AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON June 12, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MMCA AUTO OWNER TRUST 2000-1
(Issuer with respect to the Notes)
MMCA AUTO RECEIVABLES TRUST
(Originator of the Issuer)
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 9999 33-0869011
<S> <C> <C>
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
incorporation or organization Classification Code No.) Identification No.)
</TABLE>
STEVEN E. GRIMALDI
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)
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STEVEN E. GRIMALDI
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)
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Copies to:
DAVID H. MIDVIDY, ESQ. DALE W. LUM, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP BROWN & WOOD LLP
FOUR TIMES SQUARE 555 CALIFORNIA STREET
NEW YORK, NEW YORK 10036 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. |_|
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT (1) OFFERING PRICE(1) FEE (1)
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<S> <C> <C> <C> <C>
% Class A-1 Asset Backed Notes..... $250,000 100% $250,000 $66.00
% Class A-2 Asset Backed Notes..... $250,000 100% $250,000 $66.00
% Class A-3 Asset Backed Notes..... $250,000 100% $250,000 $66.00
% Class B Asset Backed Notes....... $250,000 100% $250,000 $66.00
==============================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee.
</TABLE>
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.
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 Dated _____________, 2000
PROSPECTUS
$
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MMCA AUTO OWNER TRUST 2000-1
$ % CLASS A-1 ASSET BACKED NOTES
---------- ----
$ % CLASS A-2 ASSET BACKED NOTES
---------- ----
$ % CLASS A-3 ASSET BACKED NOTES
---------- -----
$ % CLASS B ASSET BACKED NOTES
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MMCA AUTO RECEIVABLES TRUST
SELLER
[INSERT GRAPHIC]
SERVICER
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UNDERWRITING DISCOUNTS
PRICE* AND COMMISSIONS NET PROCEEDS TO SELLER
------------------------ ---------------------- ----------------------------
<S> <C> <C> <C>
Class A-1 Notes $__________(________%) $__________(_____%) $__________ (________%)
Class A-2 Notes $__________(________%) $__________(_____%) $__________ (________%)
Class A-3 Notes $__________(________%) $__________(_____%) $__________ (________%)
Class B Notes $__________(________%) $__________(_____%) $__________ (________%)
Total $__________ $__________ $__________
</TABLE>
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* The price of the notes will also include any interest accrued on the
notes from the date on which the notes are issued.
Interest on and principal of 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 _____.
THE NOTES REPRESENT OBLIGATIONS OF THE ISSUER AND ARE BACKED ONLY BY THE
ASSETS OF THE ISSUER. 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.
UNDERWRITERS OF THE CLASS A NOTES
SALOMON SMITH BARNEY J.P. MORGAN & CO.
UNDERWRITERS OF THE CLASS B NOTES
SALOMON SMITH BARNEY J.P. MORGAN & CO.
The date of this Prospectus is __________, 2000
TABLE OF CONTENTS
Page
IMPORTANT NOTICE ABOUT
INFORMATION PRESENTED
IN THIS PROSPECTUS.........................................................4
SUMMARY OF TERMS.............................................................5
RISK FACTORS.................................................................9
THE ISSUER..................................................................16
Limited Purposes and Limited Assets.........................................16
Capitalization of the Issuer................................................17
The Owner Trustee...........................................................17
PROPERTY OF THE ISSUER......................................................17
MMCA'S CONTRACT PORTFOLIO...................................................18
Types of Contracts Included in MMCA's
Contract Portfolio........................................................18
Underwriting Standards......................................................18
Servicing and Collection Procedures.........................................19
Physical Damage Insurance on MMCA's Contracts...............................19
Delinquency, Credit Loss and Returned Vehicle
Loss Experience of MMCA's Contracts.......................................19
THE RECEIVABLES POOL........................................................22
Selection Criteria..........................................................23
Characteristics of the Initial Receivables Sold to the
Issuer on the Closing Date................................................24
Payment Methods.............................................................28
Balloon Payment Receivables.................................................29
Defaulted Receivables.......................................................30
Maturity and Prepayment Considerations......................................30
HOW NOTEHOLDERS CAN COMPUTE
THEIR PORTION OF THE AMOUNT
OUTSTANDING ON THE NOTES..................................................40
USE OF PROCEEDS.............................................................40
MMCA AUTO RECEIVABLES TRUST.................................................40
THE SERVICER................................................................41
TERMS OF THE NOTES..........................................................41
Principal Amount and Interest Rates.........................................41
Interest Payments...........................................................41
Principal Payments..........................................................42
Mandatory Prepayment........................................................43
Optional Redemption.........................................................43
The Indenture Trustee.......................................................44
The Yield Supplement Agreement..............................................44
The Yield Supplement Account................................................44
The Issuer's Bank Accounts..................................................45
Indenture Cash Flows........................................................46
The Negative Carry Account..................................................48
The Reserve Account and Supplemental
Reserve Account...........................................................48
Subordination of the Class B Notes..........................................50
Subordination of the Certificates...........................................50
Advances by the Servicer of Amounts Payable on
the Receivables...........................................................50
Deposit of Collections on the Receivables
to Collection Account.....................................................51
Statements to Noteholders...................................................51
Book Entry Registration.....................................................53
Issuance of Definitive Notes Upon the Occurrence
of Various Circumstances..................................................56
Terms of the Indenture......................................................57
THE SALE AND SERVICING AGREEMENT AND THE
TRUST AGREEMENT...........................................................64
Sale and Assignment.........................................................64
The Pre-Funding Period......................................................66
Mandatory Repurchase of Receivables.........................................67
Servicing Procedures........................................................67
Servicing Compensation......................................................69
Evidence to be Provided as to Servicer's Compliance
with its Servicing Obligations............................................69
Resignation by the Servicer.................................................70
Consequences of Merger, Conversion, Consolidation
or Similar Actions by Servicer............................................70
Limits on Servicer's Liability..............................................70
Limits on Servicer's Obligations in Connection
with Legal Actions........................................................70
Events of Servicing Termination.............................................70
Rights of Indenture Trustee and Noteholders Upon
an Event of Servicing Termination Under the
Sale and Servicing Agreement..............................................71
Requirements for Amendments of the Sale and
Servicing Agreement and the Trust Agreement...............................71
Requirements for Termination of the Issuer..................................72
Actions to be Taken by Indenture Trustee
Upon Termination of the Issuer............................................73
The Administration Agreement................................................73
SOME IMPORTANT LEGAL ASPECTS OF
THE RECEIVABLES...........................................................73
Bankruptcy Considerations...................................................73
The Issuer's Rights in the Receivables......................................73
Security Interests in Vehicles..............................................74
Repossession................................................................75
Notice of Sale; Redemption Rights...........................................75
Deficiency Judgments and Excess Proceeds....................................76
Obligor's Right to Excess Proceeds Upon Sale
of a Vehicle..............................................................76
Consumer Protection Laws....................................................76
Other Limitations...........................................................77
FEDERAL INCOME TAX CONSEQUENCES.............................................77
Tax Treatment of the Notes and the Issuer under
Federal Income Tax Law....................................................78
Federal Tax Consequences of Waivers of Events
of Default and Amendments of Notes
by Noteholders............................................................80
Information Reporting and Backup Withholding
of Taxes by Indenture Trustee.............................................80
Tax Consequences to Foreign Investors.......................................81
STATE TAX CONSEQUENCES......................................................82
ERISA CONSIDERATIONS........................................................82
Special ERISA Considerations for
Employee Benefit Plans....................................................83
Special ERISA Considerations Applicable to
Insurance Company General Accounts........................................84
General Investment Considerations for Employee
Benefit Plans.............................................................84
UNDERWRITING................................................................85
LEGAL OPINIONS..............................................................86
REPORTS TO NOTEHOLDERS......................................................86
WHERE YOU CAN FIND MORE
INFORMATION.................................................................86
GLOSSARY....................................................................87
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 __.
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 Issuer: MMCA Auto Owner Trust 2000-1
Seller of the Receivables to the Issuer: 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 Property of the Issuer: The property of the issuer 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 payahead 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
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<CAPTION>
Class A-1 Notes Class A-2 Notes Class A-3 Notes Class B Notes
<S> <C> <C> <C> <C>
Principal Amount: $__________ $__________ $__________ $__________
Interest Rate Per Annum: _____% _____% _____% _____%
Interest Accrual Method: 30/360 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/S&P):* Aaa/AAA Aaa/AAA Aaa/AAA A2/A
</TABLE>
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* 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 issuer will own three types of receivables:
o receivables which provide for equal monthly payments over their
term;
o receivables which provide that the first payment is deferred for
a specified period - between 90 days and fifteen months - and for
equal monthly payments for the remainder of the term of the
receivable; and
o receivables which provide for equal monthly payments and one
substantially larger final balloon payment.
On ______ ___, 2000:
o The principal balance of the receivables was $___________.
o The principal balance of the balloon payments was $__________.
o The principal balance of receivables that have a deferred first
payment was $_________.
MART expects to sell additional receivables having a principal balance of
about $__________ to the issuer during a pre-funding period that begins on
the closing date and ends no later than __________. As of the date any
additional receivables are sold to the issuer:
o The total principal balance of balloon payments under those
additional receivables as a percentage of the total principal
balance of those additional receivables on that date will not
exceed _____%.
o The total principal balance of receivables with a deferred first
payment that was not due prior to that date as a percentage of
the total principal balance of receivables sold to the issuer on
that date will not exceed _____%.
Payments on the Notes
SOURCES OF PAYMENTS
On each payment date, the issuer will pay the amounts owed by the issuer
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.
MONTHLY INTEREST PAYMENTS
On each payment date, the issuer will pay interest on the class A notes
based on the total amount of interest due on each class of the class A
notes without preference of priority between the classes of class A notes.
Interest on the class B notes is subordinate to interest on the class A
notes and will not be paid on any payment date until accrued interest on
the class A notes has been paid in full.
SEQUENTIAL PAYMENT OF MONTHLY PRINCIPAL AMOUNT
The notes feature sequential payment of principal. No principal will be
paid on any class of the class A notes until each class with a lower
numerical designation has been paid in full. No principal will be paid on
the class B notes until all of the class A notes have been paid in full.
On each payment date, the amount required to be paid as principal of 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.
PRIORITY OF DISTRIBUTIONS
On each payment date, the issuer will make the following payments in the
following order:
(1)payment to the servicer of amounts advanced by the servicer on
previous payment dates;
(2)payment to the servicer 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 all classes of the class A
notes;
(4)payment of the interest payable on the class B notes;
(5)payment of the principal payable on the class A-1 notes, until the
class A-1 notes have been paid in full;
(6)payment of the principal payable on the class A-2 notes,
until the class A-2 notes have been paid in full;
(7)payment of the principal payable on the class A-3 notes, until the
class A-3 notes have been paid in full;
(8)payment of the principal payable on the class B notes; and
(9)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-Indenture Cash Flows."
The order of the payments of interest and principal on the notes will
change if there is a default under the indenture and the maturity of the
notes is accelerated. This change is important to noteholders. Principal
will be paid to all three classes of the class A notes simultaneously - not
sequentially by class - and no interest will be paid on the class B notes
until all of the accrued interest and principal of the class A notes have
been paid.
CERTIFICATES
In addition to the notes, the issuer will issue $__________ of
certificates. The issuer 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 and the supplemental reserve 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 issuer 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
issuer acquired them and (2) the principal balance of the notes.
YIELD SUPPLEMENT ACCOUNT
On each payment date, the issuer will use funds in the yield supplement
account to cover any shortfall between:
o the interest rate on the class B notes plus _____ percentage
points; and
o the interest rate on each receivable that is not a defaulted
receivable.
For purposes of calculating this shortfall, the interest rate on a
receivable will be zero if no interest payment on that receivable was due
in the prior month.
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 issuer. 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 treated as debt; and
o the issuer will not be classified 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
under the Employee Retirement Income Security Act of 1974, as amended, or
Section 4975 of the Internal Revenue Code of 1986, as amended. However,
fiduciaries of employee benefit plans, including those investing plan
assets, should review the matters discussed under "ERISA Considerations" in
this prospectus and should consult with their legal advisors before
purchasing the notes.
RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase notes.
<TABLE>
<S> <C>
ABSENCE OF SECONDARY MARKET The underwriters for the notes may assist in resales of the notes
NOTES COULD LIMIT YOUR ABILITY but they are not required to do so. A secondary market for the notes
TO RESELL NOTES may 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 final maturity dates for your notes.
INTERESTS OF OTHER PERSONS IN Another person could acquire an interest in a receivable that is
RECEIVABLES AND VEHICLES COULD superior to the issuer's interest in the receivable because the
REDUCE THE FUNDS AVAILABLE TO servicer will not segregate or mark the receivables as belonging
MAKE PAYMENTS ON THE NOTES to the issuer. If another person acquires an interest in a
receivable that is superior to the issuer'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
issuer's interest in the vehicle because the servicer will not amend
the certificate of title or ownership to identify the issuer as the
new secured party. If another person acquires an interest in a vehicle
that is superior to the issuer's interest in the vehicle, the proceeds
from the sale of the vehicle will not be available to make payments on
the notes. See "Some Important Legal Aspects of the Receivables-
Security Interests in Vehicles."
BANKRUPTCY OF MMCA COULD If MMCA enters a bankruptcy proceeding, you could experience losses or
RESULT IN LOSSES OR DELAY IN delays in the payments on your notes. MMCA will sell the receivables to
PAYMENTS ON THE NOTES MART, and MART will transfer the receivables to the issuer. 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 for bankruptcy purposes and that MMCA still
owns the receivables. The court also could 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 other government liens on MMCA's property that
arose before the transfer of the receivables to the
issuer 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 "MMCA Auto
Receivables Trust" and "Some Important Legal Aspects of the
Receivables-Bankruptcy Considerations."
POTENTIAL LOSS ON NOTES DUE TO The first payment on approximately $__________ or __% by principal
RECEIVABLES WITH NO PAYMENT balance of the receivables to be transferred to the issuer on the
AN INITIAL PERIOD closing date is deferred for a specified period. Vehicles financed
with deferred payment receivables will incur wear and tear
during the deferral period. As a result, the value of the
related vehicles will decrease before the first payment is
due by an amount that is larger than it would have decreased
without a deferral period. The first payment on
approximately %___________ or __% by principal balance of
the receivables to be transferred to the issuer on the
closing date will not be due until after the closing date.
