EXHIBIT 4(f)(3)
EXECUTION COPY
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CONTRIBUTION AGREEMENT
between
CREDIT ACCEPTANCE CORPORATION,
a Michigan corporation
and
CAC FUNDING CORP.,
a Nevada corporation
Dated as of July 7, 1998
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.2. Other Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.3. Computation of Time Periods . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II
CONTRIBUTION AND SERVICING OF LOANS
SECTION 2.1 Contribution and Sale of Loans
SECTION 2.2. Servicing of Loans. . . . . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE III
CONSIDERATION AND PAYMENT
SECTION 3.1. Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 3.2. Delivery of the Shares. . . . . . . . . . . . . . . . . . . . . . . .5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties. . . . . . . . . . . . . . . . . . . .5
SECTION 4.2. Reaffirmation of Representations and Warranties by CAC;
Notice of Breach. . . . . . . . . . . . . . . . . . . . . . . . . . .8
SECTION 5.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . .8
SECTION 5.2. Negative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . .9
SECTION 5.3. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VI
REPURCHASE OBLIGATION
SECTION 6.1. Mandatory Repurchase upon Breach of Warranty. . . . . . . . . . . . 11
SECTION 6.2. No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1. Conditions to Funding's Obligations Regarding Loans . . . . . . . . 11
ARTICLE VIII
TERM AND TERMINATION
SECTION 8.1. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 8.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 9.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 9.4. Severability of Provisions. . . . . . . . . . . . . . . . . . . . . 14
SECTION 9.5. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 9.6. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 9.7. No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . . . . . 15
SECTION 9.8. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 9.9. Binding Effect; Third-Party Beneficiaries . . . . . . . . . . . . . 15
SECTION 9.10. Merger and Integration. . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 9.11. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 9.12. Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
EXHIBIT 4(f)(3)
Exhibit A -- List of Dealer Agreements and Loans
CONTRIBUTION AGREEMENT
This CONTRIBUTION AGREEMENT, dated as of July 7, 1998 (the "AGREEMENT"), is
made between CREDIT ACCEPTANCE CORPORATION, a Michigan corporation ("CAC") and
CAC FUNDING CORP., a Nevada corporation ("Funding").
Funding desires to acquire from time to time certain Loans and related
property including CAC's rights in the Dealer Agreements and Contracts securing
payment of such Loans and the Collections derived therefrom during the full term
of this Agreement, and CAC desires to transfer, convey and assign from time to
time such Loans and related property to the Purchaser upon the terms and
conditions hereinafter set forth. CAC has also agreed to service the Loans and
related property to be transferred, conveyed and assigned to Funding.
In consideration of the premises and the mutual agreements set forth
herein, it is hereby agreed by and between CAC and Funding as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. All capitalized terms used herein shall have
the meanings specified herein or, if not so specified, the meaning specified in,
or incorporated by reference into, the Security Agreement or the Note Purchase
Agreement, and shall include in the singular number the plural and in the plural
number the singular:
"ADVERSE CLAIM" shall mean a lien, security interest, charge or
encumbrance, or other right or claim in, of or on any Person's assets or
properties in favor of any other Person (other than the interests of a Dealer
under a Dealer Agreement).
"AGENT" shall mean NationsBank, N.A., as agent on behalf of Kitty Hawk and
the Bank Investors appointed pursuant to the Note Purchase Agreement and its
successors and assigns.
"CLOSING DATE" shall mean July 7, 1998.
"CONTRIBUTED PROPERTY" means (i) all Loans, including, without limitation,
all monies due or to become due, and all monies received, with respect thereto
on or after the Cut-Off Date, all Related Security therefor, (ii) all Records
with respect to the Loans, (iii) all of CAC's right, title and interest in and
to a business interruption insurance policy number FIP 000490002 issued by
Fidelity & Deposit Company of
Maryland, (iv) all Collections and (v) and all proceeds (including "proceeds"
as defined in the UCC) of any of the foregoing.
"EVENT OF BANKRUPTCY" shall mean CAC or Funding voluntarily seeking,
consenting to or acquiescing in the benefit or benefits of any Debtor Relief
Law or similar proceeding or becoming a party to (or be made the subject of )
any proceeding provided for by any Debtor Relief Law or similar proceedings
of or relating to CAC or Funding, or relating to all or substantially all of
their respective properties, other than as a creditor or claimant, and in the
event such proceeding is involuntary, the petition instituting the same is
not dismissed within 60 days of its filing; or CAC or Funding, as its debts
generally become due, making an assignment for the benefit of its creditors
or voluntarily suspending payment of its obligations.
"KITTY HAWK" shall mean Kitty Hawk Funding Corporation, a Delaware
corporation, and its successors and assigns.
