Delaware. SFC and ACAC are duly incorporated, validly existing, and in good standing under the laws of Texas. B. Each Search Party has full power and authority to carry on its business as now conducted and as proposed to be conducted, and to execute and perform its Obligations under this agreement and the Loan Documents to which it will be a signatory hereunder. C. The execution, delivery and performance of this agreement by each Search Party, and the execution, delivery and performance of the Notes, the Security Agreements, the Pledge Agreements, and the other Loan Documents by each Search Party that will be a signatory to each such instrument hereunder, have been duly authorized by all requisite corporate action, will not violate the articles of incorporation or bylaws of any Search Party, and do not require any approval of its stockholders. D. Search's only subsidiaries are SFC, ACHI, Newsearch, the Chapter Subsidiaries, and the Non-Chapter Subsidiaries. Search owns and holds all of the issued and outstanding capital stock of all of its subsidiaries. ACHI owns and holds all of the issued and outstanding capital stock of ACAC. Search owns no direct or indirect interest in any other entity. FUNDING AGREEMENT 6 13 E. Search owns and holds the receivables scheduled in Exhibit A, subject to no encumbrances or adverse claims, except for the portion of the receivables owned and held by Search that is subject to a security interest in favor of GECC under the GECC Loan Agreement, as identified in Exhibit A. The receivables are chattel paper held by Search at its principal place of business in Dallas, Texas. F. SFC owns and holds the receivables shown in Exhibit A, subject to no encumbrances or adverse claims, except for the portion of the receivables owned and held by SFC that is subject to a security interest in favor of GECC under the GECC Loan Agreement, as identified in Exhibit A. The receivables are chattel paper held by SFC at its principal place of business in Dallas, Texas. G. The GECC Loan Agreement has not been amended, and there is no uncured or unwaived default by Search or SFC under the GECC Loan Agreement, or any condition that but for the giving of notice or the passage of time would be a default under the GECC Loan Agreement, except as has been certified in writing to HFG by the Search Parties before execution of this agreement. H. Each of the Non-Chapter Subsidiaries is a duly organized and validly existing corporation in good standing under the laws of the state of its incorporation, which is correctly identified in Par. 3.1, with requisite corporate power and authority to own its properties and to transact the businesses in which it is engaged. I. Each of the Chapter Subsidiaries is a duly organized and validly existing corporation in good standing under the laws of the state of its incorporation, which is correctly identified in Par. 3.1, with requisite corporate power and authority to own its properties and to transact the businesses in which it is engaged, subject to the authority of the bankruptcy court in the Bankruptcy Proceeding; and each of the Chapter Subsidiaries is now a debtor in the Bankruptcy Proceeding. J. As of the date of its filing, the Second Amended Disclosure Statement filed in the Bankruptcy Proceeding was true in all material respects, and fairly disclosed all material matters required to make its statements not misleading and to enable a creditor or potential investor in the Chapter Subsidiaries through the plan to make a reasonably informed decision in voting upon the plan. K. The execution and delivery of this agreement by each Search Party is for good and sufficient consideration. L. Performance by the Search Parties under this agreement and under any Loan Documents to which any of them will be a signatory will not violate the articles of incorporation or bylaws of any of them, or require any approval of stockholders. N. The person executing this agreement on behalf of each of the Search Parties is duly authorized so to act. FUNDING AGREEMENT 7 14 O. The execution and delivery of this agreement by the Search Parties and the performance by each Search Party of this agreement or the Loan Documents to which it will be a party will not (i) violate (a) any provision of law applicable to any of them, or any order, judgment or decree of any court or other agency of government binding either of them or (b) any material contractual obligation of any of them (except the GECC Loan Agreement, to the extent certified in writing to HFG by the Search Parties before execution of this agreement), (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of any of them, (iii) result in or require the creation or imposition of any encumbrance of any nature whatsoever upon any of the properties or assets of any Search Party, other than the security interests granted to HFG under the Loan Documents, or (iv) require any approval or consent under any material contractual obligation of any of them, other than approvals or consents which have been obtained. P. There are no actions, suits or proceedings pending or, to their knowledge, threatened against any Search Party wherein an adverse ruling or decision is reasonably likely to affect materially and adversely the ability of any Search Party to perform its Obligations under this agreement or the Loan Documents; and there are no unsatisfied judgments outstanding against any Search Party. Q. Except for the filing of the Financing Statements, and the continuations of such filings as required by the UCC, no consent, approval, authorization or other action of or by, or registration, designation, declaration, filing or qualification with, any court, administrative agency or other governmental entity which has not been obtained is necessary as a condition to, or in connection with, the execution, delivery or performance by, or the enforceability against, any Search Party, or the validity of this agreement or the Loan Documents to which any of them is a party, or the consummation of the transactions contemplated by this agreement or the Loan Documents. R. No order, consent, approval, license, authorization or validation of, or recording, registration, declaration or filing with, or exemption by, any governmental or public body or authority (including, without limitation, any bankruptcy court, trustee or receiver), or any other third party is required to be made or obtained by Search or any of its subsidiaries or affiliates in connection with the execution, delivery and performance by Search of this agreement or of any of Loan Documents to which it will be a party, or in connection with the legality, validity, binding effect or enforceability of the this agreement or any of the Loan Documents, except those which have been made or obtained prior to the date of this agreement and are effective. S. Each financial statement of Search, SFC, ACHI, ACAC and Newsearch supplied to HFG by the Search Parties fairly present in accordance with GAAP the assets, liabilities, financial condition and income of the relevant entity as of the date of the statement, and there has been no material adverse change in the assets, liabilities or FUNDING AGREEMENT 8 15 financial condition of any of Search, SFC, Newsearch, ACHI, or ACAC since the date of the most recent financial statement of that entity supplied to HFG. T. There is no fact known to the Search Parties that they have not disclosed to HFG in writing that would or might likely have a material adverse effect upon the Collateral or the ability of any of the Search Parties to perform its respective Obligations hereunder. To the best of the knowledge of the Search Parties, all other information, documents, financial data and reports supplied to HFG in connection with the negotiation and preparation of this agreement, including without limitation copies of articles of incorporation, bylaws, certificates and warrants, were when supplied and remain in all material respects true and accurate. U. All required federal, state and local tax returns of the Search Parties have been accurately prepared and duly and timely filed within the initial or extended time allowed. There is no delinquency in the payment of any governmental charge , tax or assessment that could adversely affect in any way the Collateral. There is no audit or dispute expected or ongoing with respect to any federal, state or local tax return of any of the Search Parties. V. This agreement and the Loan Documents constitute legal, valid and binding agreements of the Search Parties who are signatories to them, enforceable against them in accordance with their terms. 4.2 HFG. HFG represents and warrants to the Search Parties that HFG is a corporation incorporated and in good standing under the laws of Delaware, and that HFG's execution and delivery of this agreement has been duly authorized by all requisite corporate action. 5.0 COMMITMENT 5.1 HFG FUNDING COMMITMENT. HFG shall advance the funds required under the Notes and shall fulfill the Plan Funding Commitment under Section 8.0, upon the terms and subject to the conditions of this agreement. 5.2 COMMITMENT FEE. The Search Companies have paid to HFG upon execution of this agreement a commitment fee of $20,000 with respect to Notes I and II (the "Note Commitment Fee"). The parties intend that the Note Commitment Fee is an earned fee paid in consideration for HFG's commitments hereunder, and for HFG's evaluation, inspection and efforts expended in connection with the execution of this agreement. However, in the event HFG should not be required to fund an aggregate of $2,000,000 under Notes I and II, HFG shall refund to the Search Parties 1% of the amount of the difference between $2,000,000 and the amount actually loaned under Notes I and II. FUNDING AGREEMENT 9 16 6.0 LOAN CLOSING CONDITIONS 6.1 LEGAL OPINION. The Search Parties shall deliver to HFG at or before closing, as a condition of HFG's obligations to advance any funds under this agreement, an opinion of counsel in form and substance reasonably satisfactory to HFG and by counsel reasonably satisfactory to HFG, expressing the opinions that: A. Search, ACHI, and Newsearch are duly incorporated, validly existing, and in good standing under the laws of Delaware. SFC and ACAC are duly incorporated, validly existing, and in good standing under the laws of Texas B. Each Search Party has full power and authority to carry on its business as now conducted and as proposed to be conducted, and to execute and perform its Obligations under this agreement and the Loan Documents to which it will be a signatory hereunder. C. The execution, delivery and performance of this agreement by each Search Party, and the execution, delivery and performance of the Notes, the Security Agreements, the Pledge Agreements, and the other Loan Documents by each Search Party that will be a signatory to each such instrument hereunder, have been duly authorized by all requisite corporate action. D. Performance by the Search Parties under this agreement and under any Loan Documents to which any of them will be a signatory will not violate the articles of incorporation or bylaws of any of them, or require any approval of stockholders. E. The person executing this agreement on behalf of each Search Party is duly authorized so to act. F. The opinion giver has no current actual knowledge that the execution and delivery of this agreement by any Search Party, or the performance by any Search Party of this agreement or the Loan Documents to which it will be a party will (i) violate (a) any provision of law applicable to the any of them, or any order, judgment or decree of any court or other agency of government binding any of them or (b) any material contractual obligation of any of them, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of any of them, (iii) result in or require the creation or imposition of any encumbrance of any nature whatsoever upon any of the properties or assets of any of them, other than the security interests granted to HFG under the Loan Documents, or (iv) require any approval or consent under any material contractual obligation of either of them, other than approvals or consents which have been obtained. G. When the Financing Statements have been duly filed in the office of the Texas Secretary of State, Uniform Commercial Code Division, the security interests created by the Security agreements in and to the Collateral will constitute valid, FUNDING AGREEMENT 10 17 enforceable and perfected security interests under the UCC to the extent that perfection of security interests in the Collateral is governed by Article 9 of the UCC. H. To the extent that Collateral consists of instruments, and assuming HFG's continued possession of such Collateral, the security interests granted under the Security Agreement will constitute valid and perfected security interests in such Collateral, prior to all other liens against such Collateral or interests therein now existing or hereafter existing. I. Except for the filing of the Financing Statements referred to in Par. 6.1(G) above, and the continuations of such filings as required by the UCC, no consent, approval, authorization or other action of or by, or registration, designation, declaration, filing or qualification with, any court, administrative agency or other governmental entity which has not been obtained is necessary as a condition to, or in connection with, the execution, delivery or performance by, or the enforceability against, Search or SFC, or the validity of this agreement or the Loan Documents to which either is a party, or the consummation of the transactions contemplated by this agreement or the Loan Documents. J. The opinion giver has no current actual knowledge of any proceeding, investigation or litigation pending or threatened against or affecting any Search Party or any of the other assets or properties of any Search Party in any court or before any administrative agency or arbitration board wherein an adverse ruling or decision is reasonably likely to affect materially and adversely the ability of any Search Party to perform its Obligations under the Loan Documents; and there are no unsatisfied judgments outstanding against any Search Party. K. No Search Party is an "investment company" or a company "controlled" by an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended. L. This agreement and the Loan Documents constitute legal, valid and binding agreements of the Search Parties who are signatories to them, enforceable against them in accordance with their terms, subject to: 1. rights of the United States under the Federal Tax Lien Act of 1966, as amended; the application of the standard of good faith, such as that defined in section 1.203 of the Texas UCC; principles of equity which may limit the availability of certain equitable remedies; and bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and other laws applicable to creditors' rights or the collection of debtors' obligations generally; and 2. the qualification that certain of the remedial, waiver and other provisions of this agreement and the Loan Documents may be further limited or rendered unenforceable by other provisions of applicable law, but those FUNDING AGREEMENT 11 18 provisions are unlikely substantially to interfere with the practical realization of the benefits to HFG purported to be provided by this agreement and the Loan Documents, except for the economic consequences of any procedural delay that may result. 7.0 LOAN CLOSING 7.1 CLOSING. Closing shall be in the offices of Burke & Wright, P.C., 2900 Renaissance Tower, 1201 Elm Street, Dallas, Texas on November 30, 1995. 7.2 OBLIGATIONS AT CLOSING. A. SEARCH. At closing, Search shall: 1. execute and deliver to HFG Notes I, II and III; 2. execute and deliver to HFG the Search Security Agreement upon the Search Collateral and the GECC Pledged Collateral that is owned by Search; and execute and deliver to HFG a related Financing Statement, for recording in the office of the Texas Secretary of State; 3. deliver to HFG in pledge under the Search Security Agreement all Search Collateral identified in Exhibit A, that is not subject to a security interest under the GECC Loan Agreement, identified in Exhibit A; 4. issue to HFG 3,000,000 warrants to purchase Search common shares, having an exercise price of $2.00 per share, and upon the warrant terms set forth in Exhibit K; 5. execute and deliver to HFG the Search Pledge Agreement; 6. deliver to HFG one or more share certificates in appropriate form and with executed transfer powers complying with the Search Pledge Agreement, representing the Share Collateral being pledged by Search; B. SFC . At closing SFC shall: 1. execute and deliver to HFG Notes I, II and III; 2. execute and deliver the SFC Security Agreement upon the SFC Collateral and the GECC Pledged Collateral that is owned by SFC; and execute and deliver the related Financing Statement, for recording in office of Texas Secretary of State; and FUNDING AGREEMENT 12 19 3. deliver to HFG in pledge under the SFC Security Agreement all SFC Collateral identified in Exhibit A, that is not subject to a security interest under the GECC Loan Agreement, identified in Exhibit A. C. NEWSEARCH. At closing Newsearch shall: 1. execute and deliver to HFG the Newsearch Pledge Agreement and execute and deliver to HFG a related Financing Statement, for recording in the office of the Texas Secretary of State; and 2. deliver to HFG one or more share certificates in appropriate form and with executed transfer powers complying with the Newsearch Pledge Agreement, representing the Share Collateral being pledged by Newsearch. D. ACAC. At closing ACAC shall execute and deliver to HFG the ACAC Security Agreement and execute and deliver to HFG a related Financing Statement, for recording in the office of the Texas Secretary of State; E. ACHI. At closing, ACHI shall: 1. execute and deliver to HFG the ACHI Pledge Agreement and execute and deliver to HFG a related Financing Statement, for recording in the office of the Texas Secretary of State; and 2. deliver to HFG one or more share certificates in appropriate form and with executed transfer powers complying with the ACHI Pledge Agreement, representing the Share Collateral being pledged by ACHI. F. SEARCH PARTIES. At closing the Search Parties shall reimburse to HFG all of HFG's attorney's fees and other out-of-pocket costs and expenses incurred by HFG to the date of closing in investigation and documentation of the transactions evidenced by this agreement. G. HFG. At closing HFG shall: 1. deliver to the Search Parties the required advances under Notes I (less the amounts previously advanced on the $500,000 Note plus accrued interest), II (if any), and III; 2. execute the Security Agreements and the Pledge Agreements and accept pledge of the Search Collateral identified in Exhibit A, the SFC Collateral identified in Exhibit A, and the Share Collateral; and 3. return to the Search Parties the $500,000 Note. 7.3 CONDITIONS FOR FUNDING UNDER NOTE II. HFG shall at closing or thereafter advance the principal of Note II in the amount, if any, not exceeding the lesser of (i) the principal amount FUNDING AGREEMENT 13 20 owing on the GECC Loan on the date of closing, and (ii) the principal amount owing on the GECC Loan on the later date, if any, at which the advance to pay the balance of the GECC Loan is required after notice by GECC of a default other than the defaults disclosed to HFG prior to closing and an intention to resort to the collateral of the GECC loan, or at such earlier time as HFG shall elect; on the condition that (i) the proceeds of Note II are delivered to GECC to release all security interest held by GECC under the GECC Loan Agreement, and (ii) all Search Parties deliver to HFG in pledge under the Search and SFC Security Agreements all GECC Pledged Collateral at the time of the funding. Subject to the consent of GECC to the extent required by the GECC Loan Documents, HFG at its option may either payoff the GECC Loan or acquire the GECC Loan by assignment. HFG shall not be required to fund Note II if: (i) the GECC Loan is in monetary default other than as a result of acceleration of maturity from a nonmonetary default or (ii) the Search Parties cannot meet the Collateral Coverage Ratio. 7.4 CONDITIONS FOR FUNDING UNDER NOTE III. $500,000.00 of the principal of Note III will be funded at closing. The remaining $500,000.00 shall be advanced as soon as practicable after (but not more than 10 days after) approval by the bankruptcy court in the Bankruptcy Proceeding of the Disclosure Statement, or such approval of an amended version of the Disclosure Statement that is approved by HFG, which approval HFG shall not unreasonably withhold if any amendment does not materially modify the debt-to-equity conversion alternative contained in the Plan. 7.5 POST-CLOSING EXTENSIONS OF MATURITIES OF NOTES I AND II. The Search Parties shall have the option to extend the maturities of Notes I and II one time for 60 days, if the Plan is not confirmed in 90 days or less, under the terms of Notes I and II. 8.0 PLAN FUNDING 8.1 PLAN FUNDING COMMITMENT. HFG will loan to the Chapter Subsidiaries in connection with the Plan an amount as necessary to enable the Chapter Subsidiaries to cash-out up to 10% of the outstanding notes, as defined in the Plan, in each of the Chapter Subsidiaries, at an amount equal to 80% of the net present value (net present value being determined by the application of a discount rate of 15% to net cash flow, as defined in the Plan) of such notes. If more than 10% of the noteholders in any particular Chapter Subsidiary seek to have their notes cashed-out under the Plan, HFG may, in HFG's sole discretion, loan additional amounts to the Chapter Subsidiaries to fund the cash-out of all or such lesser amount of Noteholders electing the cash-out option as HFG, in HFG's sole discretion, may determine. Noteholders electing the cash-out must have cast a ballot accepting the Plan, and must have selected the cash-out option on their ballot. 8.2 FUNDING COMMITMENT FEE. In addition to the other consideration provided in this agreement for the Plan Funding Commitment, Search shall at closing pay to HFG a plan-funding commitment fee of $15,000 in consideration of HFG's commitment under this Section 8.0. 8.3 CONDITIONS TO PLAN FUNDING. HFG shall not be required to fund the commitment under Paragraph 8.1 until the Disclosure Statement, containing the following provisions, has been approved by the bankruptcy court in the Bankruptcy Proceeding, the Plan, containing the following provisions, has FUNDING AGREEMENT 14 21 been confirmed by the bankruptcy court in the Bankruptcy Proceeding, and the order of confirmation, containing the following provisions, has become final and nonappealable: a. The Plan shall include a description of the Plan Funding Commitment similar in content to the description in Par. 8.1 above. b. The Plan shall disclose the conditions to funding contained in this Par. 8.3. c. The Plan shall provide for the surrender by the noteholders electing the cash-out option of their notes to the Chapter Subsidiaries in full satisfaction of their secured and unsecured claims. d. The Plan shall provide for noteholders electing the cash-out option to so indicate on their ballot. e. The Plan shall provide for the repayment of the administrative claim of HFG as a result of the amounts loaned by HFG under the Plan Funding Commitment with an equal amount of common stock, convertible preferred stock, warrants, dividends, and cash payments that would have been paid to the noteholders that were cashed-out with such funds with respect to both their secured and unsecured claims on the Effective Date under the Search Equity Option. f. The Plan shall not impose any restrictions with respect to the shares HFG receives under the Plan. g. The Plan shall provide that HFG shall not be an issuer or underwriter for purposes of Section 1145 of the Bankruptcy Code. h. The Disclosure Statement shall fully and completely disclose the foregoing provisions of the Plan. i. The Plan and Disclosure Statement containing the foregoing provisions shall be sent to all creditors and parties-in-interest along with a ballot containing the cash-out option at least 25 days prior to the hearing on confirmation of the Plan. j. At the Confirmation hearing, evidence shall be introduced by Search establishing that HFG is neither an issuer nor an underwriter. k. The Order confirming the Plan shall contain findings that HFG is not an issuer, is purchasing claims of noteholders with a view to investment and not distribution of any security to be received, and is not an underwriter. l. The Plan, Disclosure Statement, Order confirming Plan, Ballot, and any other documents sent to creditors in connection with the Plan shall be subject to the final approval of HFG and shall not be amended or withdrawn without the consent of HFG. FUNDING AGREEMENT 15 22 Further, HFG shall not be required to fund the commitment under Paragraph 8.1 if noteholders who elect the Collateral/Sale Service Option under the Plan hold notes having in the aggregate a net present value exceeding 40% of the total net present value of all of the notes of all of the Chapter Subsidiaries. 8.4 TERM. The term of the commitment in Paragraph 8.1 shall be for 90 days, beginning on the effective date of this agreement. Search shall have the option to extend the term for an additional 60 days, if there is then no default under this agreement by any Search Party, by paying HFG a $100,000.00 funding extension fee before the end of the original 90- day term. 8.5 DISCLOSURE. HFG and the Search Parties agree that the terms of HFG's Plan Funding Commitment under this Section 8.0 shall be included in the Plan and Disclosure Statement subject to the approval of HFG. 8.6 BOARD REPRESENTATION. HFG shall have the right to appoint one representative to the Search board of directors upon purchasing an aggregate amount of notes equal to $1,000,000.00 of net present value in all of the Chapter Subsidiaries (i.e., upon paying $800,000.00 for notes having a net present value of $1,000,000.00). 