MMCA does not have historical data on the default rate of
these receivables. The severity of any credit loss on a
deferred payment receivable will depend, in part, on the
length of the deferral period. Approximately $__________ or
__% by principal balance of the receivables to be
transferred to the issuer on the closing date have a
deferred payment period of between 12 and 15 months. The
severity of the credit losses on these receivables may be
higher than the severity of the credit losses on MMCA's
combined portfolio of receivables. You may experience delays
in payments or losses on your notes if (i) the severity of
credit losses on these receivables is higher than expected
by MMCA and (ii) the protection provided to the class A
notes by the subordination of the class B notes, and
provided to all of the notes by the certificates and the
funds on deposit in the reserve account and the supplemental
reserve account, are insufficient to protect you against
such delays or losses. See "MMCA's Contract
Portfolio-Delinquency, Credit Loss and Returned Vehicle Loss
Experience of MMCA's Contracts" for information concerning
MMCA's combined portfolio of receivables.
RISK THAT YOU MAY BE REQUIRED POTENTIAL PREPAYMENT OF NOTES DUE TO PREPAYMENT OF RECEIVABLES.
TO REINVEST YOUR PRINCIPAL IN Prepayments on the receivables by the related obligors and purchases
NOTES AT A LOWER RATE OF of the receivables by MART and the servicer due to breaches of
RETURN BECAUSE OF PREPAYMENTS representations, warranties and covenants by MART and the servicer will
ON THE NOTE accelerate the NOTES payment of principal of your notes. The extent
of this prepayment cannot be fully predicted. You will bear the risk
that you will have to reinvest the principal of 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 its
representations and warranties with respect to any
receivables in way that has a material adverse effect on the
noteholders, MMCA will be required to repurchase those
receivables from MART, and MART will be required to
repurchase those receivables from the issuer. MMCA will also
be required to purchase receivables from the issuer if it
breaches its servicing obligations with respect to those
receivables. MMCA will be entitled to purchase all of the
remaining receivables from the issuer once the total
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 issuer.
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 each returned vehicle on behalf of
the issuer but expects the amount realized from the sale of
the vehicle to be less than the related balloon payment. 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 resulting in a higher level
of prepayments on the notes than would otherwise be the
case. See "The Receivables Pool-Maturity and Prepayment
Considerations."
POTENTIAL PREPAYMENT OF NOTES DUE TO PREPAYMENTS OF
RECEIVABLES WITH A DEFERRED FIRST PAYMENT. Obligors on
receivables that provide for a deferred first payment may
prepay their receivables in full or in part at any time.
Obligors on these receivables may refinance their vehicles
with other lenders at more attractive terms - for example,
at lower interest rates - and use the proceeds to prepay in
full the receivable sold to the issuer. In addition, some of
the obligors on receivables originated under this program
may use the savings realized by them through not having to
make any payments - for up to 15 months - to prepay the
receivables when the first payment is due. MMCA does not
have historical data on the rate of prepayment of these
receivables. If the rate of prepayment on these receivables
is higher than the rate of prepayment on the receivables in
MMCA's combined portfolio that do not provide for a deferred
first payment, the level of prepayments on the notes would
be higher than anticipated.
POTENTIAL PREPAYMENTS ON NOTES If the total principal balance of the receivables and related amounts
DUE TO FAILURE TO TRANSFER A transferred to the issuer during the pre-funding period is less than
SUFFICIENT NUMBER OF ADDITIONAL the amount deposited to the pre-funding account on the date of the
RECEIVABLES TO THE ISSUER issuance of the notes, the notes will be prepaid in the amount of
the shortfall. See "Terms of the Notes--Mandatory Prepayment."
MART's ability to apply the entire pre-funding account
balance to the transfer of receivables to the issuer 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 issuer 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, or if there is a sharp decline in sales of motor
vehicles generally, then MMCA's ability to originate
receivables for sale to MART will be adversely affected.
POTENTIAL LOSS OR PREPAYMENTS ON The addition of receivables during the pre-funding period
NOTES DUE TO CHANGES IN POOL may change the overall characteristics of the pool of
CHARACTERISTICS receivables. 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 issuer during
the pre-funding period may differ from the credit criteria
used by MMCA in originating the receivables transferred to
the issuer on the date that the notes are issued. 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,
affecting the timing and amount of payment of principal and
interest on your notes.
POTENTIAL LOSS ON NOTES DUE TO You may suffer a loss on your notes if the assets of the issuer
LIMITED ASSETS OF THE ISSUER are insufficient to pay the principal amount of the notes in full.
The only source of funds for payments on the notes will be
the assets of the issuer. The assets of the issuer are
limited to the receivables and the funds on deposit in the
issuer'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 issuer's bank
accounts. See "Terms of the Notes--The Reserve Account and
Supplemental Reserve Account."
CLASS B NOTES HAVE GREATER You may suffer a loss on your class B notes because payments of
CREDIT RISK BECAUSE THE CLASS B interest on CandSprincipal of the class B notes are subordinated
NOTES ARE SUBORDINATE TO THE to payments of interest and principal of the class A notes.
CLASS A NOTES
Interest payments on the class B notes on each payment date
will be subordinated to servicing fees due to the servicer
and interest payments on the class A notes. Also, if a
default under the indenture occurs, interest payments on the
class B notes will be subordinated to the payment of
principal of the class A notes.
Principal payments on the class B notes will be fully
subordinated to principal payments on the class A notes. No
principal will be paid on the class B notes until principal
of all of the class A notes has been paid in full. You may
experience losses on the class B notes if the protection
provided to the class B notes by the subordination of the
certificates and the funds on deposit in the reserve account
and the supplemental reserve account are insufficient to
protect the class B notes from losses on the receivables.
POTENTIAL LOSS ON NOTES IN The obligors on balloon payment receivables will not have to pay the
CONNECTION WITH SALES OF balloon payment if they return the related vehicle to MMCA at the end
VEHICLES of the term of the receivable. MMCA will sell the returned vehicle on
behalf of the issuer and the issuer will use the proceeds
from the sale 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 the class A notes by the
subordination of the class B notes, and provided to all of
the notes by the certificates to be issued by the issuer and
the funds on deposit in the reserve account and the
supplemental reserve account, are insufficient to protect
you against these delays or losses. See "MMCA's Contract
Portfolio-Delinquency, Credit Loss and Returned Vehicle Loss
Experience of MMCA's Contracts" for information concerning
MMCA's combined portfolio of receivables.
MMCA expects the proceeds from the sale of a returned
vehicle to be less than the balloon payment because MMCA
sets 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 IF The obligor under a balloon payment receivable also has the option to
DOES NOT REFINANCE refinance the balloon payment with MMCA, if various conditions are satisfied.
BALLOON RECEIVABLES 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
issuer for prices less than the related balloon payments.
POTENTIAL LOSS ON NOTES DUE TO conomic conditions in the states where the obligors under the receivables
GEOGRAPHIC CONCENTRATION OF reside may affect the delinquency, loan loss and repossession experience
RECEIVABLES of the issuer 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 issuer,
_____% of the receivables relate to obligors with a billing
address in California and _____% relate to obligors with a
billing address in Texas. 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
issuer and may adversely affect the timing and amount of
payment of principal and interest on your notes.
RISKS IN CONNECTION WITH AN If a default occurs under the indenture and the maturity dates of
EVENT OF DEFAULT UNDER the notes are accelerated, the indenture trustee may sell the
INDENTURE 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 issuer are
insufficient to pay the total principal amount of the notes.
In addition, the acceleration of the maturity dates will change the order
of priority for the payment of principal of the different classes of
notes. After the occurrence of an event of default under the
indenture, distributions to the class B noteholders become fully
subordinated to the class A noteholders. No interest on or principal
of the class B notes will be paid after an event of default has
occurred until the full principal balance of each class of the class A
notes has been paid in full. See "Terms of the Notes--Principal
Payable."
If the maturity dates of the notes are accelerated following an event of
default and the indenture trustee determines that the receivables will
not be sufficient to make scheduled payments on the notes, all of the
noteholders, voting as a group, will have the right to vote as to
whether the receivables should be sold. The proportion of the principal
amount of the class B notes to the total principal amount of the class A
notes and the class B notes will increase as principal of the class A
notes is paid. Accordingly, the class A noteholders may require the
consent of class B noteholders to sell the receivables. Payments on the
class A notes could be delayed if this consent is required and not
obtained.
</TABLE>
THE ISSUER
LIMITED PURPOSES AND LIMITED ASSETS
MMCA Auto Owner Trust 2000-1, the issuer, 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 issuer'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 issuer will not engage in any activity other than:
o acquiring, holding and managing the assets of the issuer,
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 that are in any way connected with those activities.
The issuer will be capitalized through the issuance of $__________ of
notes and $__________ of 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 issuer. 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 issuer will have any need for
additional capital resources.
On the closing date, the issuer will purchase from MART retail
installment contracts originated by MMCA in connection with the financing
of automobiles and sports-utility vehicles. 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 issuer
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 issuer 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, either directly or through subservicers, will hold the
receivables and the certificates of title for the vehicles as custodian for
the indenture trustee and the issuer. However, the receivables will not be
marked or stamped to indicate that they have been sold to the issuer, and
the certificates of title for the vehicles will not be endorsed or
otherwise amended to identify the issuer as the new secured party. Under
those circumstances, the issuer may not have a perfected security interest
in the receivables and the vehicles 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 and the reserve account is insufficient, the noteholders would have
to look for payment of the notes to the receivables that have not
defaulted, the proceeds from the repossession and sale of vehicles which
secure defaulted receivables and the proceeds from any recourse against
dealers. In that event, factors including the issuer's not having perfected
security interests in the vehicles in all states may affect the issuer's
ability to repossess and sell the vehicles, and thus may reduce the funds
distributed to noteholders. Losses on the receivables or other shortfalls
in the funds to be distributed to the noteholders, after withdrawals from
the accounts of the issuer, will be allocated first to the certificates and
then Class B notes because payments on the certificates and the Class B
notes are subordinate to the payments on the Class A notes. See "Terms of
the Notes--Indenture Cash Flows" and "Some Important Legal Aspects of the
Receivables."
CAPITALIZATION OF THE ISSUER
The following table illustrates the capitalization of the issuer as
of the closing date, after the issuance of the notes and certificates and
the sale of the notes has taken place:
Class A-1 notes.................................... $
Class A-2 notes....................................
Class A-3 notes....................................
Class B notes......................................
Certificates.......................................
-------------
Total........................................ $
=============
Because the issuer 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 for the issuer
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 ISSUER
Under the indenture, the notes will be secured by the property of the
issuer, which will include:
o a pool of motor vehicle retail installment sale contracts
originated during or after __________ 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 vehicles;
o MART's rights to receive proceeds from claims on insurance
policies covering the 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 issuer's rights under the sale and servicing agreement
and the purchase agreement, including its right to cause MMCA and
MART to repurchase receivables from the issuer;
o all of MART's rights under the yield supplement agreement; and
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 sports-utility vehicles manufactured or distributed by
Mitsubishi Motors and contracts relating to used vehicles 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
to MMCA and to other finance providers. MMCA purchases the contracts from
the dealers under 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
certain of the representations and warranties. Those representations and
warranties typically relate to the origination of the contract and the
security interest in the related vehicles 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
vehicle 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 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. The 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 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:
o the ratio of income to debt;
o an applicant's equity in the vehicle;
o satisfactory existing account relationships;
o excellent recent reported credit history; and
o availability of an acceptable guarantor.
MMCA management sets limits on the percentage of credit decisions
that approve credit to applicants scoring below MMCA's credit score
minimums and on the percentage of credit decisions that deny credit to
applicants scoring above those minimums. Where the applicant is a business
entity, MMCA reviews 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 entity's
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 to an applicant is made at the appropriate management level.
The application, if approved, is assigned to one of the 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 begins collection activities on delinquent
contracts through telephone contact based upon the credit risk initially
assigned to each obligor. Obligors considered to be weaker credits are
contacted by telephone when the contract becomes 12 days delinquent.
Obligors considered strong credits with lesser risk are 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. Except for some limitations,
MMCA as servicer is able to extend the dates on which payments on
receivables are due. 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 vehicle securing a delinquent contract is repossessed, MMCA
charges off the related delinquent contract on the date on which the
proceeds from the sale of the repossessed vehicle are applied to the
contract balance and the deficiency is determined. If the vehicle cannot be
repossessed, MMCA charges off the delinquent contract on the date on which
it determines that it will be unable to recover the vehicle from the
obligor. Any deficiencies remaining after repossession and sale of the
vehicle or after the full charge off of the related contract are pursued by
MMCA to the extent practicable and legally permitted. If a vehicle financed
with a balloon payment contract is returned to MMCA at the end of the
contract term, MMCA will not charge off any loss on sale of the vehicle,
because that loss is not a credit loss. However, MMCA does charge off
losses on the amortizing monthly installments and the balloon payments
following defaults by obligors and acceleration of the amount owed under
the 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 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 AND LOSS DATA OF MMCA'S CONTRACTS
Delinquency and loss experience of receivables may differ from the
loss experience of MMCA's combined portfolio and may change in the future.
The following tables describe the delinquency and loss experience of MMCA
with its portfolio of contracts. Those contracts include previously sold
contracts which MMCA continues to service. Delinquency and loss experience
may be influenced by a variety of economic, social, geographic and other
factors. There is no assurance that the delinquency, repossession or loss
experience of the receivables will be similar to MMCA's historical
experience described below.
Historical delinquency experience. MMCA tracks delinquency
information for periods of 30 to 59 days, 60 to 89 days, and 90 days or
more. As of June 30, 2000, delinquencies of between 60 and 89 days as a
percentage of contracts outstanding were about ___%. As of June 30, 2000,
delinquencies of over 90 days as a percentage of contracts outstanding were
about ___%. Additional detail and historical information on delinquencies
is set forth in the table below.