"LOAN" shall mean all amounts advanced by CAC under a Dealer Agreement and
payable from Collections, including servicing charges, insurance charges and
service policies and all related finance charges, late charges, and all other
fees and charges charged to customers; PROVIDED, HOWEVER, that the term "Loan"
shall include only those Loans identified on Exhibit A hereto, as amended from
time to time in accordance herewith.
"RELEVANT UCC" shall mean the Uniform Commercial Code as in effect in the
States of New York and Michigan, as applicable.
"SECURITY AGREEMENT" means the Security Agreement, dated as of July 7,
1998, by and among CAC, Funding, Kitty Hawk and NationsBank N.A., as Agent and
Bank Investor, as such agreement may be amended, modified or supplemented from
time to time.
"SERVICER" means CAC, or its successors and assigns, acting pursuant to the
Servicing Agreement of even date herewith between Funding and CAC.
"SUBSEQUENT CONTRIBUTION DATE" means any date on which Loans are
contributed by the Seller to Funding after the date hereof.
"TERMINATION DATE" shall have the meaning specified in Section 8.1.
SECTION 1.2. OTHER TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. All terms used in Article 9
of the Relevant UCC, and not specifically defined herein, are used herein as
defined in such Article 9.
SECTION 1.3. COMPUTATION OF TIME PERIODS. Unless otherwise stated in
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding."
ARTICLE II
CONTRIBUTION AND SERVICING OF LOANS
SECTION 2.1 CONTRIBUTION AND SALE OF LOANS. (a) Upon the terms and
subject to the conditions set forth herein (i) CAC hereby assigns, transfers
and conveys to Funding, and Funding hereby accepts from CAC, on the terms and
subject to the conditions specifically set forth herein, all of CAC's right,
title and interest, in, to and under the Contributed Property conveyed on the
Closing Date and, (ii) CAC hereby agrees, on each Subsequent Contribution
Date, to assign, transfer and convey to Funding, and Funding hereby agrees to
accept from CAC, on the terms and subject to the conditions specifically set
forth herein, all of CAC's right, title and interest, in, to, and under any
Contributed Property conveyed on such Subsequent Contribution Date. Any such
sale, assignment, transfer and conveyance does not constitute an assumption
by Funding of any obligations of CAC or any other Person to Obligors or to
any other Person in connection with the Loans or under any Related Security,
Dealer Agreement or other agreement and instrument relating to the Loans.
(b) In connection with any such foregoing conveyance, CAC agrees to
record and file on or prior to the Closing Date, at its own expense, a
financing statement or statements with respect to the Contributed Property
conveyed by CAC hereunder meeting the requirements of applicable state law in
such manner and in such jurisdictions as are necessary to perfect and protect
the interests of Funding created hereby under the Relevant UCC (subject, in
the case of Related Security constituting returned inventory, to the
applicable provisions of Section 9-306 of the Relevant UCC) against all
creditors of and purchasers from CAC, and to deliver either the originals of
such financing statements or a file-stamped copy of such financing statements
or other evidence of such filings to Funding on the Closing Date.
(c) CAC agrees that from time to time, at its expense, it will promptly
execute and deliver all instruments and documents and take all actions as may be
necessary or as Funding may reasonably request in order to perfect or protect
the interest of Funding in the Loans and other Contributed Property purchased
hereunder or to enable Funding to exercise or enforce any of its rights
hereunder. CAC shall, upon request of Funding, obtain such additional search
reports as Funding shall request. To the
fullest extent permitted by applicable law, Funding shall be permitted to
sign and file continuation statements and amendments thereto and assignments
thereof without CAC's signature. Carbon, photographic or other reproduction
of this Agreement or any financing statement shall be sufficient as a
financing statement.
(d) It is the express intent of CAC and Funding that the conveyance of the
Loans and other Contributed Property by CAC to Funding pursuant to this
Agreement be construed as a complete transfer of such Loans and other
Contributed Property by CAC to Funding. Further, it is not the intention of CAC
and Funding that such conveyance be deemed a grant of a security interest in the
Loans and other Contributed Property by CAC to Funding to secure a debt or other
obligation of CAC. However, in the event that, notwithstanding the express
intent of the parties, the Loans and other Contributed Property are construed to
constitute property of CAC, then (i) this Agreement also shall be deemed to be,
and hereby is, a security agreement within the meaning of the Relevant UCC; and
(ii) the conveyance by CAC provided for in this Agreement shall be deemed to be,
and CAC hereby grants to Funding, a security interest in, to and under all of
CAC's right, title and interest in, to and under the Contributed Property, to
secure the rights of Funding set forth in this Agreement or as may be determined
in connection therewith by applicable law. CAC and Funding shall, to the extent
consistent with this Agreement, take such actions as may be necessary to ensure
that, if this Agreement were deemed to create a security interest in the Loans
and other Contributed Property, such security interest would be deemed to be a
perfected security interest in favor of Funding under applicable law and will be
maintained as such throughout the term of this Agreement.