8.7 FUNDING CLOSING. HFG shall fund its payments under the Plan Funding Commitment on the Effective Date. 9.0 NEGATIVE COVENANTS 9.1 LIMITATIONS ON CHANGES IN SEARCH'S CAPITAL STRUCTURE. Without the prior express written consent of HFG, which HFG may withhold in its sole discretion, no Search Party may amend its articles of incorporation or issue authorized common stock (except to comply with the Plan, issue approximately 180,000 shares to Search's ESOP, settle the shareholders suit on the terms disclosed in the Disclosure Statement, or exercise or terminate outstanding stock options disclosed in the Disclosure Statement) or issue additional warrants or rights to acquire shares of any class, so long as any Obligation remains unpaid. 9.2 LIMITATIONS ON CHANGES IN GECC LOAN AGREEMENT. Without the prior express written consent of HFG, which HFG shall not unreasonably withhold, no Search Party may modify the GECC Loan Agreement. 9.3 LIMITATIONS ON TRANSFERS AMONG ENTITIES. Without the prior express written consent of HFG, which HFG may withhold in its sole discretion, no Search Party may make or permit any transfer of property between or among any Search Party or Non-Chapter Subsidiary that is not for fair value and contemporaneously evidenced by duly executed and delivered documents of transfer and debt or consideration. 9.4 LIMITATIONS ON CHANGE OF PRINCIPAL PLACE OF BUSINESS OF SEARCH AND SFC. Without the prior express written consent of HFG, which HFG may withhold in its sole discretion, no Search Party may change its principal place of business to a location outside Texas so long as any Obligation remains unpaid. FUNDING AGREEMENT 16 23 9.5 LIMITATIONS ON SALE OR TRANSFER OF SEARCH AND SFC RECEIVABLES. Without the prior express written consent of HFG, which HFG may withhold in its sole discretion, no Search Party may sell or transfer any Collateral that secures any Obligation, whether or not such sale or transfer is in the ordinary course of the business of the Search Party. 9.6 LIMITATIONS ON JUNIOR SECURITY INTERESTS IN SEARCH AND SFC RECEIVABLES. Without the prior express written consent of HFG, which HFG may withhold in its sole discretion, no Search Party may grant any junior or conflicting security interest in any Collateral that secures any Obligation. 9.7 LIMITATIONS ON FILING VOLUNTARY PETITIONS UNDER BANKRUPTCY CODE. Without the prior express written consent of HFG, which HFG may withhold in its sole discretion, and the unanimous vote of the board of directors of the Search Party, no Search Party shall file a voluntary petition under any chapter of the Bankruptcy Code. All Search Parties acknowledge that the board of directors and officers of all Search Parties owe a fiduciary duty to the creditors of each Search Party under the current circumstances of the Search Parties, and that the limitations of this Paragraph 9.7 are reasonably intended to assure compliance with that fiduciary duty. 10.0 AFFIRMATIVE COVENANTS 10.1 NOTICE OF DEFAULTS. The Search Parties shall give prompt notice to HFG of any default or claim of default by any party under the GECC Loan Agreement in addition to those certified to HFG in writing before execution of this agreement, and shall extend to HFG the opportunity to cure any such default and be subrogated to GECC's position to the extent of such cure. The Search Parties shall also give prompt written notice to HFG of any default under any other agreement upon which any of the Search Parties or any Non-Chapter Subsidiary is obligated. 10.2 PERIODIC REPORTS. All Search Parties shall frequently, at intervals selected by HFG, deliver to HFG reports of operations, cash flows, debt repayments, GECC Loan status, and other matters as HFG may request; and shall without request give to HFG immediate notice and copies of any correspondence with or reports to GECC about the GECC Loan. 10.3 SUBSEQUENT PLEDGE OF GECC PLEDGED COLLATERAL. All Search Parties shall immediately deliver to HFG in pledge under the Search and SFC Security Agreements all GECC Pledged Collateral as to which at any time, and from time to time, GECC's security interest under the GECC Loan Agreement terminates. 10.4 BOARD REPRESENTATION. Search shall give timely notice to HFG of all meetings of Search's board of directors, and shall permit HFG to have one representative in attendance at all such meetings as an observer and guest. If HFG exercises its option under Note III to convert debt to Search stock, Search shall cause its articles of incorporation to be amended, if necessary, to assure that HFG shall have the right as holder of such stock thereafter to elect one representative to the Search board of directors in lieu of HFG's observer representative. 10.5 COLLATERAL COVERAGE. The Search Parties shall at all times remain in compliance with the Collateral Coverage Ratio. FUNDING AGREEMENT 17 24 11.0 DEFAULT 11.1 EVENTS OF DEFAULT. An "Event of Default" shall occur under this agreement if: A. any of the representations and warranties under Paragraphs 4.1, or under any of the Loan Documents, is untrue in any material respect; B. any of the Search Parties fails timely to pay an amount payable to HFG under this agreement or under any of the Loan Documents; or C. any of the Search Parties breaches any other obligation under this agreement or under any of the Loan Documents, and fails to cure the breach within 10 days of HFG's giving a notice of such default to all Search Parties. D. Any of the following events occurs in the Bankruptcy Proceedings of the Chapter Subsidiaries: (1) confirmation of a Plan of reorganization for any of the Chapter Subsidiaries other than a Plan proposed by Search and the Chapter Subsidiary; (2) conversion of any of the Bankruptcy Proceedings to a case under chapter 7 of the Bankruptcy Code; (3) appointment of a trustee in any of the Bankruptcy Proceedings; or (4) the granting of relief from the automatic stay with respect to the claim of any pre-petition creditor. E. Any guarantor revokes, terminates or fails to perform any of the terms of any guaranty, endorsement or other agreement of such party in favor of HFG or any affiliate of HFG; F. Any judgment or judgments aggregating in excess of $100,000 in excess of applicable insurance coverage, or any injunction or attachment is obtained against a Search Party which remains unstayed for a period of thirty (30) days or is enforced; G. A Search Party is dissolved, or a Search Party which is a corporation fails to maintain its corporate existence in good standing, or the usual business of a Search Party ceases or is suspended; H. Without the express written consent of HFG, there will not be any change in the chief executive officer, chief operating officer, or chief financial officer of Search; I. A Search Party becomes insolvent, makes an assignment for the benefit of creditors, makes or sends notice of a bulk transfer or calls a general meeting of its creditors or principal creditors; J. Any petition or application for any relief under the bankruptcy laws of the United States now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether at law or in equity) is filed by or FUNDING AGREEMENT 18 25 against a Search Party. Provided, however, that in the event of the filing of an involuntary petition, the Search Party shall have a period of sixty days from the date of filing of such petition to obtain a dismissal of the petition before there shall be a default; K. The indictment or threatened indictment of a Search Party under any criminal statute, or the commencement or threatened commencement of criminal or civil proceedings against a Search Party, pursuant to which statute or proceedings the penalties or remedies sought or available include forfeiture of any of the property having an aggregate value in excess of $100,000 of a Search Party; L. Any event of default under any financing, security or other agreement, document or instrument at any time executed and/or delivered to, with or in favor of HFG or any of its affiliates by any affiliate of a Search Party; M. Failure of the Search Parties to maintain the Collateral Coverage Ratio; N. A Search Party is in default of any of the provisions of the GECC Loan Agreement other than the defaults disclosed in writing to HFG prior to closing; O. Search and the Chapter Subsidiaries fail to obtain approval of the Disclosure Statement containing the provisions required by Paragraph 8.3 within 60 days of the execution of this Agreement. P. Search and the Chapter Subsidiaries fail to obtain confirmation of the Plan containing the provisions required by Paragraph 8.3 within 150 days of the execution of this Agreement. Q. Search fails to comply with the provisions of Paragraph 8.3 regarding the filing of a Plan and Disclosure Statement containing the provisions required by Paragraph 8.3 within 14 days of a written request by HFG. 11.2 HFG RIGHTS UPON OCCURRENCE OF AN EVENT OF DEFAULT. If an event of default occurs, HFG shall have the option to terminate its further obligations under this agreement by notice to the Search Parties, and shall be entitled to all of its remedies for such breach and all of the remedies provided for in the Loan Documents. 12.0 GUARANTIES 12.1 SEARCH'S GUARANTY. Search unconditionally and irrevocably guarantees the due and punctual payment and performance of the Obligations, including without limitation all of SFC's Obligations under the Notes and SFC's Security Agreement, all of ACAC's Obligations under the ACAC Security Agreement, all of Newsearch's Obligations under the Pledge Agreement, all of ACHI's Obligations under the ACHI Pledge Agreement as well as all Obligations of SFC, ACAC, ACHI and Newsearch under this agreement and the other Loan Documents. Upon any failure of SFC to pay or perform any of the Obligations under Notes I, II and III and the SFC Security Agreement, or any other failure by SFC in payment or performance of an Obligation, Search shall FUNDING AGREEMENT 19 26 forthwith on demand pay or perform the Obligations not so paid or performed at the place and in the manner specified in this agreement and the other Loan Documents. Search acknowledges that its guarantee is a guarantee of payment and performance, and not merely of collection. 12.2 SFC'S GUARANTY. SFC unconditionally and irrevocably guarantees the due and punctual payment and performance of the Obligations, including without limitation all of Search's Obligations under the Notes, Search Pledge Agreement and Search Security Agreement, all of ACAC's Obligations under the ACAC Security Agreement, all of Newsearch's Obligations under the Pledge Agreement, all of ACHI's Obligations under the ACHI Pledge Agreement as well as all Obligations of Search, ACAC, ACHI and Newsearch under this agreement and the other Loan Documents. Upon any failure of Search to pay or perform any of the Obligations under the Notes, the Search Pledge Agreement and the Search Security Agreement, or any other failure in payment or performance of an Obligation, SFC shall forthwith on demand pay or perform the Obligations not so paid or performed at the place and in the manner specified in this agreement and the other Loan Documents. SFC acknowledges that its guarantee is a guarantee of payment and performance, and not merely of collection. 12.3 ACAC'S, ACHI'S, AND NEWSEARCH'S GUARANTY. ACAC, ACHI, and Newsearch jointly and severally, unconditionally and irrevocably guarantee the due and punctual payment and performance of the Obligations, including without limitation all of Search's and SFC's Obligations under the Notes, the Pledge Agreements, and the Security Agreements, as well as all other Obligations of the Search Parties under this agreement and the Loan Documents. Upon any failure of Search or SFC to pay or perform any of the Obligations under the Notes, the Pledge Agreements, and the Security Agreements, and any other failure in payment or performance of an Obligation, ACAC, ACHI, and Newsearch shall forthwith on demand pay or perform the Obligations not so paid or performed at the place and in the manner specified in this agreement and the other Loan Documents. Each of ACAC, ACHI, and Newsearch acknowledge that its guarantee is a guarantee of payment and performance, and not merely of collection. 12.4 GENERAL PROVISIONS OF ALL GUARANTIES All guaranty Obligations under Paragraphs 12.1, 12.2 and 12.3 are continuing, unconditional, and absolute, and without limiting the generality of the foregoing, shall not be released, discharged, impaired, or otherwise affected by: A. any extension, renewal, settlement, compromise, waiver, or release in respect of any Obligation of the Search Parties or any other Non-Chapter Subsidiary under this agreement or any Loan Documents, whether by operation of law or otherwise; B. any modification or amendment of or supplement to any of the Loan Documents; C. the taking of any Collateral, or any release, exchange, non-perfection or invalidity of any security interest in any Collateral, or any action taken or not taken by the Search Parties with respect to any Collateral, or any damage to or destruction of any Collateral; D. any change in the corporate existence, structure or ownership of any Search Party or any Non-Chapter Subsidiary, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Search Party or any Non-Chapter Subsidiary, FUNDING AGREEMENT 20 27 or any of their respective assets, or any resulting release or discharge of any Obligation of any Search Party or any Non-Chapter Subsidiary; E. the existence of any claim, setoff or other right which any Search Party or any Non-Chapter Subsidiary may have at any time against HFG, whether in connection with this agreement, with any Loan Document, or with the transactions contemplated by this agreement, or any unrelated transaction, except that nothing in this subsection shall prevent the assertion of such claim by separate suit or compulsory counterclaim; F. any invalidity, irregularity, or unenforceability of any provision of this agreement or any Loan Document; G. the incapacity, lack of authority, death or disability of any person; H. the revocation or repudiation by a Search Party or any Non-Chapter Subsidiary of any Obligation under this agreement or the Loan Documents; or I. any other act or failure to act, or delay of any kind, by any Search Party, any Non-Chapter Subsidiary, or HFG, or any other circumstance whatsoever which might, but for the provisions of this Paragraph 12.4 constitute legal or equitable discharge of the Obligations of any Search Party hereunder. 12.5 TERM OF GUARANTIES. All guaranty Obligations under Paragraphs 12.1, 12.2 and 12.3 shall remain in full force and effect until all Obligations have been paid and performed in full. If at any time any payment or performance of an Obligation is rescinded, or must otherwise be restored or returned upon the insolvency, bankruptcy or reorganization of any Search Party or any Non-Chapter Subsidiary, all guaranty Obligations under Paragraphs 12.1, 12.2 and 12.3 with respect to such payment or performance shall be reinstated as though such payment or performance had been due but not paid or performed at such time. 12.6 GUARANTORS' WAIVERS. Each Search Party irrevocably and unconditionally waives acceptance of its guaranty under this section, and irrevocably and unconditionally waives presentment, demand, protest, and all notices, including without limitation notice of acceleration, notice of intent to accelerate, and notice of borrowings by any Search Party, as well as any requirement that at any time any action be taken by any person or entity against any Search Party, any Non-Chapter Subsidiary, or any Collateral. 13.0 EXPENSE REIMBURSEMENT AND INDEMNITY 13.1 REIMBURSEMENT OF EXPENSES. The Search Parties shall from time to time pay on demand to HFG all reasonable costs and expenses (including attorney's fees) incurred by HFG in preparing, negotiating, executing and delivering this agreement and the Loan Documents, in filing, registering recording and perfecting any security interest granted to secure any amount advanced under this agreement, in auditing, inspecting, or appraising any of the Collateral, and in appearing and participating in the Bankruptcy Proceeding in connection with the Plan Funding Commitment. FUNDING AGREEMENT 21 28 13.2 INDEMNITY. THE SEARCH PARTIES SHALL JOINTLY AND SEVERALLY INDEMNIFY HFG AND ITS OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, ATTORNEYS AND AGENTS, AND HOLD THEM HARMLESS, FROM AND AGAINST LIABILITY, LOSS AND COST OF DEFENSE UPON ALL CLAIMS THAT DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO (I) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION OR ENFORCEMENT OF THIS AGREEMENT, ANY LOAN DOCUMENT, AND ANY OTHER DOCUMENT OR INSTRUMENT EXECUTED BY ANY SEARCH PARTY UNDER OR IN CONNECTION WITH THIS AGREEMENT, (II) ANY TRANSACTION CONTEMPLATED UNDER THIS AGREEMENT, AND (III) ANY BREACH BY ANY SEARCH PARTY OF ANY REPRESENTATION, WARRANTY OR COVENANT IN THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY ANY SEARCH PARTY UNDER THIS AGREEMENT; EXCLUDING ANY CLAIM ATTRIBUTABLE TO GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE INDEMNIFIED PERSON. IT IS THE INTENTION OF ALL PARTIES THAT THE INDEMNITY OF THE PRECEDING SENTENCE SHALL EXTEND TO THE INDEMNIFIED PARTY EVEN IF THE INDEMNIFIED CLAIM IS ATTRIBUTABLE TO THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE INDEMNIFIED PARTY. 14.0 USURY 14.1 NON-USURIOUS INTENT. All parties intend to comply fully with the applicable Texas usury laws, and no party considers that this agreement calls for the receiving, charging, collecting or contracting for payment of interest in excess of the maximum amount permitted by applicable law. 14.2 CONSTRUCTION TO AVOID USURY. All parties recognize that ambiguities in legal rules and uncertainties in characterization of complex facts, particularly where, as in this case, funding is being provided in a context of high risk and financial distress, create risk of unintentional violations of usury prohibitions. All parties intend that in determining whether any provision of this agreement or any performance under it results in receiving, charging, collecting or contracting for interest in excess of the maximum amount permitted by applicable law, (i) all consideration given, paid or payable in connection with this agreement that is not designated as principal or interest shall to the fullest extent permitted by applicable law be characterized as non-interest expense, (ii) voluntary prepayments and their effects shall to the fullest extent permitted by applicable law be excluded, and (iii) all interest shall to be fullest extent permitted by applicable law be spread throughout the maximum contemplated term. IF ANY PROVISION OF THIS AGREEMENT OR ANY PERFORMANCE UNDER IT NEVERTHELESS IS DEEMED IN THE ABSENCE OF THIS SENTENCE TO RESULT IN RECEIVING, CHARGING, COLLECTING OR CONTRACTING FOR PAYMENT OF INTEREST IN EXCESS OF THE MAXIMUM AMOUNT PERMITTED BY APPLICABLE LAW, THEN THIS SENTENCE SHALL PREVAIL OVER ALL OTHER INCONSISTENT PROVISIONS OF THIS AGREEMENT AND OF NOTES I, II AND III, THE SECURITY AGREEMENTS, THE PLEDGE AGREEMENTS, AND OR OTHER LOAN DOCUMENT DELIVERED UNDER THIS AGREEMENT; AND (I) ALL REMAINING AMOUNTS PAYABLE BY ANY SEARCH PARTY SHALL FIRST BE REDUCED BY THE AMOUNT OF SUCH EXCESS, APPLIED FIRST TO UNPAID PRINCIPAL AND THEN TO UNPAID FUNDING AGREEMENT 22 29 INTEREST, AND (II) ANY REMAINING EXCESS SHALL PROMPTLY BE REIMBURSED BY HFG TO THE SEARCH PARTIES. 15.0 GENERAL PROVISIONS 15.1 AMENDMENTS AND WAIVERS. To amend this agreement or waive any provision of this agreement , all parties must sign a written amendment or waiver that identifies by section or paragraph number the provision that it purports to amend or waive. No delay in exercising any right, or noncomplying course of dealing, shall be construed to amend or waive any provisions of this agreement. 15.2 ASSIGNMENT. No Search Party may assign any of its rights under this agreement without HFG's prior express written consent. No assignment, if permitted, shall relieve any Search Party of any obligation under this agreement unless such relief is expressly provided for in HFG's consent to the assignment. The term "Search Parties" shall include any permitted assignee of any Search Party. HFG may at any time and from time to time wholly or partly assign or grant participations in any debt Obligations of any Search Party to HFG incurred under this agreement; and HFG may disclose to any potential assignee or participant any information obtained by HFG in connection with this agreement about any Search Party, any Search affiliate, and any aspect of the business of any Search Party and any Search affiliate. 15.3 NOTICES. All notices must be in writing. Notices may be given by U.S. Certified Mail, postage prepaid, addressed to the intended recipient at its address in Par. 1.2, or to such other notice address as that party designates by notice to the other party, and any notice so given shall be deemed given one business day after its deposit with the U.S. Postal Service. A business day is any day other than a Saturday, Sunday, or legal holiday in Texas. A notice given by other means shall be effective only when actually received by the addressee. 15.4 HFG RELIANCE ON DISCLOSURE STATEMENT. Notwithstanding the limitations in the Disclosure Statement, HFG may rely upon the Disclosure Statement, without independent investigation and irrespective of its subsequent approval or disapproval by the bankruptcy court in the Consolidated Proceeding, as being in all material respects a true and adequate disclosure as of the date of this agreement of the matters it expresses; and HFG shall have a claim against all Search Parties for breach of this agreement, without election of remedies and independently of HFG's rights, if any, under the Bankruptcy Code and in the Consolidated Proceeding, if HFG suffers any liability, loss, cost or expense attributable in any way to the representations and warranties of any Search Party hereunder being untrue, or to the Disclosure Statement's being in any material way untrue, misleading or inadequate. Approval of the Disclosure Statement or the Plan by the bankruptcy court in the Consolidated Proceeding, whether or not HFG appears and takes any action in the Consolidated Proceeding, shall not be deemed or construed for purposes of this agreement to be res judicata as to the truth, sufficiency or adequacy of the Disclosure Statement, or to estop HFG from raising such issues in connection with a claim under this agreement. 15.5 DUTY OF HFG'S PROFESSIONALS. All attorneys, accountants, appraisers and other professional persons retained by HFG in connection with this agreement shall have the right to act FUNDING AGREEMENT 23 30 exclusively in the interest of HFG, and shall have no duty of disclosure, duty of loyalty, duty of care, or any other duty or obligation of any kind to Search, SFC or any of their subsidiaries or affiliates. 15.6 NO FIDUCIARY RELATIONSHIP. The relationship between the Search Parties, on the one hand, and HFG on the other, is solely that of debtor and creditor, and HFG is not intended or to be construed to have any fiduciary or other special relationship with any Search Party or any of their subsidiaries or affiliates. 15.7 CONSTRUCTION. A. GOVERNING LAW. Texas law governs the effect and construction of this agreement. With respect to arbitration matters, the Federal Arbitration Act shall govern. Delaware corporate law governs corporate matters with respect to all parties incorporated in Delaware. B. BINDING AGREEMENT. This agreement binds and benefits all parties and their respective successors and permitted assigns. C. MERGER. This is the entire agreement among the parties concerning the subject matter. It merges and supersedes all former agreements, promises or representations, whether oral or written, express or implied, between any one or more of the Search Parties, on the one hand, and HFG or any of its affiliates, on the other, concerning the subject matter. No oral agreements modify or contradict any provision of this agreement. D. SURVIVAL. All representations and warranties by any Search Party in this agreement, and by any Search Party in any document, statement or certificate furnished or to be furnished in connection with this agreement, shall survive the execution and delivery of this agreement and closing. No investigation by HFG shall affect the rights of HFG to rely on such representations and warranties. Without prejudice to the survival of any other obligation of any Search Party hereunder, the Search Parties' Obligations under Section 13.0 shall survive termination of this agreement with or without full performance of all other provisions of this agreement. E. WAIVER. No waiver of a claim or default under this agreement shall be construed to be a waiver of any other claim or default. F. RESOLUTION OF AMBIGUITIES. All parties have been represented by legal counsel of their own choice in negotiation, drafting and review of this agreement. No rule of construction resolving any ambiguity against a drafting party shall apply. G. LIMITATION AND WAIVER OF REMEDIES. If any Search Party breaches this agreement, HFG shall cumulatively have all remedies available at law or in equity, and if HFG breaches this agreement, the Search Parties shall cumulatively have all remedies available at law or in equity; except that NO PARTY SHALL BE LIABLE FOR SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, AND ALL SEARCH PARTIES EXPRESSLY WAIVE AND AGREE NEVER TO SEEK ANY PUNITIVE FUNDING AGREEMENT 24 31 DAMAGES FROM HFG, OR ANY OF ITS OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, ATTORNEYS OR AGENTS ATTRIBUTABLE TO ANY CLAIM ARISING OUT OF THIS AGREEMENT, ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, OR ANY OF THE LOAN DOCUMENTS. H. CAPTIONS. Captions, titles and headings are only for convenient reference and are not to be construed in interpretation. I. SEVERABILITY. If any provision of this agreement is held to be invalid or unenforceable, that invalidity or enforceability shall not impair or invalidate the remainder of the agreement, which shall continue to be effective and enforceable as if the invalid or unenforceable provision had not been included. J. EXHIBITS. Exhibits A, B, C, D, E, F, G, H, I, J, and K are attached to this agreement and incorporated as part of this agreement. 