In the following delinquency experience table:
o the information includes contracts for new and used vehicles
owned by MMCA or previously sold by MMCA which MMCA continues
to service and delinquency numbers are net of bankrupt accounts
and repossessions;
o 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 and the percent represents
delinquent dollars as a percent of dollars outstanding; and
o repossessions means the vehicle has been repossessed but the
sale proceeds have not yet been applied to the contract
balance.
MMCA's ability, in its capacity as servicer, to extend the dates on
which payments on receivables are due is limited. See "The Sale and
Servicing Agreement and the Trust Agreement-Servicing Procedures."
DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
As of June 30, As of December 31,
-------------- ------------------
2000 1999 1999 1998 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Number of Contracts Outstanding at End of Period 127,475 120,961
Delinquencies as a Percent of Contracts Outstanding
30-59 Days................................ % % % 3.81% 4.45%
60-89 Days................................ % % % 1.08% 1.58%
90 Days or More........................... % % % 0.29% 0.52%
Repossessions as a Percent of Contracts Outstanding % % % 0.79% 0.96%
</TABLE>
-----------
CREDIT LOSS EXPERIENCE. The following table sets forth information
concerning MMCA's combined portfolio of contracts, including contracts
previously sold which MMCA continues to service. In the following table:
o the information includes contracts for new and used vehicles
owned by MMCA or previously sold by MMCA which MMCA continues to
service;
o Amount Outstanding means 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;
o averages are computed by taking a simple average of the average
for the months outstanding for each period presented;
o Charge-offs represent the total amount due on contracts that is
determined to be uncollectible in the period, less proceeds from
disposition of related vehicles, other than recoveries. The
calculation of charge-offs for the contracts in the combined
portfolio includes both earned but unpaid finance charges and
balloon payments;
o Recoveries consist of amounts received on contracts following the
time at which the contract is charged off net of collection
expenses;
o Number of Repossessions means the number of repossessed vehicles
in a given period; and
o The six-month period ended June 30, 2000 is an annualized rate
and 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 vehicles.
NET CREDIT LOSS AND REPOSSESSION EXPERIENCE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
-------- -----------------------
2000 1999 1999 1998 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Amount Outstanding................... $ $ $ $1,879,226 $1,729,312
Average Amount Outstanding........... $ $ $ $1,805,701 $1,737,477
Number of Contracts Outstanding...... 127,475 120,961
Average Number of Contracts Outstanding 123,663 122,652
Charge-offs.......................... $ $ $ $ 51,325 $ 72,986
Recoveries........................... $ $ $ $ 9,490 $ 13,089
Net Losses........................... $ $ $ $ 41,835 $ 59,897
Number of Repossessions.............. 4,796 7,338
Number of Repossessions as a Percent of the
Average Number of Contracts Outstanding % % % 3.88% 5.98%
Net Losses as a Percent of Average Amount
Outstanding........................ % % % 2.32% 3.45%
</TABLE>
-----------
RETURNED VEHICLE LOSS EXPERIENCE. The following table sets forth
information concerning MMCA's combined portfolio of contracts, including
contracts previously sold which MMCA continues to service. In this table:
o the information includes vehicles returned upon the expiration of
the related contracts and vehicles returned under MMCA's program
that offers attractive terms to owners of vehicles to
prepay their accounts in connection with their respective purchases of
a new Mitsubishi Motors vehicle;
o Return Ratio means the number of vehicles returned to MMCA
through June 30, 2000 as a percentage of the number of balloon
payment receivables scheduled to terminate in the period
indicated; and
o losses are calculated without deduction for auction or other
disposition expenses on resale.
CONTRACTS PROVIDING FOR BALLOON PAYMENTS: LOSS EXPERIENCE ON RETURNED VEHICLES
<TABLE>
<CAPTION>
For Contracts Scheduled to For Contracts Scheduled
Terminate in the Six Months to Terminate in the
Ended June 30, Year Ended December 31,
-------------- -----------------------
2000 1999 1999 1998 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total Number of Final Payment Receivables 19,723 10,734
Total Number of Vehicles Returned to MMCA
through June 30, 2000............. 4,750 2,921
Return Ratio........................ % % % 24.08% 27.21%
Total Losses on Returned Vehicles Sold through
June 30, 2000..................... $ $ $ $7,608,392 $5,831,829
Total Number of Returned Vehicles Sold through
June 30, 2000..................... 4,704 2,912
Average Loss per Returned Vehicle Sold through
June 30, 2000..................... $ $ $ $ 1,617 $ 2,003
</TABLE>
-----------
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 vehicles depends on:
o the number of vehicles returned;
o any programs offered by MMCA that permit the early return of
vehicles;
o the amount of the related receivables outstanding at the time the
vehicles are returned; and
o the resale value of the returned vehicles.
Because obligors on balloon payment receivables have an option to
return the vehicle to MMCA, MMCA historically has realized losses more
frequently than gains on returned vehicles. Based on results for the
contracts included in the preceding table, from 1997 through 1999, in each
year:
o an average of __%, ___%, and __%, respectively, of all vehicles
financed with balloon payment receivables which terminated at or
near then end of their scheduled term were not purchased by the
obligor and were returned to MMCA and subsequently sold by MMCA
to a third party; and
o of those vehicles returned to MMCA on or near the scheduled end
of term of the related contract and which were subsequently sold
by MMCA at auction, substantially all of them were sold for a
loss.
THE RECEIVABLES POOL
The issuer will purchase from MART receivables which consist of a
pool of retail installment sale contracts secured by new and used vehicles.
The property to be purchased by the issuer includes rights to receive
payments made on 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 issuer under a sale and
servicing agreement. Under the purchase agreement, MART will purchase
receivables from MMCA on the closing date and during the Pre-Funding
Period. Under the sale and servicing agreement, MART will transfer those
receivables to the issuer on the date it purchases them from MMCA. The
receivables will be selected based on the criteria specified in the sale
and servicing agreement and described in this prospectus.
The receivables to be purchased by the issuer on the closing date
have a total principal balance of $__________, calculated as of the initial
Cutoff Date. Balloon payments comprised $__________ of the total principal
balance of those receivables. Receivables having a deferred first payment
comprised $__________ of the total principal balance of those receivables.
Of the deferred payment receivables transferred to the issuer on the
closing date:
o $__________total principal balance of those receivables had a
deferral period of between 13 and 15 months. None of these
receivables had a first payment due prior to the initial cut-off
date.
o $__________total principal balance of those receivables had a
deferral period of between 10 and 12 months. $____ of these
receivables had a first payment due prior to the initial cut-off
date..
o $__________total principal balance of those receivables had a
deferral period of between 6 and 9 months. $____ of these
receivables had a first payment due prior to the initial cut-off
date.
$__________total principal balance of those receivables had a
deferral period of 90 days. $_____ of these receivables had a
first payment due prior to the initial cut-off date.
$________ total principal balance of the deferred payment receivables
with a 90 day deferral period, were originated pursuant to a program in
which interest accrued during the deferral period although no payments were
due during the deferral period. Interest did not accrue during the deferral
period for any of the other deferred payment receivables transferred to the
issuer on the closing date.
None of the receivables transferred to the issuer will have a final
scheduled maturity later than _______________.
The principal balance of the receivables transferred to the issuer on
any date, except during _________ 2000, will equal the total principal
balance of the receivables transferred to the issuer at the end of the
preceding month less the sum of the following amounts received after the
end of the preceding month through that date:
o for Simple Interest Receivables, the principal payments
received from obligors;
o for Actuarial Receivables, the principal payments received
from obligors that were due during that month;
o amounts to be remitted by the servicer or MART as the
purchase price for receivables they are required to
repurchase from the issuer;
o advances made by the servicer; and
o the principal balance of receivables which defaulted during
that month.
The principal balance of the receivables transferred to the issuer on
any date during __________ 2000 will equal the total principal balance of
the receivables in the trust as of the initial Cutoff Date less the sum of
the foregoing amounts received after the end of __________ 2000, through
that date.
SELECTION CRITERIA
The receivables will be purchased by MMCA from dealers in the
ordinary course of business under 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 vehicles;
o each receivable has an annual percentage rate of at least 0%
and not more than 30%;
o each receivable had a remaining maturity of not more than 60
months from the date the first payment is due under the
receivable;
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 for 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 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 __________;
o if the first payment on a receivable was deferred, the first
payment on that receivable will be due not later than _____
days after the date of origination of that receivable;
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 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 issuer. Each group of receivables
transferred to the issuer 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
issuer;
o the total balloon payments of the receivables in that group
as a percentage of the total principal balance of the
receivables in that group will not be more than _____%;
o if the first payment on a receivable in that group was
deferred, the deferral period will not extend for more than
_____ days after origination of that receivable;
o the total principal balance of the limited credit experience
receivables in that group as a percentage of the total
principal balance of the receivables in that group will be
not more than _____%; and
o the total principal balance of the receivables that allow a
deferred first payment in that group as a percentage of the
total principal balance of the receivables in that group
will be not more than _____%.
The receivables transferred to the issuer on the closing date 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 issuer 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 issuer on
the closing date. 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 INITIAL RECEIVABLES SOLD TO THE ISSUER ON THE
CLOSING DATE
COMPOSITION. The following table sets forth the composition of the
initial receivables sold to the issuer on the closing date, calculated as
of the initial Cutoff Date. The receivables transferred to the issuer on
the closing date, calculated as of the initial Cutoff Date, contained
balloon payment receivables of approximately _____% of the principal
balance of those receivables and deferred payment receivables with a total
principal balance of $________. A balloon payment receivable may be either
a Simple Interest Receivable or an Actuarial Receivable. All deferred
payment receivables are Simple Interest Receivables. The Average Balloon
Payment Principal Balance is based on balloon payment receivables balances
only. See "--Balloon Payment Receivables."
COMPOSITION OF THE INITIAL RECEIVABLES AS OF THE INITIAL CUTOFF DATE
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................... $
(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
-----------
GEOGRAPHIC DISTRIBUTION. The following table sets forth the
geographic distribution of the principal balance of the initial receivables
sold to the issuer on the closing date, calculated as of the initial Cutoff
Date. Geographic distribution is based on the current billing addresses of
the obligors. Percentages may not add to 100% due to rounding.
GEOGRAPHIC DISTRIBUTION OF THE INITIAL RECEIVABLES AS OF THE INITIAL CUTOFF
DATE
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
PRINCIPAL BALANCSTATE PRINCIPAL BALANCE OF
STATE RECEIVABLES POOLE OF RECEIVABLES POOL
----- -------------------- ----------------
<S> <C> <C> <C>
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..............
Military.............
----------------
Total 100%
================
</TABLE>
-----------
DISTRIBUTION BY ANNUAL PERCENTAGE RATE. The following table sets
forth the distribution by annual percentage rate of the principal balance
of the initial receivables sold to the issuer on the closing date,
calculated as of the initial Cutoff Date. The Principal Balance of
Receivables Pool means the remaining principal balance for Simple Interest
Receivables, and the present value of scheduled remaining payments for
Actuarial Receivables discounted at a rate equal to the annual percentage
rate for those receivables. Percentages may not add to 100% due to
rounding.
DISTRIBUTION BY ANNUAL PERCENTAGE RATE OF THE INITIAL RECEIVABLES AS OF THE
INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE
PRINCIPAL OF PRINCIPAL
BALANCE OF BALANCE OF
NUMBER OF RECEIVABLES RECEIVABLES
ANNUAL PERCENTAGE RATE RANGE (%) RECEIVABLES POOL POOL
-------------------------------- ----------- ---- ----
<S> <C> <C> <C>
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...................................... $ 100%
========== ============= =========
</TABLE>
-----------
Based on the principal balance of the initial receivables as of
________, 2000:
o approximately _____% of the total number of receivables, or
approximately _____% of the principal balance of the
receivables pool, relate to new vehicles, substantially all of
which were manufactured or distributed by Mitsubishi Motors;
o approximately _____% of the total number of receivables, or
approximately _____% of the principal balance of the
receivables pool, relate to program vehicles, substantially all
of which were manufactured or distributed by Mitsubishi Motors;
and
o approximately _____% of the total number of receivables, or
approximately _____% of the principal balance of the
receivables pool, relate to used vehicles, substantially all of
which were manufactured or distributed by Mitsubishi Motors and
approximately _____% of the total number of receivables, or
approximately _____% of the principal balance of the
receivables pool, relate to other used vehicles.
Program vehicles are used vehicles which dealers have acquired under a
remarketing program administered by MMCA. This program allows dealers to
offer to purchasers of program vehicles the same rate of interest and terms
offered to new car buyers. Program vehicles are primarily vehicles returned
to MMCA by rental car companies, but also include off-lease MMCA company
and employee lease vehicles and MMCA pool cars.
PAYMENT METHODS
Approximately _____% of the principal balance of the receivables
transferred to the issuer on the closing date, calculated as of the initial
Cutoff Date, was attributable to Actuarial Receivables. An Actuarial
Receivable provides for the amortization of the loan over a series of fixed
level 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 have to pay a late
payment charge.
Approximately _____% of the principal balance of the receivables
transferred to the issuer on the closing date, calculated as of the initial
Cutoff Date, was attributable to Simple Interest Receivables. A Simple
Interest Receivable, like an Actuarial Receivable, also provides for the
amortization of the loan over a series of fixed level 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.
The remainder of the initial receivables transferred to the issuer on
the closing date were Simple Interest Receivables that have a cap on the
total amount of the interest to be paid over the term of the receivable. 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
total 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 principal balance of the receivables
transferred to the issuer on the closing date, calculated as of the initial
Cutoff Date, 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.
Approximately _____% of the principal balance of the receivables
transferred to the issuer on the closing date, calculated as of the initial
Cutoff Date, was attributable to receivables that allow a deferred first
payment. The obligor on a receivable with a deferred first payment is not
required to make any payments of interest or principal for as long as _____
days from the day of origination of the receivable. On and after the date
the first payment is due, the obligor is required to make monthly payments
on interest and principal under the receivable. The effect of the deferment
of the first payment is to increase the term of the receivable for the
period of the deferment.
