AMENDMENT NUMBER 1 TO
AMENDED AND RESTATED SECURITY AGREEMENT
AMENDMENT NUMBER 1 TO AMENDED AND RESTATED SECURITY AGREEMENT
(this "Amendment"), dated as of August 31, 2000 by and among UNION ACCEPTANCE
FUNDING CORPORATION, an Indiana corporation, as Seller (in such capacity, the
"Seller"), UAFC CORPORATION, a Delaware corporation, as debtor (in such
capacity, the "Debtor"), UNION ACCEPTANCE CORPORATION, an Indiana corporation
("UAC"), individually and in its capacity as collection agent (in such capacity,
the "Collection Agent"), ENTERPRISE FUNDING CORPORATION, a Delaware corporation
(the "Company"), MBIA INSURANCE CORPORATION, a New York stock insurance company,
as financial guaranty insurer (the "Insurer") and BANK OF AMERICA, N.A., a
national banking association ("Bank of America"), individually and as collateral
agent for the Company, the Bank Investors, and the Insurer (in such capacity,
the "Collateral Agent") amending that certain Security Agreement dated as of May
12, 2000 (the "Security Agreement").
WHEREAS, the parties hereto mutually desire to make certain
amendments to the Security Agreement as hereinafter set forth.
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. Defined Terms. As used in this Amendment, and
except as otherwise provided in this Section 1, capitalized terms shall have the
same meanings as signed thereto in the Security Agreement.
(a) Section 1.1 of the Security Agreement is hereby amended by
deleting the definition of "Commitment Termination Date" and replacing it with
the following (solely for convenience changed language is italicized):
""Commitment Termination Date" shall mean August 30, 2001, or
such later date to which the Commitment Termination Date may be
extended by the Debtor, the Agent and the Bank Investors not later than
30 days prior to the then current Commitment Termination Date."
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(b) Section 1.1 of the Security Agreement is hereby amended by
deleting the word "and" appearing at the end of clause (xiii) of the definition
of "Eligible Receivable, " deleting the "." at the end of clause (xiv) of such
definition and replacing it with "; and" and adding to such definition a new
clause (xv) as follows:
"(xv) with respect to any Receivable that is an Undocumented
Receivable, all documentation required to be received after the
origination of such Receivable pursuant to the Credit and Collection
Policy has been received and accepted by the Collection Agent within
twenty (20) days following the date of the initial draft drawn by the
originating dealer on UAC in connection with the origination of such
Receivable."
(c) Section 1.1 of the Security Agreement is hereby amended by
deleting the definition of "Non-Prime Percentage" and replacing it with the
following:
""Non-Prime Percentage" shall mean 100% less the Prime
Percentage".
(d) Section 1.1 of the Security Agreement is hereby amended by
deleting the definition of "Noteholder's Percentage" and replacing it with the
following (solely for convenience changed language is italicized):
""Noteholder's Percentage" shall mean an amount equal to
98.25% less the product of (i) 2, and (ii) the amount, if any, by which
the Target Net Yield exceeds the Net Yield as of the most recent
Determination Date. The Noteholder's Percentage shall initially equal
98.25%."
(e) Section 1.1 of the Security Agreement is hereby amended by adding
thereto in the proper alphabetical location a definition of "Prime Percentage"
which shall be as follows:
""Prime Percentage" shall mean a percentage (not greater than
100%) equal to a fraction where (i) the numerator shall equal the Net
Receivables Balance of all Prime Receivables and (ii) the denominator
shall equal the Net Investment minus the amount on deposit in the
Prefunding Account."