15.8 BINDING AGREEMENT TO ARBITRATE DISPUTES. All disputes under or relating to this agreement must exclusively be resolved by binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association (the "AAA") in effect at the time the arbitration proceeding commences; except that (i) Paragraph 15.7 shall govern applicable law and construction, there shall be a panel of three arbitrators, the locale of the arbitration shall be Dallas, Texas, and the arbitrators shall provide written findings of fact and conclusions of law; and (ii) any party may seek from a court of competent jurisdiction any provisional remedy that may be necessary to protect its rights or property pending the establishment of the arbitration panel or its determination of the merits of the controversy. The arbitration award shall be final and binding on all parties, and judgment upon such arbitration award may be entered in any court having jurisdiction. A prevailing party in arbitration or litigation about this agreement shall be entitled to recover its reasonable attorneys' fees and costs. 15.9 LIMITATION OF ACTIONS. Any action upon a claim arising out of this agreement must be commenced by filing of an arbitration claim with the AAA within two years after the cause of action accrues. HALL FINANCIAL GROUP, INC. By:/s/ LARRY E. LEVEY -------------------------- Larry E. Levey Senior Vice President FUNDING AGREEMENT 25 32 SEARCH CAPITAL GROUP, INC. By:/s/ ROBERT D. IDZI -------------------------------- Robert D. Idzi, Senior Vice President SEARCH FUNDING CORP. By:/s/ ROBERT D. IDZI -------------------------------- Robert D. Idzi, Senior Vice President AUTOMOBILE CREDIT ACCEPTANCE CORP. By:/s/ ROBERT D. IDZI -------------------------------- Robert D. Idzi, Senior Vice President NEWSEARCH, INC. By:/s/ ROBERT D. IDZI -------------------------------- Robert D. Idzi, Senior Vice President AUTOMOBILE CREDIT HOLDINGS, INC. By:/s/ ROBERT D. IDZI -------------------------------- Robert D. Idzi, Senior Vice President FUNDING AGREEMENT 26 33 State of Texas County of Dallas This instrument was acknowledged before me on this 30th day of November, 1995, by Larry E. Levey, Senior Vice President of Hall Financial Group, Inc., a Delaware corporation, on behalf of said corporation. /s/ BETTY J. WALLACE ------------------------------------------ Notary Public in an for the State of Texas Name printed: NOTARY SEAL BETTY J. WALLACE ------------------------------------------ My commission expires: 2-17-97 ----------------------------- State of Texas County of Dallas This instrument was acknowledged before me on this 30th day of November, 1995, by Robert D. Idzi, Senior Vice President of Search Capital Group, Inc., a Delaware corporation, on behalf of said corporation. /s/ BETTY J. WALLACE ------------------------------------------ Notary Public in an for the State of Texas Name printed: NOTARY SEAL BETTY J. WALLACE ------------------------------------------ My commission expires: 2-17-97 ----------------------------- FUNDING AGREEMENT 27 34 STATE OF TEXAS COUNTY OF DALLAS This instrument was acknowledged before me on this 30th day of November, 1995, by Robert D. Idzi, Senior Vice President of Search Funding Corp., a Texas corporation, on behalf of said corporation. /s/ BETTY J. WALLACE ------------------------------------------ Notary Public in an for the State of Texas Name printed: NOTARY SEAL BETTY J. WALLACE ------------------------------------------ My commission expires: 2-17-97 ----------------------------- STATE OF TEXAS COUNTY OF DALLAS This instrument was acknowledged before me on this 30th day of November, 1995, by Robert D. Idzi, Senior Vice President of Automobile Credit Acceptance Corp., a Texas corporation, on behalf of said corporation. /s/ BETTY J. WALLACE ------------------------------------------ Notary Public in an for the State of Texas Name printed: NOTARY SEAL BETTY J. WALLACE ------------------------------------------ My commission expires: 2-17-97 ----------------------------- FUNDING AGREEMENT 28 35 STATE OF TEXAS COUNTY OF DALLAS This instrument was acknowledged before me on this 30th day of November, 1995, by Robert D. Idzi, Senior Vice President of Newsearch, Inc., a Delaware corporation, on behalf of said corporation. /s/ BETTY J. WALLACE ------------------------------------------ Notary Public in an for the State of Texas Name printed: NOTARY SEAL BETTY J. WALLACE ------------------------------------------ My commission expires: 2-17-97 ----------------------------- STATE OF TEXAS COUNTY OF DALLAS This instrument was acknowledged before me on this 30th day of November, 1995, by Robert D. Idzi, Senior Vice President of Automobile Credit Holdings, Inc., a Delaware corporation, on behalf of said corporation. /s/ BETTY J. WALLACE ------------------------------------------ Notary Public in an for the State of Texas Name printed: NOTARY SEAL BETTY J. WALLACE ------------------------------------------ My commission expires: 2-17-97 ----------------------------- FUNDING AGREEMENT 29 36 FUNDING AGREEMENT LIST OF EXHIBITS Exhibit A - Collateral Schedule Exhibit B - Note I Exhibit C - Note II Exhibit D - Note III Exhibit E - NewSearch Pledge Exhibit F - Search Pledge Exhibit G - ACHI Pledge Exhibit H - Search Security Agreement Exhibit I - SFC Security Agreement Exhibit J - ACAC Security Agreement Exhibit K - Warrant FUNDING AGREEMENT 30 EX-99.2 4 CONVERTIBLE PROMISSORY NOTE (NOTE I) 1 EXHIBIT 99.2 CONVERTIBLE PROMISSORY NOTE DATED NOVEMBER 30, 1995 FROM SEARCH CAPITAL GROUP, INC. AND SEARCH FUNDING CORP. PAYABLE TO THE ORDER OF HALL FINANCIAL GROUP, INC. IN THE PRINCIPAL AMOUNT OF $1,284,487.28 2 EXHIBIT 99.2 CONVERTIBLE PROMISSORY NOTE --------------------------- (NOTE I) $1,284,487.28 November 30, 1995 1. AGREEMENT TO PAY. FOR VALUE RECEIVED, SEARCH CAPITAL GROUP, INC., a Delaware corporation, and SEARCH FUNDING CORP., a Texas corporation (herein called the "BORROWERS"), promise to pay to the order of HALL FINANCIAL GROUP, INC. ("HFG"), in the manner provided herein, the principal sum of ONE MILLION TWO HUNDRED EIGHTY-FOUR THOUSAND FOUR HUNDRED EIGHTY-SEVEN AND 28/100 DOLLARS ($1,284,487.28) together with interest remaining from time to time unpaid at the rate provided for in Section 2 hereof. This Promissory Note (hereinafter the "NOTE") is given at closing under and in compliance with that certain Funding Agreement dated November 30, 1995, by and among Borrowers, HFG, Newsearch, Inc., Automobile Credit Holdings, Inc. and Automobile Credit Acceptance Corp. ("FUNDING AGREEMENT"). All terms used in this Note shall have the meanings given to them in the Funding Agreement if they are defined in the Funding Agreement and not in this Note. 2. INTEREST RATE. Outstanding principal balance hereof prior to maturity shall bear interest from the date set forth above until paid at the rate of 12% per annum (herein called the "INTEREST RATE"), in each case calculated daily on the basis of a 360-day year for each day all or any part of the principal balance hereof shall remain outstanding. 3. PAYMENTS. This Note shall be payable in monthly installments of interest only commencing on the 1st day of January, 1996 and continuing thereafter on the 1st day of each month until the Maturity Date. The Maturity Date shall be the earlier of (i) 90 days after the execution of this Note unless extended as provided in Paragraph 5 (in which event CONVERTIBLE PROMISSORY NOTE (NOTE I) - PAGE 1 3 it shall be 150 days after execution of this Note) or (ii) the Effective Date of the Plan. Principal shall be paid in weekly installments each Monday commencing on the first Monday after the execution of this Note and shall be in an amount equal to the proceeds collected during the prior week on the receivables identified in the Funding Agreement as having been pledged to secure the GECC Loan (regardless of whether such receivables are subsequently released by GECC from its collateral). To the extent that principal payments are made to General Electric Credit Corporation ("GECC") under the GECC Loan Agreement such principal payments shall be a reduction of the weekly principal payments required under this Note. On the Maturity Date, the unpaid principal balance hereof and all accrued but unpaid interest hereon shall become due and payable. After an Event of Default, payments shall be applied to principal or interest as determined by the holder of this Note in its sole discretion. 4. METHOD AND PLACE OF PAYMENT. Payments upon this Note shall be made in lawful money of the United States of America which shall be legal tender for public and private debt at the time of payment, and shall be made at such place as the holder of this Note may from time to time in writing appoint. 5. SECURITY. This Note is secured by a security interest in the Collateral as described in and evidenced by the Funding Agreement, the Security Agreements, and the Pledge Agreements. Payment of this Note is guaranteed by the guaranties set forth in Section 12 of the Funding Agreement. This Note is enforceable by the holder without first enforcing the guaranties or the security interests and whether or not the security interests and guaranties exist or are enforceable. CONVERTIBLE PROMISSORY NOTE (NOTE I) - PAGE 2 4 6. EXTENSION OF MATURITY. Borrowers may extend the Maturity Date of this Note for a period of sixty days upon written notice to the holder of this Note prior to the initial Maturity Date. In the event of such extension, the interest rate as to the then principal balance shall be increased to fourteen percent (14%) per annum. Borrowers may extend the Maturity Date of this Note even if no principal has been advanced under this Note. 7. DEFAULT. The outstanding principal balance of this Note together with accrued and unpaid interest thereon, shall, at the option of the holder of this Note and without demand, notice or legal process of any kind become at once due and payable at the place last designated by holder as the place for payment hereof, upon the occurrence of an Event of Default. For determination of an Event of Default and the rights of the holder upon the occurence of an Event of Default, this Note refers to and incorporates by reference the applicable provisions of the Funding Agreement, as if fully set forth in this Note. 8. PREPAYMENT. This Note may not be prepaid in part or in full at any time except as provided in Paragraph 3. Partial prepayments shall be applied to principal or accrued but unpaid interest as determined by holder in its sole reasonable discretion. Partial prepayments shall not alter or reduce the weekly principal payment obligation under paragraph 3. 9. CONVERSION. The outstanding balance of this Note is convertible at the option of the holder at any time after the entry of an order confirming the Plan ("Confirmation") or on or after the Maturity Date in the event Confirmation has not occurred prior to the Maturity Date. The outstanding balance of this Note will be convertible into fully paid and nonassessable shares of the common stock of Search at the following rates: CONVERTIBLE PROMISSORY NOTE (NOTE I) - PAGE 3 5 (a) in the first 30 trading days after Confirmation, the price per share will be the lesser of (i) 65% of the Implied Common Stock Price (as hereinafter defined) per Alex. Brown calculated as of Confirmation or (ii) 65% of $1.43 per share; (b) following the first 30 trading days after Confirmation, the conversion price will be at a price per share equal to 60% of the average bid price as determined by Alex. Brown for the previous 30 trading days; (c) On or after the Maturity Date in the event Confirmation has not occurred prior to the Maturity Date, the conversion price will be at a price per share equal to 60% of the average bid price as determined by Alex. Brown for the previous 30 trading days. The Implied Common Stock Price shall be calculated after Confirmation but as of the confirmation date in accordance with the formula used to determine the number of shares to be issued to noteholders under the Plan. A holder desiring to convert the outstanding balance of this Note into capital stock must give written notice to Search and, simultaneously, surrender this Note in exchange for the number of shares of stock into which the Note is convertible. This conversion option is limited to an amount of shares equal to 2,500,000 shares of Search less the shares required to satisfy the conversion or stock prepayment feature of Note III. 10. NO USURY. It is the intent of Borrowers and holder to comply with the laws of the State of Texas with regard to the rate of interest charged hereunder and, accordingly, notwithstanding any provision to the contrary in the Note, the Security Agreement or any of the Loan Documents, no such provision in any such instrument, including without limitation any provision of this Note providing for payment of interest or other charges and CONVERTIBLE PROMISSORY NOTE (NOTE I) - PAGE 4 6 any provision of the loan documents providing for the payment of interest, fees, costs or other charges, shall require the payment or permit the collection of any amount (herein called the "EXCESS INTEREST") in excess of the maximum amount of interest permitted by law to be contracted for, charged or collected for the use, detention, or forbearance in the collection, of all or any portion of the indebtedness evidenced by this Note; provided that if Excess Interest is provided for, or is adjudicated as being provided for, in this Note, the Security Agreement or any of the loan documents, or if Excess Interest is otherwise charged or collected, then in such event: (a) The provisions of this Section shall control and govern; (b) Borrowers shall not be obligated to pay any Excess Interest; (c) Any Excess Interest that holder may have received hereunder shall, at the option of holder, be (i) applied as a credit against the then outstanding principal balance due under this Note, or accrued and unpaid interest thereof, not to exceed the maximum amount permitted by law, or both, (ii) refunded to the payor thereof, or (iii) any combination of the foregoing; (d) The applicable interest rate or rates shall be automatically subject to reduction to the maximum lawful rate allowed to be contracted for in writing under the applicable usury laws of the State of Texas as of the date of disbursement of the indebtedness evidenced hereby; and this Note and all other loan documents and any writing otherwise constituting a charge of Excess Interest shall be deemed to have been, and shall be, reformed and modified to reflect such reduction in such interest rate or rates; and CONVERTIBLE PROMISSORY NOTE (NOTE I) - PAGE 5 7 (e) Neither Borrowers nor any other person shall have any action or remedy against holder for any damages whatsoever or any defense to enforcement of any of the loan documents arising out of the payment or collection of any Excess Interest. 11. COSTS OF ENFORCEMENT. In the event that this Note is placed in the hands of an attorney-at-law for collection after maturity, or upon default specified in Section 7 hereof, or to enforce any of the rights, requirements or remedies contained herein or in the other loan documents, then and in any such event the Borrowers hereby agree to pay within ten (10) days after demand all reasonable costs of collecting or attempting to collect this Note, or protecting or enforcing such rights, or evaluating, prosecuting or defending any such proceedings, including, without limitation, reasonable attorneys' fees (whether or not suit is brought), in addition to all principal, interest and other amounts payable hereunder; all of which shall be secured by the Loan Documents. 12. TIME. Time is of the essence in the performance of this Note and each of the provisions hereof and of the Loan Documents. 13. NOTICES. All notices required or permitted to be given hereunder to Borrowers shall be given in the manner and to the place provided in the Funding Agreement for notices to Borrowers. 14. WAIVER. Borrowers and any and all others who may become liable for all or part of the obligations of Borrowers under this Note or any of the Loan Documents (all of the foregoing being collectively "OBLIGOR") agree to be jointly and severally bound hereby and jointly and severally, and to the fullest extent permitted by law, waive any and all demand, presentment for payment, notice of non-payment, protest and notice of protest, CONVERTIBLE PROMISSORY NOTE (NOTE I) - PAGE 6 8 notice of dishonor, notice of intent to accelerate, notice of acceleration, and all lack of diligence and delays in the enforcement of the payment hereof. 15. HOLDER'S ACTIONS. The remedies of the holder of this Note as provided herein or in any of the Loan Documents shall be cumulative and concurrent, and may be pursued singularly, successively or together, at the sole discretion of the holder, and may be exercised as often as occasion therefor shall arise and in connection therewith: (a) Failure of the holder, for any period of time or on more than one occasion, to exercise its option to accelerate the Maturity Date of this Note shall not constitute a waiver of the right to exercise the same at any time thereafter or in the event of any subsequent default; (b) No act or omission or commission of the holder, including specifically any failure to exercise any right, remedy or recourse, shall be deemed to be a waiver of or release of the same and any such waiver or release may be effected only through a written document executed by the holder and then only to the extent specifically recited therein; (c) A waiver or release with reference to any event shall not be construed as a waiver of release of any subsequent event, similar or dissimilar, or as a bar to any subsequent exercise of the holder's rights or remedies hereunder; and (d) Except as otherwise specifically required herein, no notice to Borrower or any other person of the exercise of any right or remedy granted to the holder by this Note shall be required. 16. SEVERABILITY. The unenforceability or invalidity of any provision or provisions hereof shall not render any other provision or provisions hereof unenforceable or invalid. CONVERTIBLE PROMISSORY NOTE (NOTE I) - PAGE 7 9 17. CAPTIONS. The captions to the Sections of this Note are for convenience only and shall not be deemed part of the text of the respective Sections and shall not vary, by implication or otherwise, any of the provisions of this Note. 18. GOVERNING LAW. This Note shall be governed by the laws of the State of Texas and venue shall be in Dallas County, Texas. IN WITNESS WHEREOF, the undersigned has executed this Note effective as of the day, month and year set forth above. SEARCH CAPITAL GROUP, INC. By: /s/ ROBERT D. IDZI ------------------------------------ Printed Name: Robert D. Idzi -------------------------- Its: SVP & CFO ----------------------------------- SEARCH FUNDING CORP. By: ROBERT D. IDZI ------------------------------------ Printed Name: Robert D. Idzi -------------------------- Its: SVP & CFO ----------------------------------- CONVERTIBLE PROMISSORY NOTE (NOTE I) - PAGE 8 EX-99.3 5 PROMISSORY NOTE (NOTE II) 1 EXHIBIT 99.3 PROMISSORY NOTE DATED NOVEMBER 30, 1995 FROM SEARCH CAPITAL GROUP, INC. AND SEARCH FUNDING CORP. PAYABLE TO THE ORDER OF HALL FINANCIAL GROUP, INC. IN THE PRINCIPAL AMOUNT OF $715,512.72. 2 EXHIBIT 99.3 PROMISSORY NOTE (NOTE II) $715,512.72 November 30, 1995 1. AGREEMENT TO PAY. FOR VALUE RECEIVED, SEARCH CAPITAL GROUP, INC., a Delaware corporation, and SEARCH FUNDING CORP., a Texas corporation (herein called the "BORROWERS"), promises to pay to the order of HALL FINANCIAL GROUP, INC. ("HFG"), in the manner provided herein, the principal sum of SEVEN HUNDRED FIFTEEN THOUSAND FIVE HUNDRED TWELVE AND 72/100 DOLLARS ($715,512.72), or such other amount as is actually advanced by HFG under this Note to Borrowers in accordance with the terms of the Funding Agreement (as hereinafter defined), together with interest remaining from time to time unpaid at the rate provided for in Section 2 hereof. This Promissory Note (hereinafter the "NOTE") is given at closing under and in compliance with that certain Funding Agreement dated November 30, 1995, by and among Borrowers, HFG, Newsearch, Inc., Automobile Credit Holdings, Inc., and Automobile Credit Acceptance Corp. ("Funding Agreement"). All terms used in this Note shall have the meanings given to them in the Funding Agreement if they are defined in the Funding Agreement and not in this Note. 2. INTEREST RATE. Outstanding principal balance hereof prior to maturity shall bear interest from the date of advance until paid at the rate of 12% per annum (herein called the "INTEREST RATE"), in each case calculated daily on the basis of a 360-day year for each day all or any part of the principal balance hereof shall remain outstanding. 3. PAYMENTS. This Note shall be payable in monthly installments of interest only commencing on the 1st day of the month following the advance of principal under this Note, PROMISSORY NOTE (NOTE II) - Page 1 3 and continuing thereafter on the 1st day of each month until the Maturity Date (as hereinafter defined). The Maturity Date shall be the earlier of (i) 90 days after the execution of this Note unless extended as provided in Paragraph 5 (in which event it shall be 150 days after execution of this Note) or (ii) the Effective Date of the Plan ("Maturity Date"). To the extent principal is advanced, principal shall be paid in weekly installments each Monday commencing on the first Monday following the advance of principal and shall be in an amount equal to the proceeds collected during the prior week on the receivables identified in the Funding Agreement as having been pledged to secure the GECC Loan (regardless of whether such receivables are subsequently released by GECC from its collateral). To the extent that principal payments are made on Note I such principal payments shall be a reduction of the weekly principal payments required under this Note. On the Maturity Date, the unpaid principal balance hereof and all accrued but unpaid interest hereon shall become due and payable. After an Event of Default, payments shall be applied to principal or interest as determined by the holder of this Note in its sole discretion. 4. METHOD AND PLACE OF PAYMENT. Payments upon this Note shall be made in lawful money of the United States of America which shall be legal tender for public and private debt at the time of payment, and shall be made at such place as the holder of this Note may from time to time in writing appoint. 5. SECURITY. This Note is secured by a security interest in the Collateral as described in and evidenced by the Funding Agreement, the Security Agreements, and the Pledge Agreements. Payment of this Note is guaranteed by the guaranties set forth in Section 12 of the Funding Agreement. This Note is enforceable by the holder without first PROMISSORY NOTE (NOTE II) - Page 2 4 enforcing the guaranties or the security interests and whether or not the security interests and guaranties exist or are enforceable. 6. EXTENSION OF MATURITY. Borrowers may extend the Maturity Date of this Note for a period of sixty days upon written notice to the holder of this Note prior to the initial Maturity Date. In the event of such extension, the interest rate as to the then principal balance shall be increased to fourteen percent (14%) per annum. Borrowers may extend the Maturity Date of this Note even if no principal has been advanced under this Note. 7. DEFAULT AND ACCELERATION. The outstanding principal balance of this Note together with accrued and unpaid interest thereon, shall, at the option of the holder of this Note and without demand, notice or legal process of any kind become at once due and payable at the place last designated by holder as the place for payment hereof, upon the occurrence of an Event of Default. For determination of an Event of Default and the rights of the holder upon the occurence of an Event of Default, this Note refers to and incorporates by reference the applicable provisions of the Funding Agreement, as if fully set forth in this Note. 8. PREPAYMENT. This Note may be prepaid in part or in full at any time without penalty. Partial prepayments shall be applied to principal or accrued but unpaid interest as determined by holder in its sole reasonable discretion. Partial prepayments shall not alter or reduce the weekly principal payment obligation under paragraph 3. 