<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 7, 1998.
REGISTRATION NO. 333-58869
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
MMCA AUTO OWNER TRUST 1998-1
(ISSUER WITH RESPECT TO THE NOTES)
MMCA AUTO RECEIVABLES, INC.
(ORIGINATOR OF THE TRUST DESCRIBED HEREIN)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<CAPTION>
DELAWARE 9999 33-0570905
<S> <C> <C>
(State or other jurisdiction (Primary Standard Industrial
of Classification Code No.) (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
6363 KATELLA AVENUE
CYPRESS, CALIFORNIA 90630-5205
(714) 236-1592
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
--------------------------
ERIC L. ECKES
6363 KATELLA AVENUE
CYPRESS, CALIFORNIA 90630-5205
(714) 236-1509
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------------
COPIES TO:
<TABLE>
<S> <C>
Susan M. Curtis, Esq. Dale W. Lum, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP Brown & Wood LLP
919 Third Avenue 555 California Street
New York, New York 10022 San Francisco, California 94104
</TABLE>
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
<TABLE>
<CAPTION>
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 (2)
<S> <C> <C> <C> <C>
% Class A-1 Asset Backed Notes............ $200,000,000 100% $200,000,000 $59,000.00
% Class A-2 Asset Backed Notes............ $250,000,000 100% $250,000,000 $73,750.00
% Class A-3 Asset Backed Notes............ $322,056,000 100% $322,056,000 $95,006.52
% Class B Asset Backed Notes.............. $60,462,000 100% $60,462,000 $17,836.29
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) $295 of which has previously been paid.
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.
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<PAGE>
SUBJECT TO COMPLETION
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PRELIMINARY PROSPECTUS DATED AUGUST 7, 1998
PROSPECTUS
$832,518,000
MMCA AUTO OWNER TRUST 1998-1
$200,000,000 % CLASS A-1 ASSET BACKED NOTES
$250,000,000 % CLASS A-2 ASSET BACKED NOTES
$322,056,000 % CLASS A-3 ASSET BACKED NOTES
$ 60,462,000 % CLASS B ASSET BACKED NOTES
------------------
MMCA AUTO RECEIVABLES, INC.
SELLER
[LOGO]
SERVICER
------------------------------
MMCA Auto Owner Trust 1998-1 (the "Trust") was formed pursuant to a Trust
Agreement dated as of July 9, 1998, between MMCA Auto Receivables, Inc. (the
"Seller") and Wilmington Trust Company, as Owner Trustee. The Trust will issue
$832,518,000 aggregate principal amount of Asset Backed Notes (collectively, the
"Notes") consisting of $200,000,000 aggregate principal amount of % Class A-1
Asset Backed Notes (the "Class A-1 Notes"), $250,000,000 aggregate principal
amount of % Class A-2 Asset Backed Notes (the "Class A-2 Notes"),
$322,056,000 aggregate principal amount of % Class A-3 Asset Backed Notes
(the "Class A-3 Notes") and $60,462,000 aggregate principal amount of % Class
B Asset Backed Notes (the "Class B Notes"), pursuant to an Indenture to be dated
as of August 1, 1998, between the Trust and Bank of Tokyo-Mitsubishi Trust
Company, as Indenture Trustee. The Trust will also issue $97,669,451.88
aggregate principal amount of Asset Backed Certificates (the "Certificates").
The Certificates are not being offered hereby.
The assets of the Trust will include a pool of motor vehicle retail
installment sale contracts originated on or after April 1, 1994 and certain
rights and obligations thereunder (collectively, the "Receivables"), certain
monies due or received thereunder on or after August 1, 1998 (the "Cutoff
Date"), the Seller's security interests in the new and used automobiles and
light- and medium-duty trucks securing the Receivables and certain other
property, as more fully described herein. The Notes will be secured by the
assets of the Trust pursuant to the Indenture. Interest on the Notes will accrue
at the rates per annum set forth herein. Interest accrued on the Notes for each
Interest Period will generally be payable on the 15th day of each month (or, if
the 15th day of the month is not a Business Day, the next following Business
Day) beginning September 15, 1998 (each, a "Payment Date"). Principal of the
Notes will be payable on each Payment Date to the extent described herein. The
rights of Certificateholders will be subordinated to the rights of the
Noteholders to the extent described herein.
The Final Payment Date for the Class A-1 Notes will be the August 1999
Payment Date, the Final Payment Date for the Class A-2 Notes will be the August
2004 Payment Date, the Final Payment Date for the Class A-3 Notes will be the
August 2004 Payment Date and the Final Payment Date for the Class B Notes will
be the August 2004 Payment Date. The Notes will be subject to redemption in
whole, but not in part, on any Payment Date on which the Servicer exercises its
option to purchase the Receivables. The Servicer may purchase the Receivables on
any Payment Date with respect to which the aggregate principal balance of the
Receivables as of the end of the related Collection Period is 10% or less of the
aggregate principal balance of the Receivables as of the Cutoff Date.
------------------------------
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" BEGINNING ON PAGE 13 HEREIN.
---------------------
THE NOTES REPRESENT OBLIGATIONS OF THE TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN THE SELLER, THE SERVICER OR ANY OF THEIR
RESPECTIVE AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO THE
PUBLIC(1) COMMISSIONS(2) SELLER(1)(3)
<S> <C> <C> <C>
Per Class A-1 Note................................... % % %
Per Class A-2 Note................................... % % %
Per Class A-3 Note................................... % % %
Per Class B Note..................................... % % %
Total................................................ $ $ $
</TABLE>
(1) Plus accrued interest, if any, from the date of initial issuance.
(2) The Seller has agreed to indemnify the several Underwriters against certain
liabilities under the Securities Act of 1933. See "Underwriting."
(3) Before deducting expenses payable by the Seller estimated at $ .
------------------------------
The Notes are offered subject to prior sale when, as and if issued by the
Trust and accepted by the Underwriters and subject to their right to reject
orders in whole or in part. It is expected that delivery of the Notes in
book-entry form will be made through the facilities of The Depository Trust
Company, Cedel Bank, societe anonyme, and the Euroclear System on or about
August , 1998.
------------------------------
UNDERWRITERS OF THE CLASS A NOTES
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
LEHMAN BROTHERS
J.P. MORGAN & CO.
UNDERWRITER OF THE CLASS B NOTES
MERRILL LYNCH & CO.
------------------
The date of this Prospectus is August , 1998.
<PAGE>
Certain persons participating in this offering may engage in transactions
that stabilize, maintain or otherwise affect the price of the Notes offered
hereby, including over-allotment, stabilizing transactions, syndicate short
covering transactions and penalty bids. For a description of these activities,
see "Underwriting."
AVAILABLE INFORMATION
The Seller has filed with the Securities and Exchange Commission (the
"Commission"), on behalf of the Trust, a Registration Statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Notes offered pursuant to this Prospectus. For further information, reference is
made to such Registration Statement, and the exhibits thereto, which are
available for inspection without charge at the public reference facilities of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, as well as the
Regional Offices of the Commission at 500 West Madison, Chicago, Illinois 60661,
and 7 World Trade Center, New York, New York 10048. Copies of such information
can be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Such material may
also be obtained from the World Wide Web site maintained by the Commission
(http://www.sec.gov). The Servicer, on behalf of the Trust, will also file or
cause to be filed with the Commission such periodic reports as may be required
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations of the Commission thereunder.
REPORTS TO NOTEHOLDERS
Unless and until Definitive Notes are issued under the limited circumstances
described herein, monthly and annual reports concerning the Receivables and the
Trust will be prepared by the Servicer and sent on behalf of the Trust only to
Cede & Co., as nominee of The Depository Trust Company ("DTC") and registered
holder of the Notes. Such reports will not contain audited financial statements
with respect to the Trust. The Seller does not intend to send any of its
financial reports to Noteholders. See "Description of the Notes--Book Entry
Registration" and "--Statements to Noteholders."
2
<PAGE>
SUMMARY
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE DETAILED
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. CERTAIN CAPITALIZED TERMS
USED IN THIS SUMMARY ARE DEFINED ELSEWHERE IN THIS PROSPECTUS. SEE THE INDEX OF
PRINCIPAL TERMS FOR THE LOCATION HEREIN OF THE DEFINITIONS OF CAPITALIZED TERMS.
<TABLE>
<S> <C>
Issuer.................. MMCA Auto Owner Trust 1998-1 (the "Trust" or the "Issuer"), a
Delaware business trust established pursuant to a Trust Agreement
dated as of July 9, 1998 (as amended and supplemented from time
to time, the "Trust Agreement") between the Seller and the Owner
Trustee.
Seller.................. MMCA Auto Receivables, Inc., a Delaware corporation and a wholly-
owned subsidiary of Mitsubishi Motors Credit of America, Inc., a
Delaware corporation ("MMCA").
Servicer................ MMCA, a wholly-owned subsidiary of Mitsubishi Motor Sales of
America, Inc., a California corporation ("MMSA").
Indenture Trustee....... Bank of Tokyo-Mitsubishi Trust Company, as trustee under the
Indenture (the "Indenture Trustee").
Owner Trustee........... Wilmington Trust Company, as trustee under the Trust Agreement
(the "Owner Trustee").
The Notes............... The Trust will issue the Notes in an aggregate initial principal
amount of $832,518,000 pursuant to an Indenture to be dated as of
August 1, 1998 (as amended and supplemented from time to time,
the "Indenture"), between the Trust and the Indenture Trustee.
The Notes will be issued in four classes consisting of: (1) %
Class A-1 Asset Backed Notes (the "Class A-1 Notes") in the
aggregate initial principal amount of $200,000,000, (2) %
Class A-2 Asset Backed Notes (the "Class A-2 Notes") in the
aggregate initial principal amount of $250,000,000, (3) %
Class A-3 Asset Backed Notes (the "Class A-3 Notes" and, together
with the Class A-1 Notes and the Class A-2 Notes, the "Class A
Notes") in the aggregate initial principal amount of $322,056,000
and (4) % Class B Asset Backed Notes (the "Class B Notes"
and, together with the Class A Notes, the "Notes") in the
aggregate initial principal amount of $60,462,000. The Notes will
be secured by the assets of the Trust pursuant to the Indenture.
The Notes will be offered for purchase in denominations of $1,000
and integral multiples thereof. See "Description of the
Notes--General."
Concurrently with the issuance of the Notes, the Trust will issue
certificates of beneficial interest evidencing interests in the
Trust Property (the "Certificates") in an aggregate principal
amount of $97,669,451.88 pursuant to the Trust Agreement. The
Certificates will be subordinated to the Notes to the extent
described herein. The Certificates are not being offered hereby
and will be retained by the Seller or an affiliate.
The Certificates evidence beneficial ownership of the Trust and
will entitle Certificateholders to receive distributions of
amounts not required to be used to make payments on the Notes or
to pay expenses of the Trust. The Certificates will be
subordinated to the Notes to the extent described herein. The
initial principal amount of the Certificates will equal
$97,669,451.88. Thereafter, the principal amount of the
Certificates will be
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
reduced on each Payment Date by principal payments made on the
Certificates.
Trust Assets............ The property of the Trust (the "Trust Property") will include (i)
the Receivables, (ii) with respect to Actuarial Receivables,
certain monies due thereunder on or after August 1, 1998 (the
"Cutoff Date"), and, with respect to Simple Interest Receivables,
certain monies due or received thereunder on or after the Cutoff
Date, (iii) the Seller's security interests in the Financed
Vehicles, (iv) certain bank accounts, including the Reserve
Account, the Supplemental Reserve Account and the Yield
Supplement Account, (v) the Seller's rights under any physical
damage, credit life, theft and disability insurance policies
covering the Financed Vehicles or the obligors under the
Receivables, (vi) certain rights related to breaches of
representations and warranties by Dealers under Dealer
Agreements, (vii) certain rights under the Sale and Servicing
Agreement, (viii) certain rights under the Yield Supplement
Agreement and (ix) certain other property, as more fully
described herein. See "The Trust Property."
The Receivables......... The Receivables will consist of a pool of retail installment sale
contracts secured by new and used automobiles and light- and
medium-duty trucks, including rights to receive certain payments
made with respect to such Receivables, security interests in the
vehicles financed thereby (the "Financed Vehicles"), and the
proceeds thereof. As of the Cutoff Date, the Receivables had an
aggregate principal balance of $930,187,451.88 (the "Initial Pool
Balance"), which consisted of a Level Pay Pool Balance of
$624,383,716.12 and a Last Scheduled Payment Pool Balance of
$305,803,735.76.
The Receivables will be purchased by the Trust from the Seller
pursuant to a Sale and Servicing Agreement, to be dated as of
August 1, 1998 (as amended or supplemented from time to time, the
"Sale and Servicing Agreement"), among the Trust, the Seller and
MMCA providing for such purchase on or before the date of
issuance of the Notes (the "Closing Date"). The Receivables will
be purchased by the Seller from MMCA pursuant to a Purchase
Agreement, to be dated as of August 1, 1998 (as amended or
supplemented from time to time, the "Purchase Agreement"),
between the Seller and MMCA, providing for such purchase on or
before the Closing Date. The Receivables will be selected from
the Contracts owned by MMCA based on the criteria specified in
the Sale and Servicing Agreement and described herein. No
Receivable will have a scheduled maturity later than July 30,
2003 (the "Final Scheduled Maturity Date"). See "The
Receivables."
