EXECUTION COPY CONTRIBUTION AGREEMENT

 

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                                                                  EXHIBIT 4(f)61

 

                                                                  EXECUTION COPY

 

                             CONTRIBUTION AGREEMENT

 

      This CONTRIBUTION AGREEMENT, dated as of August 25, 2004 (the

"Agreement"), is made between CREDIT ACCEPTANCE CORPORATION, a Michigan

corporation ("CAC") and CREDIT ACCEPTANCE FUNDING LLC 2004-1, a Delaware limited

liability company ("Funding").

 

      Funding desires to acquire from time to time certain Dealer Loans and

related rights and collateral, including certain of CAC's rights in the Dealer

Agreements related thereto, all of the related Contracts, and the Collections

(other than Dealer Collections) derived therefrom during the full term of this

Agreement, and CAC desires to transfer, convey and assign from time to time such

Dealer Loans and related property to Funding upon the terms and conditions

hereinafter set forth. CAC has also agreed to service the Dealer 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. Capitalized terms used herein shall have the

respective meanings specified herein or, if not so specified, the respective

meanings specified in, or incorporated by reference into, the Sale and Servicing

Agreement, and shall include in the singular number the plural and in the plural

number the singular:

 

      "Applicable Pool Cap" means the maximum number of Contracts that could,

under the applicable Dealer Agreement, be allocated to a pool of Contracts that

support advances which advances, when taken together, constitute a Dealer Loan.

 

      "Contributed Property" means the Initial Contributed Property and the

Subsequent Contributed Property.

 

      "Initial Contributed Property" means (i) the Dealer Loans listed on

Exhibit A hereto delivered to the Servicer, the Class A Insurer, the Backup

Insurer, the Backup Servicer and the Trust Collateral Agent on the Closing Date

and (ii) all Related Security with respect thereto.

 

      "Related Security" means, with respect to any Dealer Loans, (i) all rights

under the Dealer Agreements related thereto other than the Excluded Dealer

Agreement Rights, including CAC's right to service the Dealer Loans and the

related Contracts and to receive the related servicing fees and reimbursement of

certain recovery and repossession expenses, in accordance with the terms of the

Dealer Agreements; (ii) Collections (other than Dealer Collections) after the

applicable Cut-off Date; (iii) a security interest in each Contract securing

such Dealer Loan; (iv) all records and documents relating to such Dealer Loans

and the Contracts; (vi) all security interests purporting to secure payment of

such Dealer Loans; (vii) all security interests purporting to secure payment of

each Contract (including a security interest in each Financed Vehicle); (viii)

all guarantees, insurance (including insurance insuring the priority or

perfection

 

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of any Contract) or other agreements or arrangements securing the Contracts; and

(ix) all Proceeds of the foregoing. For the avoidance of doubt, the term

"Related Security" with respect to any Dealer Loan includes all rights arising

after the end of the Revolving Period under such Dealer Loans which rights are

attributable to advances made under such Dealer Loans as the result of Contracts

being added after the last day of the last full Collection Period during the

Revolving Period to the identifiable group of Contracts to which such Dealer

Loan relates.

 

      "Sale and Servicing Agreement" shall mean the Sale and Servicing Agreement

dated as of August 25, 2004 among CAC, Funding, Credit Acceptance Auto Dealer

Loan Trust 2004-1, as the Issuer, JPMorgan Chase Bank as the Trust Collateral

Agent and Indenture Trustee, and Systems & Services Technologies, Inc., as the

Backup Servicer.

 

      "Subsequent Contributed Property" means, with respect to any Distribution

Date, (i) the Dealer Loans added to Exhibit B hereto as of such Distribution

Date and (ii) all Related Security with respect thereto.

 

      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 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 SALE OF DEALER LOANS

 

      SECTION 2.1 Contribution and Sale of Dealer Loans. (a) In consideration of

the payments described in Section 3.1, effective as of the Closing Date, CAC

does hereby convey, assign, sell and transfer to Funding, without recourse,

except as set forth herein, all of its right, title and interest in and to the

Initial Contributed Property.

