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Exhibit 4 (f) (5)
AMENDMENT NO. 1 TO
SECURITY AGREEMENT
AMENDMENT NO. 1 TO SECURITY AGREEMENT (this "Amendment"),
dated as of June 30, 1999, among KITTY HAWK FUNDING CORPORATION, a Delaware
corporation, as a secured party (together with its successors and assigns, the
"Company"), CAC FUNDING CORP., a Nevada corporation, as debtor (together with
its successors and assigns, the "Debtor"), CREDIT ACCEPTANCE CORPORATION, a
Michigan corporation, individually and as servicer (together with its successors
and assigns, the "Servicer"), and NATIONSBANK, N.A., a national banking
association ("NationsBank"), individually and as collateral agent (together with
its successors and assigns in such capacity, the "Collateral Agent"), amending
that certain Security Agreement (the "Security Agreement"), dated as of July 7,
1998, among the Company, the Debtor, the Servicer and NationsBank, individually
and as Collateral Agent.
WHEREAS, on the terms and conditions set forth herein, the
parties to the Security Agreement wish to amend the Security Agreement as
provided herein.
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. Defined Terms. As used in this Amendment
capitalized terms have the same meanings assigned thereto in the Security
Agreement.
SECTION 2. Amendment of Certain Terms.
(a) Section 1.1 of the Security Agreement is hereby amended by
deleting the definition of "Dealer Concentration Limit" and replacing it with
the following: "Dealer Concentration Limit" shall mean 3%."
(b) The definition of "Loan" in Section 1.1 of the Security Agreement
is hereby amended by inserting the following after the word "advanced" in the
first line of such definition: ", whether before or after the listing of such
Loan on Exhibit D hereto,".
(c) Section 1.1 of the Security Agreement is hereby amended by
inserting the following definition after the definition of "Loan":
""Loan Systems" means those computer applications which are
related to or involved in the origination, collection, management or
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servicing of the Loans."
(d) Section 1.1 of the Security Agreement is hereby amended by deleting
the definition of "Required Reserve Account Balance" and replacing it with the
following:
""Required Reserve Account Balance" shall mean an amount equal
to the sum of (A) the product of (i) 1.45% and (ii) the Net Investment
related to the Initial Funding (after application of funds pursuant to
Section 5.1 on the related Remittance Date) and (B) the product of (i)
1.00% and (ii) the Net Investment related to the Subsequent Funding
(after application of funds pursuant to Section 5.1 on the related
Remittance Date)."
(e) Section 1.1 of the Security Agreement is hereby amended by
inserting the following definition after the definition of "Weighted Average
Advance Rate":
""Year 2000 Compliant" means, with respect to any Person, the
ability of such Person's computer applications to perform properly
date-sensitive functions for all dates before and after January 1,
2000."
(f) Section 1.1 of the Security Agreement is hereby amended by
inserting the following definition after the definition of "Year 2000
Compliant":
""Year 2000 Problem" means, with respect to any Person, the
risk that computer applications used by the such Person may be unable
to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999."
(g) Section 3.1 of the Security Agreement is hereby amended by
inserting the following as paragraph (k):
"(k) Year 2000 Compliance. The Debtor (i) has initiated a
review and assessment of all areas within its business and operations
(including those affected by suppliers, vendors and customers), (ii) is
in the process of developing a plan and timeline for addressing the
Year 2000 Problem on a timely basis, and (iii) will implement that plan
in accordance with that timetable. Based on the foregoing, the Debtor
believes that all computer applications (including those of its
suppliers, vendors and customers) that are material to its business and
operations are reasonably expected on a timely basis to be Year 2000
Compliant,
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except to the extent that a failure to do so could not be reasonably
expected to have a material adverse effect on the Debtor or on the
transactions contemplated by this Agreement, or to result in a
Termination Event or a Potential Termination Event.
Subject to the following paragraph, the Debtor (i) has
completed a review and assessment of all Loan Systems (including, but
not limited to, those of its suppliers, vendors and third-party
servicers), and (ii) has determined that the Loan Systems are Year 2000
Compliant or will be Year 2000 Compliant on or before August 1, 1999,
and thereafter.
The costs of all assessment, remediation, testing and
integration related to the Debtor's plan for becoming Year 2000
Compliant will not have a material adverse effect on the financial
condition or operations of the Debtor.".
(h) Section 3.3 of the Security Agreement is hereby amended by
inserting the following as paragraph (r):
"(r) Year 2000 Compliance. The Debtor will promptly notify the
Collateral Agent in the event it discovers or determines (i) that any
Loan Systems will not be Year 2000 Compliant on or before August 1,
1999, and thereafter, or (ii) that any computer application is
otherwise material to its business and operations will not be Year 2000
Compliant on a timely basis, except to the extent that, in the case of
(ii) above, such failure could not reasonably be expected (a) to have a
material adverse effect, or (b) to result in a Termination Event or a
Potential Termination Event.
