AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON August 20, 1999
REGISTRATION NO. _________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MMCA AUTO OWNER TRUST 1999-2
(Issuer with respect to the Notes)
MMCA AUTO RECEIVABLES TRUST
(Originator of the Trust described herein)
(Exact name of registrant as specified in its charter)
DELAWARE 9999 33-0869011
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification
organization) Code No.) No.)
6363 KATELLA AVENUE
CYPRESS, CALIFORNIA 90630-5205
(714) 236-1614
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
---------
6363 KATELLA AVENUE
CYPRESS, CALIFORNIA 90630-5205
(714) 236-1614
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-----------
Copies to:
SUSAN M. CURTIS, ESQ. DALE W. LUM, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP BROWN & WOOD LLP
919 THIRD AVENUE 555 CALIFORNIA STREET
NEW YORK, NEW YORK 10022 SAN FRANCISCO, CALIFORNIA 94104
Approximate date of proposed sale to the public: As soon as practicable
after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box. |_|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration number of the earlier effective registration statement for
the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=============================================================================================
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT(1) PRICE FEE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
% Class A-1 Asset
Backed Notes............ $250,000 100% $250,000 $69.50
% Class A-2 Asset
Backed Notes............ $250,000 100% $250,000 $69.50
% Class A-3 Asset
Backed Notes........... $250,000 100% $250,000 $69.50
% Class A-4 Asset
Backed Notes........... $250,000 100% $250,000 $69.50
=============================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Securities and
Exchange Commission, acting pursuant to said Section 8(a), may determine.
- ------------------------------------------------------------------------------
[FLAG]
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
Subject to Completion
Preliminary Prospectus Dated _________ __, 1999
$_____________
MMCA AUTO OWNER TRUST 1999-2
$__________ ____% CLASS A-1 ASSET BACKED NOTES
$__________ ____% CLASS A-2 ASSET BACKED NOTES
$__________ ____% CLASS A-3 ASSET BACKED NOTES
$__________ ____% CLASS A-4 ASSET BACKED NOTES
MMCA AUTO RECEIVABLES TRUST
SELLER
[INSERT GRAPHIC]
SERVICER
Underwriting
Discounts Net Proceeds
Price* and Commissions to Seller
-------------------- ------------------- --------------
Class A-1 Notes $__________ $_______ $_________
Class A-2 Notes $__________ $_______ $_________
Class A-3 Notes $__________ $_______ $_________
Class A-4 Notes $__________ $_______ $_________
Total $__________ $_______ $_________
- ---------------------
* The price of the notes will also include any interest accrued on the
notes from the date on which the notes are issued.
Interest and principal on the notes will be payable monthly, on the 15th or
the first business day after the 15th.
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
THE NOTES REPRESENT OBLIGATIONS OF THE TRUST AND ARE BACKED ONLY BY THE
ASSETS OF THE TRUST. THE NOTES DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS
IN MMCA AUTO RECEIVABLES TRUST, MITSUBISHI MOTORS CREDIT OF AMERICA, INC.
OR ANY OF THEIR AFFILIATES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
UNDERWRITER[S] OF THE NOTES
CREDIT SUISSE FIRST BOSTON
The date of this Prospectus is ______ ___, 1999
TABLE OF CONTENTS
Page
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS...........iii
SUMMARY OF TERMS............................................................1
RISK FACTORS................................................................4
THE TRUST...................................................................9
Limited Purposes and Limited Assets.........................................9
Capitalization of the Trust................................................10
The Owner Trustee..........................................................10
PROPERTY OF THE TRUST......................................................10
MMCA'S CONTRACT PORTFOLIO..................................................11
Types of Contracts Included in MMCA's Contract Portfolio...................11
Underwriting Standards.....................................................11
Servicing and Collection Procedures........................................12
Physical Damage Insurance on MMCA's Contracts..............................12
Delinquency, Credit Loss and Returned Vehicle Loss Experience
of MMCA's Contracts......................................................12
THE RECEIVABLES POOL.......................................................15
Selection Criteria.........................................................16
Payment Methods............................................................20
Balloon Payment Receivables................................................21
Defaulted Receivables......................................................22
Maturity and Prepayment Considerations.....................................22
HOW NOTEHOLDERS CAN COMPUTE THEIR PORTION OF THE AMOUNT
OUTSTANDING ON THE NOTES.................................................30
USE OF PROCEEDS............................................................30
MMCA AUTO RECEIVABLES TRUST................................................30
THE SERVICER...............................................................31
TERMS OF THE NOTES.........................................................31
Principal Amount and Interest Rates........................................31
Interest Payable...........................................................32
Principal Payable..........................................................33
Mandatory Redemption.......................................................34
Optional Redemption........................................................34
The Indenture Trustee......................................................34
The Trust's Bank Accounts..................................................34
The Yield Supplement Agreement.............................................35
The Yield Supplement Account...............................................35
Indenture Cash Flows.......................................................36
The Negative Carry Account.................................................38
The Reserve Account and Supplemental Reserve Account.......................39
Subordination of the Certificates..........................................40
Advances by the Servicer of Amounts Payable on the Receivables.............40
Deposit of Collections on the Receivables to Collection Account............41
Statements to Noteholders..................................................41
Registration of the Notes in the Name of Cede & Co. as Nominee
of DTC...................................................................43
Book Entry Registration....................................................43
Issuance of Definitive Notes Upon the Occurrence of Various
Circumstances............................................................46
Terms of the Indenture.....................................................47
THE SALE AND SERVICING AGREEMENT AND THE TRUST AGREEMENT...................53
Sale and Assignment........................................................53
The Pre-Funding Period.....................................................55
Mandatory Repurchase of Receivables........................................56
Servicing Procedures.......................................................56
Servicing Compensation.....................................................58
Evidence to be Provided as to Servicer's Compliance with its
Servicing Obligations....................................................58
Resignation by the Servicer................................................58
Consequences of Merger, Conversion, Consolidation or Similar
Actions by Servicer......................................................59
Limits on Servicer's Liability.............................................59
Limits on Servicer's Obligations in Connection with Legal Actions..........59
Events of Servicing Termination............................................59
Rights of Indenture Trustee and Noteholders Upon an Event of
Servicing Termination Under the Sale and Servicing Agreement.............60
Requirements for Amendments of the Sale and Servicing Agreement
and the Trust Agreement..................................................60
Requirements for Termination of the Trust..................................61
ACTIONS TO BE TAKEN BY INDENTURE TRUSTEE UPON TERMINATION OF
THE TRUST................................................................61
The Administration Agreement...............................................61
SOME IMPORTANT LEGAL ASPECTS OF THE RECEIVABLES............................62
Bankruptcy Considerations..................................................62
Trust's Rights in the Receivables..........................................62
Security Interests in Vehicles.............................................62
Repossession...............................................................64
Notice of Sale; Redemption Rights..........................................64
Deficiency Judgments and Excess Proceeds...................................64
Obligor's Right to Excess Proceeds Upon Sale of a Financed
Vehicle..................................................................64
Consumer Protection Laws...................................................64
Other Limitations..........................................................65
FEDERAL INCOME TAX CONSEQUENCES............................................66
Tax Treatment of the Notes and the Trust under Federal Income Tax
Law......................................................................66
Federal Tax Consequences of Waivers of Events of Default and
Amendments of Notes by Noteholders.......................................68
Information Reporting and Backup Withholding of Taxes by
Indenture Trustee........................................................69
Tax Consequences to Foreign Investors......................................69
STATE TAX CONSEQUENCES.....................................................70
ELIGIBILITY OF NOTES FOR PURCHASE BY MONEY MARKET FUNDS....................70
ERISA CONSIDERATIONS.......................................................70
Special ERISA Considerations for Employee Benefit Plans....................71
Special ERISA Considerations Applicable to Insurance Company
General Accounts.........................................................71
General Investment Considerations for Employee Benefit Plans...............72
UNDERWRITING...............................................................72
LEGAL OPINIONS.............................................................74
REPORTS TO NOTEHOLDERS.....................................................74
Where You Can Find More Information........................................74
GLOSSARY...................................................................75
ANNEX A....................................................................80
IMPORTANT NOTICE
ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
You should rely only on information on the notes provided in this
prospectus. We have not authorized anyone to provide you with different
information.
We include cross-references to sections where you can find additional
information. Check the table of contents to locate these sections.
You can find a glossary of capitalized terms used in this prospectus
beginning on page __ in this prospectus.
SUMMARY OF TERMS
This summary does not contain all of the information that you should
consider in making your investment decision. To understand all of the terms
of this offering, you should read carefully this prospectus in its
entirety.
The Trust: MMCA Auto Owner Trust 1999-2
Seller of the Receivables to
the Trust: MMCA Auto Receivables Trust
Seller's Address: 6363 Katella Avenue, Cypress, CA 90630-5205
Seller's Telephone Number: (714) 236-1614
Servicer of the Receivables: Mitsubishi Motors Credit of America, Inc.
Indenture Trustee: Bank of Tokyo - Mitsubishi Trust Company
Owner Trustee: Wilmington Trust Company
The Trust Property: The trust property will include:
o the receivables, which are motor vehicle
retail installment sale contracts
originated by Mitsubishi Motors Credit
of America, Inc.;
o the security interests in the motor
vehicles financed by the receivables;
o the pre-funding account;
o the reserve account;
o the supplemental reserve account;
o the yield supplement account; and
o the negative carry account
THE TERMS OF THE NOTES
<TABLE>
<S> <C> <C> <C> <C>
Class A-1 Notes Class A-2 Notes Class A-3 Notes Class A-4 Notes
--------------- --------------- --------------- ---------------
Principal Amount: $ $ $ $
Interest Rate Per Annum: _____% _____% _____% _____%
Interest Accrual Method: actual/360 30/360 30/360 30/360
Payment Dates: monthly (15th) monthly (15th) monthly (15th) monthly (15th)
First Payment Date:
Final Payment Date:
Anticipated Ratings
(Moody's/Standard &
Poor's):* P-1/A-1+ Aaa/AAA Aaa/AAA Aaa/AAA
</TABLE>
- ----------------
* It is a condition to the offering of the notes that these ratings be
obtained. However, Moody's or S&P in its discretion may lower or withdraw
its rating in the future.
THE RECEIVABLES
The trust will own two types of receivables:
o receivables that provide for equal monthly payments over their term;
and
o receivables that provide for equal monthly payments plus a
substantially larger final balloon payment.
The principal balance of the receivables on _______ __, 1999 was
$_______________.
The principal balance of the balloon payments on _______ __, 1999 was
$______________.
MART expects to sell additional receivables having a principal balance of
approximately $_______ to the trust during a pre-funding period that begins
on ________ __, 1999 and ends no later than ______ __, 1999.
The total principal balance of balloon payments under those additional
receivables as a percentage of the total principal balance of those
additional receivables will not exceed ___%.
PAYMENT SOURCES
On each payment date, the trust will pay the amounts owed by the trust from
the following sources:
o collections on the receivables during the prior month;
o amounts withdrawn from the reserve account and the supplemental
reserve account;
o amounts withdrawn from the yield supplement account and the negative
carry account; and
o advances by the servicer of amounts due on the receivables but not
paid during the prior month.
PRIORITY OF DISTRIBUTIONS
On each payment date, the trust will pay the amounts owed by the trust in
the following order:
(1) payment to the servicer of amounts advanced by the servicer on
previous payment dates;
(2) payment of the servicing fee equal to 1/12th of 1.00% of the total
principal balance of the receivables on the first day of the prior
month;
(3) payment of the interest payable on the notes;
(4) payment of the principal payable on the notes; and
(5) any required deposits to the reserve account and the supplemental
reserve account.
For further information on the priority of distributions, see "Terms of the
Notes-The Indenture Cash Flows" in this prospectus.
PRIORITY OF INTEREST PAYMENTS
On each payment date, the trust will pay interest on the notes, in
proportion to the principal balance of each class.
PRIORITY OF PRINCIPAL PAYMENTS
On each payment date, the amount required to be paid as principal on the
notes will equal the sum of:
o the principal scheduled to be paid on the receivables during the prior
month;
o the full prepayments on all receivables received during the prior
month;
o partial prepayments on simple interest receivables received during the
prior month; and
o the entire principal balance of receivables that became defaulted
during the prior month.
The trust will distribute principal on the notes on each payment date in
the following order:
(1) to the class A-1 notes until the class A-1 notes are paid in full;
(2) to the class A-2 notes until the class A-2 notes are paid in full;
(3) to the class A-3 notes until the class A-3 notes are paid in full;
and
(4) to the class A-4 notes until the class A-4 notes are paid in full.
If a default under the indenture occurs, the order of priority for
principal payments will change, and the trust will pay principal on all
classes of notes, in proportion to the principal balance of each class,
until the notes are paid in full.
CERTIFICATES
In addition to the notes, the trust will issue $_________ of certificates.
The trust will not make any distributions on the certificates on any
payment date until the interest and principal payable on the notes on that
payment date have been paid. The certificates are not being offered by this
prospectus.
CREDIT ENHANCEMENT
The credit enhancement for the notes will be as follows:
o the subordination of the certificates; and
o the reserve account, the supplemental reserve account and the yield
supplement account.
The credit enhancement for the notes is intended to protect you against
losses or delays in payments on your notes by absorbing losses on the
receivables and other shortfalls in cash flows.
RESERVE ACCOUNT AND SUPPLEMENTAL RESERVE ACCOUNT
On each payment date, the trust will use funds in the supplemental reserve
account and the reserve account to pay the following amounts if collections
on the receivables are insufficient to pay those amounts:
(1) first, the amounts due to the servicer; and
(2) then, the interest and principal due on the notes.
On each payment date, the total amount on deposit in the reserve account
and the supplemental reserve account will equal the lesser of (1) % of the
principal balances of the receivables as of the dates on which the trust
acquired them and (2) the principal balance of the notes.
YIELD SUPPLEMENT ACCOUNT
On each payment date, the trust will use funds in the yield supplement
account to cover any shortfall between:
o the weighted average interest rate on the notes plus ___ percentage
points
o the interest rate on each receivable.
OPTIONAL REDEMPTION
The servicer can purchase all of the remaining receivables once their total
principal balance is 10% or less of their principal balances as of the
dates the receivables were sold to the trust. If the servicer purchases the
receivables, the indenture trustee will redeem the notes for the unpaid
principal amount plus the accrued and unpaid interest on the notes.
TAX STATUS
In the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, for federal
income and Delaware and California income and franchise tax purposes:
o the notes will be characterized as debt; and
o the trust will not be characterized as an association or a publicly
traded partnership taxable as a corporation.
If you purchase a note, you agree to treat it as debt for tax purposes.
ERISA CONSIDERATIONS
The notes are generally eligible for purchase by employee benefit plans
that are subject to the Employee Retirement Income Security Act of 1974 or
to Section 4975 of the Internal Revenue Code of 1986, as amended. However,
fiduciaries of employee benefit plans, including those investing plan
assets of such plan, should review the matters discussed under "ERISA
Considerations" in this prospectus and also should consult with their legal
advisors before purchasing notes.
ELIGIBILITY OF NOTES FOR PURCHASE BY MONEY MARKET FUNDS
The class A-1 notes are structured to be eligible for purchase by money
market funds under Rule 2a-7 under the Investment Company Act of 1940, as
amended.
RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase notes.
ABSENCE OF SECONDARY The underwriters for the notes may assist in
MARKET FOR NOTES COULD resales of the notes but they are not required
LIMIT YOUR ABILITY TO to do so. A secondary market for the notes may
RESELL NOTES not develop. If a secondary market for the
notes does develop, it may not continue or it
may not be sufficiently liquid to allow you to
resell any of your notes. Consequently, you
must be prepared to hold your notes until the
respective final maturity dates for the notes.
INTERESTS OF OTHER PERSONS Another person could acquire an interest in a
IN RECEIVABLES AND receivable that is superior to the trust's
VEHICLES COULD REDUCE THE interest in the receivable because the
FUNDS AVAILABLE TO MAKE servicer will not segregate or mark the
PAYMENTS ON THE NOTES receivables as belonging to the trust. See
"Some Important Legal Aspects of the
Receivables--Trust's Rights in the
Receivables." If another person acquires an
interest in a receivable that is superior to
the trust's interest in the receivable, the
collections on that receivable will not be
available to make payments on the notes.
Another person could acquire an interest in a
vehicle financed by a receivable that is
superior to the trust's interest in the
vehicle because the servicer will not amend
the certificate of title or ownership to
identify the trust as the new secured party.
See "Some Important Legal Aspects of the
Receivables Security Interests in Vehicles."
If another person acquires an interest in a
vehicle that is superior to the trust's
interest in the vehicle, the proceeds from the
sale of the vehicle will not be available to
make payments on the notes.
BANKRUPTCY OF MMCA COULD If MMCA enters a bankruptcy proceeding, you
RESULT IN LOSSES OR DELAYS could experience losses or delays in the
IN PAYMENTS ON THE NOTES payments on your notes. MMCA will sell the
receivables to MART, and MART will transfer
the receivables to the trust. However, if MMCA
enters a bankruptcy proceeding, the court in
the bankruptcy proceeding could conclude that
the sale of the receivables by MMCA to MART
was not a "true sale" and that MMCA still owns
the receivables. The court could also conclude
that MMCA and MART should be consolidated for
bankruptcy purposes. If the court were to
reach either of these conclusions, you could
experience losses or delays in payments on
your notes because:
o the indenture trustee will not be able to
exercise remedies against MMCA on your
behalf without permission from the court;
o the court may require the indenture trustee
to accept property in exchange for the
receivables that is of less value than the
receivables;
o tax or government liens on MMCA's property
that arose before the transfer of the
receivables to the trust will be paid from
the collections on the receivables before
the collections are used to make payments
on your notes; and
o the indenture trustee may not have a
perfected security interest in one or more
of the vehicles securing the receivables or
cash collections held by MMCA at the time
that a bankruptcy proceeding begins.
MART has taken steps in structuring the
transactions described in this prospectus to
minimize the risk that a court would conclude
that the sale of the receivables to MART was
not a "true sale" or that MMCA and MART should
be consolidated for bankruptcy purposes. See
"Some Important Legal Aspects of the
Receivables-Bankruptcy Considerations" and
"MMCA Auto Receivables Trust."
RISK THAT YOU MAY BE POTENTIAL PREPAYMENT OF NOTES DUE TO
REQUIRED TO REINVEST PREPAYMENT OF RECEIVABLES. Prepayments on the
YOUR PRINCIPAL IN THE receivables by the related obligors and
NOTES AT A LOWER RATE purchases of the receivables by MART and the
OF RETURN BECAUSE OF servicer due to breaches of representations,
PREPAYMENTS ON THE NOTES warranties and covenants by MART and the
servicer will accelerate the payment of
principal on your note. The extent of this
prepayment cannot be fully predicted. You will
bear the risk that you will have to reinvest
the principal on your notes earlier than you
expected at a rate of interest that is less
than the rate of interest on your notes.
The obligors on the receivables may prepay the
receivables voluntarily at any time. The
receivables are required to be prepaid upon
the sale, insured loss or other disposition of
the related vehicle. In addition, if MMCA
breaches certain of its representations and
warranties with respect to any receivables,
MMCA will be required to repurchase those
receivables from MART, and MART will be
required to repurchase those receivables from
the trust. MMCA will also be required to
purchase receivables from the trust if it
breaches its servicing obligations with
respect to those receivables. MMCA will be
entitled to purchase all of the remaining
receivables from the trust once the aggregate
principal balance of the receivables is 10% or
less of the principal balances of the
receivables as of the dates on which they were
sold to the trust.
POTENTIAL PREPAYMENT OF NOTES DUE TO AN
INCENTIVE PROGRAM OFFERED BY MMCA. Obligors on
receivables that provide for a balloon payment
can return the related vehicle at the end of
the term of the receivable instead of paying
the balloon payment. MMCA will sell the
returned vehicles on behalf of the trust but
expects the amount realized from the sale of
the returned vehicles to be less than the
balloon payments. To reduce losses from
obligors returning their vehicles at the end
of the term of their receivables instead of
paying the balloon payments, MMCA and its
affiliates offer incentives for the obligors
to prepay their receivables and return the
related vehicles early if they purchase
another vehicle manufactured by Mitsubishi
Motors Corporation or one of its affiliates.
The incentives may encourage a higher level of
prepayments on the receivables than would
otherwise be the case. The higher level of
prepayments will be reflected in a higher
level of prepayments on the notes than would
otherwise be the case. See "The Receivables
Pool-Maturity and Prepayment Considerations."
POTENTIAL PREPAYMENTS If the aggregate principal balance of the
ON NOTES DUE TO FAILURE receivables transferred to the trust during
TO TRANSFER A SUFFICIENT the pre-funding period is less than the amount
NUMBER OF ADDITIONAL deposited to the pre-funding account on
RECEIVABLES TO THE ________ __, 1999, the notes will be prepaid
TRUST in the amount of the shortfall. See "Terms of
the Notes--Mandatory Redemption."
MART's ability to apply the entire pre-funding
account balance to the transfer of receivables
to the trust during the pre-funding period
depends on the manufacture, distribution, sale
and financing of motor vehicles by Mitsubishi
Motors Corporation and its affiliates. MART
will not be able to transfer receivables to
the trust during the pre-funding period unless
MMCA originates those receivables. MMCA mostly
finances vehicles manufactured by Mitsubishi
Motors Corporation and its affiliates. If
Mitsubishi Motors Corporation and its
affiliates temporarily or permanently stop
manufacturing, distributing, selling or
financing motor vehicles, then MMCA's ability
to originate receivables for sale to MART will
be adversely affected.
POTENTIAL LOSS OR The addition of receivables during the
PREPAYMENTS ON NOTES pre-funding period may change the overall
DUE TO CHANGES IN characteristics of the pool of receivables.
POOL CHARACTERISTICS This change may increase the risk of losses or
delays in payments on your notes or
prepayments on your notes. The credit criteria
MMCA uses to originate the receivables to be
transferred by MART to the trust during the
pre-funding period may differ from the credit
criteria used by MMCA in originating the
receivables transferred to the trust on
________ __, 1999. Any changes in those credit
criteria may result in a higher rate of
delinquencies and losses on the receivables or
a higher rate of prepayment than would
otherwise be the case, which will be reflected
in the timing and amount of payment of
principal and interest on the notes.
POTENTIAL LOSS ON NOTES You may suffer a loss on your notes if the
DUE TO LIMITED ASSETS assets of the trust are insufficient to pay
OF THE TRUST the principal amount of the notes in full. The
only source of funds for payments on the notes
will be the assets of the trust. The assets of
the trust are limited to the receivables and
the funds on deposit in the trust's bank
accounts. The notes will not be insured or
guaranteed by MMCA, including in its capacity
as servicer, or by MART, the indenture
trustee, the owner trustee or any other person
or entity. Consequently, you must rely for
payment of the notes solely upon collections
on the receivables and funds on deposit in the
trust's bank accounts. See "Terms of the
Notes--The Reserve Account and Supplemental
Reserve Account."
POTENTIAL LOSS ON NOTES The obligors on the receivables to be
DUE TO NATURE OF OBLIGORS transferred by MMCA to MART and by MART to the
trust will include a higher percentage of
borrowers with limited credit experience than
is included in MMCA's combined portfolio of
receivables. See "MMCA's Contract
Portfolio-Delinquency, Credit Loss and
Returned Vehicle Loss Experience of MMCA's
Contracts." As a result, the credit loss,
repossession, delinquency and default rates on
the receivables may be higher than the
historical credit loss, repossession,
delinquency and default rates on MMCA's
combined portfolio of receivables. You may
experience delays in payments or losses on
your notes if (i) the credit loss,
repossession, delinquency or default rates on
such receivables are higher than expected by
MMCA and (ii) the protection provided to you
by the subordination of the certificates to be
issued by the trust and the funds on deposit
in the reserve account and certain other trust
accounts are insufficient to protect you
against such delays or losses. See "MMCA's
Contract Portfolio-Delinquency, Credit Loss
and Return Vehicle Loss Experience of MMCA's
Contracts" for information concerning MMCA's
combined portfolio of receivables.
POTENTIAL LOSS ON NOTES The obligors on balloon payment receivables
IN CONNECTION WITH SALES will not have to pay the balloon payment if
OF VEHICLES they return the related vehicle to MMCA at the
end of the term of the receivable. MMCA will
sell the returned vehicle on behalf of the
trust. The trust will use the proceeds from
the sale of the returned vehicle to make
payments on the notes. You may experience
delays in payments or losses on your notes if
(i) the proceeds from the sale of the returned
vehicles are less than the amount of the
balloon payments and (ii) the protection
provided to you by the subordination of the
certificates to be issued by the trust and the
funds on deposit in the reserve account and
certain other accounts held by the trust are
insufficient to protect you against those
delays and losses.
MMCA expects the proceeds from the sale of a
returned vehicle to be less than the balloon
payment because MMCA may set the balloon
payments higher than its estimate of the end
of term value of the vehicle in order to
stimulate sales of a particular model. See
"The Receivables Pool--Balloon Payment
Receivables."
POTENTIAL LOSS ON NOTES The obligor under a balloon payment receivable
IF MMCA DOES NOT also has the option to refinance the balloon
REFINANCE BALLOON payment with MMCA, subject to the satisfaction
RECEIVABLES of various conditions. MMCA will be obligated
to provide that financing to the extent it
offers vehicle financing. No successor to MMCA
as servicer will be obligated to provide that
refinancing. If at any time MMCA no longer
makes refinancing available, MART may contract
with third parties to do so. If a refinancing
option is not available, more obligors may
return their vehicles on the date the related
balloon payment is due instead of refinancing
the balloon payment, and consequently more
motor vehicles may be sold by MMCA on behalf
of the trust for prices less than the related
balloon payments.
LACK OF HISTORICAL DATA Balloon payment receivables have matured in
REGARDING THE RETURN large volumes only in recent years. MMCA
RATES OF VEHICLES therefore does not have extensive historical
FINANCED BY BALLOON information regarding (a) the percentage of
RECEIVABLES motor vehicles that will be returned to MMCA
upon the maturity of balloon payment
receivables or (b) MMCA's loss experience upon
resale of those returned motor vehicles. MMCA
expects that, in the aggregate, the amounts
received by MMCA from the sale of those
vehicles will be less than the principal
amounts of the balloon payment because MMCA
sets balloon payments higher than its estimate
of the projected end of term value of the
vehicle in order to stimulate sales of
particular models.
POTENTIAL LOSS ON NOTES Economic conditions in the states where the
DUE TO GEOGRAPHIC obligors under the receivables reside may
CONCENTRATION OF affect the delinquency, loan loss and
RECEIVABLES repossession experience of the trust with
respect to the receivables. Based on the
principal balance of the original pool of
receivables as of the date as of which the
receivables were acquired by the trust, ____%
of the receivables relate to obligors with a
billing address in California, ____% relate to
obligors with a billing address in Texas and
____% relate to obligors with a billing
address in Florida. Accordingly, adverse
economic conditions or other factors affecting
California, Texas or Florida could have an
especially significant effect on the
delinquency, loan loss or repossession
experience of the trust and may adversely
affect the timing and amount of payment of
principal and interest on the notes.
RISKS IN CONNECTION WITH If a default occurs under the indenture and
AN EVENT OF DEFAULT UNDER the maturity dates of the notes are
INDENTURE accelerated, the indenture trustee may sell
the receivables and prepay the notes in
advance of their respective maturity dates.
You may not be able to reinvest the principal
repaid to you earlier than expected at a rate
of return that is equal to or greater than the
rate of return on your notes. You also may not
be paid the principal amount of your notes in
full if the assets of the trust are
insufficient to pay the aggregate principal
amount of the notes in full. In addition, the
acceleration of the maturity dates will change
the order of priority for the payment of
principal on the different classes of notes.
See "Terms of the Notes--Principal Payable."
POTENTIAL DELAYS IN The payment of principal and interest on the
PAYMENTS ON NOTES DUE notes could be delayed if MMCA, in its
TO POTENTIAL COMPUTER capacity as servicer, or the indenture trustee
PROGRAM PROBLEMS experience problems in their computer programs
BEGINNING IN THE YEAR relating to the year 2000. Many existing
2000 computer programs use only two digits to
identify a year. These programs could fail or
produce erroneous results during the
transition from the year 1999 to the year 2000
and afterwards. MMCA has evaluated the impact
of preparing its systems for the year 2000. It
has identified areas of potential impact and
has implemented conversion efforts. It
believes its mission-critical applications,
including its systems for operations,
collections on the receivables and servicing
the receivables, are year 2000 compliant.
If MMCA, in its capacity as the servicer, does
not have a computer system that is year 2000
compliant by the year 2000, MMCA's ability to
service the receivables may be materially and
adversely affected. If the indenture trustee
does not have a computer system that is year
2000 compliant by the year 2000, the indenture
trustee's ability to make distributions on the
notes may be materially and adversely
affected.
THE TRUST
LIMITED PURPOSES AND LIMITED ASSETS
MMCA Auto Owner Trust 1999-2 is a business trust formed under the
laws of the State of Delaware under a trust agreement between MART and
Wilmington Trust Company, as owner trustee. The trust's principal offices
are in the State of Delaware in care of the owner trustee, at Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001. The trust
will not engage in any activity other than:
o acquiring, holding and managing the assets of the trust,
including the receivables, and the proceeds of those assets;
o issuing the notes and the certificates;
o making payments on the notes and the certificates; and
o engaging in other activities that are necessary, suitable or
convenient to accomplish any of the other purposes listed above
or are in any way connected with those activities.
