EX-4.(G)(7) 3 k86601exv4wxgyx7y.txt RELEASE AND FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED SECURITY AGREEMENT EXHIBIT 4(G)(7) EXECUTION COPY RELEASE AND FOURTH AMENDMENT TO SECURITY AGREEMENT This Release and Fourth Amendment to Security Agreement ("Fourth Amendment") is dated as of June 9, 2004 by and between Credit Acceptance Corporation, a Michigan corporation ("Company"), the Subsidiaries of the Company from time to time parties hereto, including the undersigned Subsidiaries (collectively, with the Company, and either or any of them, the "Debtors" and individually, each a "Debtor") and Comerica Bank, a Michigan banking corporation ("Comerica"), as agent (in such capacity, the "Collateral Agent") for the benefit of the "Lenders" and the "Future Debt Holders" (each as referred to in the Security Agreement, defined below). R E C I T A L S: A. Pursuant to the requirements of that certain Amended and Restated Credit Agreement dated as of June 11, 2001 (the "Original Credit Agreement"), the Senior Debt Documents and the Intercreditor Agreement (each as defined in the Security Agreement), Debtors executed and delivered to the Collateral Agent that certain Second Amended and Restated Security Agreement dated as of June 11, 2001. B. Debtors and the Collateral Agent entered into that certain First Amendment to Second Amended and Restated Security Agreement ("First Amendment") dated as of September 7, 2001 and that certain Second Amendment to Second Amended and Restated Security Agreement ("Second Amendment") dated as of June 10, 2002, and that certain Third Amendment to Second Amended and Restated Security Agreement ("Third Amendment") dated as August 31, 2002, in each case amending the Security Agreement referred to in Recital A on the terms set forth therein (such Security Agreement, as amended by the First Amendment, the Second Amendment and the Third Amendment, the "Security Agreement"). C. Company and Debtors intend, concurrently with this Fourth Amendment, to consummate the New Restructuring, and to enter into that certain Third Amended and Restated Credit Agreement dated as of June 9, 2004 (as the same may be further amended, restated or otherwise modified from time to time, the "Credit Agreement"). D. Debtors and the Collateral Agent, with the concurrence of the Banks (as defined in the Intercreditor Agreement), desire to further amend the Security Agreement as set forth below as execution and delivery of this Fourth Amendment is a condition to effectiveness of the Credit Agreement. NOW THEREFORE, the parties agree as follows: 1. The following is inserted in the post-amble to Section 2.1 as new subsection (iv): "or (iv) any equity interests in Foreign Subsidiaries except to the extent a pledge or grant of lien was made pursuant to a Collateral Document (other than this Security Agreement) in existence on the Effective Date." 2. The following is inserted as new Section 3.8 of the Security Agreement: "Section 3.8 Intellectual Property. Each Debtor owns the United States registered copyrights, letters patent and trademarks and intellectual property license agreements set forth on the attached Schedule G, together with the applications for registration of copyrights, trademarks or patents, and such mask works set forth on the attached Schedule G, together with such additional intellectual property as such Debtor may disclose to the Collateral Agent from time to time." 3. The following is inserted as new Section 4.18 of the Security Agreement: "Section 4.18 Preservation of Intellectual Property. (a) Each Debtor agrees to take all necessary steps, including, without limitation, in the United States Copyright Office or the United States Patent and Trademark Office or in any court, to defend, enforce, and preserve the validity and ownership of the intellectual property identified on Schedule G hereto and all such additional registered intellectual property as may be acquired or held by each Debtor, except in each case in which the Debtors have determined, using their commercially reasonable judgment, that any of the foregoing is not of material economic value to them. (b) Each Debtor shall not abandon any registered intellectual property registrations or applications therefor without the written consent of the Collateral Agent, unless the Debtors shall have previously determined, using their commercially reasonable judgment, that such use or pursuit or