The "Pool Balance" at any time will represent the aggregate
principal balance of the Receivables (including the aggregate
principal balance of Last Scheduled Payments) at the end of the
preceding calendar month commencing August 1998 (each, a
"Collection Period") or, with respect to any time during the
first Collection Period, on the Cutoff Date, after giving effect
to all payments (other than Payaheads) received from obligors,
and the principal component of all Advances and Purchase Amounts
to be remitted by the Servicer or the Seller, as the case may be,
all for such Collection Period, and reduced by the principal
amount of Receivables that became Defaulted Receivables during
such Collection Period.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Registration of Notes... The Notes will be represented initially by one or more physical
notes registered in the name of Cede & Co. ("Cede"), as nominee
of DTC. Beneficial owners of Notes may elect to hold their Notes
through DTC (in the United States) or Cedel or Euroclear (in
Europe). Transfers within DTC, Cedel or Euroclear, as the case
may be, will be made in accordance with the usual rules and
operating procedures of the relevant system. Cross-market
transfers between persons holding directly or indirectly through
DTC in the United States, on the one hand, and counterparties
holding directly or indirectly through Cedel or Euroclear, on the
other, will be effected in DTC through the relevant Depositaries
of Cedel or Euroclear.
No person acquiring a beneficial ownership interest in the Notes
(a "Note Owner") will be entitled to receive a Definitive Note,
except in certain limited circumstances. Under the terms of the
Indenture, Note Owners will not be recognized as Noteholders and
will be permitted to exercise the rights of the Noteholders only
indirectly through DTC and its participants. See "Description of
the Notes--Definitive Notes."
Payment Dates........... Payments of interest on and principal of the Notes will be made
on the 15th day of each month or, if the 15th day of such month
is not a Business Day, the next following Business Day (each, a
"Payment Date"), commencing September 15, 1998. Payments will be
made to holders of record of the Notes (the "Noteholders") as of
the day immediately preceding each Payment Date or, if Definitive
Notes are issued, as of the 15th day of the preceding month (a
"Record Date"). A "Business Day" is a day other than a Saturday,
a Sunday or a day on which banking institutions or trust
companies in New York, New York, Los Angeles, California or
Wilmington, Delaware are authorized or obligated by law,
regulation or executive order to be closed.
Note Interest Rates..... The Class A-1 Notes will bear interest at the rate of % per
annum (the "Class A-1 Rate"), the Class A-2 Notes will bear
interest at the rate of % per annum (the "Class A-2 Rate"), the
Class A-3 Notes will bear interest at the rate of % per annum
(the "Class A-3 Rate") and the Class B Notes will bear interest
at a rate of % per annum (the "Class B Rate"). The interest
rates for the various classes of Notes are referred to herein
collectively as the "Note Interest Rates."
Interest................ Interest on the outstanding principal amount of each class of the
Notes will accrue at the applicable Note Interest Rate (a) with
respect to the Class A-1 Notes, from and including the Closing
Date (in the case of the first Payment Date) or from and
including the most recent Payment Date on which interest has been
paid, to but excluding the following Payment Date and (b) with
respect to the Class A-2 Notes, the Class A-3 Notes and the Class
B Notes, from and including the Closing Date (in the case of the
first Payment Date) or from and including the 15th day of the
calendar month preceding each Payment Date to but excluding the
15th day of the following calendar month. Interest on the Class
A-1 Notes will be calculated on the basis of the actual number of
days elapsed and a 360-day year. Interest on the Class A-2 Notes,
the Class A-3 Notes and the Class B Notes will be calculated on
the basis of a 360-day year of twelve 30-day months. See
"Description of the Notes--Interest."
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Principal............... Principal of the Notes will be payable on each Payment Date in an
aggregate amount equal to the Principal Distribution Amount for
such Payment Date to the extent described in "Description of the
Notes--The Indenture Cash Flows." The "Principal Distribution
Amount" for a Payment Date will be the sum of (i) the Scheduled
Principal for such Payment Date (including, in the case of a
Final Payment Receivable, the amount owed by an obligor with
respect to a Last Scheduled Payment) plus (ii) any outstanding
Principal Carryover Shortfall as of the close of business on the
preceding Payment Date; provided, however, that the Principal
Distribution Amount shall not exceed the outstanding aggregate
principal balance of the Notes; and provided, further, that, on
the Final Payment Date for each class of Notes, the principal
required to be deposited in the Note Payment Account will include
the amount necessary (after giving effect to the other amounts to
be deposited in the Note Payment Account on such Payment Date and
allocable to principal) to reduce the outstanding principal
amount of such class of Notes to zero.
On each Payment Date, an amount equal to the Principal
Distribution Amount will be paid to the holders of the Class A-1
Notes (the "Class A-1 Noteholders") until the Class A-1 Notes
have been paid in full. On each Payment Date on and after the
Payment Date on which the Class A-1 Notes have been paid in full,
(a) an amount equal to the Class A Noteholders' Percentage of the
difference between (x) the Principal Distribution Amount and (y)
any portion of the Principal Distribution Amount applied on such
Payment Date to reduce the outstanding principal amount of the
Class A-1 Notes to zero will be paid (i) to the holders of the
Class A-2 Notes (the "Class A-2 Noteholders") until the Class A-2
Notes have been paid in full, and (ii) following payment in full
of the Class A-2 Notes, to the holders of the Class A-3 Notes
(the "Class A-3 Noteholders" and, together with the Class A-1
Noteholders and the Class A-2 Noteholders, the "Class A
Noteholders") until the Class A-3 Notes have been paid in full
and (b) an amount equal to the Class B Noteholders' Percentage of
the difference between (x) the Principal Distribution Amount and
(y) any portion of the Principal Distribution Amount applied on
such Payment Date to reduce the outstanding principal amount of
the Class A-1 Notes to zero will be paid to the holders of the
Class B Notes (the "Class B Noteholders") until the Class B Notes
have been paid in full. Notwithstanding the foregoing, on each
Payment Date occurring on or after the date on which the maturity
dates of the Notes have been accelerated following the occurrence
of an Event of Default, an amount equal to the Principal
Distribution Amount will be paid (i) to the Class A-1
Noteholders, the Class A-2 Noteholders and the Class A-3
Noteholders PRO RATA in proportion to the respective principal
balances of the Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes until all of such classes have been paid in full
and (ii) following payment in full of the Class A Notes, to the
Class B Noteholders until the Class B Notes have been paid in
full. As used herein, "Class A Noteholders' Percentage" means
90.44%, the percentage equivalent of a fraction, the numerator of
which is an amount equal to the sum of the initial principal
balances of the Class A-2 Notes and the Class A-3 Notes, and the
denominator of which is an amount equal to the sum of the initial
principal balances of the Class A-2 Notes, the Class A-3 Notes
and the Class B Notes. As used herein, "Class B
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
Noteholders' Percentage" means 9.56%, the percentage equivalent
of a fraction, the numerator of which is the initial principal
balance of the Class B Notes, and the denominator of which is an
amount equal to the sum of the initial principal balances of the
Class A-2 Notes, the Class A-3 Notes and the Class B Notes.
To the extent not previously paid, the outstanding principal
amount of (i) the Class A-1 Notes will be payable on the August
1999 Payment Date (the "Class A-1 Final Payment Date"), (ii) the
Class A-2 Notes will be payable on the August 2004 Payment Date
(the "Class A-2 Final Payment Date"), (iii) the Class A-3 Notes
will be payable on the August 2004 Payment Date (the "Class A-3
Final Payment Date") and (iv) the Class B Notes will be payable
on the August 2004 Payment Date (the "Class B Final Payment Date"
and, collectively with the foregoing, the "Final Payment Dates").
Optional Redemption..... The Notes (and the Certificates) will be redeemed in whole, but
not in part, on any Payment Date on which the Servicer exercises
its option to purchase the Receivables, which can occur on any
Payment Date with respect to which the Pool Balance as of the end
of the related Collection Period is 10% or less of the Initial
Pool Balance, at a redemption price equal to the unpaid principal
amount of the Notes plus accrued and unpaid interest thereon,
together with the unpaid principal amount of the Certificates.
The Seller does not anticipate, although no assurances can be
given, that the Pool Balance will decline to a level permitting
the Servicer to purchase the Receivables while the Notes are
outstanding. See "Description of the Notes--Optional Redemption."
Reserve Account......... The Indenture Trustee, on behalf of the Trust, will have the
benefit of funds on deposit from time to time in an account (the
"Reserve Account") maintained in the name of the Indenture
Trustee for the payment of the Total Servicing Fee, the Accrued
Note Interest and the Principal Distribution Amount on each
Payment Date (the "Total Required Payment") and to reimburse the
Servicer for the aggregate amount of Advances previously made by
the Servicer that are due and payable to the Servicer on such
Payment Date, in each case to the extent that the sum of (i) the
Trust's receipt of payments on the Receivables (after giving
effect to payments of any Yield Supplement Amounts and any
Advances) that are allocable to the payment of the Total Required
Payment and the reimbursement of Advances and (ii) amounts on
deposit in the Supplemental Reserve Account are insufficient to
pay the Total Required Payment and reimburse the Servicer for
Advances. See "Description of the Notes -- Reserve Account." The
Reserve Account will be funded initially by a deposit by the
Seller on the Closing Date of cash or Permitted Investments
having a value of $1,395,281 (the "Reserve Initial Deposit") and
will be supplemented on each Payment Date by application of funds
from the Collection Account to the extent remaining after giving
effect to the reimbursement of Advances due and payable to the
Servicer and the payment of the Total Required Payment on such
Payment Date. However, in certain circumstances the Reserve
Account could be depleted with the result that funds would not be
available from the Reserve Account for deposit in the Collection
Account to make the Total Required Payment and
</TABLE>
7
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<TABLE>
<S> <C>
to reimburse the Servicer for Advances. See "Risk
Factors--Limited Assets; Deficiencies from Sale Upon Insolvency
of Seller." The Reserve Account, together with any amounts
deposited therein from time to time, will be Trust Property, and
will be pledged in accordance with the Indenture by the Trust to
the Indenture Trustee, on behalf of the Noteholders, as secured
party.
Amounts on deposit in the Reserve Account on any Payment Date
(after giving effect to deposits thereto and withdrawals
therefrom on such Payment Date) in excess of the Specified
Reserve Balance for such Payment Date will be released and
distributed to the Seller. Upon any such distribution, the
Noteholders will have no rights in, or claims to, such amounts.
The "Specified Reserve Balance" with respect to any Payment Date
will be an amount equal to the lesser of (i) $6,976,406 and (ii)
an amount equal to (x) the outstanding principal amount of the
Notes as of such Payment Date (after giving effect to any
principal payment made on such Payment Date) less (y) the amounts
on deposit in the Supplemental Reserve Account on such Payment
Date (after giving effect to any deposits to or withdrawals from
the Supplemental Reserve Account on such Payment Date). See
"Description of the Notes--Reserve Account."
Supplemental Reserve
Account............... The Indenture Trustee, on behalf of the Trust, will have the
benefit of funds on deposit from time to time in an account (the
"Supplemental Reserve Account") maintained in the name of the
Indenture Trustee for the payment of the Total Required Payment
with respect to each Payment Date and to reimburse the Servicer
for the aggregate amount of Advances previously made by the
Servicer that are due and payable to the Servicer on such Payment
Date, in each case in the event of shortfalls in the Trust's
receipt of payments on the Receivables (after giving effect to
payments of any Yield Supplement Amounts and any Advances) that
are allocable to the payment of the Total Required Payment and
the reimbursement of Advances. The Supplemental Reserve Account
will be funded on each Payment Date by application of funds from
the Collection Account to the extent remaining after giving
effect to the reimbursement of Advances due and payable to the
Servicer, the payment of the Total Required Payment and the
deposit to the Reserve Account of the amount, if any, necessary
to reinstate the balance in the Reserve Account to the Specified
Reserve Balance (after giving effect to withdrawals therefrom on
such Payment Date). The Seller will not make a deposit to the
Supplemental Reserve Account on the Closing Date. In certain
circumstances the Supplemental Reserve Account could be depleted
with the result that funds would not be available from the
Supplemental Reserve Account for deposit in the Collection
Account to pay the Total Required Payment and to reimburse the
Servicer for Advances. See "Risk Factors--Limited Assets;
Deficiencies from Sale Upon Insolvency of Seller." The
Supplemental Reserve Account, together with any amounts deposited
therein from time to time, will be Trust Property, and will be
pledged in accordance with the Indenture by the Trust to the
Indenture Trustee, on behalf of the Noteholders, as secured
party.
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Amounts on deposit in the Supplemental Reserve Account on any
Payment Date (after giving effect to deposits thereto and
withdrawals therefrom on such Payment Date) in excess of the
Maximum Supplemental Reserve Amount for such Payment Date will be
released for distribution to the Seller. Upon any such
distribution, the Noteholders will have no rights in, or claims
to, such amounts.
