4(f)(29)
AMENDMENT NO. 2 TO
AMENDED AND RESTATED SECURITY AGREEMENT
AMENDMENT NO. 2 TO AMENDED AND RESTATED SECURITY AGREEMENT
(this "Amendment"), dated as of November 2, 2001, 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 BANK OF AMERICA,
N.A., a national banking association ("Bank of America"), individually and as
collateral agent (together with its successors and assigns in such capacity, the
"Collateral Agent"), amending that certain Amended and Restated Security
Agreement (as amended to the date hereof, the "Security Agreement"), dated as of
July 20, 2001, among the Company, the Debtor, the Servicer and Bank of America,
individually and as Collateral Agent.
WHEREAS, the Debtor desires a Subsequent Funding as of the
date set forth above (the "November 2001 Funding");
WHEREAS, in order to secure the November 2001 Funding the
Debtor desires to utilize as collateral certain Loans and related property
related to the Funding that occurred on March 12, 2001 in addition to new Loans
and related property as set forth in Amendment No. 6 to the Contribution
Agreement dated as of even date herewith; and
WHEREAS, on the terms and conditions set forth herein, the
parties to the Security Agreement wish to amend the Security Agreement and set
forth certain other agreements 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. Amendments.
(a) Section 1.1 of the Security Agreement is hereby amended by amending
the definition of "Blended Advance Rate" as follows (solely for
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convenience, changed text is italicized):
""Blended Advance Rate" shall mean, as applicable, either (i)
the percentage designated by the Company, in its sole
discretion, on the day of the most recent Funding as the
Blended Advance Rate applicable to the Loans which are the
subject of such Funding, or (ii) the percentage designated by
the Company, in its sole discretion (using methodology similar
to that utilized in determining Blended Advance Rates in
connection with Fundings that occurred prior to the date of
this Amended and Restated Agreement and which may take into
account the fees and expenses of any Back-up Servicer), on the
day funds are released to the Debtor pursuant to the Release
Provisions as the Blended Advance Rate applicable to the Loans
which are the subject of such release. As of the Closing Date,
the Blended Advance Rate will be 72.77%."
(b) Section 1.1 of the Security Agreement is hereby amended by
adding the following definitions (in appropriate alphabetical order):
""Back-up Servicer" shall have the meaning specified in
Section 4.8."
""Back-up Servicing Agreement" shall have the meaning
specified in Section 4.8."
""November 2001 Funding" means the Funding that occurred on
November 2, 2001."
(c) Section 3.2(c)(ii) of the Security Agreement is hereby amended
as follows (solely for convenience, changed text is italicized):
"(ii) all information with respect to the Dealer Agreements
and the Loans and the Contracts and the other Collateral
provided to the Collateral Agent by the Debtor or the Servicer
was true and correct in all material respects as of the date
such information was provided to the Collateral Agent and the
methodology and assumptions applied by the Debtor and the
Servicer in respect of forecasting collections on the
Contracts has been consistently applied since December 1,
1999;
(d) Section 5.1(a)(vi) of the Security Agreement is hereby amended
as follows (solely for convenience, changed text is italicized):
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"(vi) (A) (x) with respect to Income Collections that relate
to the July 2001 Funding as of each Remittance Date up to and
including the January 2002 Remittance Date and (y) with
respect to Income Collections that relate to the November 2001
Funding as of each Remittance Date up to and including (I) the
March 2002 Remittance Date if a Back-up Servicer has been
designated and entered into a Back-up Servicing Agreement on
or prior to January 31, 2002 pursuant to Section 4.8 or (II)
the January 2002 Remittance Date if a Back-up Servicer has not
been designated or has not entered into a Back-up Servicing
Agreement on or prior to January 31, 2002 pursuant to Section
4.8, to the Debtor provided that (a) a Termination Date shall
not have occurred and a Potential Termination Event or a
Termination Event shall not have occurred or be continuing,
(b) after giving effect to such release to the Debtor, the Net
Investment related to any Funding will not be greater than the
product of (x) the applicable Aggregate Outstanding Eligible
Loan Balance minus the applicable Excluded Loan Balance and
(y) the applicable Blended Advance Rate, (c) additional Loans