The trust will be capitalized through the issuance of $_________ of
notes and $_________ of asset-backed certificates. The certificates will
entitle certificateholders to receive distributions of amounts not required
to make payments on the notes or to pay expenses of the trust. The
certificates will be subordinated to the notes to the extent described in
this prospectus. The principal amount of the certificates will be reduced
on each payment date by principal payments made on the certificates. The
certificates are not being offered hereby and will be retained by MART or
an affiliate. It is not anticipated that the trust will have any need for
additional capital resources.
On _______ __, 1999, the trust will purchase from MART retail
installment contracts originated by MMCA in connection with the financing
of automobiles and light-duty trucks. The purchase will be made under a
sale and servicing agreement in exchange for the proceeds of the notes and
the issuance to MART or an affiliate of the certificates. The trust will
also purchase additional receivables from MART during the Pre-Funding
Period with proceeds from the sale of the notes.
MMCA or a successor will service the receivables, either directly or
through subservicers. The servicer will be paid the servicing fee and will
be reimbursed for any advances that are due and payable to it out of
collections from the receivables prior to distributions to noteholders.
Some other expenses of the trust will be paid by the servicer or by MART as
provided in the sale and servicing agreement. See, "The Sale and Servicing
Agreement and the Trust Agreement--Servicing Procedures," "--Servicing
Compensation" and "Terms of the Notes--Indenture Cash Flows."
The servicer will hold the receivables and the certificates of title
or ownership relating to the financed vehicles as custodian for the
indenture trustee and the trust. However, the receivables will not be
marked or stamped to indicate that they have been sold to the trust, and
the certificates of title or ownership for the financed vehicles will not
be endorsed or otherwise amended to identify the trust as the new secured
party. Under those circumstances, the trust's security interest in the
receivables and the financed vehicles may be defeated or may not be
perfected in some jurisdictions. See "Some Important Legal Aspects of the
Receivables."
If the protection provided to the noteholders by the subordination of
the certificates and by amounts on deposit in the supplemental reserve
account, the reserve account, the negative carry account and the yield
supplement account is insufficient, the noteholders would have to look
principally to the receivables that have not defaulted, the proceeds from
the repossession and sale of financed vehicles which secure defaulted
receivables and the proceeds from any recourse against dealers for payment
of the notes. In that event, factors such as the trust's not having
perfected security interests in the financed vehicles in all states may
affect the trust's ability to repossess and sell the financed vehicles, and
thus may reduce the proceeds to be distributed to noteholders. See "Terms
of the Notes--Indenture Cash Flows" and "Some Important Legal Aspects of
the Receivables."
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the trust as of
________ ___, 1999:
Class A-1 notes.................................... $
Class A-2 notes....................................
Class A-3 notes....................................
Class A-4 notes....................................
Certificates.......................................
-------------
Total........................................ $
=============
Because the trust will have no operating history upon its
establishment and will not engage in any business other than acquiring and
holding the receivables and related assets and issuing and distributing
payments on the notes and the certificates, no historical or pro forma
financial statements or ratios of earnings to fixed charges with respect to
the trust have been included in this prospectus.
THE OWNER TRUSTEE
Wilmington Trust Company is the owner trustee under the trust
agreement. The owner trustee's Corporate Trust Office is located at Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001.
MART, the servicer and their individual affiliates may have other banking
relationships with the owner trustee and its affiliates in the ordinary
course of their businesses.
PROPERTY OF THE TRUST
Under the indenture, the notes will be secured by the property of the
trust, which will include:
o a pool of motor vehicle retail installment sale contracts
originated during or after [September 1995] and rights and
obligations thereunder;
o all monies due under Actuarial Receivables on or after the
related Cutoff Date and all monies received under Simple
Interest Receivables on or after the related Cutoff Date;
o amounts and property held in or credited to the collection
account, the note payment account, the payahead account, the
reserve account, the negative carry account and the
supplemental reserve account;
o MART's rights in the yield supplement account and the
pre-funding account;
o MART's security interests in the financed vehicles;
o MART's rights to receive proceeds from claims on insurance
policies covering the financed vehicles or the obligors;
o MART's rights of recourse against the dealers under the dealer
agreements relating to the receivables;
o all of the trust's rights under the sale and servicing
agreement, the purchase agreement including its right to cause
MMCA to repurchase receivables from the trust;
o all of MART's rights under the yield supplement agreement;
o all proceeds of the foregoing.
MMCA'S CONTRACT PORTFOLIO
TYPES OF CONTRACTS INCLUDED IN MMCA'S CONTRACT PORTFOLIO
MMCA purchases retail installment contracts relating to new
automobiles and light-duty trucks manufactured or distributed by Mitsubishi
Motors and contracts relating to used automobiles and light-duty trucks
manufactured or distributed by Mitsubishi Motors or other motor vehicle
manufacturers. MMCA applies the same underwriting standards to its
purchases of receivables whether or not the related vehicle was
manufactured by Mitsubishi Motors.
MMCA purchases contracts from dealers that regularly sell contracts
both to MMCA and also to other finance providers. MMCA purchases the
contracts from the dealers subject to the terms of a dealer agreement with
each dealer. Each dealer agreement requires the dealer to repurchase any
contract that it sold to MMCA for the outstanding principal balance if the
dealer breaches some of the representations and warranties set forth in the
agreement. Those representations and warranties typically relate to the
origination of the contract and the security interest in the related
automobile or light-duty truck and not to the creditworthiness of the
obligor under the contract.
UNDERWRITING STANDARDS
MMCA's underwriting standards emphasize each prospective obligor's
ability to pay and creditworthiness as well as the asset value of the
automobile or light-duty truck that secures the related contract.
Before purchasing a contract, MMCA reviews credit applications from
applicants that include information about each applicant's income,
residential status, monthly mortgage or rent payments, credit obligations,
bank accounts and other personal information. MMCA also reviews a credit
report from an independent credit bureau which MMCA reviews to determine
the applicant's current credit status and past credit performance. If
necessary, MMCA verifies the employment or the income of an applicant.
MMCA uses a credit scoring system and considers other factors to
reach each credit decision. In November 1996, MMCA introduced a new credit
scoring system for all contracts, replacing the one that had been used
since June 1994. The new credit scoring system first assigns the
application to one of three credit segments: prime, non-prime and limited
credit experience. Each segment considers different credit application and
credit bureau report characteristics or assigns different weighting to some
characteristics that are considered by all segments. This segmentation is
based solely upon the information in the applicant's credit bureau report.
The new credit scoring system identifies those aspects of an applicant's
credit report and credit application and the proposed financing arrangement
that, based upon the specific performance experience of MMCA's portfolio,
are most predictive of the probability that the applicant will pay MMCA as
agreed. MMCA considers attributes other than the credit score in its credit
decision process. These factors include the ratio of income to debt, an
applicant's equity in the automobile or light-duty truck, satisfactory
existing account relationships, excellent recent reported credit history
and availability of an acceptable guarantor. MMCA management sets limits on
the percentage of credit decisions that approve credit to applicants
scoring below company credit score minimums and deny credit to applicants
scoring above those minimums. Prior to June 1994, MMCA used a
credit-scoring system for contracts, other than contracts with Balloon
Payments, that took into account additional factors from the credit
application. Where the obligor of a contract is a business entity, MMCA
reviews credit applications that include information about bank accounts,
credit references and financial results of the business entity. In
addition, MMCA obtains and reviews any published credit reports on the
business entity. In some cases, MMCA may require an individual to guarantee
the business' obligation under the contract.
After considering the relevant information, MMCA assesses the degree
of credit risk of a particular application and the decision to grant or
deny credit for a contract is made at the appropriate management level. The
application, if approved, is assigned to one of three credit tiers
reflecting its degree of credit risk. The interest rate for the customer's
account is determined by the credit tier, with the more risky accounts
receiving a higher interest rate.
SERVICING AND COLLECTION PROCEDURES
MMCA measures delinquency by the number of days elapsed from the date
a payment is due under a contract, after giving effect to any extension of
that date by MMCA. MMCA considers a payment to be past due or delinquent
when the obligor fails to make at least 90% of a scheduled payment by the
date the payment is due. MMCA generally begins collection activities with
respect to delinquent contracts through telephone contact based upon the
credit risk initially assigned to each obligor. Obligors considered to be
weaker credits are generally contacted by telephone when the contract
becomes 12 days delinquent. Obligors considered strong credits with lesser
risk are generally contacted when the contract becomes 20 days delinquent.
Computer generated delinquency notices are mailed to all delinquent
obligors on the 12th day of delinquency. MMCA also uses an automated system
of monitoring delinquency, which categorizes delinquent accounts into
different priorities of collection activity, based on the level of
delinquency of each account. MMCA's ability as servicer to extend the dates
on which payments on receivables are due is subject to some limitations.
See "The Sale and Servicing Agreement and the Trust Agreement--Servicing
Procedures."
MMCA's collectors are assigned to specific delinquent obligors and
attempt to contact each one by telephone or by letter based on the length
of delinquency and the history of the account. Repossession procedures
typically begin when a contract becomes between 60 to 75 days delinquent.
Repossession is carried out according to applicable state law and specific
procedures adopted by MMCA.
If the financed vehicle securing a delinquent contract is
repossessed, MMCA charges off the related delinquent contract upon the date
on which the proceeds from the sale of the financed vehicle are applied to
the contract balance and the deficiency is determined. If the financed
vehicle cannot be repossessed, MMCA charges off the delinquent contact on
the date on which it determines that it will be unable to recover the
financed vehicle from the obligor. Any deficiencies remaining after
repossession and sale of the related automobile or light-duty truck or
after the full charge off of the related contract are pursued by MMCA to
the extent practicable and legally permitted. MMCA does not charge off
losses on sales of financed vehicles with respect to Balloon Payment
Receivables, because those losses are not credit losses. However, MMCA does
charge off losses for the amortizing monthly installments and the Balloon
Payments for Balloon Payment Receivables. Furthermore, MMCA does not charge
off collection expenses but does charge off repossession and disposition
expenses. Obligors are contacted, and when warranted by individual
circumstances, repayment schedules are established and monitored until the
deficiencies are either paid in full or become impractical to pursue.
PHYSICAL DAMAGE INSURANCE ON MMCA'S CONTRACTS
Each contract requires the obligor to obtain physical damage
insurance covering loss or damage to the related vehicle. The dealer
agreements require that the dealers provide MMCA with written confirmation
that there is physical damage insurance acceptable to MMCA covering each
vehicle at the time that MMCA purchased the related contract from the
dealers. MMCA tracks the ongoing status of insurance by the obligors, and
attempts to cause the obligors to reinstate the insurance if it is allowed
to lapse; nevertheless, there is no assurance that each vehicle will
continue to be covered by physical damage insurance for the entire term
during which the related contract is outstanding.
DELINQUENCY, CREDIT LOSS AND RETURNED VEHICLE LOSS EXPERIENCE OF MMCA'S
CONTRACTS
MMCA's credit scoring system for contracts assigns contracts to one
of three credit segments: prime, non-prime and limited credit experience.
See "MMCA's Contract Portfolio--Underwriting Standards." The trust property
includes every limited credit experience contract in MMCA's portfolio as of
the Cutoff Date that is not scheduled to mature in 1999 and satisfies the
selection criteria set forth under "The Receivables Pool-- Selection
Criteria."
The following two tables set forth information concerning MMCA's
combined portfolio of contracts, including contracts previously sold which
MMCA continues to service. The delinquency, credit loss and returned
vehicle loss experience by the trust may be different than the delinquency,
credit loss and returned vehicle loss experience of MMCA's combined
portfolio, as reflected in the following two tables, because the
distribution among the three credit segments of the receivables transferred
to the trust on ____ __, 1999 and during the Pre-Funding Period is and will
be different than the distribution among the three credit segments of the
contracts in MMCA's combined portfolio.
The trust property includes every limited experience contract in
MMCA's portfolio as of [August 31], 1999 that is not scheduled to mature in
1999 which satisfies the eligibility criteria for inclusion in the trust.
As of ____ __, 1999, limited credit experience receivables were __% of
the receivables in the trust, representing ___% of the aggregate principal
balance of the receivables in the trust. By contrast, as of [August 31],
1999, limited credit experience contracts were __% of the contracts in
MMCA's combined portfolio, representing __% of the aggregate principal
balance of the contracts in MMCA's combined portfolio.
DELINQUENCY EXPERIENCE (1)
<TABLE>
<CAPTION>
As of August 31, As of December 31,
---------------- ------------------
1999 1998 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Number of Contracts Outstanding at End of
Period...................................... _____ _____ _____ _____ _____
Delinquencies as a Percent of Contracts
Outstanding (2)
30-59 Days................................ ___% ___% ___% ___% ___%
60-89 Days................................ ___% ___% ___% ___% ___%
90 Days or More........................... ___% ___% ___% ___% ___<*>
Repossessions as a Percent of Contracts
Outstanding (2)(3).......................... ___% ___% ___% ___% ___%
</TABLE>
- --------------
(1) The information in the table includes contracts for new and used
automobiles and light-duty trucks owned by MMCA or previously sold by
MMCA which MMCA continues to service. Delinquency numbers are net of
bankrupt accounts and repossessions.
(2) The period of delinquency is based on the number of days more than
10% of a payment is contractually past due after giving effect to any
extension by MMCA. The percent represents delinquent dollars as a
percent of dollars outstanding. MMCA's ability, in its capacity as
servicer, to extend the dates on which payments on receivables are
due is subject to certain limitations. See "The Sale and Servicing
Agreement and the Trust Agreement-Servicing Procedures."
(3) Repossessions means the vehicle has been repossessed but the sale
proceeds have not yet been applied to the contract balance.
NET CREDIT LOSS AND REPOSSESSION EXPERIENCE (1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Eight Months Ended
August 31, Year Ended December 31,
---------- -----------------------
1999 1998 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Amount Outstanding (2)............... $ $ $ $ $
Average Amount Outstanding (3)....... $ $ $ $ $
Number of Contracts Outstanding......
Average Number of Contracts
Outstanding (3)....................
Charge-offs (4)...................... $ $ $ $ $
Recoveries (5)....................... $ $ $ $ $
Net Losses........................... $ $ $ $ $
Number of Repossessions (6)..........
Number of Repossessions as a
Percent of the Average Number
of Contracts Outstanding (7)....... % % % % %
Net Losses as a Percent of
Average Amount Outstanding (7)..... % % % % %
</TABLE>
- -------------
(1) The information in the table includes contracts for new and used
automobiles and light-duty trucks owned by MMCA or previously sold by
MMCA which MMCA continues to service.
(2) Amount outstanding is the remaining principal balance of the
contracts, including the principal portion of balloon payments plus
any outstanding fees and charges and any accrued and unpaid interest.
(3) Averages are computed by taking a simple average of the average for
the months outstanding for each period presented.
(4) Charge-offs represent the total aggregate amount due on contracts
that is determined to be uncollectible in the period, less proceeds
from disposition of related vehicles, other than recoveries described
in Note (5). The calculation of charge-offs for the contracts in the
combined portfolio includes both earned but unpaid finance charges
and Balloon Payments.
(5) Recoveries generally consist of amounts received on contracts
following the time at which the contract is charged off net of
collection expenses.
(6) Number of Repossessions means the number of repossessed automobiles
and light-duty trucks in a given period.
(7) Annualized rate. The eight-month period ended August 31, 1999 is not
necessarily indicative of a full year's actual results. MMCA's credit
loss experience is dependent upon the number of repossessions, the
amount outstanding at the time of repossession, and the resale value
of repossessed vehicles. Losses and delinquencies are affected by,
among other things, general and regional economic conditions and the
supply of and demand for automobiles and light-duty trucks.
CONTRACTS PROVIDING FOR BALLOON PAYMENTS: LOSS EXPERIENCE
ON RETURNED VEHICLES (1)
<TABLE>
<CAPTION>
For Contracts Scheduled to For Contracts Scheduled
Terminate in the Eight Months to Terminate in the
----------------------------- -----------------------
Ended August 31, Year Ended December 31,
---------------- -----------------------
1999 1998 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total Number of Final Payment
Receivables........................
Total Number of Vehicles Returned
to MMCA through August 31, 1999....
Return Ratio (2)..................... % % % % %
Total Losses on Returned Vehicles
Sold through August 31, 1999 (3)... $ $ $ $ $
Total Number of Returned Vehicles
Sold through August 31, 1999.......
Average Loss per Returned Vehicle
Sold through August 31, 1999 (3)... $ $ $ $ $
</TABLE>
- -------------
(1) The information in the table includes automobiles and light-duty
trucks returned upon the expiration of the related contracts and
automobiles and light-duty trucks returned under MMCA's program that
offers attractive terms to owners of automobiles and light-duty
trucks to prepay their accounts in connection with their respective
purchases of a new automobile or light-duty truck.
(2) The number of vehicles returned to MMCA through August 31, 1999 as a
percentage of the number of Balloon Payment Receivables scheduled to
terminate in the period indicated.
(3) Losses are calculated without deduction for auction or other
disposition expenses on resale.
The percentage of Balloon Payment Receivables to be included in the
trust property that are assigned to the prime, non-prime and limited credit
experience credit segments is different from the corresponding percentages
for the combined portfolio. No assurance can be given that the performance
of the Balloon Payment Receivables will be similar to the information set
forth in the preceding table.
MMCA's loss experience on returned automobiles and light-duty trucks
is dependent upon the number of automobiles and light-duty trucks returned,
any programs offered by MMCA that permit the early return of automobiles
and light-duty trucks, the amount of the related receivables outstanding at
the time the automobiles and light-duty trucks are returned and the resale
value of the returned automobiles and light-duty trucks.
THE RECEIVABLES POOL
The trust will purchase from MART receivables which consist of a pool
of retail installment sale contracts secured by new and used automobiles
and light-duty trucks. The property to be purchased by the trust includes
rights to receive payments made with respect to the receivables, as well as
security interests in the vehicles and any proceeds of the sale of the
vehicles. MART will purchase the receivables from MMCA under a purchase
agreement and will simultaneously sell the receivables to the trust under a
sale and servicing agreement. Each agreement will provide for some of the
receivables to be sold on ________, 1999, which will be on or before the
date of the issuance of the notes. Each of those agreements will also
provide for receivables sales after that date during the Pre-Funding
Period. The receivables sold will be selected from those owned by MMCA
based on the criteria specified in the sale and servicing agreement and
described in this prospectus.
The receivables to be purchased by the trust on __________, 1999 had
an aggregate principal balance of $____________, calculated as of
___________ __, 1999. $________ aggregate principal amount of those
receivables include Balloon Payments. None of the receivables included in
the trust will have a final scheduled maturity later than ______ __, 200_.
The principal balance of the receivables in the trust on any date
will equal the aggregate principal balance of the receivables in the trust
at the end of the preceding calendar month, or with respect to any date
during October 1999, the principal balance of the receivables in the trust
on ____ __, 1999 less the sum of the following amounts with respect to the
preceding month:
o principal payments on receivables received from obligors;
o amounts to be remitted by the servicer or MART as the purchase
price for receivables they are required to repurchase from the
trust;
o advances made by the servicer; and
o the principal balance of receivables which defaulted during that
month.
SELECTION CRITERIA
The receivables will be purchased by MMCA from dealers in the
ordinary course of business in accordance with MMCA's underwriting
standards. The receivables were selected and will be selected from MMCA's
portfolio by several criteria, including:
o each receivable is secured by a new or used automobile or
light-duty truck;
o each receivable has an annual percentage rate of at least 0%
and not more than 30%;
o each receivable had an original maturity of not more than 61
months;
o each receivable had an original principal balance, net of
unearned precomputed finance charges, of not more than $60,000
and a remaining principal balance of not less than $100 as of
the related Cutoff Date;
o no receivable was more than 30 days delinquent with respect to
more than 10% of a payment as of the related Cutoff Date;
o no receivable had been pre-paid by more than six monthly
payments as of the related Cutoff Date.
o no financed vehicle had been repossessed as of the related
Cutoff Date;
o each receivable is an installment sale contract;
o each receivable is an Actuarial Receivable or a Simple Interest
Receivable, and may also be a Balloon Payment Receivable;
o each receivable was originated during or after [September
1995];
o no receivable was due from an obligor who, as of the related
Cutoff Date, was the subject of a proceeding under the United
States Bankruptcy Code; and
o each receivable was originated in the United States by a dealer
for the consumer or commercial sale of a financed vehicle in
the ordinary course of that dealer's business.
In addition, during the Pre-Funding Period, MART will transfer
separate groups of receivables to the trust. Each group of receivables
transferred to the trust during the Pre-Funding Period will have the
following characteristics:
o the weighted average remaining maturity of the receivables in
that group will not be more than __ months after the date that
group of receivables was transferred to the trust; and
o the aggregate Balloon Payments of the receivables in that group
as a percentage of the aggregate principal balance of the
receivables in that group will not be more than __%.
The receivables transferred to the trust on ________ __, 1999 will be
approximately __% of the sum of the initial principal amount of the notes
and the initial principal amount of the certificates. The receivables
transferred to the trust during the Pre-Funding Period will have no
required characteristics except for the criteria described in the preceding
paragraph and in "The Sale and Servicing Agreement and the Trust
Agreement-Sale and Assignment." Following each transfer, the aggregate
characteristics of the entire pool of receivables, including the
composition of the receivables, the geographic distribution of the
receivables and the distribution by the annual percentage rate of the
receivables described in the following tables, may vary from those of the
receivables transferred to the trust on ________ __, 1999. Following the
end of the Pre-Funding Period, MART will file a report with the Securities
and Exchange Commission on Form 8-K containing information comparable to
that contained in the tables set forth below regarding the aggregate
characteristics of the entire pool of receivables.
CHARACTERISTICS OF THE RECEIVABLES SOLD TO THE TRUST ON ________ __, 1999
The following tables set forth
o the composition of the receivables sold to the trust on
__________, 1999, calculated as of _______ __, 1999; and
o the geographic distribution and distribution by annual
percentage rate of the principal balance of the receivables
sold to the trust on ____________, 1999, calculated as of
_______ __, 1999.
See "The Receivables Pool--Balloon Payment Receivables."
COMPOSITION OF THE RECEIVABLES SOLD TO THE TRUST ON ______ __, 1999,
CALCULATED AS OF _______ __, 1999
Balance of Receivables Pool................................. $
Level Pay Balance of Receivables Pool....................... $
Balloon Payment Balance of Receivables Pool................. $
Number of Receivables.......................................
Average Principal Balance................................... $
(Range)............................................... $ to $
Average Original Amount Financed............................ $
(Range)............................................... $ to $
Average Level Pay Balance................................... $
(Range)............................................... $ to $
Average Balloon Payment Principal Balance(1)................ $
(Range)............................................... $ to $
Average Balloon Payment Principal Balance as a
Percentage of the Average Principal
Balance of the Balloon Payment Receivables............. %
Weighted Average Annual Percentage Rate..................... %
(Range)............................................... % to %
Weighted Average Original Term to Maturity.................. months
(Range)............................................... months to months
Weighted Average Remaining Term to Maturity................. months
(Range)............................................... months to months
- -----------
(1) Based on Balloon Payment Receivables balances only.
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES SOLD TO THE TRUST ON
_________ __, 1999, CALCULATED AS OF _______ __, 1999
PERCENTAGE OF PERCENTAGE OF
PRINCIPAL PRINCIPAL
BALANCE OF BALANCE OF
RECEIVABLES RECEIVABLES
STATE(1) POOL STATE POOL
- ----- ---- ----- ----
Alabama.................. % Montana................. %
Alaska................... Nebraska................
Arizona.................. Nevada..................
Arkansas................. New Hampshire...........
California............... New Jersey..............
Colorado................. New Mexico..............
Connecticut.............. New York................
Delaware................. North Carolina..........
District of Columbia..... North Dakota............
Florida.................. Ohio....................
Georgia.................. Oklahoma................
Hawaii................... Oregon..................
Idaho.................... Pennsylvania............
Illinois................. Puerto Rico.............
Indiana.................. Rhode Island............
Iowa..................... South Carolina..........
Kansas................... South Dakota............
Kentucky................. Tennessee...............
Louisiana................ Texas...................
Maine.................... Utah....................
Maryland................. Vermont.................
Massachusetts............ Virginia................
Michigan................. Washington..............
Minnesota................ West Virginia...........
Mississippi.............. Wisconsin...............
Missouri................. Wyoming.................
-------------
Total 100.00%
=============
- -----------
(1) Geographic distribution is based on the current billing
addresses of the obligors.
(2) Percentages may not add to 100.00% due to rounding.
DISTRIBUTION BY ANNUAL PERCENTAGE RATE OF THE RECEIVABLES SOLD TO
THE TRUST ON _________ __, 1999, CALCULATED AS OF _________ __, 1999
PERCENTAGE
PRINCIPAL OF PRINCIPAL
BALANCE OF BALANCE OF
NUMBER OF RECEIVABLES RECEIVABLES
ANNUAL PERCENTAGE RATE RANGE (%) RECEIVABLES POOL(1) POOL(2)
- -------------------------------- ----------- ----------- ------------
0.00 to 0.99....................... $ %
1.00 to 1.99.......................
2.00 to 2.99.......................
3.00 to 3.99.......................
4.00 to 4.99.......................
5.00 to 5.99.......................
6.00 to 6.99.......................
7.00 to 7.99.......................
8.00 to 8.99.......................
9.00 to 9.99.......................
10.00 to 10.99.....................
11.00 to 11.99.....................
12.00 to 12.99.....................
13.00 to 13.99.....................
14.00 to 14.99.....................
15.00 to 15.99.....................
16.00 to 16.99.....................
17.00 to 17.99.....................
18.00 to 18.99.....................
19.00 to 19.99.....................
20.00 to 20.99.....................
21.00 to 21.99.....................
22.00 to 22.99.....................
23.00 to 23.99.....................
----------- ----------- ------------
Total.............................. $ %
=========== =========== ============
- -----------
(1) Remaining principal balance for Simple Interest Receivables,
and the present value of scheduled remaining payments for
Actuarial Receivables.
(2) Percentage may not add to 100.00% due to rounding.
Approximately ____% of the total number of receivables, which is
approximately _____% of the principal balance of the receivables pool,
calculated as of _______ __, 1999, relate to new automobiles and light-duty
trucks. Substantially all of the new automobiles and light-duty trucks were
manufactured or distributed by Mitsubishi Motors.
Approximately ____% of the total number of receivables, which is
approximately ____% of the principal balance of the receivables pool,
calculated as of ___________ __, 1999, relate to used automobiles and
light-duty trucks.
Approximately ____% of the total number of receivables, which is
approximately ____% of the principal balance of the receivables, calculated
as of __________ __, 1999, relate to program automobiles and light-duty
trucks. Program automobiles are vehicles which dealers have acquired under
a remarketing program administered by MMCA. This program allows dealers to
offer to purchasers of program automobiles the same rate of interest and
terms offered to new car buyers. Program vehicles are primarily automobiles
returned to MMCA by rental car companies, but also include off-lease MMCA
company and employee lease vehicles and MMCA pool cars.
Approximately ____% of the total number of receivables, which is
approximately ____% of the principal balance of the receivables pool,
calculated as of ________ __, 1999 relate to refinanced program automobiles
and light-duty trucks manufactured in prior model years which are financed
at the original rates set forth in the related receivables or at used
vehicle rates.
PAYMENT METHODS
Approximately ____% of the principal balance of the receivables
transferred to the trust on _________ ___, 1999, calculated as of
__________ __, 1999, was attributable to Actuarial Receivables, excluding
Actuarial Receivables based on the Rule of 78's, as described in the next
paragraph. An Actuarial Receivable provides for the amortization of the
loan over a series of equal monthly installments. Each monthly installment
is deemed to consist of an amount of interest equal to one-twelfth of the
stated annual percentage rate of the loan multiplied by the scheduled
principal balance. The remainder of the scheduled payment is applied to
principal. No adjustment is typically made in the event of early or late
payments, although in the case of a late payment the obligor may be subject
to a late payment charge.
Approximately ____% of the principal balance of the receivables
transferred to the trust on ___________ ___, 1999, calculated as of
__________ __, 1999, was attributable to Actuarial Receivables which
provide for a refund of a portion of the interest paid if the Actuarial
Receivable is prepaid in full. The amount payable will be determined in
accordance with the "Rule of 78's". If an Actuarial Receivable is prepaid
in full, the excess of the amount that would be due using the Rule of 78's
method over the amount that would be payable upon that prepayment using the
actuarial method will not be used to make payments due to noteholders but
will be paid to the servicer.
Approximately ____% of the balance of the receivables transferred to
the trust as of ___________ ___, 1999, calculated as of __________ __,
1999, was attributable to Simple Interest Receivables, including Simple
Interest Receivables of the type described in the next paragraph. A Simple
Interest Receivable, like an Actuarial Receivable, also provides for the
amortization of the loan over a series of equal monthly installments.
However, unlike the monthly payment under an Actuarial Receivable, each
monthly payment under a Simple Interest Receivable consists of an
installment of interest which is equal to the principal balance of the
receivable actually outstanding, as opposed to scheduled, at the time of
calculation multiplied by the stated annual percentage rate and further
multiplied by the period elapsed, as a fraction of a calendar year since
the preceding payment of interest was made. As payments are received under
a Simple Interest Receivable, the amount received is applied first to
interest accrued to the date of payment and the balance is applied to
reduce the unpaid principal balance. Accordingly, if an obligor pays a
fixed monthly installment before the date on which the installment is due,
the interest portion of the payment will be less than it would have been
had the payment been made as scheduled, and the principal portion of the
payment will be correspondingly greater. Conversely, if an obligor pays a
fixed monthly installment after the date on which it is due, the interest
portion of the payment will be greater than it would have been had the
payment been made when due and the principal portion of the payment will be
correspondingly less. In either case, the obligor pays a fixed monthly
installment until the final scheduled payment date, at which time the
amount of the final installment is increased or decreased as necessary to
repay the then outstanding principal balance. In the case of a Balloon
Payment Receivable that is also a Simple Interest Receivable, the remaining
principal balance on the due date of the receivable may be greater or less
than the scheduled Balloon Payment on the receivable. In November 1996,
MMCA began phasing out Actuarial Receivables in favor of Simple Interest
Receivables.