The "Maximum Supplemental Reserve Amount" with respect to any
Payment Date will be an amount equal to the lesser of (i)
$18,603,749 and (ii) the outstanding principal amount of the
Notes on such Payment Date (after giving effect to any principal
payment made on such Payment Date). See "Description of the
Notes--Supplemental Reserve Account."
Yield Supplement
Agreement............. MMCA will enter into a yield supplement agreement (the "Yield
Supplement Agreement") with the Seller, which will sell and
assign its rights thereunder to the Owner Trustee for the benefit
of Certificateholders, who will pledge such rights to the
Indenture Trustee for the benefit of the Noteholders. The Yield
Supplement Agreement will, with respect to each Receivable,
provide for payment on the Business Day prior to each Payment
Date of an amount (if positive) calculated by the Servicer equal
to one-twelfth of (i) interest on such Receivable's principal
balance as of the first day of the related Collection Period at a
rate equal to the sum of (A) the Servicing Rate for such
Collection Period, (B) the Weighted Average Rate for such
Collection Period and (C) 2.00%, minus (ii) interest on such
Receivable's principal balance as of the first day of the related
Collection Period at the annual percentage rate on such
Receivable (in the aggregate for all Receivables with respect to
any Payment Date, the "Yield Supplement Amount").
The "Weighted Average Rate" means, with respect to any Payment
Date, a per annum rate equal to the product of (i) twelve and
(ii) the aggregate amount of the Monthly Accrued Note Interest
for the Notes on such Payment Date divided by the sum of the
outstanding principal amount of the Notes as of the preceding
Payment Date (after giving effect to any principal payment made
on such preceding Payment Date) or, with respect to the first
Payment Date, as of the Closing Date.
The Yield Supplement Amount payable under the Yield Supplement
Agreement will be supported by funds on deposit in a segregated
trust deposit account to be maintained with the Indenture Trustee
for the benefit of the Noteholders and the Certificateholders
(the "Yield Supplement Account"). The Yield Supplement Account
will be funded on the Closing Date with an initial deposit in an
amount to be specified in the Sale and Servicing Agreement. The
amount required to be on deposit in the Yield Supplement Account
on each Payment Date, after giving effect to withdrawals required
to be made therefrom on such Payment Date, will be an amount
equal to the sum of all projected Yield Supplement Amounts for
all future Payment Dates, assuming that future scheduled payments
on the Receivables are made on their scheduled Due Dates. The
amount, if any, by which the amount in the Yield Supplement
Account on each Payment Date after giving effect to withdrawals
required to be made therefrom on such Payment Date exceeds the
amount required to be on deposit in the Yield
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Supplement Account for such Payment Date will be released to the
Seller. The amount on deposit in the Yield Supplement Account
will therefore decrease as withdrawals are made with respect to
the Yield Supplement Amount and funds in excess of the maximum
required balance are released to the Seller. See "Description of
the Notes--Yield Supplement Account."
Collection Account;
Priority of
Payments.............. Except under certain conditions described herein, the Servicer
will be required to remit collections received with respect to
the Receivables within two Business Days of receipt thereof to an
account in the name of the Indenture Trustee (the "Collection
Account"). Pursuant to the Sale and Servicing Agreement, the
Servicer will have the power, which may be revoked by the
Indenture Trustee or by the Owner Trustee with the consent of the
Indenture Trustee, to instruct the Indenture Trustee to withdraw
funds on deposit in the Collection Account for the related
Collection Period (including funds, if any, deposited therein
from the Reserve Account, the Supplemental Reserve Account, the
Yield Supplement Account and the Payahead Account) following the
withdrawal therefrom of the amount necessary to reimburse the
Servicer for Advances previously made by the Servicer to the
extent due and payable to the Servicer on such Payment Date and
Rule of 78's Payments due and payable to the Servicer on such
Payment Date and to apply such funds on each Payment Date to the
following (in the priority indicated): (i) the Total Servicing
Fee to the Servicer, (ii) the Accrued Note Interest into the Note
Payment Account, (iii) the Principal Distribution Amount into the
Note Payment Account, (iv) any amount necessary to bring the
amounts on deposit in the Reserve Account up to the Specified
Reserve Balance into the Reserve Account, (v) any amount
necessary to bring the amounts on deposit in the Supplemental
Reserve Account up to the Maximum Supplemental Reserve Amount and
(vi) any remaining funds to the Certificate Distribution Account.
Notwithstanding the foregoing, on each Payment Date following the
occurrence of an Event of Default which has resulted in
acceleration of the Notes, the principal amount of the Class A
Notes must be paid in full prior to any payment of principal on
the Class B Notes and the principal amount of the Class B Notes
must be paid in full prior to the distribution of any amounts on
the Certificates. See "Description of the Notes--The Accounts"
and "--The Indenture Cash Flows."
Servicing Fee........... A monthly fee for servicing the Receivables (the "Servicing Fee")
will be payable to the Servicer on each Payment Date in an amount
equal to the product of one-twelfth of the Servicing Rate and the
Pool Balance as of the first day of the related Collection Period
and will be payable generally out of collections on the
Receivables prior to distributions to Noteholders. The "Servicing
Rate" will equal 1.00% per annum. As additional servicing
compensation, the Servicer will also be entitled to earnings (net
of losses and investment expenses) on amounts on deposit in the
Payahead Account, as well as Rule of 78's Payments, disposition
fees paid with respect to Final Payment Receivables, late fees
and certain other administrative fees and charges (other than
extension or deferral fees) collected on the Receivables. See
"Description of the Transfer and Servicing Agreements--Servicing
Compensation."
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Advances................ The Servicer will make an advance in respect of each Collection
Period for any portion of the scheduled payment on each Actuarial
Receivable that has not been timely made (an "Actuarial
Advance"). In addition, the Servicer will make an advance for any
portion of the Last Scheduled Payment on an Actuarial Receivable
or a Simple Interest Receivable in respect of the Collection
Period in which such payment becomes due to the extent such
payment has not been made (such an advance, a "Last Scheduled
Payment Advance" and, together with an Actuarial Advance, each an
"Advance"). Subsequent collections on Receivables and funds on
deposit in the Supplemental Reserve Account and the Reserve
Account will be used to reimburse the Servicer for Advances to
the extent described herein. See "Description of the Notes--The
Indenture Cash Flows," "--Reserve Account" and "--Supplemental
Reserve Account."
Repurchases and
Purchases of Certain
Receivables........... The Seller will be obligated to repurchase any Receivable if the
interest of the Trust therein is materially and adversely
affected by a breach of any representation or warranty made by
the Seller with respect to the Receivable, if the breach has not
been cured by the last day of the Collection Period which
includes the 60th day after the date of discovery by or notice to
the Seller of the breach. MMCA will be obligated to repurchase
the Receivable from the Seller pursuant to the Purchase
Agreement. See "Description of the Transfer and Servicing
Agreements--Mandatory Repurchase of Receivables."
The Servicer will be obligated to purchase any Receivable if,
among other things, it extends the date for final payment by the
obligor of such Receivable beyond the last day of the Collection
Period preceding the Final Scheduled Maturity Date, extends any
Receivable for more than two months for each twelve months of the
original term of the Receivable or fails to maintain a perfected
security interest in the related Financed Vehicle. See
"Description of the Transfer and Servicing Agreements--Servicing
Procedures."
Tax Status.............. In the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, for
Federal income and Delaware and California income and franchise
tax purposes, the Notes will be characterized as debt, and the
Trust will not be characterized as an association (or a publicly
traded partnership) taxable as a corporation. Each Noteholder, by
the acceptance of a Note, will agree to treat the Notes as
indebtedness. See "Certain Federal Income Tax Consequences" and
"Certain State Tax Consequences."
Legal Investment........ The Class A-1 Notes are structured to be eligible for purchase by
money market funds under Rule 2a-7 under the Investment Company
Act of 1940, as amended. A money market fund should consult its
legal advisors regarding the eligibility of the Class A-1 Notes
under Rule 2a-7 and whether an investment by the money market
fund in the Class A-1 Notes satisfies the money market fund's
investment policies and objectives.
Rating of the Notes..... It is a condition to the issuance of the Notes that each class of
Class A Notes be rated "AAA" by Moody's Investors Service, Inc.
("Moody's") and "AAA" by Standard & Poor's Ratings Services, a
division of The McGraw-
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Hill Companies ("Standard & Poor's" and, together with Moody's,
each a "Rating Agency"), and that the Class B Notes be rated
"A-1" by Moody's and "A" by Standard & Poor's. There can be no
assurance that a rating will not be lowered or withdrawn by a
Rating Agency if circumstances so warrant.
ERISA Considerations.... Subject to the considerations discussed under "ERISA
Considerations," the Notes may, in general, be purchased by or on
behalf of employee benefit plans subject to ERISA. Any employee
benefit plan fiduciary considering a purchase of Notes should,
among other things, consult with legal counsel regarding the
availability of a statutory or administrative exemption from the
prohibited transaction rules of ERISA and the Code.
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RISK FACTORS
LIMITED LIQUIDITY
There currently is no secondary market for the Notes, and there is no
assurance that one will develop. The Underwriters expect, but will not be
obligated, to make a market in each class of Notes. There is no assurance that
any such market will develop or, if one does develop, that it will provide
liquidity of investment or will continue for the life of the related Notes.
CERTAIN LEGAL ASPECTS -- THE RECEIVABLES
The Seller will cause financing statements to be filed with the appropriate
governmental authorities to perfect the interest of the Trust in the
Receivables, and the Servicer will hold the Receivables, either directly or
through subservicers, as custodian for the Indenture Trustee and the Trust
following the sale and assignment of the Receivables to the Trust. The
Receivables will not be segregated, stamped or otherwise marked to indicate that
they have been sold to the Trust. If, through inadvertence or otherwise, another
party purchases (or takes a security interest in) one or more Receivables for
new value in the ordinary course of business and obtains possession of the
Receivables without actual knowledge of the Trust's interest, the purchaser (or
secured party) will acquire an interest in such Receivables superior to the
interest of the Trust. See "Certain Legal Aspects of the Receivables--Rights in
the Receivables."
The Seller will assign its security interests in the Financed Vehicles to
the Trust in connection with the sale and assignment of the Receivables to the
Trust. Following the sale and assignment of the Receivables to the Trust, the
Servicer will hold the certificates of title or ownership relating to the
Financed Vehicles, either directly or through subservicers, as custodian for the
Indenture Trustee and the Trust. The certificates of title or ownership will not
be endorsed or otherwise amended to identify the Trust as the new secured party.
Because the Trust will not be identified as the secured party on any
certificates of title or ownership, the security interest of the Trust in a
Financed Vehicle (i) might be defeated through fraud, forgery, negligence or
error and (ii) may not be perfected in every state. See "Certain Legal Aspects
of the Receivables--Security Interests in the Financed Vehicles."
CERTAIN LEGAL ASPECTS -- BANKRUPTCY CONSIDERATIONS
The Seller has taken steps in structuring the transactions contemplated
hereby that are intended to ensure that the voluntary or involuntary application
for relief by MMCA under the United States Bankruptcy Code or similar state laws
("Insolvency Laws") will not result in consolidation of the assets and
liabilities of the Seller with those of MMCA. These steps include the
maintenance of the Seller as a separate, limited purpose subsidiary pursuant to
a certificate of incorporation containing certain limitations (including
restrictions on the nature of the Seller's business and a restriction on the
Seller's ability to commence a voluntary case or proceeding under any Insolvency
Law without the prior unanimous affirmative vote of all of its directors).
However, there can be no assurance that the activities of the Seller would not
result in a court concluding that the assets and liabilities of the Seller
should be consolidated with those of MMCA in a proceeding under any Insolvency
Law. If a court were to reach such a conclusion, then delays in payments on the
Notes could occur or reductions in the amounts of such payments could result.
See "The Seller."
It is intended by MMCA and the Seller that the transfer of the Receivables
by MMCA to the Seller constitute a "true sale" of the Receivables to the Seller.
If the transfer constitutes such a "true sale," the Receivables and the proceeds
thereof would not be part of MMCA's bankruptcy estate should it become the
subject of a bankruptcy case subsequent to the transfer of the Receivables to
the Seller.
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 or the
Seller were to become subject to a bankruptcy proceeding and a court were to
follow the OCTAGON court's reasoning, Noteholders might
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experience delays in payment or possibly losses on their investment in the
Notes. Counsel to the Seller has advised the Seller that the reasoning of the
OCTAGON case appears to be inconsistent with other precedent. In addition, the
Permanent Editorial Board of the UCC has issued an official commentary (PEB
Commentary No. 14) which characterizes the OCTAGON court's interpretation of
Article 9 of the UCC as erroneous. Such commentary states that nothing in
Article 9 is intended to prevent the transfer of ownership of accounts or
chattel paper. See "The Seller."