(e) In connection with such conveyance, CAC agrees to deliver to Funding
on the Closing Date, one or more computer files or microfiche lists containing
true and complete lists of all Dealer Agreements and Loans conveyed to Funding
on the Closing Date, and all Contracts securing all such Loans, identified by
account number, dealer number, and pool number and Outstanding Balance as of the
Cut-Off Date. Such file or list shall be marked as Exhibit A to this Agreement,
shall be delivered to Funding as confidential and proprietary, and is hereby
incorporated into and made a part of this Agreement.
CAC further agrees to deliver to Funding on each Subsequent Contribution
Date, one or more computer files or microfiche lists containing true and
complete lists of all Dealer Agreements and Loans conveyed to Funding on such
Subsequent Contribution Date, and all Contracts securing all such Loans,
identified by account number, dealer number, and pool number and Outstanding
Balance as of two days prior to such Subsequent Contribution Date. Such file or
list shall be marked as Exhibit A to this Agreement,
shall be delivered to Funding as confidential and proprietary, and is hereby
incorporated into and made a part of this Agreement.
SECTION 2.2. SERVICING OF LOANS. The servicing, administering and
collection of the Loans shall be conducted by the Servicer, which hereby agrees
to perform, take or cause to be taken all such action as may be necessary or
advisable to collect each Loan from time to time, all in accordance with
applicable laws, rules and regulations and with the care and diligence which the
Servicer employs in servicing similar loans for its own account, in accordance
with the Credit Guidelines and the Collection Guidelines. Funding hereby
appoints the Servicer as its agent to enforce Funding's rights and interests in,
to and under the Loans, the Related Security, the Collections, and the other
Contributed Property. The Servicer shall hold in trust for Funding, in
accordance with its interests, all Records which evidence or relate to the
Loans, Related Security, Collections and other Contributed Property.
Notwithstanding anything to the contrary contained herein, from and after the
occurrence of a Termination Event or a Servicer Event of Default (each as
defined in the Security Agreement), the Agent or Kitty Hawk shall have the
absolute and unlimited right to terminate the Servicer's servicing activities
described in this Section 2.2. In consideration of the foregoing, Funding
agrees to pay the Servicer a Monthly Servicing Fee for its performance of the
duties and obligations described in this Section 2.2; PROVIDED that any such
monthly payment shall be reduced by any amounts payable in such month by Kitty
Hawk or the Bank Investors to the Servicer, in its capacity as Servicer pursuant
to the Security Agreement.
ARTICLE III
CONSIDERATION AND PAYMENT; LOANS
SECTION 3.1. CONSIDERATION. The consideration for the Loans and other
Contributed Property conveyed on the Closing Date or on any Subsequent
Contribution Date to Funding by CAC under this Agreement shall be 1,000 shares
of common stock, par value $1.00 each (the "Shares"). The Contributed Property
shall be deemed to have a value equal to the aggregate principal amount of the
Loans contributed by CAC to Funding on the Closing Date or on any Subsequent
Contribution Date, as applicable.
SECTION 3.2. DELIVERY OF THE SHARES. The Shares shall be issued and
delivered to CAC on the Closing Date and shall be evidenced by an appropriate
stock certificate duly executed by officers of Funding, which certificate shall
bear an appropriate restrictive legend to the effect that the Shares may not be
sold or otherwise transferred by CAC with the prior consent of Funding, except
that CAC may transfer its ownership of the Shares
to a wholly-owned subsidiary.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. REPRESENTATIONS AND WARRANTIES. CAC represents and warrants
to Funding as of the Closing Date and each Subsequent Contribution Date that:
(a) CORPORATE EXISTENCE AND POWER. CAC is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and each has all corporate power and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business in each jurisdiction in which its business is now conducted. CAC is
duly qualified to do business in, and is in good standing in, every other
jurisdiction in which the nature of its business requires it to be so qualified,
except where the failure to be so qualified or in good standing would not have a
material adverse effect.
(b) CORPORATE AND GOVERNMENTAL AUTHORIZATION; CONTRAVENTION. The
execution, delivery and performance by CAC of this Agreement are within its
corporate powers, have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with, any Official Body or
official thereof (except for the filing by Seller of UCC financing statements as
required by this Agreement), and do not contravene, or constitute a default
under, any provision of applicable law, rule or regulation or of the Articles of
Incorporation or Bylaws or of any agreement, judgment, injunction, order, writ,
decree or other instrument binding upon CAC, or result in the creation or
imposition of any Adverse Claim on the assets of CAC or any of its subsidiaries
(except those created by this Agreement).
(c) BINDING EFFECT. This Agreement constitutes the legal, valid and
binding obligation of CAC, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
affecting the rights of creditors generally.