Further, the Debtor will deliver simultaneously with any
quarterly or annual financial statements or reports to be delivered
under this Agreement or any other Transaction Document, a letter,
report, certificate or statement signed by the chief financial officer
or chief accounting officer of the Debtor, as appropriate, that no
material event, problems or conditions have occurred which in the
opinion of management would (i) prevent or materially delay the
Debtor's plan to become Year 2000 Compliant or (ii) cause or be likely
to cause the Debtor's representations and warranties set forth herein
with respect to being or becoming Year 2000 Compliant to no longer be
true; provided, however, that such letter, report, certificate or
statement need not be
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delivered after August 1, 1999, for so long as the Debtor remains Year
2000 Compliant.".
(i) Section 4.1(c) of the Security Agreement is hereby amended by
deleting the reference to "ninety (90)" therein and replacing such reference
with "one hundred twenty (120)".
(j) Section 4.6 of the Security Agreement is hereby amended by adding
the following after the word "are" in the sixth line thereof: "(i) owned by it,
or (ii)".
(k) Article IV of the Security Agreement is hereby amended by adding
the following as Section 4.8:
"SECTION 4.8 Year 2000 Compliance. (a) The Servicer (i) has
initiated a review and assessment of all areas within its business and
operations (including those affected by suppliers, vendors and
customers), (ii) is in the process of developing a plan and timeline
for addressing the Year 2000 Problem on a timely basis, and (iii) will
implement that plan in accordance with that timetable. Based on the
foregoing, the Servicer believes that all computer applications
(including those of its suppliers, vendors and customers) that are
material to its business and operations are reasonably expected on a
timely basis to be Year 2000 Compliant, except to the extent that a
failure to do so could not be reasonably expected to have a material
adverse effect on the Servicer or on the transactions contemplated by
this Agreement, or to result in a Termination Event or a Potential
Termination Event.
Subject to the following paragraph, the Servicer (i) has
completed a review and assessment of all Loan Systems (including, but
not limited to, those of its suppliers, vendors and third-party
servicers), and (ii) has determined that the Loan Systems are Year 2000
Compliant or will be Year 2000 Compliant on or before August 1, 1999,
and thereafter.
The costs of all assessment, remediation, testing and
integration related to the Servicer's plan for becoming Year 2000
Compliant will not have a material adverse effect on the financial
condition or operations of the Servicer.
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(b) The Servicer will promptly notify the Collateral Agent in
the event it discovers or determines (i) that any Loan Systems will not
be Year 2000 Compliant on or before August 1, 1999, and thereafter, or
(ii) that any computer application is otherwise material to its
business and operations will not be Year 2000 Compliant on a timely
basis, except to the extent that, in the case of (ii) above, such
failure could not reasonably be expected (a) to have a material adverse
effect, or (b) to result in a Termination Event or a Potential
Termination Event.
Further, the Servicer will deliver simultaneously with any
quarterly or annual financial statements or reports to be delivered
under this Agreement, a letter, report, certificate or statement signed
by the chief financial officer or chief accounting officer of the
Servicer, as appropriate, that no material event, problems or
conditions have occurred which in the opinion of management would (i)
prevent or materially delay the Servicer's plan to become Year 2000
Compliant or (ii) cause or be likely to cause the Servicer's
representations and warranties set forth herein with respect to being
or becoming Year 2000 Compliant to no longer be true; provided,
however, that such letter, report, certificate or statement need not be
delivered after August 1, 1999, for so long as the Servicer remains
Year 2000 Compliant.".
(l) Section 6.1(vii) of the Security Agreement is hereby amended by
deleting clause (vii) and adding the following in its place: "(vii) the Net
Investment shall exceed the Outstanding Balance of all Eligible Contracts minus
the Outstanding Balance of all Eligible Contracts which have become Defaulted
Contracts."
(m) Section 5.4 of the Security Agreement is hereby amended by (i)
deleting all references to "Debtor" and replacing each such reference with
"Servicer", and (ii) adding to the end thereof the following sentence: "The
rights and obligations of the Servicer pursuant to this Section 5.4 shall be
applicable to CAC as the initial Servicer and to any Successor Servicer.".
SECTION 3. Representations and Warranties.
(a) The Debtor hereby makes to the Collateral Agent, the Company and
the Bank Investors, on and as of the date hereof, all of the representations and
warranties set forth in Sections 3.1 and 3.2 of the Security Agreement, except
that to the extent that any of such representations and warranties expressly
relate to an earlier date, such representations and warranties shall be true and
correct as of such earlier date.
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SECTION 4. Effectiveness. This Amendment shall become
effective on June 30, 1999.
SECTION 5. Costs and Expenses. The Debtor shall pay all of the
Company's, the Bank Investors' and the Collateral Agent's cost and expenses
(including out of pocket expenses and reasonable attorneys fees and
disbursements) incurred by them in connection with the preparation, execution
and delivery of this Amendment.
SECTION 6. Governing Law. THIS AMENDMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
SECTION 7. 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 8. Captions. The captions in this Amendment are
for convenience of reference only and shall not define or limit any of the terms
or provisions hereof.
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 No. 1 to the Security Agreement as of the date first
written above.
CAC FUNDING CORP., as Debtor
By: /S/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
Title: Treasurer
CREDIT ACCEPTANCE CORPORATION,
Individually and as Servicer
By: /S/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
Title: Treasurer
KITTY HAWK FUNDING CORPORATION,
as Company
By: /S/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Vice President
NATIONSBANK, N.A., Individually and
as Collateral Agent
By: /S/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Title: Vice President
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