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 actual amount owed by an obligor at the end of term of a balloon
payment receivable may be different than the scheduled balloon payment set
forth in the contract. If a balloon payment receivable is a Simple Interest
Receivable, the actual amount owed by the obligor at the end of term of the
receivable may be different than the scheduled balloon payment set forth in
the related contract as a result of:
o early payments by the obligor during the term of the
receivable which will reduce the amount owed;
o late payments by the obligor during the term of the
receivable which will increase the amount owed; and
o additional fees and charges that may be owed by the obligor
on the contract, including late charges and any other
miscellaneous charges, which will increase the amount owed.
If a balloon payment receivable is an Actuarial Receivable, the
actual amount owed by the obligor at the end of term of the receivable will
be the scheduled balloon payment set forth in the related contract
increased by any additional fees and charges that may be owed by the
obligor on the contract, including late charges other miscellaneous
charges.
Upon maturity of a balloon payment receivable, the obligor may
satisfy the amount it owes by:
o paying the actual balloon payment due under the contract;
o subject to various conditions, refinancing the actual
balloon payment due under the contract; or
o returning the vehicle to MMCA for a credit against the
actual amount due under the contract equal to the scheduled
balloon payment set forth in the contract, less charges for
excess wear and tear and excess mileage and a disposition
fee payable to the servicer, and paying the excess, if any,
of the actual amount due under the contract over the amount
credited by MMCA for the returned vehicle.
If the obligor returns the vehicle to MMCA, acting on behalf of the
issuer, it is anticipated that the issuer will not receive the full amount
of the balloon payment set forth in the contract upon the subsequent sale
of the vehicle by MMCA on behalf of the issuer. 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 size of the
balloon payment to above its estimate of the wholesale market value at the
end of the contract's term in order to stimulate sales of particular models
by reducing the amount of the monthly payments under the contract. As a
result the balloon payment set forth in the contract may be higher than the
wholesale market value of the vehicle at the end of term of the contract.
If there is a total loss of the vehicle caused by its theft or
physical damage, MMCA does not require the obligor under a receivable
providing for a balloon payment to pay the difference between the amount
owed on the receivable as of the date of the total loss and the insurance
proceeds, including payment by the obligor of any applicable deductible,
received for the vehicle. MMCA will instead reduce the principal amount of
the balloon payment by that amount.
If the full amount of a balloon payment is not collected upon sale of
the vehicle, 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 which may reduce the amount available to pay interest on and
principal of the notes. None of MMCA, the servicer, MART or the issuer 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 issuer.
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 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."
DEFAULTED RECEIVABLES
A receivable, other than a receivable which has been purchased from
the issuer by MART or the servicer, will be considered to have defaulted
if:
o the related 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
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 vehicle or
repossessed and held the related 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 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 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 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 issuer if breaches of representations and
warranties occur that materially and adversely affect the
receivable.
In light of the above considerations, there can be no assurance as to
the amount of principal payments that will be made on the notes on each
payment date. The 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 decides to implement a
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. While this
program may encourage prepayments, the effect on prepayments of the program
and other programs like it cannot be predicted.
Obligors of receivables that allow a deferred first payment, for
example, may prepay their receivables in full or in part at any time.
Obligors of these receivables may refinance their vehicles with other
lenders at more attractive terms, such as lower interest rates, and use the
proceeds to prepay in full the receivable transferred to the issuer.
Prepayments on the receivables can be measured relative to a
prepayment standard or model. This prospectus uses the Absolute Prepayment
Model ("ABS"). ABS assumes that a 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 issuer.
Approximately _____% of the principal balance of the receivables
transferred to the issuer on the closing date, calculated as of the initial
Cutoff Date, consists of 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 __________ and __________ and
significant payments of principal are likely to be made during that period.
The average principal balance of those balloon payments is approximately
$__________, which is approximately _____% of the average principal balance
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 B 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 the
closing date is applied in its entirety to the purchase of
contracts transferred to the issuer 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 if the first payment on a receivable is deferred, no
prepayments are made on that receivable prior to the date
the first payment on that receivable is due;
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 issuer is the Closing date;
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 Motors
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 to be transferred to the issuer on the Closing date
have been divided into five hypothetical pools made up of receivables that
have equal scheduled monthly payments that fully amortize those
receivables. Pool 5 includes receivables with no payments due for an
initial period of _____ months and then amortize over _____ months. These
hypothetical pools have the following characteristics:
Weighted Weighted
Average Average
LEVEL Total 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 ................$ %
5 ................$ %
-----------
The receivables to be transferred to the issuer on the Closing date
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 Total Weighted Original Term Remaining Term to
PAYMENT Principal Average Annual to Maturity Maturity
POOL Balance Percentage Rate (in months) (in months)
---- ------- --------------- ----------- -----------
1 ................$ %
2 ................$ %
3 ................$ %
4 ................$ %
The ABS tables also assume that the additional receivables to be
transferred to the issuer during the Pre- Funding Period occur in two
groups. The first group, with an assumed total principal balance of
$__________, are assumed to be transferred to the issuer on __________. The
second group, with an assumed total principal balance of $__________, are
assumed to be transferred to the issuer on __________.
The receivables to be transferred to the issuer on __________ have
been divided into five hypothetical pools made up of receivables that have
equal monthly payments that fully amortize those receivables. Pool 5
includes receivables with no payments due for an initial period of _____
months and then amortize over _____ months. These hypothetical pools have
the following characteristics:
Weighted Weighted
Average Average
LEVEL Total Weighted Original Term Remaining Term
PAYMENT Principal Average Annual to Maturity to Maturity
POOL Balance Percentage Rate (in months) (in months)
---- ------- --------------- ----------- -----------
1 ................$ %
2 ................$ %
3 ................$ %
4 ................$ %
5 ................$ %
-----------
The receivables to be transferred to the issuer during the
Pre-Funding Period 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 Total Weighted Original Term Remaining Term to
PAYMENT Principal Average Annual to Maturity Maturity
POOL Balance Percentage Rate (in months) (in months)
---- ------- --------------- ----------- -----------
1 ................$ %
2 ................$ %
3 ................$ %
4 ................$ %
The receivables to be transferred to the issuer on __________ have
been divided into five hypothetical pools made up of receivables that have
equal monthly payments that fully amortize those receivables. Pool 5
includes receivables with no payments due for an initial period of _____
months and then amortize over _____ months. These hypothetical pools have
the following characteristics:
Weighted Weighted
Average Average
LEVEL Total 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 ................$ %
5 ................$ %
-----------
The receivables to be transferred to the issuer during the
Pre-Funding Period 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 Total Weighted Original Term Remaining Term to
PAYMENT Principal Average Annual to Maturity Maturity
POOL Balance Percentage Rate (in months) (in months)
---- ------- --------------- ----------- -----------
1 ................$ %
2 ................$ %
3 ................$ %
4 ................$ %
The actual characteristics and performance of the receivables
transferred to the issuer 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. 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
issuer on the Closing date are expected to be different from the
receivables transferred to the issuer 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 of receivables. See "-Selection
Criteria."
THE ABS 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 1.3% ABS 1.5% ABS 2.0% ABS
------------ -------- -------- -------- -------- --------
ABSSS
Closing date
PAYMENT DATE 0.0% ABS 1.0% ABS 1.3% ABS 1.5% ABS 2.0% ABS
------------
-------- -------- -------- -------- ---------
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 1.3% ABS 1.5% ABS 2.0% ABS
------------ -------- -------- -------- -------- --------
ABS
Closing date
PAYMENT DATE 0.0% ABS 1.0% ABS 1.3% ABS 1.5% ABS 2.0% ABS
------------
-------- -------- -------- -------- --------
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 1.3% ABS 1.5% ABS 2.0% ABS
------------ -------- -------- -------- -------- --------
ABS
Closing date
PAYMENT DATE 0.0% ABS 1.0% ABS 1.3% ABS 1.5% ABS 2.0% ABS
------------
-------- -------- -------- -------- --------
Weighted Average Life (yrs).
PROJECTED CLASS B NOTE AMORTIZATION
PERCENT OF INITIAL NOTE PRINCIPAL AMOUNT
CLASS B NOTE BALANCE (%)
PAYMENT DATE 0.0% ABS 1.0% ABS 1.3% ABS 1.5% ABS 2.0% ABS
------------ -------- -------- -------- -------- --------
ABS
closing date
-------- -------- -------- -------- --------
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 for 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 Issuer 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 issuer will not change any of
these factors.
USE OF PROCEEDS
The net proceeds from the sale of the notes will be applied:
o to the purchase of the receivables;
o to make the required deposit into the pre-funding account;
o to make the required deposit into the negative carry account;
o to make the required deposit into the payahead account;
o to make the required deposit into the yield supplement account; and
o to make the required deposit 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 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 dealers of Mitsubishi Motors vehicles 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 vehicles 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 issuer will issue $__________ total principal amount of
asset-backed notes under an indenture to be dated as of __________, 2000,
between the issuer and Bank of Tokyo-Mitsubishi Trust Company, in its
capacity as indenture trustee.
The notes will be issued in four classes:
o $__________ total principal amount of _____% Class A-1 notes;
o $__________ total principal amount of _____% Class A-2 notes;
o $__________ total principal amount of _____% Class A-3 notes; and
o $__________ total principal amount of _____% Class B 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 is qualified in its entirety by reference to, the notes, the
indenture, the trust agreement and the sale and servicing agreement.
INTEREST PAYMENTS
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 B 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 day of each month. If the 15th day of a
month is not a business day, the payment will be made on the next following
business day. The first payment will be made on __________, 2000. Payments
will be made to noteholders as of each record date. The record date will be
the business day preceding each payment date. However, if notes in fully
registered, certificated form are issued, the record date will become the
15th day of the preceding month, or if that day is not a business day, the
preceding business day.
Calculation of interest. Interest will accrue during each interest
period and will be calculated on the notes on the basis of a 360-day year
of twelve 30-day months. 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. Interest payable on the 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 the closing date through __________, 2000.
Priority of Interest Payments. Funds to make interest payments on the
notes will 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 total 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 on all of the Class A notes will have the same
priority of payment and will be paid to each class of the Class A notes
without priority or preference of any kind among classes based upon the
total amount of interest due on each class of the Class A notes. Interest
on the Class B notes is subordinate to interest on the Class A notes. No
interest will be paid on the Class B notes on any payment date until
interest on the Class A notes has been paid in full. If the amount
available for interest payments is less than the amount of interest payable
on the Class A notes on any payment date, each class of the Class A notes
will receive its ratable share of the total amount available to pay
interest on the Class A notes and no interest will be paid on the Class B
notes.
If a default under the indenture occurs, interest payments on the
Class B notes also will be subordinated to the payment of principal of the
Class A notes.
Events of Default Under the Indenture. 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 PAYMENTS
On each payment date, principal payments will be made to the
noteholders in an amount equal to the Principal Distribution Amount for
that payment date, with several limitations. Certificateholders will not be
entitled to receive payments of principal until all classes of notes have
been paid in full. See "--Indenture Cash Flows" and "--The Reserve Account
and Supplemental Reserve Account."
On each payment date 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 B notes, until the Class B notes have been paid in
full.
Events 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 of the Class A notes will be paid to the
holders of each class of Class A notes in proportion to the principal
balance of that class to the sum of the principal balances of all of the
Class A notes, until all of the Class A notes are paid in full. See
"-Indenture Cash Flows-Monthly Withdrawals From the Note Payment Account On
and After an Acceleration of the Maturity Dates of the Notes."
Following an event of default, principal of the Class A notes will be
paid only after the payment of the following:
o amounts due to the servicer;
o interest due on the Class A notes;
Following an event of default under the indenture, principal of the
Class B notes will be paid only after payment of the following:
o amounts due to the servicer;
o interest due on the Class A notes;
o principal in full of all of the Class A notes; and
o interest due on the Class B notes.
The noteholders will be paid in full before any distributions may be made
on the certificates.
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 B notes, __________.
The actual date on which the total outstanding principal amount of
any class of notes is paid may be earlier or later than 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 PREPAYMENT
On the payment date on or immediately following the last day of the
Pre-Funding Period, any funds remaining in the pre-funding account will be
applied to pay principal of 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 issuer to acquire
receivables during the Pre-Funding Period, it is unlikely that the total
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
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 on the notes, 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 YIELD SUPPLEMENT AGREEMENT
Simultaneously with the sale and assignment 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 issuer on the business day before 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 (1) some of the receivables transferred to the issuer will not have
any payments due from the related obligors until some time after the first
payment date of the notes and (2) some of the receivables owned by the
issuer will 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 interest rate on the Class B 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 after the delivery of any
required 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 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 Issuer. MART will make an initial deposit to
the yield supplement account on the closing date, in the amount specified
in the sale and servicing agreement. On each subsequent date on which
receivables are transferred to the issuer, 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 issuer on that date, unless the
yield supplement account has been replaced by an acceptable letter of
credit on or before that date.
THE ISSUER'S BANK ACCOUNTS
The servicer will establish and maintain 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 and maintain the note payment account and the negative carry
account in the name of the indenture trustee for the exclusive benefit of
the noteholders. The servicer will establish and maintain the certificate
distribution account in the name of the owner trustee for the exclusive
benefit of the certificateholders.
ACCOUNTS RELATING TO THE ISSUER
-------------------------------------------------------------------------------
COLLECTION Payments made on receivables and advances made by the servicer
ACCOUNT will be deposited into the collection account.
-------------------------------------------------------------------------------
PRE-FUNDING $__________ will be deposited into the pre-funding account on
ACCOUNT the closing date.
-------------------------------------------------------------------------------
NOTE PAYMENT Amounts released from the collection account for distribution to
ACCOUNT noteholders will be deposited into the note payment account
and all payments to noteholders will be made from this account.
-------------------------------------------------------------------------------
CERTIFICATE Amounts released from the collection account for distribution
DISTRIBUTION to certificateholders will be deposited into the certificate
ACCOUNT distribution account and all distributions to certificateholders
will be made from this account.
-------------------------------------------------------------------------------
PAYAHEAD Early payments by obligors of less than the remaining balance of
ACCOUNT Actuarial Receivables will be deposited into the payahead
account until the time as the payment on the receivables falls
due or until those funds are applied to shortfalls in the
scheduled payments for those receivables.