MATURITY AND PREPAYMENT CONSIDERATIONS
The weighted average life of each class of Notes may be reduced by
prepayments in full on Actuarial Receivables and full or partial prepayments on
Simple Interest Receivables (including any such prepayments by obligors in
response to programs maintained by MMCA or any of its affiliates that provide
special incentives for obligors to prepay all or part of the principal balance
of their respective Receivables) because the rate of payment of principal of
each class of Notes depends on the rate of payment (including prepayments) of
the principal balance of the Receivables. The Receivables are prepayable at any
time. Prepayments may also result from liquidations due to default, the receipt
of proceeds from physical damage or other insurance, repurchases by the Seller
as a result of certain uncured breaches of the warranties made by it in the Sale
and Servicing Agreement with respect to the Receivables, purchases by the
Servicer as a result of certain uncured breaches of the covenants made by it in
the Sale and Servicing Agreement with respect to the Receivables, or the
Servicer exercising its optional purchase right. See "The Receivables--Maturity
and Prepayment Considerations."
Currently, MMCA has in place a program to manage end-of-term risk and
mitigate returned vehicle losses by offering attractive terms to obligors to
prepay their contracts and return their vehicles early, provided that they
purchase a new Mitsubishi Motors vehicle. Under this program, the returned
vehicle is sold to a dealer at a price calculated, based on MMCA's then-current
assessment of the market value of the vehicle, to result in no greater a
returned vehicle loss than would be the case if the obligor had returned the
vehicle at the end-of-term and the vehicle was sold at such time. The program
applies to the Final Payment Receivables and therefore has the effect of
encouraging a higher level of prepayments on the Final Payment Receivables
(including Last Scheduled Payments) than would otherwise be the case.
The rate of prepayments on the Receivables may be influenced by a variety of
economic, social and other factors in addition to those described in the two
preceding paragraphs.
MMCA does not generally maintain records of the historical prepayment
experience of its Motor Vehicle Contract or Truck Contract portfolio. No
assurance can be given that prepayments on the Receivables will conform to any
historical experience, and no prediction can be made as to the actual prepayment
rates which will be experienced on the Receivables. Noteholders will bear all
reinvestment risk resulting from the rate of prepayment of the Receivables and
corresponding payments on the Notes.
It is expected that the final payment of each class of Notes will occur on
or prior to its respective Final Payment Date because of the considerations set
forth above. However, if sufficient funds are not available to pay any class of
Notes in full on or prior to its respective Final Payment Date, an Event of
Default will occur and final payment of such class of Notes could occur later
than such date.
LIMITED ASSETS; DEFICIENCIES FROM SALE UPON INSOLVENCY OF SELLER
LIMITED ASSETS. The Trust does not have, nor is it permitted or expected to
have, any significant assets or sources of funds other than the Receivables, the
Reserve Account, the Supplemental Reserve Account and the right to receive
payments under certain circumstances pursuant to the Yield Supplement Agreement.
The Notes represent obligations solely of the Trust. The Notes will not be
insured or guaranteed by the Seller, the Servicer, the Indenture Trustee, the
Owner Trustee or any other person or entity. Consequently, Noteholders must rely
for payment of the Notes upon payments on the Receivables (including sales
proceeds of Financed Vehicles returned to the Servicer for sale), payments under
the Yield
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Supplement Agreement and the Yield Supplement Account and, to the extent
available, amounts on deposit in the Reserve Account and the Supplemental
Reserve Account.
Amounts on deposit in the Supplemental Reserve Account and, to the extent
such amounts are insufficient, amounts on deposit in the Reserve Account will be
available on any Payment Date to cover the Total Required Payment and to
reimburse the Servicer for the aggregate amount of Advances previously made by
the Servicer that are due and payable to the Servicer with respect to such
Payment Date to the extent of any shortfalls in the Trust's receipt of payments
on Receivables (after giving effect to payments of any Yield Supplement Amounts
and any Advances) that are allocable to the payment of the Total Required
Payment and the reimbursement of Advances. See "Description of the Notes--The
Indenture Cash Flows", "--Reserve Account" and "--Supplemental Reserve Account."
If the amounts on deposit in the Supplemental Reserve Account and the Reserve
Account were exhausted, the Trust would depend solely on current payments on the
Receivables, Advances by the Servicer, proceeds from the liquidation of
Defaulted Receivables, Recoveries and payments under the Yield Supplement
Agreement and the Yield Supplement Account to make the Total Required Payment.
See "Description of the Notes--The Indenture Cash Flows" and "--Yield Supplement
Agreement."
Although the Indenture authorizes the Indenture Trustee to sell the
Receivables in accordance with the Indenture following an acceleration of the
Notes upon an Event of Default, there is no assurance that the market value of
the Receivables will at any time be equal to or greater than the aggregate
outstanding principal amount of the Notes. Therefore, upon an Event of Default,
there can be no assurance that sufficient funds will be available to repay
Noteholders in full. In addition, the amount of principal required to be
distributed to Noteholders, in the aggregate under the Indenture on any Payment
Date, other than a Final Payment Date with respect to any class of Notes, will
generally be limited to amounts available to be deposited in the Note Payment
Account. Therefore, the failure to pay principal on a class of Notes may not
result in the occurrence of an Event of Default until the Final Payment Date for
that class of Notes.
LAST SCHEDULED PAYMENT RISK
The aggregate initial principal amount of the Notes will exceed 100% of the
Level Pay Pool Balance and thus, payment of the Notes will depend in part upon
collections received with respect to Last Scheduled Payments. Collections
attributable to the Last Scheduled Payments will be deposited along with other
collections on the Receivables into the Collection Account and will be treated
as part of the Principal Distribution Amount.
The amount realized by the Trust with respect to a Last Scheduled Payment on
a Final Payment Receivable is likely to be less than the scheduled amount of the
Last Scheduled Payment if the obligor exercises its option to sell the related
Motor Vehicle to MMCA (acting on behalf of the Trust as assignee of the Final
Payment Receivable). In such circumstances, MMCA as Servicer, either directly or
through an affiliate, will resell the Motor Vehicle at wholesale in a public or
private sale, on behalf of the Trust. The amount realized on such sale is
expected to be less than the Last Scheduled Payment, in part as a result of
MMCA's method of setting the amount of the Last Scheduled Payment. The Last
Scheduled Payment on a Final Payment Receivable is determined by MMCA at the
time the related retail installment sale contract is entered into. The amount of
the Last Scheduled Payment is based on MMCA's projection of the anticipated end
of term wholesale value of the vehicle that is being financed under such
Contract, plus an additional amount that MMCA adds in order to stimulate sales
of Motor Vehicles by reducing the amount of the earlier scheduled payments under
those contracts. In addition, if MMCA were no longer distributing Motor Vehicles
in the United States, or Mitsubishi Motors were no longer manufacturing Motor
Vehicles, the market for used Motor Vehicles manufactured by Mitsubishi Motors
might be adversely affected, and the proceeds realized by the Servicer upon the
sale of Motor Vehicles which obligors elect to sell to MMCA on the maturity date
of a Final Payment Receivable might be reduced.
In the event that sale proceeds of a Motor Vehicle sold on behalf of the
Trust in connection with the obligor's exercise of its right to sell the Motor
Vehicle to MMCA or its assignee are less than the related
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Last Scheduled Payment, none of MMCA, the Servicer, the Seller or the Trust will
have any recourse to the obligor for any shortfall, nor will MMCA, the Servicer
or the Seller be obligated to pay any such shortfall to the Trust. Although the
Servicer will make a Last Scheduled Payment Advance of the full amount owed by
the obligor with respect to a Last Scheduled Payment on the Payment Date
immediately following the Collection Period in which the Last Scheduled Payment
is owed, the Servicer will be reimbursed for such Last Scheduled Payment Advance
on each Payment Date subsequent to the Payment Date on which the Last Scheduled
Payment Advance was made in an amount equal to the sum of (i) the payments by or
on behalf of the related obligor in the preceding Collection Period to the
extent such payments are allocable to the reimbursement of the Last Scheduled
Payment Advance and (ii) the aggregate amount of losses on the related
Receivable that the Servicer has recorded in its books and records during the
preceding Collection Period, but only to the extent such losses are allocable to
the Last Scheduled Payment and the Last Scheduled Payment Advance has not
otherwise been reimbursed. See "Description of the Notes--Reserve Account" and
"--Supplemental Reserve Account" herein.
The obligor under a Final Payment Receivable also has the option to
refinance with MMCA the total amount then due, subject to certain conditions.
MMCA will be obligated to the extent it offers vehicle financing, but no
successor Servicer will be obligated, to provide such refinancing, although the
Seller may contract with third parties to provide refinancing if MMCA no longer
makes such refinancing available. If a refinancing option is not available, more
Motor Vehicles may be sold to the Trust on the Due Date of the Last Scheduled
Payment, and consequently more Motor Vehicles may be sold by the Servicer on
behalf of the Trust for prices less than the Last Scheduled Payments. MMCA has a
program which encourages owners of Mitsubishi Motors vehicles to replace their
respective Mitsubishi Motors vehicle with a new Mitsubishi Motors vehicle by
offering attractive terms to such owners to prepay their accounts so long as
such owners replace their existing Mitsubishi Motors vehicle with a new
Mitsubishi Motors vehicle. The MMCA program, which permits obligors to return
their vehicles prior to the scheduled end of the Receivable's term, encourages a
higher level of prepayments on the Receivables (including Last Scheduled
Payments) than would otherwise be the case.
MMCA does not require the obligor under a Final Payment Receivable to pay
the "Gap Amount" in the event that there is a total loss of the Motor Vehicle
caused by its theft or physical damage, provided that the obligor has maintained
the insurance required by the Motor Vehicle Contract and is not in default
thereunder. The "Gap Amount" is the difference between the amount owed in
respect of the Final Payment Receivable as of the date of the total loss and
insurance proceeds (inclusive of any applicable deductible) received with
respect to the Motor Vehicle. In accordance with its customary servicing
practices and procedures, MMCA treats such Gap Amount, if any, as a non-cash
reduction of the principal of the related Last Scheduled Payment. Any such
reduction will decrease the amount of Available Funds to the Trust to the extent
of any Gap Amount in the related Collection Period.
Because MMCA has been originating Final Payment Receivables only since
October 1993, MMCA does not have extensive historical experience with respect to
the percentage of Motor Vehicles purchased by obligors, refinanced or sold back
to MMCA or with respect to the amounts realized upon sale. However, because Last
Scheduled Payments are generally set higher than MMCA's estimate of the
wholesale value at the end of the Contract, and are dependent upon conditions in
the used car market at the time of resale, MMCA expects that, in the aggregate,
the amounts received from the sale of vehicles and payments of applicable excess
wear and tear and excess mileage charges will be less than the stated amounts of
the Last Scheduled Payments.
GEOGRAPHIC CONCENTRATION
Economic conditions in the states where the obligors under the Contracts
reside may affect the delinquency, loan loss and repossession experience of the
Trust with respect to the Contracts. Based on the Cutoff Date Pool Balance,
11.54% of the Receivables will have been originated in California, 21.86% in
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Texas and 10.40% in Florida. Accordingly, adverse economic conditions or other
factors affecting California, Texas or Florida in particular could adversely
affect the delinquency, loan loss or repossession experience of the Trust.
EVENT OF DEFAULT CONSIDERATIONS
If the maturity dates of the Notes have been accelerated following the
occurrence of an Event of Default, the Notes may be prepaid in advance of their
respective maturity dates. The acceleration of the maturity dates following the
occurrence of an Event of Default will also change the order of priority for the
payment of principal on the different classes of Notes. If the maturity dates of
the Notes have been accelerated following the occurrence of an Event of Default,
the Principal Distribution Amount will be paid (i) to the Class A-1 Noteholders,
the Class A-2 Noteholders and the Class A-3 Noteholders PRO RATA in proportion
to the respective principal balances of the Class A-1 Notes, the Class A-2 Notes
and the Class A-3 Notes until all of such classes have been paid in full and
(ii) then to the Class B Noteholders until the Class B Notes are paid in full.
BOOK ENTRY REGISTRATION
The Notes of each class will be represented initially by one or more
physical notes registered in the name of Cede as nominee of DTC. No Note Owner
will be entitled to receive a Definitive Note except in certain limited
circumstances. Under the terms of the Indenture, Note Owners will not be
recognized as Noteholders, and will be permitted to exercise the rights of the
Noteholders only indirectly through DTC and its participants. See "Description
of the Notes--Book Entry Registration" and "--Definitive Notes."
THE TRUST
GENERAL
The Issuer, MMCA Auto Owner Trust 1998-1, is a business trust formed under
the laws of the State of Delaware pursuant to the Trust Agreement for the
transactions described in this Prospectus. The Trust will hold title to the
Receivables, issue the Notes and the Certificates and distribute payments on the
Notes and the Certificates. The Trust's principal offices are in the State of
Delaware in care of Wilmington Trust Company, as Owner Trustee, at the address
listed below. See "--The Owner Trustee."
The Trust will initially be capitalized through the issuance of the Notes
and the Certificates. The Trust will purchase the Receivables from the Seller
pursuant to the Sale and Servicing Agreement in exchange for the proceeds of the
Notes and the issuance to the Seller or an affiliate thereof of the
Certificates. The Seller or an affiliate will retain the Certificates.