Approximately ____% of the balance of the receivables transferred to
the trust on __________ ___, 1999, calculated as of __________ __, 1999,
was attributable to Simple Interest Receivables that are subject to a cap
on the aggregate amount of interest to be paid during the term of those
receivables.
If the obligor on a capped receivable
consistently makes scheduled payments after the date on which the scheduled
payments are due, the amount of interest accrued over the term of the loan
will be less than would be the case in the absence of the cap. If, as a
result of those delinquencies, the aggregate amount of interest paid under
the receivable reaches the lifetime cap, no further interest will accrue
and each scheduled payment due thereafter will be applied to the reduction
of principal.
Approximately ____% of the balance of the receivables transferred to
the trust on _________ ___, 1999, calculated as of __________ __, 1999, was
attributable to Balloon Payment Receivables. A Balloon Payment receivable
may be either a Simple Interest Receivable or an Actuarial Receivable. See
"- Balloon Payment Receivables" below.
BALLOON PAYMENT RECEIVABLES
Balloon Payment Receivables provide for the loan to amortize over a
series of equal monthly installments, but also provide for a substantially
larger final scheduled payment of principal together with one month's
interest. This final payment is known as a "Balloon Payment" and is due at
the end of the term of the receivable. MMCA sets the Balloon Payment for a
particular model of vehicle at the time the contract is entered into. The
net amount actually due from an obligor at the end of term of a Balloon
Payment Receivable may be greater or less than the Balloon Payment as a
result of:
o in the case of a Simple Interest Receivable, early or late
payments by the obligor during the term of the receivable and
the application of day counting conventions; and
o in the case of a Simple Interest Receivable or an Actuarial
Receivable, additional fees and charges that may be owed by the
obligor with respect to the contract or the financed vehicle,
including charges for excess wear and tear and excess mileage
on the financed vehicle.
Obligors may prepay the receivables in full at any time. Prepayments
may also result from liquidations due to default, the receipt of insurance
proceeds after destruction or theft of the financed vehicle and purchases
of the receivable by MART or the servicer as a result of uncured breaches
of representations and warranties in the sale and servicing agreement. See
"-- Maturity and Prepayment Considerations."
Upon maturity of a Balloon Payment Receivable, the related obligor
may satisfy the amount it owes by:
o paying the remaining principal amount of the receivable, all
accrued and unpaid interest, plus any fees, charges, and other
amounts then owing;
o refinancing the net amount then due, which may be greater or
less than the Balloon Payment, subject to several conditions;
or
o selling the related financed vehicle to MMCA or its assignee
for an amount equal to the Balloon Payment, as reduced by
charges for excess wear and tear and excess mileage and by a
disposition fee payable to the servicer, and paying any excess
of the total amount owed under the receivable over the Balloon
Payment to MMCA.
If the obligor sells the financed vehicle to MMCA, acting on behalf
of the trust, it is anticipated that the trust will not receive the full
amount of the Balloon Payment upon the subsequent sale of the financed
vehicle. MMCA sets the Balloon Payment for a particular model at the time
of origination of the related contract by reference to its estimate of the
wholesale market value of the model at the end of the contract's term.
However, in connection with sales incentive programs for particular models,
MMCA may increase the Balloon Payments to levels above its estimate of the
wholesale market values at the end of their respective contract terms, in
order to stimulate sales of particular models by reducing the amount of the
monthly installments which would be owed by obligors.
If there is a total loss of the automobile or light-duty truck caused
by its theft or physical damage, MMCA does not require the obligor under a
receivable providing for a Balloon Payment Receivable to pay the difference
between the amount owed in respect of the receivable as of the date of the
total loss and insurance proceeds, including payment by the obligor of any
applicable deductible, received with respect to the financed vehicle. MMCA
will instead reduce the principal amount of the Balloon Payment by that
amount.
If the full amount owed by an obligor under a Balloon Payment
Receivable is not collected, the shortfall will reduce the Available Funds
available to pay the Total Required Payment and to make any required
transfers from the collection account to the reserve account and the
supplemental reserve account. None of MMCA, the servicer, MART or the trust
will have any recourse to the obligor for any shortfall, nor will MMCA, the
servicer or MART be obligated to pay any shortfall to the trust.
DEFAULTED RECEIVABLES
A receivable, other than a receivable which has been purchased from
the trust by MART or the servicer, will be considered to have defaulted if:
o the related financed vehicle has been repossessed and
liquidated;
o more than 10% of a scheduled payment is 120 or more days past
due as of the end of the month in which the payment was due and
the servicer has not repossessed the related financed vehicle;
or
o the servicer has determined, in accordance with its customary
standards, policies and procedures, that eventual payment in
full, excluding charges for excess wear and tear or excess
mileage, of the receivable is unlikely and has either
repossessed and liquidated the related financed vehicle or
repossessed and held the related financed vehicle in its
repossession inventory for a period which may not exceed 90
days.
MATURITY AND PREPAYMENT CONSIDERATIONS
The weighted average life of the notes will generally be influenced
by the rate of payment of principal balances of the receivables. This
payment may be in the form of scheduled payments or prepayments.
Prepayments in full on Actuarial Receivables and Simple Interest
Receivables and partial prepayments on Simple Interest Receivables
generally will have the effect of reducing the weighted average life of the
notes. Delinquencies by obligors under Simple Interest Receivables and
extensions and payment deferrals on any type of receivable generally will
have the effect of increasing the weighted average life of the notes.
"Prepayments" for these purposes includes the following circumstances:
o Prepayments in full and partial prepayments. The obligors may
prepay the receivables in full or in
part.
o Mandatory prepayments. An obligor may be required to prepay a
receivable because of, among other things, the sale, insured
loss or other disposition of the related vehicle or the
receivable becoming defaulted.
o Repurchases of the receivables by MART or the servicer. MART or
the servicer may be required to repurchase a receivable from
the trust if certain breaches of representations and warranties
materially and adversely affect the receivable.
In light of the above considerations, there can be no assurance as to
the amount of principal payments to be made on the notes on each date
payment on the notes is due. Such amount will depend, in part, on the
amount of principal collected on the receivables during the preceding
calendar month. Any reinvestment risks resulting from a faster or slower
incidence of prepayment of receivables will be borne entirely by the
noteholders.
In addition, if MMCA or any affiliate of MMCA maintains any program
that encourages prepayments, prepayments may increase. MMCA currently
maintains a program that offers attractive terms to obligors to prepay
their accounts and return their vehicles early if they purchase a new
vehicle manufactured by Mitsubishi Motors or an affiliate. This program may
encourage prepayments. The effect of such programs on prepayments cannot be
predicted and MMCA is not required to establish or maintain any program.
Prepayments on the receivables can be measured relative to a
prepayment standard or model. This prospectus uses the Absolute Prepayment
Model ("ABS"). The ABS assumes that a certain percentage of the receivables
in a pool will be repaid each month. It also assumes that all the
receivables are the same size and amortize at the same rate. The final
assumption is that each receivable will either be paid as scheduled or be
prepaid in full in any given month. For example, in a pool of receivables
originally containing 10,000 receivables, a 1% ABS rate means that 100
receivables prepay each month. ABS does not purport to be an historical
description of prepayment experience or a prediction of the anticipated
rate of prepayment of any pool of receivables, including the receivables
purchased by the trust.
Approximately ____% of the balance of the receivables transferred to
the trust on _______ __, 1999, calculated as of __________ __, 2000,
consists of the principal balance of the Balloon Payments. Accordingly, a
portion of the principal amount of the notes is expected to be paid from
Balloon Payments. All of the Balloon Payments are due between _______ __,
2000 and ________ __, 200_. Accordingly, significant payments of principal
are likely to be made during that period. The average principal balance of
those Balloon Payments are approximately $_________, which is approximately
____% of the average principal balance of one of those receivables.
The tables relating to ABS captioned "Projected Class A-1 Note
Amortization", "Projected Class A-2 Note Amortization", "Projected Class
A-3 Note Amortization" and "Projected Class A-4 Note Amortization" assume
that:
o the Yield Supplement Amount is deposited into the collection
account each period;
o the Negative Carry Amount is deposited into the collection
account each period;
o the amount deposited into the pre-funding account on _________
__, 1999 is applied in its entirety to the purchase of
contracts transferred to the trust during the Pre-Funding
Period and to make the related deposits to the reserve account,
the yield supplement account and the payahead account;
o the receivables prepay in full at the specified constant
percentage of ABS monthly, with no defaults, losses or
repurchases;
o each scheduled monthly payment on the receivables is made on
the last day of each month, and each month has 30 days;
o payments on the notes are made on each payment date, which is
assumed to be the 15th day of each applicable month;
o the first date on which receivables will be transferred to the
trust is ___________ __, 1999;
o the servicer exercises its option to purchase the receivables;
and
o MMCA's program to manage end-of-term risks and mitigate
returned vehicle losses by offering attractive terms to
obligors to prepay their receivables and return their vehicle
early, if they purchase a new Mitsubishi Motor vehicle, does
not extend to the receivables.
The ABS Tables indicate the percent of the initial principal balance
of each class of the notes projected to be outstanding after each of the
payment dates.
For purposes of creating the ABS Tables, the receivables have been
aggregated into different hypothetical pools.
The receivables transferred to the trust on _________ __, 1999 have
been divided into four hypothetical pools made up of receivables that have
equal scheduled monthly payments that fully amortize those receivables.
These hypothetical pools have the following characteristics:
Weighted Weighted
Average Average
LEVEL Aggregate Weighted Original Term Remaining Term
PAYMENT Principal Average Annual to Maturity to Maturity
POOL Balance Percentage Rate (in months) (in months)
- ---- ------- --------------- ----------- -----------
1 ............... $ %
2 ...............
3 ...............
4 ...............
The receivables transferred to the trust on _________ ___, 1999 also
have been divided into four hypothetical pools made up of balloon payment
receivables. These hypothetical pools have the following characteristics:
Weighted Weighted
Average Average
BALLOON Aggregate Weighted Original Term Remaining Term
PAYMENT Principal Average Annual to Maturity to Maturity
POOL Balance Percentage Rate (in months) (in months)
- ---- ------- --------------- ----------- -----------
1 ............... $ %
2 ...............
3 ...............
4 ...............
The receivables to be transferred to the trust during the Pre-Funding
Period have been divided into four hypothetical pools made up of
receivables that have equal monthly payments that fully amortize those
receivables. These hypothetical pools have the following characteristics:
Weighted Weighted
Average Average
LEVEL Aggregate Weighted Original Term Remaining Term
PAYMENT Principal Average Annual to Maturity to Maturity
POOL Balance Percentage Rate (in months) (in months)
- ---- ------- --------------- ----------- -----------
1 ............... $ %
2 ...............
3 ...............
4 ...............
The receivables transferred to the trust during the Pre-Funding
Period have been divided into four hypothetical pools made up of balloon
payment receivables. These hypothetical pools have the following
characteristics:
Weighted Weighted
Average Average
BALLOON Aggregate Weighted Original Term Remaining Term
PAYMENT Principal Average Annual to Maturity to Maturity
POOL Balance Percentage Rate (in months) (in months)
- ---- ------- --------------- ----------- -----------
1 ............... $ %
2 ...............
3 ...............
4 ...............
The actual characteristics and performance of the receivables in the
trust will differ from the assumptions used in constructing the ABS Tables.
The assumptions used are hypothetical and have been provided only to give a
general sense of how the principal cash flow might behave under varying
prepayment scenarios. For example, it is very unlikely that the receivables
will prepay at the same level of ABS. Moreover, the diverse terms of
receivables within each of the hypothetical pools could produce slower or
faster principal distributions than indicated in the ABS Tables. In
addition, the characteristics of the receivables transferred to the trust
on _________ __, 1999 are expected to be different from those transferred
to the trust during the Pre-Funding Period. Any difference between those
assumptions and the actual characteristics and performance of the
receivables, or actual prepayment experience, will affect the percentages
of initial balances outstanding over time, as well as collections of
interest and principal on receivables. See"-Selection Criteria."
THE APM TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED
ABOVE AND SHOULD BE READ IN CONJUNCTION THEREWITH.
PROJECTED CLASS A-1 NOTE AMORTIZATION
PERCENT OF INITIAL NOTE PRINCIPAL AMOUNT
CLASS A-1 NOTE BALANCE (%)
--------------------------------------------
PAYMENT DATE 0.0% ABS 1.0% ABS 1.5% ABS 2.0% ABS
- ------------ -------- -------- -------- --------
100 100 100 100
-------- -------- -------- --------
Weighted Average Life (yrs)...
PROJECTED CLASS A-2 NOTE AMORTIZATION
PERCENT OF INITIAL NOTE PRINCIPAL AMOUNT
CLASS A-2 NOTE BALANCE (%)
--------------------------------------------
PAYMENT DATE 0.0% ABS 1.0%ABS 1.5% ABS 2.0% ABS
- ------------ -------- ------- -------- --------
100 100 100 100
-------- ------- -------- --------
Weighted Average Life (yrs)....
PROJECTED CLASS A-3 NOTE AMORTIZATION
PERCENT OF INITIAL NOTE PRINCIPAL AMOUNT
CLASS A-3 NOTE BALANCE (%)
--------------------------------------------
PAYMENT DATE 0.0% ABS 1.0% ABS 1.5% ABS 2.0% ABS
- ------------ -------- -------- -------- --------
100 100 100 100
-------- -------- -------- --------
Weighted Average Life (yrs)....
PROJECTED CLASS A-4 NOTE AMORTIZATION
PERCENT OF INITIAL NOTE PRINCIPAL AMOUNT
CLASS A-4 NOTE BALANCE (%)
--------------------------------------------
PAYMENT DATE 0.0% ABS 1.0% ABS 1.5% ABS 2.0% ABS
- ------------ -------- -------- -------- --------
100 100 100 100
-------- -------- -------- --------
Weighted Average Life (yrs)....
HOW NOTEHOLDERS CAN COMPUTE THEIR PORTION OF THE AMOUNT
OUTSTANDING ON THE NOTES
The servicer's monthly report will give the noteholders, a factor
that can be used to compute the portion of the principal amount outstanding
on the notes.
How the Servicer Computes the Factor For Each Class of Notes. The
servicer will compute a separate factor for each class of notes prior to
each distribution for that class. This factor will be a seven-digit decimal
which the servicer will compute prior to each distribution with respect to
that class of notes indicating the remaining outstanding principal amount
of that class of notes, as of the applicable payment date. The servicer
will compute the factor after giving effect to payments to be made on that
payment date, as a fraction of the initial outstanding principal amount of
that class of notes.
Portion of the Outstanding Amount of the Notes. For each note, the
portion outstanding is the product of:
o the original denomination of the note; and
o the factor relating to that class of notes computed by the
servicer in the manner described above.
The Factors Described Above Will Decline as the Trust Makes Payments on
the Securities.
Each of the factors described above will initially be 1.0000000. They
will decline as the principal amount of the applicable class of notes is
reduced by scheduled payments, prepayments, liquidations of the receivables
and prepayment arising from application of funds in the pre-funding
account. The addition of receivables to the trust will not change any of
these factors.
USE OF PROCEEDS
The net proceeds from the sale of the notes will be applied by the
trust:
o to the purchase of the receivables from MART;
o to make the required deposits into the pre-funding account;
o to make the required deposits into the negative carry account;
o to make the required deposits into the payahead account
o to make the required deposits into the yield supplement account;
and
o to make the required deposits into the reserve account.
MMCA AUTO RECEIVABLES TRUST
MART was established as a business trust in the State of Delaware on
May 19, 1999. MMCA is the sole beneficial owner of MART. MART was
established for limited purposes, which include purchasing receivables from
MMCA, transferring the receivables to third parties and any activities
related to those purposes. MART's principal executive offices are located
at 6363 Katella Avenue, Cypress, California 90630-5205. MART's telephone
number is (714) 236-1614.
In structuring these transactions MART has taken steps intended to
ensure that the voluntary or involuntary application for relief by MMCA
under the United States Bankruptcy Code or similar state laws will not
cause the assets and liabilities of MART to be consolidated with those of
MMCA. These steps include the maintenance of MART as a separate,
limited-purpose entity. The trust agreement by which MART was formed and
which governs MART's activities restricts the nature of MART's business and
MART's ability to commence a voluntary case or proceeding under any
insolvency law without the unanimous vote of all of its managers. However,
there can be no assurance that the activities of MART would not result in a
court concluding that its assets and liabilities should be consolidated
with those of MMCA in an insolvency proceeding.
MART's counsel has advised that it would not be a proper exercise by
a court of its equitable discretion to disregard the separate existence of
MART and consolidate its assets and liabilities with the assets and
liabilities of MMCA if MMCA filed for bankruptcy protection. MART's counsel
has assumed that MART will follow various procedures in the conduct of its
affairs, including maintaining records and books of account separate from
those of MMCA, refraining from commingling its assets with those of MMCA
and refraining from holding itself out as having agreed to pay, or being
liable for, the debts of MMCA. MART intends to follow and has represented
to that counsel that it will follow these and other procedures related to
maintaining its separate legal identity. However, if MART does not follow
those procedures, a court could conclude that the assets and liabilities of
MART should be consolidated with those of MMCA. If a court were to reach
that conclusion, or if a filing were made under any insolvency law by or
against MART, or if an attempt were made to litigate any of the foregoing
issues, delays in payments on the notes could occur or reductions in the
amounts of the payments could result.
THE SERVICER
MMCA is a Delaware corporation which primarily provides retail and
wholesale financing, retail leasing and other financial services to
authorized Mitsubishi Motors automobile and light-duty truck dealers and
their customers in the United States. MMCA was incorporated in August 1990
and commenced operations in March 1991.
MMCA is a wholly-owned subsidiary of MMSA, a California corporation
which is engaged in the wholesale distribution of automobiles and
light-duty trucks throughout the United States manufactured by Mitsubishi
Motors Corporation and its affiliates. MMSA is a subsidiary of Mitsubishi
Motors Corporation, a Japanese corporation that is a worldwide manufacturer
and distributor of motor vehicles and light-duty trucks. Mitsubishi Motors
Corporation owns 97.20% of the stock of MMSA. Mitsubishi Corporation, a
Japanese corporation that is a worldwide general trading company, owns
2.00% of the stock of MMSA. Mitsubishi International Corporation, a New
York corporation that is a worldwide trading company and a wholly-owned
subsidiary of Mitsubishi Corporation, owns 0.80% of the stock of MMSA.
MMCA's national headquarters is located at 6363 Katella Avenue,
Cypress, CA 90630-5205. Its telephone number is (714) 236-1500.
TERMS OF THE NOTES
PRINCIPAL AMOUNT AND INTEREST RATES
The trust will issue $____________ aggregate principal amount of
asset-backed notes pursuant to an indenture to be dated as of __________
__, 1999, between the trust and Bank of Tokyo-Mitsubishi Trust Company, in
its capacity as indenture trustee.
The notes will be issued in four classes:
o $_________ aggregate principal amount of % Class A-1 notes;
o $_________ aggregate principal amount of % Class A-2 notes;
o $_________ aggregate principal amount of % Class A-3 notes;
and
o $_________ aggregate principal amount of % Class A-4 notes.
A form of the indenture has been filed as an exhibit to the
registration statement of which this prospectus forms a part. The following
summary does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the notes, the indenture, the trust agreement
and the sale and servicing agreement.
INTEREST PAYABLE
The notes will bear interest at the following annual rates:
o the Class A-1 notes: %;
o the Class A-2 notes: %;
o the Class A-3 notes: %; and
o the Class A-4 notes: %.
Interest on the outstanding principal amount of each class of notes
will accrue at the applicable interest rate and will be payable to the
applicable noteholders on the 15th of each month. If the 15th of the month
is not a business day, the payment will be made on the next following
business day. The first payment will be made on __ __, 1999. Payments will
be made to noteholders as of each record date. The record date will be the
business day preceding each payment date. If notes in fully registered,
certificated form are issued, the record date will be as of the 15th day of
the preceding month. If that day is not a business day the record date will
be the preceding business day.
Calculation of interest. Interest will accrue during each interest
period and will be calculated on the notes as follows:
o Actual/360. Interest on the Class A-1 notes will be calculated
on the basis of actual days elapsed and
a 360-day year.
o 30/360. Interest on the Class A-2 notes, the Class A-3 notes
and the Class A-4 notes will be calculated on the basis of a
360-day year of twelve 30-day months.
o Unpaid Interest Accrues. Interest accrued as of any payment
date but not paid on that payment date will be due on the next
payment date, together with interest on that amount at the
applicable interest rate, to the extent lawful.
Interest Periods. The Class A-1 Notes: Interest payable on the Class
A-1 Notes on each payment date will accrue from the previous payment date
through the day before the current payment date. For the first payment
date, interest will accrue from _______, 1999 through ______, 1999.
The Class A-2 Notes, Class A-3 Notes and Class A-4 Notes: Interest
payable on the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes
on each payment date will accrue from the 15th of the month preceding the
payment date through the 14th of the month of the payment date. For the
first payment date interest will accrue from ______, 1999 through _____,
1999.
Priority of Interest Payments. Funds to make interest payments on the
notes will generally come from the Available Funds remaining after the
payment of the servicing fee for the related month plus any portion of the
servicing fee that remains unpaid from prior months. If the Available Funds
remaining are insufficient, the interest will be paid from amounts on
deposit in the supplemental reserve account. If those funds are
insufficient also, interest will then be paid from amounts on deposit in
the reserve account.
Interest payments to all classes of notes will have the same priority
of payment. If the amount available for interest payments were less than
the amount of interest payable on the notes on any payment date, each class
of noteholders would receive its ratable share of the aggregate amount
available to be distributed in respect of interest on the notes.
Event of Default. An event of default under the indenture will occur
if the full amount of interest due on all classes of notes is not paid
within five days after the payment date on which the interest is due. No
distributions will be made on the certificates on any payment date until
the interest and principal payable on the notes on that payment date are
paid in full.
PRINCIPAL PAYABLE
On each payment date, principal payments will be made to the
noteholders in an amount equal in the aggregate to the Principal
Distribution Amount for that payment date, subject to several limitations.
Certificateholders will not be entitled to receive payments of principal
until all classes of notes have been paid in full. Following the occurrence
and during the continuation of an event of default under the indenture
resulting in an acceleration of the notes, the noteholders will be paid in
full before any distributions may be made on the certificates. See
"--Indenture Cash Flows" and "--The Reserve Account and Supplemental
Reserve Account."
On each payment date, an amount equal to the Principal Distribution
Amount will be paid:
o to the holders of the Class A-1 notes, until the Class A-1 notes
have been paid in full;
o after the Class A-1 notes are paid in full, to the holders of
the Class A-2 notes, until the Class A-2 notes have been paid
in full;
o after the Class A-2 notes are paid in full, to the holders of
the Class A-3 notes, until the Class A-3 notes have been paid
in full; and
o after the Class A-3 notes are paid in full, to the holders of
the Class A-4 notes, until the Class A-4 notes have been paid
in full.
Event of default under the indenture. Payments on the notes may be
accelerated upon an event of default under the indenture. If this occurs,
the order of priority for principal payments on the notes will change.
Amounts available to pay principal on the notes will be paid to the holders
of all classes of notes, without priority or preference of any kind. See "-
Indenture Cash Flows-Monthly Withdrawals From the Note Payment Account On
and After an Acceleration of the Maturity Dates of the Notes."
Scheduled Final Payment Dates. Any outstanding principal balance of
each class of notes will be payable in full on the final payment date in
the months specified below:
o for the Class A-1 notes, ________ _____;
o for the Class A-2 notes, ________ _____;
o for the Class A-3 notes, ________ _____; and
o for the Class A-4 notes, ________ _____.
The actual date on which the aggregate outstanding principal amount
of any class of notes is paid may be earlier or later than the these dates
due to a variety of factors, including those described under "Risk Factors
- -- Risk that You May Be Required to Reinvest Your Principal in the Notes at
a Lower Rate of Return Because of Prepayments on the Notes" and "The
Receivables Pool--Maturity and Prepayment Considerations."
MANDATORY REDEMPTION
On the payment date on or immediately following the last day of the
Pre-Funding Period, any funds remaining in the pre-funding account, after
giving effect to the purchase of all receivables purchased, during the
Pre-Funding Period, exclusive of any net earnings from the investment of
funds on deposit in the pre-funding account will be applied to redeem the
notes then outstanding in the same sequence and proportions that would
apply if the remaining funds were a part of the Principal Distribution
Amount. Although the pre-funding account will be funded in an amount that
MART anticipates will allow the trust to acquire receivables during the
Pre-Funding Period in an aggregate principal amount approximately equal to
the amount on deposit in the pre-funding account, it is unlikely that the
aggregate principal amount of those receivables will exactly equal the
amount on deposit in the pre-funding account, and it is likely that at
least a nominal amount of principal will be prepaid to the noteholders at
the end of the Pre-Funding Period.
OPTIONAL REDEMPTION
All of the outstanding notes and certificates will be redeemed on any
payment date on which the servicer exercises its option to purchase the
receivables. The servicer may purchase the receivables on any payment date
with on which the principal balance of the receivables pool as of the end
of the preceding calendar month is 10% or less of the Initial Pool Balance.
The redemption price will be equal to the unpaid principal amount of the
notes plus accrued and unpaid interest thereon, together with the unpaid
principal amount of the certificates.
THE INDENTURE TRUSTEE
Bank of Tokyo-Mitsubishi Trust Company, a New York banking
corporation, will be the indenture trustee. The indenture trustee's
Corporate Trust Office is located at 1251 Avenue of the Americas, New York,
New York 10020-1104. MART, the servicer, and their respective affiliates
may have other banking relationships with the indenture trustee and its
affiliates in the ordinary course of their businesses.
THE TRUST'S BANK ACCOUNTS
The servicer will establish and maintain the following trust
accounts:
o a collection account into which payments made on receivables
and advances made by the servicer will be deposited.
o a pre-funding account in which $_____________ will be deposited
on __________ __, 1999.
o a note payment account in which amounts released from the
collection account for distribution to noteholders will be
deposited and from which all payments to noteholders will be
made;
o any certificate distribution account in which amounts released
from the collection account for distribution to
certificateholders will be deposited and from which all
distributions to certificateholders will be made; and
o a payahead account in which early payments by obligors of less
than the remaining balance of Actuarial Receivables will be
deposited until the time as the payment on such receivables
falls due or until those funds are applied to shortfalls in the
scheduled payments with respect to those receivables.
Amounts on deposit in the reserve account, the supplemental reserve
account, the negative carry account and the yield supplement account may be
transferred into the collection account from time to time, other than some
amounts payable to the servicer under the sale and servicing agreement that
are not required to be transferred to the collection account.
The Servicer will establish the pre-funding account, the payahead
account, the reserve account, the supplemental reserve account and the
yield supplement account in the name of the indenture trustee for the
benefit of the noteholders and the certificateholders. The Servicer will
establish the note payment account and the negative carry account in the
name of the indenture trustee for the exclusive benefit of the noteholders.
MART will establish the certificate distribution account in the name of the
indenture trustee for the exclusive benefit of the certificateholders.
On ___, 1999, MART will deposit to the payahead account the early
payments with respect to Actuarial Receivables which were received during
the period from ____ 1999 to ____, 1999. On each date during the
Pre-Funding Period on which receivables are transferred to the trust, the
indenture trustee will withdraw from the pre-funding account and deposit to
the payahead account any early payments with respect to Actuarial
Receivables transferred to the trust on that date which were received prior
to the related Cutoff Date.
Funds in the collection account, the pre-funding account, the
payahead account, the reserve account, the supplemental reserve account,
the negative carry account and the yield supplement account will be
invested in investments as permitted by the sale and servicing agreement,
which generally will be limited to investments acceptable to each of
Moody's and S&P as being consistent with the ratings of the notes.
Investments permitted by the sale and servicing agreement will be limited
to obligations or securities that mature not later than the business day
immediately preceding the next payment date or the date on which payment is
due, in the case of early payments with respect to Actuarial Receivables on
deposit in the payahead account. Any earnings, net of losses and investment
expenses, on amounts on deposit in the collection account will be paid to
the certificateholders. Any earnings, net of losses and investment
expenses, on amounts on deposit in the payahead account will be paid to the
servicer as additional servicing compensation and will not be available to
noteholders, and any earnings, net of losses and investment expenses on,
and any amounts released from the reserve account, the supplemental reserve
account, the negative carry account and the yield supplement account will
be distributed to MART. However, earnings on amounts on deposit in the
reserve account, the supplemental reserve account and the negative carry
account will be distributed to MART only to the extent that the amounts on
deposit in those accounts exceed the required balances of those accounts.
THE YIELD SUPPLEMENT AGREEMENT
Simultaneously with the sale and assignment on __________ __, 1999 of
the receivables by MMCA to MART, MMCA and MART will enter into the yield
supplement agreement. The yield supplement agreement will obligate MMCA to
pay any Yield Supplement Amount to the trust on the business day prior to
each payment date.