which are satisfactory to the Agent are being conveyed to the
Debtor on such Remittance Date as described in Section 5.5
hereof, and, (d) the Required Reserve Account Balance is
deposited in the Reserve Account or the Debtor shall have
given irrevocable instructions to the Collateral Agent to
withhold from the proceeds of such release and to deposit in
the Reserve Account, an amount equal to the amount necessary
to cause the amount on deposit in the Reserve Account as of
such Remittance Date (after giving effect to any deposits or
withdrawals to occur on such date) to at least equal the
Required Reserve Account Balance after giving effect to such
release of funds; otherwise (B) to the Noteholder to reduce
the Net Investment, until the Net Investment has been reduced
to zero (it being understood that to the extent the conditions
provided for in part (A) above are not satisfied such that all
amounts that could have been released under this clause (vi)
are eligible for release to the Debtor, then only those funds
eligible for release shall be paid to the Debtor and the
remainder shall be paid to the Noteholder);"
(e) Section 5.1(b)(ii) of the Security Agreement is hereby amended
as follows (solely for convenience, changed text is italicized):
"(ii) to the Noteholder to reduce the related Net Investment
to an
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amount equal to the product of (x) the applicable Blended
Advance Rate (with respect to the July 2001 Funding or the
November 2001 Funding, the respective weighted average Blended
Advance Rate for such Funding and all releases related
thereto) and (y) (a) the applicable Aggregate Outstanding
Eligible Loan Balance determined as of the last day of the
related Collection Period minus (b) the applicable Excluded
Loan Balance;"
(f) Section 5.1(b)(iv) of the Security Agreement is hereby amended
as follows (solely for convenience, changed text is italicized):
"(iv)(A) (x) with respect to Principal Collections that relate
to the July 2001 Funding as of each Remittance Date up to and
including the January 2002 Remittance Date and (y) with
respect to Principal Collections that relate to the November
2001 Funding as of each Remittance Date up to and including
(I) the March 2002 Remittance Date if a Back-up Servicer has
been designated and entered into a Back-up Servicing Agreement
on or prior to January 31, 2002 pursuant to Section 4.8 or
(II) the January 2002 Remittance Date if a Back-up Servicer
has not been designated or has not entered into a Back-up
Servicing Agreement on or prior to January 31, 2002 pursuant
to Section 4.8, to the Debtor, provided that (a) a Termination
Date shall not have occurred and a Potential Termination Event
or a Termination Event shall not have occurred or be
continuing, (b) additional Loans which are satisfactory to the
Agent are being conveyed to the Debtor on such Remittance Date
as described in Section 5.5 hereof, and (c) the Required
Reserve Account Balance is deposited in the Reserve Account or
the Debtor shall have given irrevocable instructions to the
Collateral Agent to withhold from the proceeds of such release
and to deposit in the Reserve Account, an amount equal to the
amount necessary to cause the amount on deposit in the Reserve
Account as of such Remittance Date (after giving effect to any
deposits or withdrawals to occur on such date) to at least
equal the Required Reserve Account Balance after giving effect
to such release of funds; otherwise (B) to the Noteholder to
reduce the related Net Investment, until the related Net
Investment has been reduced to zero, then to any other Net
Investment(s) until reduced to zero (it being understood that
to the extent the conditions provided for in part (A) above
are not satisfied such that all amounts that could have been
released under this clause (iv) are eligible for release to
the
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Debtor, then only those funds eligible for release shall be
paid to the Debtor and the remainder shall be paid to the
Noteholder);"
(g) Article 4 of the Security Agreement is hereby amended by
adding the following Section 4.8:
"SECTION 4.8 Back-Up Servicer. On or before January 31, 2002,
the Servicer shall designate a back-up servicer acceptable to
the Collateral Agent in its sole discretion (the "Back-up
Servicer"), which such back-up servicer shall have entered
into a back-up servicing agreement on or before January 31,
2002 that is satisfactory in form and substance (including,
but not limited to, the scope of the back-up servicer's duties
and responsibilities specified therein) to the Collateral
Agent in its sole discretion (a "Back-up Servicing
Agreement")."