9. NO USURY. It is the intent of Borrowers and holder to comply with the laws of the State of Texas with regard to the rate of interest charged hereunder and, accordingly, notwithstanding any provision to the contrary in the Note, the Security Agreement or any of the Loan Documents, no such provision in any such instrument, including without PROMISSORY NOTE (NOTE II) - Page 3 5 limitation any provision of this Note providing for payment of interest or other charges and any provision of the loan documents providing for the payment of interest, fees, costs or other charges, shall require the payment or permit the collection of any amount (herein called the "EXCESS INTEREST") in excess of the maximum amount of interest permitted by law to be contracted for, charged or collected for the use, detention, or forbearance in the collection, of all or any portion of the indebtedness evidenced by this Note; provided that if Excess Interest is provided for, or is adjudicated as being provided for, in this Note, the Security Agreement or any of the loan documents, or if Excess Interest is otherwise charged or collected, then in such event: (a) The provisions of this Section shall control and govern; (b) Borrowers shall not be obligated to pay any Excess Interest; (c) Any Excess Interest that holder may have received hereunder shall, at the option of holder, be (i) applied as a credit against the then outstanding principal balance due under this Note, or accrued and unpaid interest thereof, not to exceed the maximum amount permitted by law, or both, (ii) refunded to the payor thereof, or (iii) any combination of the foregoing; (d) The applicable interest rate or rates shall be automatically subject to reduction to the maximum lawful rate allowed to be contracted for in writing under the applicable usury laws of the State of Texas as of the date of disbursement of the indebtedness evidenced hereby; and this Note and all other loan documents and any writing otherwise constituting a charge of Excess Interest shall be deemed to have been, and shall be, reformed and modified to reflect such reduction in such interest rate or rates; and PROMISSORY NOTE (NOTE II) - Page 4 6 (e) Neither Borrowers nor any other person shall have any action or remedy against holder for any damages whatsoever or any defense to enforcement of any of the loan documents arising out of the payment or collection of any Excess Interest. 10. COSTS OF ENFORCEMENT. In the event that this Note is placed in the hands of an attorney-at-law for collection after maturity, or upon default specified in Section 7 hereof, or to enforce any of the rights, requirements or remedies contained herein or in the other loan documents, then and in any such event the Borrowers hereby agree to pay within ten (10) days after demand all reasonable costs of collecting or attempting to collect this Note, or protecting or enforcing such rights, or evaluating, prosecuting or defending any such proceedings, including, without limitation, reasonable attorneys' fees (whether or not suit is brought), in addition to all principal, interest and other amounts payable hereunder; all of which shall be secured by the Loan Documents. 11. TIME. Time is of the essence in the performance of this Note and each of the provisions hereof and of the Loan Documents. 12. NOTICES. All notices required or permitted to be given hereunder to Borrowers shall be given in the manner and to the place provided in the Funding Agreement for notices to Borrowers. 13. WAIVER. Borrowers and any and all others who may become liable for all or part of the obligations of Borrowers under this Note or any of the Loan Documents (all of the foregoing being collectively "OBLIGOR") agree to be jointly and severally bound hereby and jointly and severally, and to the fullest extent permitted by law, waive any and all demand, presentment for payment, notice of non-payment, protest and notice of protest, PROMISSORY NOTE (NOTE II) - Page 5 7 notice of dishonor, notice of intent to accelerate, notice of acceleration, and all lack of diligence and delays in the enforcement of the payment hereof. 14. HOLDER'S ACTIONS. The remedies of the holder of this Note as provided herein or in any of the Loan Documents shall be cumulative and concurrent, and may be pursued singularly, successively or together, at the sole discretion of the holder, and may be exercised as often as occasion therefor shall arise and in connection therewith: (a) Failure of the holder, for any period of time or on more than one occasion, to exercise its option to accelerate the Maturity Date of this Note shall not constitute a waiver of the right to exercise the same at any time thereafter or in the event of any subsequent default; (b) No act or omission or commission of the holder, including specifically any failure to exercise any right, remedy or recourse, shall be deemed to be a waiver of or release of the same and any such waiver or release may be effected only through a written document executed by the holder and then only to the extent specifically recited therein; (c) A waiver or release with reference to any event shall not be construed as a waiver of release of any subsequent event, similar or dissimilar, or as a bar to any subsequent exercise of the holder's rights or remedies hereunder; and (d) Except as otherwise specifically required herein, no notice to Borrower or any other person of the exercise of any right or remedy granted to the holder by this Note shall be required. 15. SEVERABILITY. The unenforceability or invalidity of any provision or provisions hereof shall not render any other provision or provisions hereof unenforceable or invalid. PROMISSORY NOTE (NOTE II) - Page 6 8 16. CAPTIONS. The captions to the Sections of this Note are for convenience only and shall not be deemed part of the text of the respective Sections and shall not vary, by implication or otherwise, any of the provisions of this Note. 17. GOVERNING LAW. This Note shall be governed by the laws of the State of Texas and venue shall be in Dallas County, Texas. IN WITNESS WHEREOF, the undersigned has executed this Note effective as of the day, month and year set forth above. SEARCH CAPITAL GROUP, INC. By: /s/ ROBERT D. IDZI --------------------------------- Printed Name: Robert D. Idzi ----------------------- Its: SVP & CFO -------------------------------- SEARCH FUNDING CORP. By: /s/ ROBERT D. IDZI --------------------------------- Printed Name: Robert D. Idzi ----------------------- Its: SVP & CFO -------------------------------- PROMISSORY NOTE (NOTE II) - Page 7 EX-99.4 6 CONVERTIBLE NOTE (NOTE III) 1 EXHIBIT 99.4 CONVERTIBLE NOTE DATED NOVEMBER 30, 1995 FROM SEARCH CAPITAL GROUP, INC. AND SEARCH FUNDING CORP. PAYABLE TO THE ORDER OF HALL FINANCIAL GROUP, INC. IN THE PRINCIPAL AMOUNT OF $1,000,000.00. 2 EXHIBIT 99.4 CONVERTIBLE NOTE (NOTE III) $1,000,000 November 30, 1995 1. AGREEMENT TO PAY. FOR VALUE RECEIVED, SEARCH CAPITAL GROUP, INC., a Delaware corporation, and SEARCH FUNDING CORP., a Texas corporation (herein called the "BORROWERS"), promise to pay to the order of HALL FINANCIAL GROUP, INC. ("HFG"), in the manner provided herein, the principal sum of ONE MILLION AND 00/100THS DOLLARS ($1,000,000), or such other amount as is actually advanced by HFG to Borrowers in accordance with the terms of the Funding Agreement (as hereinafter defined), together with interest remaining from time to time unpaid at the rate provided for in Section 2 hereof. This Note shall be funded in two parts: Part I, in the amount of $500,000 shall be funded on the date of execution of this Note; and Part II, in the amount of $500,000 will be funded not later than ten days after the entry of an order approving the Disclosure Statement for the Plan. This Convertible Note (hereinafter the "NOTE") is given at closing under and in compliance with that certain Funding Agreement dated November 30, 1995, by and among Borrowers, HFG, Newsearch, Inc., Automobile Credit Holdings, Inc., and Automobile Credit Acceptance Corp. ("Funding Agreement"). All terms used in this Note shall have the meanings given to them in the Funding Agreement if they are defined in the Funding Agreement and not in this Note. 2. INTEREST RATE. Outstanding principal balance hereof prior to maturity shall bear interest from the date set forth above until paid at the rate of 6% per annum (herein called the "INTEREST RATE"), in each case calculated daily on the basis of a 360-day year for CONVERTIBLE NOTE (NOTE III) - PAGE 1 3 each day all or any part of the principal balance hereof shall remain outstanding. In the event the holder elects to convert this Note to stock or this Note is paid in stock, all accrued and unpaid interest shall be waived. 3. PAYMENTS. This Note shall be payable on the 29th day of November, 1996. Payments shall be applied to principal or interest as determined by the holder of this Note in its sole discretion. 4. METHOD AND PLACE OF PAYMENT. Payments upon this Note shall be made in lawful money of the United States of America which shall be legal tender for public and private debt at the time of payment, and shall be made at such place as the holder of this Note may from time to time in writing appoint. 5. SECURITY. This Note is secured by a security interest in the Collateral as described in and evidenced by the Funding Agreement, the Security Agreements, and the Pledge Agreements. Payment of this Note is guaranteed by the guaranties set forth in Section 12 of the Funding Agreement. This Note is enforceable by the holder without first enforcing the the guaranties or the security interests and whether or not the security interests and guaranties exist or are enforceable. 6. DEFAULT AND ACCELERATION. The outstanding principal balance of this Note, together with accrued and unpaid interest thereon, shall, at the option of the holder of this Note and without demand, notice or legal process of any kind become at once due and payable at the place last designated by holder as the place for payment hereof, upon the occurrence of an Event of Default. For determination of an Event of Default and the rights of the holder upon the occurence of an Event of Default, this Note refers to and CONVERTIBLE NOTE (NOTE III) - PAGE 2 4 incorporates by reference the applicable provisions of the Funding Agreement, as if fully set forth in this Note. 7. PREPAYMENT. This Note may not be prepaid in part or in full at any time except as provided herein. Borrowers may prepay this Note beginning on the 31st trading day after Confirmation (as hereinafter defined), with shares of the common stock of Search at a price per share equal to 60% of the average bid price for the prior 30 trading days. In the event the Borrowers elect to prepay this Note with stock, all accrued and unpaid interest shall be waived. The average bid price will be determined by Alex. Brown & Sons ("Alex. Brown"). 8. CONVERSION. This Note is convertible at the option of the holder at any time after the entry of an order confirming the Plan ("Confirmation") or after the expiration of 150 days after the execution of this Note in the event Confirmation has not occurred during such time. The principal of this Note will be convertible into fully paid and nonassessable shares of the common stock of Search at the following rates: (a) in the first 30 trading days after Confirmation, the price per share will be the lesser of (i) 65% of the Implied Common Stock Price (as hereinafter defined) per Alex. Brown calculated as of Confirmation or (ii) 65% of $1.43 per share; (b) following the first 30 trading days after Confirmation, the conversion price will be at a price per share equal to 60% of the average bid price as determined by Alex. Brown for the previous 30 trading days; (c) following the expiration of 150 days after execution of this Note and provided that Confirmation has not occurred during such time, the conversion price CONVERTIBLE NOTE (NOTE III) - PAGE 3 5 will be at a price per share equal to 60% of the average bid price as determined by Alex. Brown for the previous 30 trading days. The Implied Common Stock Price shall be calculated after Confirmation but as of the confirmation date in accordance with the formula used to determine the number of shares to be issued to noteholders under the Plan. A holder desiring to convert the outstanding balance of this Note into capital stock must give written notice to Search and, simultaneously, surrender this Note in exchange for the number of shares of stock into which the Note is convertible. The shares shall be restricted from resale for a period of twelve months except that 25,000 shares may be resold per month on a cumulative basis during such twelve month period. 9. NO USURY. It is the intent of Borrowers and holder to comply with the laws of the State of Texas with regard to the rate of interest charged hereunder and, accordingly, notwithstanding any provision to the contrary in the Note, the Security Agreement or any of the Loan Documents, no such provision in any such instrument, including without limitation any provision of this Note providing for payment of interest or other charges and any provision of the loan documents providing for the payment of interest, fees, costs or other charges, shall require the payment or permit the collection of any amount (herein called the "EXCESS INTEREST") in excess of the maximum amount of interest permitted by law to be contracted for, charged or collected for the use, detention, or forbearance in the collection, of all or any portion of the indebtedness evidenced by this Note; provided that if Excess Interest is provided for, or is adjudicated as being provided for, in this Note, the CONVERTIBLE NOTE (NOTE III) - PAGE 4 6 Security Agreement or any of the loan documents, or if Excess Interest is otherwise charged or collected, then in such event: (a) The provisions of this Section shall control and govern; (b) Borrowers shall not be obligated to pay any Excess Interest; (c) Any Excess Interest that holder may have received hereunder shall, at the option of holder, be (i) applied as a credit against the then outstanding principal balance due under this Note, or accrued and unpaid interest thereof, not to exceed the maximum amount permitted by law, or both, (ii) refunded to the payor thereof, or (iii) any combination of the foregoing; (d) The applicable interest rate or rates shall be automatically subject to reduction to the maximum lawful rate allowed to be contracted for in writing under the applicable usury laws of the State of Texas as of the date of disbursement of the indebtedness evidenced hereby; and this Note and all other loan documents and any writing otherwise constituting a charge of Excess Interest shall be deemed to have been, and shall be, reformed and modified to reflect such reduction in such interest rate or rates; and (e) Neither Borrowers nor any other person shall have any action or remedy against holder for any damages whatsoever or any defense to enforcement of any of the loan documents arising out of the payment or collection of any Excess Interest. 10. COSTS OF ENFORCEMENT. In the event that this Note is placed in the hands of an attorney-at-law for collection after maturity, or upon default specified in Section 6 hereof, CONVERTIBLE NOTE (NOTE III) - PAGE 5 7 or to enforce any of the rights, requirements or remedies contained herein or in the other loan documents, then and in any such event the Borrowers hereby agree to pay within ten (10) days after demand all reasonable costs of collecting or attempting to collect this Note, or protecting or enforcing such rights, or evaluating, prosecuting or defending any such proceedings, including, without limitation, reasonable attorneys' fees (whether or not suit is brought), in addition to all principal, interest and other amounts payable hereunder; all of which shall be secured by the Loan Documents. 11. TIME. Time is of the essence in the performance of this Note and each of the provisions hereof and of the Loan Documents. 12. NOTICES. All notices required or permitted to be given hereunder to Borrowers shall be given in the manner and to the place provided in the Funding Agreement for notices to Borrowers. 13. WAIVER. Borrowers and any and all others who may become liable for all or part of the obligations of Borrowers under this Note or any of the Loan Documents (all of the foregoing being collectively "OBLIGOR") agree to be jointly and severally bound hereby and jointly and severally, and to the fullest extent permitted by law, waive any and all demand, presentment for payment, notice of non-payment, protest and notice of protest, notice of dishonor, notice of intent to accelerate, notice of acceleration, and all lack of diligence and delays in the enforcement of the payment hereof. 14. HOLDER'S ACTIONS. The remedies of the holder of this Note as provided herein or in any of the Loan Documents shall be cumulative and concurrent, and may be pursued CONVERTIBLE NOTE (NOTE III) - PAGE 6 8 singularly, successively or together, at the sole discretion of the holder, and may be exercised as often as occasion therefor shall arise and in connection therewith: (a) Failure of the holder, for any period of time or on more than one occasion, to exercise its option to accelerate the Maturity Date of this Note shall not constitute a waiver of the right to exercise the same at any time thereafter or in the event of any subsequent default; (b) No act or omission or commission of the holder, including specifically any failure to exercise any right, remedy or recourse, shall be deemed to be a waiver of or release of the same and any such waiver or release may be effected only through a written document executed by the holder and then only to the extent specifically recited therein; (c) A waiver or release with reference to any event shall not be construed as a waiver of release of any subsequent event, similar or dissimilar, or as a bar to any subsequent exercise of the holder's rights or remedies hereunder; and (d) Except as otherwise specifically required herein, no notice to Borrower or any other person of the exercise of any right or remedy granted to the holder by this Note shall be required. 15. SEVERABILITY. The unenforceability or invalidity of any provision or provisions hereof shall not render any other provision or provisions hereof unenforceable or invalid. 16. CAPTIONS. The captions to the Sections of this Note are for convenience only and shall not be deemed part of the text of the respective Sections and shall not vary, by implication or otherwise, any of the provisions of this Note. CONVERTIBLE NOTE (NOTE III) - PAGE 7 9 17. GOVERNING LAW. This Note shall be governed by the laws of the State of Texas and venue shall be in Dallas County, Texas. IN WITNESS WHEREOF, the undersigned has executed this Note effective as of the day, month and year set forth above. SEARCH CAPITAL GROUP, INC. By: /s/ ROBERT D. IDZI ---------------------------- Printed Name: Robert D. Idzi ------------------ Its: SVP AND CFO --------------------------- SEARCH FUNDING CORP. By: /s/ ROBERT D. IDZI ---------------------------- Printed Name: Robert D. Idzi ------------------ Its: SVP AND CFO --------------------------- CONVERTIBLE NOTE (NOTE III) - PAGE 8 EX-99.5 7 NEWSEARCH PLEDGE AGREEMENT 1 EXHIBIT 99.5 NEWSEARCH PLEDGE AGREEMENT DATED AS OF NOVEMBER 30, 1995 BETWEEN NEWSEARCH, INC. AND HALL FINANCIAL GROUP, INC. 2 EXHIBIT 99.5 NEWSEARCH PLEDGE AGREEMENT This PLEDGE AGREEMENT (the "AGREEMENT") is made and entered into as of the 30th day of November, 1995, by and between NEWSEARCH, INC., a Delaware corporation ("PLEDGOR") and HALL FINANCIAL GROUP, INC., a Delaware corporation ("SECURED PARTY"). W I T N E S S E T H: 1. Pledgor is the owner of shares of the issued and outstanding capital stock of Search Capital Group, Inc., a Delaware corporation ("SEARCH"). 2. Search and Search Funding Corp. ("SFC"), a Texas corporation, are affiliates of Pledgor in that both SFC and Pledgor are wholly owned subsidiaries of Search. 3. Concurrently herewith, Search and 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, Pledgor, Search, SFC, Automobile Credit Acceptance Corp. ("ACAC"), and Automobile Credit Holdings, Inc. ("ACHI"). 4. In order to induce Secured Party to provide financial accommodations to Pledgor, Search, ACAC, ACHI, and SFC ("SEARCH PARTIES") 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, this Agreement, the Funding Agreement 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"), Pledgor has agreed to grant to Secured Party a security interest in the property hereinafter described. For good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE I COLLATERAL AND SECURED INDEBTEDNESS 1.1 GRANT OF SECURITY INTEREST. Pledgor hereby assigns, pledges and grants a security interest in the following property (herein, collectively, called the "COLLATERAL") to Secured Party: NEWSEARCH PLEDGE AGREEMENT - PAGE 1 3 (a) two million two hundred fifty thousand (2,250,000) shares of the capital stock of Search (the "PLEDGED STOCK"), and being more specifically described on Exhibit "A" attached hereto and incorporated herein by reference for all purposes, and all certificates representing the Pledged Stock; provided that 250,000 shares of the Pledged Stock shall initially be represented by a 400,000 share certificate until the Secured Party using reasonable efforts can obtain the issuance of two new share certificates in the amounts of 250,000 and 150,000 at which time the 250,000 share certificate shall continue to be Pledged Stock and the 150,000 share certificate shall be returned to Pledgor and at such time Exhibit A shall be amended to reflect such substitution; (b) with respect to the Pledged Stock, all (i) dividends declared and payable in cash, (ii) dividends declared and payable in the form of stock, securities or other property, (iii) dividends or distributions payable upon dissolution, partial or total liquidation, or in connection with a reduction of capital, capital surplus or paid-in surplus, (iv) all other distributions, whether of cash, stock other securities or other property issued with respect to or in lieu of or exchanged for the stock included in the Collateral (whether through stock split, spin-off, reclassification, merger, consolidation, acquisition, sale of assets, combination of shares, subdivision, redemption, payment of principal or otherwise), all of which Secured Party shall be entitled to receive and retain as part of the Collateral; and (c) all proceeds (cash and noncash) arising out of the sale, exchange, collection, enforcement or other disposition of all or any portion of the Pledged Stock, including, without limitation, proceeds in the form of accounts, chattel paper, instruments, documents, consumer goods, inventory and equipment. Coverage of proceeds, however, does not authorize sale, exchange or other disposition of any Collateral without the prior written consent of Secured Party, which consent shall not be unreasonably withheld. 1.2 SECURED OBLIGATION. This Agreement and the security interest herein created shall secure full and punctual payment and performance of the following indebtedness, duties and obligations (hereinafter, collectively, called the "SECURED OBLIGATION"): (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 NEWSEARCH PLEDGE AGREEMENT - PAGE 2 4 Parties, or otherwise owing by the Search Parties to Secured Party pursuant to the Loan Documents. 1.3 PARTIAL RELEASE. Secured Party agrees to release from the Pledged Stock the amount of shares necessary to satisfy the respective conversion rights under Note I and conversion and prepayment rights under Note III at such time as the holder of each respective note elects to convert such note to stock of Search or the Borrowers under Note III elect to pay Note III with stock of Search as provided in Note III. ARTICLE II REPRESENTATIONS AND WARRANTIES 2.1 REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and warrants to the Secured Party as follows: (a) Pledgor is the owner and holder of the Pledged Stock and has good and marketable title to the Pledged Stock free and clear of any lien, security interest, charge or encumbrance, except for the security interest created by this Agreement, or otherwise in favor of the Secured Party. The Pledged Stock is duly authorized, validly issued, fully paid and nonassessable. (b) Pledgor has the lawful right, power and authority to grant a security interest in the Collateral. This Agreement together with all filings and other actions necessary or desirable to perfect and protect such security interest, including, without limitation, the delivery of all stock certificates representing the Pledged Stock, when duly taken, create a valid and perfected first priority security interest in the Collateral securing the payment and performance of the Secured Obligation. (c) No authorization, approval or other action by, and no notice to or filing with Pledgor or any governmental authority or regulatory body, is required either (i) for the grant by Pledgor of the security interest herein granted or for the execution, delivery or performance of this Agreement by Pledgor, or (ii) for the perfection or exercise by Secured Party of its rights and remedies hereunder. The Pledged Stock is subject to no restrictions or limitations on sale, assignment or transfer other than restrictions generally applicable to securities arising under State and Federal securities laws. (d) The delivery at any time by Pledgor to Secured Party of any Collateral shall constitute a representation and warranty by Pledgor under this Agreement that, with respect to such Collateral: (i) Pledgor is the record and beneficial owner thereof, and (ii) the matters heretofore warranted in clauses (a) through (c) of this Section 2.1 are true and correct. NEWSEARCH PLEDGE AGREEMENT - PAGE 3 5 ARTICLE III CERTAIN RIGHTS OF SECURED PARTY 3.1 APPOINTMENT OF AGENTS; REGISTRATION IN NOMINEE NAME. Secured Party shall have physical possession of the certificates representing or evidencing the Collateral which, after the occurrence of an Event of Default, may be held (in the discretion of Secured Party) in the name of Pledgor, endorsed or assigned in blank or in favor of Secured Party or in the name of Secured Party or any nominee or nominees of Secured Party or an agent appointed by Secured Party. In addition to all other rights possessed by Secured Party, Secured Party, at its option, may from time to time at its sole discretion, take any of the following actions: (a) extend or renew the Secured Obligation for one or more periods (whether shorter or longer than the original period) and grant releases, compromises or indulgences with respect to the Secured Obligation or any extension or renewal thereof or any security therefor or to any obligor hereunder or thereunder; and (b) exchange certificates or instruments representing or evidencing Collateral for certificates or instruments of smaller or larger denominations for any purpose consistent with its performance of this Agreement. 