(f) Section 1.1 of the Security Agreement is hereby amended by
deleting the definition of "Receivables" and replacing it with the following
(solely for convenience changed language is italicized):
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""Receivable" shall mean indebtedness owed to the Debtor by an
Obligor (without giving effect to any transfer hereunder) under a
Contract which is a Prime Receivable or a Non-Prime Receivable, whether
constituting an account, chattel paper, instrument or general
intangible, arising out of or in connection with the sale of new or
used automobiles, vans or light-duty trucks or the rendering of
services by the originating dealer in connection therewith, and
includes the right of payment of any Finance Charges and other
obligations of the Obligor with respect thereto. Notwithstanding the
foregoing, once the Collateral Agent has released its security interest
in a Receivable and the related Contract pursuant to Section 2.7 or
Section 2.15 hereof, it shall no longer constitute a Receivable
hereunder. The term "Receivable" specifically excludes Modified
Receivables."
(g) Section 1.1 of the Security Agreement is hereby amended by
deleting the definition of "Required Reserve Account Percentage" and replacing
it with the following:
""Required Reserve Account Percentage" shall mean the
percentage specified in the following table corresponding to the
Non-Prime Percentage:
Non-Prime Percentage Required Reserve Account Percentage
2.51% or greater 1.25%
0.0 to 2.50% 1.00%"
(h) Section 1.1 of the Security Agreement is hereby amended by
deleting the definition of "Take-Out" and replacing it with the following
(solely for convenience changed language is italicized):
""Take-Out" shall mean the release, pursuant to Section
2.15(a) or 2.15(d), excluding releases due to Warehouse Transfers, by
the Collateral Agent of Receivables and the Contracts related thereto.
In order to qualify as a "Take-Out", the Take-Out Percentage shall be
no greater than 25%."
(i) Section 1.1 of the Security Agreement is hereby amended by
deleting the definition of "Termination Date" and replacing it with the
following (solely for convenience changed language is italicized):
""Termination Date" shall mean the earliest of (i) that
Business Day designated by the Debtor to the Agent as the Termination
Date at any time following 60 days' written notice to the Agent, (ii)
the date of termination of the liquidity
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commitment of the Liquidity Provider under the Liquidity Provider
Agreement, (iii) the date of termination of the commitment of the
Credit Support Provider under the Credit Support Agreement, (iv) the
day on which a Termination Event occurs pursuant to Section 7.1, (v)
two business days prior to the Commitment Termination Date, or (vi)
August 30, 2001, unless extended prior to such date pursuant to a
Revolving Period Extension (as defined in the Insurance Agreement)."
SECTION 2. Amendment to Section 2.3(a). Section 2.3(a) of the
Security Agreement is hereby amended by deleting such paragraph and replacing it
with the following (solely for convenience added language is italicized):
"(a) On each Determination Date, the Collection Agent shall
allocate all Collections received during the preceding Settlement
Period as Receipts of Interest or Receipts of Principal. On each
Remittance Date, Receipts of Interest plus all earnings during the
related Settlement Period on amounts on deposit in the Prefunding Ac
count to the extent not required pursuant to Section 2.11 to be
distributed to the Col lection Agent in reimbursement for previously
advanced Interest Reserve Advances plus all amounts deposited in the
Prefunding Interest Reserve Account with respect to the related
Settlement Period (together with any earnings thereon during such
Settlement Period) plus any Interest Reserve Advance made by the
Collection Agent on such Remittance Date pursuant to Section 2.11 plus
any payments to the Debtor under an Acceptable Hedging Arrangement (it
being understood that prior to a Termination Event and provided that
Acceptable Hedging Arrangements are in place, proceeds from the
termination of any Acceptable Hedging Arrangements in connection with a
Securitization or Warehouse Transfer will be released to the Debtor and
not constitute "Available Funds") plus all amounts to be applied
pursuant to Section 2.14(c)(ii)(y) (the aggregate of such amounts in
respect of any remittance date, the "Available Funds") shall be
applied, without duplication, by the Collection Agent as follows: "
SECTION 3. Amendment to Section 2.7(b). Section 2.7(b) of the
Security Agreement is hereby amended by deleting such paragraph and replacing it
with the follow ing: "[RESERVED]".