The Servicer will service the Receivables, either directly or through
subservicers, and will be paid the Total Servicing Fee out of collections from
the Receivables, prior to distributions to Noteholders. Certain other expenses
of the Trust will be paid by the Servicer or by the Seller as provided in the
Sale and Servicing Agreement. See "Description of the Transfer and Servicing
Agreements--Servicing Procedures," "--Servicing Compensation" and "Description
of the Notes--The Indenture Cash Flows."
The Servicer will hold the Receivables and the certificates of title or
ownership relating to the Financed Vehicles as custodian for the Indenture
Trustee and the Trust. However, the Receivables will not be marked or stamped to
indicate that they have been sold to the Trust, and the certificates of title or
ownership for the Financed Vehicles will not be endorsed or otherwise amended to
identify the Trust as the new secured party. Under such circumstances and in
certain jurisdictions, the Trust's security interest in the Receivables and the
Financed Vehicles may be defeated or may not be perfected. See "Certain Legal
Aspects of the Receivables."
The Trust will not acquire any assets other than the Trust Property and it
is not anticipated that the Trust will have any need for additional capital
resources. Because the Trust will have no operating history upon its
establishment and will not engage in any business other than acquiring and
holding the Trust Property and issuing and distributing payments on the Notes
and the Certificates, no historical or pro
17
<PAGE>
forma financial statements or ratios of earnings to fixed charges with respect
to the Trust have been included herein.
If the protection provided to the Noteholders by the subordination of the
Certificates and by amounts on deposit in the Supplemental Reserve Account, the
Reserve Account and the Yield Supplement Account from time to time is
insufficient, the Noteholders would have to look principally to the Receivables
that are not Defaulted Receivables, the proceeds from the repossession and sale
of Financed Vehicles which secure Defaulted Receivables and the proceeds from
recourse, if any, against Dealers with respect to the Receivables for payment of
the Notes. In such event, certain factors, such as the Trust's not having
perfected security interests in the Financed Vehicles in all states, may affect
the Trust's ability to repossess and sell the collateral securing the
Receivables, and thus may reduce the proceeds to be distributed to Noteholders.
See "Description of the Notes--The Indenture Cash Flows" and "Certain Legal
Aspects of the Receivables."
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of the
Closing Date:
<TABLE>
<S> <C>
Class A-1 Notes............................................. $200,000,000.00
Class A-2 Notes............................................. 250,000,000.00
Class A-3 Notes............................................. 322,056,000.00
Class B Notes............................................... 60,462,000.00
Certificates................................................ 97,669,451.88
--------------
Total..................................................... $930,187,451.88
--------------
--------------
</TABLE>
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. The Seller, the Servicer
and their respective affiliates may have other banking relationships with the
Owner Trustee and its affiliates in the ordinary course of their businesses.
THE TRUST PROPERTY
The Notes will be secured by the Trust Property. The Trust Property will
include (i) the Receivables, (ii) with respect to Actuarial Receivables, certain
monies due thereunder on or after the Cutoff Date (including Payaheads) and,
with respect to Simple Interest Receivables, certain monies due or received
thereunder on or after the Cutoff Date, (iii) certain amounts and property from
time to time held in or credited to one or more accounts maintained by the
Indenture Trustee pursuant to the Sale and Servicing Agreement as described
below, including the Reserve Account, the Supplemental Reserve Account and the
Yield Supplement Account, (iv) the Seller's security interests in the Financed
Vehicles, (v) the Seller's rights to receive proceeds from claims on physical
damage, credit life, theft and disability insurance policies covering the
Financed Vehicles or the obligors, (vi) certain of the Seller's rights of
recourse against the Dealers under the Dealer Agreements relating to the
Receivables, (vii) all of the Seller's rights to certain documents contained in
the Receivable Files, (viii) certain rights under the Sale and Servicing
Agreement and the Yield Supplement Agreement, (ix) certain rights under the
Purchase Agreement, including the right of the Seller to cause MMCA to
repurchase certain Receivables from the Seller, (x) certain payments and
proceeds with respect to the Receivables held by the Servicer, (xi) all property
(including the right to receive liquidation proceeds and recoveries and Financed
Vehicles and the proceeds thereof acquired by the Trust pursuant to the terms of
a Final Payment Receivable) that shall have secured a Receivable (other than a
Receivable repurchased by the Seller or purchased by the Servicer) and that
shall have been acquired by or on behalf of the Trust, (xii) certain rebates of
premiums and other amounts relating to insurance policies and other items
financed under the Receivables in effect as of the Cutoff Date, and (xiii) all
proceeds of the foregoing.
18
<PAGE>
MMCA'S VEHICLE CONTRACT PORTFOLIO
GENERAL
MMCA currently purchases motor vehicle and light-duty truck retail
installment sale contracts (the "Motor Vehicle Contracts") and medium-duty truck
retail installment sale contracts (the "Truck Contracts," and together with the
Motor Vehicle Contracts, the "Contracts") directly from authorized Mitsubishi
Motors motor vehicle dealers and authorized Mitsubishi Motors FUSO truck dealers
(each, a "Dealer"), respectively, throughout the United States. The Contracts
are originated by Dealers who regularly sell such contracts to MMCA and other
finance providers. MMCA purchases Contracts in accordance with its established
underwriting procedures and subject to the terms of its agreements (each, a
"Dealer Agreement") with each Dealer. Each Dealer Agreement, among other things,
obligates the related Dealer to repurchase any Motor Vehicle Contract or Truck
Contract that it sold to MMCA for the outstanding principal balance thereof if
the Dealer breaches certain representations and warranties set forth in the
agreement. Such representations and warranties typically relate to the
origination of the Motor Vehicle Contract or Truck Contract and the security
interest in the related automobile or light-duty truck (a "Motor Vehicle") or
medium-duty truck (a "Truck") and not the creditworthiness of the obligor under
the Contract.
MMCA currently purchases Motor Vehicle Contracts relating to new Motor
Vehicles manufactured or distributed by Mitsubishi Motors and Motor Vehicle
Contracts relating to used Motor Vehicles manufactured or distributed by
Mitsubishi Motors or other motor vehicle manufacturers. MMCA has applied the
same underwriting standards to its purchases of Motor Vehicle Contracts whether
or not the Contracts related to Motor Vehicles manufactured or distributed by
Mitsubishi Motors. See "--Underwriting."
MMCA has at all times purchased Truck Contracts relating to new Trucks
manufactured or distributed by Mitsubishi Motors and used Trucks manufactured or
distributed by Mitsubishi Motors or other truck manufacturers. MMCA has applied
the same underwriting standards to its purchases of Truck Contracts whether or
not the Contracts related to Trucks manufactured or distributed by Mitsubishi
Motors. See "--Underwriting."
UNDERWRITING
MMCA's underwriting standards emphasize each prospective obligor's ability
to pay and creditworthiness as well as the asset value of the Motor Vehicle or
Truck that secures the related Motor Vehicle Contract or Truck Contract.
Prior to its purchase of a Motor Vehicle Contract, MMCA reviews credit
applications from the obligors that include information about each obligor's
income, residential status, monthly mortgage or rent payments, credit
obligations, bank accounts and other personal information. Upon receipt of a
credit application, MMCA obtains a credit report from an independent credit
bureau which MMCA reviews to determine the applicant's current credit status and
past credit performance. Where necessary, MMCA verifies the employment or the
income of an applicant. MMCA uses a credit scoring system and considers other
factors to reach each credit decision. In November 1996, MMCA introduced a new
credit scoring system for all Motor Vehicle Contracts, replacing the one that
had been used since June 1994. The new credit scoring system first assigns the
application to one of three credit segments: prime, limited credit experience
and non-prime. Each segment considers different credit application and credit
bureau report characteristics or assigns different weighting to certain
characteristics that are considered by all segments. This segmentation is based
solely upon the information in the applicant's credit bureau report. The new
credit scoring system identifies those aspects of an applicant's credit report
and credit application and the proposed financing arrangement that, based upon
the specific performance experience of MMCA's portfolio, are most predictive of
the probability that the applicant will pay MMCA as agreed. MMCA considers
attributes other than the credit score as part of its credit decision process,
including such factors as ratio of income to debt, an applicant's equity in the
Motor Vehicle, satisfactory existing account relationships, excellent recent
reported credit history and availability of an acceptable guarantor. MMCA
19
<PAGE>
management sets limits on the percentage of credit decisions that approve credit
to applicants scoring below company credit score minimums and deny credit to
applicants scoring above such minimums. Prior to June 1994, MMCA used a
credit-scoring system for Motor Vehicle Contracts (other than Contracts relating
to Final Payment Receivables) that took into account additional factors from the
credit application. Where the obligor of a Motor Vehicle Contract is a business
entity, MMCA reviews credit applications that include information about bank
accounts, credit references and financial results of such business entity. In
addition, MMCA obtains and reviews published credit reports on the business
entity, where available. In some cases, MMCA may require an individual to
guarantee the business' obligation under the Motor Vehicle Contract.
After considering the relevant information, an assessment is made of the
relative degree of credit risk of a particular application and the decision to
grant or deny credit for a Contract is made at the appropriate management level.
The application, if approved, is assigned to one of four credit tiers reflecting
its degree of credit risk. The interest rate for the customer's account is
determined by the credit tier, with the relatively more risky accounts receiving
a higher interest rate.
Prior to its purchase of a particular Truck Contract, MMCA reviews credit
applications from the obligors that include information about the business of
the applicant, its trade references, its bank references and personal
information of sole proprietors, partners or guarantors. MMCA does not use a
formal credit scoring system but considers, where appropriate, Dun & Bradstreet
reports, business checking account references, business credit references,
review of business financial statements and the projected income to be generated
from the Truck. An individual guarantor is generally required for a business
entity.
SERVICING AND COLLECTION
MMCA measures delinquency by the number of days elapsed from the date a
payment is due under the Motor Vehicle Contract or the Truck Contract (the "Due
Date"). 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 related Due Date. MMCA
generally begins collection activities with respect to delinquent Motor Vehicle
Contracts or Truck Contracts through telephone contact based upon the original
credit risk assigned to each obligor at contract origination. Obligors
considered to be weaker credits are generally contacted by telephone when the
Receivable becomes 7 days delinquent, while obligors considered strong credits
with lesser risk are generally contacted when the Receivable becomes 15 days
delinquent. Computer generated delinquency notices are mailed to all delinquent
obligors on the 12th day of delinquency. MMCA also uses an automated system of
monitoring delinquency, which categorizes delinquent accounts into different
priorities of collection activity, based on the level of delinquency of each
account.
MMCA's collectors are assigned to specific delinquencies and attempt to
contact the delinquent obligor by telephone or by letter based on the term of
delinquency and the history of the account. Repossession procedures typically
begin when a Motor Vehicle Contract or Truck Contract becomes between 60 to 75
days delinquent. Repossession is carried out pursuant to applicable state law
and specific procedures adopted by MMCA.
If the Motor Vehicle or Truck securing a delinquent Contract is repossessed,
MMCA's current policy is generally to charge off the Motor Vehicle Contract or
Truck Contract on the date on which the proceeds of sale of the Motor Vehicle or
Truck are applied to the Contract balance and the deficiency is determined.
Prior to February 1997, MMCA's policy was generally to charge off a Contract on
the earlier of the date on which the proceeds of sale of the repossessed
Financed Vehicle were applied to the Contract balance and the date on which the
Motor Vehicle Contract became 120 days delinquent or the Truck Contract became
180 days delinquent if MMCA had not yet repossessed the related Motor Vehicle or
Truck. MMCA's current policy, which was first implemented in February 1997, is
to charge off a delinquent Contract as to which the related Financed Vehicle has
not been repossessed only at such time as it determines that it will be unable
to recover the Financed Vehicle (which time may be later than the time at which
the Contract
20
<PAGE>
would have been charged off under MMCA's prior policy). Any deficiencies
remaining after repossession and sale of the related Motor Vehicle or Truck or
after the full charge-off of the related Motor Vehicle Contract or Truck
Contract are pursued by MMCA to the extent practicable and legally permitted.
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
Each Contract generally requires the obligor to obtain physical damage
insurance covering loss or damage to the Motor Vehicle or Truck. The Dealer
Agreements include a requirement that the Dealers provide MMCA with written
confirmation that there is physical damage insurance acceptable to MMCA covering
each Motor Vehicle or Truck at the time that MMCA purchased the related Motor
Vehicle Contract or Truck Contract from the Dealers. MMCA tracks the ongoing
status of insurance by the obligors, and attempts to cause the obligors to
reinstate such insurance in the event that it is allowed to lapse; nevertheless,
there is no assurance that each Motor Vehicle or Truck will continue to be
covered by physical damage insurance for the entire term during which the
related Contract is outstanding.
DELINQUENCY, CREDIT LOSS AND RETURNED VEHICLE LOSS EXPERIENCE
Set forth below is certain information concerning MMCA's combined portfolio
of Motor Vehicle Contracts and Truck Contracts, including Contracts previously
sold which MMCA continues to service. MMCA changed its credit scoring system for
Motor Vehicle Contracts (other than contracts relating to Final Payment
Receivables) in June 1994, and in November 1996, MMCA again changed its credit
scoring system and made the changes applicable to all types of Motor Vehicle
Contracts. See "--Underwriting" above. The Receivables were originated more
recently than, on average, the receivables related to Motor Vehicles and Trucks
in the tables in the following pages.