(d) PERFECTION. CAC is the owner of all of the Loans and the other
Contributed Property, free and clear of all Adverse Claims. On or prior to the
date of each contribution of Loans and the other Contributed Property to Funding
pursuant to this Agreement, all financing statements and other documents
required to be recorded or filed in order to perfect and protect the ownership
interest of Funding in and to the Loans and the other Contributed Property
against all creditors of and purchasers from CAC will have been duly filed in
each filing office necessary for such purpose and all filing fees and taxes, if
any, payable in
connection with such filings shall have been paid in full.
(e) ACCURACY OF INFORMATION. All information heretofore furnished by CAC
to Funding, the Agent, Kitty Hawk and any Bank Investor for purposes of or in
connection with this Agreement or any transaction contemplated hereby is, and
all such information hereafter furnished by CAC to Funding, the Agent, Kitty
Hawk and any Bank Investor will be, true and accurate in every material respect,
on the date such information is stated or certified.
(f) TAX STATUS. CAC has filed all material tax returns (federal, state
and local) required to be filed and has paid or made adequate provision for the
payment of all taxes, assessments and other governmental charges.
(g) ACTION, SUITS. Except as set forth in this Agreement, there are no
actions, suits or proceedings pending, or to the knowledge of CAC, threatened
against or affecting CAC or any Affiliate of CAC or its properties, in or before
any court, arbitrator or other body, which may, individually or in the
aggregate, have a material adverse effect.
(h) PLACE OF BUSINESS. The principal place of business and chief
executive office of CAC is in Southfield, Michigan, and the office where CAC
keeps all of its Records is at the address listed in Section 9.3, or such other
locations notified to Funding in accordance with this Agreement in jurisdictions
where all action required by the terms of this Agreement has been taken and
completed.
(i) GOOD TITLE. Upon the contribution of the Loans and related property
to Funding pursuant to this Agreement, Funding shall acquire all of CAC's
ownership and other interest in each Loan (and in the Related Security,
Collections and proceeds with respect thereto) and in the Related Security,
Collections and proceeds with respect thereto, in each case free and clear of
any Adverse Claim.
(j) TRADENAMES, ETC. As of the date hereof CAC has not, within the last
five (5) years, operated under any tradenames other than its corporate name, nor
has it changed its name, merged with or into or consolidated with any other
corporation or been the subject of any proceeding under Xxxxx 00, Xxxxxx Xxxxxx
Code (Bankruptcy).
(k) NATURE OF LOANS, CONTRACTS. Each Loan represented by CAC to be an
Eligible Loan, or included in the calculation of the Aggregate Outstanding
Eligible Loan Balance, at the time of such representation, or at the time of
such calculation, as applicable, in fact satisfies the definition of "Eligible
Loan" set forth in the Security Agreement. Each Contract classified as
an "Eligible Contract" (or included in any aggregation of balances of
"Eligible Contracts") by CAC satisfies at the time of such classification the
definition of "Eligible Contract" set forth in the Security Agreement.
(l) AMOUNT OF LOANS. As of the Cut-Off Date, the aggregate Outstanding
Balance of the Eligible Loans was at least $69,712,673.71.
(m) COLLECTION GUIDELINES. Since May 1, 1998, there have been no material
changes in the Collection Guidelines other than as permitted hereunder and under
the Security Agreement. Since such date, no material adverse change has
occurred in the overall rate of collection of the Loans.
(n) COLLECTIONS AND SERVICING. Since April 1, 1998, there has been no
material adverse change in the ability of the Servicer to service and collect
the Loans.
(o) NOT AN INVESTMENT COMPANY. CAC is not, and is not controlled by, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or each is exempt from all provisions of such Act.
(p) ERISA. Each of CAC and its ERISA Affiliates is in compliance in all
material respects with ERISA and no lien exists in favor of the Pension Benefit
Guaranty Corporation on any of the Loans.
(q) BULK SALES. No transaction contemplated by this Agreement requires
compliance with any bulk sales act or similar law.
(r) PREFERENCE; VOIDABILITY. The transfer of the Loans, Collections,
Related Security and other Contributed Property by the Servicer to Funding, has
not been made for or on account of an antecedent debt owed by Funding to CAC, or
by CAC to Funding, and neither of such transfers is or may be voidable under any
Section of the Bankruptcy Reform Act of 1978 (11 U.S.C. Section Section 101 et
seq.), as amended.
(s) CONSENTS, LICENSES, APPROVALS. With respect to each Dealer Agreement
and each Loan and Contract and all other Contributed Property, all consents,
licenses, approvals or authorizations of or registrations or declarations with
any Governmental Authority required to be obtained, effected or given by CAC, in
connection with the conveyance of such Loan, Contract or other Contributed
Property to Funding have been duly obtained, effected or given and are in full
force and effect.