3.2 VOTING RIGHTS; DIVIDENDS; REPLACEMENT OF COLLATERAL, ETC. (a) Prior to the occurrence of an Event of Default (as hereinafter defined) hereunder or under any of the Loan Documents, Pledgor shall be entitled to exercise any and all voting rights and powers relating or pertaining to the Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement. Following the occurrence of an Event of Default, at the option of Secured Party following notice to Pledgor, all rights of Pledgor to exercise such voting rights and powers shall cease, and all such rights shall thereupon become vested in Secured Party who shall have the sole and exclusive right and authority to exercise such voting and/or consensual rights and powers. (b) Any payments received and any dividends declared and payable in cash arising from the Pledged Stock shall forthwith be delivered to Secured Party for application to the costs, expenses, disbursements, reimbursements, fees, interest and principal then owing and unpaid in respect of the Secured Obligation, in such priority as Secured Party may determine in its reasonable discretion. (c) Any and all dividends (other than dividends declared and payable in cash), distributions or exchanges or other items, all as more fully described in Section 1.1(b) above, if received by Pledgor, shall be held in trust for the benefit of Secured Party and shall forthwith be delivered to Secured Party or its designated NEWSEARCH PLEDGE AGREEMENT - PAGE 4 6 agent (accompanied by proper instruments of assignment and/or stock powers executed by Pledgor in accordance with Secured Party's instructions) to be held subject to the terms of this Agreement. ARTICLE IV PLEDGOR'S AFFIRMATIVE AND NEGATIVE COVENANTS Pledgor hereby covenants and agrees with Secured Party that until the Secured Obligation is paid and performed in full, unless Secured Party otherwise consents in writing: 4.1 BOOKS AND RECORDS. Pledgor hereby covenants and agrees that it will keep accurate and complete books and records of the Collateral, and shall, from time to time at request of Secured Party, deliver to or cause to be delivered to Secured Party such information regarding the Collateral as Secured Party may reasonably request. 4.2 INSPECTION RIGHTS. Pledgor hereby covenants and agrees to permit Secured Party, and such accountants or other agents as it may from time to time designate, to inspect, after reasonable notice, during normal business hours all records of Pledgor relating to the Collateral, and to make and retain copies of Pledgor's records relating to such Collateral. 4.3 OBLIGATIONS. Pledgor hereby covenants and agrees to duly and punctually pay and perform the obligations of Pledgor under this Agreement. 4.4 NOTIFICATION. Pledgor hereby covenants and agrees (i) to promptly notify Secured Party of any material change in any material fact or circumstance warranted or represented by Pledgor in this Agreement or in any other document furnished by Pledgor to Secured Party in connection with the Collateral or the Secured Obligation; and (ii) to promptly notify Secured Party of any claim, action, or proceeding affecting title to the Collateral, or any part thereof, or the security interest granted in this Agreement, and, at the request of Secured Party, to appear in and defend, at Pledgor's expense, any such action or proceeding. 4.5 SALE OR TRANSFER OF COLLATERAL. Pledgor hereby covenants and agrees that it will not sell, assign, or transfer any of the Collateral to any person, firm, or corporation (except Secured Party) without the prior written consent of Secured Party, which consent shall not be unreasonably withheld. 4.6 ENCUMBRANCE OF COLLATERAL. Pledgor hereby covenants and agrees that it will not create in favor of anyone, except Secured Party, any other security interest in the NEWSEARCH PLEDGE AGREEMENT - PAGE 5 7 Collateral, or in any part thereof, or otherwise encumber or permit the same to become subject to any lien, attachment, execution, sequestration, or other legal or equitable process. 4.7 DISTRIBUTIONS. If Pledgor shall become entitled to receive or shall receive anything of value from the Pledged Stock, including but not limited to any cash, any stock certificate (including, without limitation, any certificate representing a stock dividend or a distribution in connection with any reclassification, increase, or reduction of capital or issued in connection with any reorganization), option or rights, whether as an addition to, in substitution of, or in exchange for any Collateral, or otherwise, Pledgor hereby covenants and agrees to accept the same as Secured Party's agent, to hold the same in trust for Secured Party, and to deliver the same forthwith to Secured Party in the exact form received, with the appropriate endorsement of Pledgor when necessary and/or appropriate, completed stock powers duly executed, to be held by Secured Party as additional collateral for the Secured Obligation, subject to the terms hereof. Any sums paid upon or in respect of the Collateral upon the liquidation or dissolution of the issuer thereof shall be paid over to Secured Party to be held by it as additional collateral for the Secured Obligation subject to the terms hereof; and in case any distribution of capital shall be made on or in respect of the Collateral or any recapitalization or reclassification of the capital of the issuer thereof or pursuant to any reorganization of the issuer thereof, the property so distributed shall be delivered to the Secured Party to be held by it, as additional collateral for the Secured Obligation, subject to the terms hereof. 4.8 ADDITIONAL SECURITIES. Pledgor shall not consent to or approve the issuance of any additional shares of any class of capital stock of the issuer of the Collateral, or any securities convertible into, or exchangeable for, any such shares or any warrants, options, rights or other commitments entitling any person to purchase or otherwise acquire any such shares except as permitted by the Funding Agreement. 4.9 FURTHER ASSURANCES. Pledgor hereby covenants and agrees to promptly execute and deliver to Secured Party all such other assignments, certificates, supplemental documents and financing statements, and to do all other acts or things, as Secured Party may from time to time request in order to more fully evidence and perfect the security interest granted in this Agreement including, without limitation, (a) delivering of any additional stock certificates from time to time in Pledgor's possession which represent shares of stock which are part of the Collateral and (b) doing of all other acts or things necessary or appropriate to enable Secured Party to fully protect and exercise its rights under this Agreement. NEWSEARCH PLEDGE AGREEMENT - PAGE 6 8 ARTICLE V DEFAULTS AND REMEDIES 5.1 EVENTS OF DEFAULT. 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 REMEDIES OF SECURED PARTY. (a) Upon the occurrence of an Event of Default Secured Party may, at its option: (i) reduce Secured Party's claim to judgment, foreclose or otherwise enforce Secured Party's security interest in all or any part of the Collateral by any available judicial procedure; (ii) after notification, if any, provided for in clause (b) of this Section 5.2, sell or otherwise dispose of, at the office of Secured Party, or elsewhere, as chosen by Secured Party, all or any part of the Collateral, and any such sale or other disposition may be as a unit or in parcels, by public or private proceedings, and by way of one or more contracts (it being agreed that the sale of any part of the Collateral shall not exhaust Secured Party's power of sale, but sales may be made from time to time until all of the Collateral has been sold or until the Secured Obligation has been paid in full), and at any such sale it shall not be necessary to exhibit the Collateral; (iii) at its discretion, retain such portion of the Collateral as shall aggregate in value to an amount equal to the Secured Obligation, in satisfaction of the Secured Obligation whenever the circumstances are such that Secured Party is entitled to do so under the Uniform Commercial Code applicable hereto (the "CODE"); (iv) apply by appropriate judicial proceedings for appointment of a receiver for the Collateral, or any part thereof, and Pledgor hereby consents to any such appointment; (v) buy all or any portion of the Collateral at any public sale; or (vi) buy the Collateral at any private sale if the Collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations. NEWSEARCH PLEDGE AGREEMENT - PAGE 7 9 (b) Reasonable notification of time and place of any public sale of the Collateral or reasonable notification of the time after which any private sale or other intended disposition of the Collateral is to be made shall be sent to Pledgor and to any other person entitled under the Code to notice; provided, however, that if the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, Secured Party may sell or otherwise dispose of the Collateral without notification, advertisement or other notice of any kind. It is agreed that notice sent not less than ten (10) business days prior to the taking of the action to which such notice relates is reasonable notification and notice for the purposes of this Section 5.2. (c) Because of the Securities Act of 1933, as amended, or other laws or regulations, there may be legal restrictions or limitations affecting Secured Party in any attempts to dispose of all or any portion of the Collateral in the enforcement of its rights and remedies hereunder. For these reasons, Secured Party is hereby authorized by Pledgor, but not obligated, upon the occurrence of any Event of Default hereunder giving rise to Secured Party's rights to sell or otherwise dispose of the Collateral, to sell all or any part of the Collateral at private sale, subject to investment letter or in any manner which will not require the Collateral, or any part thereof, to be registered in accordance with the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder, or any other law or regulation, at the best price reasonably obtainable by Secured Party at any such private sale or other disposition in the manner mentioned above. Secured Party is also hereby authorized by Pledgor, but not obligated, to take such actions, give such notices, obtain such consents and do such other things as Secured Party may reasonably deem necessary or appropriate in the event of a private sale or disposition of any of the Collateral. Pledgor clearly understands that Secured Party may in its discretion approach a restricted number of potential purchasers and that a sale under such circumstances may yield a lower price for the Collateral, or any part or parts thereof, than would otherwise be obtainable if same were registered and sold in the open market. Pledgor agrees (i) that in the event Secured Party shall, after any Event of Default hereunder, sell the Collateral, or any portion thereof, at such private sale or sales, Secured Party shall have the right to rely upon the advice and opinion of any member firm of a national securities exchange as to the best price reasonably obtainable upon such a private sale thereof; and (ii) such reliance shall be conclusive evidence that Secured Party handled such matter in a commercially reasonably manner under the Code. 5.3 WAIVERS BY PLEDGOR. Neither Pledgor nor anyone claiming by, through or under Pledgor, to the extent Pledgor may lawfully so agree, shall or will set up, claim or seek to take advantage of any appraisement, valuation, stay, extension or redemption law now or hereafter in force in any locality where any of the collateral is situated for purposes of applicable law, in order to prevent or hinder the enforcement of this Agreement, or the absolute sale of the Collateral, or the final and absolute putting into possession thereof, NEWSEARCH PLEDGE AGREEMENT - PAGE 8 10 immediately after such sale, of the purchaser thereof; and Pledgor in Pledgor's own right and for all who may claim under Pledgor, hereby waive, to the full extent that Pledgor may lawfully do so, the benefit of all enforcement of the security interest herein granted, and Pledgor agrees that Secured Party or any court having jurisdiction to enforce such security interest may sell the Collateral in parts or as an entirety. 5.4 APPLICATION OF PROCEEDS. Secured Party may apply the proceeds of any foreclosure sale hereunder as follows: (a) first, to the payment of all costs and expenses of any enforcement, foreclosure and collection hereunder and all proceedings in connection therewith, including reasonable attorneys' fees; (b) then, to the reimbursement of Secured Party for all disbursements made by Secured Party for taxes, assessments or liens superior to the security interest hereof and which Secured Party shall deem expedient to pay; (c) then, to the reimbursement of Secured Party of any other disbursements made by Secured Party in accordance with the terms hereof; (d) then, to or among the costs, expenses, disbursements, reimbursements, fees, interest and principal then owing and unpaid in respect of the Secured Obligation, in such priority as Secured Party may determine in its discretion; and (e) then, to Pledgor or to each other Person who may be entitled thereto by law. If such proceeds shall be insufficient to discharge the entire Secured Obligation, Secured Party shall have any other available legal recourse against Pledgor for the deficiency. 5.5 ENFORCEMENT OF SECURED OBLIGATION. Nothing in this Agreement or in any other Loan Documents shall affect or impair the unconditional and absolute right of Secured Party to enforce the Secured Obligation as and when the same shall become due in accordance with the terms of the Loan Documents. ARTICLE VI RIGHTS OF SECURED PARTY 6.1 SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor hereby irrevocably appoints Secured Party as Pledgor's attorney-in-fact, effective upon the occurrence of an Event of Default, with full authority in the place and stead of Pledgor and in the name of Pledgor, Secured Party or otherwise, from time to time in Secured Party's discretion, to take NEWSEARCH PLEDGE AGREEMENT - PAGE 9 11 any action and to execute any instrument which Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including without limitation: (a) to ask, demand, collect, sue for, recover, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral; (b) to receive, endorse, and collect any drafts or other instruments, documents and chattel paper, in connection with clause (a) of this Section 6.1; and (c) to file any claims or take any action or institute any proceeding which Secured Party may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of Secured Party against any of the Collateral. 6.2 PERFORMANCE BY SECURED PARTY. If Pledgor fails to perform any agreement contained herein, Secured Party may itself perform, or cause the performance of, such agreement, and the expenses of Secured Party incurred in connection therewith shall be payable by Pledgor under Section 6.7. In no event, however, shall Secured Party have any obligation or duties whatsoever to perform any covenant or agreement of Pledgor contained herein, and any such performance by Secured Party shall be wholly discretionary with Secured Party. 6.3 DUTIES OF SECURED PARTY. The powers conferred upon Secured Party hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for money or other property actually received by it hereunder, Secured Party shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. 6.4 NO LIABILITY OF SECURED PARTY. Neither the acceptance of this Agreement by Secured Party, nor the exercise of any rights hereunder by Secured Party, shall be construed in any way as an assumption by Secured Party of any obligations, responsibilities or duties of Pledgor arising in connection with the Collateral assigned hereunder or otherwise bind Secured Party to the performance of any obligations respecting the Collateral, it being expressly understood that Secured Party shall not be obligated to perform, observe or discharge any obligation, responsibility, duty or liability of Pledgor in respect of any of the Collateral, including, but not limited to, appearing in or defending any action, expending any money or incurring any expense in connection therewith. 6.5 RIGHT TO DEFEND ACTION AFFECTING SECURITY. Secured Party may, at Pledgor's expense, appear in and defend any action or proceeding at law or in equity purporting to affect the security interest granted under this Agreement. NEWSEARCH PLEDGE AGREEMENT - PAGE 10 12 6.6 RIGHT TO PREVENT OR REMEDY DEFAULT. At any time following an Event of Default, Secured Party: (a) may but shall not be obligated to take any action Secured Party deems necessary or desirable to prevent or remedy any such failure by Pledgor or otherwise to protect the security interest granted under this Agreement, and (b) shall have the absolute and immediate right to take possession of the Collateral or any part thereof to such extent and as often as Secured Party, in its sole discretion, deems necessary or desirable in order to prevent or to cure any such default by Pledgor, or otherwise to protect the security of this Agreement. Secured Party may advance or expend such sums of money for the account of Pledgor as Secured Party in its sole discretion deems necessary for any such purpose. 6.7 EXPENSES. All reasonable advances, costs, expenses, charges and attorneys' fees which Secured Party may make, pay or incur under any provision of this Agreement for the protection of its security or for the enforcement of any of its rights hereunder, or in foreclosure proceedings commenced and subsequently abandoned, or in any dispute or litigation in which Secured Party or the holder of the Notes may become involved by reason of or arising out of the Loan Documents or the Collateral, shall be a part of the Secured Obligation and shall be paid by Pledgor to Secured Party, upon demand, and shall, at Secured Party's election, bear interest until paid at the rate specified in the applicable note until demand and then at the maximum rate of interest permitted by applicable law (or such lesser rate as may be chosen by Secured Party), from the date of such payment until repaid by Pledgor. 6.8 SECURED PARTY'S RIGHT OF SET-OFF. Upon the happening of any event entitling Secured Party to pursue any remedy provided herein, or if Secured Party shall be served with garnishment process in which Pledgor shall be named as defendant, whether or not Pledgor shall be in default hereunder at the time, Secured Party may, but shall not be required to, set-off any indebtedness owing by Secured Party to Pledgor against any of the Secured Obligation without first resorting to the security hereunder and without prejudice to any other rights or remedies of Secured Party or its security interest herein. 6.9 NO WAIVER. In case Secured Party shall have proceeded to enforce any right or remedy hereunder and such proceedings shall have been discontinued or abandoned for any reason, then in every such case, Pledgor and Secured Party shall be restored to their former positions and rights hereunder with respect to the Collateral, and all rights, remedies and powers of Secured Party shall continue as if no such proceeding has been taken. No failure or delay on the part of Secured Party in exercising any right, remedy or power under this Agreement or in giving or insisting upon strict performance by Pledgor hereunder or in giving notice hereunder shall operate as a waiver of the same or any other power or right, and no single or partial exercise of any such power or right shall preclude any other or further exercise thereof or the exercise of any other such power or right. Secured Party, NEWSEARCH PLEDGE AGREEMENT - PAGE 11 13 notwithstanding any such failure, shall have the right thereafter to insist upon the strict performance by Pledgor of any and all of the terms and provisions of this Agreement to be performed by Pledgor. The collection and application of proceeds, the entering and taking possession of the Collateral, and the exercise of the rights of Secured Party contained in the Loan Documents, including this Agreement, shall not cure or waive any default, or affect any notice of default, or invalidate any acts done pursuant to such notice. No waiver by Secured Party of any breach or default of or by any party hereunder shall be deemed to alter or affect Secured Party's rights hereunder with respect to any prior or subsequent default. 6.10 REMEDIES CUMULATIVE. No right or remedy herein reserved to Secured Party is intended to be exclusive of any other right or remedy, but each and every such right or remedy shall be cumulative, not in lieu of, but in addition to any other rights or remedies given under this Agreement and all other Loan Documents at law, and in equity. Subject to any limitations set forth in this Agreement, any and all of Secured Party's rights and remedies may be exercised from time to time and as often as such exercise is deemed necessary or desirable by Secured Party. 6.11 RIGHT OF SECURED PARTY TO EXTEND TIME OF PAYMENT, SUBSTITUTE, RELEASE SECURITY, ETC. Without affecting the liability of any person for the payment of any of the Secured Obligation or the security interests of this Agreement on the Collateral for the full amount of any Secured Obligation unpaid, Secured Party may, without notice or without affecting or impairing the security interest or rights of Secured Party granted or arising under this Agreement: (a) release any person liable for the payment of any of the Secured Obligation, (b) extend the time or otherwise alter the terms of payment of any of the Secured Obligation, (c) accept additional security for the Secured Obligation of any kind, (d)alter, substitute or release any property securing the Secured Obligation, (e) resort for the payment of all or any portion of the Secured Obligation to its several securities therefor in such order and manner as it may deem fit, or (f) join in any subordination or other agreement affecting this Agreement or the lien or charge thereof. ARTICLE VII MISCELLANEOUS 7.1 DEFINITIONS. In this Agreement, whenever the context so requires, the neuter gender includes the masculine and feminine, and the singular number includes the plural and vice versa. The terms "ADVANCES", "COSTS", and "EXPENSES" shall include, but shall not be limited to, reasonable attorneys' fees whenever incurred. The terms "INDEBTEDNESS", "OBLIGATIONS" and "SECURED OBLIGATION" shall mean and include, but shall not be limited to, all claims, demands, obligations and liabilities whatsoever, however arising, whether owing by the subject NEWSEARCH PLEDGE AGREEMENT - PAGE 12 14 person or entity individually or as a joint venturer, or jointly or in common with any other party, and whether absolute or contingent, and whether owing by the subject person or entity as principal debtor or as accommodation maker or as endorser, liquidated or unliquidated, and whenever contracted, accrued or payable. 7.2 PARAGRAPH HEADINGS. 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. 7.3 CHANGE, AMENDMENT, ETC. No change, amendment, modification, cancellation or discharge of any provision of this Agreement shall be valid unless consented to in writing by Secured Party. 7.4 SUCCESSORS AND ASSIGNS. As and when used herein, the term "PLEDGOR" shall mean and include the Pledgor herein named and its successors and permitted assigns, and the term "SECURED 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 Pledgor and Secured Party and their respective successors and permitted assigns. 7.5 APPLICABLE LAWS. THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND ENFORCEABLE UNDER AND PURSUANT TO THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW. 7.6 SEVERABILITY. 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. 7.7 NOTICES. 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 Pledgor 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 Pledgor: Newsearch, Inc. 700 N. Pearl Suite 400, L.B. 401 Dallas, Texas 75201-2809 With a copy to: Akin, Gump, Strauss, Hauer & Feld, L.L.P. 1700 Pacific Avenue, Suite 4100 Dallas, Texas 75201 Attention: Ford Lacy, P.C. NEWSEARCH PLEDGE AGREEMENT - PAGE 13 15 If to Secured Party: Hall Financial Group, Inc. 750 North St. Paul Suite 200 Dallas, Texas 75201-3247 With a copy to: Burke & Wright, P.C. 2900 Renaissance Tower 1201 Elm Street Dallas, Texas 75270-2102 Attention: Frank J. Wright, Esq. 7.8 INDEPENDENT REPRESENTATION. Pledgor specifically acknowledges that it has been represented by independent counsel in connection with its negotiation and execution of this Agreement and that it is entering into this Agreement of its own free will, without duress or coercion by any other person. 7.9 COUNTERPARTS. 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. IN WITNESS WHEREOF, Pledgor and Secured Party have executed this Agreement on the date and year first above written. PLEDGOR: NEWSEARCH, INC. By: /s/ ROBERT D. IDZI ------------------------------------ Printed Name: Robert D. Idzi --------------------------- Its: SVP & CFO ----------------------------------- SECURED PARTY: HALL FINANCIAL GROUP, INC. By: /s/ LARRY E. LEVEY ------------------------------------- Larry E. Levey, Senior Vice President NEWSEARCH PLEDGE AGREEMENT - PAGE 14 16 EXHIBIT "A" LIST OF PLEDGED STOCK
==================================================================================================== PLEDGOR PLEDGED SHARES NUMBER CERTIFICATE ------- -------------- ------ ----------- OF IDENTIFICATION -- -------------- SHARES NUMBER ------ ------ - ---------------------------------------------------------------------------------------------------- Newsearch, Inc. Search Capital Group, Inc. 2,000,000 18985 - ---------------------------------------------------------------------------------------------------- Newsearch, Inc. Search Capital Group, Inc. 400,000 18986 ====================================================================================================