MMCA began originating Final Payment Receivables in October 1993. Because
Final Payment Receivables have been originated in large volume over only a short
period of time, the experience shown in the tables below may not be comparable
to the actual performance of the Final Payment Receivables included in the Trust
Property.
Because (i) the composition of Receivables included in the Trust differs
from MMCA's combined portfolio, (ii) MMCA changed its underwriting criteria with
respect to non-Final Payment Receivables in June 1994 and (iii) MMCA changed its
underwriting criteria again in November 1996 with respect to all types of
Receivables, no assurance can be given that the performance of the Receivables
included in the Trust will be similar to the historical performance of the
portfolio as a whole. Further, for the same reasons as are set forth above, the
delinquencies, credit losses and returned vehicle losses experienced by the
Trust may differ from the delinquencies, credit losses and returned vehicle
losses experienced by the combined portfolio in the past or in the future.
21
<PAGE>
DELINQUENCY EXPERIENCE (1)
<TABLE>
<CAPTION>
AS OF JUNE 30, AS OF DECEMBER 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Number of Contracts Outstanding at End of Period................ 126,005 126,080 123,274 122,224 107,507
Delinquencies as a Percent of Contracts Outstanding (2)
30-59 Days.................................................... 3.55% 4.27% 4.42% 5.13% 4.00%
60-89 Days.................................................... 1.12% 1.30% 1.56% 1.69% 0.92%
90 Days or More............................................... 0.26% 0.30% 0.51% 0.54% 0.30%
Repossessions as a Percent of Contracts Outstanding (2)(3)...... 0.69% 1.10% 0.96% 1.41% 1.70%
</TABLE>
- ------------------------
(1) The information in the table includes Motor Vehicle Contracts for new and
used Motor Vehicles and Truck Contracts for new and used Trucks owned by
MMCA or previously sold by MMCA which MMCA continues to service. Delinquency
numbers are net of bankrupt accounts and repossessions.
(2) The period of delinquency is based on the number of days more than 10% of a
payment is contractually past due, and the percent represents delinquent
dollars as a percent of dollars outstanding.
(3) Repossessions means Contracts with respect to which the Financed Vehicle has
been repossessed but for which sale proceeds have not yet been applied to
the Contract balance.
NET CREDIT LOSS AND REPOSSESSION EXPERIENCE (1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------------- ----------------------------------------
1998 1997 1997 1996 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Amount Outstanding (2)......................... $ 1,861,071 $ 1,802,327 $ 1,769,219 $ 1,687,592 $ 1,436,009
Average Amount Outstanding (3)................. $ 1,776,937 $ 1,747,828 $ 1,776,481 $ 1,590,046 $ 1,221,467
Number of Contracts Outstanding................ 126,005 126,080 123,274 122,224 107,507
Average Number of Contracts Outstanding (3).... 122,927 124,304 124,945 117,048 93,879
Charge-offs (4)................................ $ 28,212 $ 40,008 $ 73,242 $ 84,872 $ 20,171
Recoveries (5)................................. $ 5,192 $ 7,483 $ 13,126 $ 7,372 $ 1,058
Net Losses..................................... $ 23,020 $ 32,525 $ 60,116 $ 77,500 $ 19,113
Number of Repossessions (6).................... 2,531 4,006 7,382 6,712 4,260
Number of Repossessions as a Percent of the
Average Number of Contracts Outstanding
(7).......................................... 4.12% 6.45% 5.91% 5.73% 4.54%
Net Losses as a Percent of Average Amount
Outstanding (7).............................. 2.59% 3.72% 3.38% 4.87% 1.56%
</TABLE>
- ------------------------
(1) The information in the table includes Motor Vehicle Contracts for new and
used Motor Vehicles and Truck Contracts for new and used Trucks owned by
MMCA or previously sold by MMCA which MMCA continues to service.
(2) Amount outstanding is remaining principal balance of the Contracts,
including Last Scheduled Payments to the extent attributable to principal on
Final Payment Receivables, plus any outstanding fees and charges and any
accrued and unpaid interest.
(3) Averages are computed by taking a simple average of the average months
outstanding for each period presented.
(4) Charge-offs represent the total aggregate amount due on Motor Vehicle
Contracts and Truck Contracts that is determined to be uncollectible in the
period, less proceeds from disposition of related vehicles, other than
recoveries described in Note (5). The calculation of Charge-offs for the
Contracts in the portfolio includes both earned but unpaid finance charges
and Last Scheduled Payments. Charge-offs do not include any losses on sales
of Motor Vehicles that were purchased by MMCA pursuant to the terms of a
Final Payment Receivable, because such losses would not constitute credit
losses, but Charge-offs do include losses with respect to both the
amortizing monthly installments and Last Scheduled Payments for Final
Payment Receivables which
22
<PAGE>
have defaulted. Charge-offs do not include expenses associated with
collection, but do include expenses associated with repossession or
disposition of the vehicles. MMCA currently charges off a Contract upon the
earlier of (i) the date upon which the related Financed Vehicle is sold
following repossession or (ii) the date as of which MMCA determines that it
will be unable to recover the Financed Vehicle from the obligor. Prior to
February 1997, MMCA had a policy of charging off Motor Vehicle Contracts and
Truck Contracts upon the earlier of the date of sale of the repossessed
Financed Vehicle and the dates as of which the Motor Vehicle Contract or
Truck Contract became 120 days and 180 days delinquent, respectively.
Contracts of bankrupt obligors are included only if charged off.
(5) Recoveries generally consist of amounts received on Contracts following the
time at which the Contract is charged off net of collection expenses.
(6) Number of Repossessions means the number of repossessed Motor Vehicles and
Trucks in a given period.
(7) Annualized rate. The six-month period ending June 30, 1998 is not
necessarily indicative of a full year's actual results. MMCA's credit loss
experience is dependent upon the number of repossessions, the amount
outstanding at the time of repossession, and the resale value of repossessed
vehicles. Losses and delinquencies are affected by, among other things,
general and regional economic conditions and the supply of and demand for
automobiles and light- or medium-duty trucks.
FINAL PAYMENT RECEIVABLES: LOSS EXPERIENCE ON RETURNED VEHICLES (1)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------------- --------------------------------------
1998 1997 1997 1996 1995
------------- ----------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Total Number of Final Payment Receivables
Scheduled to Terminate....................... 10,849 1,349 10,716 1,022 34
Total Number of Vehicles Returned to MMCA...... 2,550 383 2,926 435 7
Return Ratio (2)............................... 23.50% 28.39% 27.31% 42.56% 20.59%
Total (Losses)/Gains on Returned Vehicles Sold
(3).......................................... $ (3,084,377) $ (628,759) $ (5,371,694) $ (726,208) $ (12,464)
Total Number of Returned Vehicles Sold......... 1,643 364 2,578 432 7
Average (Loss)/Gain per Returned Vehicle Sold
(3).......................................... $ (1,877) $ (1,727) $ (2,084) $ (1,681) $ (1,781)
</TABLE>
- ------------------------
(1) The information in the table includes Motor Vehicles returned upon the
expiration of the related Contracts and Motor Vehicles returned under MMCA's
program that offers attractive terms to owners of Motor Vehicles to prepay
their accounts in connection with their respective purchases of a new Motor
Vehicle.
(2) The number of vehicles returned to MMCA as a percentage of the number of
Final Payment Receivables scheduled to terminate in the related period.
(3) Losses are calculated without deduction for auction or other disposition
expenses on resale.
MMCA's loss experience on returned Motor Vehicles is dependent upon the
number of Motor Vehicles returned, any programs offered by MMCA that permit the
early return of Motor Vehicles, the amount of the related Receivables
outstanding at the time the Motor Vehicles are returned and the resale value of
the returned Motor Vehicles.
23
<PAGE>
THE RECEIVABLES
SELECTION CRITERIA
The Receivables were purchased by MMCA from Dealers in the ordinary course
of business in accordance with MMCA's underwriting standards. The Receivables
were selected from MMCA's portfolio by several criteria, including the
following: (i) each Receivable is secured by a new or used automobile or a
light- or medium-duty truck; (ii) each Receivable has an annual percentage rate
("APR") of at least 0% and not more than 30%; (iii) each Receivable had a
remaining maturity as of the Cutoff Date of not more than 60 months, and an
original maturity of not more than 60 months; (iv) 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 Cutoff Date; (v) no Receivable was more than 30 days delinquent as of the
Cutoff Date; (vi) no Financed Vehicle had been repossessed as of the Cutoff
Date; (vii) each Receivable is an installment sale contract; (viii) each
Receivable is an Actuarial Receivable or a Simple Interest Receivable (and may
also be a Final Payment Receivable); (ix) each Receivable was originated during
or after April 1994; (x) as of the Cutoff Date, no obligor under a Receivable is
the subject of a proceeding under the United States Bankruptcy Code; and (xi)
each Receivable was originated in the United States by a Dealer for the consumer
or commercial sale of a Financed Vehicle in the ordinary course of such Dealer's
business.
CERTAIN CHARACTERISTICS
The composition of the Receivables as of July 31, 1998 and the geographical
distribution and distribution by APR of the Pool Balance as of July 31, 1998 are
set forth in the following tables. "Level Pay Pool Balance" means the Pool
Balance exclusive of the Last Scheduled Payment Pool Balance. See "Description
of the Notes--Final Payment Receivables." "Last Scheduled Payment Pool Balance"
means the aggregate principal balance of Last Scheduled Payments.
COMPOSITION OF THE RECEIVABLES
<TABLE>
<S> <C>
Pool Balance........................................................ $930,187,451.88
Level Pay Pool Balance.............................................. $624,383,716.12
Last Scheduled Payment Pool Balance................................. $305,803,735.76
Number of Receivables............................................... 53,764
Average Principal Balance........................................... $17,301.31
(Range)........................................................... $224.07 to $53,096.25
Average Original Amount Financed.................................... $20,326.90
$3,063.76 to
(Range)........................................................... $56,598.00
Average Level Pay Balance........................................... $11,613.42
(Range)........................................................... $130.75 to $53,096.25
Average Last Scheduled Payment Balance (1).......................... $10,191.42
(Range)........................................................... $2,203.84 to 27,911.36
Weighted Average APR................................................ 5.938%
(Range)........................................................... 0.00% to 23.591%
Weighted Average Original Term to Maturity.......................... 49.96 months
(Range)........................................................... 12 months to 60 months
Weighted Average Remaining Term to Maturity......................... 38.96 months
(Range)........................................................... 5 months to 60 months
</TABLE>
- ------------------------------
(1) Based on Final Payment Receivable balances only.
24
<PAGE>
GEOGRAPHIC DISTRIBUTION
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF POOL OF POOL
STATE(1) BALANCE(2) STATE(1) BALANCE(2)
- -------------------------------------------- ----------- -------------------------------------------- -----------
<S> <C> <C> <C>
Alaska...................................... 0.10% Nebraska.................................... 0.17%
Arizona..................................... 1.15 Nevada...................................... 0.28
Arkansas.................................... 1.09 New Hampshire............................... 0.17
California.................................. 11.54 New Jersey.................................. 1.44
Colorado.................................... 0.41 New Mexico.................................. 0.79
Connecticut................................. 1.91 New York.................................... 3.28
Delaware.................................... 0.56 North Carolina.............................. 1.24
Florida..................................... 10.40 North Dakota................................ 0.05
Georgia..................................... 6.04 Ohio........................................ 1.12
Idaho....................................... 0.07 Oklahoma.................................... 1.38
Illinois.................................... 7.28 Oregon...................................... 0.48
Indiana..................................... 0.63 Pennsylvania................................ 1.81
Iowa........................................ 0.75 Rhode Island................................ 0.13
Kansas...................................... 0.14 South Carolina.............................. 2.64
Kentucky.................................... 0.41 South Dakota................................ 0.03
Louisiana................................... 6.09 Tennessee................................... 1.83
Maine....................................... 0.27 Texas....................................... 21.86
Maryland.................................... 4.06 Utah........................................ 0.21
Massachusetts............................... 0.82 Vermont..................................... 0.06
Michigan.................................... 0.35 Virginia.................................... 2.70
Minnesota................................... 0.50 Washington.................................. 0.40
Mississippi................................. 2.01 West Virginia............................... 0.04
Missouri.................................... 0.99 Wisconsin................................... 0.33
Montana..................................... 0.00
-----------
Total....................................... 100.00%
-----------
-----------
</TABLE>
- ------------------------
(1) State of origination is based on the addresses of the originating Dealers.
(2) Percentages may not add to 100.00% due to rounding.