SECTION 3. Exhibit G. Exhibit G, the Form of Monthly
Servicer's Certificate appended to the Security Agreement is hereby deleted and
replaced with the attached revised Form of Monthly Servicer's Certificate.
SECTION 4. Blended Advance Rate. The Company has determined a
Blended Advance Rate for the November 2001 Funding that has been based in part
on assumptions with respect to collections received on the Loans related to such
Funding (the "November Blended Advance Rate"). The Debtor and/or the Servicer
shall provide, on or prior to November 12, 2001, confirmation as to the
correctness of such assumptions to the Company and if upon receipt thereof the
Company determines that the November Blended Advance Rate was higher than it
would otherwise have been had such information been available to the Company
prior to the November 2001 Funding, the Company shall have the right to apply a
revised November Blended Advance Rate retroactive to November 2, 2001, at which
point the Debtor shall, on or prior to November 16, 2001, either (i) pay to the
Company such amount as is necessary to reduce the Net Investment related to the
November 2001 Funding (the "November Net Investment") such that the November Net
Investment will not be greater than the product of (x) the applicable Aggregate
Outstanding Eligible Loan Balance minus the applicable Excluded Loan Balance and
(y) the revised November Blended Advance Rate, or (ii) provide additional Loans
and related Contracts as collateral for the November 2001 Funding such that the
November Net Investment will not be greater than the product of (x) the
applicable Aggregate Outstanding Eligible Loan Balance (including the additional
Loans and related Contracts added pursuant hereto) minus the applicable Excluded
Loan
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Balance and (y) the revised November Blended Advance Rate. The failure by the
Debtor to take one of the actions provided for in clause (i) or (ii) above in
the time required shall constitute a Termination Event under the Security
Agreement.
SECTION 5. Application of March 2001 Funding Collection.
Notwithstanding Section 5.1 of the Security Agreement, the Collateral Agent
shall utilize and apply all funds in the Collection Account that relate to the
Funding that occurred on March 12, 2001 (the "March 2001 Funding") on behalf of
the Debtor towards payment of the amounts required to be paid to the Company in
connection with the Release Agreement dated as of even date herewith among the
Debtor, Servicer, Company, and the Collateral Agent .
SECTION 6. November 2001 Funding. The collateral for the
November 2001 Funding will include certain Loans and related property related to
the Funding that occurred on March 12, 2001 as identified on Exhibit A hereto in
addition to new Loans and related property as set forth in Amendment No. 6 to
the Contribution Agreement dated as of even date herewith (collectively, the
"November Funding Collateral"), and all references to the Net Investment with
respect to the November 2001 Funding shall refer to the Net Investment related
to the November Funding Collateral.
SECTION 7. Representations and Warranties. 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.
SECTION 8. Effectiveness. This Amendment shall become
effective when it has been signed by the parties hereto.
SECTION 9. 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 10. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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SECTION 11. 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 12. 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 13. 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.2 to the Amended and Restated Security Agreement as
of the date first written above.
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CAC FUNDING CORP., as Debtor
By: /S/ Matthew F. Hilzinger
-------------------------
Name: Matthew F. Hilzinger
Title: Chief Financial Officer
CREDIT
ACCEPTANCE CORPORATION, Individually and as
Servicer
By: /S/ Matthew F. Hilzinger
-------------------------
Name: Matthew F. Hilzinger
Title: Chief Financial Officer
KITTY HAWK FUNDING CORPORATION,
as Company
By: /S/ Andy Yan
Name: Andy Yan
Title: Vice President
BANK OF AMERICA, N.A., individually,
as Collateral Agent
By: /S/ Christopher G. Young
-------------------------
Name: Christopher G. Young
Title: Vice President