SECTION 4. Amendment to Section 2.13(a). Section 2.13(a) of
the Security Agreement is hereby amended by deleting such paragraph and
replacing it with the follow ing: (solely for convenience changed language is
italicized):
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"(a) On the day of the Initial Funding with respect to all
Receivables recorded on the Collection Agent's master servicing records
as of such day and on any Business Day thereafter on which a Receivable
is recorded on the Collection Agent's master servicing records, the
Debtor shall deposit into the Yield Supplement Account for each such
Receivable with respect to which the related Contract provides for
interest to accrue thereunder at a rate less than the Minimum Required
APR (determined as of the date of such recordation on the Collection
Agent's master servicing records) an amount (each such amount, a
"Required Yield Deposit Amount") equal to the product of (i) the number
of monthly payments originally required under such Contract and (ii) an
amount equal to (x) the scheduled monthly payment on such Contract
which would be required to be made by the Obligor thereunder if such
Contract had a rate per annum equal to the Minimum Required APR minus
(y) the scheduled monthly payment on such Contract which would be
required to be made by the Obligor thereunder if such Contract had a
rate per annum equal to the rate set forth in such Contract.
Notwithstanding the foregoing, no Required Yield Deposit Amount need be
deposited to the Yield Supplement Account until the total amount of all
undeposited Required Yield Deposit Amounts equals or exceeds $10,000."
SECTION 5. Amendment to Section 2.14(c)(ii). Section
2.14(c)(ii) of the Security Agreement is hereby amended by deleting such
paragraph and replacing it with the following: (solely for convenience changed
and added language is italicized):
"(ii) In the event that on any Remittance Date, any day on
which a Take-Out occurs or any day on which a Warehouse Transfer
occurs, after giving effect to clause (c)(i) above, the amount on
deposit in the Reserve Account (calculated as of the related
Determination Date or the date of the Take-Out, as applicable) exceeds
the Required Reserve Account Amount, the Collateral Agent shall (x) if
no Termination Event shall have occurred, release to the Debtor an
amount equal to the excess of the amount on deposit in the Reserve
Account over the Required Reserve Account Amount and (y) if a
Termination Event shall have occurred, apply as part of Available Funds
pursuant to Section 2.3 an amount equal to the excess of the amount on
deposit in the Reserve Account over the Required Reserve Account
Amount."
SECTION 6. Limited Scope. This amendment is specific to the
circumstanc es described above and does not imply any future amendment or waiver
of rights allocated to the Debtor, the Collection Agent, the Agent, the
Administrative Agent, the Insurer or the Collateral Agent under the Security
Agreement.
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SECTION 7. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 8. Severability; Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
instrument. Any provisions of this Amendment which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 9. Ratification. Except as expressly affected by the
provisions hereof, the Security Agreement as amended shall remain in full force
and effect in accordance with its terms and ratified and confirmed by the
parties hereto. On and after the date hereof, each reference in the Security
Agreement to "this Agreement", "hereunder", "herein" or words of like import
shall mean and be a reference to the Security Agreement as amended by this
Amendment.
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Amendment Number 1 as of the date first written above.
ENTERPRISE FUNDING CORPORATION,
as Company
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title:
UAFC CORPORATION,
as Debtor
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title:
UNION ACCEPTANCE FUNDING
CORPORATION, as Seller
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title:
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UNION ACCEPTANCE CORPORATION,
individually and as Collection Agent
By: /s/ Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
Title:
BANK OF AMERICA, N.A.,
individually and as Collateral Agent
and Bank Investor
By: /s/ Xxxxxxxx X. Xxxxx
Name: Xxxxxxxx X. Xxxxx
Title:
MBIA INSURANCE CORPORATION, as
Insurer
By: /s/ Xxxxxxxx Xxxxxxx
Name: Xxxxxxxx Xxxxxxx
Title:
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