THE YIELD SUPPLEMENT ACCOUNT
Payments of the Yield Supplement Amount due under the yield
supplement agreement will be secured by funds on deposit in the yield
supplement account. The yield supplement account has been established
because the trust will own some receivables which have an annual percentage
rate which is lower than the minimum annual percentage rate MART and MMCA
have agreed is required to cover interest on the notes, the 1% servicing
fee and anticipated losses on defaulted receivables. This minimum annual
percentage rate has been set at the weighted average interest rate on the
notes plus __ percentage points. However, if MMCA either obtains a letter of
credit securing timely payment to the indenture trustee of amounts due from
MMCA under the yield supplement agreement or otherwise satisfies several
other conditions satisfactory to each of Moody's and S&P, then subject to
the delivery of certain tax opinions the yield supplement account may be
terminated. Any letter of credit related to the yield supplement agreement
will be issued by a bank that has a debt rating sufficient to maintain the
rating of each class of notes at the initial level at which it was rated by
each of Moody's and S&P. If the rating of the letter of credit bank that
issues the letter of credit is reduced below either of those ratings, the
indenture trustee will be required to obtain a suitable replacement letter
of credit, to obtain funds in the required amount for deposit in the yield
supplement account or to draw the full amount available under the letter of
credit and deposit those funds in the yield supplement account.
On each payment date, after giving effect to payments on that date,
the amount required to be on deposit in the yield supplement account or to
be available under an acceptable letter of credit will be an amount equal
to the sum of all projected Yield Supplement Amounts for all future payment
dates, which will be determined assuming that future scheduled payments on
the receivables are made on the dates they are scheduled. The amount on
deposit in the yield supplement account will decrease as payments are made
from that account with respect to the Yield Supplement Amounts and funds in
excess of the maximum required balance are released to MART.
MART Will Make Deposits into the Yield Supplement Account upon each
Transfer of Receivables to the Trust. MART will make an initial deposit to
the yield supplement account on ________ __, 1999, in the amount specified
in the sale and servicing agreement. On each subsequent date on which
receivables are transferred to the trust, the indenture trustee will make
an additional deposit to the yield supplement account from funds on deposit
in the pre-funding account that otherwise would be distributable to MART as
payment for the receivables sold to the trust on that date, unless the
yield supplement account has been replaced by an acceptable letter of
credit on or prior to that date.
INDENTURE CASH FLOWS
Deposits to the Collection Account; Calculations Made by the
Servicer; Notice to the Indenture Trustee. On or before each payment date,
the servicer will cause all payments on the receivables and all proceeds of
the receivables in the collection account received by the servicer during
the related calendar month to be deposited into the collection account,
other than amounts payable to the servicer that are not required to be
deposited into the collection account. On or before the seventh business
day, but no later than the tenth calendar day of each month, the servicer
will calculate the following for that payment date:
o the Available Funds;
o the Total Available Funds;
o the servicing fee for that payment date plus any portion of the
servicing fee that remains unpaid from prior payment dates;
o the Accrued Note Interest;
o the Scheduled Principal;
o the Principal Distribution Amount;
o the Negative Carry Amount; and
o the Yield Supplement Amount.
On or before each payment date, the servicer will deliver to the indenture
trustee a certificate setting forth the deposits to and withdrawals from
the collection account, the supplemental reserve account and the reserve
account to be made on that payment date.
Withdrawals from the Supplemental Reserve Account and the Reserve
Account to Reimburse Advances. On each payment date, the indenture trustee
will withdraw from the supplemental reserve account and pay to the servicer
an amount equal to the lesser of:
o the amount on deposit in the supplemental reserve account on that
payment date, calculated prior to giving effect to any deposits or
withdrawals on or relating to that payment date; and
o the amount of advances due to be reimbursed on that payment date
but not reimbursed from funds on deposit in the collection account.
If the amount on deposit in the supplemental reserve account is
insufficient to fully reimburse the servicer for advances due to be
reimbursed on the applicable payment date, the indenture trustee will
withdraw from the reserve account and pay to the servicer an amount equal
to the lesser of:
o the amount on deposit in the reserve account on that date,
calculated prior to giving effect to any deposits or withdrawals from the
reserve account on or relating to that payment date; and
o the amount, if any, of advances due to be reimbursed on that
payment date but not reimbursed from funds on deposit in the collection
account or the supplemental reserve account.
Withdrawals from the Supplemental Reserve Account and the Reserve
Account to pay the Total Required Payment. If on any payment date the Total
Required Payment is greater than the Available Funds, the indenture trustee
will withdraw from the supplemental reserve account and deposit in the
collection account an amount equal to the lesser of:
o the amount on deposit in the supplemental reserve account on that
payment date, calculated after any reimbursement of advances but prior to
any deposits or other withdrawals from the supplemental reserve account
relating to that payment date; and
o the amount, if any, by which the Total Required Payment exceeds the
Available Funds for that payment date.
If the amount on deposit in the supplemental reserve account is
insufficient to make up a shortfall in the Available Funds to pay the Total
Required Payment, the indenture trustee will withdraw from the reserve
account and deposit in the collection account an amount equal to the lesser
of:
o the amount on deposit in the reserve account on that payment date,
calculated after any reimbursement of advances but prior to any deposits or
other withdrawals relating to that payment date; and
o the amount, if any, by which the Total Required Payment for that
payment date exceeds the sum of the Available Funds and amounts withdrawn
from the supplemental reserve account to pay the Total Required Payment.
The Available Funds on any payment date will exclude all payments and
proceeds of any receivables the purchase amount of which has been included
in the Available Funds for a prior calendar month.
Monthly Withdrawals from Collection Account. On each payment date,
the indenture trustee will withdraw the Total Available Funds for the
preceding calendar month from the collection account and make deposits,
distributions and payments in the amounts and in the order of priority
specified below:
o to the servicer, the servicing fee due on that payment date,
together with any portion of the servicing fee that remains
unpaid from prior payment dates;
o to the note payment account, the Accrued Note Interest for each
class of notes;
o to the note payment account, the Principal Distribution Amount;
o to the reserve account, the amount required to bring the amount
in the reserve account up to the Specified Reserve Balance;
o to the supplemental reserve account, the amount required to
bring the amount in the supplemental reserve account up to the
Maximum Supplemental Reserve Amount; and
o to the certificate distribution account, any remaining Total
Available Funds.
On each payment date, the amount on deposit in the certificate
distribution account will be distributed to the certificateholders.
Notwithstanding the foregoing, following an acceleration of the
maturity dates of notes following the occurrence of an event of default
under the indenture, the Total Available Funds will be deposited in the
note payment account for distribution in the order of priority set forth
under "-- Monthly Withdrawals From the Note Payment Account On and After an
Acceleration of the Maturity Dates of the Notes."
Monthly Withdrawals From the Note Payment Account. On each payment
date, unless the maturity dates of the notes have been accelerated
following the occurrence of an event of default under the indenture, all
amounts on deposit in the note payment account will be paid in the
following order of priority:
o to the noteholders, the Accrued Note Interest on the applicable
class of notes;
o to the Class A-1 noteholders, the Principal Distribution Amount
until the Class A-1 notes have been paid in full;
o following payment in full of the Class A-1 notes, to the Class
A-2 noteholders, the Principal Distribution Amount until the
Class A-2 notes have been paid in full;
o following payment in full of the Class A-2 notes, to the Class
A-3 noteholders, the Principal Distribution Amount until the
Class A-3 notes have been paid in full; and
o following payment in full of the Class A-3 notes, to the Class
A-4 noteholders, the Principal Distribution Amount until the
Class A-4 notes have been paid in full.
Monthly Withdrawals From the Note Payment Account On and After an
Acceleration of the Maturity Dates of the Notes. On each payment date
occurring on or after the acceleration of the maturity dates of the notes
following the occurrence of an event of default under the indenture, all
amounts on deposit in the note payment account will be paid in the
following order of priority:
o to the indenture trustee, amounts due as compensation or
indemnity payments pursuant to the terms of the indenture;
o to the servicer, the amounts accrued and unpaid in respect of
the servicing fee plus any portion of the servicing fee that
remains unpaid from prior payment dates;
o to the noteholders of all classes, the Accrued Note Interest on
each class of notes;
o to the noteholders of all classes without priority or
preference of any kind, all unpaid principal on the notes pro
rata in proportion to the respective principal balances of each
class of notes until each of the classes has been paid in full;
and
o to the certificate distribution account, any amount remaining
in the note payment account after each class of notes has been
paid in full.
THE NEGATIVE CARRY ACCOUNT
On ___________ __, 1999, MART will make an initial deposit of $ into
the negative carry account. That amount is equal to the Maximum Negative
Carry Amount as of __________ ___, 1999.
During the Pre-Funding Period, the amounts on deposit in the
pre-funding account will earn interest at a rate that is less than the
weighted average interest rate on the notes. The amount on deposit in the
negative carry account is intended to cover that shortfall. On each payment
date during the Pre-Funding Period, the indenture trustee will withdraw the
Negative Carry Amount for that payment date from the negative carry account
and deposit such amount to the collection account as a part of the funds
available to pay interest on notes.
THE RESERVE ACCOUNT AND SUPPLEMENTAL RESERVE ACCOUNT
On ___________ __, 1999, MART will make an initial deposit to the
reserve account of cash or investments permitted by the sale and servicing
agreement having a value of $___________. That amount is equal to the
principal balance of the receivables pool as of __________ __, 1999,
multiplied by %. On each date after __________ __, 1999 on which
receivables are transferred to the trust, cash or investments permitted by
the sale and servicing agreement having a value approximately equal to
_____% of the aggregate principal balance as of the related Cutoff Date of
the receivables transferred on that date will be withdrawn from the
pre-funding account and deposited in the reserve account.
On or before each payment date, the indenture trustee will make the
following payments and deposits from funds in the supplemental reserve
account:
o to the servicer, an amount equal to any shortfall between the
aggregate amount of advances that are due and payable to the
servicer on that payment date and the aggregate amount of the
collections on the receivables that are paid to the servicer on
that payment date as reimbursement for those advances; and
o to the collection account, an amount equal to any shortfall
between the Total Required Payment for that payment date and
the Available Funds allocable to pay the Total Required
Payment.
If there are insufficient funds in the supplemental reserve account
on a particular payment date, the indenture trustee will make up any
shortfall with funds in the reserve account which will be applied in the
same order of priority.
The reserve account and the supplemental reserve account will be
funded on each payment date with the Available Funds remaining after
payment of interest and principal on the notes on that payment date, in the
following order of priority:
o to the reserve account, an amount, equal to the excess, if any,
of the Specified Reserve Balance for that payment date over the
amount on deposit in the reserve account; and
o to the supplemental reserve account, an amount equal to the
excess, if any, of the Maximum Supplemental Reserve Amount for
that payment date over the amount on deposit in the
supplemental reserve account.
MART will invest funds in the reserve account and the supplemental
reserve account in investments as permitted by the sale and servicing
agreement. If amounts on deposit in the reserve account and the
supplemental reserve account on any date exceed the required balances in
those accounts, after giving effect to withdrawals on that payment date,
the excess will be withdrawn and paid to MART. The noteholders will not
have any rights in, or claims to, any of those amounts paid to MART.
Amounts in the reserve account and the supplemental reserve account
are intended to enhance the likelihood of receipt by noteholders of amounts
due them and to decrease the likelihood that the noteholders will
experience losses. If the amount withdrawn from the reserve account and the
supplemental reserve account on any payment date to reimburse the servicer
for advances and to cover shortfalls in Available Funds exceeds the amount
on deposit in the reserve account and the supplemental reserve account, a
temporary shortfall in the amounts distributed to the noteholders could
result. In addition, depletion of the reserve account and the supplemental
reserve account ultimately could result in losses to noteholders, as
noteholders will have no recourse to the assets of MART as a source of
payment.
The servicer may request each of Moody's and S&P to approve a
reduction in the Specified Reserve Balance or the Maximum Supplemental
Reserve Amount or a change in the manner in which the reserve account or
the supplemental reserve account is funded. If each of Moody's and S&P
confirms that the requested action will not result in the qualification,
reduction or withdrawal of its then-current rating of any class of notes,
then the required balance of the account will be reduced. However, a
reduction in the Specified Reserve Balance will also require the delivery
of several tax opinions. The indenture will accordingly be amended to
reflect the change in the required balance of the account without the
consent of any noteholders.
SUBORDINATION OF THE CERTIFICATES
The rights of certificateholders to receive distributions are
subordinated to the rights of noteholders to receive payments of interest
and principal. Funds on deposit in the collection account will be applied
to the reimbursement of advances made by the servicer, the payment to the
servicer of Rule of 78's payments and the servicing fee plus any portion of
the servicing fee that remains unpaid from prior payment dates, the Accrued
Note Interest on the notes and principal payable on the notes on each
payment date and to making the required deposits to the reserve account and
the supplemental reserve account before distributions on the certificates.
In addition, following the occurrence of an event of default under the
indenture that has resulted in an acceleration of the notes, the
noteholders will be entitled to be paid in full before the
certificateholders are entitled to any distributions. The foregoing
subordination of the certificates is intended to enhance the likelihood of
receipt by noteholders of amounts due them and to decrease the likelihood
that the noteholders will experience losses. See "-- Indenture Cash Flows."
ADVANCES BY THE SERVICER OF AMOUNTS PAYABLE ON THE RECEIVABLES
If the monthly collection of interest and principal on an Actuarial
Receivable and amounts in the payahead account allocable to that receivable
are less than the scheduled payment due, the servicer will make an advance
of the remaining amount on the related payment date.
The servicer will be reimbursed for each of these advances:
o on each subsequent payment date out of any payments by or on
behalf of the related obligor to the
extent those payments are allocable to the reimbursement of the
advance; and
o on the payment date following the calendar month in which the
related receivable becomes defaulted, out of collections on
other receivables.
In addition, the servicer will make an advance for any portion of a
Balloon Payment for the calendar month in which the Balloon Payment becomes
due if the entire scheduled payment has not been received by the servicer,
including amounts in the payahead account allocable to the Balloon Payment.
The servicer will be reimbursed for any advance relating to a
Balloon Payment on each payment date following the payment date on which
the advance was made:
o out of payments by or on behalf of the related obligor to the
extent those payments are allocable to the reimbursement of the
advance; and
o out of collections on other receivables to the extent of any
losses allocable to the Balloon Payment that the servicer has
recorded in its books and records during the preceding calendar
month, but only to the extent the Balloon Payment and the
advance has not otherwise been reimbursed.
If MMCA is replaced in its capacity as servicer, the successor
servicer will not be required to make advances. In the absence of advances
by the servicer, noteholders must rely for payment of the notes upon the
following:
o payments on the receivables, including sales proceeds of
financed vehicles returned to the servicer for sale;
o payments under the yield supplement agreement and the yield
supplement account;
o withdrawals from the negative carry account; and
o available amounts on deposit in the reserve account and the
supplemental reserve account.
See "--Indenture Cash Flows" and "--The Reserve Account and Supplemental
Reserve Account."
DEPOSIT OF COLLECTIONS ON THE RECEIVABLES TO COLLECTION ACCOUNT
The servicer will deposit the payments and proceeds on the
receivables required by the sale and servicing agreement to be deposited
into the collection account, other than extension or deferral fees
collected on the receivables that are payable to the servicer under the
sale and servicing agreement and into the collection account not later than
two business days after receipt unless (a) the servicer has a rating
acceptable to each of Moody's and S&P with respect to its short-term
indebtedness, MMCA is the servicer, and no events of servicing termination
have occurred or (b) the trust shall have received written notice from each
of Moody's and S&P that no outstanding rating on any class of notes would
be lowered or withdrawn as a result, in which case those amounts will be
paid into the collection account on the business day prior to each payment
date. MART and the servicer will also deposit into the collection account
on each payment date the purchase amount of each receivable required to be
repurchased or purchased by either of them pursuant to an obligation that
arose during the related calendar month. The servicer will be entitled to
be reimbursed for the amounts previously deposited in the collection
account but later determined to have resulted from mistaken deposits or
posting or checks returned unpaid for insufficient funds or other reasons
from amounts otherwise payable into the collection account or amounts on
deposit in the collection account.
In those cases where a subservicer is servicing a receivable pursuant
to a subservicing agreement, the servicer will cause the subservicer to
remit to the collection account the amounts collected by that subservicer
on or with respect to the receivables being serviced by it, within the
period after receipt, and subject to the limitations, described above.
As an administrative convenience, unless the servicer is required to
remit collections within two business days of receipt, the servicer will be
permitted to make the deposit of collections and purchase amounts for or
with respect to the related calendar month, net of distributions to be made
to the servicer, with respect to the related calendar month. The servicer,
however, will account to the indenture trustee and the noteholders as if
all deposits, distributions and transfers were made individually.
STATEMENTS TO NOTEHOLDERS
On or prior to each payment date, the servicer will prepare and
provide to the indenture trustee a statement to be delivered to the
noteholders. Each of those statements to be delivered to noteholders will
include the following information as to the notes with respect to that
payment date and the preceding calendar month:
o the amount of the payment allocable to principal of each class
of notes;
o the amount of the payment allocable to interest on or with
respect to each class of notes;
o the Yield Supplement Amount;
o the amount of the servicing fee due on that payment date plus
any portion of the servicing fee that remains unpaid from prior
payment dates;
o the aggregate outstanding principal amount of each class of the
notes and the applicable note pool factor, after giving effect
to payments on the payment date;
o the principal balance of the receivables pool, the principal
balance of the receivables pool exclusive of the aggregate
principal balance of Balloon Payments and the aggregate
principal balance of the Balloon Payments calculated as of the
close of business on the last day of the preceding calendar
month;
o the cumulative amount of interest due but not paid to the
noteholders of each class on such payment date and on prior
payment dates plus interest on such overdue interest at the
applicable note interest rate, to the extent permitted by law;
o the cumulative amount of principal due but not paid to the
noteholders of each class on such payment date and on prior
payment dates;
o with respect to receivables that became defaulted during the
related calendar month, the aggregate amount of the excess of
the principal balance of those contracts, including any
principal of a Balloon Payment, over the net proceeds from the
liquidation of those contracts;
o the balance of the reserve account on that payment date, after
giving effect to changes in the balance on that payment date;
o the balance of the supplemental reserve account on that payment
date, after giving effect to changes in the balance on that
payment date;
o the advances by the servicer, if any;
o the aggregate purchase amount of receivables repurchased by
MART or purchased by the servicer during the preceding calendar
month;
o for each payment date during the Pre-Funding Period and the
payment date that is on or immediately following the end of the
Pre-Funding Period, (A) the amount, if any, withdrawn from the
pre-funding account to purchase receivables during the
preceding calendar month (B) the remaining amount on deposit in
the pre-funding account, if any, (C) the Negative Carry Amount,
if any, for the preceding calendar month and (D) the amount
remaining on deposit in the negative carry account after all
withdrawals made on that payment date; and
o for the payment date on or immediately following the end of the
Pre-Funding Period, the remaining amount on deposit in the
pre-funding account, if any, that has not been used to fund the
purchase of receivables after __________ __, 1999 and is being
passed through as payments of principal on the notes.
Each amount set forth in the first, second, third, fourth and seventh
clauses of this paragraph will be expressed in the aggregate and as a
dollar amount per $1,000 of original denomination of the notes or class of
notes, as applicable. Copies of those statements may be obtained by the
beneficial owners of the notes by a request in writing addressed to the
indenture trustee.
Within a reasonable period of time after the end of each calendar
year, but not later than the latest date permitted by law, the indenture
trustee will furnish to each person who at any time during that calendar
year was a noteholder a statement prepared for the purposes of that
noteholder's preparation of federal income tax returns. See "Federal Income
Tax Consequences" and "--Book Entry Registration."
REGISTRATION OF THE NOTES IN THE NAME OF CEDE & CO. AS NOMINEE OF DTC
The notes of each class will be offered for purchase in minimum
denominations of $1,000 and integral multiples of $1,000. They will be
represented initially by one or more physical notes registered in the name
of Cede & Co. as nominee of The Depository Trust Company. No person
acquiring a beneficial ownership interest in the notes will receive a
definitive note registered in that person's name unless definitive notes
are issued under the limited circumstances described herein. Unless and
until definitive notes are issued, all references to actions by noteholders
refer to actions taken by DTC upon instructions from its participating
organizations. All references to payments, notices, reports and statements
to noteholders will refer to payments, notices, reports and statements to
DTC or Cede & Co., as the registered holder of the notes, for payment or
distribution to beneficial owners of the notes in accordance with DTC's
procedures. See "--Book Entry Registration" and "--Issuance of Definitive
Notes Upon the Occurrence of Various Circumstances."
BOOK ENTRY REGISTRATION
Beneficial owners of notes may hold their notes through DTC in the
United States or through Cedelbank, societe anonyme or Euroclear in Europe
if they are participants of those systems, or indirectly through
organizations that are participants in those systems.
DTC is a limited purpose trust company organized under the laws of
the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and
a "clearing agency" registered pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. DTC was created to hold securities for
its direct participants and to facilitate the clearance and settlement of
securities transactions between those direct participants through
electronic book-entries, thereby eliminating the need for physical movement
of certificates. Direct DTC participants include securities brokers and
dealers, banks, trust companies and clearing corporations, and may include
other organizations. Indirect participation in the DTC system is also
available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a direct
participant.
To facilitate subsequent transfers, all notes deposited with DTC will
be registered in the name of DTC's nominee, Cede & Co. The deposit of notes
with DTC and their registration in the name of Cede & Co. does not change
their beneficial ownership. DTC does not know of the actual beneficial
owners of the notes; DTC's records reflect only the identity of the direct
participants to whose accounts the notes are credited, which may or may not
be the beneficial owners. The DTC participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Beneficial owners of notes will receive all payments of principal and
interest on the notes through direct or indirect participants. DTC will
forward those payments to its direct participants which thereafter will
forward them to indirect participants or beneficial owners of notes. Under
a book-entry format, beneficial owners of notes may experience some delay
in their receipt of payments, since those payments will be forwarded to
Cede & Co. as nominee of DTC. Beneficial owners of notes will not be
recognized by the indenture trustee as noteholders, as that term is used in
the indenture. Beneficial owners of notes can exercise the rights of
noteholders only indirectly through DTC and its direct and indirect
participants. Because DTC can act only on behalf of direct participants,
who in turn act on behalf of indirect participants, and on behalf of
various banks, trust companies and other persons approved by it, the
absence of physical notes may limit the ability of a beneficial owner of a
note to pledge the notes to persons or entities that do not participate in
the DTC system.
Communications by DTC to direct participants, by direct participants
to indirect participants and by any participants to beneficial owners of
the notes will be governed by arrangements between them, subject to any
applicable statutory or regulatory requirements. Payments by DTC
participants to beneficial owners of the notes will be governed by standing
instructions and customary practices, as is the case with securities held
for the accounts of customers in bearer form or registered in "street
name". They will be the responsibility of the DTC participant and not of
DTC, the indenture trustee, the owner trustee, MART or the servicer,
subject to any applicable statutory or regulatory requirements. Payment of
principal and interest to DTC is the responsibility of the indenture
trustee, disbursement of those payments to direct participants shall be the
responsibility of DTC and disbursement of those payments beneficial owners
shall be the responsibility of all participants.
Purchases of notes under the DTC system must be made by or through
direct participants, which will receive a credit for the notes on DTC's
records. Each actual beneficial owner's interest in the notes is in turn to
be recorded on the applicable DTC participant's records. Beneficial owners
of notes will not receive written confirmation from DTC of their purchase,
but those beneficial owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of
their holdings, from the DTC participant through which the beneficial owner
entered into the transaction. Transfers of ownership interests in the notes
are to be accomplished by entries made on the books of DTC participants
acting on behalf of beneficial owners of notes. Beneficial owners of notes
will not receive physical notes representing their ownership interest in
notes, except if the use of the book-entry system for the notes is
discontinued.
Neither DTC nor Cede & Co. will comment or vote with respect to the
notes. DTC has advised MART that it will take any action permitted to be
taken by a noteholder under the indenture only at the direction of one or
more direct participants to whose accounts with DTC the notes are credited.
Additionally, DTC has advised MART the indenture requires that any action
may be taken only by noteholders representing a specified percentage of the
aggregate outstanding principal amount thereof, DTC will take that action
only at the direction of and on behalf of direct participants whose
holdings include undivided interests that satisfy that specified
percentage. Under its usual procedures, DTC will mail an "omnibus proxy" to
the indenture trustee as soon as possible after any applicable record date
with respect to a consent or vote. The omnibus proxy will assign Cede &
Co.'s consenting or voting rights to those direct participants to whose
accounts the notes will be credited on that record date, who will be
identified on a listing attached to the omnibus proxy.
DTC may discontinue providing its services as securities depository
with respect to the notes at any time by giving reasonable notice to the
indenture trustee. Under those circumstances, if a successor securities
depository is not obtained, definitive notes are required to be printed and
delivered. MART may decide to discontinue use of the system of book-entry
transfers through DTC or a successor securities depository. In that event,
definitive notes will be delivered to noteholders. See "--Issuance of
Definitive Notes Upon the Occurrence of Various Circumstances."
Cedelbank and Euroclear will hold omnibus positions on behalf of the
Cedelbank participants and the Euroclear participants, respectively. This
will be done through customers' securities accounts in Cedelbank's and
Euroclear's names on the books of their respective depositaries which in
turn will hold those positions in customers' securities accounts in the
depositaries' names on the books of DTC.
Transfers within DTC between direct participants will occur in
accordance with DTC rules. Transfers between Cedelbank participants and
Euroclear participants will occur in the ordinary way in accordance with
their applicable rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, through Cedelbank or Euroclear will be effected in DTC in
accordance with DTC rules through the relevant European international
clearing system through its depositary; however, those cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in that system in
accordance with its rules and procedures and within its established
deadlines, which are based on European time. The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its depositary to take action to
effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Cedelbank
participants and Euroclear participants may not deliver instructions
directly to the depositaries.
Because of time-zone differences, credits of securities in Cedelbank
or Euroclear as a result of a transaction with a DTC participant will be
made during the subsequent securities settlement processing day, dated the
business day following the DTC settlement date, and those credits or any
transactions in the securities settled during that processing day will be
reported to the relevant participant in Cedelbank or Euroclear on that
business day. Cash received in Cedelbank or Euroclear as a result of sales
of securities by or through a participant in Cedelbank or Euroclear to a
DTC participant will be received with value on the DTC settlement date but
will be available in the relevant Cedelbank or Euroclear cash account only
as of the business day following settlement in DTC.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that MART believes to be reliable,
but MART takes no responsibility for the accuracy of the information.
Cedelbank is incorporated under the laws of Luxembourg as a
professional depository. Cedelbank holds securities for its participants
and facilitates the clearance and settlement of securities transactions
between Cedelbank participants through electronic book-entry changes in
accounts of Cedelbank participants, thereby eliminating the need for
physical movement of certificates. Transactions may be settled in Cedelbank
in any of 36 currencies, including United States dollars. Cedelbank
provides to its participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedelbank interfaces with
domestic markets in several countries. As a professional depository,
Cedelbank is subject to regulation by the Luxembourg Monetary Institute.
Cedelbank participants are recognized financial institutions around the
world, including underwriters, securities brokers and dealers, banks, trust
companies, clearing corporations and other organizations and may include
the underwriters. Indirect access to Cedelbank is also available to others,
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Cedelbank participant, either
directly or indirectly.
The Euroclear system was created in 1968 to hold securities for
participants of the Euroclear system and to clear and settle transactions
between Euroclear participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers
of securities and cash. Transactions may now be settled in any of 34
currencies, including United States dollars. The Euroclear system includes
various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries generally similar to
the arrangements for cross-market transfers with DTC described above. The
Euroclear system is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York, under contract with Euroclear Clearance
System, S.C., a Belgian cooperative corporation. All operations are
conducted by Morgan Stanley's Belgium office, and all Euroclear securities
clearance accounts and Euroclear cash accounts are accounts with Morgan
Stanley's Belgium office, not Euroclear Clearance System, which establishes
policy for the Euroclear system on behalf of Euroclear participants, which
include banks, central banks, securities brokers and dealers and other
professional financial intermediaries and may include the underwriters.
Indirect access to the Euroclear system is also available to other firms
that clear through or maintain a custodial relationship with a Euroclear
participant, either directly or indirectly.
Morgan Stanley's Belgium office is the Belgian branch of a New York
banking corporation which is a member bank of the Federal Reserve System.
As such, it is regulated and examined by the Board of Governors of the
Federal Reserve System and the New York State Banking Department, as well
as the Belgian Banking Commission.
The Terms and Conditions Governing Use of Euroclear and the related
Operating Procedures of the Euroclear system and applicable Belgian law
govern the securities clearance accounts and cash accounts maintained with
Morgan Stanley's Belgium office, transfers of securities and cash within
the Euroclear system, withdrawal of securities and cash from the Euroclear
system, and receipts of payments with respect to securities in the
Euroclear system. All securities in the Euroclear system are held on a
fungible basis without attribution of specific securities to specific
securities clearance accounts. Morgan Stanley's Belgium office, as the
operator of Euroclear, acts under the Terms and Conditions only on behalf
of Euroclear participants and has no record of or relationship with persons
holding through those organizations.
Payments on notes held through Cedelbank or Euroclear will be
credited to the cash accounts of participants in Cedelbank or Euroclear in
accordance with the relevant system's rules and procedures, to the extent
received by its depositary. Those payments will be subject to tax reporting
in accordance with relevant United States tax laws and regulations. See
"Federal Income Tax Consequences" and Annex A.