maintenance of such intellectual property registrations or applications, is not of material economic value to them. (c) In the event that a Debtor becomes aware that any item of the intellectual property which such Debtor has determined, using its commercially reasonable judgment, to be material to its business (either singly or when taken as a whole together with other such intellectual property rights then being infringed against or misappropriated) is infringed or misappropriated by a third party, such Debtor shall notify the Collateral Agent promptly and in writing, in reasonable detail, and shall take such actions as such Debtor or the Collateral Agent deems necessary or appropriate (using its reasonable commercial judgment) including, without limitation, suing for infringement or misappropriation and for an injunction against such infringement or misappropriation. Any expense incurred in connection with such activities shall be borne by the Debtors. Each Debtor will advise the Collateral Agent promptly and in writing and in reasonable detail, of 2 any adverse determination or the institution of any proceeding (including, without limitation, the institution of any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court) regarding any material item of the intellectual property collateral. (d) Promptly following application for registration, registration or acquisition by a Debtor of any trademark, patent or copyright, such Debtor shall provide notice to the Collateral Agent of such application, registration or acquisition so that the Collateral Agent may make such filings as it may deem necessary or desirable to perfect its interest in such intellectual property, and such Debtor shall execute an amendment to the Security Agreement in substantially the form of Exhibit C in order to for the Collateral Agent to perfect its interests in any intellectual property held by such Debtor." 4. The Security Agreement is amended by attaching Annex 1 hereto to the Security Agreement as Schedule G and Annex 2 hereto to the Security Agreement as Exhibit C. 5. Upon the due execution of this Fourth Amendment by all parties hereto (and, in the case of the release of the assets, equity interests and guaranty of the T&C Subsidiary, upon completion of the New Restructuring), the Collateral Agent hereby (i) releases and discharges any security interests and other Liens or encumbrances over the assets of the T&C Subsidiary, CAC Life or over the equity interests of the T&C Subsidiary or CAC Life which are held by the Collateral Agent for the benefit of the Lenders or Future Debt Holders, except for any pledge of the equity interests of CAC Scotland, the equity interests of which shall be transferred to CAC South Dakota subject to such pledge (collectively, the "Security on the Collateral"); (ii) acknowledges that the Security on the Collateral shall cease to be of any force or effect whatsoever and that neither the T&C Subsidiary nor CAC Life shall be bound by any the representations, warranties, covenants, obligations or agreements set forth in the Security Agreement; (iii) authorizes the Company and each Debtor to file, at Company's or such Debtor's expense, such Uniform Commercial Code financing statements or such other filings which are necessary to terminate the Security on the Collateral, and (iv) releases T&C Subsidiary and CAC Life from any and all obligations under that certain Amended and Restated Domestic Guaranty dated as of June 9, 2004, provided, however, that (x) retroactive to consummation of the CAC Life Restructuring, CAC Reinsurance, Ltd. hereby assumes all of the obligations of CAC Life under the Loan Documents executed by CAC Life prior to this Fourth Amendment and (y) the release of CAC Life described in this section shall not extend to any of the obligations of CAC Reinsurance Ltd. (the company into which CAC Life was liquidated pursuant to the CAC Life Restructuring) under any Loan Document, which in each case remains in full force and effect. 6. Each undersigned Debtor hereby reaffirms its obligations under the Security Agreement as amended as of the date hereof. Each reference in the Security Agreement to "this Agreement" or "the Agreement" shall be deemed to refer to the Security Agreement as amended by the First Amendment, the Second Amendment, the Third Amendment and this Fourth Amendment, and each further amendment which may be executed and delivered from time to time. 3 7. Unless otherwise defined to the contrary herein, all capitalized terms used in this Fourth Amendment shall have the meaning set forth in the Credit Agreement. 