-------------------------------------------------------------------------------
On the closing date, MART will deposit to the payahead account the
early payments as to Actuarial Receivables which were received prior to the
initial Cutoff Date. On each date during the Pre-Funding Period on
which receivables are transferred to the issuer, the indenture trustee will
withdraw from the pre-funding account and deposit to the payahead account
any early payments as to Actuarial Receivables transferred to the issuer on
that date which were received before the related date of transfer.
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 the types of investments permitted by the sale and servicing
agreement, which will normally 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 as to Actuarial Receivables on deposit
in the payahead account.
Any earnings, net of losses and investment expenses, on amounts on
deposit in each account will be paid out as follows:
o any earnings in the collection account will be paid to the
certificateholders;
o any earnings in the payahead account will be paid to the
servicer as additional servicing compensation and will not
be available to pay noteholders; and
o any earnings 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 and will not be available to pay
noteholders, but only to the extent that the amounts on
deposit in those accounts exceed the required balances of
those accounts.
INDENTURE CASH FLOWS
Calculations Made by the Servicer. 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 the payment date occurring in that month:
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.
Notice to the Indenture Trustee. 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.
STEP 1. DAILY DEPOSITS TO THE COLLECTION ACCOUNT.
On or before each payment date, the servicer will cause all payments
on the receivables and all proceeds of the receivables to be deposited into
the collection account.
STEP 2. MONTHLY WITHDRAWALS FROM THE COLLECTION ACCOUNT TO REIMBURSE
SERVICER ADVANCES.
On each payment date, the indenture trustee will withdraw from the
collection account and pay to the servicer the amounts on deposit in the
collection account that are allocable to reimbursement of servicer advances
in accordance with the sale and servicing agreement.
STEP 3. MONTHLY WITHDRAWALS FROM THE SUPPLEMENTAL RESERVE ACCOUNT TO
REIMBURSE SERVICER 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 before giving effect to any
deposits or withdrawals on or relating to that payment date;
and
o the amount of servicer advances due to be reimbursed on that
payment date but not reimbursed from funds on deposit in the
collection account under step 2.
STEP 4. MONTHLY WITHDRAWALS FROM THE RESERVE ACCOUNT TO REIMBURSE
ADVANCES.
If the amount on deposit in the supplemental reserve account is
insufficient fully to 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 before 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 under step 2 or the supplemental reserve
account under step 3.
STEP 5. MONTHLY WITHDRAWALS FROM THE SUPPLEMENTAL RESERVE ACCOUNT
TO PAY THE TOTAL REQUIRED PAYMENT.
If on any payment date the Total Required Payment is greater than the
Available Funds on deposit in the collection account after reimbursement of
servicer advances under step 2, 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 under step 3 but before 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 on deposit in the
collection account after reimbursement of servicer advances
under step 2 .
STEP 6. MONTHLY WITHDRAWALS FROM THE RESERVE ACCOUNT TO PAY THE TOTAL
REQUIRED PAYMENT.
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 as described in step 5, 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 under step
4 but before 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 under
step 5 to pay the Total Required Payment.
STEP 7. 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.
Notwithstanding the foregoing, following an acceleration of the
maturity dates of the 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."
STEP 8. 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 Class A noteholders, the Accrued Note Interest on the
applicable class of the Class A notes;
o to the Class B noteholders, the Accrued Note Interest on the
Class B 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,
less any amounts paid to the Class A-1 noteholders on such
payment date, 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,
less any amounts paid to the Class A-2 noteholders on such
payment date, 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 B noteholders, the Principal Distribution Amount, less
any amounts paid to the Class A-3 noteholders on such
payment date, until the Class B notes have been paid in
full.
STEP 9. WITHDRAWALS FROM THE CERTIFICATE DISTRIBUTION ACCOUNT.
On each payment date, the amount on deposit in the certificate
distribution account, if any, will be distributed to the
certificateholders.
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 under 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 of the Class A notes, without
priority or preference of any kind, the Accrued Note Interest
on each class of the Class A notes;
o to the noteholders of all classes of the Class A notes without
priority or preference of any kind, all unpaid principal of the
Class A notes until each class of the Class A notes has been
paid in full;
o to the noteholders of the Class B notes, the Accrued Note Interest
on the Class B notes;
o to the noteholders of the Class B notes, unpaid principal of
the Class B notes until the Class B notes have 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 the closing date, MART will make an initial deposit of $__________
into the negative carry account. That amount is equal to the Maximum
Negative Carry Amount as of the closing date.
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 that amount to the collection account as a part of the funds
available to pay interest on notes.
If the amount on deposit in the negative carry account on any payment
date, after the withdrawal of the Negative Carry Amount, for that payment
date, is greater than the amount required to be on deposit in the negative
carry account, the excess will be released to MART. All amounts remaining
on deposit in the negative carry account on the first payment date after
the Pre-Funding Period, after giving effect to any withdrawals from that
account on that payment date, will be released to MART.
On any payment date, the amount required to be on deposit in the
negative carry account is equal to the lesser of:
o the initial deposit into the negative carry account minus the
sum of the withdrawal of the Negative Carry Amount on that
payment date and all previous withdrawals of the Negative Carry
Amount; and
o the Maximum Negative Carry Amount as of that payment date.
THE RESERVE ACCOUNT AND SUPPLEMENTAL RESERVE ACCOUNT
On the closing date, 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 _____% of
the principal balance of the initial receivables pool as of the initial
Cutoff Date. On each subsequent date on which receivables are transferred
to the issuer, cash or investments permitted by the sale and servicing
agreement having a value approximately equal to _____% of the total
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
total amount of advances that are due and payable to the
servicer on that payment date and the total 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 of 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.
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
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. Losses
on the receivables or other shortfalls in the amounts to be distributed to
the noteholders will, after depletion of the supplemental reserve account
and the reserve account, be allocated first to the certificates and then
Class B notes because payments on the certificates and Class B notes are
subordinate to the payments on the Class A notes.
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 and the indenture
will be amended without the consent of any noteholders to reflect the
change in the required balances of the accounts. A reduction in the
Specified Reserve Balance will also require the delivery of several tax
opinions to the effect that, among other things, the reduction will not
adversely affect the characterization of the notes for federal income tax
purposes.
SUBORDINATION OF THE CLASS B NOTES
The rights of the Class B noteholders to be paid interest and
principal are subordinated to the rights of the Class A noteholders to be
paid interest on each payment date. Following an event of default under the
indenture, the rights of the Class B noteholders to be paid interest and
principal are subordinated to the rights of the Class A noteholders to be
paid all accrued interest and all of the principal of the Class A notes.
Interest on the Class B notes will be paid on each payment date after
servicing fees due to the servicer and interest due on the Class A notes.
However, if an event of default under the indenture occurs, interest on the
Class B notes also will be subordinated to the payment of principal of the
Class A notes.
Principal of the Class B notes will be subordinated to the servicing
fees, interest on Class A notes, interest on the Class B notes, and the
payment of principal of the Class A notes. No principal will be paid on the
Class B notes until the principal of the Class A notes has been paid in
full.
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 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 of 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 from any payments made by or on
behalf of the related obligor; 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 advance any portion of a balloon
payment not received in the calendar month in which the Balloon Payment is
due less any 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 have 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
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, other than extension or deferral fees collected on the
receivables which are payable to the servicer, into the collection account
not later than two business days after receipt unless:
(1) the servicer has a rating acceptable to each of Moody's and S&P
on its short-term indebtedness, MMCA is the servicer, and no
events of servicing termination have occurred; or
(2) the issuer 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 before each payment date.
On each Payment Date, MART and the servicer also will deposit into
the collection account the purchase amount of each receivable required to
be repurchased or purchased by either of them during the preceding 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 under a
subservicing agreement, the servicer will cause the subservicer to remit to
the collection account the amounts collected by that subservicer within two
business days of receipt.
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 in
the related calendar month, net of distributions to be made to the
servicer, for 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 for that payment date and
the preceding calendar month:
(1) the amount of the payment allocable to principal of each class of
notes;
(2) the amount of the payment allocable to interest on or for each
class of notes;
(3) the Yield Supplement Amount;
(4) 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;
(5) the total outstanding principal amount of each class of the
notes and the applicable note pool factor, after giving effect
to payments on that payment date;
(6) the principal balance of the receivables pool, the principal
balance of the receivables pool exclusive of the total
principal balance of balloon payments and the total principal
balance of the balloon payments calculated as of the close of
business on the last day of the preceding calendar month;
(7) the cumulative amount of interest due but not paid to the
noteholders of each class on that payment date and on prior
payment dates plus interest on the overdue interest at the
applicable note interest rate, to the extent permitted by law;
(8) the cumulative amount of principal due but not paid to the
noteholders of each class on that payment date and on prior
payment dates;
(9) for receivables that became defaulted during the related
calendar month, the total 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;
(10) the balance of the reserve account on that payment date, after
giving effect to changes in the balance on that payment date;
(11) the balance of the supplemental reserve account on that payment
date, after giving effect to changes in the balance on that
payment date;
(12) the advances by the servicer, if any;
(13) the total purchase amount of receivables repurchased by MART or
purchased by the servicer during the preceding calendar month;
(14) 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
(15) 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 ___________ and is being passed
through as payments of principal of the notes.
Each amount set forth in clauses (1), (2), (3), (4), (7) and (8) 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."
BOOK ENTRY REGISTRATION
Each class of notes will be represented by one or more notes, in each
case registered in the name of Cede & Co. as nominee of The Depository
Trust Company. The notes will be available for purchase in book-entry form
only. Accordingly, Cede & Co. will be the holder of record of the notes. No
person acquiring a beneficial ownership interest in the notes will be
entitled to receive a definitive note registered in that person's name
unless and until definitive notes are issued under the limited
circumstances described in this prospectus. All references in this
prospectus to:
o actions by noteholders of any class refer to actions taken
by DTC upon instructions from its participating
organizations; and
o distributions, notices, reports and statements to the
noteholders of any class
will be made to DTC or Cede & Co., as the registered holder of that class,
for distribution to the noteholders of that class according to DTC
procedures.
Investors in the global notes may hold them through any of DTC,
Clearstream Banking Luxembourg S.A. or the Euroclear System. The global
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.
INITIAL SETTLEMENT OF THE GLOBAL NOTES. Investors' interests in the
global notes will be represented through financial institutions acting on
their behalf as direct and indirect participating members of DTC. As a
result, Clearstream Banking and Euroclear will hold positions on behalf of
their customers or participants through their respective depositaries,
which, in turn, will hold those positions in accounts as DTC participants.
Investors electing to hold their global notes through DTC will follow
the settlement practices applicable to U.S. corporate debt obligations.
Investor's securities custody accounts will be credited with their holdings
against payment in same-day funds on the settlement date.
Investors electing to hold their global notes through Clearstream
Banking 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. Global notes
will be credited to the securities custody accounts on the settlement date
against payment in same-day funds.
If any of DTC, Clearstream Banking or Euroclear should stop its
services, the administrative agent would seek an alternative depository, if
available, or cause the issuance of definitive notes to noteholders or
their nominees in the manner described under "Terms of the Notes--Issuance
of Definitive Notes Upon the Occurrence of Various Circumstances."
Except as required by law, none of the servicer, the indenture
trustee or the owner trustee will have any liability:
o for any aspect of the records relating to or payments made
on account of beneficial ownership interests of the notes
held by DTC's nominee; or
o for maintaining, supervising or reviewing any records
relating to those beneficial ownership interests.
SECONDARY MARKET TRADING OF THE GLOBAL NOTES. 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.
Secondary market trading between DTC participants will be settled
using the procedures applicable to U.S. corporate debt obligations in
same-day funds.
Secondary market trading between Clearstream Banking customers or
Euroclear participants will be settled using the procedures applicable to
conventional eurobonds in same-day funds.
When global notes are to be transferred from the account of a DTC
participant to the account of a Clearstream Banking customer or Euroclear
participant:
o the purchaser sends instructions to Clearstream Banking or
Euroclear through a Clearstream Banking customer or Euroclear
participant at least one business day before settlement;
o Clearstream Banking or Euroclear instructs its depositary to
receive the global notes against payment, which includes
interest accrued on the global notes from and including the
last coupon payment date to and excluding the settlement date;
o that depositary credits payments to the DTC participant's account
against delivery of the global notes; and
o after settlement has been completed, the depositary credits the
global notes to the relevant clearing system, which, in turn,
under its usual procedures, credits those global notes to that
customer's or participant's account.
The securities credit will appear the next day, European time, and the cash
debit will be back-valued to, and the interest on the global 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, which means the trade fails, the Clearstream Banking
or Euroclear cash debit will be valued instead as of the actual settlement
date.
Clearstream Banking customers 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
Clearstream Banking or Euroclear. Under this approach, they may take on
credit exposure to Clearstream Banking or Euroclear until the global notes
are credited to their accounts one day later.
As an alternative, if Clearstream Banking or Euroclear has extended a
line of credit to them, Clearstream Banking customers or Euroclear
participants can elect not to pre-position funds and allow that credit line
to be drawn upon to finance settlement. Under this procedure, Clearstream
Banking customers or Euroclear participants purchasing global notes would
incur overdraft charges for one day, assuming they cleared the overdraft
when the global notes were credited to their accounts. However, interest on
the global notes would accrue from the value date. So the investment income
on the global notes earned during that one-day period may substantially
reduce or offset the amount of the overdraft charges, although this result
will depend on each Clearstream Banking customer's or Euroclear
participant's particular cost of funds.
Since the settlement is taking place during New York business hours,
DTC participants can use their usual procedures for sending global notes to
the respective depositary for the benefit of Clearstream Banking customers
or Euroclear participants. The sale proceeds will be available to the DTC
seller on the settlement date. In this way, to the DTC participant, a
cross-market transaction will settle no differently than a trade between
two DTC participants.
Due to time zone differences in their favor, Clearstream Banking
customers and Euroclear participants may use their customary procedures for
transactions in which global notes are to be transferred by the respective
clearing system, through the respective depositary, to a DTC participant.