25
<PAGE>
DISTRIBUTION BY APR
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF POOL OF POOL
APR RANGE(%) RECEIVABLES BALANCE(1)(2) BALANCE(3)
- ------------------------------------------------------------------------ ----------- -------------- -----------
<S> <C> <C> <C>
0.00 to 0.99............................................................ 6,590 $ 138,737,916 14.92%
1.00 to 1.99............................................................ 834 12,001,556 1.29
2.00 to 2.99............................................................ 5,492 74,929,996 8.06
3.00 to 3.99............................................................ 8,287 167,741,036 18.03
4.00 to 4.99............................................................ 3,373 56,853,896 6.11
5.00 to 5.99............................................................ 5,420 74,795,400 8.04
6.00 to 6.99............................................................ 5,116 85,786,440 9.22
7.00 to 7.99............................................................ 2,986 51,501,743 5.54
8.00 to 8.99............................................................ 1,860 44,478,497 4.78
9.00 to 9.99............................................................ 3,835 74,711,093 8.03
10.00 to 10.99.......................................................... 3,137 49,460,484 5.32
11.00 to 11.99.......................................................... 2,158 35,343,241 3.80
12.00 to 12.99.......................................................... 1,111 16,072,235 1.73
13.00 to 13.99.......................................................... 931 13,181,497 1.42
14.00 to 14.99.......................................................... 802 11,692,473 1.26
15.00 to 15.99.......................................................... 507 6,955,436 0.75
16.00 to 16.99.......................................................... 274 3,667,060 0.39
17.00 to 17.99.......................................................... 236 3,020,022 0.32
18.00 to 18.99.......................................................... 415 4,766,504 0.51
19.00 to 19.99.......................................................... 169 1,766,456 0.19
20.00 to 20.99.......................................................... 81 993,157 0.11
21.00 to 21.99.......................................................... 56 629,174 0.07
22.00 to 22.99.......................................................... 88 1,063,667 0.11
23.00 to 23.99.......................................................... 6 38,474 0.00
----------- -------------- -----------
Total................................................................... 53,764 $ 930,187,453 100.00%
----------- -------------- -----------
----------- -------------- -----------
</TABLE>
- ------------------------
(1) Remaining principal balance for Simple Interest Receivables, and the present
value of scheduled remaining payments for Actuarial Receivables.
(2) Pool Balance does not add up to Initial Pool Balance because of rounding.
(3) Percentages may not add to 100.00% due to rounding.
Based on the Initial Pool Balance, approximately 88.51% of the total number
of Receivables and approximately 93.29% of the Pool Balance, relate to new
automobiles and light- or medium-duty trucks. Substantially all of such new
automobiles and light- or medium-duty trucks were manufactured or distributed by
Mitsubishi Motors. Approximately 11.49% of the total number of Receivables and
approximately 6.71% of the Pool Balance as of the Cutoff Date, relate to used
automobiles and light- or medium-duty trucks. Of the new and used vehicles,
approximately 3.16% of the total number of Receivables and approximately 2.26%
of the Pool Balance as of the Cutoff Date, relate to program automobiles and
light-duty trucks. Program automobiles are vehicles in the current and
immediately preceding model years which dealers have acquired under a
remarketing program administered by MMCA. This program allows dealers to offer
to purchasers of program automobiles the same rate of interest and terms offered
to new car buyers. Program vehicles are primarily automobiles returned to MMCA
by rental car companies, but also include off-lease MMCA company and employee
lease vehicles and MMCA pool cars. Approximately 0.85% of the total number of
Receivables and approximately 1.29% of the Pool Balance as of the Cutoff Date,
relate to medium-duty trucks, the primary purchasers of which are businesses. Of
the used vehicles,
26
<PAGE>
approximately 6.75% of the total number of Receivables and approximately 3.38%
of the Pool Balance as of the Cutoff Date, relate to refinanced program
automobiles and light- or medium-duty trucks manufactured in prior model years
which are financed at the original rates set forth in the related Contracts or
at used vehicle rates.
PAYMENTS ON THE RECEIVABLES
Approximately 30.07% of the Initial Pool Balance was attributable to
Receivables that provide for the allocation of payments according to the
"actuarial" method ("Actuarial Receivables") excluding Actuarial Receivables of
the type described in the immediately following paragraph. An Actuarial
Receivable provides for 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 APR of the loan multiplied by the
scheduled principal balance. The remainder of the scheduled payment is applied
to principal. Generally, no adjustment is made in the event of early or late
payments, although in the latter case the obligor may be subject to a late
payment charge.
Approximately 1.54% of the Initial Pool Balance was attributable to
Actuarial Receivables that provide that if the Receivable is prepaid in full,
the amount payable will be determined in accordance with a contractual
calculation that is based upon the "Rule of 78's." In the event of the
prepayment in full of such Actuarial Receivables, the excess of the amount that
would be due if the receivable generally provided for allocation of payments
between principal and interest using the Rule of 78's over the amount that would
be payable upon such prepayment using the actuarial method (the "Rule of 78's
Payment") will not be used to make payments due to Noteholders but will be paid
to the Servicer.
Approximately 68.38% of the Initial Pool Balance was attributable to
receivables that provide for the allocation of payments according to the "simple
interest" method ("Simple Interest Receivables") including Simple Interest
Receivables of the type described in the immediately following paragraph. In
November 1996, MMCA began phasing out Motor Vehicle Contracts and Truck
Contracts that provide for the allocation of payments according to the actuarial
method in favor of those Contracts that provide for allocation of payments
according to the "simple interest" method. Since June 1997, MMCA has purchased
only Motor Vehicle Contracts and Truck Contracts which provide for allocation of
payments according to the "simple interest" method. A Simple Interest Receivable
also provides for the amortization of the amount financed under the receivable
over a series of fixed level monthly payments. However, unlike the monthly
payment under an Actuarial Receivable, each monthly payment consists of an
installment of interest which is calculated on the basis of the outstanding
principal balance of the receivable multiplied by the stated APR 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
Due Date, the portion of the payment allocable to interest for the period since
the preceding payment was made will be less than it would have been had the
payment been made as scheduled, and the portion of the payment applied to reduce
the unpaid principal balance will be correspondingly greater. Conversely, if an
obligor pays a fixed monthly installment after its Due Date, the portion of the
payment allocable to interest for the period since the preceding payment was
made will be greater than it would have been had the payment been made as
scheduled, and the portion of the payment applied to reduce the unpaid principal
balance 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 Final Payment
Receivable that is a Simple Interest Receivable, this allocation of payments may
result in the remaining principal balance of the Final Payment Receivable on the
Due Date for the Last Scheduled Payment being greater or less than the Last
Scheduled Payment.
27
<PAGE>
Approximately 0.60% of the Initial Pool Balance was attributable to Simple
Interest Receivables that are subject to a cap on the aggregate amount of
interest to be paid during the term of such receivables ("Capped Receivables").
With respect to Capped Receivables, if the obligor consistently makes scheduled
payments after the Due Date, 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 on the
aggregate amount of interest payable over the term of a Capped Receivable. If,
as a result of such delinquencies, the aggregate amount of interest paid under
the receivable reaches the lifetime cap, no further interest will accrue and
each scheduled payment due thereafter will be applied to the reduction of
principal.
Approximately 54.51% of the Initial Pool Balance was attributable to Final
Payment Receivables. Such receivables provide for amortization of a portion of
the amount financed over a series of fixed level monthly installments in
accordance with the actuarial method or the simple interest method, but also
provide for a substantially larger final scheduled payment of principal together
with one month's interest after payment of such monthly installments. Upon
maturity of a Final Payment Receivable, an obligor thereunder may satisfy the
amount then owed by the obligor by (1) paying the remaining principal amount of
the receivable, all accrued and unpaid interest, plus any fees, charges, and
other amounts then owing, on the Due Date of the Last Scheduled Payment; (2)
refinancing the net amount then due, which may be greater or less than the Last
Scheduled Payment, subject to certain conditions; or (3) selling the related
Motor Vehicle to MMCA or its assignee for an amount equal to the Last Scheduled
Payment (reduced by certain charges) and paying any excess of the total amount
owed over the Last Scheduled Payment to MMCA. See "Description of the Notes --
Final Payment Receivables."
The Receivables will be prepayable by the obligors at any time. Prepayments
may also result from liquidations due to default, the receipt of proceeds from
physical damage or other insurance, repurchases by the Seller as a result of
certain uncured breaches of the warranties made by it in the Sale and Servicing
Agreement with respect to the Receivables, purchases by the Servicer as a result
of certain uncured breaches of the covenants made by it in the Sale and
Servicing Agreement with respect to the Receivables, or the Servicer exercising
its option to purchase all of the remaining Receivables. The rate of prepayments
on the Receivables may be influenced by a variety of economic, social, and other
factors. See "-- Maturity and Prepayment Considerations."
MATURITY AND PREPAYMENT CONSIDERATIONS
Prepayments in full on Actuarial Receivables and full or partial prepayments
on Simple Interest Receivables generally will have the effect of reducing the
weighted average life of the Notes, while delinquencies by obligors under the
Simple Interest Receivables, as well as extensions and deferrals on the
Receivables generally, will have the effect of increasing the weighted average
life of the Notes. The Receivables may be prepaid by the obligors at any time
and mandatory prepayments of a Receivable may result from, among other things,
the sale, insured loss or other disposition of the Financed Vehicle or the
Receivable becoming a Defaulted Receivable. No assurance can be given as to the
rate of prepayments or as to whether there will be a substantial amount of
prepayments, nor can any assurance be given as to the level or timing of
prepayments, since prepayments are affected by numerous social, economic and
other factors. Noteholders will bear all reinvestment risk resulting from the
rate of prepayment of the Receivables. To the extent that MMCA or any affiliate
of MMCA maintains any program which has the effect of encouraging prepayments,
prepayments may increase. MMCA currently maintains a program that offers
attractive terms to obligors to prepay their accounts and return their vehicles
early, provided that they purchase a new Mitsubishi Motors vehicle, has the
effect of encouraging prepayments. No prediction can be made of the effect of
such programs on prepayments, and MMCA is not required to establish or maintain
any such program.
The Receivables have different APRs, and the rates of prepayments of
Receivables with higher and lower APRs may differ. Higher rates of prepayments
of Receivables with higher APRs will decrease the amount available to cover
delinquencies and defaults on the Receivables and may decrease the amount
28
<PAGE>
available to the Reserve Account and the Supplemental Reserve Account. See
"Description of the Notes --The Indenture Cash Flows", " --Reserve Account" and
"--Supplemental Reserve Account." The Yield Supplement Agreement will mitigate
this effect in the case of Receivables having APRs less than the sum of the
Servicing Rate and the Weighted Average Rate.
Prepayments on receivables relating to Motor Vehicle Contracts and Truck
Contracts can be measured relative to a prepayment standard or model. The model
used in this Prospectus, the Absolute Prepayment Model ("ABS"), represents an
assumed rate of prepayment each month relative to the original number of
receivables in a pool of receivables. ABS further assumes that all the
receivables are the same size and amortize at the same rate and that each
receivable in each month of its life will either be paid as scheduled or be
prepaid in full. 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.
As the rate of payment of principal of the Notes will depend on the rate of
payment (including prepayments) of the principal balance of the Receivables,
final payment of the Notes of any class could occur significantly earlier than
the Final Payment Date for such class. Reinvestment risk associated with early
payment of the Notes will be borne exclusively by the Noteholders.
32.88% of the Initial Pool Balance consists of the principal balance of the
Last Scheduled Payments. Accordingly, a portion of the principal amount of the
Notes is expected to be paid from Last Scheduled Payments. All of the Last
Scheduled Payments on Final Payment Receivables are due, as of the Closing Date,
between January 1, 1999 and July 26, 2003. Accordingly, significant payments of
principal are likely to be made during such period. The average amount of a Last
Scheduled Payment on a Final Payment Receivable is approximately $10,191.42,
which is approximately 60.31% of the average principal balance of a Final
Payment Receivable.
The tables 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" (collectively, the "ABS Tables") assume
that (i) the Yield Supplement Amount is deposited into the Collection Account
each period, (ii) the Receivables prepay in full at the specified constant
percentage of ABS monthly, with no defaults, losses or repurchases, (iii) each
scheduled monthly payment on the Receivables is made on the last day of each
month, and each month has 30 days, (iv) payments on the Notes are made on each
Payment Date (and each such date is assumed to be the 15th day of each
applicable month), (v) the Closing Date is August 20, 1998 and the Servicer does
exercise its option to purchase the Receivables and (vi) MMCA's program to
manage end-of-term risks and mitigate returned vehicle losses by offering
attractive terms to owners of Motor Vehicles to prepay their accounts and return
their Motor Vehicles early, provided that they purchase a new Motor Vehicle,
does not extend to the Receivables. The ABS Tables indicate the percent of the
initial principal balance of each class of the Notes that is projected to be
outstanding after each of the Payment Dates shown at various constant ABS
percentages.
The ABS Tables also assume that the Receivables have been aggregated into
four hypothetical level payment pools with all of the Receivables within each
such pool having the following characteristics and that the level scheduled
monthly payment for each of the four pools (which is based on its aggregate
29
<PAGE>
principal balance, APR, original term to maturity and remaining term to maturity
as of the Cutoff Date) will be such that each pool will be fully amortized by
the end of its remaining term to maturity.