NEWSEARCH PLEDGE AGREEMENT - PAGE 15 EX-99.6 8 SEARCH PLEDGE AGREEMENT 1 EXHIBIT 99.6 SEARCH PLEDGE AGREEMENT DATED AS OF NOVEMBER 30, 1995 BETWEEN SEARCH CAPITAL GROUP, INC. AND HALL FINANCIAL GROUP, INC. 2 EXHIBIT 99.6 SEARCH PLEDGE AGREEMENT This PLEDGE AGREEMENT (the "AGREEMENT") is made and entered into as of the 30th day of November, 1995, by and between SEARCH CAPITAL GROUP, INC., a Delaware corporation ("PLEDGOR") and HALL FINANCIAL GROUP, INC., a Delaware corporation ("SECURED PARTY"). W I T N E S S E T H: 1. Pledgor is the owner of 100% of the shares of the issued and outstanding capital stock of Newsearch, Inc., a Delaware corporation ("NEWSEARCH"), Search Funding Corp., a Texas corporation ("SFC"), and Automobile Credit Holdings, Inc., a Delaware corporation ("ACHI"). 2. SFC is an affiliate of Pledgor in that SFC is a wholly owned subsidiary of Search. 3. Concurrently herewith, Search and 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, Pledgor, SFC, ACAC, ACHI, and Newsearch. 4. In order to induce Secured Party to provide financial accommodations to Pledgor, ACAC, ACHI, Newsearch, and SFC ("SEARCH PARTIES") 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, this Agreement, the Funding Agreement 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"), Pledgor has agreed to grant to Secured Party a security interest in the property hereinafter described. For good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE I COLLATERAL AND SECURED INDEBTEDNESS 1.1 GRANT OF SECURITY INTEREST. Pledgor hereby assigns, pledges and grants a security interest in the following property (herein, collectively, called the "COLLATERAL") to Secured Party: SEARCH PLEDGE AGREEMENT - PAGE 1 3 (a) 100% of the shares of the capital stock of Newsearch, SFC, and ACHI (the "PLEDGED STOCK"), and being more specifically described on Exhibit "A" attached hereto and incorporated herein by reference for all purposes, and all certificates representing the Pledged Stock; (b) with respect to the Pledged Stock, all (i) dividends declared and payable in cash, (ii) dividends declared and payable in the form of stock, securities or other property, (iii) dividends or distributions payable upon dissolution, partial or total liquidation, or in connection with a reduction of capital, capital surplus or paid-in surplus, (iv) all other distributions, whether of cash, stock other securities or other property issued with respect to or in lieu of or exchanged for the stock included in the Collateral (whether through stock split, spin-off, reclassification, merger, consolidation, acquisition, sale of assets, combination of shares, subdivision, redemption, payment of principal or otherwise), all of which Secured Party shall be entitled to receive and retain as part of the Collateral; and (c) all proceeds (cash and noncash) arising out of the sale, exchange, collection, enforcement or other disposition of all or any portion of the Pledged Stock, including, without limitation, proceeds in the form of accounts, chattel paper, instruments, documents, consumer goods, inventory and equipment. Coverage of proceeds, however, does not authorize sale, exchange or other disposition of any Collateral without the prior written consent of Secured Party, which consent shall not be unreasonably withheld. 1.2 SECURED OBLIGATION. This Agreement and the security interest herein created shall secure full and punctual payment and performance of the following indebtedness, duties and obligations (hereinafter, collectively, called the "SECURED OBLIGATION"): (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 PARTIAL RELEASE. Secured Party agrees to release from the Pledged Stock the amount of shares necessary to satisfy Note III at such time as the holder of such note elects SEARCH PLEDGE AGREEMENT - PAGE 2 4 to convert such note to stock of Search or the Borrowers under such note elect to pay such note with stock of Search as provided in such note. ARTICLE II REPRESENTATIONS AND WARRANTIES 2.1 REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and warrants to the Secured Party as follows: (a) Pledgor is the owner and holder of the Pledged Stock and has good and marketable title to the Pledged Stock free and clear of any lien, security interest, charge or encumbrance, except for the security interest created by this Agreement, or otherwise in favor of the Secured Party. The Pledged Stock is duly authorized, validly issued, fully paid and nonassessable. The Pledged Stock constitutes 100% of the issued and outstanding stock of Newsearch, SFC, and ACHI. (b) Pledgor has the lawful right, power and authority to grant a security interest in the Collateral. This Agreement together with all filings and other actions necessary or desirable to perfect and protect such security interest, including, without limitation, the delivery of all stock certificates representing the Pledged Stock, when duly taken, create a valid and perfected first priority security interest in the Collateral securing the payment and performance of the Secured Obligation. (c) No authorization, approval or other action by, and no notice to or filing with Pledgor or any governmental authority or regulatory body, is required either (i) for the grant by Pledgor of the security interest herein granted or for the execution, delivery or performance of this Agreement by Pledgor, or (ii) for the perfection or exercise by Secured Party of its rights and remedies hereunder. The Pledged Stock is subject to no restrictions or limitations on sale, assignment or transfer other than restrictions generally applicable to securities arising under State and Federal securities laws. (d) The delivery at any time by Pledgor to Secured Party of any Collateral shall constitute a representation and warranty by Pledgor under this Agreement that, with respect to such Collateral: (i) Pledgor is the record and beneficial owner thereof, and (ii) the matters heretofore warranted in clauses (a) through (c) of this Section 2.1 are true and correct. SEARCH PLEDGE AGREEMENT - PAGE 3 5 ARTICLE III CERTAIN RIGHTS OF SECURED PARTY 3.1 APPOINTMENT OF AGENTS; REGISTRATION IN NOMINEE NAME. Secured Party shall have physical possession of the certificates representing or evidencing the Collateral which, after the occurrence of an Event of Default, may be held (in the discretion of Secured Party) in the name of Pledgor, endorsed or assigned in blank or in favor of Secured Party or in the name of Secured Party or any nominee or nominees of Secured Party or an agent appointed by Secured Party. In addition to all other rights possessed by Secured Party, Secured Party, at its option, may from time to time at its sole discretion, take any of the following actions: (a) extend or renew the Secured Obligation for one or more periods (whether shorter or longer than the original period) and grant releases, compromises or indulgences with respect to the Secured Obligation or any extension or renewal thereof or any security therefor or to any obligor hereunder or thereunder; and (b) exchange certificates or instruments representing or evidencing Collateral for certificates or instruments of smaller or larger denominations for any purpose consistent with its performance of this Agreement. 3.2 VOTING RIGHTS; DIVIDENDS; REPLACEMENT OF COLLATERAL, ETC. (a) Prior to the occurrence of an Event of Default (as hereinafter defined) hereunder or under any of the Loan Documents, Pledgor shall be entitled to exercise any and all voting rights and powers relating or pertaining to the Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement. Following the occurrence of an Event of Default, at the option of Secured Party following notice to Pledgor, all rights of Pledgor to exercise such voting rights and powers shall cease, and all such rights shall thereupon become vested in Secured Party who shall have the sole and exclusive right and authority to exercise such voting and/or consensual rights and powers. (b) Any payments received and any dividends declared and payable in cash arising from the Pledged Stock shall forthwith be delivered to Secured Party for application to the costs, expenses, disbursements, reimbursements, fees, interest and principal then owing and unpaid in respect of the Secured Obligation, in such priority as Secured Party may determine in its reasonable discretion. (c) Any and all dividends (other than dividends declared and payable in cash), distributions or exchanges or other items, all as more fully described in Section 1.1(b) above, if received by Pledgor, shall be held in trust for the benefit of Secured Party and shall forthwith be delivered to Secured Party or its designated SEARCH PLEDGE AGREEMENT - PAGE 4 6 agent (accompanied by proper instruments of assignment and/or stock powers executed by Pledgor in accordance with Secured Party's instructions) to be held subject to the terms of this Agreement. ARTICLE IV PLEDGOR'S AFFIRMATIVE AND NEGATIVE COVENANTS Pledgor hereby covenants and agrees with Secured Party that until the Secured Obligation is paid and performed in full, unless Secured Party otherwise consents in writing: 4.1 BOOKS AND RECORDS. Pledgor hereby covenants and agrees that it will keep accurate and complete books and records of the Collateral, and shall, from time to time at request of Secured Party, deliver to or cause to be delivered to Secured Party such information regarding the Collateral as Secured Party may reasonably request. 4.2 INSPECTION RIGHTS. Pledgor hereby covenants and agrees to permit Secured Party, and such accountants or other agents as it may from time to time designate, to inspect, after reasonable notice, during normal business hours all records of Pledgor relating to the Collateral, and to make and retain copies of Pledgor's records relating to such Collateral. 4.3 OBLIGATIONS. Pledgor hereby covenants and agrees to duly and punctually pay and perform the obligations of Pledgor under this Agreement. 4.4 NOTIFICATION. Pledgor hereby covenants and agrees (i) to promptly notify Secured Party of any material change in any material fact or circumstance warranted or represented by Pledgor in this Agreement or in any other document furnished by Pledgor to Secured Party in connection with the Collateral or the Secured Obligation; and (ii) to promptly notify Secured Party of any claim, action, or proceeding affecting title to the Collateral, or any part thereof, or the security interest granted in this Agreement, and, at the request of Secured Party, to appear in and defend, at Pledgor's expense, any such action or proceeding. 4.5 SALE OR TRANSFER OF COLLATERAL. Pledgor hereby covenants and agrees that it will not sell, assign, or transfer any of the Collateral to any person, firm, or corporation (except Secured Party) without the prior written consent of Secured Party, which consent shall not be unreasonably withheld. 4.6 ENCUMBRANCE OF COLLATERAL. Pledgor hereby covenants and agrees that it will not create in favor of anyone, except Secured Party, any other security interest in the Collateral, or in any part thereof, or otherwise encumber or permit the same to become subject to any lien, attachment, execution, sequestration, or other legal or equitable process. SEARCH PLEDGE AGREEMENT - PAGE 5 7 4.7 DISTRIBUTIONS. If Pledgor shall become entitled to receive or shall receive anything of value from the Pledged Stock, including but not limited to any cash, any stock certificate (including, without limitation, any certificate representing a stock dividend or a distribution in connection with any reclassification, increase, or reduction of capital or issued in connection with any reorganization), option or rights, whether as an addition to, in substitution of, or in exchange for any Collateral, or otherwise, Pledgor hereby covenants and agrees to accept the same as Secured Party's agent, to hold the same in trust for Secured Party, and to deliver the same forthwith to Secured Party in the exact form received, with the appropriate endorsement of Pledgor when necessary and/or appropriate, completed stock powers duly executed, to be held by Secured Party as additional collateral for the Secured Obligation, subject to the terms hereof. Any sums paid upon or in respect of the Collateral upon the liquidation or dissolution of the issuer thereof shall be paid over to Secured Party to be held by it as additional collateral for the Secured Obligation subject to the terms hereof; and in case any distribution of capital shall be made on or in respect of the Collateral or any recapitalization or reclassification of the capital of the issuer thereof or pursuant to any reorganization of the issuer thereof, the property so distributed shall be delivered to the Secured Party to be held by it, as additional collateral for the Secured Obligation, subject to the terms hereof. 4.8 ADDITIONAL SECURITIES. Pledgor shall not consent to or approve the issuance of any additional shares of any class of capital stock of the issuer of the Collateral, or any securities convertible into, or exchangeable for, any such shares or any warrants, options, rights or other commitments entitling any person to purchase or otherwise acquire any such shares except as permitted by the Funding Agreement. 4.9 FURTHER ASSURANCES. Pledgor hereby covenants and agrees to promptly execute and deliver to Secured Party all such other assignments, certificates, supplemental documents and financing statements, and to do all other acts or things, as Secured Party may from time to time request in order to more fully evidence and perfect the security interest granted in this Agreement including, without limitation, (a) delivering of any additional stock certificates from time to time in Pledgor's possession which represent shares of stock which are part of the Collateral and (b) doing of all other acts or things necessary or appropriate to enable Secured Party to fully protect and exercise its rights under this Agreement. ARTICLE V DEFAULTS AND REMEDIES 5.1 EVENTS OF DEFAULT. 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. SEARCH PLEDGE AGREEMENT - PAGE 6 8 5.2 REMEDIES OF SECURED PARTY. (a) Upon the occurrence of an Event of Default Secured Party may, at its option: (i) reduce Secured Party's claim to judgment, foreclose or otherwise enforce Secured Party's security interest in all or any part of the Collateral by any available judicial procedure; (ii) after notification, if any, provided for in clause (b) of this Section 5.2, sell or otherwise dispose of, at the office of Secured Party, or elsewhere, as chosen by Secured Party, all or any part of the Collateral, and any such sale or other disposition may be as a unit or in parcels, by public or private proceedings, and by way of one or more contracts (it being agreed that the sale of any part of the Collateral shall not exhaust Secured Party's power of sale, but sales may be made from time to time until all of the Collateral has been sold or until the Secured Obligation has been paid in full), and at any such sale it shall not be necessary to exhibit the Collateral; (iii) at its discretion, retain such portion of the Collateral as shall aggregate in value to an amount equal to the Secured Obligation, in satisfaction of the Secured Obligation whenever the circumstances are such that Secured Party is entitled to do so under the Uniform Commercial Code applicable hereto (the "CODE"); (iv) apply by appropriate judicial proceedings for appointment of a receiver for the Collateral, or any part thereof, and Pledgor hereby consents to any such appointment; (v) buy all or any portion of the Collateral at any public sale; or (vi) buy the Collateral at any private sale if the Collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations. (b) Reasonable notification of time and place of any public sale of the Collateral or reasonable notification of the time after which any private sale or other intended disposition of the Collateral is to be made shall be sent to Pledgor and to any other person entitled under the Code to notice; provided, however, that if the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, Secured Party may sell or otherwise dispose of the Collateral without notification, advertisement or other notice of any kind. It is agreed that notice sent not less than ten (10) business days prior to the taking of the action to SEARCH PLEDGE AGREEMENT - PAGE 7 9 which such notice relates is reasonable notification and notice for the purposes of this Section 5.2. (c) Because of the Securities Act of 1933, as amended, or other laws or regulations, there may be legal restrictions or limitations affecting Secured Party in any attempts to dispose of all or any portion of the Collateral in the enforcement of its rights and remedies hereunder. For these reasons, Secured Party is hereby authorized by Pledgor, but not obligated, upon the occurrence of any Event of Default hereunder giving rise to Secured Party's rights to sell or otherwise dispose of the Collateral, to sell all or any part of the Collateral at private sale, subject to investment letter or in any manner which will not require the Collateral, or any part thereof, to be registered in accordance with the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder, or any other law or regulation, at the best price reasonably obtainable by Secured Party at any such private sale or other disposition in the manner mentioned above. Secured Party is also hereby authorized by Pledgor, but not obligated, to take such actions, give such notices, obtain such consents and do such other things as Secured Party may reasonably deem necessary or appropriate in the event of a private sale or disposition of any of the Collateral. Pledgor clearly understands that Secured Party may in its discretion approach a restricted number of potential purchasers and that a sale under such circumstances may yield a lower price for the Collateral, or any part or parts thereof, than would otherwise be obtainable if same were registered and sold in the open market. Pledgor agrees (i) that in the event Secured Party shall, after any Event of Default hereunder, sell the Collateral, or any portion thereof, at such private sale or sales, Secured Party shall have the right to rely upon the advice and opinion of any member firm of a national securities exchange as to the best price reasonably obtainable upon such a private sale thereof; and (ii) such reliance shall be conclusive evidence that Secured Party handled such matter in a commercially reasonably manner under the Code. 5.3 WAIVERS BY PLEDGOR. Neither Pledgor nor anyone claiming by, through or under Pledgor, to the extent Pledgor may lawfully so agree, shall or will set up, claim or seek to take advantage of any appraisement, valuation, stay, extension or redemption law now or hereafter in force in any locality where any of the collateral is situated for purposes of applicable law, in order to prevent or hinder the enforcement of this Agreement, or the absolute sale of the Collateral, or the final and absolute putting into possession thereof, immediately after such sale, of the purchaser thereof; and Pledgor in Pledgor's own right and for all who may claim under Pledgor, hereby waive, to the full extent that Pledgor may lawfully do so, the benefit of all enforcement of the security interest herein granted, and Pledgor agrees that Secured Party or any court having jurisdiction to enforce such security interest may sell the Collateral in parts or as an entirety. 5.4 APPLICATION OF PROCEEDS. Secured Party may apply the proceeds of any foreclosure sale hereunder as follows: SEARCH PLEDGE AGREEMENT - PAGE 8 10 (a) first, to the payment of all costs and expenses of any enforcement, foreclosure and collection hereunder and all proceedings in connection therewith, including reasonable attorneys' fees; (b) then, to the reimbursement of Secured Party for all disbursements made by Secured Party for taxes, assessments or liens superior to the security interest hereof and which Secured Party shall deem expedient to pay; (c) then, to the reimbursement of Secured Party of any other disbursements made by Secured Party in accordance with the terms hereof; (d) then, to or among the costs, expenses, disbursements, reimbursements, fees, interest and principal then owing and unpaid in respect of the Secured Obligation, in such priority as Secured Party may determine in its discretion; and (e) then, to Pledgor or to each other Person who may be entitled thereto by law. If such proceeds shall be insufficient to discharge the entire Secured Obligation, Secured Party shall have any other available legal recourse against Pledgor for the deficiency. 5.5 ENFORCEMENT OF SECURED OBLIGATION. Nothing in this Agreement or in any other Loan Documents shall affect or impair the unconditional and absolute right of Secured Party to enforce the Secured Obligation as and when the same shall become due in accordance with the terms of the Loan Documents. ARTICLE VI RIGHTS OF SECURED PARTY 6.1 SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor hereby irrevocably appoints Secured Party as Pledgor's attorney-in-fact, effective upon the occurrence of an Event of Default, with full authority in the place and stead of Pledgor and in the name of Pledgor, Secured Party or otherwise, from time to time in Secured Party's discretion, to take any action and to execute any instrument which Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including without limitation: (a) to ask, demand, collect, sue for, recover, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral; (b) to receive, endorse, and collect any drafts or other instruments, documents and chattel paper, in connection with clause (a) of this Section 6.1; and SEARCH PLEDGE AGREEMENT - PAGE 9 11 (c) to file any claims or take any action or institute any proceeding which Secured Party may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of Secured Party against any of the Collateral. 6.2 PERFORMANCE BY SECURED PARTY. If Pledgor fails to perform any agreement contained herein, Secured Party may itself perform, or cause the performance of, such agreement, and the expenses of Secured Party incurred in connection therewith shall be payable by Pledgor under Section 6.7. In no event, however, shall Secured Party have any obligation or duties whatsoever to perform any covenant or agreement of Pledgor contained herein, and any such performance by Secured Party shall be wholly discretionary with Secured Party. 6.3 DUTIES OF SECURED PARTY. The powers conferred upon Secured Party hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for money or other property actually received by it hereunder, Secured Party shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. 6.4 NO LIABILITY OF SECURED PARTY. Neither the acceptance of this Agreement by Secured Party, nor the exercise of any rights hereunder by Secured Party, shall be construed in any way as an assumption by Secured Party of any obligations, responsibilities or duties of Pledgor arising in connection with the Collateral assigned hereunder or otherwise bind Secured Party to the performance of any obligations respecting the Collateral, it being expressly understood that Secured Party shall not be obligated to perform, observe or discharge any obligation, responsibility, duty or liability of Pledgor in respect of any of the Collateral, including, but not limited to, appearing in or defending any action, expending any money or incurring any expense in connection therewith. 6.5 RIGHT TO DEFEND ACTION AFFECTING SECURITY. Secured Party may, at Pledgor's expense, appear in and defend any action or proceeding at law or in equity purporting to affect the security interest granted under this Agreement. 6.6 RIGHT TO PREVENT OR REMEDY DEFAULT. At any time following an Event of Default, Secured Party: (a) may but shall not be obligated to take any action Secured Party deems necessary or desirable to prevent or remedy any such failure by Pledgor or otherwise to protect the security interest granted under this Agreement, and (b) shall have the absolute and immediate right to take possession of the Collateral or any part thereof to such extent and as often as Secured Party, in its sole discretion, deems necessary or desirable in order to prevent or to cure any such SEARCH PLEDGE AGREEMENT - PAGE 10 12 default by Pledgor, or otherwise to protect the security of this Agreement. Secured Party may advance or expend such sums of money for the account of Pledgor as Secured Party in its sole discretion deems necessary for any such purpose. 6.7 EXPENSES. All reasonable advances, costs, expenses, charges and attorneys' fees which Secured Party may make, pay or incur under any provision of this Agreement for the protection of its security or for the enforcement of any of its rights hereunder, or in foreclosure proceedings commenced and subsequently abandoned, or in any dispute or litigation in which Secured Party or the holder of the Notes may become involved by reason of or arising out of the Loan Documents or the Collateral, shall be a part of the Secured Obligation and shall be paid by Pledgor to Secured Party, upon demand, and shall, at Secured Party's election, bear interest until paid at the rate specified in the applicable note until demand and then at the maximum rate of interest permitted by applicable law (or such lesser rate as may be chosen by Secured Party), from the date of such payment until repaid by Pledgor. 6.8 SECURED PARTY'S RIGHT OF SET-OFF. Upon the happening of any event entitling Secured Party to pursue any remedy provided herein, or if Secured Party shall be served with garnishment process in which Pledgor shall be named as defendant, whether or not Pledgor shall be in default hereunder at the time, Secured Party may, but shall not be required to, set-off any indebtedness owing by Secured Party to Pledgor against any of the Secured Obligation without first resorting to the security hereunder and without prejudice to any other rights or remedies of Secured Party or its security interest herein. 