 

      (b) CAC hereby further agrees that on each Distribution Date during the

Revolving Period, in consideration of the payment described in Section 3.1 with

respect to such Distribution Date, CAC shall, and CAC does hereby agree to,

convey, assign, sell and transfer to Funding, without recourse, except as set

forth in this Agreement, all of its right, title and interest in and to the

Subsequent Contributed Property with respect to such Distribution Date.

 

      (c) CAC hereby further agrees that the above-described conveyances shall,

without the need for any further action on the part of CAC or Funding, include

all rights arising after the end of the Revolving Period under any Dealer Loan

included in the Initial Contributed Property or Subsequent Contributed Property

which rights are attributable to advances made under such Dealer Loans as the

result of Contracts being added after the last day of the last full Collection

Period during the Revolving Period to the identifiable group of Contracts to

which such Dealer Loan relates.

 

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      (d) Each 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 Dealer Loans or

under any Contract, Dealer Agreement or other agreement and instrument relating

to the Dealer Loans.

 

      (e) 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 the interests of Funding created

hereby, 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.

 

      (f) 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 Dealer 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 authorized and permitted to file continuation

statements and amendments to financing statements and assignments thereof to

preserve and protect its right, title and interest in, to and under the

Contributed Property.

 

      (g) It is the express intent of CAC and Funding that the conveyance of the

Dealer Loans and other Contributed Property by CAC to Funding pursuant to this

Agreement be construed as an absolute sale and contribution of such Dealer 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 Dealer Loans and other Contributed Property by CAC to

Funding in the nature of a consensual lien securing an obligation. However, in

the event that, notwithstanding the express intent of the parties, the Dealer

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 UCC as enacted in the State of

Michigan; 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 such a

security interest in the Dealer Loans and other Contributed Property, such

security interest would be a perfected security interest in favor of Funding

under applicable law and will be maintained as such throughout the term of this

Agreement.

 

      (h) 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 Dealer Loans conveyed to

Funding on the Closing Date, and all Contracts securing all such Dealer Loans,

identified by account number, dealer number and pool number. Such file or list

shall be marked as Exhibit A to this Agreement, shall be delivered to

 

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Funding as confidential and proprietary, and is hereby incorporated into and

made a part of this Agreement. Such list and such Exhibit A shall be

supplemented and updated by lists delivered by CAC to Funding on each

Distribution Date in the Revolving Period describing all Contributed Property

conveyed on each such Distribution Date so that, on each such date, Funding will

have an aggregate list and Exhibit A that describes all Dealer Loans conveyed by

CAC to Funding hereunder on or prior to said Distribution Date and the related

Dealer Agreements.

 

      (i) CAC will reflect the transactions described in paragraph (a) of this

Section 2.1 on its internal non-consolidated financial statements and on its

non-consolidated state tax returns as a sale or other absolute transfer of the

Dealer Loans from CAC to Funding, even though CAC will reflect this transaction

on its consolidated financial statements as an "on-balance sheet" item in

accordance with generally accepted accounting principles. CAC will present the

data in its consolidated financial statements with an accompanying footnote

describing Funding's separate existence and stating that such item is a

financing secured by the Dealer Loans and is non-recourse to CAC.

 

      SECTION 2.2. Servicing of Dealer Loans. The servicing, administering and

collection of the Dealer Loans shall be conducted by the Servicer then

authorized to act as such under the Sale and Servicing Agreement.

 

                                    ARTICLE III

                            CONSIDERATION AND PAYMENT

 

      SECTION 3.1. Consideration. The consideration for the Dealer Loans and

other Contributed Property conveyed on the Closing Date to Funding by CAC under

this Agreement shall be an amount equal to the net cash proceeds received by

Funding arising out of its conveyance on the Closing Date of Contributed

Property to the Issuer under the Sale and Servicing Agreement, plus 100% of the

sole membership interest in Funding. Thereafter, on each Distribution Date in

the Revolving Period, the consideration for the Dealer Loans and other

Contributed Property conveyed on such Distribution Date will be cash in the

amount of the Aggregate Outstanding Net Eligible Loan Balance of such Dealer

Loans. The Contributed Property shall be deemed to have a value equal to the

aggregate principal amount of the Dealer Loans sold and contributed by CAC to

Funding.