(t) EXHIBIT A. Exhibit A to this Agreement is and will be
an accurate and complete listing of all Dealer Agreements and Loans in all
material respects and all Contracts securing such Loans on the date each such
Dealer Agreement, Contract and Loan was added to Exhibit A, and the
information contained therein with respect to the identity of such Dealer
Agreements and Loans and all Contracts securing such Loans and the
Outstanding Balances thereunder and under the related Contracts is and will
be true and correct in all material respects as of each such date.
(u) ADVERSE SELECTION. No selection procedure believed by CAC to be
adverse to the interests of Funding has been or will be used in selecting the
Dealer Agreements or the Loans (it being expressly understood that the Loans
consist of closed pools of Loans under the related Dealer Agreements).
(v) USE OF PROCEEDS. No proceeds of any contribution hereunder will be
used for a purpose that violates, or would be inconsistent with, regulations G,
T, U or X promulgated by the Board of Governors of the Federal Reserve System.
SECTION 4.2. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES BY CAC;
NOTICE OF BREACH. On each Subsequent Contribution Date, with respect to any
Contributed Property that is contributed on such date, CAC shall be deemed to
have certified that all representations and warranties described in Section 4.1
are true and correct on and as of such day as though made on and as of such day.
The representations and warranties set forth in Section 4.1 shall survive the
conveyance of the Loans to Funding, and termination of the rights and
obligations of Funding and CAC under this Agreement. Upon discovery by Funding
or CAC of a breach of any of the foregoing representations and warranties, the
party discovering such breach shall give prompt written notice to the other
within three Business Days of such discovery.
ARTICLE V
COVENANTS OF CAC AND THE SERVICER
SECTION 5.1. AFFIRMATIVE COVENANTS. So long as this Agreement is in
effect, and until all Loans, an interest in which has been contributed to
Funding pursuant hereto, shall have been paid in full or written-off as
uncollectible, and all amounts owed by CAC pursuant to this Agreement have been
paid in full, unless Funding otherwise consents in writing, CAC and the Servicer
hereby covenant and agree as follows:
(a) CONDUCT OF BUSINESS. CAC and the Servicer will each, and the Servicer
will cause its Subsidiaries to, carry on and conduct its business in
substantially the same manner and in substantially the same fields of enterprise
as it is presently conducted and do all things necessary to remain duly
incorporated, validly existing and in good standing as a domestic
corporation in its jurisdiction of incorporation and each of CAC and Servicer
will maintain all requisite authority to conduct its business in each
jurisdiction in which its business is conducted.
(b) COMPLIANCE WITH LAWS. CAC and the Servicer will, and each will cause
each of its Subsidiaries to, comply in all material respects with all laws,
rules, regulations, orders, writs, judgments, injunctions, decrees or awards to
which it or its properties may be subject.
(c) FURNISHING OF INFORMATION AND INSPECTION OF RECORDS. CAC and the
Servicer will furnish to Funding from time to time such information with respect
to the Loans as Funding may reasonably request, including, without limitation,
listings identifying the Obligor and the Outstanding Balance for each Loan. CAC
and the Servicer will at any time and from time to time during regular business
hours permit Funding, or its agents or representatives, (i) to examine and make
copies of and abstracts from all Records and (ii) to visit the offices and
properties of CAC for the purpose of examining such Records, and to discuss
matters relating to Loans or CAC's performance hereunder with any of the
officers, directors, employees or independent public accountants of CAC or the
Servicer having knowledge of such matters.
(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. CAC and the Servicer will
each maintain a system of accounting established and administered in accordance
with GAAP, consistently applied, and will maintain and implement administrative
and operating procedures (including, without limitation, an ability to recreate
records evidencing Loans in the event of the destruction of the originals
thereof), and keep and maintain, all documents, books, records and other
information reasonably necessary or advisable for the collection of all Loans
(including, without limitation, records adequate to permit adjustments to each
existing Loan). CAC and the Servicer will each give Funding and the Agent
notice of any material change in the administrative and operating procedures
referred to in the previous sentence.
(e) PERFORMANCE AND COMPLIANCE WITH LOANS AND DEALER AGREEMENTS. CAC and
the Servicer, at their expense, will timely and fully perform and comply with
all material provisions, covenants and other promises required to be observed by
either of them under the Dealer Agreements related to the Loans.
(f) CREDIT AND COLLECTION POLICIES. CAC and the Servicer will comply in
all material respects with the Credit Guidelines (as in effect on the Closing
Date) and the Collection Guidelines in regard to each Loan and the related
Dealer Agreement.
(g) COLLECTIONS RECEIVED. The Servicer shall hold in
trust, and deposit to the Collection Account, not later than the close of
business on the second Business Day following the Date of Processing, all
Collections received from time to time by the Servicer.