Cedelbank or Morgan Stanley's Belgium office, as operator of
Euroclear, as the case may be, will take any other action permitted to be
taken by a noteholder under the related agreement on behalf of a Cedelbank
participant or Euroclear only in accordance with its relevant rules and
procedures and subject to its depositary's ability to effect those actions
on its behalf through DTC.
Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of notes among participants of
DTC, Cedelbank and Euroclear, they are under no obligation to perform or
continue to perform those procedures and those procedures may be
discontinued at any time.
ISSUANCE OF DEFINITIVE NOTES UPON THE OCCURRENCE OF VARIOUS CIRCUMSTANCES
The notes of each class will be issued in fully registered,
certificated form to noteholders or their nominees, rather than to DTC or
its nominee or a successor clearing agency, only if:
o the trust, the administrator or the servicer advises the
indenture trustee in writing that DTC or its successor is no
longer willing or able to discharge properly its
responsibilities as depository with respect to the notes and
the indenture trustee or the administrator is unable to locate
a qualified successor;
o the administrator, at its option, elects to terminate the
book-entry system through DTC or its successor; or
o after the occurrence of an event of default under the indenture
or an event of servicing termination under the sale and
servicing agreement, the beneficial owners of the notes
representing in the aggregate at least 51% of the aggregate
outstanding principal amount of the notes advise the indenture
trustee and DTC or its successor in writing that the
continuation of a book-entry system through DTC or its
successor is no longer in the best interest of the beneficial
owners of the notes.
Upon the occurrence of any of these events, DTC is required to notify
all of its direct participants and the indenture trustee of the
availability through DTC of notes in fully registered, certificated form.
Upon surrender by DTC of the certificates representing the notes and
receipt by the indenture trustee of instructions for re-registration, the
indenture trustee will reissue the notes in fully registered, certificated
form, and thereafter the indenture trustee will recognize the holders of
those notes as noteholders.
Payments of principal of, and interest on, the notes in fully
registered, certificated form will be made by the indenture trustee
directly to noteholders in accordance with the procedures set forth herein
and in the indenture. Payments of principal and interest on each payment
date will be made to noteholders in whose names the notes in fully
registered, certificated form were registered at the close of business on
the preceding record date. Those payments will be made by check mailed to
the address of that noteholder as it appears on the register maintained by
the indenture trustee. The final payment on any note in fully registered,
certificated form, however, will be made only upon presentation and
surrender of the note in that form at the office or agency specified in the
notice of final payment mailed to noteholders.
Notes in fully registered, certificated form will be transferable and
exchangeable at the offices of the indenture trustee. No service charge
will be imposed for any registration of transfer or exchange, but the
indenture trustee may require payment of a sum sufficient to cover any tax
or other governmental charge imposed in connection therewith.
TERMS OF THE INDENTURE
Events of Default Under the Indenture.
The events of default under the indenture consist of:
o a default for five days or more in the payment of interest on
any note when it becomes due and payable;
o a default in the payment of principal of, or any installment of
principal of, any note when it becomes due and payable
including, with respect to each class of notes, on the final
payment date of such class; or
o events of bankruptcy, insolvency, receivership or liquidation of
the trust. (Indenture, Section 5.1).
Noteholders holding at least a majority of the aggregate principal
amount of the notes outstanding, voting as a group, may waive any past
default or event of default under the indenture prior to the declaration of
the acceleration of the maturity of the notes. Notwithstanding that, they
may not waive a default in payment of principal of or interest on any of
the notes or of any covenant or provision in the indenture which cannot be
modified or amended without unanimous consent of the noteholders.
(Indenture, Section 5.12). Any of those waivers could be treated, for
federal income tax purposes, as a constructive exchange of the notes by the
noteholders for deemed new notes upon which gain or loss would be
recognized.
Remedies Following an Event of Default Under the Indenture. If an
event of default under the indenture should occur and be continuing, the
indenture trustee or the holders of a majority of the aggregate outstanding
principal amount of the notes of all classes, voting as a group, may
declare the principal of the notes to be immediately due and payable. The
declaration may be rescinded by the holders of a majority of the aggregate
principal amount of the notes before a judgment or decree for payment of
the amount due has been obtained by the indenture trustee if:
o the trust has deposited with the indenture trustee an amount
sufficient to pay (x) all interest on and principal of the
notes as if the event of default under the indenture giving
rise to the declaration had not occurred and (y) all amounts
advanced by the indenture trustee and its costs and expenses;
and
o all events of default under the indenture, other than the
nonpayment of principal of the notes that has become due solely
by that acceleration, have been cured or waived. (Indenture,
Section 5.2).
Any rescission could be treated, for federal income tax purposes, as a
constructive exchange of the notes by the noteholders for deemed new notes
upon which gain or loss would be recognized.
If the notes have been declared due and payable following an event of
default under the indenture, the indenture trustee may institute
proceedings to collect amounts due, exercise remedies as a secured party,
including foreclosure or sale of the trust property, or elect to maintain
the trust property and continue to apply proceeds from the trust property
as if there had been no declaration of acceleration. The indenture trustee
may not, however, sell the trust property following an event of default
under the indenture, other than a default in the payment of any principal
or a default for five days or more in the payment of any interest on the
notes, unless:
o 100% of the noteholders consent;
o the proceeds of that sale are sufficient to pay in full the
principal of and the accrued interest on the then outstanding
notes; or
o the indenture trustee determines that the trust property would
not be sufficient on an ongoing basis to make all payments on
the notes as those payments would have become due if those
obligations had not been declared due and payable, and the
indenture trustee obtains the consent of holders of 66 2/3% of
the aggregate principal amount of the outstanding notes, voting
as a group, to that sale.
The indenture trustee may, but need not, obtain and rely upon an opinion of
an independent accountant or investment banking firm as to the sufficiency
of the trust property to pay interest on and principal of the notes on an
ongoing basis. (Indenture, Sections 5.4 and 5.5).
In the event of a sale of the trust property following the occurrence
of an event of default under the indenture under the circumstances
described in the preceding paragraph pursuant to the direction of the
indenture trustee or the noteholders, the proceeds of that sale will be
distributed:
o first, to the indenture trustee for amounts due as compensation
or indemnity payments pursuant to the terms of the indenture;
o second, to the servicer for amounts due in respect of accrued
and unpaid servicing fees;
o third, to the noteholders for interest which is due and unpaid;
and
o fourth, to the noteholders for principal which is due and
unpaid.
Any remaining amounts will be distributed to the certificateholders
for amounts due and unpaid in accordance with the terms of the trust
agreement and the sale and servicing agreement.
(Indenture, Section 5.4).
If an event of default occurs under the indenture and is continuing
with respect to the notes, the indenture trustee will not be required to
exercise any of its rights or powers at the request or direction of any of
the noteholders, if it reasonably believes it will not be adequately
indemnified against the costs, expenses and liabilities which might be
incurred by it in complying with that request. (Indenture, Sections 6.1 and
6.2). The holders of at least a majority of the aggregate principal amount
of the outstanding notes, voting as a group, will have the right to direct
the time, method and place of conducting any proceeding or any remedy
available to the indenture trustee with respect to the notes or exercising
any trust power conferred on the indenture trustee.
Until the time, if any, as notes in fully registered, certificated
form have been issued, the indenture trustee will act only in accordance
with the instructions of Cede & Co., as nominee for DTC. However, under the
rules, DTC will act only in accordance with the instructions of the DTC
participants to whom notes are credited, which will in turn act in
accordance with the instructions of persons holding beneficial interests in
those notes through those participants. Accordingly, although only Cede &
Co. will be entitled to vote under the indenture, the beneficial owners of
the notes will be entitled to instruct DTC as to the manner in which to
vote.
Noteholders will not have the right to institute any proceeding with
respect to the indenture unless:
o the noteholders gave written notice to the indenture trustee of
a continuing event of default under the indenture;
o the holders of not less than 25% of the aggregate principal
amount of the notes outstanding have made written request of
the indenture trustee to institute a proceeding in its own name
as indenture trustee;
o the noteholders offered the indenture trustee reasonable
indemnity;
o the indenture trustee has for 60 days failed to institute the
requested proceeding; and
o no direction inconsistent with that written request has been
given to the indenture trustee during that 60-day period by the
holders of a majority of the aggregate principal amount of the
notes outstanding. (Indenture, Section 5.6).
Neither the indenture trustee nor the owner trustee in their
respective individual capacities, nor any holder of a certificate, nor any
of their respective owners, beneficiaries, agents, officers, directors,
employees, successors or assigns will, in the absence of an express
agreement to the contrary, be personally liable for the payment of interest
on or principal of the notes or for the agreements of the trust and the
owner trustee, in its capacity as trustee, contained in the indenture.
Covenants by the Trust under the Indenture. The trust will not, among
other things:
o except as expressly permitted by the indenture, the sale and
servicing agreement, the trust agreement or related documents
sell, transfer, exchange or otherwise dispose of any of the
assets of the trust;
o claim any credit on or make any deduction from the principal or
interest payable in respect of the notes, other than amounts
withheld under the Internal Revenue Code of 1986, as amended,
or applicable state law, or assert any claim against any
present or former holder of notes because of the payment of
taxes levied or assessed upon the trust;
o dissolve or liquidate in whole or in part;
o permit the validity or effectiveness of the indenture to be
impaired;
o permit any person to be released from any covenants or
obligations with respect to the notes under the indenture
except as may be expressly permitted by the indenture;
o permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance to be created on or extend to or
otherwise arise upon or burden any assets of the trust, or any
interest in those assets or their proceeds;
o permit the lien of the indenture not to constitute a valid,
first priority security interest in the trust property, other
than with respect to any such tax, mechanics or other lien.
(Indenture, Section 3.8);
o engage in any activities other than financing, acquiring,
owning, pledging and managing the contracts as contemplated by
the indenture, the sale and servicing agreement, the trust
agreement and other related documents and incidental
activities; (Indenture, Section 3.12)
o incur, assume or guarantee any indebtedness other than
indebtedness incurred pursuant to the notes, or otherwise in
accordance with the indenture, the sale and servicing
agreement, the trust agreement and other related documents;
(Indenture, Section 3.13)
o make any payments to certificateholders in respect of their
certificates for any calendar month unless the Total Required
Payment and any deposits required to be made to the reserve
account and the supplemental reserve account have been provided
for; or (Indenture, Section 2.8)
o fail to or fail to cause the servicer to deliver to the
indenture trustee on or prior to each payment date the
disbursement and payment instructions as required pursuant to
the indenture. (Sale and Servicing Agreement, Section 4.11)
Replacement of Indenture Trustee. Noteholders holding not less than a
majority of the aggregate principal amount of the outstanding notes, voting
as a group, may remove the indenture trustee without cause by so notifying
the indenture trustee and the trust, and following that removal may appoint
a successor indenture trustee. Any successor indenture trustee must at all
times satisfy the requirements of Section 310(a) of the Trust Indenture Act
of 1939, as amended, and must have a combined capital and surplus of at
least $50,000,000 and a long-term debt rating of investment grade by each
of Moody's and S&P or otherwise acceptable to each of Moody's and S&P.
(Indenture, Sections 6.8 and 6.11).
The indenture trustee may resign at any time by so notifying the
trust and the noteholders. The trust will be required to remove the
indenture trustee if the indenture trustee:
o ceases to be eligible to continue as the indenture trustee;
o is adjudged to be bankrupt or insolvent;
o comes under the charge of a receiver or other public officer;
or
o otherwise becomes incapable of acting.
Upon the resignation or required removal of the indenture trustee, or
the failure of the noteholders to appoint a successor indenture trustee
following the removal without cause of the indenture trustee, the trust
will be required promptly to appoint a successor indenture trustee.
(Indenture, Section 6.8).
Duties of Indenture Trustee Under the Indenture. Except during the
continuance of an event of default under the indenture, the indenture
trustee:
o will perform the duties and only the duties as are specifically
set forth in the indenture;
o may in the absence of bad faith, rely on certificates or
opinions furnished to the indenture trustee which conform to
the requirements of the indenture and on the truth of the
statements and the correctness of the opinions expressed
therein; and
o will examine any of those certificates and opinions which are
specifically required to be furnished to the indenture trustee
by the indenture to determine whether or not they conform to
the requirements of the indenture.
Upon the continuance of an event of default under the indenture, the
indenture trustee will be required to exercise the rights and powers vested
in it by the indenture and use the same degree of care and skill in the
exercise thereof as a prudent person would exercise or use under the
circumstances in the conduct of that person's own affairs. (Indenture,
Section 6.1).
Compensation and Indemnity of the Indenture Trustee under the
Indenture. The trust will:
o pay to the indenture trustee from time to time reasonable
compensation for its services;
o reimburse the indenture trustee for all expenses, advances and
disbursements reasonably incurred; and
o indemnify the indenture trustee for, and hold it harmless
against, any and all losses, liability or expense, including
attorneys' fees, incurred by it in connection with the
performance of its duties.
The indenture trustee will not be indemnified against any loss,
liability or expense incurred by it through its own willful misconduct,
negligence or bad faith, except that the indenture trustee will not be
liable:
o for any error of judgment made by it in good faith unless it is
proved that the indenture trustee was negligent in ascertaining
the pertinent facts;
o with respect to any action it takes or omits to take in good
faith in accordance with a direction received by it from
noteholders in accordance with the terms of the indenture; and
o for interest on any money received by it except as the
indenture trustee and the trust may agree in writing.
The indenture trustee will not be deemed to have knowledge of any
event of default under the indenture unless an officer of the indenture
trustee has actual knowledge or has received written notice of the event of
default in accordance with the provisions of the indenture. (Indenture,
Sections 6.1 and 6.7).
Indenture Trustee's Access to Noteholder Lists. If notes are issued
in fully registered, certificated form and the indenture trustee is not the
registrar for the notes, the trust will furnish or cause to be furnished to
the indenture trustee a list of the names and addresses of the noteholders:
o as of each record date, within five days thereafter; and
o as of not more than 10 days prior to the time that list is
furnished, within 30 days after receipt by the
trust of a written request therefor. (Indenture, Section 7.1).
Annual Compliance Statement to be Provided by Trust to Indenture
Trustee. The trust will be required to file annually with the indenture
trustee a written statement as to the fulfillment of its obligations under
the indenture. (Indenture, Section 3.9).
Requirements for Satisfaction and Discharge of Indenture. The
indenture will be discharged with respect to the collateral securing the
notes upon the delivery to the indenture trustee for cancellation of all
the notes or, with several limitations, including receipt of various
opinions with respect to tax matters, upon deposit with the indenture
trustee of funds sufficient for the payment in full of all of the notes,
including interest and any fees due and payable to the owner trustee or the
indenture trustee. (Indenture, Section 4.1).
Requirements for Modification of Indenture. Without the consent of
the noteholders, the owner trustee, on behalf of the trust, and the
indenture trustee, upon request by the trust, may execute a supplemental
indenture for the purpose of, among other things, adding to the covenants
of the trust, curing any ambiguity, correcting or supplementing any
provision which may be inconsistent with any other provision or making any
other provision with respect to matters or questions arising under the
indenture which will not be inconsistent with other provisions of the
indenture; provided that
o the action will not, (1) as evidenced by an opinion of counsel
materially adversely affect the interests of any noteholder and
(2) as confirmed by each of Moody's and S&P rating any class of
notes, cause the then-current rating assigned to any class of
notes to be withdrawn, reduced or qualified and
o an opinion of counsel as to various tax matters is delivered.
(Indenture, Section 9.1).
The owner trustee, on behalf of the trust, and the indenture trustee,
upon request by the trust, may also enter into supplemental indentures,
with the consent of not less than a majority of the aggregate principal
amount of the outstanding notes, voting as a group, and with prior written
notice to each of Moody's and S&P, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of the
indenture or of modifying in any manner the rights of noteholders;
provided, that
o the action will not, (1) as evidenced by an opinion of counsel,
materially adversely affect the interests of any noteholder and
(2) as confirmed by each of Moody's and S&P, cause the
then-current rating assigned to any of the affected class of
notes to be withdrawn, reduced or qualified and
o an opinion of counsel as to various tax matters is delivered.
(Indenture, Section 9.1).
Any opinion of counsel referred to in this paragraph or the preceding one
may be rendered by internal counsel to MART or the servicer.
Without the consent of the holder of each outstanding note affected
thereby, however, no supplemental indenture may:
o change the final payment date for any class of notes or the
date on which any installment of principal of or interest on
any note is due or reduce the principal amount of any note, the
specified interest rate of any note or the redemption price of
any note, change the provisions of the indenture relating to
the application of collections on, or the proceeds of the sale
of, the trust property to payment of principal of or interest
on the notes, or change any place of payment where, or the coin
or currency in which, any note or any interest thereon is
payable;
o impair the right to institute suit for the enforcement of
various provisions of the indenture regarding payment;
o reduce the percentage of the aggregate outstanding principal
amount of the notes the consent of the holders of which is
required for any supplemental indenture or for any waiver of
compliance with various provisions of the indenture, or of
various defaults thereunder, and their consequences as provided
for in the indenture;
o modify or alter the provisions of the indenture regarding the
voting of notes held by the trust, MART, the servicer, an
affiliate of any of them;
o reduce the percentage of the aggregate outstanding principal
amount of the notes the consent of the holders of which is
required to direct the indenture trustee to sell or liquidate
the trust property if the proceeds of that sale would be
insufficient to pay the principal amount and accrued but unpaid
interest on the notes and the certificates;
o modify any provision of the indenture specifying a percentage
of the aggregate principal amount of the notes necessary to
amend the indenture, the sale and servicing agreement, the
trust agreement or any other related documents except to
increase any percentage specified in the indenture or to
provide that various additional provisions of the indenture,
the sale and servicing agreement, the trust agreement or any
other related documents cannot be modified or waived without
the consent of the holder of each outstanding note affected by
the modification;
o modify any provisions of the indenture in a manner as to affect
the calculation of the amount of any payment of interest or
principal due on any note on any payment date or to affect the
rights of the holders of notes to the benefit of any provisions
for the mandatory redemption of the notes contained in the
indenture; or
o permit the creation of any lien ranking prior to or on a parity
with the lien of the indenture with respect to any of the trust
property or, except as otherwise permitted or contemplated in
the indenture, terminate the lien of the indenture on any of
that collateral or deprive the holder of any note of the
security afforded by the lien of the indenture. (Indenture,
Section 9.2).
The trust agreement will require the owner trustee to give the
certificateholders 30 days' written notice of any proposed supplemental
indenture if it materially adversely affects the certificateholders or if
any noteholders' consent to the proposed supplemental indenture is required
and provides that the owner trustee will not enter into the amendment
unless certificateholders holding a majority of the certificate balance
including, for this purpose, certificates held by MART or any affiliate of
MART, consent in writing. (Trust Agreement, Section 4.1).
THE SALE AND SERVICING AGREEMENT AND THE TRUST AGREEMENT
We have summarized below some of the important terms of the sale and
servicing agreement and the trust agreement. We will file copies of those
agreements with the Securities and Exchange Commission after we issue the
notes and the certificates. This summary is not a complete description of
all of the provisions of those agreements and is subject to those
agreements in their entirety.
SALE AND ASSIGNMENT
Prior to the time of issuance of the notes and pursuant to the
purchase agreement, MMCA will sell and assign to MART, without recourse,
its entire right, title and interest in, to and under the receivables to be
purchased by the trust on __________ __, 1999, including its security
interests in the related financed vehicles. At the time of issuance of the
notes, MART, pursuant to the sale and servicing agreement, will sell and
assign to the trustee, without recourse, MART's entire interest in the
receivables, including its security interests in the related financed
vehicles. Each of the receivables conveyed by MART to the trust will be
identified in a schedule attached to the sale and servicing agreement. The
receivables will be sold and assigned by MMCA to MART and sold and assigned
by MART to the trust as of __________ __, 1999. The owner trustee will,
concurrently with the sale and assignment of the receivables, execute,
authenticate and deliver the certificates. The net proceeds received from
the sale of the notes will be applied to the purchase of the receivables on
__________ __, 1999 and to the deposits required to be made to the reserve
account, the pre-funding account, the negative carry account, the payahead
account and the yield supplement account on __________ __, 1999.
It is anticipated that additional receivables will be conveyed to the
trust monthly on dates specified by MART occurring during the Pre-Funding
Period. MART will designate as a Cutoff Date the date as of which
particular receivables are conveyed to the trust. On or prior to each
transfer of receivables to the trust during the Pre-Funding Period, MMCA
will sell and assign to MART, without recourse, its entire right, title and
interest in, to and under the receivables to be transferred by MART to the
trust on that date, including MMCA's security interests in the related
financed vehicles. On each of those dates, subject to the conditions
described below, MART will sell and assign to the trust, without recourse,
MART's entire interest in the receivables sold on that date designated by
MART as of the related Cutoff Date.
Upon the conveyance of receivables to the trust during the
Pre-Funding Period:
(1) the principal balance of the receivables pool will increase in
an amount equal to the aggregate principal balance of the
receivables sold on that date;
(2) an amount equal to ___% of the aggregate principal balance of
the receivables sold on that date will be withdrawn from the
pre-funding account and deposited in the reserve account;
(3) an amount equal to any early payments with respect to Actuarial
Receivables which were received prior to the related Cutoff
Date will be withdrawn from the pre-funding account and
transferred to the payahead account;
(4) an amount equal to the projected Yield Supplement Amounts for
all future payment dates for the receivables conveyed to the
trust on that date will be withdrawn from the pre-funding
account and deposited in the yield supplement account unless
the yield supplement account has been replaced by an acceptable
letter of credit on or prior to that date; and
(5) an amount equal to the excess of the aggregate principal
balance of the receivables transferred to the trust on that
date over the sum of the amounts described in clauses (2), (3)
and (4) of this paragraph will be withdrawn from the
pre-funding account and paid to MART.
Any conveyance of receivables during the Pre-Funding Period is
subject to the satisfaction, on or before the date of conveyance, of the
following conditions precedent, among others:
o each of the receivables transferred to the trust on that date
must satisfy the eligibility criteria specified in the sale and
servicing agreement (see "The Receivables Pool--Selection
Criteria");
o MART must not have selected those receivables in a manner that
it believes is adverse to the interests of the trust, the
noteholders or the certificateholders;
o the applicable reserve account deposit for that date must have
been made;
o the applicable payahead account deposit for that date must have
been made;
o the applicable yield supplement account deposit for that date
must have been made;
o MART must have executed and delivered to the trust, with a copy
to the indenture trustee, a written assignment conveying those
receivables to the trust, including a schedule identifying the
receivables;
o MART must have delivered various opinions of counsel to the
owner trustee, the indenture trustee, the representative of the
underwriters, and each of Moody's and S&P with respect to the
transfer of those receivables; and
o the owner trustee, the indenture trustee and each of Moody's
and S&P must have received written notification from MART of
the addition of all receivables transferred to the trust on
that date.
In addition, each group of receivables transferred to the trust
during the Pre-Funding Period will have the following characteristics:
o the weighted average remaining maturity of the receivables in
that group will not be more than __ months after the date that
the group of receivables was transferred to the trust; and
o the aggregate Balloon Payments of the receivables in that group
as a percentage of the aggregate principal balance of the
receivables in that group will not be more than __%.
Except for the criteria described in the two preceding paragraphs,
there will be no required characteristics of receivables transferred to the
trust after _____ __, 1999. Therefore, following the transfer of
receivables to the trust on any date after _____ __, 1999, the aggregate
characteristics of the entire pool of receivables may vary from those of
the receivables transferred to the trust on ______ __, 1999. See "Risk
Factors" and "The Receivables Pool."
In the purchase agreement, MMCA will represent and warrant to MART,
and in the sale and servicing agreement, MART will represent and warrant to
the owner trustee, among other things, that:
o the information provided in the schedule of receivables
transferred to the trust on _____ __, 1999 attached to the sale
and servicing agreement and each schedule of receivables
transferred to the trust on any date after_____ __, 1999
attached to the related assignment is correct in all material
respects;
o MMCA shall have determined whether or not the obligor on each
contract has maintained physical damage insurance, which shall
not be force-placed insurance, covering the financed vehicle in
accordance with its normal requirements;
o on any date that receivables are transferred to the trust, the
receivables are free and clear of all security interests,
liens, charges, and encumbrances and no setoffs, defenses, or
counterclaims against it have been asserted or threatened;
o on any date that receivables are transferred to the trust, each
of the receivables is or will be secured by a perfected first
priority security interest in the financed vehicle in favor of
MMCA; and
o each receivable, at the time it was originated, complied, and
complies or will comply in all material respects with
applicable federal and state laws, including consumer credit,
truth in lending, equal credit opportunity and disclosure laws.
The noteholders, the trust, the indenture trustee, the
certificateholders and the owner trustee will have no recourse against MMCA
or MART for breach of any of the foregoing representations and warranties
with respect to a receivable other than the right to require MMCA and MART
to repurchase the receivable. See "--Mandatory Repurchase of Receivables."
The owner trustee, the indenture trustee, the trust and the servicer will
covenant in the sale and servicing agreement not to institute or join in
the institution of any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceeding, or other similar proceeding against MART for a
period of one year and a day after any securities rated by Moody's or S&P
were issued by MART or by a trust for which MART was the depositor.
To assure uniform quality in servicing the contracts and to reduce
administrative costs, the trust will appoint the servicer as initial
custodian of the contracts. The servicer, in its capacity as custodian,
will hold the receivables and all documents and instruments relating to the
contracts, either directly or through subservicers, on behalf of the trust.
The contracts will not be stamped or otherwise marked to reflect the sale
and assignment of the receivables to the trust and will not be segregated
from other receivables held by the servicer or the subservicers. However,
Uniform Commercial Code financing statements reflecting the sale and
assignment of the receivables by MMCA to MART and by MART to the trust will
be filed, and the servicer's accounting records and computer systems will
be marked to reflect that sale and assignment. See "The Trust" and "Some
Important Legal Aspects of the Receivables."
THE PRE-FUNDING PERIOD
The trust will pay the purchase price for receivables to be
transferred to the trust during the Pre-Funding Period with funds on
deposit in the pre-funding account. MART will deposit an amount equal to
$_________________ in the pre-funding account on _____ __, 1999. MART
expects to sell receivables to the trust after _____ __, 1999 with an
aggregate principal balance approximately equal to $______________. Prior
to being used to purchase receivables or paid to holders of the notes as
described under "Terms of the Notes-Mandatory Redemption," funds on deposit
in the pre-funding account will be invested in investments as permitted by
the sale and servicing agreement. The net earnings from the investment of
funds on deposit in the pre-funding account will be transferred to the
collection account on a monthly basis on the business day preceding each
payment date.
The Pre-Funding Period is expected to begin on _________ __, 1999 and
to end on ___________ __, ____, but will end earlier if:
o the amount of funds on deposit in the pre-funding account is
reduced to less than $100,000 because of purchases of
receivables after _____ __, 1999;
o there is an event of default under the indenture;
o there is an event of servicing termination under the sale and
servicing agreement; or
o MART or the servicer becomes subject to various insolvency
events.
Any funds remaining on deposit in the pre-funding account at the end
of the Pre-Funding Period will be payable to the noteholders as described
under "Terms of the Notes-Mandatory Redemption."
MANDATORY REPURCHASE OF RECEIVABLES
In the event of a breach or failure to be true of any representation
or warranty with respect to the receivables described in "--Sale and
Assignment," which breach or failure materially and adversely affects the
interest of the trust in a receivable, MART, unless that breach or failure
has been cured by the last day of the calendar month which includes the
60th day after the date on which MART becomes aware of, or receives written
notice from the owner trustee or the servicer of, the breach or failure,
will be required to repurchase the receivable from the trust, and MMCA will
be required to repurchase the receivable from MART, for the purchase
amount, which is described in the following paragraph. The purchase amount
will be payable on the payment date immediately following that calendar
month. The obligation of MART to repurchase a receivable will not be
conditioned on performance by MMCA of its obligation to repurchase a
receivable. The repurchase obligation will constitute the sole remedy
available to the noteholders, the trust, the indenture trustee, the
certificateholders or the owner trustee against MART and MMCA for any
uncured breach or failure.
The purchase amount of a receivable to be purchased on any payment
date will equal the sum of (a) the outstanding principal balance of the
receivable as of the first day of the preceding calendar month and (b) the
accrued and unpaid interest on the principal balance at the annual
percentage rate of the receivable from the date a payment was last made on
the receivable through the date on which payment was due for that
receivable in the preceding calendar month. This calculation will be made
after giving effect to the receipt of monies collected on the contract in
the preceding calendar month.
SERVICING PROCEDURES
The servicer will make reasonable efforts to collect all payments due
with respect to the receivables in a manner consistent with the sale and
servicing agreement and will exercise the degree of skill and care that the
servicer exercises with respect to comparable motor vehicle receivables
owned and/or serviced by the servicer for itself or others.
Although it has no current plans to do so, the servicer may enter
into subservicing agreements with servicers that are eligible under the
sale and servicing agreement for the subservicing of receivables. Any
subservicing agreements will contain provisions substantially identical to
those contained in the sale and servicing agreement and may contain other
provisions as are not inconsistent with the terms of the sale and servicing
agreement. The servicer may terminate a subservicing agreement and either
service the related receivables directly or enter into a new subservicing
agreement for the receivables with another subservicer, provided that any
subservicer must be eligible to act as servicer. Notwithstanding any
subservicing agreement, the servicer will remain obligated and liable to
the trust and the owner trustee for servicing and administering the
receivables in accordance with the sale and servicing agreement as if the
servicer alone were servicing the receivables. All references in this
prospectus to actions required or permitted to be taken, or restrictions on
actions to be taken, by the servicer apply equally to actions by a
subservicer. References in this prospectus to amounts received by the
servicer include amounts received by a subservicer.