8. This Fourth Amendment shall be construed in accordance with and governed by the laws of the State of Michigan. 9. This Fourth Amendment may be executed in counterparts in accordance with Section 13.10 of the Credit Agreement. 10. Except as expressly modified hereby, all the terms and conditions of the Security Agreement shall remain in full force and effect, and except as expressly set forth herein, nothing set forth in this Fourth Amendment shall constitute a waiver or release of any term or condition of the Security Agreement or any of the Collateral Agent's rights and remedies provided thereunder or as otherwise provided by law. 4 IN WITNESS WHEREOF, the parties hereto have duly executed this Fourth Amendment as of the day and year first written above. DEBTORS: CREDIT ACCEPTANCE CORPORATION By: -------------------------------------- Name: ------------------------------------ Title: ----------------------------------- Address for Notices: Credit Acceptance Corporation 25505 W. 12 Mile Road, Suite 3000 Southfield, Michigan 48034 Fax No.: 248-827-8542 Telephone No.: 248-353-2700 Attention: Douglas Busk AUTO FUNDING AMERICA OF NEVADA INC. BUYERS VEHICLE PROTECTION PLAN, INC. CAC LEASING, INC. VEHICLE REMARKETING SERVICES, INC. CREDIT ACCEPTANCE CORPORATION OF NEVADA, INC. CREDIT ACCEPTANCE CORPORATION OF SOUTH DAKOTA, INC. By: -------------------------------------- Name: ------------------------------------ Title: ----------------------------------- Address for Notices: c/o Credit Acceptance Corporation 25505 W. 12 Mile Road, Suite 3000 Southfield, Michigan 48034 Fax No.: 248-827-8542 Telephone No.: 248-353-2700 Attention: Douglas Busk 5 CAC REINSURANCE, LTD By: -------------------------------------- Name: ------------------------------------ Title: ----------------------------------- Address for Notices: c/o Credit Acceptance Corporation 25505 W. 12 Mile Road, Suite 3000 Southfield, Michigan 48034 Fax No.: 248-827-8542 Telephone No.: 248-353-2700 Attention: Douglas Busk CAC (TCI), LTD. By: -------------------------------------- Name: ------------------------------------ Title: ----------------------------------- Address for Notices: c/o Credit Acceptance Corporation 25505 W. 12 Mile Road, Suite 3000 Southfield, Michigan 48034 Fax No.: 248-827-8542 Telephone No.: 248-353-2700 Attention: Douglas Busk 6 COLLATERAL AGENT: COMERICA BANK as Collateral Agent By: -------------------------------------- Name: ------------------------------------ Title: ----------------------------------- Address for Notices: Metropolitan Loans F One Detroit Center, 5th Floor 500 Woodward Avenue Detroit, Michigan 48226 Fax No.: 313/222-5636 Telephone No.: 313/222-0236 Attention: Harve C. Light 7 ANNEX 1 SCHEDULE G COPYRIGHT SCHEDULE CREDIT ACCEPTANCE CORPORATION
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TRADEMARK SCHEDULE CREDIT ACCEPTANCE CORPORATION
MARK SERIAL/REGIS. NO. ------------------------------------------------ ----------------- ASK ABOUT OUR GUARANTEED CREDIT APPROVAL 76/367134 ASK OTTO 2,699,904 CAC CREDIT ACCEPTANCE CORPORATION 1,576,794 CREDIT ACCEPTANCE WE CHANGE LIVES! 2,644,387 MISCELLANEOUS DESIGN 2,657,196 PROFIT PROTECTOR 2,451,702 WE CHANGE LIVES 2,660,738 OTTO (and Design) 76/447928
9 ANNEX 2 EXHIBIT C FORM OF AMENDMENT This Amendment, dated ________________, 20__, is delivered pursuant to Section 4.18(d) of the Security Agreement referred to below. The undersigned hereby agrees that this Amendment may be attached to the Second Amended and Restated Security Agreement dated as of June 11, 2001, between the undersigned and Comerica Bank, as the Collateral Agent, as the same may be amended, restated or otherwise modified from time to time (the "Security Agreement"), and that the intellectual property listed on Schedule G annexed hereto shall be and become part of the Collateral referred to in the Security Agreement and shall secure payment and performance of all Indebtedness as provided in the Security Agreement. Capitalized terms used herein but not defined herein shall have the meanings therefor provided in the Security Agreement. [Debtors] By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- Comerica Bank, as Collateral Agent By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- 10