6.9 NO WAIVER. In case Secured Party shall have proceeded to enforce any right or remedy hereunder and such proceedings shall have been discontinued or abandoned for any reason, then in every such case, Pledgor and Secured Party shall be restored to their former positions and rights hereunder with respect to the Collateral, and all rights, remedies and powers of Secured Party shall continue as if no such proceeding has been taken. No failure or delay on the part of Secured Party in exercising any right, remedy or power under this Agreement or in giving or insisting upon strict performance by Pledgor hereunder or in giving notice hereunder shall operate as a waiver of the same or any other power or right, and no single or partial exercise of any such power or right shall preclude any other or further exercise thereof or the exercise of any other such power or right. Secured Party, notwithstanding any such failure, shall have the right thereafter to insist upon the strict performance by Pledgor of any and all of the terms and provisions of this Agreement to be performed by Pledgor. The collection and application of proceeds, the entering and taking possession of the Collateral, and the exercise of the rights of Secured Party contained in the Loan Documents, including this Agreement, shall not cure or waive any default, or affect any notice of default, or invalidate any acts done pursuant to such notice. No waiver by Secured Party of any breach or default of or by any party hereunder shall be deemed to alter or affect Secured Party's rights hereunder with respect to any prior or subsequent default. SEARCH PLEDGE AGREEMENT - PAGE 11 13 6.10 REMEDIES CUMULATIVE. No right or remedy herein reserved to Secured Party is intended to be exclusive of any other right or remedy, but each and every such right or remedy shall be cumulative, not in lieu of, but in addition to any other rights or remedies given under this Agreement and all other Loan Documents at law, and in equity. Subject to any limitations set forth in this Agreement, any and all of Secured Party's rights and remedies may be exercised from time to time and as often as such exercise is deemed necessary or desirable by Secured Party. 6.11 RIGHT OF SECURED PARTY TO EXTEND TIME OF PAYMENT, SUBSTITUTE, RELEASE SECURITY, ETC. Without affecting the liability of any person for the payment of any of the Secured Obligation or the security interests of this Agreement on the Collateral for the full amount of any Secured Obligation unpaid, Secured Party may, without notice or without affecting or impairing the security interest or rights of Secured Party granted or arising under this Agreement: (a) release any person liable for the payment of any of the Secured Obligation, (b) extend the time or otherwise alter the terms of payment of any of the Secured Obligation, (c) accept additional security for the Secured Obligation of any kind, (d)alter, substitute or release any property securing the Secured Obligation, (e) resort for the payment of all or any portion of the Secured Obligation to its several securities therefor in such order and manner as it may deem fit, or (f) join in any subordination or other agreement affecting this Agreement or the lien or charge thereof. ARTICLE VII MISCELLANEOUS 7.1 DEFINITIONS. In this Agreement, whenever the context so requires, the neuter gender includes the masculine and feminine, and the singular number includes the plural and vice versa. The terms "ADVANCES", "COSTS", and "EXPENSES" shall include, but shall not be limited to, reasonable attorneys' fees whenever incurred. The terms "INDEBTEDNESS", "OBLIGATIONS" and "SECURED OBLIGATION" shall mean and include, but shall not be limited to, all claims, demands, obligations and liabilities whatsoever, however arising, whether owing by the subject person or entity individually or as a joint venturer, or jointly or in common with any other party, and whether absolute or contingent, and whether owing by the subject person or entity as principal debtor or as accommodation maker or as endorser, liquidated or unliquidated, and whenever contracted, accrued or payable. 7.2 PARAGRAPH HEADINGS. 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. 7.3 CHANGE, AMENDMENT, ETC. No change, amendment, modification, cancellation or discharge of any provision of this Agreement shall be valid unless consented to in writing by Secured Party. SEARCH PLEDGE AGREEMENT - PAGE 12 14 7.4 SUCCESSORS AND ASSIGNS. As and when used herein, the term "PLEDGOR" shall mean and include the Pledgor herein named and its successors and permitted assigns, and the term "SECURED 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 Pledgor and Secured Party and their respective successors and permitted assigns. 7.5 APPLICABLE LAWS. THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND ENFORCEABLE UNDER AND PURSUANT TO THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW. 7.6 SEVERABILITY. 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. 7.7 NOTICES. 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 Pledgor 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 Pledgor: Search Capital Group, Inc. 700 N. Pearl Suite 400, L.B. 401 Dallas, Texas 75201-2809 With a copy to: Akin, Gump, Strauss, Hauer & Feld, L.L.P. Suite 4100 1700 Pacific Avenue Dallas, Texas 75201 Attention: Ford Lacy, P.C. If to Secured Party: Hall Financial Group, Inc. 750 North St. Paul, Suite 200 Dallas, Texas 75201-3247 With a copy to: Burke & Wright, P.C. 2900 Renaissance Tower 1201 Elm Street Dallas, Texas 75270-2102 Attention: Frank J. Wright, Esq. SEARCH PLEDGE AGREEMENT - PAGE 13 15 7.8 INDEPENDENT REPRESENTATION. Pledgor specifically acknowledges that it has been represented by independent counsel in connection with its negotiation and execution of this Agreement and that it is entering into this Agreement of its own free will, without duress or coercion by any other person. 7.9 COUNTERPARTS. 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. IN WITNESS WHEREOF, Pledgor and Secured Party have executed this Agreement on the date and year first above written. PLEDGOR: SEARCH CAPITAL GROUP, INC.. By: /s/ ROBERT D. IDZI -------------------------------- Printed Name: Robert D. Idzi ---------------------- Its: SVP & CFO ------------------------------- SECURED PARTY: HALL FINANCIAL GROUP, INC. By: /s/ LARRY E. LEVEY -------------------------------- Printed Name: Larry E. Levey ---------------------- Its: SENIOR VICE PRESIDENT ------------------------------- SEARCH PLEDGE AGREEMENT - PAGE 14 16 EXHIBIT "A" LIST OF PLEDGED STOCK
=========================================================================================== PLEDGOR PLEDGED SHARES NUMBER CERTIFICATE ------- -------------- ------ ----------- OF SHARES IDENTIFICATION --------- -------------- NUMBER ------ - ------------------------------------------------------------------------------------------- Search Capital Newsearch, Inc. 2,400,000 003 Group, Inc. - ------------------------------------------------------------------------------------------- Search Capital Automobile Credit 4,500,000 011 Group, Inc. Holdings, Inc. - ------------------------------------------------------------------------------------------- Search Capital Automobile Credit 246,580 001 Group, Inc. Holdings, Inc. - ------------------------------------------------------------------------------------------- Search Capital Automobile Credit 4,500,000 048 Group, Inc. Holdings, Inc. - ------------------------------------------------------------------------------------------- Search Capital Search Funding Corp. 1,000 001 Group, Inc. ===========================================================================================
SEARCH PLEDGE AGREEMENT - PAGE 15 EX-99.7 9 ACHI PLEDGE AGREEMENT 1 EXHIBIT 99.7 ACHI PLEDGE AGREEMENT DATED AS OF NOVEMBER 30, 1995 BETWEEN AUTOMOBILE CREDIT HOLDINGS, INC. AND HALL FINANCIAL GROUP, INC. 2 EXHIBIT 99.7 ACHI PLEDGE AGREEMENT This PLEDGE AGREEMENT (the "AGREEMENT") is made and entered into as of the 30th day of November, 1995, by and between AUTOMOBILE CREDIT HOLDINGS, INC., a Delaware corporation ("PLEDGOR") and HALL FINANCIAL GROUP, INC., a Delaware corporation ("SECURED PARTY"). W I T N E S S E T H: 1. Pledgor is the owner of 100% of the shares of the issued and outstanding capital stock of Automobile Credit Acceptance Corp., a Texas corporation ("ACAC"). 2. Search Capital Group, Inc.., a Delaware corporation ("SEARCH"), and Search Funding Corp. ("SFC"), a Texas corporation, are affiliates of Pledgor in that both SFC and Pledgor are wholly owned subsidiaries of Search. 3. Concurrently herewith, Search and 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, Pledgor, Search, SFC, ACAC, and Newsearch, Inc.. ("NEWSEARCH"). 4. In order to induce Secured Party to provide financial accommodations to Pledgor, Search, ACAC, Newsearch, and SFC ("SEARCH PARTIES") 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, this Agreement, the Funding Agreement 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"), Pledgor has agreed to grant to Secured Party a security interest in the property hereinafter described. For good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE I COLLATERAL AND SECURED INDEBTEDNESS 1.1 GRANT OF SECURITY INTEREST. Pledgor hereby assigns, pledges and grants a security interest in the following property (herein, collectively, called the "COLLATERAL") to Secured Party: ACHI PLEDGE AGREEMENT - PAGE 1 3 (a) 100% of the shares of the capital stock of ACAC (the "PLEDGED STOCK"), and being more specifically described on Exhibit "A" attached hereto and incorporated herein by reference for all purposes, and all certificates representing the Pledged Stock; (b) with respect to the Pledged Stock, all (i) dividends declared and payable in cash, (ii) dividends declared and payable in the form of stock, securities or other property, (iii) dividends or distributions payable upon dissolution, partial or total liquidation, or in connection with a reduction of capital, capital surplus or paid-in surplus, (iv) all other distributions, whether of cash, stock other securities or other property issued with respect to or in lieu of or exchanged for the stock included in the Collateral (whether through stock split, spin-off, reclassification, merger, consolidation, acquisition, sale of assets, combination of shares, subdivision, redemption, payment of principal or otherwise), all of which Secured Party shall be entitled to receive and retain as part of the Collateral; and (c) all proceeds (cash and noncash) arising out of the sale, exchange, collection, enforcement or other disposition of all or any portion of the Pledged Stock, including, without limitation, proceeds in the form of accounts, chattel paper, instruments, documents, consumer goods, inventory and equipment. Coverage of proceeds, however, does not authorize sale, exchange or other disposition of any Collateral without the prior written consent of Secured Party, which consent shall not be unreasonably withheld. 1.2 SECURED OBLIGATION. This Agreement and the security interest herein created shall secure full and punctual payment and performance of the following indebtedness, duties and obligations (hereinafter, collectively, called the "SECURED OBLIGATION"): (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 PARTIAL RELEASE. Secured Party agrees to release from the Pledged Stock the amount of shares necessary to satisfy Note III at such time as the holder of such note elects ACHI PLEDGE AGREEMENT - PAGE 2 4 to convert such note to stock of Search or the Borrowers under such note elect to pay such note with stock of Search as provided in such note. ARTICLE II REPRESENTATIONS AND WARRANTIES 2.1 REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and warrants to the Secured Party as follows: (a) Pledgor is the owner and holder of the Pledged Stock and has good and marketable title to the Pledged Stock free and clear of any lien, security interest, charge or encumbrance, except for the security interest created by this Agreement, or otherwise in favor of the Secured Party. The Pledged Stock is duly authorized, validly issued, fully paid and nonassessable. The Pledged Stock constitutes 100% of the issued and outstanding stock of ACAC. (b) Pledgor has the lawful right, power and authority to grant a security interest in the Collateral. This Agreement together with all filings and other actions necessary or desirable to perfect and protect such security interest, including, without limitation, the delivery of all stock certificates representing the Pledged Stock, when duly taken, create a valid and perfected first priority security interest in the Collateral securing the payment and performance of the Secured Obligation. (c) No authorization, approval or other action by, and no notice to or filing with Pledgor or any governmental authority or regulatory body, is required either (i) for the grant by Pledgor of the security interest herein granted or for the execution, delivery or performance of this Agreement by Pledgor, or (ii) for the perfection or exercise by Secured Party of its rights and remedies hereunder. The Pledged Stock is subject to no restrictions or limitations on sale, assignment or transfer other than restrictions generally applicable to securities arising under State and Federal securities laws. (d) The delivery at any time by Pledgor to Secured Party of any Collateral shall constitute a representation and warranty by Pledgor under this Agreement that, with respect to such Collateral: (i) Pledgor is the record and beneficial owner thereof, and (ii) the matters heretofore warranted in clauses (a) through (c) of this Section 2.1 are true and correct. ACHI PLEDGE AGREEMENT - PAGE 3 5 ARTICLE III CERTAIN RIGHTS OF SECURED PARTY 3.1 APPOINTMENT OF AGENTS; REGISTRATION IN NOMINEE NAME. Secured Party shall have physical possession of the certificates representing or evidencing the Collateral which, after the occurrence of an Event of Default, may be held (in the discretion of Secured Party) in the name of Pledgor, endorsed or assigned in blank or in favor of Secured Party or in the name of Secured Party or any nominee or nominees of Secured Party or an agent appointed by Secured Party. In addition to all other rights possessed by Secured Party, Secured Party, at its option, may from time to time at its sole discretion, take any of the following actions: (a) extend or renew the Secured Obligation for one or more periods (whether shorter or longer than the original period) and grant releases, compromises or indulgences with respect to the Secured Obligation or any extension or renewal thereof or any security therefor or to any obligor hereunder or thereunder; and (b) exchange certificates or instruments representing or evidencing Collateral for certificates or instruments of smaller or larger denominations for any purpose consistent with its performance of this Agreement. 3.2 VOTING RIGHTS; DIVIDENDS; REPLACEMENT OF COLLATERAL, ETC. (a) Prior to the occurrence of an Event of Default (as hereinafter defined) hereunder or under any of the Loan Documents, Pledgor shall be entitled to exercise any and all voting rights and powers relating or pertaining to the Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement. Following the occurrence of an Event of Default, at the option of Secured Party following notice to Pledgor, all rights of Pledgor to exercise such voting rights and powers shall cease, and all such rights shall thereupon become vested in Secured Party who shall have the sole and exclusive right and authority to exercise such voting and/or consensual rights and powers. (b) Any payments received and any dividends declared and payable in cash arising from the Pledged Stock shall forthwith be delivered to Secured Party for application to the costs, expenses, disbursements, reimbursements, fees, interest and principal then owing and unpaid in respect of the Secured Obligation, in such priority as Secured Party may determine in its reasonable discretion. (c) Any and all dividends (other than dividends declared and payable in cash), distributions or exchanges or other items, all as more fully described in Section 1.1(b) above, if received by Pledgor, shall be held in trust for the benefit of Secured Party and shall forthwith be delivered to Secured Party or its designated ACHI PLEDGE AGREEMENT - PAGE 4 6 agent (accompanied by proper instruments of assignment and/or stock powers executed by Pledgor in accordance with Secured Party's instructions) to be held subject to the terms of this Agreement. ARTICLE IV PLEDGOR'S AFFIRMATIVE AND NEGATIVE COVENANTS Pledgor hereby covenants and agrees with Secured Party that until the Secured Obligation is paid and performed in full, unless Secured Party otherwise consents in writing: 4.1 BOOKS AND RECORDS. Pledgor hereby covenants and agrees that it will keep accurate and complete books and records of the Collateral, and shall, from time to time at request of Secured Party, deliver to or cause to be delivered to Secured Party such information regarding the Collateral as Secured Party may reasonably request. 4.2 INSPECTION RIGHTS. Pledgor hereby covenants and agrees to permit Secured Party, and such accountants or other agents as it may from time to time designate, to inspect, after reasonable notice, during normal business hours all records of Pledgor relating to the Collateral, and to make and retain copies of Pledgor's records relating to such Collateral. 4.3 OBLIGATIONS. Pledgor hereby covenants and agrees to duly and punctually pay and perform the obligations of Pledgor under this Agreement. 4.4 NOTIFICATION. Pledgor hereby covenants and agrees (i) to promptly notify Secured Party of any material change in any material fact or circumstance warranted or represented by Pledgor in this Agreement or in any other document furnished by Pledgor to Secured Party in connection with the Collateral or the Secured Obligation; and (ii) to promptly notify Secured Party of any claim, action, or proceeding affecting title to the Collateral, or any part thereof, or the security interest granted in this Agreement, and, at the request of Secured Party, to appear in and defend, at Pledgor's expense, any such action or proceeding. 4.5 SALE OR TRANSFER OF COLLATERAL. Pledgor hereby covenants and agrees that it will not sell, assign, or transfer any of the Collateral to any person, firm, or corporation (except Secured Party) without the prior written consent of Secured Party, which consent shall not be unreasonably withheld. 4.6 ENCUMBRANCE OF COLLATERAL. Pledgor hereby covenants and agrees that it will not create in favor of anyone, except Secured Party, any other security interest in the Collateral, or in any part thereof, or otherwise encumber or permit the same to become subject to any lien, attachment, execution, sequestration, or other legal or equitable process. ACHI PLEDGE AGREEMENT - PAGE 5 7 4.7 DISTRIBUTIONS. If Pledgor shall become entitled to receive or shall receive anything of value from the Pledged Stock, including but not limited to any cash, any stock certificate (including, without limitation, any certificate representing a stock dividend or a distribution in connection with any reclassification, increase, or reduction of capital or issued in connection with any reorganization), option or rights, whether as an addition to, in substitution of, or in exchange for any Collateral, or otherwise, Pledgor hereby covenants and agrees to accept the same as Secured Party's agent, to hold the same in trust for Secured Party, and to deliver the same forthwith to Secured Party in the exact form received, with the appropriate endorsement of Pledgor when necessary and/or appropriate, completed stock powers duly executed, to be held by Secured Party as additional collateral for the Secured Obligation, subject to the terms hereof. Any sums paid upon or in respect of the Collateral upon the liquidation or dissolution of the issuer thereof shall be paid over to Secured Party to be held by it as additional collateral for the Secured Obligation subject to the terms hereof; and in case any distribution of capital shall be made on or in respect of the Collateral or any recapitalization or reclassification of the capital of the issuer thereof or pursuant to any reorganization of the issuer thereof, the property so distributed shall be delivered to the Secured Party to be held by it, as additional collateral for the Secured Obligation, subject to the terms hereof. 4.8 ADDITIONAL SECURITIES. Pledgor shall not consent to or approve the issuance of any additional shares of any class of capital stock of the issuer of the Collateral, or any securities convertible into, or exchangeable for, any such shares or any warrants, options, rights or other commitments entitling any person to purchase or otherwise acquire any such shares except as permitted by the Funding Agreement. 4.9 FURTHER ASSURANCES. Pledgor hereby covenants and agrees to promptly execute and deliver to Secured Party all such other assignments, certificates, supplemental documents and financing statements, and to do all other acts or things, as Secured Party may from time to time request in order to more fully evidence and perfect the security interest granted in this Agreement including, without limitation, (a) delivering of any additional stock certificates from time to time in Pledgor's possession which represent shares of stock which are part of the Collateral and (b) doing of all other acts or things necessary or appropriate to enable Secured Party to fully protect and exercise its rights under this Agreement. ARTICLE V DEFAULTS AND REMEDIES 5.1 EVENTS OF DEFAULT. 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. ACHI PLEDGE AGREEMENT - PAGE 6 8 5.2 REMEDIES OF SECURED PARTY. (a) Upon the occurrence of an Event of Default Secured Party may, at its option: (i) reduce Secured Party's claim to judgment, foreclose or otherwise enforce Secured Party's security interest in all or any part of the Collateral by any available judicial procedure; (ii) after notification, if any, provided for in clause (b) of this Section 5.2, sell or otherwise dispose of, at the office of Secured Party, or elsewhere, as chosen by Secured Party, all or any part of the Collateral, and any such sale or other disposition may be as a unit or in parcels, by public or private proceedings, and by way of one or more contracts (it being agreed that the sale of any part of the Collateral shall not exhaust Secured Party's power of sale, but sales may be made from time to time until all of the Collateral has been sold or until the Secured Obligation has been paid in full), and at any such sale it shall not be necessary to exhibit the Collateral; (iii) at its discretion, retain such portion of the Collateral as shall aggregate in value to an amount equal to the Secured Obligation, in satisfaction of the Secured Obligation whenever the circumstances are such that Secured Party is entitled to do so under the Uniform Commercial Code applicable hereto (the "CODE"); (iv) apply by appropriate judicial proceedings for appointment of a receiver for the Collateral, or any part thereof, and Pledgor hereby consents to any such appointment; (v) buy all or any portion of the Collateral at any public sale; or (vi) buy the Collateral at any private sale if the Collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations. (b) Reasonable notification of time and place of any public sale of the Collateral or reasonable notification of the time after which any private sale or other intended disposition of the Collateral is to be made shall be sent to Pledgor and to any other person entitled under the Code to notice; provided, however, that if the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, Secured Party may sell or otherwise dispose of the Collateral without notification, advertisement or other notice of any kind. It is agreed that notice sent not less than ten (10) business days prior to the taking of the action to ACHI PLEDGE AGREEMENT - PAGE 7 9 which such notice relates is reasonable notification and notice for the purposes of this Section 5.2. (c) Because of the Securities Act of 1933, as amended, or other laws or regulations, there may be legal restrictions or limitations affecting Secured Party in any attempts to dispose of all or any portion of the Collateral in the enforcement of its rights and remedies hereunder. For these reasons, Secured Party is hereby authorized by Pledgor, but not obligated, upon the occurrence of any Event of Default hereunder giving rise to Secured Party's rights to sell or otherwise dispose of the Collateral, to sell all or any part of the Collateral at private sale, subject to investment letter or in any manner which will not require the Collateral, or any part thereof, to be registered in accordance with the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder, or any other law or regulation, at the best price reasonably obtainable by Secured Party at any such private sale or other disposition in the manner mentioned above. Secured Party is also hereby authorized by Pledgor, but not obligated, to take such actions, give such notices, obtain such consents and do such other things as Secured Party may reasonably deem necessary or appropriate in the event of a private sale or disposition of any of the Collateral. Pledgor clearly understands that Secured Party may in its discretion approach a restricted number of potential purchasers and that a sale under such circumstances may yield a lower price for the Collateral, or any part or parts thereof, than would otherwise be obtainable if same were registered and sold in the open market. Pledgor agrees (i) that in the event Secured Party shall, after any Event of Default hereunder, sell the Collateral, or any portion thereof, at such private sale or sales, Secured Party shall have the right to rely upon the advice and opinion of any member firm of a national securities exchange as to the best price reasonably obtainable upon such a private sale thereof; and (ii) such reliance shall be conclusive evidence that Secured Party handled such matter in a commercially reasonably manner under the Code. 5.3 WAIVERS BY PLEDGOR. Neither Pledgor nor anyone claiming by, through or under Pledgor, to the extent Pledgor may lawfully so agree, shall or will set up, claim or seek to take advantage of any appraisement, valuation, stay, extension or redemption law now or hereafter in force in any locality where any of the collateral is situated for purposes of applicable law, in order to prevent or hinder the enforcement of this Agreement, or the absolute sale of the Collateral, or the final and absolute putting into possession thereof, immediately after such sale, of the purchaser thereof; and Pledgor in Pledgor's own right and for all who may claim under Pledgor, hereby waive, to the full extent that Pledgor may lawfully do so, the benefit of all enforcement of the security interest herein granted, and Pledgor agrees that Secured Party or any court having jurisdiction to enforce such security interest may sell the Collateral in parts or as an entirety. 