To be eligible to act as a servicer or subservicer under the sale and
servicing agreement, a person must, at the time of its appointment as
servicer or as a subservicer:
o have a net worth of not less than $50,000,000;
o be servicing a portfolio of motor vehicle retail installment
sale contracts and/or motor vehicle loans;
o be legally qualified, and have the capacity, to service the
receivables;
o have demonstrated the ability to service a portfolio of motor
vehicle retail installment sale contracts and/or motor vehicle
loans similar to the receivables professionally and competently
in accordance with standards of skill and care that are
consistent with prudent industry standards; and
o be qualified and entitled to use pursuant to a license or other
written agreement, and agree to maintain the confidentiality
of, the software which the servicer or any subservicer uses in
connection with performing its duties and responsibilities
under the sale and servicing agreement or the related
subservicing agreement or obtain the right to use, or develop
at its own expense, software which is adequate to perform its
duties and responsibilities under the sale and servicing
agreement or the related subservicing agreement.
The servicer will covenant in the sale and servicing agreement that:
(1) the financed vehicle securing each receivable will not be
released from the security interest granted by the receivable
in whole or in part, except as contemplated by the sale and
servicing agreement;
(2) the servicer will not and will not permit any subservicer to
impair in any material respect the rights of the trust, the
indenture trustee, the noteholders, the owner trustee or the
certificateholders in the receivables or otherwise amend or
alter the terms of a contract if, as a result of that amendment
or alteration, the interests of the trust, the noteholders, the
indenture trustee, the owner trustee, or the certificateholders
under the sale and servicing agreement would be materially
adversely affected; and
(3) the servicer will not increase or decrease the number or amount
of scheduled payments or the amount financed under a contract,
or extend, rewrite or otherwise modify the payment terms of a
contract; provided, however, that the servicer may extend any
contract for credit-related reasons that would be acceptable to
the servicer with respect to comparable motor vehicle
receivables that it services for itself or others in accordance
with its customary standards if the cumulative extensions with
respect to any contract shall not cause the term of that
contract to extend beyond ________ __, 200_; provided further,
that the extensions, in the aggregate, do not exceed two months
for each twelve months of the original term of the contract.
If the servicer breaches any covenant described in the preceding
paragraph that materially and adversely affects a receivable, the servicer
will be required to purchase the receivable from the trust. That purchase
obligation is sole remedy against the servicer for any uncured breach,
except for the indemnities of the servicer specified in the sale and
servicing agreement. The servicer's obligation to purchase a receivable in
the case of a breach does not apply if the breach has been cured by the
last day of the calendar month which includes the 60th day after the date
on which the servicer becomes aware of, or receives written notice of, the
breach.
The sale and servicing agreement will generally require the servicer
to charge off a receivable in conformity with its normal practice. It will
also generally require the servicer to follow its normal collection
practices and procedures that are consistent with the standard of care
required by the sale and servicing agreement to realize upon any
receivable. Currently, MMCA charges off a receivable at the time that the
related financed vehicle has been repossessed and sold, or at the time as
MMCA determines that it will not recover the financed vehicle. The servicer
may sell the financed vehicle securing the receivable at judicial sale, if
any, or take any other action permitted by law. See "Some Important Legal
Aspects of the Receivables." The net proceeds of the sale will be deposited
in the collection account at the time and in the manner described above.
The sale and servicing agreement will also require the servicer to
make advances, for which the servicer will be reimbursed in the manner
described under "Terms of the Notes--Advances by the Servicer of Amounts
Payable on the Receivables."
The sale and servicing agreement will provide that the servicer will
defend and indemnify the trust, the indenture trustee, the owner trustee,
the noteholders, the certificateholders and MART against any and all costs,
expenses, losses, damages, claims, and liabilities, including reasonable
fees and expenses of counsel and expenses of litigation, arising out of or
resulting from the use, ownership or operation by the servicer or any
affiliate thereof of any financed vehicle, or in respect of any negligence,
willful misfeasance or bad faith of the servicer in the performance of its
duties-other than errors in judgment-or by reason of reckless disregard of
its obligations and duties, under any of the indenture, the sale and
servicing agreement, the trust agreement or any related document to which
it is a party. The servicer's obligations to indemnify the trust, the
indenture trustee, the owner trustee, the noteholders, MART and the
certificateholders for the servicer's actions or omissions will survive the
removal of the servicer, but will not apply to any action or omission of a
successor servicer.
SERVICING COMPENSATION
The servicer will be entitled to receive a servicing fee for
servicing the receivables each calendar month, in an amount equal to the
product of one-twelfth of 1.00% and the principal balance of the
receivables pool as of the first day of the calendar month. The servicer
will also be entitled to receive, as additional servicing compensation,
earnings, net of losses and investment expenses, on amounts on deposit in
the payahead account, Rule of 78's payments, all disposition fees paid with
respect to receivables providing for Balloon Payments, all administrative
fees and charges, and all late payment fees paid with respect to the
receivables, other than fees paid in connection with extension or deferral
of payments on a receivable, which will be deposited in the collection
account. The servicing fee, together with any portion of the servicing fee
that remains unpaid from prior payment dates, will be paid to the servicer
on each payment date.
The servicing fee and the additional servicing compensation will
compensate the servicer for performing the functions of a third party
servicer of contracts and for administering the receivables on behalf of
the noteholders and the certificateholders, including collecting payments,
accounting for collections, furnishing monthly and annual statements to the
indenture trustee and the owner trustee with respect to distributions,
responding to inquiries of obligors, investigating delinquencies, and
providing collection and repossession services in cases of obligor default.
In addition, the servicing fee and the additional servicing compensation
will further compensate the servicer for various taxes, accounting fees,
outside auditor fees, data processing costs, and other costs incurred by
the servicer under the sale and servicing agreement in connection with
administering and servicing the receivables.
EVIDENCE TO BE PROVIDED AS TO SERVICER'S COMPLIANCE WITH ITS SERVICING
OBLIGATIONS
The sale and servicing agreement will provide that a firm of
independent certified public accountants, who may provide audit and other
services to the servicer, MART or MMCA, will furnish to the indenture
trustee and the owner trustee, on or before March 31 of each year,
beginning March 31, 2000, a report of examination as to compliance by the
servicer during the 12 months - or shorter period in the case of the first
report - ended the preceding December 31 with various standards relating to
the servicing of the receivables.
The sale and servicing agreement will also provide for delivery to
the indenture trustee and the owner trustee, on or before March 31 of each
year, beginning March 31, 2000, of a certificate signed by an officer of
the servicer stating that to the best of that officer's knowledge the
servicer has fulfilled its obligations under the sale and servicing
agreement throughout the 12 months ended the preceding December 31 or, if
there has been a default in the fulfillment of any such obligation,
describing each of those defaults.
Beneficial owners of the notes may obtain copies of those statements
and certificates by written request addressed to the indenture trustee.
RESIGNATION BY THE SERVICER
The sale and servicing agreement will provide that the servicer may
not resign from its obligations and duties as servicer thereunder, except
upon a determination that the servicer's performance of its duties is no
longer permissible under applicable law. No resignation of the servicer
will become effective until the indenture trustee or a successor servicer
has assumed the servicer's servicing obligations and duties under the sale
and servicing agreement and becomes the administrator under the
administration agreement.
CONSEQUENCES OF MERGER, CONVERSION, CONSOLIDATION OR SIMILAR ACTIONS BY
SERVICER
Any legal successor to the servicer, whether by merger, consolidation
or purchase and assumption of all or substantially all of the business of
the servicer, will become the servicer under the sale and servicing
agreement, provided that any such successor must be eligible to be servicer
under the sale and servicing agreement.
LIMITS ON SERVICER'S LIABILITY
The sale and servicing agreement will provide that the servicer will
be liable only to the extent of the obligations specifically undertaken by
it under the sale and servicing agreement and will have no other
obligations or liabilities thereunder.
LIMITS ON SERVICER'S OBLIGATIONS IN CONNECTION WITH LEGAL ACTIONS
The sale and servicing agreement will also provide that the servicer
will be under no obligation to appear in, prosecute or defend any legal
action that is not incidental to the servicer's responsibilities under the
sale and servicing agreement and that, in its opinion, may cause it to
incur any expense or liability. The servicer may, however, at its expense
undertake any reasonable action that it may deem necessary or desirable in
respect of the interests of the noteholders and the certificateholders
under the sale and servicing agreement.
EVENTS OF SERVICING TERMINATION
The following events will constitute events of servicing termination
under the sale and servicing agreement:
o any failure by the servicer to deliver to the owner trustee or
the indenture trustee the monthly certificate detailing the
collections and distributions for any calendar month, which
failure continues beyond the earlier of three business days
from the date the servicer's certificate was due to be
delivered and the related payment date;
o any failure by the servicer to deliver to the collection
account or any other account, any required payment or deposit
under the sale and servicing agreement, which failure continues
unremedied for five business days, or, in the case of a payment
or deposit to be made no later than a payment date, the failure
to make the payment or deposit by the payment date;
o any failure by the servicer duly to observe or perform in any
material respect any other covenant or agreement in the notes,
the certificates or the sale and servicing agreement, which
failure materially and adversely affects the rights of
noteholders or certificateholders and which continues
unremedied for 30 days after written notice of the failure is
given to the servicer by the indenture trustee or the owner
trustee, or to MART, the servicer, the owner trustee and the
indenture trustee by the holders of notes or certificates, as
applicable, evidencing not less than 25% in aggregate principal
amount of the outstanding notes, voting as a group, or
certificates;
o various events of bankruptcy, receivership, insolvency,
readjustment of debt, marshalling of assets and liabilities, or
similar proceedings with respect to MART or the servicer and
various actions by MART or the servicer indicating its
insolvency or reorganization pursuant to bankruptcy,
receivership, conservatorship, insolvency, or similar
proceedings; and
o failure of the servicer to be eligible to act as servicer under
the sale and servicing agreement.
The holders of notes evidencing not less than 51% of the aggregate
principal amount of the outstanding notes, voting as a group, or the
holders of certificates evidencing not less than a majority of the
certificate balance, in the case of any default which does not adversely
affect the indenture trustee or the noteholders may, on behalf of all
noteholders and certificateholders, as applicable, waive any event of
servicing termination under the sale and servicing agreement except an
event resulting from the failure to make any required deposit to or payment
from any account. For purposes of the foregoing, any notes or certificates
owned by MART, the servicer, or any affiliate will not be considered to be
outstanding.
The indenture trustee will have no obligation to notify noteholders
of any event which, with lapse of time to cure, would become an event of
servicing termination under the sale and servicing agreement, until after
the expiration of any applicable cure period, subject to the obligation of
the indenture trustee to deliver a copy of any certificate received by the
indenture trustee from the servicer pursuant to the sale and servicing
agreement notifying the indenture trustee of any event which constitutes
or, with the giving of notice or lapse of time or both, would become, an
event of servicing termination under the sale and servicing agreement to
each noteholder. See "--Rights of Indenture Trustee and Noteholders Upon an
Event of Servicing Termination under the Sale and Servicing Agreement."
RIGHTS OF INDENTURE TRUSTEE AND NOTEHOLDERS UPON AN EVENT OF SERVICING
TERMINATION UNDER THE SALE AND SERVICING AGREEMENT
As long as an event of servicing termination under the sale and
servicing agreement remains unremedied, the indenture trustee or the
holders of notes evidencing not less than a majority of the aggregate
principal amount of the outstanding notes may terminate the servicer's
rights and obligations under the sale and servicing agreement. Thereafter,
the indenture trustee or a servicer meeting the requisite eligibility
standards, which may be an affiliate of the indenture trustee, appointed by
the indenture trustee will succeed to all the responsibilities, duties, and
liabilities of the original servicer. The successor servicer will then be
entitled to the compensation payable to the servicer. If the indenture
trustee is unwilling or legally unable so to act, the indenture trustee may
appoint, or petition a court of competent jurisdiction for the appointment
of, a person eligible to act as servicer as successor to the outgoing
servicer under the sale and servicing agreement. In no event may the
servicing compensation to be paid to that successor be greater than the
servicing compensation payable to the servicer under the sale and servicing
agreement. In the event of the bankruptcy of the servicer, the bankruptcy
trustee or the servicer, as debtor in possession, may have the power to
prevent a termination of the servicer's rights and obligations under the
sale and servicing agreement.
REQUIREMENTS FOR AMENDMENTS OF THE SALE AND SERVICING AGREEMENT AND
THE TRUST AGREEMENT
Both the sale and servicing agreement and the trust agreement may be
amended by the parties without the consent of the noteholders or the
certificateholders, to cure any ambiguity, to correct or supplement any
provision of either agreement which may be inconsistent with any other
provision thereof, and to add, change or eliminate any other provisions of
either agreement which are not inconsistent with the provisions of that
agreement; provided that the action will not, as evidenced by an opinion of
counsel-which may be given by internal counsel to MART or the servicer-to
the indenture trustee and the owner trustee, materially and adversely
affect the interest of any noteholder or certificateholder or, with respect
to the trust agreement, have adverse tax consequences.
The sale and servicing agreement may be amended by the parties for
the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, the sale and servicing agreement or
for the purpose of modifying the rights of noteholders or
certificateholders, with the consent of the indenture trustee, the holders
of notes evidencing not less than 51% of the aggregate principal amount of
then outstanding notes, voting as a group, and the holders of certificates
evidencing not less than 51% of the certificate balance.
The trust agreement may be amended by the parties for the purpose of
adding any provisions to or changing in any manner, or eliminating any of
the provisions of the trust agreement, or for the purpose of modifying the
rights of noteholders or certificateholder, with the consent of the
indenture trustee, MART, the holders of notes evidencing not less than a
majority of the aggregate principal amount of then outstanding notes,
voting as a group, and the holders of certificates evidencing not less than
majority of the certificate balance.
However, no amendment of either agreement may:
o increase or reduce in any manner the amount of, or accelerate
or delay the timing of, or change the allocation or priority
of, collections of payments on receivables or distributions
that are required to be made on any note or certificate, or
change any interest rate of any note, the Specified Reserve
Balance or the Maximum Supplemental Reserve Amount, without the
consent of all adversely affected noteholders or
certificateholders;
o reduce the aforesaid percentage of the notes and the
certificates which is required to consent to any amendment,
without the consent of all noteholders or certificateholders
affected thereby; or
o with respect to any amendment to the sale and servicing
agreement or the trust agreement, adversely affect the ratings
of any class of notes by Moody's and S&P without the consent of
holders of notes evidencing not less than 66 2/3% of the
aggregate principal amount of the then outstanding notes of
that class.
Additionally, with respect to an amendment of the trust agreement, an
opinion of counsel to the effect that the amendment will not have specified
adverse tax consequences will be furnished to the indenture trustee and the
owner trustee. See "Terms of the Notes--Book Entry Registration."
REQUIREMENTS FOR TERMINATION OF THE TRUST
The trust will terminate and be of no further force and effect upon
the earlier of :
o payment to noteholders and certificateholders of all amounts
required to be paid to them pursuant to the indenture, the
trust agreement and the sale and servicing agreement; and
o the payment date next succeeding the month which is one year
after the maturity or other liquidation of the last receivable
and the disposition of any amounts received upon liquidation of
any property remaining in the trust in accordance with the
terms and priorities set forth in the indenture, the trust
agreement and the sale and servicing agreement.
In order to avoid excessive administrative expense, the servicer will
be permitted, at its option, if the principal balance of the receivables
pool as of the close of business on the last day of a calendar month has
declined to 10% or less of the Initial Pool Balance, to purchase from the
trust, on any payment date occurring in a subsequent calendar month, all
remaining receivables in the trust at a purchase price equal to the
outstanding principal amount of the notes and the certificates, in each
case plus accrued and unpaid interest thereon. The exercise of this right
will effect early retirement of the notes and the certificates.
ACTIONS TO BE TAKEN BY INDENTURE TRUSTEE UPON TERMINATION OF THE TRUST
The indenture trustee will give written notice of termination of the
trust to each noteholder of record. The final distribution to any
noteholder will be made only upon surrender and cancellation of that
holder's note, whether a note in fully registered, certificated form or the
one or more physical notes representing the notes, at the office or agency
of the indenture trustee specified in the notice of termination. Any funds
remaining in the trust, after the indenture trustee has taken various
measures to locate a noteholder and the measures have failed, will be
distributed to MART or as otherwise provided in the sale and servicing
agreement and the trust agreement.
THE ADMINISTRATION AGREEMENT
MMCA, in its capacity as administrator, will enter into an
administration agreement with the trust and the indenture trustee. Under
the administration agreement, the administrator will agree to provide the
notices and to perform other administrative obligations required by the
indenture. As compensation for the performance of the administrator's
obligations under the administration agreement and as reimbursement for its
expenses relating to the administration agreement, the administrator will
be entitled to a monthly administration fee to be paid by the servicer.
SOME IMPORTANT LEGAL ASPECTS OF THE RECEIVABLES
BANKRUPTCY CONSIDERATIONS
MMCA and MART intend that each transfer of receivables by MMCA to
MART be structured such that the receivables and the related proceeds would
not be part of MMCA's bankruptcy estate under Section 541 of the United
States Bankruptcy Code should MMCA become the subject of a bankruptcy case
subsequent to the transfers of the receivables to MART. This is known as a
"true sale." Legal counsel has advised MART that if MMCA were to become the
subject of a voluntary or involuntary case under the United States
Bankruptcy Code, the receivables and their proceeds would not be part of
MMCA's bankruptcy estate pursuant to Section 541 of the United States
Bankruptcy Code.
In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir.
1993), cert. denied, 114 S. Ct. 554 (1993), the United States Court of
Appeals for the 10th Circuit suggested that even where a transfer of
accounts from a seller to a buyer constitutes a "true sale," the accounts
would nevertheless constitute property of the seller's estate in a
bankruptcy of the seller. If MMCA ever becomes subject to a bankruptcy
proceeding and the court follows the Octagon court's reasoning, you could
experience losses or delays in payments on your notes. Counsel to MART has
advised MART that the reasoning of the Octagon case appears to be
inconsistent with other precedent. In addition, the Permanent Editorial
Board of the UCC has issued PEB Commentary No. 14, which characterizes the
Octagon court's interpretation of Article 9 of the UCC as erroneous. That
commentary states that nothing in Article 9 is intended to prevent the
transfer of ownership of accounts or chattel paper.
TRUST'S RIGHTS IN THE RECEIVABLES
The receivables are "chattel paper" as defined in the UCC. Under the
UCC, for most purposes, a sale of chattel paper is treated in a manner
similar to a transaction creating a security interest in chattel paper.
Following transfers of the receivables, MMCA and MART will cause financing
statements to be filed with the appropriate governmental authorities to
perfect the interest of MART and the trust, as the case may be, in the
receivables.
Pursuant to the sale and servicing agreement, the servicer will hold
the receivables, either directly or through subservicers, as custodian for
the indenture trustee and the trust following the sale and assignment of
the receivables to the trust on any date. MART will take the action as is
required to perfect the rights of the indenture trustee and the trust in
the receivables. The receivables will not be stamped, or otherwise marked,
to indicate that they have been sold to the trust. If, through inadvertence
or otherwise, another party purchases or takes a security interest in the
receivables for new value in the ordinary course of business and takes
possession of the receivables without actual knowledge of the trust's
interest, the purchaser or secured party will acquire an interest in the
receivables superior to the interest of the trust.
The servicer will be obligated to take those actions which are
necessary to protect and perfect the trust's interest in the receivables
and their proceeds.
SECURITY INTERESTS IN VEHICLES
In all states in which the receivables have been originated, retail
installment sale contracts evidence the credit sale of automobiles and
light-duty trucks by dealers to obligors; the contracts also constitute
personal property security agreements and include grants of security
interests in the financed vehicles under the Uniform Commercial Code.
Perfection of security interests in the financed vehicles is generally
governed by the motor vehicle registration laws of the state in which the
vehicle is located. In most states in which the receivables have been
originated, a security interest in a vehicle is perfected by notation of
the secured party's lien on the vehicle's certificate of title, including
California and Texas, the states in which the largest number of obligors
are located.
MMCA will assign its security interests in the financed vehicles
securing the related receivables to MART and MART will subsequently assign
its security interests in the financed vehicles to the trust. However,
because of the administrative burden and expense, the servicer, MART and
the trust will not amend any certificate of title to identify the trust as
the new secured party on the certificates of title relating to the financed
vehicles. Also, the servicer will continue to hold any certificates of
title relating to the financed vehicles in its possession as custodian for
the trust.
In most states, assignments together with a perfected security
interest in the chattel paper are an effective conveyance of a security
interest in the vehicles subject to the chattel paper without amendment of
any lien noted on a vehicle's certificate of title, and the assignee
succeeds thereby to the assignor's rights as secured party. In the absence
of fraud or forgery by the vehicle owner or the servicer or administrative
error by state or local agencies, the notation of MMCA's lien on the
certificates of title will be sufficient to protect the trust against the
rights of subsequent purchasers of a financed vehicle or subsequent lenders
who take a security interest in a financed vehicle. If there are any
financed vehicles as to which MMCA failed to obtain a perfected security
interest, its security interest would be subordinate to, among others,
subsequent purchasers of the financed vehicles and holders of perfected
security interests. Such a failure would constitute a breach of MMCA's
warranties under the purchase agreement and of MART's warranties under the
sale and servicing agreement and would create an obligation of MMCA and of
MART to purchase the related receivable if such breach materially adversely
affects the interest of the trust in the receivable. By not identifying the
trust as the secured party on the certificate of title, the trust's
interest in the chattel paper may not have the benefit of the security
interest in the financed vehicle in all states or such security interest
could be defeated through fraud or negligence. MART will assign its rights
under the purchase agreement to the trust. If the trust does not have a
perfected security interest in a financed vehicle, its ability to realize
on such financed vehicle in the event of a default may be adversely
affected.
Under the laws of most states, a perfected security interest in a
vehicle would continue for four months after a vehicle is moved to a state
other than the state in which it is initially registered and thereafter
until the vehicle owner re-registers the vehicle in the new state. A
majority of states, including California, generally require surrender of a
certificate of title to re-register a vehicle. Accordingly, a secured party
must surrender possession if it holds the certificate of title to the
vehicle, or, in the case of vehicles registered in states providing for the
notation of a lien on the certificate of title but not possession by the
secured party, the secured party would receive notice of surrender if the
security interest is noted on the certificate of title. Thus, the secured
party would have the opportunity to re-perfect its security interest in the
vehicle in the state of relocation. In states that do not require a
certificate of title for registration of a motor vehicle, re-registration
could defeat perfection. In the ordinary course of servicing receivables,
MMCA takes steps to effect re-perfection upon receipt of notice of
re-registration or information from the obligor as to relocation.
Similarly, when an obligor sells a vehicle, MMCA must either surrender
possession of the certificate of title or it will receive notice as a
result of its lien noted thereon and, as such, will have an opportunity to
require satisfaction of the receivable before release of the lien. The
servicer will be obligated to take appropriate steps, at the servicer's
expense, to maintain perfection of security interests in the financed
vehicles.
Under the laws of most states, including California and Texas, liens
for repairs performed on a motor vehicle and liens for certain unpaid taxes
take priority over even a perfected security interest in a financed
vehicle. The Internal Revenue Code of 1986, as amended, also grants
priority to certain federal tax liens over the lien of a secured party.
Federal law and the laws of certain states permit the confiscation of motor
vehicles under certain circumstances if used in unlawful activities, which
may result in the loss of a secured party's perfected security interest in
the confiscated motor vehicle. With respect to each trust, MMCA will
represent to MART and MART will represent to the trust that the trust's
security interest in each financed vehicle is or will be prior to all other
present liens (other than tax liens and liens that arise by operation of
law) and security interests in, the financed vehicle. However, liens for
repairs or taxes, or the confiscation of a financed vehicle, could arise or
occur at any time during the term of a receivable. No notice will be given
to the trustee, certificateholders, and the indenture trustee or
noteholders in the event such a lien arises or confiscation occurs. Neither
MART nor the servicer will have any obligation to repurchase a receivable
as to which any of the aforementioned occurrences result in the trust
losing the priority of its security interest or its security interest in
such financed vehicle after the date a receivables is sold to the trust.
REPOSSESSION
In the event of default by a purchaser of a financed vehicle, the
holder of the retail installment sale contract has all the remedies of a
secured party under the Uniform Commercial Code, except where specifically
limited by other state laws. Under the Uniform Commercial Code, remedies of
a secured party include the right to repossession by self-help, unless
repossession would constitute a breach of the peace. Unless a vehicle is
voluntarily surrendered, self-help repossession is the method employed by
MMCA in the majority of instances in which a default occurs and is
accomplished simply by retaking possession of the financed vehicle. In
cases where the obligor objects or raises a defense to repossession, or if
otherwise required by applicable state law, a court order must be obtained
from the appropriate state court, and the vehicle must then be repossessed
in accordance with that order.
NOTICE OF SALE; REDEMPTION RIGHTS
In the event of default by an obligor, some jurisdictions require
that the obligor be notified of the default and be given a time period
within which the obligor may cure the default prior to repossession.
Generally, this right of reinstatement may be exercised on a limited number
of occasions in any one-year period.
The Uniform Commercial Code and other state laws require the secured
party to provide a defaulting obligor with reasonable notice of the date,
time, and place of any public sale and/or the date after which any private
sale of the collateral may be held. The obligor has the right to redeem the
collateral prior to actual sale by paying the secured party the unpaid
principal balance of the obligation plus reasonable expenses for
repossessing, holding, and preparing the collateral for disposition and
arranging for this sale, plus, in some jurisdictions, reasonable attorneys'
fees, or, in some states, by payment of delinquent installments or the
unpaid balance.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of a repossessed vehicle generally will be
applied first to the expenses of resale and repossession and then to the
satisfaction of the indebtedness of the obligor on the related receivable.
While some states impose prohibitions or limitations on deficiency
judgments, if the net proceeds from resale do not cover the full amount of
the indebtedness, a deficiency judgment can be sought in those states that
do not prohibit or limit such judgments. However, the deficiency judgment
would be a personal judgment against a defaulting obligor, who can be
expected to have very limited capital or income available following
repossession. Therefore, in many cases, it may not be useful to seek a
deficiency judgment or, if one is obtained, it may be settled at a
significant discount or not paid at all. MMCA generally seeks to recover
any deficiency existing after repossession and sale of a financed vehicle.
OBLIGOR'S RIGHT TO EXCESS PROCEEDS UPON SALE OF A FINANCED VEHICLE
Occasionally, after resale of a financed vehicle and payment of all
expenses and indebtedness, there is a surplus of funds. In that case, the
Uniform Commercial Code requires the lender to remit the surplus to any
holder of any lien with respect to the vehicle sold or if no such
lienholder exists or there are remaining funds, the Uniform Commercial Code
requires the lender to remit the surplus to the former obligor.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon lenders and servicers
involved in consumer finance. These laws include the Truth-in-Lending Act,
the Equal Credit Opportunity Act, the Federal Trade Commission Act, the
Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B and
Z, state adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code, and state motor vehicle retail installment sales
acts, retail installment sales acts, and other similar laws. Also, state
laws impose finance charge ceilings and other restrictions on consumer
transactions and require contract disclosures in addition to those required
under federal law. Such requirements impose specific statutory liabilities
upon creditors who fail to comply with their provisions. In some cases,
this liability could affect an assignee's ability to enforce consumer
finance contracts such as the receivables.
The so-called holder-in-due-course rule of the Federal Trade Commission,
also known as the FTC rule, the provisions of which are generally
duplicated by the Uniform Consumer Credit Code, other state statutes, or
the common law in certain states, has the effect of subjecting a seller
(and certain related lenders and their assignees) in a consumer credit
transaction and any assignee of the seller to all claims and defenses which
the buyer in a transaction could assert against the seller of the goods.
Liability under the FTC rule is limited to the amounts paid by the buyer,
and may result in the inability of the holder of the contract to collect
all or a portion of the balance remaining due thereunder from the buyer.
Most of the receivables will be subject to the requirements of the
FTC rule. Accordingly, the trust, as holder of the related receivables,
will be subject to any claims or defenses that a purchaser of a financed
vehicle may assert against the seller of the financed vehicle. Such claims
are limited to a maximum liability equal to the amounts paid by the obligor
on the receivable. Under most state motor vehicle dealer licensing laws,
sellers of motor vehicles are required to be licensed to sell motor
vehicles at retail sale. Furthermore, Federal Odometer Regulations
promulgated under the Motor Vehicle Information and Cost Savings Act
require that all sellers of new and used vehicles furnish a written
statement signed by the seller certifying the accuracy of the odometer
reading. If a seller is not properly licensed or if an Odometer Disclosure
Statement was not provided to the purchaser of the related financed
vehicle, the obligor may be able to assert a defense against the seller of
the vehicle. If an obligor were successful in asserting any such claim or
defense, such claim or defense would constitute a breach of MMCA's and
MART's representations and warranties under the purchase agreement and the
sale and servicing agreement and would create an obligation of MMCA and
MART to repurchase the receivable unless the breach is cured. See "The Sale
and Servicing Agreement and the Trust Agreement -- Sale and Assignment."
Courts have imposed general equitable principles on secured parties
pursuing repossession of collateral or litigation involving deficiency
balances. These equitable principles may have the effect of relieving an
obligor from some or all of the legal consequences of a default.
In several cases, obligors have asserted that the self-help remedies
of secured parties under the Uniform Commercial Code and related laws
violate the due process protections provided under the 14th Amendment to
the Constitution of the United States. Courts have generally upheld the
notice provisions of the Uniform Commercial Code and related laws as
reasonable or have found that the repossession and resale by the creditor
do not involve sufficient state action to afford constitutional protection
to consumers.