(h) SALE TREATMENT. CAC agrees to treat the conveyance of the Contributed
Property made pursuant to this Agreement for all purposes (including, without
limitation, tax and financial accounting purposes) as a complete disposition
and, to the extent any such reporting is required, shall report the transactions
contemplated by this Agreement on all relevant books, records, tax returns,
financial statements and other applicable documents as a complete disposition of
the Loans to Funding.
(i) ERISA. CAC and the Servicer shall each promptly give Funding written
notice upon becoming aware that CAC or the Servicer, or any of the Servicer's
Subsidiaries, is not in compliance in all material respects with ERISA or that
any ERISA lien on any of the Loans exists.
SECTION 5.2. NEGATIVE COVENANTS. During the term of this Agreement,
unless the Agent and Funding shall otherwise consent in writing:
(a) NO SALES, LIENS, ETC. Except as otherwise provided herein, CAC will
not sell, assign (by operation of law or otherwise) or otherwise dispose of, or
create or suffer to exist any Adverse Claim upon (or the filing of any financing
statement) or with respect to (i) any of the Loans, the Related Security,
Collections or other Contributed Property, (ii) any goods (other than
inventory), the sale, which may give rise to any Loan, Related Security or
Collections or other Contributed Property (subject, in each case with respect to
Related Security constituting returned inventory, to the applicable provisions
of Section 9-306 of the Relevant UCC) or (iii) upon or with respect to any
account to which any Collections of any Loan are sent, or, in each case, assign
any right to receive income in respect thereof. CAC shall, and will cause each
of its Subsidiaries to, specifically exclude from the property subject to any
Adverse Claim granted on inventory any and all accounts receivable generated by
sales of such inventory and the proceeds thereof and shall provide, upon
Funding's request, evidence satisfactory to Funding that any such Adverse Claim
(and each related UCC financing statement or other related filing) expressly
excludes any such accounts receivable. CAC will provide Funding and the Agent
with a copy of any inventory financing agreement at least three Business Days
prior to the effectiveness thereof.
(b) NO EXTENSION OR AMENDMENT OF LOANS. Neither CAC nor the Servicer will
extend, amend or otherwise modify the terms of
any Loan, or amend, modify or waive any term or condition of any Dealer
Agreement related thereto, except as permitted by any other Transaction
Document.
(c) NO CHANGE IN BUSINESS OR CREDIT GUIDELINES. Except as provided in the
Security Agreement, neither CAC nor the Servicer will make any change in the
character of its business or in the Credit Guidelines or the Collection
Guidelines, which change might, in either case, impair the collectability of any
substantial portion of the Loans or otherwise result in a material adverse
effect.
(d) CHANGE IN THE COLLECTION ACCOUNT. Neither CAC nor the Servicer will
add or terminate, or make any change to, the Collection Account, except in
accordance with the Security Agreement.
(e) CHANGE OF NAME, ETC. Neither CAC nor the Servicer will change its
name, identity or structure or location of its chief executive office, unless at
least ten (10) days prior to the effective date of any such change CAC or the
Servicer, as the case may be, delivers to Funding and the Agent such documents,
instruments or agreements, including, without limitation, appropriate financing
statements under the Relevant UCC, executed by CAC, as are necessary to reflect
such change and to continue the perfection of Funding's and any assignee's
interest in the Loans.
(f) SEPARATE BUSINESS. Neither CAC nor the Servicer will: (i) fail to
maintain separate books, financial statements, accounting records and other
corporate documents from those of Funding; (ii) commingle any of its assets or
the assets of any of its Affiliates with those of Funding; (iii) pay from its
own assets any obligation or indebtedness of any kind incurred by Funding; (iv)
directly, or through any of its Affiliates, borrow funds or accept credit or
guaranties from Funding except pursuant to this Agreement in connection with the
purchase of the Loans.
SECTION 5.3. INDEMNIFICATION. CAC and the Servicer, jointly and
severally, agree to indemnify, defend and hold Funding harmless from and against
any and all loss, liability, damage, judgment, claim, deficiency, or expense
(including interest, penalties, reasonable attorneys' fees and amounts paid in
settlement) to which Funding or any assignee thereof may become subject insofar
as such loss, liability, damage, judgment, claim, deficiency, or expense arises
out of or is based upon a breach by CAC or the Servicer of its representations,
warranties and covenants contained herein, or any information certified in any
schedule or certificate delivered by CAC or the Servicer hereunder, being untrue
in any material respect at any time. The obligations of CAC and the Servicer
under this Section 5.3 shall
be considered to have been relied upon by Funding, Kitty Hawk and the Agent
and shall survive the execution, delivery, performance and termination of
this Agreement, regardless of any investigation made by Funding, Kitty Hawk
or the Agent or on behalf of any of them.