5.4 APPLICATION OF PROCEEDS. Secured Party may apply the proceeds of any foreclosure sale hereunder as follows: ACHI PLEDGE AGREEMENT - PAGE 8 10 (a) first, to the payment of all costs and expenses of any enforcement, foreclosure and collection hereunder and all proceedings in connection therewith, including reasonable attorneys' fees; (b) then, to the reimbursement of Secured Party for all disbursements made by Secured Party for taxes, assessments or liens superior to the security interest hereof and which Secured Party shall deem expedient to pay; (c) then, to the reimbursement of Secured Party of any other disbursements made by Secured Party in accordance with the terms hereof; (d) then, to or among the costs, expenses, disbursements, reimbursements, fees, interest and principal then owing and unpaid in respect of the Secured Obligation, in such priority as Secured Party may determine in its discretion; and (e) then, to Pledgor or to each other Person who may be entitled thereto by law. If such proceeds shall be insufficient to discharge the entire Secured Obligation, Secured Party shall have any other available legal recourse against Pledgor for the deficiency. 5.5 ENFORCEMENT OF SECURED OBLIGATION. Nothing in this Agreement or in any other Loan Documents shall affect or impair the unconditional and absolute right of Secured Party to enforce the Secured Obligation as and when the same shall become due in accordance with the terms of the Loan Documents. ARTICLE VI RIGHTS OF SECURED PARTY 6.1 SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor hereby irrevocably appoints Secured Party as Pledgor's attorney-in-fact, effective upon the occurrence of an Event of Default, with full authority in the place and stead of Pledgor and in the name of Pledgor, Secured Party or otherwise, from time to time in Secured Party's discretion, to take any action and to execute any instrument which Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including without limitation: (a) to ask, demand, collect, sue for, recover, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral; (b) to receive, endorse, and collect any drafts or other instruments, documents and chattel paper, in connection with clause (a) of this Section 6.1; and ACHI PLEDGE AGREEMENT - PAGE 9 11 (c) to file any claims or take any action or institute any proceeding which Secured Party may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of Secured Party against any of the Collateral. 6.2 PERFORMANCE BY SECURED PARTY. If Pledgor fails to perform any agreement contained herein, Secured Party may itself perform, or cause the performance of, such agreement, and the expenses of Secured Party incurred in connection therewith shall be payable by Pledgor under Section 6.7. In no event, however, shall Secured Party have any obligation or duties whatsoever to perform any covenant or agreement of Pledgor contained herein, and any such performance by Secured Party shall be wholly discretionary with Secured Party. 6.3 DUTIES OF SECURED PARTY. The powers conferred upon Secured Party hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for money or other property actually received by it hereunder, Secured Party shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. 6.4 NO LIABILITY OF SECURED PARTY. Neither the acceptance of this Agreement by Secured Party, nor the exercise of any rights hereunder by Secured Party, shall be construed in any way as an assumption by Secured Party of any obligations, responsibilities or duties of Pledgor arising in connection with the Collateral assigned hereunder or otherwise bind Secured Party to the performance of any obligations respecting the Collateral, it being expressly understood that Secured Party shall not be obligated to perform, observe or discharge any obligation, responsibility, duty or liability of Pledgor in respect of any of the Collateral, including, but not limited to, appearing in or defending any action, expending any money or incurring any expense in connection therewith. 6.5 RIGHT TO DEFEND ACTION AFFECTING SECURITY. Secured Party may, at Pledgor's expense, appear in and defend any action or proceeding at law or in equity purporting to affect the security interest granted under this Agreement. 6.6 RIGHT TO PREVENT OR REMEDY DEFAULT. At any time following an Event of Default, Secured Party: (a) may but shall not be obligated to take any action Secured Party deems necessary or desirable to prevent or remedy any such failure by Pledgor or otherwise to protect the security interest granted under this Agreement, and (b) shall have the absolute and immediate right to take possession of the Collateral or any part thereof to such extent and as often as Secured Party, in its sole discretion, deems necessary or desirable in order to prevent or to cure any such ACHI PLEDGE AGREEMENT - PAGE 10 12 default by Pledgor, or otherwise to protect the security of this Agreement. Secured Party may advance or expend such sums of money for the account of Pledgor as Secured Party in its sole discretion deems necessary for any such purpose. 6.7 EXPENSES. All reasonable advances, costs, expenses, charges and attorneys' fees which Secured Party may make, pay or incur under any provision of this Agreement for the protection of its security or for the enforcement of any of its rights hereunder, or in foreclosure proceedings commenced and subsequently abandoned, or in any dispute or litigation in which Secured Party or the holder of the Notes may become involved by reason of or arising out of the Loan Documents or the Collateral, shall be a part of the Secured Obligation and shall be paid by Pledgor to Secured Party, upon demand, and shall, at Secured Party's election, bear interest until paid at the rate specified in the applicable note until demand and then at the maximum rate of interest permitted by applicable law (or such lesser rate as may be chosen by Secured Party), from the date of such payment until repaid by Pledgor. 6.8 SECURED PARTY'S RIGHT OF SET-OFF. Upon the happening of any event entitling Secured Party to pursue any remedy provided herein, or if Secured Party shall be served with garnishment process in which Pledgor shall be named as defendant, whether or not Pledgor shall be in default hereunder at the time, Secured Party may, but shall not be required to, set-off any indebtedness owing by Secured Party to Pledgor against any of the Secured Obligation without first resorting to the security hereunder and without prejudice to any other rights or remedies of Secured Party or its security interest herein. 6.9 NO WAIVER. In case Secured Party shall have proceeded to enforce any right or remedy hereunder and such proceedings shall have been discontinued or abandoned for any reason, then in every such case, Pledgor and Secured Party shall be restored to their former positions and rights hereunder with respect to the Collateral, and all rights, remedies and powers of Secured Party shall continue as if no such proceeding has been taken. No failure or delay on the part of Secured Party in exercising any right, remedy or power under this Agreement or in giving or insisting upon strict performance by Pledgor hereunder or in giving notice hereunder shall operate as a waiver of the same or any other power or right, and no single or partial exercise of any such power or right shall preclude any other or further exercise thereof or the exercise of any other such power or right. Secured Party, notwithstanding any such failure, shall have the right thereafter to insist upon the strict performance by Pledgor of any and all of the terms and provisions of this Agreement to be performed by Pledgor. The collection and application of proceeds, the entering and taking possession of the Collateral, and the exercise of the rights of Secured Party contained in the Loan Documents, including this Agreement, shall not cure or waive any default, or affect any notice of default, or invalidate any acts done pursuant to such notice. No waiver by Secured Party of any breach or default of or by any party hereunder shall be deemed to alter or affect Secured Party's rights hereunder with respect to any prior or subsequent default. ACHI PLEDGE AGREEMENT - PAGE 11 13 6.10 REMEDIES CUMULATIVE. No right or remedy herein reserved to Secured Party is intended to be exclusive of any other right or remedy, but each and every such right or remedy shall be cumulative, not in lieu of, but in addition to any other rights or remedies given under this Agreement and all other Loan Documents at law, and in equity. Subject to any limitations set forth in this Agreement, any and all of Secured Party's rights and remedies may be exercised from time to time and as often as such exercise is deemed necessary or desirable by Secured Party. 6.11 RIGHT OF SECURED PARTY TO EXTEND TIME OF PAYMENT, SUBSTITUTE, RELEASE SECURITY, ETC. Without affecting the liability of any person for the payment of any of the Secured Obligation or the security interests of this Agreement on the Collateral for the full amount of any Secured Obligation unpaid, Secured Party may, without notice or without affecting or impairing the security interest or rights of Secured Party granted or arising under this Agreement: (a) release any person liable for the payment of any of the Secured Obligation, (b) extend the time or otherwise alter the terms of payment of any of the Secured Obligation, (c) accept additional security for the Secured Obligation of any kind, (d)alter, substitute or release any property securing the Secured Obligation, (e) resort for the payment of all or any portion of the Secured Obligation to its several securities therefor in such order and manner as it may deem fit, or (f) join in any subordination or other agreement affecting this Agreement or the lien or charge thereof. ARTICLE VII MISCELLANEOUS 7.1 DEFINITIONS. In this Agreement, whenever the context so requires, the neuter gender includes the masculine and feminine, and the singular number includes the plural and vice versa. The terms "ADVANCES", "COSTS", and "EXPENSES" shall include, but shall not be limited to, reasonable attorneys' fees whenever incurred. The terms "INDEBTEDNESS", "OBLIGATIONS" and "SECURED OBLIGATION" shall mean and include, but shall not be limited to, all claims, demands, obligations and liabilities whatsoever, however arising, whether owing by the subject person or entity individually or as a joint venturer, or jointly or in common with any other party, and whether absolute or contingent, and whether owing by the subject person or entity as principal debtor or as accommodation maker or as endorser, liquidated or unliquidated, and whenever contracted, accrued or payable. 7.2 PARAGRAPH HEADINGS. 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. 7.3 CHANGE, AMENDMENT, ETC. No change, amendment, modification, cancellation or discharge of any provision of this Agreement shall be valid unless consented to in writing by Secured Party. ACHI PLEDGE AGREEMENT - PAGE 12 14 7.4 SUCCESSORS AND ASSIGNS. As and when used herein, the term "PLEDGOR" shall mean and include the Pledgor herein named and its successors and permitted assigns, and the term "SECURED 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 Pledgor and Secured Party and their respective successors and permitted assigns. 7.5 APPLICABLE LAWS. THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND ENFORCEABLE UNDER AND PURSUANT TO THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW. 7.6 SEVERABILITY. 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. 7.7 NOTICES. 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 Pledgor 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 Pledgor: Automobile Credit Holdings, Inc. 700 N. Pearl Suite 400, L.B. 401 Dallas, Texas 75201-2809 With a copy to: Akin, Gump, Strauss, Hauer & Feld, L.L.P. Suite 4100 1700 Pacific Avenue Dallas, Texas 75201 Attention: Ford Lacy, P.C. If to Secured Party: Hall Financial Group, Inc. 750 North St. Paul, Suite 200 Dallas, Texas 75201-3247 With a copy to: Burke & Wright, P.C. 2900 Renaissance Tower 1201 Elm Street Dallas, Texas 75270-2102 Attention: Frank J. Wright, Esq. ACHI PLEDGE AGREEMENT - PAGE 13 15 7.8 INDEPENDENT REPRESENTATION. Pledgor specifically acknowledges that it has been represented by independent counsel in connection with its negotiation and execution of this Agreement and that it is entering into this Agreement of its own free will, without duress or coercion by any other person. 7.9 COUNTERPARTS. 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. IN WITNESS WHEREOF, Pledgor and Secured Party have executed this Agreement on the date and year first above written. PLEDGOR: AUTOMOBILE CREDIT HOLDINGS, INC. By: /s/ ROBERT D. IDZI ------------------------------------ Printed Name: Robert D. Idzi -------------------------- Its: SVP & CFO ----------------------------------- SECURED PARTY: HALL FINANCIAL GROUP, INC. By: /s/ LARRY G. LEVEY ------------------------------------ Printed Name: Larry G. Levey -------------------------- Its: Senior Vice President ----------------------------------- ACHI PLEDGE AGREEMENT - PAGE 14 16 EXHIBIT "A" LIST OF PLEDGED STOCK
=============================================================================================================== PLEDGOR PLEDGED SHARES NUMBER CERTIFICATE ------- -------------- ------ ----------- OF IDENTIFICATION -- -------------- SHARES NUMBER ------ ------ - --------------------------------------------------------------------------------------------------------------- Automobile Credit Automobile Credit Acceptance 1,000 7 Holdings, Inc. Corp. ===============================================================================================================
ACHI PLEDGE AGREEMENT - PAGE 15 EX-99.8 10 SEARCH SECURITY AGREEMENT 1 EXHIBIT 99.8 SEARCH SECURITY AGREEMENT DATED AS OF NOVEMBER 30, 1995 BETWEEN SEARCH CAPITAL GROUP, INC. AND HALL FINANCIAL GROUP, INC. 2 EXHIBIT 99.8 SEARCH SECURITY AGREEMENT This SECURITY AGREEMENT (the "AGREEMENT") is made and entered into as of the 30th day of November, 1995, by and between Search Capital Group, Inc., (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, Grantor 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, Newsearch, Inc. ("NEWSEARCH"), SFC, Automobile Credit Acceptance Corp. ("ACAC"), 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, Newsearch, SFC, ACHI, or ACAC ("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 Grantor'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. 395-34981-11 ("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. SEARCH SECURITY AGREEMENT - PAGE 1 3 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: the Search Collateral set forth in exhibit "A" attached hereto; 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; SEARCH SECURITY AGREEMENT - PAGE 2 4 All now owned and hereafter acquired right, title and interest of Grantor in, to and in respect of goods, including, but not limited to: 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. Notwithstanding the foregoing, the Collateral shall not include the treasury stock of Grantor or the stock held by Grantor in the Chapter Subsidiaries. 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 SEARCH SECURITY AGREEMENT - PAGE 3 5 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 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 SEARCH SECURITY AGREEMENT - PAGE 4 6 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 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 SEARCH SECURITY AGREEMENT - PAGE 5 7 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 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: SEARCH SECURITY AGREEMENT - PAGE 6 8 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 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 "B" 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 SEARCH SECURITY AGREEMENT - PAGE 7 9 (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. 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 SEARCH SECURITY AGREEMENT - PAGE 8 10 (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 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 SEARCH SECURITY AGREEMENT - PAGE 9 11 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 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, sue 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 SEARCH SECURITY AGREEMENT - PAGE 10 12 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 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 SEARCH SECURITY AGREEMENT - PAGE 11 13 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 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. SEARCH SECURITY AGREEMENT - PAGE 12 14 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 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. 750 North St. Paul Suite 200 Dallas, Texas 75201-3247 With copy to: Burke & Wright, P.C. 2900 Renaissance Tower 1201 Elm Street Dallas, Texas 75270-2102 Attn: Frank J. Wright, Esq. If to Grantor: Search Capital Group, Inc 700 N. Pearl Suite 400, L.B. 401 Dallas, Tx. 75201-2809 Attn: General Counsel With a copy to: Akin, Gump, Strauss, Hauer & Feld, L.L.P. 1700 Pacific Avenue, Suite 4100 Dallas, Texas 75201 Attention: Ford Lacy, P.C. SEARCH SECURITY AGREEMENT - PAGE 13 15 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. 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: Search Capital Group, Inc. By: /s/ ROBERT D. IDZI --------------------------------- Printed Name: Robert D. Idzi ----------------------- Its: SVP & CFO -------------------------------- SECURED PARTY: Hall Financial Group, Inc. By: /s/ LARRY E. LEVEY ---------------------------------- Larry E. Levey Senior Vice President SEARCH SECURITY AGREEMENT - PAGE 14 16 EXHIBIT "A" SEARCH COLLATERAL LEGEND FOR COLLATERAL LIST The contract receivables listed on the attached schedule can be identified to a specific entity using the following legend (the words in bold print below are defined in the Funding Agreement): SEARCH COLLATERAL includes all of the contract receivables identified in the Fund column as Fund 7 and Fund 10; SFC COLLATERAL includes all of the contract receivables identified in the Fund column as Fund 12; GECC PLEDGED COLLATERAL includes all contracts receivables that specify the letter "G" in the G column. 17 EXHIBIT "B" PERMITTED LIENS 1. Any liens granted to Secured Party; 2. All liens previously granted to General Electric Capital Corporation; 3. 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; 4. 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. 5. 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. EX-99.9 11 SFC SECURITY AGREEMENT 1 EXHIBIT 99.9 SFC SECURITY AGREEMENT DATED AS OF NOVEMBER 30, 1995 BETWEEN SEARCH FUNDING CORP. AND HALL FINANCIAL GROUP, INC. 2 EXHIBIT 99.9 SFC SECURITY AGREEMENT This SECURITY AGREEMENT (the "AGREEMENT") is made and entered into as of the 30th day of November, 1995, by and between Search Funding 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, Grantor and Search Capital Group, Inc.. ("SEARCH") 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, Newsearch, Inc. ("NEWSEARCH"), Automobile Credit Acceptance Corp. ("ACAC"), 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, Newsearch, ACHI, or ACAC ("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. 395-34981-11 ("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 SFC SECURITY AGREEMENT - PAGE 1 3 of setoff against, and Grantor hereby assigns and pledges to Secured Party, all of the Collateral. 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: the SFC Collateral set forth in Exhibit "A" attached hereto; 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; SFC SECURITY AGREEMENT - PAGE 2 4 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: 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 SFC SECURITY AGREEMENT - PAGE 3 5 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 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 SFC SECURITY AGREEMENT - PAGE 4 6 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 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 SFC SECURITY AGREEMENT - PAGE 5 7 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 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: SFC SECURITY AGREEMENT - PAGE 6 8 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 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 "B" 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 SFC SECURITY AGREEMENT - PAGE 7 9 (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. 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 SFC SECURITY AGREEMENT - PAGE 8 10 (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 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 SFC SECURITY AGREEMENT - PAGE 9 11 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 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, sue 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 SFC SECURITY AGREEMENT - PAGE 10 12 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 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 SFC SECURITY AGREEMENT - PAGE 11 13 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 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. SFC SECURITY AGREEMENT - PAGE 12 14 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 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. 750 North St. Paul Suite 200 Dallas, Texas 75201-3247 With copy to: Burke & Wright, P.C. 2900 Renaissance Tower 1201 Elm Street Dallas, Texas 75270-2102 Attn: Frank J. Wright, Esq. If to Grantor: Search Funding Corp. 700 N. Pearl Suite 400, L.B. 401 Dallas, TX 75201-2809 Attention: General Counsel With a copy to: Akin, Gump, Strauss, Hauer & Feld, L.L.P. 1700 Pacific Avenue, Suite 4100 Dallas, Texas 75201 Attention: Ford Lacy, P.C. SFC SECURITY AGREEMENT - PAGE 13 15 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. 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: Search Funding Corp. By: /s/ ROBERT D. IDZI --------------------------------- Printed Name: Robert D. Idzi ----------------------- Its: SVP and CFO -------------------------------- SECURED PARTY: Hall Financial Group, Inc. By: /s/ LARRY E. LEVEY --------------------------------- Larry E. Levey Senior Vice President SFC SECURITY AGREEMENT - PAGE 14 16 EXHIBIT "A" SFC COLLATERAL LEGEND FOR COLLATERAL LIST The contract receivables listed on the attached schedule can be identified to a specific entity using the following legend (the words in bold print below are defined in the Funding Agreement): SEARCH COLLATERAL includes all of the contract receivables identified in the Fund column as Fund 7 and Fund 10; SFC COLLATERAL includes all of the contract receivables identified in the Fund column as Fund 12; GECC PLEDGED COLLATERAL includes all contracts receivables that specify the letter "G" in the G column. 17 EXHIBIT "B" PERMITTED LIENS 1. Any liens granted to Secured Party; 2. All liens previously granted to General Electric Capital Corporation; 3. 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; 4. 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. 5. 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. EX-99.10 12 ACAC SECURITY AGREEMENT 1 EXHIBIT 99.10 ACAC SECURITY AGREEMENT DATED AS OF NOVEMBER 30, 1995 BETWEEN AUTOMOBILE CREDIT ACCEPTANCE CORP. AND HALL FINANCIAL GROUP, INC. 2 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. 395-34981-11 ("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 3 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: ACAC SECURITY AGREEMENT - PAGE 2 4 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 5 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 6 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 ACAC SECURITY AGREEMENT - PAGE 5 7 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 ACAC SECURITY AGREEMENT - PAGE 6 8 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. ACAC SECURITY AGREEMENT - PAGE 7 9 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 ACAC SECURITY AGREEMENT - PAGE 8 10 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 ACAC SECURITY AGREEMENT - PAGE 9 11 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, sue 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 ACAC SECURITY AGREEMENT - PAGE 10 12 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. 750 North St. Paul Suite 200 Dallas, Texas 75201-3247 With copy to: Burke & Wright, P.C. 2900 Renaissance Tower 1201 Elm Street Dallas, Texas 75270-2102 Attn: Frank J. Wright, Esq. If to Grantor: Automobile Credit Acceptance Corp. 700 N. Pearl Suite 400, L.B. 401 Dallas, Texas 75201-2809 Attn: General Counsel With a copy to: Akin, Gump, Strauss, Hauer & Feld, L.L.P. 1700 Pacific Avenue, Suite 4100 Dallas, Texas 75201 Attention: Ford Lacy, 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/ ROBERT D. IDZI ---------------------------------- Printed Name: Robert D. Idzi ------------------------ Its: SVP & CFO --------------------------------- SECURED PARTY: Hall Financial Group, Inc. By: /s/ LARRY E. LEVEY ---------------------------------- Larry E. Levey 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 -----END PRIVACY-ENHANCED MESSAGE-----