MMCA and MART will warrant that each receivable complies with all
requirements of law in all material respects. Accordingly, if an obligor
has a claim against the trust for violation of any law and such claim
materially and adversely affects the trust's interest in a receivable, the
violation would constitute a breach of warranty and would create an
obligation of MMCA and MART to repurchase the affected receivable unless
the breach is cured. See "The Sale and Servicing Agreement and the Trust
Agreement -- Mandatory Repurchase of Receivables."
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a lender to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the federal bankruptcy law, a court may prevent
a lender from repossessing a motor vehicle, and, as part of the
rehabilitation plan, reduce the amount of the secured indebtedness to the
market value of the motor vehicle at the time of bankruptcy (as determined
by the court), leaving the lender as a general unsecured creditor for the
remainder of the indebtedness. A bankruptcy court may also reduce the
monthly payments due under a contract or change the rate of interest and
time of repayment of the indebtedness.
FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a summary of some of the United States federal
income tax consequences of the purchase, ownership and disposition of the
notes. This discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended, existing and proposed Treasury
regulations thereunder, current administrative rulings, judicial decisions
and other applicable authorities in effect as of the date hereof, all of
which are subject to change, possibly with retroactive effect. There can be
no assurance that the Internal Revenue Service will not challenge the
conclusions reached in this prospectus, and no ruling from the IRS has been
or will be sought on any of the issues discussed below.
This summary does not purport to deal with all aspects of federal
income taxation that may be relevant to beneficial owners of notes in light
of their personal investment circumstances nor, except for some limited
discussions of particular topics, to some types of beneficial owners of
notes subject to special treatment under the federal income tax laws (e.g.,
financial institutions, broker-dealers, life insurance companies and
tax-exempt organizations). This information is directed to beneficial
owners who hold the notes as "capital assets" within the meaning of Section
1221 of the Internal Revenue Code.
TAX TREATMENT OF THE NOTES AND THE TRUST UNDER FEDERAL INCOME TAX LAW
Tax Status of the Notes and the Trust. On _____ __, 1999, Skadden,
Arps, Slate, Meagher & Flom LLP will render its opinion that for federal
income tax purposes under existing law, subject to customary assumptions
and qualifications:
o the notes will be treated as debt; and
o the trust will not be classified as an association or publicly
traded partnership taxable as a corporation.
MART, the owner trustee and the indenture trustee have agreed, and the
noteholders will agree by their purchase of notes, to treat the notes for
federal, state and local income and franchise tax purposes as indebtedness
of the trust.
Stated Interest. Stated interest on the notes will be taxable as
ordinary income for federal income tax purposes when received or accrued in
accordance with a beneficial owner's method of tax accounting.
Original Issue Discount. A note will be treated as issued with
original issue discount ("OID") if the excess of the note's "stated
redemption price at maturity" over the issue price equals or exceeds a de
minimis amount equal to 1/4 of 1 percent of the note's stated redemption
price at maturity multiplied by the number of complete years to its
maturity based on the anticipated weighted average life of a note.
In general, OID, if any, will equal the difference between the stated
redemption price at maturity of a note and its issue price. A holder of a
note must include OID in gross income as ordinary interest income as it
accrues under a method taking into account an economic accrual of the
discount. In general, OID must be included in income in advance of the
receipt of the cash representing that income. The amount of OID on a note
will be considered to be zero if it is less than a de minimis amount
determined as described above.
The issue price of a note will generally be the initial offering
price at which a substantial amount of the notes are sold. The trust
intends to treat the issue price as including, in addition, the amount paid
by the noteholder for accrued interest that relates to a period prior to
_____ __, 1999. The stated redemption price at maturity generally will
equal the principal amount of the Note.
The holder of a note issued with OID must include in gross income for
each taxable year the OID accrued for each day during its taxable year on
which it holds the note. The daily portions are determined by calculating
the OID for the accrual period and then allocating to each day a pro rata
portion of the OID that accrued during the accrual period. The trust
intends to report OID on the basis of an accrual period that corresponds to
the interval between payment dates.
OID on the notes will be computed by taking into account the
anticipated rate of prepayments assumed in pricing the notes, which will be
1.50% ABS. The amount of OID that will accrue during an accrual period will
equal:
o the present value of all payments remaining to be made on the
note as of the close of the accrual period, plus the payments
during the accrual period of amounts included in the stated
redemption price of the note, minus
o the "adjusted issue price" of the note at the beginning of the
accrual period.
The adjusted issue price of a note is the sum of its issue price plus
prior accruals of OID, reduced by the total payments made with respect to
the note in all prior periods, other than qualified stated interest
payments. The present value of the remaining payments is determined on the
basis of three factors:
o the original yield to maturity of the note, determined on the
basis of compounding at the end of each accrual period and
properly adjusted for the length of the accrual period,
o events which have occurred before the end of the accrual period
and
o the assumption that the remaining payments will be made in
accordance with the original assumption.
The effect of this method is to increase the OID the rate at which a
noteholder includes OID in income to take into account prepayments on the
receivables at a rate that exceeds the anticipated rate of prepayments, and
to decrease (but not not below zero) for any period the rate at which a
noteholder includes OID in income to take into account prepayments with
respect to the receivables at a rate that is slower than the anticipated
rate of prepayments. Although OID will be reported to noteholders based on
the anticipated rate of prepayments, no representation is made to
noteholders that receivables will be prepaid at that rate or at any other
rate.
A holder of a note that acquires the note for an amount that exceeds
its stated redemption price will not include any OID in gross income. A
holder of a note which acquires the notes for an amount that is less than
its stated redemption price will be required to include OID in gross
income, but a subsequent holder who purchases a note for an amount that
exceeds its adjusted issue price will be entitled, as will an initial
holder who pays more than a note's issue price, to reduce the amount of OID
included in income in each period by the amount of OID multiplied by a
fraction, the numerator of which is:
o the purchaser's adjusted basis in the note immediately after
purchase thereof minus
o the adjusted issue price of the note;
and the denominator of which is:
o all amounts remaining to be paid on the note after the purchase
date, other than qualified stated interest, minus
o the adjusted issue price of the note.
Total Accrual Election. As an alternative to separately accruing
stated interest, OID, de minimis OID, market discount, de minimis market
discount, unstated interest, premium, and acquisition premium, a holder of
a note may elect to include all income that accrues on the note using the
constant yield method. If a noteholder makes this election, income on a
note will be calculated as though:
o the issue price of the note were equal to the noteholder's
adjusted basis in the note immediately after its acquisition by
the noteholder;
o the note were issued on the noteholder's acquisition date; and
o none of the interest payments on the note were "qualified
stated interest." A noteholder may make this election for a
note that has premium or market discount, respectively, only if
the noteholder makes, or has previously made, an election to
amortize bond premium or to include market discount in income
currently. See "--Market Discount" and "--Amortizable Bond
Premium."
Market Discount. The notes, whether or not issued with OID, will be
subject to the market discount rules of the Code. In general, these rules
provide that if the beneficial owner purchases a note at a discount (if the
discout exceeds a de minimis amount specified in the Code) from its stated
redemption price at maturity or, if the notes were issued with OID, its
adjusted issue price, and thereafter (a) recognizes gain upon a
disposition, or (b) receives payments of principal, the lesser of (x) the
gain or principal payment or (y) the accrued market discount will be taxed
as ordinary interest income (and not capital gain). Generally, the accrued
market discount will be the total market discount on the note multiplied by
a fraction equal to:
o the number of days the beneficial owner held the note divided by
o the number of days from the date the beneficial owner acquired
the note until its maturity date.
The beneficial owner may elect, however, to determine accrued market
discount under the constant yield method.
Limitations imposed by the Code which are intended to match
deductions with the taxation of income may defer deductions for interest on
indebtedness incurred or continued, or short-sale expenses incurred, to
purchase or carry a note with market discount. A beneficial owner of a note
may elect to include market discount in gross income as it accrues and, if
it makes this election, is exempt from this rule. This election will apply
to all debt instruments acquired by the taxpayer on or after the first day
of the first taxable year to which the election applies. The adjusted basis
of a note subject to the election will be increased to reflect market
discount included in gross income, thereby reducing any gain or increasing
any loss on a sale or other taxable disposition.
Amortizable Bond Premium. In general, if a beneficial owner of a note
purchases a note at a premium-that is, an amount in excess of the amount
payable upon the maturity thereof-that beneficial owner will be considered
to have purchased the note with "amortizable bond premium" equal to the
amount of the excess. The beneficial owner of a note may elect to amortize
bond premium as an offset to interest income (not as a separate deduction
item) as it accrues under a constant yield method over the remaining term
of the note. That beneficial owner's tax basis in the note will be reduced
by the amount of the amortized bond premium. Any election will apply to all
debt instruments, other than instruments the interest on which is
excludible from gross income, held by that beneficial owner at the
beginning of the first taxable year for which the election applies or
thereafter acquired, and cannot be revoked without the consent of the IRS.
Bond premium on a note held by a beneficial owner who does not elect to
amortize the premium will decrease the gain or increase the loss otherwise
recognized on the disposition of the note.
Disposition of Notes. A beneficial owner of a note's adjusted tax
basis will be its cost, increased by the amount of any OID, market discount
and gain previously included in income with respect to the note, and
reduced by the amount of any payment on the note that is not qualified
stated interest and the amount of bond premium previously amortized with
respect to the note. A beneficial owner will generally recognize gain or
loss on the sale or retirement of a note equal to the difference between
the amount realized on the sale or retirement and the tax basis of the
note. The gain or loss will be capital gain or loss-except to the extent
attributable to OID not previously accrued, accrued but unpaid interest, or
as described above under "--Market Discount"-and will be long-term capital
gain or loss if the note was held for more than one year. In addition, if
the Prepayable Obligation rules apply, any OID that has not accrued at the
time of the payment in full of a note will be treated as ordinary income.
FEDERAL TAX CONSEQUENCES OF WAIVERS OF EVENTS OF DEFAULT AND AMENDMENTS OF
NOTES BY NOTEHOLDERS
The indenture permits the noteholders to waive an event of default
under the indenture or rescind an acceleration of the notes in some
circumstances upon a vote of the requisite percentage of noteholders. Any
waiver or rescission under the indenture, or any amendment of the terms of
the notes, could be treated for federal income tax purposes as a
constructive exchange by a noteholder of the notes for new notes, upon
which gain or loss would be recognized.
INFORMATION REPORTING AND BACKUP WITHHOLDING OF TAXES BY INDENTURE TRUSTEE
The indenture trustee will be required to report annually to the IRS,
and to each beneficial owner of a note, the amount of interest paid on the
notes and the amount withheld for federal income taxes for each calendar
year, except as to exempt recipients which are generally corporations,
tax-exempt organizations, qualified pension and profit-sharing trusts,
individual retirement accounts, or nonresident aliens who provide
certification as to their status. Each beneficial owner of note, other than
beneficial owners who are not subject to the reporting requirements will be
required to provide, under penalties of perjury, a certificate containing
the beneficial owner's name, address, correct federal taxpayer
identification number-which includes a social security number-and a
statement that the beneficial owner is not subject to backup withholding.
Should a non-exempt beneficial owner fail to provide the required
certification or should the IRS notify the indenture trustee or the trust
that the beneficial owner has provided an incorrect federal taxpayer
identification number or is otherwise subject to backup withholding, the
indenture trustee will be required to withhold, or cause to be withheld,
31% of the interest otherwise payable to the beneficial owner, and remit
the withheld amounts to the IRS as a credit against the beneficial owner's
federal income tax liability.
TAX CONSEQUENCES TO FOREIGN INVESTORS
The following information describes the U.S. federal income tax
treatment of investors that are not U.S. persons, which are any persons
other than:
o citizens or residents of the United States
o corporations, partnerships or other entities treated as
corporations or partnerships for United States federal income
tax purposes organized in or under the laws of the United
States, any state or the District of Columbia, unless, in the
case of a partnership or entity treated as a partnership,
Treasury regulations provide otherwise
o estates the income of which is includible in gross income for
U.S. federal income tax purposes, regardless of source, or
o trusts if a U.S. court is able to exercise primary supervision
over the administration of the trusts and one or more U.S.
persons has authority to control all substantial decisions of
the trust.
Interest paid or accrued to a non-U.S. person that is not effectively
connected with the conduct of a trade or business within the United States
by the non-U.S. person will generally be considered "portfolio interest"
and generally will not be subject to United States federal income tax and
withholding tax, as long as the non-U.S. Person
o is not actually or constructively a "10 percent shareholder" of
the trust or a "controlled foreign corporation" with respect to
which the trust is a "related person" within the meaning of the
Internal Revenue Code, and
o provides an appropriate statement, signed under penalties of
perjury, certifying that the beneficial owner of a note is a
non-U.S. person and providing that non-U.S. person's name and
address.
If the information provided in this statement changes, the non-U.S.
person must so inform the indenture trustee within 30 days of the change.
The statement generally must be provided in the year a payment occurs or in
either of the two preceding years. If the interest were not portfolio
interest, then it would be subject to United States federal income and
withholding tax at a rate of 30 percent unless reduced or eliminated
pursuant to an applicable income tax treaty.
Any capital gain realized on the sale or other taxable disposition of
a note by a non-U.S. person will be exempt from United States federal
income and withholding tax, provided that
o the gain is not effectively connected with the conduct of a
trade or business in the United States by the non-U.S. person,
and
o in the case of an individual non-U.S. person, the non-U.S.
person is not present in the United States for 183 days or more
in the taxable year and several other requirements are met.
If the interest, gain or income on a note held by a non-U.S. person
is effectively connected with the conduct of a trade or business in the
United States by the non-U.S. person, the beneficial owner of a note,
although exempt from the withholding tax previously discussed if a duly
executed Form 4224 is furnished, generally will be subject to United States
federal income tax on the interest, gain or income at regular federal
income tax rates. In addition, if the non-U.S. person is a foreign
corporation, it may be subject to a branch profits tax under the Internal
Revenue Code equal to 30 percent of its "effectively connected earnings and
profits" for the taxable year, as adjusted for specified items, unless it
qualified for a lower rate under an applicable tax treaty.
Recent Treasury regulations could affect the procedures to be
followed by a non-U.S. person in complying with the United States federal
withholding, backup withholding, and information reporting rules. The
regulations will generally be effective for payments made after December
31, 2000. Prospective investors are advised to consult their own tax
advisors regarding the effect, if any, of the regulations on the purchase,
ownership and disposition of the notes.
STATE TAX CONSEQUENCES
Set forth below is a summary of some of the state income tax
consequences of the purchase, ownership and disposition of the notes.
Because of the variation in each state's income tax laws, it is impossible
to predict tax consequences to noteholders in all states. Noteholders are
urged to consult their tax advisors with respect to state tax consequences
arising out of the purchase, ownership and disposition of notes.
The trust has been organized as a Delaware business trust, and MART
and servicer are headquartered in the State of California. In the opinion
of Skadden, Arps, Slate, Meagher & Flom LLP, assuming that the notes are
treated as debt for federal income tax purposes:
o the notes will be treated as debt for Delaware and California
income and franchise tax purposes,
o the trust will not be subject to Delaware or California income
or franchise taxes at the entity level, and
o noteholders not otherwise subject to taxation in California or
Delaware, respectively, would not become subject to taxation in
California or Delaware, respectively, solely because of a
noteholder's ownership of a note.
THE FEDERAL AND STATE TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
NOTEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF
ACQUIRING, HOLDING AND DISPOSING OF NOTES, INCLUDING THE TAX CONSEQUENCES
UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF
CHANGES IN FEDERAL OR OTHER TAX LAWS.
ELIGIBILITY OF NOTES FOR PURCHASE BY MONEY MARKET FUNDS
The class A-1 notes are structured to be eligible for purchase by
money market funds under Rule 2a-7 under the Investment Company Act of
1940, as amended. A money market fund should consult its legal advisors
regarding the eligibility of the class A-1 notes under Rule 2a-7 and
whether an investment by the money market fund in the class A-1 notes
satisfies the money market fund's investment policies and objectives.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended, and
the Internal Revenue Code impose restrictions on (a) employee benefit plans
(as defined in Section 3(3) of ERISA), (b) plans described in Section
4975(e)(1) of the Internal Revenue Code, including individual retirement
accounts or Keogh Plans, (c) any entities whose underlying assets include
plan assets by reason of a plan's investment in those entities and (d)
persons who have specified relationships to one of the benefit plan
described in clauses (a), (b) or (c), which are called
"Parties-in-Interest" under ERISA and "Disqualified Persons" under the
Internal Revenue Code. Moreover, based on the reasoning of the United
States Supreme Court in John Hancock Mut. Life Ins. Co. v. Harris Trust and
Sav. Bank, 114 S. Ct. 517 (1993), the general account of an insurance
company may be deemed to include assets of benefit plans investing in its
general account -- e.g., through the purchase of an annuity contract -- and
the insurance company might be treated as a Party-in-Interest with respect
to a benefit plan by virtue of that type of investment. ERISA also imposes
duties on persons who are fiduciaries of benefit plans subject to ERISA. In
addition, ERISA and the Internal Revenue Code prohibit some transactions
between a benefit plan and Parties-in-Interest or Disqualified Persons with
respect to that benefit plan.
SPECIAL ERISA CONSIDERATIONS FOR EMPLOYEE BENEFIT PLANS
Some transactions involving the trust might be deemed to constitute
prohibited transactions under ERISA and the Internal Revenue Code if assets
of the trust were deemed to be assets of a benefit plan. Under a regulation
issued by the United States Department of Labor relating to assets of
benefit plans, the assets of the trust would be treated as plan assets of a
benefit plan for purposes of ERISA and the Internal Revenue Code only if
the benefit plan acquires an "Equity Interest" in the trust and none of the
exceptions contained in the regulation is applicable. An Equity Interest is
defined under the regulation as an interest other than an instrument which
is treated as indebtedness under applicable local law and which has no
substantial equity features. Although there is very little authority
directly on point, because the Notes (a) are expected to be treated as
indebtedness under local law and will, in the opinion of Skadden, Arps,
Slate, Meagher & Flom LLP, be treated as debt, rather than equity, for
federal tax purposes (see "Federal Income Tax Consequences"), and (b)
should not be deemed to have any "substantial equity features," the notes
should not be treated as an Equity Interest for purposes of the Plan Assets
Regulation. This conclusion is based, in part, upon the traditional debt
features of the notes, including the reasonable expectation of purchasers
of the notes that the notes will be repaid when due, as well as the absence
of conversion rights, warrants and other typical equity features. However,
without regard to whether the notes are treated as an Equity Interest for
such purposes, the acquisition or holding of notes by or on behalf of a
benefit plan could be considered to give rise to a prohibited transaction
if the trust, the owner trustee, the indenture trustee, any holder of the
certificates or any of their respective affiliates, is or becomes a party
in interest or a disqualified person with respect to such benefit plan. In
such case, certain exemptions from the prohibited transaction rules could
be applicable depending on the type and circumstances of the benefit plan
fiduciary making the decision to acquire a Note. Included among these
exemptions are: Prohibited Transaction Class Exemption 90-1, regarding
investments by insurance company pooled separate accounts; Prohibited
Transaction Class Exemption 91-38, regarding investments by bank collective
investment funds; Prohibited Transaction Class Exemption 84-14, regarding
transactions effected by "qualified professional asset managers";
Prohibited Transaction Class Exemption 95-60, regarding investments by
insurance company general accounts; and Prohibited Transaction Class
Exemption 96-23, regarding investments effected by in-house asset managers.
A violation of the prohibited transaction rules may result in the
imposition of an excise tax and other liabilities under ERISA and the
Internal Revenue Code of 1986, as amended, unless one or more statutory,
regulatory or administrative exemptions is available. Therefore, each
benefit plan and each government plan subject to a federal, state or local
law substantially similar to ERISA, by its acceptance of a note, will be
deemed to represent that an exemption applies to its acquisition, holding
and disposition of the note.
SPECIAL ERISA CONSIDERATIONS APPLICABLE TO INSURANCE COMPANY GENERAL
ACCOUNTS
It should be noted that the Small Business Job Protection Act of 1996
added new Section 401(c) of ERISA relating to the status of the assets of
insurance company general accounts under ERISA and Section 4975 of the
Internal Revenue Code. Pursuant to Section 401(c), the Department of Labor
is required to issue final regulations with respect to insurance policies
issued on or before December 31, 1998 that are supported by an insurer's
general account. The regulations are to provide guidance on which assets
held by the insurer constitute "plan assets" for purposes of the fiduciary
responsibility provisions of ERISA and Section 4975 of the Internal Revenue
Code. Section 401(c) also provides that, except as provided in regulations
intended to prevent avoidance of the regulation and in actions brought by
the Secretary of Labor relating to specified breaches of fiduciary duties
that also constitute breaches of state or federal criminal law, until the
date that is 18 months after the regulations become final, no person will
be subject to liability under the fiduciary responsibility and prohibited
transaction provisions of ERISA and Section 4975 of the Internal Revenue
Code on the basis of a claim that the assets of the general account of an
insurance company constitute the assets of any plan. The plan asset status
of insurance company separate accounts is unaffected by new Section 401(c)
of ERISA, and separate account assets continue to be treated as the assets
of any plan invested in the separate account. Insurance companies should
consult with their counsel regarding the potential impact of Section 401(c)
on their purchase of notes.
As of the date hereof, the Department of Labor has issued proposed
regulations under Section 401(c). It should be noted that if the
regulations are adopted substantially in the form in which proposed, the
regulations may not exempt the assets of insurance company general accounts
from treatment as "plan assets" of plans holding policies issued after
December 31, 1998. The proposed regulations should not, however, adversely
affect the applicability of Prohibited Transaction Class Exemption 95-60 to
purchases of notes.
GENERAL INVESTMENT CONSIDERATIONS FOR EMPLOYEE BENEFIT PLANS
Prior to making an investment in the notes, prospective benefit plan
investors should consult with their legal advisors concerning the impact of
ERISA and the Internal Revenue Code and the potential consequences of that
investment with respect to their specific circumstances. Moreover, each
benefit plan fiduciary should take into account, among other
considerations, whether the fiduciary has the authority to make the
investment; the composition of the benefit plan's portfolio with respect to
diversification by type of asset; the benefit plan's funding objectives;
the tax effects of the investment; and whether under the general fiduciary
standards of investment prudence and diversification an investment in the
notes is appropriate for the benefit plan, taking into account the overall
investment policy of the benefit plan and the composition of the benefit
plan's investment portfolio.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting
agreement, MART has agreed to sell to each of the underwriters named below
in this paragraph, and each of the underwriters, for whom Credit Suisse
First Boston is acting as representative (the "Representative"), has
severally agreed to purchase from MART, the principal amount of the notes
set forth opposite its name below:
<TABLE>
<CAPTION>
Principal Principal Principal Principal
Amount Amount Amount Amount
of Class A-1 of Class A-2 of Class A-3 of Class A-4
UNDERWRITERS Notes Notes Notes Notes
- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Credit Suisse First Boston
Corporation................. $ $ $ $
__________________..........
Total....................... $ $ $ $
=========== ========== =========== ===========
</TABLE>
In the underwriting agreement, the several underwriters have agreed,
subject to the terms and conditions set forth in the underwriting
agreement, to purchase all the notes offered hereby if any of the notes are
purchased. In the event of a default under the underwriting agreement, by
any underwriter, the underwriting agreement provides that, in some
circumstances, purchase commitments of the non-defaulting underwriters may
be increased or the underwriting agreement may be terminated.
The underwriting discounts and commissions of the underwriters, the
selling concessions that the underwriters may allow to some dealers and the
discounts that some dealers may reallow to some other dealers, each
expressed as a percentage of the principal amount of the class A-1 notes,
the class A-2 notes, the class A-3 notes and the class A-4 notes, will be
as follows:
UNDERWRITING SELLING
DISCOUNTS AND CONCESSIONS, REALLOWANCE,
COMMISSIONS NOT TO EXCEED NOT TO EXCEED
------------- ------------- -------------
Class A-1 notes............... % % %
Class A-2 notes............... % % %
Class A-3 notes............... % % %
Class A-4 notes............... % % %
The transaction expenses payable by MART are estimated to be $______.
The Representative has informed MART that it does not expect
discretionary sales by the underwriters to exceed 5% of the principal
amount o the notes being offered hereby.
The underwriters may engage in over-allotment, stabilizing
transactions, syndicate covering transactions and penalty bids in
accordance with Regulation M of the Exchange Act. Overallotment involves
syndicate sales in excess of the offering size, which creates a syndicate
short position. Stabilizing transactions permit bids to purchase the
underlying security so long as the stabilizing bids do not exceed a
specified maximum. Syndicate covering transactions involve purchases o the
securities in the open market after the distribution has been completed in
order to cover syndicate short positions. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when
the securities originally sold by such syndicate member are purchased in a
syndicate covering transaction to cover syndicate short positions. Such
stabilizing transactions, syndicate covering transactions and penalty bids
may cause the price of the securities to be higher than it would be in the
absence of such transactions.
The closing of the sale of the notes is conditioned on the issuance
of the certificates.
The indenture trustee may, from time to time, invest the funds in the
trust accounts in investments permitted by the sale and servicing agreement
acquired from the underwriters.
In the ordinary course of business, the underwriters and their
affiliates have engaged and may engage in investment banking and commercial
banking transactions with the servicer and its affiliates.
MMCA and MART have agreed to indemnify the underwriters against
specified liabilities, including liabilities under the Securities Act of
1933, as amended or to contribute to payments the underwriters may be
required to make in respect thereof.
Upon receipt of a request by an investor who has received an
electronic prospectus from an underwriter or a request by the investor's
representative within the period during which there is an obligation to
deliver a prospectus, MART or the underwriters will promptly deliver, or
cause to be delivered, without charge, a paper copy of the prospectus.
LEGAL OPINIONS
The validity of the notes and federal income tax matters will be
passed upon for MART by Skadden, Arps, Slate, Meagher & Flom LLP, New York,
New York. Brown & Wood LLP, San Francisco, California, will act as counsel
to the underwriters.
REPORTS TO NOTEHOLDERS
Unless and until definitive notes are issued under the limited
circumstances described under "Terms of the Notes-Issuance of Definitive
Notes Upon the Occurrence of Various Circumstances," all notices, reports
and statements to noteholders, including any monthly and annual reports
concerning the trust and the receivables, will be prepared by the servicer
and sent on behalf of the trust only to DTC or Cede & Co. as nominee of DTC
and registered holder of the notes. See "Terms of the Notes-Principal
Amount and Interest Rates," "-Book Entry Registration" and "-Issuance of
Definitive Notes Upon the Occurrence of Various Circumstances." Those
notices, reports and statements will not contain audited financial
statements with respect to the trust. The servicer also does not intend to
send any financial reports of the servicer or MART to noteholders.
WHERE YOU CAN FIND MORE INFORMATION
MART, as originator of the trust, filed with the Securities and
Exchange Commission a registration statement under the Securities Act of
1933 relating to the notes. This prospectus is part of the registration
statement, but the registration statement includes additional information.
The servicer, on behalf of MART in its capacity as originator of the
trust, will file or cause to be filed with the Securities and Exchange
Commission periodic reports with respect to the trust as may be required
under the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission thereunder.
You may read and copy any notices, reports, statements or other
information the servicer files or causes to be filed at the Securities and
Exchange Commission's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can request copies of these documents, upon
payment of a duplicating fee, by writing to the Securities and Exchange
Commission. Please call the Securities and Exchange Commission at (800)
SEC-0330 for further information on the operation of the public reference
rooms. Our filings with the Securities and Exchange Commission are also
available to the public on the Securities and Exchange Commission's
Internet site (http://www.sec.gov), which contains reports, proxy and
information statements, and other information regarding issuers that file
publicly with the Securities and Exchange Commission.
GLOSSARY
"Accrued Note Interest" means, with respect to any payment date and
each class of notes, the sum of the Monthly Accrued Note Interest and the
Interest Carryover Shortfall for the class for that payment date.
"Actuarial Receivables" means receivables which provide for
amortization of the loan over a series of fixed level monthly installments.
Each monthly installment, including the monthly installment representing
the final payment on the receivable, consists of an amount of interest
equal to 1/12 of the annual percentage rate of the loan multiplied by the
unpaid principal balance of the loan, and an amount of principal equal to
the remainder of the monthly installment.
"Available Funds" means, with respect to a payment date:
(1) an amount equal to the sum of the following amounts with
respect to the preceding calendar month:
o all collections on the contracts withdrawn from the payahead
account;
o the proceeds of sale by the trust of any financed vehicle sold
by the trust upon termination of a Balloon Payment Receivable;
o all proceeds of the liquidation of receivables which became
defaulted receivables during the preceding calendar month, net
of expenses incurred by the servicer in connection with such
liquidation and any amounts required by law to be remitted to
the obligor on any defaulted receivable;
o any recoveries in respect of contracts that became defaulted in
prior calendar months;
o all extension and deferral fees paid with respect to the
contracts;
o the purchase amount of each receivable purchased from the trust
during or prior to the preceding calendar month, net of
applicable expenses;
o all advances made by the servicer;
o the Yield Supplement Amount for that payment date;
o the Negative Carry Amount for that payment date;
o partial prepayments of any refunded item included in the
principal balance of a contract, such as extended warranty
protection plan costs, or physical damage, credit life,
disability insurance premiums, or any partial prepayment which
causes a reduction in the obligor's periodic payment to an
amount below the scheduled payment as of the related cutoff
date;
o the net earnings on funds on deposit in the pre-funding account
to the extent deposited to the collection account on that
payment date by the indenture trustee; and
o with respect to the payment date on or immediately following
the last day of the Pre-Funding Period, any funds remaining in
the pre-funding account, calculated after giving effect to the
purchase of all receivables purchased by the trust during the
Pre-funding Period,
minus
(2) the aggregate amount of the funds described in clause (1) above
that are used in the related calendar month to reimburse
servicer advances that are due and payable on that payment
date.