 

      SECTION 3.2. Membership Interest. The membership interest of CAC in

Funding shall arise on the Closing Date. Such membership interest may not be

sold or otherwise transferred by CAC except as otherwise permitted in the Sale

and Servicing Agreement.

 

                                   ARTICLE IV

                          REPRESENTATIONS AND WARRANTIES

 

      SECTION 4.1. Representations and Warranties. CAC represents and warrants

to Funding, as of the Closing Date and each Distribution Date during the

Revolving Period, that:

 

      (a) Organization and Good Standing. CAC is duly organized and is validly

existing as a corporation in good standing under the laws of the State of

Michigan, with power and authority to own its properties and to conduct its

business as such properties are currently owned and such business is presently

conducted, and has and had at all relevant times, full power,

 

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authority, and legal right to acquire, own, sell, and service the Dealer Loans

and the related Contracts, and to perform its obligations under the Basic

Documents.

 

      (b) Due Qualification. CAC is duly qualified to do business as a foreign

corporation in good standing, and has obtained all necessary licenses and

approvals in all jurisdictions in which the ownership or lease of property or

the conduct of its business, including the servicing of the Dealer Loans and the

related Contracts as required by this Agreement, requires such qualifications

except where such failure will not have a material adverse effect.

 

      (c) Power and Authority. CAC has the power and authority to execute and

deliver this Agreement and the other Basic Documents to which it is a party and

to carry out their respective terms; and the execution, delivery, and

performance of this Agreement and the other Basic Documents to which it is a

party have been duly authorized by CAC by all necessary corporate action.

 

      (d) Valid Sale; Binding Obligations. This Agreement evidences a valid

sale, transfer, and assignment of the Contributed Property enforceable against

creditors of and purchasers from CAC; and this Agreement and the other Basic

Documents to which CAC is a party constitute legal, valid and binding

obligations of CAC enforceable in accordance with their terms, subject to the

effects of bankruptcy, insolvency, reorganization, or other similar laws

affecting the enforcement of creditors' or secured creditors' rights generally

and to general principles of equity.

 

      (e) No Violation. The consummation of the transactions contemplated by

this Agreement and the other Basic Documents to which it is a party and the

fulfillment of the terms hereof and thereof do not conflict with, result in any

breach of any of the terms and provisions of, or constitute (with or without

notice or lapse of time) a default under, the Articles of Incorporation or

by-laws of CAC, or any indenture, agreement, or other instrument to which CAC is

a party or by which it is or may be bound; nor result in the creation or

imposition of any Lien upon any of its properties pursuant to the terms of any

such indenture, agreement (other than this Agreement), or other instrument; or

violate any law or, to the best of CAC's knowledge, any order, rule, or

regulation applicable to CAC of any court or of any federal or state regulatory

body, administrative agency, or other governmental instrumentality having

jurisdiction over CAC or its properties.

 

      (f) No Proceedings. There are no proceedings or investigations pending, or

to CAC's best knowledge threatened, before any court, regulatory body,

administrative agency, or other governmental instrumentality having jurisdiction

over CAC or its properties: A) asserting the invalidity of this Agreement or any

other Basic Document to which it is a party; B) seeking to prevent the

consummation of any of the transactions contemplated by this Agreement or any

other Basic Document to which it is a party; or C) seeking any determination or

ruling that might materially and adversely affect the performance by CAC of its

obligations under, or the validity or enforceability of, this Agreement, or any

other Basic Document to which it is a party.

 

      (g) 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 8.3, or such other locations

notified to Funding and the Trust Collateral

 

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Agent in accordance with this Agreement in jurisdictions where all action

required by the terms of this Agreement has been taken and completed.