Trading usually occurs as follows:
o the seller sends instructions to Clearstream Banking or
Euroclear through a Clearstream Banking customer or Euroclear
participant at least one business day before settlement;
o Clearstream Banking or Euroclear instructs its depositary to
deliver the bonds to the DTC participant's account against
payment, which includes interest accrued on the global notes
from and including the last coupon payment date to and
excluding the settlement date; and
o the payment is reflected in the account of the Clearstream
Banking customer or Euroclear participant the next day, and
receipt of the cash proceeds in the Clearstream Banking
customer's or Euroclear participant's account is back-valued to
the value date -- the preceding day when settlement occurred in
New York.
Should the Clearstream Banking customer or Euroclear participant have a
line of credit with its clearing system and elect to be in debit in
anticipation of receipt of the sale proceeds in its account, the
back-valuation will cancel out any overdraft charges incurred over that
one-day period. If settlement is not completed on the intended value date,
which means the trade fails, receipt of the cash proceeds in the
Clearstream Banking customer's or Euroclear participant's account would
instead be valued as of the actual settlement date.
Finally, day traders that use Clearstream Banking or Euroclear and
that purchase global notes from DTC participants for delivery to
Clearstream Banking customers 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:
o borrowing through Clearstream Banking or Euroclear for one day
-- until the purchase side of the day trade is reflected in
their Clearstream Banking or Euroclear accounts -- under the
clearing system's customary procedures;
o borrowing the global notes in the U.S. from a DTC participant
no later than one day before settlement which would give the
global notes sufficient time to be reflected in their
Clearstream Banking or Euroclear account to settle the sale
side of the trade; or
o 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 before the value date for the
sale to the Clearstream Banking customer or Euroclear
participant.
Those persons who are not participants, either directly or
indirectly, but who desire to purchase, sell or otherwise transfer
ownership of, or other interest in, the notes may do so only through direct
and indirect participants. In addition, noteholders will receive all
distributions of principal and interest from the indenture trustee through
the participants who, in turn, will receive them from DTC. Under a
book-entry format, noteholders may experience some delay in their receipt
of payments, since those payments will be forwarded by the indenture
trustee to DTC's nominee. DTC will forward those payments to its
participants which, then, will forward them to indirect participants or
noteholders. The only noteholder will be DTC's nominee. Noteholders will
not be recognized by the indenture trustee as noteholders and noteholders
will be permitted to exercise the rights of noteholders only indirectly
through DTC and its participants.
Under the rules, regulations and procedures creating and affecting
DTC and its operations, DTC is required to:
o make book-entry transfers of securities among participants
on whose behalf it acts as to the securities; and
o receive and transmit distributions of principal and interest
on the securities.
Participants and indirect participants with which securityholders
have accounts as to their respective securities similarly are required to:
o make book-entry transfers; and
o receive and transmit the payments on behalf of their
respective securityholders.
Accordingly, although securityholders will not possess their respective
securities, the rules provide a mechanism by which participants will
receive payments and will be able to transfer their interests.
Because DTC can only act on behalf of participants, who in turn act
on behalf of indirect participants and some banks, the ability of a
securityholder to pledge securities to persons or entities that do not
participate in the DTC system, or otherwise take actions related to the
securities, may be limited due to the lack of a physical certificate for
those securities.
DTC will advise the indenture trustee that it will take any action
permitted to be taken by a noteholder under the indenture only at the
direction of one or more participants to whose accounts with DTC the notes
are credited. DTC may take conflicting actions related to other undivided
interests to the extent that those actions are taken on behalf of
participants whose holdings include those undivided interests.
Non-U.S. holders of global notes will be liable for U.S. withholding
taxes unless the holders meet specified requirements and deliver
appropriate U.S. tax documents to the securities clearing organizations or
their participants.
THE DEPOSITORIES. 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 under the provisions of
Section 17A of the Securities Exchange Act of 1934, as amended. DTC was
created to hold securities for its participants and facilitate the
clearance and settlement of securities transactions between participants
through electronic book-entries to eliminate the need for physical movement
of certificates. Participants in the DTC system:
o include securities brokers and dealers, who may include any
of the underwriters of securities of the issuer, banks,
trust companies and clearing corporations; and
o may include other organizations.
Indirect access to the DTC system also is available to others, such
as banks, brokers, dealers and trust companies, that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly.
Clearstream Banking Luxembourg S.A. is incorporated under the laws of
Luxembourg as a professional depository. Clearstream Banking holds
securities for its customers and facilitates the clearance and settlement
of securities transactions between Clearstream Banking customers through
electronic book-entry changes in accounts of Clearstream Banking customers
to eliminate the need for physical movement of certificates. Transactions
may be settled by Clearstream Banking in any of 36 currencies, including
United States dollars. Clearstream Banking provides to its Clearstream
Banking customers, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Clearstream Banking
interfaces with domestic markets in several countries. As a professional
depository, Clearstream Banking is subject in Luxembourg to regulation by
and supervision by the Commission for the Supervision of the Financial
Sector. Clearstream Banking customers:
o are recognized financial institutions around the world,
including underwriters, securities brokers and dealers,
banks, trust companies, clearing corporations and some other
organizations; and
o may include any of the underwriters of any securities of the
issuer.
Indirect access to Clearstream Banking is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a Clearstream Banking customer, either
directly or indirectly.
Euroclear was created in 1968 to hold securities for its participants
and to clear and settle transactions between Euroclear participants through
simultaneous electronic book-entry delivery against payment to eliminate
the need for physical movement of certificates and the risk from transfers
of securities and cash that are not simultaneous.
The Euroclear system has subsequently been extended to clear and
settle transactions between Euroclear participants and counterparties both
in Clearstream Banking and in many domestic securities markets.
Transactions may be settled in any of 34 currencies. In addition to
safekeeping, custody and securities clearance and settlement, the Euroclear
system includes securities lending and borrowing and money transfer
services. 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 that establishes
policy on behalf of Euroclear participants. The Euroclear operator 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.
All operations are conducted by the Euroclear operator and all
Euroclear securities clearance accounts and cash accounts are accounts with
the Euroclear operator. They are governed by the Terms and Conditions
Governing Use of Euroclear and the related Operating Procedures of the
Euroclear system and applicable Belgian law. These govern all transfers of
securities and cash, both within the Euroclear system, and receipts and
withdrawals of securities and cash. All securities in the Euroclear system
are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts.
Euroclear participants:
o include banks, including central banks, securities brokers
and dealers and other professional financial intermediaries;
and
o may include any of the underwriters of any securities of the
issuer.
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. The Euroclear operator acts
under the Terms and Conditions Governing Use of Euroclear, the related
Operating Procedures of the Euroclear system and applicable Belgian law
only on behalf of Euroclear participants and has no record of or
relationship with persons holding through Euroclear participants.
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 issuer, 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 for 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 at least 51% of the total 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 physical 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 in this
prospectus 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,
for each class of notes, on the final payment date of that class;
o a default in the observance or performance of any material
covenant or agreement of the issuer made in the indenture other
than those dealt with specifically elsewhere as an event of
default and the continuation of any of these defaults for a
period of 60 days after notice is given to the issuer by the
indenture trustee or to the issuer and the indenture trustee by
the holders of at least 25% of the total principal amount of the
notes;
o any representation or warranty made by the issuer in the
indenture or in any certificate delivered under the terms of the
indenture having been incorrect in any material respect as of the
time made, and the breach not having been cured within 30 days
after notice is given to the issuer by the indenture trustee or
to the issuer and the indenture trustee by the holders of at
least 25% of the total principal amount of the notes; or
o events of bankruptcy, insolvency, receivership or liquidation of
the issuer. (Indenture, Section 5.1).
Under the Trust Indenture Act of 1939, the indenture trustee may be
deemed to have a conflict of interest and be required to resign as trustee
for either the Class A notes or the Class B notes if a default occurs under
the indenture. In these circumstances, the indenture will provide for a
successor trustee to be appointed for one or both of the Class A notes and
Class B notes, in order that there be separate trustees for each of the
Class A notes and the Class B notes.
If an indenture trustee relating to any class of notes resigns, its
resignation will become effective only after a successor indenture trustee
for that class of notes is appointed and the successor accepts the
appointment.
Noteholders holding at least a majority of the total principal amount
of the notes outstanding 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 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 total outstanding
principal amount of the notes, 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 total 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 issuer 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 property of the issuer, or elect to
maintain the property of the issuer and continue to apply proceeds from the
property of the issuer as if there had been no declaration of acceleration.
The indenture trustee may not, however, sell the property of the issuer
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 the sale will be sufficient to pay in full the
principal of and the accrued interest on all of the then
outstanding notes; or
o the indenture trustee determines that the property of the issuer
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 total principal amount of the outstanding notes, voting as a
group, to the sale.
The indenture trustee may, but need not, obtain and rely upon an opinion of
an independent accountant or investment banking firm as to whether the
property of the issuer will suffice to pay interest on and principal of the
notes on an ongoing basis. (Indenture, Sections 5.4 and 5.5).
If the property of the issuer is sold after an event of default under
the indenture has occurred, the proceeds of that sale will be distributed:
o first, to the indenture trustee for amounts due as compensation
or indemnity payments under the indenture;
o second, to the servicer for amounts due in respect of accrued and
unpaid servicing fees and unreimbursed advances;
o third, to the Class A noteholders pro rata for interest which is
due and unpaid;
o fourth, to the Class A noteholders pro rata for principal which
is due and unpaid;
o fifth, to the Class B noteholders for interest which is due and
unpaid; and
o sixth, to the Class B 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
on 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 total 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 as to the notes or exercising any trust power conferred on the
indenture trustee.
A noteholder will not have the right to institute any proceeding as
to the indenture unless:
o the noteholder has given 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 total principal amount of
the outstanding notes have made a written request of the
indenture trustee to institute a proceeding in its own name as
indenture trustee;
o the noteholder has 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 total principal amount of the
outstanding notes. (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 be personally liable for the payment
of interest on or principal of the notes or for the agreements of the
issuer and the owner trustee, in its capacity as trustee, contained in the
indenture.
Covenants by the Issuer under the Indenture. The issuer will not,
among other things:
o sell, transfer, exchange or otherwise dispose of any of the
assets of the issuer, except as expressly permitted by the
indenture, the sale and servicing agreement, the trust agreement
or related documents;
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 issuer;
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 as 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 issuer, 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 property of the issuer, other
than for any 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 under 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 before each payment date the disbursement and
payment instructions as required by the indenture. (Sale and
Servicing Agreement, Section 4.11)
Replacement of Indenture Trustee. Noteholders holding not less than a
majority of the total principal amount of the outstanding notes, may remove
the indenture trustee without cause by so notifying the indenture trustee
and the issuer, and following that removal the issuer 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
issuer and the noteholders. The issuer 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, the
issuer will be required promptly to appoint a successor indenture trustee.
(Indenture, Section 6.8)
Duties of Indenture Trustee Under the Indenture. The indenture trustee:
o will perform the duties 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 in those
certificates or opinions; 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.
However, 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 of those rights and powers 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 issuer 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, although 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 for 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 issuer 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 issuer 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 after the record date;
and
o as of not more than 10 days before that list is furnished, within
30 days after receipt by the issuer of a written request for that
list. (Indenture, Section 7.1)
Annual Compliance Statement to be Provided by Issuer to Indenture
Trustee. The issuer 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 as 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 on 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 issuer, and the
indenture trustee, upon request by the issuer, may execute a supplemental
indenture for the purpose of, among other things, adding to the covenants
of the issuer, curing any ambiguity, correcting or supplementing any
provision which may be inconsistent with any other provision or making any
other provision as 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, 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 issuer, and the indenture trustee,
upon request by the issuer, may also enter into supplemental indentures,
with the consent of noteholders holding not less than a majority of the
total 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 9.2).
Any opinion of counsel referred to in this paragraph or the preceding one
may be rendered by internal counsel to MART or the servicer.
However, no supplemental indenture may do any of the following without
the consent of the holder of each outstanding note affected by that
supplemental indenture:
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 property of the issuer 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 on the notes 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 total 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 under
the indenture, 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 issuer, MART, the servicer or an
affiliate of any of them;
o reduce the percentage of the total 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 property of
the issuer 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 total 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 prepayment 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 on any of the property of the
issuer 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.
SALE AND ASSIGNMENT
Together with the issuance of the notes, and under the terms of the
purchase agreement, MMCA will sell and assign to MART its entire right,
title and interest in, to and under the initial receivables to be purchased
by the issuer on the closing date, including its security interests in the
related vehicles. At the time the notes are issued, MART will sell and
assign to the issuer, without recourse, MART's entire interest in the
initial receivables, including its security interests in the related
vehicles. Each of the initial receivables conveyed by MART to the issuer
will be identified in a schedule attached to the sale and servicing
agreement.
The initial receivables will be sold and assigned by MMCA to MART and
sold and assigned by MART to the issuer on the initial Cutoff Date. The
owner trustee will, at the same time as the sale and assignment of the
receivables, execute, authenticate and deliver the certificates. The net
proceeds received from the sale of the notes on the closing date will be
applied to the purchase of the receivables 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.
It is anticipated that additional receivables will be conveyed to the
issuer monthly on dates specified by MART occurring during the Pre-Funding
Period. MART will designate as a related Cutoff Date the date as of which
particular additional receivables are conveyed to the issuer. On or before
each transfer of additional receivables to the issuer 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 additional
receivables to be transferred by MART to the issuer on that date, including
MMCA's security interests in the related vehicles. On each of those dates,
under the conditions described below, MART will sell and assign to the
issuer, without recourse, MART's entire interest in the additional
receivables sold on that date designated by MART as of the related Cutoff
Date.