"Balloon Payment" means, with respect to a Balloon Payment
Receivable, the final payment which is due at the end of the term of the
receivable.
"Balloon Payment Receivable" means a receivable that provides for the
amortization of the entire amount financed under the receivable to one
substantially larger final payment which is due at the end of the term of
the receivable.
"Cutoff Date" means, (A) with respect to receivables transferred to
the trust on _______ __, 1999, ________ __, 1999, and (B) with respect to
receivables transferred to the trust after ________ __, 1999, during the
Pre-Funding Period, the date, which will be on or before the date of
transfer, as of which the trust will be entitled to collections of the
receivables transferred on that date.
"Initial Pool Balance" means the sum of (a) the principal balance of
the receivables pool as of _________ __, 1999, plus (b) the aggregate
principal balance of all contracts transferred to the trust after that
date, calculated as of their respective Cutoff Dates.
"Interest Carryover Shortfall" means, with respect to any payment
date and any class of notes, the excess of the sum of the Monthly Accrued
Note Interest for the preceding payment date and any outstanding Interest
Carryover Shortfall from the close of business on the preceding payment
date, over the amount in respect of interest that is actually deposited in
the note payment account on the preceding payment date with respect to that
class, plus interest on the excess, to the extent permitted by law, at the
applicable note interest rate for the related interest period.
"Maximum Negative Carry Amount" means, as of any date of
determination, the product of (1) the Weighted Average Rate as of such date
minus 2.50%, multiplied by (2) the product of the Note Percentage as of
such date and the pre-funded amount as of such date after giving effect to
any withdrawals from the pre-funding account on such date, multiplied by
(3) the percentage equivalent of a fraction, the numerator of which is the
actual number of days until the expected end of the pre-funding period and
the denominator of which is 360.
"Maximum Supplemental Reserve Amount" with respect to any payment
date will be an amount equal to the lesser of:
(1) the sum of (x) $______, which is ___% of the aggregate
principal balance of the receivables sold to the trust on
__________ __, 1999, calculated as of _______, __ 1999, and (y)
___% of the principal balances of the receivables transferred
to the trust after _______, __ 1999, but on or prior to that
payment date, calculated as of the related Cutoff Dates; and
(2) an amount equal to (x) the outstanding principal amount of the
notes on that payment date, after giving effect to any
principal payment made on that payment date less (y) the amount
on deposit in the reserve account on such payment date, after
giving effect to all deposits and withdrawals from the reserve
account on that payment date.
"MART" means MMCA Auto Receivables Trust.
"Mitsubishi Motors" means Mitsubishi Motors Corporation and its
affiliates.
"MMCA" means Mitsubishi Motors Credit of America, Inc.
"MMSA" means Mitsubishi Motor Sales of America, Inc.
"Monthly Accrued Note Interest" means, with respect to any payment
date and (a) any class of notes, interest accrued for the related interest
period at the applicable interest rate for that class on the aggregate
principal balance of the notes of that class as of the immediately
preceding payment date, after giving effect to all payments of principal to
noteholders on or prior to such preceding payment date (or, in the case of
the first payment date, the initial principal amount of the notes); and (b)
the notes collectively, the sum of Monthly Accrued Note Interest for each
class.
"Negative Carry Amount" will be calculated by the servicer as the
difference (if positive) between (1) the product of (a) the Monthly Accrued
Note Interest for such payment date, multiplied by (b) the Pre-Funded
Percentage as of the immediately preceding payment date, or in the case of
the first payment date, the Closing Date, minus (2) the net investment
earnings on the pre-funded amount for the related collection period (or in
the case of the first payment date, from the Closing Date until January 31,
1999).
"Note Percentage" means, as of any date of determination, the
percentage equivalent of a fraction, the numerator of which is the
aggregate principal amount of the notes as of that date, and the
denominator of which is an amount equal to the sum of the aggregate
principal amount of the notes as of that date and aggregate principal
amount of the certificates as of that date, in each case after giving
effect to any payment of principal on that date.
"Pre-Funded Percentage" means, as of any date of determination, the
percentage equivalent of a fraction, the numerator of which is the
pre-funded amount and the denominator of which is the sum of the principal
balance of the receivables pool and the pre-funded amount, in each case as
of such date after taking into account all withdrawals from the pre-funding
account and all transfers of contracts transferred to the trust after
___________ __, 1999 on or prior to such date.
"Pre-Funding Period" means a period beginning on _________ ___, 1999
and ending not later than ____________ __, _____.
"Principal Carryover Shortfall" means, as of the close of business on
any payment date, the excess of the Principal Distribution Amount and any
outstanding Principal Carryover Shortfall from the preceding payment date
over the amount in respect of principal that is actually deposited in the
note payment account on such payment date.
"Principal Distribution Amount" means, with respect to any payment
date, the sum of:
o the Scheduled Principal for such payment date (including, in
the case of a Balloon Payment Receivable, the amount owed by an
obligor with respect to a Balloon Payment);
o any outstanding Principal Carryover Shortfall as of the close
of business on the preceding payment date; and
o with respect to the payment date on or immediately following
the end of the pre-funding period, any funds remaining in the
pre-funding account (after giving effect to the purchase of all
contracts transferred to the trust after _________ ___, 1999,
including any purchase on the last day of the Pre- Funding
Period) exclusive of any net earnings from the investment of
funds on deposit in the pre-funding account.
However, the Principal Distribution Amount shall not exceed the outstanding
aggregate principal balance of the notes; and provided further, that, on
the final payment date for each class of notes, the principal required to
be deposited in the note payment account will include the amount necessary
(after giving effect to the other amounts to be deposited in the note
payment account on such payment date and allocable to principal) to reduce
the outstanding principal amount of such class of notes to zero.
"Qualified Institution" means a depository institution organized
under the laws of the United States or any state thereof or incorporated
under the laws of a foreign jurisdiction with a branch or agency located in
the United States qualified to take deposits and subject to supervision and
examination by federal or state banking authorities, having a short-term
deposit rating acceptable to each of Moody's and S&P, and, if such
institution is organized under the laws of the United States, the deposits
of which are insured by the Federal Deposit Insurance Corporation or any
successor thereto.
"Qualified Trust Institution" means the corporate trust department of
an institution organized under the laws of the United States or any state
thereof or incorporated under the laws of a foreign jurisdiction with a
branch or agency located in the United States qualified to take deposits
and subject to supervision and examination by federal or state banking
authorities, with authority to act under such laws as trustee or in any
other fiduciary capacity, having not less than $1 billion in assets under
fiduciary management and a long-term deposit rating acceptable to each
rating agency.
"Required Negative Carry Account Balance" means, as of any payment
date, an amount equal to the lesser of (x) the initial deposit into the
negative carry account minus all previous withdrawals of the Negative Carry
Amount from the negative carry account, including any withdrawals of the
Negative Carry Amount therefrom on such payment date and (y) the Maximum
Negative Carry Amount as of such payment date. If the amount on deposit in
the negative carry account on any payment date (after giving effect to the
withdrawal of the Negative Carry Amount, if any, for such payment date) is
greater than the Required Negative Carry Account Balance, the excess will
be released to MART. All amounts remaining on deposit in the negative carry
account on the payment date on or immediately following the last day of the
pre-funding period (after giving effect to all withdrawals therefrom on
such payment date for deposit to the collection account on such payment
date) will be released to MART.
"Scheduled Principal" means, with respect to any payment date, the
sum of:
(1) (A) collections of principal on Simple Interest Receivables
received during the related calendar month, including
collections of principal attributable to Balloon Payment
Receivables --unless a Balloon Payment Advance has previously
been made with respect to the Balloon Payment--and charges for
excess wear and tear and excess mileage and (B) Balloon Payment
Advances made on that payment date with respect to Simple
Interest Receivables that are Balloon Payment Receivables;
(2) the principal portion of each scheduled payment, including a
Balloon Payment Receivable, due on any Actuarial Receivable
during the related calendar month;
(3) without duplication of amounts taken into account under (1) or
(2), the outstanding principal balance of (A) contracts prepaid
in full during the related calendar month, and (B) contracts
which became defaulted during the related calendar month;
(4) the purchase amount of each contract that was repurchased by
MART or purchased by the servicer during that calendar month,
to the extent attributable to principal;
(5) the proceeds of any other sale of a receivable to the extent
allocable to principal; and
(6) partial prepayments attributable to any refunded item included
in the amount financed, such as extended warranty protection
plan costs or physical damage, credit life, disability
insurance premiums, or any partial prepayment which causes a
reduction in the obligor's periodic payment to be below the
scheduled payment as of the related cutoff date; provided,
however, that in calculating the Scheduled Principal, (A) all
payments and proceeds (including liquidation proceeds) of any
purchased contracts the purchase amount of which has been
included in Scheduled Principal in a prior collection period
(which shall be paid to MART or servicer, as applicable) and
(B) all amounts released from the pre-funding account will be
excluded.
"Simple Interest Receivables" are receivables that provide for the
amortization of the amount financed under each receivable over a series of
fixed level monthly installments. However, unlike the monthly installment
under an Actuarial Receivable, each monthly installment consists of an
amount of interest which is calculated on the basis of the outstanding
principal balance of the receivable multiplied by the stated annual
percentage rate and further multiplied by the period elapsed (as a fraction
of a calendar year) since the preceding payment of interest was made. As
payments are received under a Simple Interest Receivable, the amount
received is applied first to interest accrued to the date of payment and
the balance is applied to reduce the unpaid principal balance.
"Specified Reserve Balance" means, with respect to any payment date,
an amount equal to the lesser of:
(1) the sum of (x) $_________, which is ___% of the aggregate
principal balance of the contracts transferred to the trust on
_________ __, 1999, calculated as of _________ __, 1999, and
(y) ___% of the principal balances of contracts transferred to
the trust after that date on or prior to that payment date,
calculated as of the related Cutoff Dates; and
(2) the outstanding principal amount of the notes on that payment
date, after giving effect to any principal payment made on that
payment date.
"Total Available Funds" for a payment date is an amount equal to the
Available Funds for that payment date plus the amounts, if any, deposited
by the indenture trustee to the collection account from the supplemental
reserve account and the reserve account on such payment date.
"Weighted Average Rate" means, with respect to any date of
determination, a per annum rate equal to (1) the sum of (a) the product of
(x) the outstanding principal amount of the class A-1 notes on that date,
(y) the class A-1 rate and (z) a fraction, the numerator of which is 365
and the denominator of which is 360, plus (b) the product of (x) the
outstanding principal amount of the class A-2 notes on that date and (y)
the class A-2 rate, plus (c) the product of (x) the outstanding principal
amount of the class A-3 notes on that date and (y) the class A-3 rate, plus
(d) the product of (x) the outstanding principal amount of the class A-4
notes on that date and (y) the class A-4 rate, divided by (2) the
outstanding principal amount of the notes on that date.
"Yield Supplement Amount" with respect to any payment date will be
determined by aggregating with respect to all of the receivables the amount
(if positive) calculated by the servicer with respect to each receivable
(other than (i) a defaulted receivable that has defaulted or a receivable
purchased by the servicer or repurchased by MART for the calendar months
after the calendar month in which the receivable became defaulted or was
purchased or repurchased, as the case may be, or (ii) any receivable sold
by the indenture trustee following an event of default under the indenture
for calendar months after the calendar month in which the receivable is
sold by the indenture trustee) equal to the product of (x) one-twelfth
times (y) an amount equal to the difference (if positive) between (1)
interest on such receivable's principal balance as of the first day of the
related calendar month at a rate equal to the sum of (A) the Weighted
Average Rate as of the first day of the related calendar month and (B)
___% (which percentage represents the servicing rate plus ___%) and (2)
interest on such receivable's principal balance as of the first day of the
related calendar month at the annual percentage rate on the contract.
ANNEX A
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in limited circumstances, the globally offered MMCA Auto Owner
Trust 1999-1 Asset Backed Notes will be available only in book-entry form.
Investors in the notes may hold those notes through any of DTC, Cedelbank,
or Euroclear. The notes will be tradeable as home market instruments in
both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors holding notes through
Cedelbank and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding notes directly
through DTC will be conducted according to the rules and procedures
applicable to U.S. corporate debt obligations.
Secondary cross-market trading between Cedelbank or Euroclear and DTC
participants holding notes will be effected on a delivery-against-payment
basis through the respective Depositaries of Cedelbank and Euroclear (in
that capacity) and DTC participants.
Non-U.S. holders (as described below) of notes will be subject to
U.S. withholding taxes unless those holders meet specified requirements and
deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
Initial Settlement
All notes will be held in book-entry form by DTC in the name of Cede
& Co. as nominee of DTC. Investors' interests in the notes will be
represented through financial institutions acting on their behalf as DTC
participants. As a result, Cedelbank and Euroclear will hold positions on
behalf of their participants through their respective Depositaries, which
in turn will hold those positions in accounts as DTC participants.
Investors electing to hold their notes through DTC will follow the
settlement practices applicable to U.S. corporate debt obligations.
Investor securities custody accounts will be credited with their holdings
against payment in same-day funds on the settlement date.
Investors electing to hold their notes through Cedelbank or Euroclear
accounts will follow the settlement procedures applicable to conventional
eurobonds, except that there will be no temporary global security and no
"lock-up" or restricted period. Notes will be credited to the securities
custody accounts on the settlement date against payment in the same-day
funds.
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and
seller's accounts are located to ensure that settlement can be made on the
desired value date.
Trading between DTC Participants. Secondary market trading between
DTC participants will be settled using the procedures applicable to U.S.
corporate debt obligations in same-day funds.
Trading between Cedelbank and/or Euroclear Participants. Secondary
market trading between Cedelbank participants or Euroclear participants
will be settled using the procedures applicable to conventional eurobonds
in same-day funds.
Trading between DTC seller and Cedelbank or Euroclear purchaser. When
notes are to be transferred from the account of a DTC participant to the
accounts of a Cedelbank participant or a Euroclear participant, the
purchaser will send instructions to Cedelbank or Euroclear through a
Cedelbank participant or Euroclear participant at least one business day
prior to settlement. Cedelbank or Euroclear, as the case may be, will
instruct the respective Depositary to receive the notes against payment.
Payment will include interest accrued on the notes from and including the
last coupon payment date to and excluding the settlement date, which with
respect to the class A-1 notes will be on the basis of a 360-day year and
the actual number of days elapsed and with respect to the class A-2 notes,
the class A-3 notes and the class A-4 notes will be on the basis of a
360-day year consisting of twelve 30-day months. Payment will then be made
by the Depositary to the DTC participant's account against delivery of the
notes. After settlement has been completed, the notes will be credited to
the respective clearing system and by the clearing system, in accordance
with its usual procedures, to the Cedelbank participant's or Euroclear
participant's account. The notes credit will appear the next day (European
time) and the cash debit will be back-valued to, and the interest on the
notes will accrue from, the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on
the intended value date (i.e., the trade fails), the Cedelbank or Euroclear
cash debit will be valued instead as of the actual settlement date.
Cedelbank participants and Euroclear participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to
pre-position funds for settlement, either from cash on hand or existing
lines of credit, as they would for any settlement occurring within
Cedelbank or Euroclear. Under this approach, they may take on credit
exposure to Cedelbank or Euroclear until the notes are credited to their
accounts one day later.
As an alternative, if Cedelbank or Euroclear has extended a line of
credit to them, Cedelbank participants or Euroclear participants can elect
not to pre-position funds and allow that credit line to be drawn upon the
finance settlement. Under this procedure, Cedelbank participants or
Euroclear participants purchasing notes would incur overdraft charges for
one day, assuming they cleared the overdraft when the notes were credited
to their accounts. However, interest on the notes would accrue from the
value date. Therefore, in many cases the investment income on the notes
earned during that one-day period may substantially reduce or offset the
amount of those overdraft charges, although this result will depend on each
Cedelbank participant's or Euroclear participant's particular cost of
funds.
Since the settlement is taking place during New York business hours,
DTC participants can employ their usual procedures for sending notes to the
respective Depositary for the benefit of Cedelbank participants or
Euroclear participants. The sale proceeds will be available to the DTC
seller on the settlement date. Thus, to the DTC participants a cross-market
transaction will settle no differently than a trade between two DTC
participants.
Trading between Cedelbank or Euroclear seller and DTC purchaser. Due
to time zone differences in their favor, Cedelbank participants and
Euroclear participants may employ their customary procedures for
transactions in which notes are to be transferred by the respective
clearing system, through the respective Depositary, to a DTC participant.
MART will send instructions to Cedelbank or Euroclear through a Cedelbank
participant or Euroclear participant at least one business day prior to
settlement. In these cases, Cedelbank or Euroclear will instruct the
respective Depositary, as appropriate, to deliver the bonds to the DTC
participant's account against payment. Payment will include interest
accrued on the notes from and including the last coupon payment date to and
excluding the settlement date, which with respect to the Class A-1 notes
will be on the basis of a 360-day year and the actual number of days
elapsed and with respect to the Class A-2 notes, the Class A-3 notes and
the Class A-4 notes will be on the basis of a 360-day year consisting of
twelve 30-day months. The payment will then be reflected in the account of
the Cedelbank participant or Euroclear participant the following day, and
receipt of the cash proceeds in the Cedelbank participant's or Euroclear
participant's account would be back-valued to the value date (which would
be the preceding day, when settlement occurred in New York). Should the
Cedelbank participant or Euroclear participant have a line of credit with
its respective clearing system and elect to be in debt in anticipation of
receipt of the sale proceeds in its account, the back-valuation will
extinguish any overdraft charges incurred over that one-day period. If
settlement is not completed on the intended value date (i.e., the trade
fails), receipt of the cash proceeds in the Cedelbank participant's or
Euroclear participant's account would instead be valued as of the actual
settlement date.
Finally, day traders that use Cedelbank or Euroclear and purchase
notes from DTC participants for delivery to Cedelbank participants or
Euroclear participants should note that these trades would automatically
fail on the sale side unless affirmative action were taken. At least three
techniques should be readily available to eliminate this potential problem:
(a) borrowing through Cedelbank or Euroclear for one day (until
the purchase side of the day trade is reflected in their Cedelbank or
Euroclear accounts) in accordance with the clearing system's
customary procedures;
(b) borrowing the notes in the U.S. from a DTC participant no
later than one day prior to settlement, which would give the notes
sufficient time to be reflected in their Cedelbank or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of
the trade so that the value date for the purchase from the DTC
Participant is at least one day prior to the value date for the sale
to the Cedelbank participant or Euroclear participant.
U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of notes holding securities through Cedelbank or
Euroclear (or through DTC if the holder has an address outside the U.S.)
will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless (a) each clearing system, bank, or other
financial institution that holds customers' securities in the ordinary
course of its trade or business in the chain of intermediaries between that
beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (b) that beneficial owner takes
one of the following steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of notes
that are non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign
Status). If the information shown on Form W-8 changes, a new Form W-8 must
be filed within 30 days of that change.
Exemption for non-U.S. Persons with effectively connected income
(Form 4224). A non-U.S. Person, including a non-U.S. corporation or bank
with a U.S. branch, for which the interest income is effectively connected
with its conduct of a trade or business in the United States, can obtain an
exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).
Exemption or reduced rate for non-U.S. persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are beneficial owners of notes
residing in a country that has a tax treaty with the United States can
obtain an exemption or reduced tax rate (depending on the treaty terms) by
filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate). If the
treaty provides only for a reduced rate, withholding tax will be imposed at
that rate unless the filer alternatively files Form W-8. Form 1001 may be
filed by the beneficial owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's
Request for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The beneficial owner of
a note or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it
holds the note (the clearing agency, in the case of persons holding
directly on the books of the clearing agency). Form W-8 and Form 1001 are
effective for three calendar years and Form 4224 is effective for one
calendar year.
The term "U.S. Person" means (a) a citizen or resident of the United
States, (b) a corporation or partnership (including an entity treated as a
corporation or partnership) organized in or under the laws of the United
States or any state or the District of Columbia (unless, in the case of a
partnership, Treasury regulations provide otherwise), (c) an estate the
income of which is includible in gross income for United States tax
purposes, regardless of its source, or (iv) a trust if a U.S. court is able
to exercise primary supervision over the administration of that trust and
one or more U.S. persons has the authority to control all substantial
decisions of the trust. This summary does not deal with all aspects of U.S.
federal income tax withholding that may be relevant to foreign holders of
the notes. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of the notes.
Recent Treasury regulations could affect the procedures to be
followed by a non-U.S. Person in complying with the United States federal
withholding, backup withholding, and information reporting rules. The
regulations generally will be effective for payments made after December
31, 1999. Prospective investors are advised to consult their own tax
advisors regarding the effect, if any, of the regulations on the purchase,
ownership and disposition of the notes.
PROSPECTUS
$_______________
MMCA AUTO OWNER TRUST 1999-2
$__________ % CLASS A-1 ASSET BACKED NOTES
$__________ % CLASS A-2 ASSET BACKED NOTES
$__________ % CLASS A-3 ASSET BACKED NOTES
$__________ % CLASS A-4 ASSET BACKED NOTES
MMCA AUTO RECEIVABLES TRUST
SELLER
[INSERT GRAPHIC]
SERVICER
UNDERWRITERS OF THE NOTES
CREDIT SUISSE FIRST BOSTON
You should rely only on the information contained in or incorporated
by reference in this prospectus. We have not authorized anyone to provide
you with different information.
We are not offering the notes in any state where the offer of the
notes is not permitted.
We do not claim the accuracy of the information in this prospectus as
of any date other than the date stated on the cover of this prospectus.
Dealers will deliver a prospectus when acting as underwriters of the
notes and with respect to their unsold allotments or subscriptions. In
addition, all dealers that effect transactions in the notes, whether or not
participating in the offering of the notes, will be required to deliver a
prospectus until ,1999.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Registration Fee................................................ $*
Printing and Engraving.......................................... $*
Trustee's Fee................................................... $*
Legal Fees and Expenses......................................... $*
Blue Sky Fees and Expenses...................................... $*
Accountant's Fees and Expenses.................................. $*
Rating Agency Fees.............................................. $*
Miscellaneous Fees and Expenses................................. $
----------
Total Expenses ................................................. $*
==========
*to be provided by amendment
ITEM 14. INDEMNIFICATION OF TRUSTEES AND BENEFICIAL OWNERS
Section 3817 of the Delaware Code provides as follows:
(a) Subject to such standards and restrictions, if any, as are set
forth in the governing instrument of a business trust, a business
trust shall have the power to indemnify and hold harmless any trustee
or beneficial owner or other person from and against any and all
claims and demands whatsoever.
(b) The absence of a provision for indemnity in the governing
instrument of a business trust shall not be construed to deprive any
trustee or beneficial owner or other person of any right to indemnity
which is otherwise available to such person under the laws of this
State.
Clause (b) of Section 5.7 of the Amended and Restated Trust
Agreement, dated as of July 1, 1999, between Mitsubishi Motors Credit of
America, Inc. and Chase Manhattan Bank Delaware provides as follows:
(b) Subject to the terms of this Agreement, the Beneficial Owner shall
hold harmless the Trustee, its officers, directors, employees,
shareholders and agents (collectively the "Indemnified Persons" or
individually an "Indemnified Person"), against any and all losses,
liabilities, claims, actions, suits, costs, damages, expenses and
liabilities, joint or several (including, but not limited to, any
investigation, reasonable legal and other expenses (including expenses
of investigation) of any kind and nature whatsoever incurred in
connection with, and any amount paid in settlement of any action,
suit, proceeding or claim) (collectively, "Losses") which such
Indemnified Persons may become subject to or liable for by reason of
Trustee's acting as trustee under this Agreement. Notwithstanding the
foregoing, the Beneficial Owner shall not be liable to any Indemnified
Person, and shall not be required to indemnify the Trustee under this
Agreement, for any Losses arising out of the negligence, bad faith or
wilful misconduct of such Indemnified Person or any other Indemnified
Person.
Section 3.8 of the Amended and Restated Trust Agreement provides as follows:
No person shall be personally liable to MMCA Auto Receivables Trust or
the Beneficial Owner for any breach of its duties as a Manager;
provided, however, that the foregoing shall not eliminate or limit the
liability of a Manager for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the
law.
Section 3.10 of the Amended and Restated Trust Agreement provides as follows:
No Authorized Officer shall be personally liable to MMCA Auto
Receivables Trust or the Beneficial Owner for any breach of its duties
as an Authorized Officer; provided, however, that the foregoing shall
not eliminate or limit the liability of an Authorized Officer of MMCA
Auto Receivables Trust for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the
law.
"Agreement" means the Amended and Restated Trust Agreement, dated as
of October [ ], 1999, between Mitsubishi Motors Credit of America, Inc. and
Chase Manhattan Bank Delaware.
"Authorized Officer" means officers appointed by the Board of Managers
or Chief Executive Receivables Trust as may be appropriate for the conduct
of the trust's business, subject to the supervision and control of the
Board of Managers and Chief Executive Officer.
"Beneficial Owner" means Mitsubishi Motors Credit of America, Inc., in
its capacity as the exclusive beneficial owner of MMCA Auto Receivables
Trust and its successors and assigns in such capacity.
"Manager" means a person appointed by the Beneficial Owner to serve as
a member of the Board of Managers of the MMCA Auto Receivables Trust.
"Trustee" means Chase Manhattan Bank Delaware, as trustee under the
Agreement, and its permitted successors and assigns in such capacity.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Not applicable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
Number Description
------ -----------
1.1 Form of Underwriting Agreement***
3.1 Amended and Rested Trust Agreement of MART***
4.1 Form of Amended and Restated Trust Agreement of the Trust
between MART and the Owner Trustee***
4.2 Form of Sale and Servicing Agreement among MART the Servicer and
the Trust***
4.3 Form of Indenture between the Trust and the Indenture Trustee***
4.4 Form of Administration Agreement among the Trust, the
Administrator and the Indenture Trustee***
4.5 Form of Note (contained in Exhibit 4.3)
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP re
Legality***
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP re Tax
Matters***
10.1 Form of Purchase Agreement between Mitsubishi Motors Credit of
America, Inc. and MART***
10.2 Form of Yield Supplement Agreement***
23.1 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (contained
in Exhibit 5.1)***
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (contained
in Exhibit 8.1)***
24 Powers of Attorney (included on signature page)
24.1 Board Resolutions of MART***
25 Form T-1 of Indenture Trustee***
- -----------
*** To be filed by amendement
(b) Financial Statement Schedules
Not applicable.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes as follows:
(a) To provide to the underwriters at the closing specified in the
underwriting agreement certificates in such denominations and registered in
such names as required by the underwriters to permit prompt delivery to
each purchaser.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. If a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(c) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b) (1) or (4) or 497(h) under the Securities Act of 1933, as amended
shall be deemed to be part of this Registration Statement as of the time it
was declared effective.
(d) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Cypress, State of California, on August 18, 1999.
MMCA AUTO RECEIVABLES TRUST
By: /s/ Hiroshi Yajima
---------------------------------
Hiroshi Yajima
Manager and President
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Susan M. Tyner, J. Sean Plater and
Tatsuo Nonaka, and each of them, his true and lawful attorneys-in-fact and
agents with full power of substitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments, including
post-effective amendments, to this Registration Statement, and to file the
same, with all exhibits thereto, and all documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ Hiroshi Yajima Manager and President August 18, 1999
- -------------------------- (principal executive
Hiroshi Yajima officer)
/s/ Hideyuki Kitamura Secretary and Treasurer August 18, 1999
- -------------------------- (principal financial
Hideyuki Kitamura officer and principal
accounting officer)
/s/ John Maynard Manager August 18, 1999
- -------------------------
John Maynard
/s/ Kenzo Yamada Manager August 18, 1999
- -------------------------
Kenzo Yamada
/s/ Charles A. Tredway Manager August 18, 1999
- -------------------------
Charles A. Tredway
Manager August 18, 1999
- -------------------------
Yasuhiro Hagihara
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ----
1.1 Form of Underwriting Agreement***
3.1 Amended and Restated Trust Agreement of MART
between MMCA and the MART Trustee***
4.1 Form of Amended and Restated Trust Agreement
of the Trust between between MART and the
Owner Trustee***
4.2 Form of Sale and Servicing Agreement among
MART, the Servicer and the Trust***
4.3 Form of Indenture between the Trust and the
Indenture Trustee***
4.4 Form of Administration Agreement among the
Trust, the Administrator and the Indenture
Trustee***
4.5 Form of Note (contained in Exhibit 4.3)***
5.1 Opinion of Skadden, Arps, Slate, Meagher &
Flom LLP re Legality***
8.1 Opinion of Skadden, Arps, Slate, Meagher &
Flom LLP re Tax Matters***
10.1 Form of Purchase Agreement between Mitsubishi
Motors Credit of America, Inc. and MART***
10.2 Form of Yield Supplement Agreement***
23.1 Consent of Skadden, Arps, Slate, Meagher &
Flom LLP (contained in Exhibit 5.1)***
23.2 Consent of Skadden, Arps, Slate, Meagher &
Flom LLP (contained in Exhibit 8.1)***
24 Powers of Attorney (included on signature page)
24.1 Board Resolutions of MART***
25 Form T-1 of Indenture Trustee***
- -----------
*** To be filed by amendment.