 

      (h) Eligibility of Dealer Agreements. Each Dealer Agreement classified as

an "Eligible Dealer Agreement" (or included in any aggregation of balances of

"Eligible Dealer Agreements") by CAC in any document or report delivered

hereunder satisfied the requirements contained in the definition of Eligible

Dealer Agreement on the date so delivered.

 

      (i) Eligibility of Dealer Loans. Each Dealer Loan classified as an

"Eligible Loan" (or included in any aggregation of balances of "Eligible Loans")

by CAC in any document or report delivered hereunder satisfied the requirements

contained in the definition of Eligible Loan on the date so delivered. Each

Dealer Loan represents, or will represent, a non-recourse obligation of a Dealer

with respect to advances related to a pool of Contracts, and CAC has, and will

maintain, a policy that each such pool will have Contracts allocated to it (as

generated by relevant Dealer) until the number of Contracts in such pool reaches

the Applicable Pool Cap. The Applicable Pool Cap for each Dealer Loan will equal

or exceed 75.

 

      (j) Eligibility of Contracts. Each Contract classified as an "Eligible

Contract" (or included in any aggregation of balances of "Eligible Contracts")

by CAC in any document or report delivered hereunder satisfied the requirements

contained in the definition of Eligible Contract on the date so delivered.

 

      (k) Accuracy of Information. All information with respect to the Dealer

Loans and other Contributed Property provided to Funding hereunder by CAC was

true and correct in all material respects as of the date such information was

provided to Funding and did not omit to state any material facts necessary to

make the statements contained therein not misleading.

 

      (l) No Liens. Each Dealer Loan and the other Contributed Property has been

pledged to Funding free and clear of any Lien of any Person, and in compliance,

in all material respects, with all Applicable Laws.

 

      (m) No Consents. With respect to each Dealer Loan and the 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 pledge of such

Contributed Property to Funding have been duly obtained, effected or given and

are in full force and effect.

 

      (n) Exhibit A. Exhibit A to this Agreement and each supplement or addendum

thereto is and will be an accurate and complete listing of all Dealer Loans and

the related Dealer Agreements and Contracts in all material respects on the date

each such Dealer Loan was sold to Funding hereunder, and the information

contained therein is and will be true and correct in all material respects as of

such date.

 

      (o) 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, Dealer Loans or Contracts.

 

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      (p) Contribution Agreement. This Contribution Agreement is the only

agreement pursuant to which Funding purchases Dealer Loans from CAC.

 

      (q) Security Interest. CAC has granted a security interest (as defined in

the UCC as enacted in the State of Michigan) to Funding in the Contributed

Property, which is enforceable in accordance with Applicable Law upon the

Closing Date. Upon the filing of UCC-1 financing statements naming Funding as

secured party and CAC as debtor, Funding shall have a first priority perfected

security interest in the Contributed Property. All filings (including, without

limitation, UCC filings) as are necessary in any jurisdiction to perfect the

interest of Funding have been made.

 

      (r) Credit Score. The weighted average (based on Contract principal

balance) of the Final Scores of each "Contract Group" is 630 or greater. A

"Contract Group" is a group of Contracts related to a group of Dealer Loans that

becomes Contributed Property on the Closing Date or on a particular Distribution

Date during the Revolving Period.

 

      (s) Use of Proceeds. No proceeds of any sale of Contributed Property will

be used (i) for a purpose that violates, or would be inconsistent with,

Regulation T, U or X promulgated by the Board of Governors of the Federal

Reserve System from time to time or (ii) to acquire any security in any

transaction which is subject to Section 12, 13 or 14 of the Securities Exchange

Act of 1934, as amended.

 

      (t) Taxes. CAC has filed on or before their respective due dates, all tax

returns which are required to be filed in any jurisdiction or has obtained

extensions for filing such tax returns and has paid all taxes, assessments, fees

and other governmental charges against CAC or any of its properties, income or

franchises, to the extent that such taxes have become due, other than any taxes

or assessments, the validity of which are being contested in good faith by

appropriate proceedings a