AMENDMENT NUMBER 1 TO
SECURITY AGREEMENT
AMENDMENT NUMBER 1 TO SECURITY AGREEMENT (this "Amendment"),
dated as of May 25, 1999 by and among UNION ACCEPTANCE FUNDING 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 NATIONSBANK, N.A., a national banking association
("NationsBank"), 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 September 18, 1998 (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 assigned thereto in the Security Agreement.
(a) Section 1.1 of the Security Agreement is hereby amended by deleting
the definition of "Delinquent Receivable" and replacing it with the following
(solely for convenience changed language is italicized):
""Delinquent Receivable" shall mean an Eligible Receivable: (i) as
to which any payment, or part thereof (provided that such part is
in excess of $10.00), remains unpaid for more than thirty (30)
days from the due date for such payment and (ii) which is not a
Defaulted Receivable."
(b) Section 1.1 of the Security Agreement is hereby amended by deleting
the definition of "Required Reserve Account Amount" and replacing it with the
following (solely for convenience changed language is italicized):
""Required Reserve Account Amount" shall mean, at any time of
determination, an amount equal to the product of (a) the Required
Reserve Account Percentage and (b) the Net Investment divided by
the Noteholder's Percentage."
(c) Section 1.1 of the Security Agreement is hereby amended by adding
thereto a new defined term "Required Reserve Account Percentage" in the
appropriate alphabetical order, and such definition shall read as follows:
""Required Reserve Account Percentage" shall mean the percentage
specified in the following table corresponding to the percentage
of type 54 or type 55 loans (i.e. "non-prime" loans) in relation
to the Net Receivables Balance:
-------------------------------------------- -----------------------------------
Percentage of Non-Prime Receivables Required Reserve Account Percentage
-------------------------------------------- -----------------------------------
2.51% or greater 3.00%
-------------------------------------------- -----------------------------------
0.0 to 2.50% 2.75%
-------------------------------------------- -----------------------------------
SECTION 2. Amendment to Section 2.3(a). The introductory
paragraph of Section 2.3(a) of the Security Agreement is hereby deleted and
replaced 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
Account to the extent not required pursuant to Section 2.11 to be
distributed to the Collection 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 Take-Out 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 9.6. Section 9.6 of the
Security Agreement is hereby amended to add thereto a new paragraph (c) and such
paragraph shall read as follows:
"(c) The parties hereto agree that the counterparties to
Acceptable Hedging Arrangements shall be third party beneficiaries
of this Agreement and that the provisions of Section 2.3 (a) may
not be amended without the prior consent of such counterparties. "
SECTION 4. Limited Scope. This amendment is specific to the
circumstances described above and does not imply any future amendment or waiver
of rights allocated to the Debtor, the Collection Agent, the Insurer or the
Collateral Agent under the Security Agreement.
SECTION 5. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. 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 7. 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.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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/ Xxxxx X. Xxxxx
--------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
UNION ACCEPTANCE FUNDING
CORPORATION, as Debtor
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
UNION ACCEPTANCE CORPORATION,
individually and as Collection Agent
By: /s/ Xxxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
MBIA INSURANCE CORPORATION,
as Insurer
By: /s/ Xxxx X. Xxxxx
--------------------------------------
Name: Xxxx X. Xxxxx
Title: Managing Director
NATIONSBANK, N.A.,
individually and as Collateral Agent
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