Upon the conveyance of receivables to the issuer during the
Pre-Funding Period:
(1) the principal balance of the receivables pool will increase in
an amount equal to the total principal balance of the
receivables as of the related Cutoff Date;
(2) an amount equal to _____% of the total 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 as to Actuarial
Receivables which were received before 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
issuer 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 before that date; and
(5) an amount equal to the excess of the total principal balance of
the receivables transferred to the issuer 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 requires
the satisfaction, on or before the date of conveyance, of the following
conditions precedent, among others:
o each of the receivables transferred to the issuer 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 issuer, 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 issuer, with a copy
to the indenture trustee, a written assignment conveying those
receivables to the issuer, including a schedule identifying the
receivables;
o MART must have delivered opinions of counsel for the transfer of
those receivables to the owner trustee, the indenture trustee,
the representative of the underwriters, and each of Moody's and
S&P; 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 issuer on that
date.
In addition, each group of receivables transferred to the issuer
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 issuer;
o the cumulative balloon payments of the receivables in that group
as a percentage of the total principal balance of the receivables
in that group will not be more than _____%;
o the cumulative principal balance of the limited credit experience
receivables in that group as a percentage of the total principal
balance of the receivables in that group will be not more than
_____%; and
o the cumulative principal balance of the receivables that allow a
deferred first payment in that group as a percentage of the total
principal balance of the receivables in that group will be not
more than -----%.
Except for the criteria described in the two preceding paragraphs,
there will be no required characteristics of receivables transferred to the
issuer after the closing date. Therefore, following the transfer of
receivables to the issuer on any date during the Pre-Funding Period, the
aggregate characteristics of the entire pool of receivables may vary from
those of the receivables transferred to the issuer on the closing date. 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 issuer, among other things, that:
o the information provided in the schedule of receivables
transferred to the issuer on the closing date attached to the
sale and servicing agreement and each schedule of receivables
transferred to the issuer on any date during the Pre-Funding
Period attached to the related assignment is and will be correct
in all material respects;
o MMCA has determined whether or not the obligor on each contract
has maintained physical damage insurance, covering the vehicle in
accordance with MMCA's normal requirements;
o on any date that receivables are transferred to the issuer, 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 issuer, each
of the receivables is or will be secured by a perfected first
priority security interest in the 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 issuer, 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
as 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 issuer 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 issuer will appoint the servicer as initial
custodian of the contracts. The servicer, in its capacity as custodian,
will hold all documents and instruments relating to the contracts, either
directly or through subservicers, on behalf of the indenture trustee and
the issuer. The contracts will not be stamped or otherwise marked to
reflect the sale and assignment of the receivables to the issuer 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 issuer will be filed, and the servicer's accounting records
and computer systems will be marked to reflect that sale and assignment.
See "The Issuer" and "Some Important Legal Aspects of the Receivables."
THE PRE-FUNDING PERIOD
The issuer will pay the purchase price for receivables to be
transferred to the issuer 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 the closing date. MART expects to
sell receivables to the issuer after the closing date with a total
principal balance approximately equal to $__________. Before being used to
purchase receivables or to pay holders of the notes, funds on deposit in
the pre-funding account will be invested in investments as permitted by the
sale and servicing agreement. See "Terms of the Notes-Mandatory
Prepayment."
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 the closing date 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 additional
receivables;
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 party 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 Prepayment."
MANDATORY REPURCHASE OF RECEIVABLES
In the event of a breach of any representation or warranty as to the
receivables, which materially and adversely affects the interest of the
issuer 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 issuer, and MMCA will be required to
repurchase the receivable from MART for an amount equal to the purchase
amount of the receivable. See "--Sale and Assignment."
The purchase amount will be payable on the payment date immediately
following that calendar month. The purchase amount of a receivable to be
purchased on any payment date will equal the sum of:
o the outstanding principal balance of the receivable as of the
first day of the preceding calendar month; and
o 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.
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 issuer, the indenture trustee, the
certificateholders or the owner trustee against MART and MMCA for any
uncured breach or failure.
SERVICING PROCEDURES
The servicer will make reasonable efforts to collect all payments due
on 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 for comparable motor vehicle receivables owned and/or serviced by
the servicer for itself or others.
MMCA performs certain of its serving functions utilizing employees of
its parent, MMSA. Although it has no current plans to do so, the servicer
may enter into subservicing agreements with servicers unaffiliated with
MMCA 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 that 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 issuer 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 professionally and competently to
service a portfolio of motor vehicle retail installment sale
contracts and/or motor vehicle loans similar to the receivables
in accordance with standards of skill and care that are
consistent with prudent industry standards; and
o be qualified and entitled to:
- use under a license or other written agreement 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; and
- agree to maintain the confidentiality of that software, 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 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 issuer, 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 issuer, 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 for
comparable motor vehicle receivables that it services for
itself or others in accordance with its customary
standards if the cumulative extensions on any contract
shall not cause the term of that contract to extend
beyond __________; provided further, that the extensions,
in total, 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 issuer. That purchase
obligation is the 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 normally requires the servicer to
charge off a receivable in conformity with its normal practice. It will
usually also 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 vehicle has been
repossessed and sold, or at the time as MMCA determines that it will not
recover the vehicle. The servicer may sell the 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:
o the issuer;
o the indenture trustee;
o the owner trustee;
o the noteholders;
o the certificateholders; and
o MART
against any and all 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 of its
affiliates of any 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 the sale and servicing agreement or under
any of the documents to which it is a party.
The servicer's obligations to indemnify the issuer, 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, all disposition fees paid as to receivables providing
for balloon payments, all administrative fees and charges, and all late
payment fees paid as 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 as 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, 2001, 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, 2001, 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 -or shorter period in the case of the
first report- ended the preceding December 31 or, if there has been a
default in the fulfillment of any of those obligations, 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, 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 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 under the sale and servicing agreement.
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% of the total principal
amount of the outstanding notes;
o various events of bankruptcy, receivership, insolvency,
readjustment of debt, marshalling of assets and liabilities, or
similar proceedings as to MART or the servicer and various
actions by MART or the servicer indicating its insolvency or
reorganization under 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.
If one of the events of servicing termination occurs and is not
remedied, either the indenture trustee or the holders of notes evidencing
not less than 51% of the total principal amount of the outstanding notes
will have the right to remove the servicer. If the servicer is removed,
either the indenture trustee will act as successor servicer or the
indenture trustee will appoint a successor servicer.
The holders of notes evidencing not less than 51% of the total
principal amount of the outstanding notes or the holders of certificates
evidencing not less than 51% 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, according to the obligation
of the indenture trustee to deliver to each noteholder a copy of any
certificate received by the indenture trustee from the servicer under 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. 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 total 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 to appoint, 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 of that agreement, 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, as 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 total 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 certificateholders, with the consent of the
indenture trustee, MART, the holders of notes evidencing not less than a
majority of the total principal amount of the then outstanding notes,
voting as a group, and the holders of certificates evidencing not less than
a 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 by the
amendment; or
o 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 total principal amount of the then
outstanding notes of that class as to any amendment to the sale
and servicing agreement or the trust agreement.
Additionally, as 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 ISSUER
The issuer 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 under the indenture, the trust
agreement and the sale and servicing agreement; and
o the payment date following 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 with the issuer 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
issuer, on any payment date occurring in a subsequent calendar month, all
remaining receivables transferred to the issuer 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 ISSUER
The indenture trustee will give written notice of termination of the
issuer 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 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 with the issuer, 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 issuer 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
The discussion below examines the material legal aspects of the
receivables under applicable federal and state laws including the laws of
California and Texas, the states in which the largest number of obligors
reside.
BANKRUPTCY CONSIDERATIONS
MMCA and MART intend that each transfer of receivables by MMCA to
MART be structured so 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
after 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 under 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 were to become part of 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 Uniform Commercial Code has issued PEB Commentary No. 14,
which characterizes the Octagon court's interpretation of Article 9 of the
Uniform Commercial Code as erroneous. That commentary states that nothing
in Article 9 is intended to prevent the transfer of ownership of accounts
or chattel paper.
ISSUER'S RIGHTS IN THE RECEIVABLES
The receivables are "chattel paper" as defined in the Uniform
Commercial Code. Under the Uniform Commercial Code, 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 issuer, as the case may be, in the receivables.
Under the sale and servicing agreement, the servicer will hold the
receivables, either directly or through subservicers, as custodian for the
indenture trustee and the issuer following the sale and assignment of the
receivables to the issuer on any date. MART will take the action as is
required to perfect the rights of the indenture trustee and the issuer in
the receivables. The receivables will not be stamped, or otherwise marked,
to indicate that they have been sold to the issuer. 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 issuer's interest, the purchaser or secured party will acquire an
interest in the receivables superior to the interest of the issuer.
The servicer will be obligated to take those actions which are
necessary to protect and perfect the issuer'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 vehicles by dealers
to obligors; the contracts also constitute personal property security
agreements and include grants of security interests in the vehicles under
the Uniform Commercial Code. Perfection of security interests in the
vehicles is usually 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. In California and Texas, a security interest in a
vehicle is perfected by recording the security interest on the vehicle's
certificate of title.
MMCA will assign its security interests in the vehicles securing the
related receivables to MART and MART will subsequently assign its security
interests in the vehicles to the issuer. However, because of the
administrative burden and expense, the servicer, MART and the issuer will
not amend any certificate of title to identify the issuer as the new
secured party on the certificates of title relating to the vehicles. Also,
the servicer will continue to hold any certificates of title relating to
the vehicles in its possession as custodian for the issuer.
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 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 issuer against the rights of
subsequent purchasers of a vehicle or subsequent lenders who take a
security interest in a vehicle. If there are any 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 vehicles and
holders of perfected security interests.
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 the breach materially adversely affects the
interest of the issuer in the receivable. By not identifying the issuer as
the secured party on the certificate of title, the issuer's interest in the
chattel paper may not have the benefit of the security interest in the
vehicle in all states or the security interest could be defeated through
fraud or negligence. MART will assign its rights under the purchase
agreement to the issuer. If the issuer does not have a perfected security
interest in a vehicle, its ability to realize on the 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
vehicle brought into California will be perfected under the laws of the
state which issued the certificate of title until four months after the
vehicle was removed from that state. The security interest in a vehicle
brought into Texas will remain perfected for four months after the vehicle
first enters Texas and will then become unperfected if no action is taken
to perfect the vehicle in Texas. A majority of states, including
California, require surrender of a certificate of title to re-register a
vehicle. If a vehicle brought into Texas from another state is required to
be registered in Texas, satisfactory evidence of title is required before
the vehicle can be sold or transferred in Texas. 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 on the certificate of
title and, 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 vehicles.
Under the laws of most states, liens for repairs performed on a motor
vehicle and liens for unpaid taxes may take priority over even a perfected
security interest in a vehicle. California gives priority to those liens
given by statute or rule of law. In Texas, liens for work intended to
enhance or preserve the value of the vehicle, such as a mechanic's lien,
may take priority over even a perfected security interest in that vehicle.
The Internal Revenue Code of 1986, as amended, also grants priority to some
federal tax liens over the lien of a secured party. Federal law and the
laws of some states permit the confiscation of motor vehicles under some
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.
MMCA will represent to MART and MART will represent to the issuer
that the issuer's security interest in each 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 vehicle. However, liens
for repairs or taxes, or the confiscation of a 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 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 issuer losing the
priority of its security interest or its security interest in the vehicle
after the date a receivable is sold to the trust.
REPOSSESSION
In the event of default by a purchaser of a 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 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. 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 the sale, plus, in some jurisdictions, reasonable attorneys'
fees, or, in some states, by payment of delinquent installments or the
unpaid balance.
In California, the secured party must give written notice to a
defaulting obligor at least five days before a public sale or before the
day on or after which any private sale of the collateral is to be made.
Texas requires the secured party to provide a defaulting obligor with
reasonable notice of the time and place of any public sale and/or the time
after which any private sale of the collateral may be held. In both Texas
and California, 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 the sale, and
reasonable attorney's fees and legal expenses.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of a repossessed vehicle will usually 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 these 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 will normally seek to recover
any deficiency existing after repossession and sale of a vehicle.
OBLIGOR'S RIGHT TO EXCESS PROCEEDS UPON SALE OF A 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 on the vehicle sold or if no 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:
o the Truth-in-Lending Act;
o the Equal Credit Opportunity Act;
o the Federal Trade Commission Act;
o the Fair Credit Reporting Act;
o the Fair Debt Collection Practices Act;
o the Magnuson-Moss Warranty Act;
o the Federal Reserve Board's Regulations B and Z;
o state adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code; and
o 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. Those 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 like 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 have been
duplicated by the Uniform Consumer Credit Code, other state statutes, or
the common law in some states, has the effect of subjecting a seller, and
some 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 from the buyer under
that contract. Most of the receivables will fall under the requirements of
the FTC rule. Also, the issuer, as holder of the related receivables, will
be liable to any claims or defenses that a purchaser of a vehicle may
assert against the seller of the vehicle. Those 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 vehicle, the obligor may be able to assert
a defense against the seller of the vehicle. If an obligor were successful
in asserting one of these claims or defenses, it would be 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 often 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 issuer for violation of any law and the claim
materially and adversely affects the issuer'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 the United States Bankruptcy
Code 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 United States Bankruptcy
Code, 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 tax code,
existing and proposed Treasury regulations under the tax code, current
administrative rulings, judicial decisions and other applicable authorities
in effect as of the date of this prospectus, all of which are subject to
change, possibly with retroactive effect. There can be no assurance that
the IRS 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 tax code.
TAX TREATMENT OF THE NOTES AND THE ISSUER UNDER FEDERAL INCOME TAX LAW
Tax Status of the Notes and the Issuer. On the closing date, 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 issuer will not be classified as an association or a 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 issuer.
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 or "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 issuer
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
the closing date. 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 issuer
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
_____% 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 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 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 tax code. In general, these
rules provide that if the beneficial owner purchases a note at a discount
(if the discount exceeds a de minimis amount specified in the tax code)
from its stated redemption price at maturity or, if the notes were issued
with OID, its adjusted issue price, and thereafter (1) recognizes gain upon
a disposition, or (2) 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 as 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 tax 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 of that note-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, and 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 later 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 issuer
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 U.S. 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 issuer or a "controlled foreign corporation" with respect to
which the issuer is a "related person" within the meaning of the
tax 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 U.S. federal income and withholding
tax at a rate of 30 percent unless reduced or eliminated under 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 U.S. 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 U.S. 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 tax 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 the notes.