ARTICLE VI
REPURCHASE OBLIGATION
SECTION 6.1. MANDATORY REPURCHASE UPON BREACH OF WARRANTY. If any Loan,
which has been contributed to Funding by CAC hereunder and which has been
reported by CAC to be an Eligible Loan, shall fail to meet the conditions set
forth in the definition of "Eligible Loan" on the date of such report or for
which any representation or warranty made herein in respect of such Loan shall
fail to be true on the date so made, CAC shall be deemed to have received on
such day a Collection of such Loan in full and shall on such day pay to Funding
an amount equal to the aggregate Outstanding Balance of such Loan. If on any
day any Contract, which has been contributed to Funding by CAC hereunder and
which has been reported by CAC to be an Eligible Contract, shall fail to meet
the conditions set forth in the definition of "Eligible Contract" on the date of
such report or for which any representation or warranty made herein in respect
of such Contract shall fail to be true on the date so made, CAC shall be deemed
to have received on such day a Collection in the amount of the Outstanding
Balance of such Contract and shall on such day pay to Funding an amount equal to
the outstanding Balance of such Contract. For purposes of this Section 6.1,
Outstanding Balance shall be calculated as of the last day of the immediately
preceding collection period. Upon the request of CAC, Funding shall release its
security interest on the Loans and the Contracts for which payment has been made
in accordance with this Section 6.1; PROVIDED, HOWEVER, that any Income
Collections relating to any such Loans accrued through the date of the release
of the security interest in such Loans shall continue to be pledged to Funding.
SECTION 6.2. NO RECOURSE. Except as otherwise provided in this Article
VI, the purchase and sale of the Loans under this Agreement shall be without
recourse to CAC or the Servicer.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1. CONDITIONS TO FUNDING'S OBLIGATIONS REGARDING LOANS.
Consummation of the transactions contemplated hereby on the Closing Date and on
any Subsequent Contribution Date shall be subject to the satisfaction of the
following conditions:
(a) All representations and warranties of CAC and the
Servicer contained in this Agreement shall be true and correct on the Closing
Date and on each Subsequent Contribution Date thereafter with the same effect
as though such representations and warranties had been made on such date;
(b) All information concerning the Loans provided to Funding shall be true
and correct in all material respects as of the Closing Date, in the case of any
Loans sold on the Closing Date, or the Subsequent Contribution Date, in the case
of any Loans sold on any Subsequent Contribution Date;
(c) CAC and the Servicer shall have substantially performed all other
obligations required to be performed by the provisions of this Agreement;
(d) CAC shall have filed or caused to be filed the financing statement(s)
required to be filed pursuant to Section 2.1(b);
(e) All corporate and legal proceedings and all instruments in connection
with the transactions contemplated by this Agreement shall be satisfactory in
form and substance to Funding, and Funding shall have received from CAC copies
of all documents (including, without limitation, records of corporate
proceedings) relevant to the transactions herein contemplated as Funding may
reasonably have requested; and
(f) On the Closing Date, CAC shall deliver to Funding and the Agent a
Monthly Servicer's Certificate as of the Closing Date.
ARTICLE VIII
TERM AND TERMINATION
SECTION 8.1. TERM. This Agreement shall commence as of the date of
execution and delivery hereof and shall continue in full force and effect until
the date following the earlier of (i) the date designated by Funding or CAC as
the termination date at any time following sixty (60) day's written notice to
the other (with a copy thereof to the Agent), (ii) upon the occurrence of an
Event of Bankruptcy with respect to either Funding, CAC or the Servicer or (iii)
the date on which either Funding or the Servicer becomes unable for any reason
to purchase or re-purchase any Loan in accordance with the provisions of this
Agreement or defaults on its obligations hereunder, which default continues
unremedied for more than thirty (30) days after written notice (any such date
being a "TERMINATION DATE"); PROVIDED, HOWEVER, that the termination of this
Agreement pursuant to this Section 8.1 hereof shall not discharge any Person
from any obligations incurred prior to such termination, including, without
limitation, any obligations to make any payments with respect to
the interest of Funding in any Loan sold prior to such termination.
SECTION 8.2. EFFECT OF TERMINATION. Following the termination of this
Agreement pursuant to Section 8.1, CAC shall not contribute any Loans. No
termination or rejection or failure to assume the executory obligations of this
Agreement in any Event of Bankruptcy with respect to CAC or Funding shall be
deemed to impair or affect the obligations pertaining to any executed sale or
executed obligations, including, without limitation, pre-termination breaches of
representations and warranties by CAC or Funding. Without limiting the
foregoing, prior to termination, the failure of CAC to deliver computer records
of Loans or any reports regarding the Loans shall not render such transfer or
obligation executory, nor shall the continued duties of the parties pursuant to
Article V or Section 9.1 of this Agreement render an executed sale executory.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1. AMENDMENT. This Agreement and the rights and obligations of
the parties hereunder may not be changed orally, but only by an instrument in
writing signed by Funding and CAC and consented to in writing by the Agent. Any
reconveyance executed in accordance with the provisions hereof shall not be
considered amendments to this Agreement.