The issuer has been organized as a Delaware business trust, and MART
and the 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 issuer 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.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended, and
the tax code impose restrictions on:
o employee benefit plans (as defined in Section 3(3) of ERISA);
o plans described in Section 4975(e)(1) of the tax code, including
individual retirement accounts or Keogh Plans;
o any entities whose underlying assets include plan assets by
reason of a plan's investment in those entities; and
o persons who have specified relationships to one of the benefit
plans described in the preceding clauses, who are called
"Parties-in-Interest" under ERISA and "Disqualified Persons"
under the tax code.
In addition, the general account of an insurance company may be
deemed to include assets of employee benefit plans investing in its general
account and the insurance company might be treated as a Party-in-Interest
with respect to an employee benefit plan by virtue of that type of
investment. ERISA also imposes duties on persons who are fiduciaries of
employee benefit plans subject to ERISA.
ERISA and the tax code prohibit some transactions between a employee
benefit plan and Parties-in-Interest or Disqualified Persons with respect
to that employee benefit plan. A violation of these prohibited transaction
rules may give rise to the imposition of an excise tax under the tax code
or the imposition of a civil penalty under ERISA on all parties to the
transaction, other than the employee benefit plan but including the person
who caused the employee benefit plan to engage in the transaction, and may
give rise to the obligation to correct the prohibited transaction, unless a
statutory, regulatory or administrative exemption is available.
SPECIAL ERISA CONSIDERATIONS FOR EMPLOYEE BENEFIT PLANS
If assets of the issuer were deemed to be assets of an employee
benefit plan for purposes of ERISA and the tax code, some transactions
involving the issuer might be deemed to constitute prohibited transactions.
Under a regulation issued by the United States Department of Labor relating
to assets of employee benefit plans, the assets of the issuer would be
treated as plan assets of an employee benefit plan that invested in the
issuer for purposes of ERISA and the tax code if the employee benefit plan
acquires an "Equity Interest" in the issuer and none of the exceptions
contained in the regulation is applicable.
Under this regulation, a security is treated as Equity Interest only
if it is not treated as a debt security under applicable local law or it
has substantial equity features. Although there is very little direct
guidance from the Department of Labor on this point, because the notes (1)
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 (2) 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.
Whether or not the notes are treated as an Equity Interest, if an
employee benefit plan acquires the notes, a prohibited transaction could
arise if the issuer, 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 that employee
benefit plan. These prohibited transactions may, however, be eligible for
an exemption from the liabilities that would otherwise be applicable under
ERISA and the tax code. The availability of one or more of these exemptions
will generally depend on the type of employee benefit plan fiduciary making
the decision to acquire a note. Included among these exemptions are:
o Prohibited Transaction Class Exemption 90-1, regarding
investments by insurance company pooled separate accounts;
o Prohibited Transaction Class Exemption 91-38, regarding
investments by bank collective investment funds;
o Prohibited Transaction Class Exemption 84-14, regarding
transactions effected by "qualified professional asset managers;"
o Prohibited Transaction Class Exemption 95-60, regarding
investments by insurance company general accounts; and
o 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 tax
code unless one or more statutory, regulatory or administrative exemptions
is available. 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
Investors should note that special rules are applicable to the assets
of insurance company general accounts under ERISA and Section 4975 of the
tax code. 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 tax code. These rules also provide that, 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 tax code on the
basis of a claim that the assets of the general account of an insurance
company constitute the assets of any plan. This exception does not apply to
actions intended to avoid the application of the regulation or to actions
brought by the Secretary of Labor relating to specified breaches of
fiduciary duties that also constitute breaches of state or federal criminal
law. The plan asset status of insurance company separate accounts is
unaffected by these new rules 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 these new rules on their purchase of notes.
As of the date of this prospectus, the Department of Labor has
issued only proposed regulations. 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 tax code and the potential consequences of that investment
with respect to their specific circumstances. In this regard, each employee
benefit plan fiduciary should take into account, among other
considerations:
o whether the fiduciary has the authority to make the investment;
o the composition of the benefit plan's portfolio with respect to
diversification by type of asset;
o the benefit plan's funding objectives;
o the tax effects of the investment; and
o 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
Under 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 Salomon Smith
Barney Inc. is acting as 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 Amounts Amount
of Class A-1 of Class A-2 of Class A-3 of Class B
UNDERWRITERS Notes Notes Notes Notes
------------ ----- ----- ----- -----
<S> <C> <C> <C> <C>
Salomon Smith Barney Inc... $ $ $ $
J.P. Morgan Securities Inc...
Total...................... $ $ $ $
------------ ----- ----- ----- -----
</TABLE>
In the underwriting agreement, the several underwriters have agreed,
in accordance with 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 B notes, will be as
follows:
UNDERWRITING
DISCOUNTS AND NET PROCEEDS TO SELLING
COMMISSIONS THE SELLER CONCESSIONS REALLOWANCE
Class A-1 notes........... % % % %
Class A-2 notes........... % % % %
Class A-3 notes........... % % % %
Class B notes............. % % % %
Total for all of the note $ $
--------- ------------ ----------- ----------
The transaction expenses payable by MART are estimated to be $__________.
The representative of the underwriters has informed MART that it does
not expect discretionary sales by the underwriters to exceed 5% of the
principal amount of 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 Securities Exchange Act of 1934, as
amended. Over- allotment 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 of 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
that syndicate member are purchased in a syndicate covering transaction to
cover syndicate short positions. Those 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 those
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
accounts of the issuer 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.
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 issuer and the receivables, will be prepared by the servicer
and sent on behalf of the issuer only to DTC or Cede & Co. as nominee of
DTC and registered holder of the notes. Those notices, reports and
statements will not contain audited financial statements for the issuer.
The servicer also does not intend to send any financial reports of the
servicer or MART to noteholders. See "Terms of the Notes-Principal Amount
and Interest Rates," "-Book Entry Registration" and "-Issuance of
Definitive Notes Upon the Occurrence of Various Circumstances."
WHERE YOU CAN FIND MORE INFORMATION
MART, as originator of the issuer, 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,
including forms of some of the agreements discussed in this prospectus.
The servicer, on behalf of MART in its capacity as originator of the
issuer, will file or cause to be filed with the Securities and Exchange
Commission periodic reports for the issuer as may be required under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Securities and Exchange Commission.
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 without charge 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, for 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
scheduled principal balance of the receivable, and an amount of principal
equal to the remainder of the monthly installment.
AVAILABLE FUNDS means, for any payment date:
(1) an amount equal to the sum of the following amounts for the
preceding calendar month:
o all collections on the contracts, including amounts withdrawn
from the payahead account;
o the proceeds of sale by the issuer of any vehicle sold by the
issuer 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 the
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 as to the contracts;
o the purchase amount of each receivable purchased from the issuer
during or before 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, like 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 on 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 issuer during the Pre-funding
Period,
minus
(2) the sum of the 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, as 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.
CLOSING DATE means __________, 2000.
CUTOFF DATE means, (A) as to receivables transferred to the issuer on
the Closing Date, __________, 2000, and (B) as to receivables transferred
to the issuer during the Pre-Funding Period, the date, which will be on or
before the date of transfer, as of which the issuer will be entitled to
collections of the receivables.
INITIAL POOL BALANCE means the sum of (a) the principal balance of
the receivables pool as of the initial Cutoff Date, plus (b) the total
principal balance of all receivables transferred to the issuer during the
Pre-Funding Period, calculated as of the related Cutoff Dates.
INTEREST CARRYOVER SHORTFALL means, on 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 as 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 interest rate on the notes as of
that date minus ____%, multiplied by (2) the product of the Note Percentage
as of that date and the pre-funded amount as of that date after giving
effect to any withdrawals from the pre-funding account on that 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 means, for any payment date, the
amount equal to the lesser of:
(1) the sum of (x) __% of the total principal balance of the
receivables sold to the issuer on the Closing Date, calculated
as of the initial Cutoff Date, and (y) ___% of the principal
balances of the receivables transferred to the issuer after the
Closing Date, but on or before 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 that 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, for 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 total 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 before that
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 for any
payment date as the difference (if positive) between (1) the product of (a)
the Monthly Accrued Note Interest for that 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 __________).
NOTE PERCENTAGE means, as of any payment date, the percentage
equivalent of a fraction, the numerator of which is the total principal
amount of the notes as of that payment date, and the denominator of which
is an amount equal to the sum of the total principal amount of the notes as
of that payment date and the total principal amount of the certificates as
of that payment date, in each case after giving effect to any payment of
principal of that payment date.
PRE-FUNDED PERCENTAGE means, as of any date, 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 that date
after taking into account all withdrawals from the pre- funding account and
all transfers of contracts transferred to the issuer after the Closing Date
on or before that date.
PRE-FUNDING PERIOD means a period beginning on the Closing Date and
ending on the earliest of (a) the last day of the collection period on
which the pre-funded amount (after giving effect to any transfers therefrom
in connection with the transfer of receivables to the issuer after the
Closing Date and on or before that date) is less than $100,000, (b) the
date on which an event of default or an event of servicing termination
occurs, (c) the date on which an insolvency event occurs as to the seller
or the servicer and (d) the close of business on ________.
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 that payment date.
PRINCIPAL DISTRIBUTION AMOUNT means, for any payment date, the sum
of:
o the Scheduled Principal for that payment date, including, in the
case of a Balloon Payment Receivable, the amount owed by an
obligor as to a Balloon Payment;
o any outstanding Principal Carryover Shortfall as of the close of
business on the preceding payment date; and
o for 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 issuer after the Closing Date, 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 will not exceed the outstanding
total principal balance of the notes. 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 that payment date
and allocable to principal, to reduce the outstanding principal amount of
that class of notes to zero.
SCHEDULED PRINCIPAL means, for any payment date, the sum of:
(1) (A) collections of principal of Simple Interest Receivables
received during the related calendar month, including
collections of principal attributable to Balloon Payment
Receivables-unless an advance has previously been made as to
the Balloon Payment-and charges for excess wear and
tear and excess mileage and (B) advances made on that payment
date as to Balloon Payments on 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, like 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;
minus (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, _______, and (B) all
amounts released from the pre-funding account.
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. 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.
SPECIFIED RESERVE BALANCE means, for any payment date, an amount
equal to the lesser of:
(1) the sum of (x) _____% of the total principal balance of the
contracts transferred to the issuer on the Closing Date,
calculated as of the initial Cutoff Date, and (y) _____% of the
principal balances of contracts transferred to the issuer after
that date on or before 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 that payment date.
TOTAL REQUIRED PAYMENT means, for any payment date, the sum of:
(1) the total due and unpaid servicing fee;
(2) the Accrued Note Interest; and
(3) the Principal Distribution Amount on that payment date.
YIELD SUPPLEMENT AMOUNt for any payment date, will be determined by
aggregating for all of the receivables, other than (i) a defaulted
receivable or a receivable purchased by the servicer or repurchased by
MART, 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, the amount
equal to the product of (x) one-twelfth times (y) an amount equal to the
difference, if positive, between (1) interest on that receivable's
principal balance as of the first day of the related calendar month at a
rate equal to the sum of (A) the interest rate on the Class B notes and (B)
_____%, and (2) interest on that receivable's principal balance as of the
first day of the related calendar month at the annual percentage rate on
the receivable. For purposes of the definition of YIELD SUPPLEMENT AMOUNT,
the annual percentage rate on a contract will be zero until the first day
of the calendar month in which the first payment under the contract is due.
Beginning with the first day of the calendar month in which the first
payment of the contract is due, the annual percentage rate on the contract
will be the rate specified in the contract.
PROSPECTUS
$----------
MMCA AUTO OWNER TRUST 2000-1
$__________ _____% CLASS A-1 ASSET BACKED NOTES
$__________ _____% CLASS A-2 ASSET BACKED NOTES
$__________ _____% CLASS A-3 ASSET BACKED NOTES
$__________ _____% CLASS B ASSET BACKED NOTES
MMCA AUTO RECEIVABLES TRUST
SELLER
[INSERT GRAPHIC]
SERVICER
UNDERWRITERS OF THE CLASS A NOTES
SALOMON SMITH BARNEY
J. P. MORGAN & CO.
UNDERWRITERS OF THE CLASS B NOTES
SALOMON SMITH BARNEY
J. P. MORGAN & CO.
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 for 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 __________.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Registration Fee.............................................. $*
Printing and Engraving........................................ $*
Trust'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 ________, 2000, 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
________, 2000, 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 Form of Amended and Restated Trust Agreement of MART*
4.1 Form of Amended and Restated Trust Agreement of the Issuer
between MART and the Owner Trustee*
4.2 Form of Sale and Servicing Agreement among MART the
Servicer and the Issuer*
4.3 Form of Indenture between the Issuer and the Indenture
Trustee*
4.4 Form of Administration Agreement among the Issuer, 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.
(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 June 12, 2000.
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 Steven E. Grimaldi, J. Sean Plater
and Tatsuo Nonaka, and each of them, his or her true and lawful
attorneys-in- fact and agents with full power of substitution, for him or
her and in his or her 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 or she 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 or her 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 June 12, 2000
---------------------------- (principal executive officer)
Hiroshi Yajima
/s/ Hideyuki Kitamura Secretary and Treasurer June 12, 2000
---------------------------- (principal financial officer and
Hideyuki Kitamura principal accounting officer)
/s/ John Maynard Manager June 12, 2000
----------------------------
John Maynard
/s/ Akinobu Saito Manager June 12, 2000
----------------------------
Akinobu Saito
/s/ Charles A. Tredway Manager June 12, 2000
-----------------------------
Charles A. Tredway
/s/ Yasuhiro Hagihara Manager June 12, 2000
-----------------------------
Yasuhiro Hagihara
INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ----
1.1 Form of Underwriting Agreement*
3.1 Form of Amended and Restated Trust Agreement of MART*
4.1 Form of Amended and Restated Trust Agreement of the Issuer
between MART and the Owner Trustee*
4.2 Form of Sale and Servicing Agreement among MART the
Servicer and the Issuer*
4.3 Form of Indenture between the Issuer and the Indenture
Trustee*
4.4 Form of Administration Agreement among the Issuer, 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.