SECTION 9.2. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN.
SECTION 9.3. NOTICES. Except as provided below, all communications and
notices provided for hereunder shall be in writing (including telecopy or
electronic facsimile transmission or similar writing) and shall be given to the
other party at its address or telecopy number set forth below or at such other
address or telecopy number as such party may hereafter specify for the purposes
of notice to such party. Each such notice or other communication shall be
effective (i) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section 9.3 and confirmation is received, (ii)
if given by mail three Business Days following such posting, postage prepaid,
U.S. certified or registered, (iii) if given by overnight courier, one Business
Day after deposit thereof with a national overnight courier service, or (iv) if
given by any other means, when received at the address specified in this Section
9.3.
(a) in the case of Funding:
CAC Funding Corp.
Silver Triangle Building
00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxx
Telephone: (000) 000-0000 (ext. 432)
Telecopy: (000) 000-0000
with a copy to:
NationsBank, N.A.
NationsBank Corporate Center
000 Xxxxx Xxxxx Xxxxxx
XX0-000-00-00
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx NC1-007-10-07
Structured Finance
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b) in the case of CAC and in the case of the Servicer (for so long as the
Server is CAC):
Credit Acceptance Corporation
Silver Triangle Building
00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxx
Telephone: (000) 000-0000 (ext. 432)
Telecopy: (000) 000-0000
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party.
SECTION 9.4. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions,
or terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
SECTION 9.5. ASSIGNMENT. This Agreement may not be assigned by the
parties hereto, except that Funding may assign its rights hereunder pursuant to
the Security Agreement to the Agent, for the benefit of Kitty Hawk and the Bank
Investors, and that Kitty Hawk may assign any or all of its rights to any
Liquidity Provider. Funding hereby notifies (and CAC hereby acknowledges that)
Funding, pursuant to the Security Agreement, has assigned its rights hereunder
to the Agent. All rights of Funding hereunder may be exercised by the Agent or
its assignees, to the extent of their respective rights pursuant to such
assignments.
SECTION 9.6. FURTHER ASSURANCES. Funding, CAC and the Servicer agree to
do and perform, from time to time, any and all acts and to execute any and all
further instruments required or reasonably requested by the other parties in
order to more fully to effect the purposes of this Agreement, including, without
limitation, the execution of any financing statements or continuation statements
or equivalent documents relating to the Loans for filing under the provisions of
the Relevant UCC or other laws of any applicable jurisdiction.
SECTION 9.7. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and
no delay in exercising, on the part of Funding, CAC or the Agent, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exhaustive of any rights,
remedies, powers and privilege provided by law.
SECTION 9.8. COUNTERPARTS. This Agreement may be executed in two or more
counterparts including telecopy transmission thereof (and by different parties
on separate counterparts), each of which shall be an original, but all of which
together shall constitute one and the same instrument.
SECTION 9.9. BINDING EFFECT; THIRD-PARTY BENEFICIARIES. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. The Agent, on behalf of Kitty Hawk
and the Bank Investors, and any Liquidity Provider are intended by the parties
hereto to be third-party beneficiaries of this Agreement.
SECTION 9.10. MERGER AND INTEGRATION. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
SECTION 9.11. HEADINGS. The headings herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.
SECTION 9.12. EXHIBITS. The schedules and exhibits referred to herein
shall constitute a part of this Agreement and are incorporated into this
Agreement for all purposes.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Funding and CAC each have caused this Contribution
Agreement to be duly executed by their respective officers as of the day and
year first above written.
CAC FUNDING CORP.
By: /S/ XXXXXXX X. XXXX
------------------------------------
Name: XXXXXXX X. XXXX
------------------------------------
Title: TREASURER
------------------------------------
CREDIT ACCEPTANCE CORPORATION,
individually and as Servicer
By: /S/ XXXXX X. XXXXXXX
------------------------------------
Name: XXXXX X. XXXXXXX
------------------------------------
Title: CFO
------------------------------------
Acknowledged and agreed as
of the date first above written:
KITTY HAWK FUNDING CORPORATION
By: /S/ XXXXXXX X. XXXXXX
------------------------------------
Name: XXXXXXX X. XXXXXX
------------------------------------
Title: VICE PRESIDENT
------------------------------------
NATIONSBANK, N.A., as Agent
By: /S/ XXXXXX X. XXXX
------------------------------------
Name: XXXXXX X. XXXX
------------------------------------
Title: VICE PRESIDENT
------------------------------------