<TABLE>
<CAPTION>
WEIGHTED AVERAGE WEIGHTED AVERAGE
LEVEL AGGREGATE WEIGHTED ORIGINAL TERM REMAINING TERM
PAYMENT PRINCIPAL AVERAGE TO MATURITY TO MATURITY
POOL BALANCE APR (IN MONTHS) (IN MONTHS)
- ----------------------------------------------- ----------------- ----------- ---------------- ----------------
<S> <C> <C> <C> <C>
1.............................................. $ 59,708,523.93 5.132% 44 19
2.............................................. 92,718,218.65 7.586 46 31
3.............................................. 246,794,803.00 3.943 48 45
4.............................................. 225,162,170.54 6.256 60 57
</TABLE>
The ABS Tables also assume that the principal amounts of the Last Scheduled
Payments on the Receivables have been aggregated into four hypothetical last
scheduled payment pools with all of the Final Payment Receivables within each
pool having the following characteristics and that the principal amount is due
at the maturity of the pool.
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
LAST WEIGHTED AVERAGE REMAINING TERM
SCHEDULED AGGREGATE WEIGHTED ORIGINAL TERM TO
PAYMENT PRINCIPAL AVERAGE TO MATURITY MATURITY
POOL BALANCE APR (IN MONTHS) (IN MONTHS)
- ----------------------------------------------- ----------------- ----------- ---------------- ----------------
<S> <C> <C> <C> <C>
1.............................................. $ 124,727,877.89 5.465% 46 17
2.............................................. 97,304,428.23 7.588 47 31
3.............................................. 78,876,224.82 8.258 46 42
4.............................................. 4,895,204.82 12.290 60 56
</TABLE>
The actual characteristics and performance of the Receivables in the Trust
will differ from the assumptions used in constructing the ABS Tables. The
assumptions used are hypothetical and have been provided only to give a general
sense of how the principal cash flow might behave under varying prepayment
scenarios. For example, it is very unlikely that the Receivables will prepay at
the same level of ABS. Moreover, the diverse terms of Receivables within each of
the four hypothetical level payment pools and the four hypothetical last
scheduled payment pools could produce slower or faster principal distributions
than indicated in the ABS Tables at the various constant percentages of ABS
specified, even if the original and remaining terms to maturity of the
Receivables are as assumed. Any difference between such assumptions and the
actual characteristics and performance of the Receivables, or actual prepayment
experience, will affect the percentages of initial balances outstanding over
time, as well as collections of interest and principal on Receivables.
THE ABS TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
AND SHOULD BE READ IN CONJUNCTION THEREWITH.
30
<PAGE>
PROJECTED CLASS A-1 NOTE AMORTIZATION
PERCENT OF INITIAL NOTE PRINCIPAL AMOUNT
<TABLE>
<CAPTION>
CLASS A-1 NOTE BALANCE (%)
----------------------------------------------------------
PAYMENT DATE 0.0% ABS 1.0% ABS 1.5% ABS 2.0% ABS
- -------------------------------------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
August 20, 1998..................................................... 1.00 1.00 1.00 1.00
September 15, 1998.................................................. 93 88 84 80
October 15, 1998.................................................... 86 76 69 61
November 15, 1998................................................... 79 63 54 42
December 15, 1998................................................... 71 52 39 23
January 15, 1999.................................................... 64 40 24 5
February 15, 1999................................................... 57 28 10 0
March 15, 1999...................................................... 49 17 0 0
April 15, 1999...................................................... 42 5 0 0
May 15, 1999........................................................ 35 0 0 0
June 15, 1999....................................................... 27 0 0 0
July 15, 1999....................................................... 20 0 0 0
August 15, 1999..................................................... 12 0 0 0
September 15, 1999.................................................. 5 0 0 0
October 15, 1999.................................................... 0 0 0 0
--- --- --- ---
Weighted Average Life (yrs)......................................... 0.60 0.38 0.30 0.24
</TABLE>
31
<PAGE>
PROJECTED CLASS A-2 NOTE AMORTIZATION
PERCENT OF INITIAL NOTE PRINCIPAL AMOUNT
<TABLE>
<CAPTION>
CLASS A-2 NOTE BALANCE (%)
----------------------------------------------------------
PAYMENT DATE 0.0% ABS 1.0% ABS 1.5% ABS 2.0% ABS
- -------------------------------------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
August 20, 1998..................................................... 100 100 100 100
September 15, 1998.................................................. 100 100 100 100
October 15, 1998.................................................... 100 100 100 100
November 15, 1998................................................... 100 100 100 100
December 15, 1998................................................... 100 100 100 100
January 15, 1999.................................................... 100 100 100 100
February 15, 1999................................................... 100 100 100 90
March 15, 1999...................................................... 100 100 97 78
April 15, 1999...................................................... 100 100 87 65
May 15, 1999........................................................ 100 96 77 53
June 15, 1999....................................................... 100 88 67 41
July 15, 1999....................................................... 100 80 57 29
August 15, 1999..................................................... 100 72 48 18
September 15, 1999.................................................. 100 64 39 6
October 15, 1999.................................................... 98 56 30 0
November 15, 1999................................................... 93 49 21 0
December 15, 1999................................................... 87 41 12 0
January 15, 2000.................................................... 36 0 0 0
February 15, 2000................................................... 31 0 0 0
March 15, 2000...................................................... 25 0 0 0
April 15, 2000...................................................... 21 0 0 0
May 15, 2000........................................................ 16 0 0 0
June 15, 2000....................................................... 12 0 0 0
July 15, 2000....................................................... 7 0 0 0
August 15, 2000..................................................... 3 0 0 0
September 15, 2000.................................................. 0 0 0 0
--- --- --- ---
Weighted Average life (yrs)......................................... 1.51 1.19 1.02 0.80
</TABLE>
32
<PAGE>
PROJECTED CLASS A-3 NOTE AMORTIZATION
PERCENT OF INITIAL NOTE PRINCIPAL AMOUNT
<TABLE>
<CAPTION>
CLASS A-3 NOTE BALANCE (%)
----------------------------------------------------------
PAYMENT DATE 0.0% ABS 1.0% ABS 1.5% ABS 2.0% ABS
- -------------------------------------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
August 20, 1998..................................................... 100 100 100 100
September 15, 1998.................................................. 100 100 100 100
October 15, 1998.................................................... 100 100 100 100
November 15, 1998................................................... 100 100 100 100
December 15, 1998................................................... 100 100 100 100
January 15, 1999.................................................... 100 100 100 100
February 15, 1999................................................... 100 100 100 100
March 15, 1999...................................................... 100 100 100 100
April 15, 1999...................................................... 100 100 100 100
May 15, 1999........................................................ 100 100 100 100
June 15, 1999....................................................... 100 100 100 100
July 15, 1999....................................................... 100 100 100 100
August 15, 1999..................................................... 100 100 100 100
September 15, 1999.................................................. 100 100 100 100
October 15, 1999.................................................... 100 100 100 97
November 15, 1999................................................... 100 100 100 88
December 15, 1999................................................... 100 100 100 80
January 15, 2000.................................................... 100 100 84 66
February 15, 2000................................................... 100 95 78 60
March 15, 2000...................................................... 100 90 73 54
April 15, 2000...................................................... 100 85 68 49
May 15, 2000........................................................ 100 81 63 44
June 15, 2000....................................................... 100 77 59 39
July 15, 2000....................................................... 100 73 54 34
August 15, 2000..................................................... 100 69 50 29
September 15, 2000.................................................. 99 65 46 25
October 15, 2000.................................................... 95 61 42 20
November 15, 2000................................................... 92 57 38 16
December 15, 2000................................................... 88 53 34 12
January 15, 2001.................................................... 84 50 30 8
February 15, 2001................................................... 81 46 26 5
March 15, 2001...................................................... 50 25 12 0
April 15, 2001...................................................... 47 23 10 0
May 15, 2001........................................................ 45 20 7 0
June 15, 2001....................................................... 42 17 5 0
July 15, 2001....................................................... 39 15 2 0
August 15, 2001..................................................... 36 13 0 0
September 15, 2001.................................................. 34 10 0 0
October 15, 2001.................................................... 31 8 0 0
November 15, 2001................................................... 28 6 0 0
December 15, 2001................................................... 25 3 0 0
January 15, 2002.................................................... 22 1 0 0
February 15, 2002................................................... 0 0 0 0
--- --- --- ---
Weighted Average Life (yrs)......................................... 2.85 2.35 2.05 1.76
</TABLE>
33
<PAGE>
PROJECTED CLASS B NOTE AMORTIZATION
PERCENT OF INITIAL NOTE PRINCIPAL AMOUNT
<TABLE>
<CAPTION>
CLASS B NOTE BALANCE (%)
----------------------------------------------------------
PAYMENT DATE 0.0% ABS 1.0% ABS 1.5% ABS 2.0% ABS
- -------------------------------------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
August 20, 1998..................................................... 100 100 100 100
September 15, 1998.................................................. 100 100 100 100
October 15, 1998.................................................... 100 100 100 100
November 15, 1998................................................... 100 100 100 100
December 15, 1998................................................... 100 100 100 100
January 15, 1999.................................................... 100 100 100 100
February 15, 1999................................................... 100 100 100 96
March 15, 1999...................................................... 100 100 99 90
April 15, 1999...................................................... 100 100 94 85
May 15, 1999........................................................ 100 98 90 79
June 15, 1999....................................................... 100 95 86 74
July 15, 1999....................................................... 100 91 81 69
August 15, 1999..................................................... 100 88 77 64
September 15, 1999.................................................. 100 84 73 59
October 15, 1999.................................................... 99 81 69 54
November 15, 1999................................................... 97 78 65 50
December 15, 1999................................................... 94 74 62 45
January 15, 2000.................................................... 72 56 47 37
February 15, 2000................................................... 70 53 44 34
March 15, 2000...................................................... 67 50 41 31
April 15, 2000...................................................... 65 48 38 28
May 15, 2000........................................................ 63 46 36 25
June 15, 2000....................................................... 61 43 33 22
July 15, 2000....................................................... 60 41 31 19
August 15, 2000..................................................... 58 39 28 17
September 15, 2000.................................................. 56 37 26 14
October 15, 2000.................................................... 54 34 23 12
November 15, 2000................................................... 52 32 21 9
December 15, 2000................................................... 50 30 19 7
January 15, 2001.................................................... 48 28 17 5
February 15, 2001................................................... 46 26 15 3
March 15, 2001...................................................... 28 14 7 0
April 15, 2001...................................................... 27 13 5 0
May 15, 2001........................................................ 25 11 4 0
June 15, 2001....................................................... 24 10 3 0
July 15, 2001....................................................... 22 8 1 0
August 15, 2001..................................................... 20 7 0 0
September 15, 2001.................................................. 19 6 0 0
October 15, 2001.................................................... 17 4 0 0
November 15, 2001................................................... 16 3 0 0
December 15, 2001................................................... 14 2 0 0
January 15, 2002.................................................... 13 1 0 0
February 15, 2002................................................... 0 0 0 0
--- --- --- ---
Weighted Average Life (yrs)......................................... 2.27 1.85 1.60 1.34
</TABLE>
34
<PAGE>
POOL FACTORS AND OTHER INFORMATION
The "Note Pool Factor" for each class of Notes will be a seven-digit decimal
which the Servicer will compute each month indicating the remaining outstanding
principal amount of the Notes of each class as of the close of business on the
Payment Date in that month, as a fraction of the initial outstanding principal
amount of the Notes of such class. The Note Pool Factor for each class of Notes
will be 1.0000000 as of the Closing Date, and thereafter will decline to reflect
reductions in the outstanding principal amount of the Notes. A Noteholder's
portion of the aggregate outstanding principal amount of the Notes of a class
will be the product of (i) the original denomination of the Noteholder's Note
and (ii) the Note Pool Factor for such Class.
Pursuant to the Sale and Servicing Agreement, the Noteholders will receive
monthly reports concerning the payments received on the Receivables, the Pool
Balance, the Note Pool Factor and various other items of information.
Noteholders of record during any calendar year will be furnished information for
tax reporting purposes not later than the latest date permitted by law. See
"Description of the Notes-- Statements to Noteholders."
USE OF PROCEEDS
The net proceeds to be received by the Seller from the sale of the Notes
will be applied to the purchase of the Receivables from MMCA.
THE SELLER
The Seller, a wholly-owned subsidiary of MMCA, was incorporated in the State
of Delaware on July 8, 1993. The Seller was organized for limited purposes,
which include purchasing receivables from MMCA and transferring such receivables
to third parties and any activities incidental to and necessary or convenient
for the accomplishment of such purposes. The principal executive offices of the
Seller are located at 6363 Katella Avenue, Cypress, California 90630-5205. The
telephone number of such offices is (714) 236-1592.
The Seller has taken steps in structuring the transactions contemplated
hereby that are intended to ensure that the voluntary or involuntary application
for relief by MMCA under any Insolvency Law will not result in consolidation of
the assets and liabilities of the Seller with those of MMCA. These steps include
the maintenance of the Seller as a separate, limited-purpose subsidiary pursuant
to a certificate of incorporation containing certain limitations (including
restrictions on the nature of the Seller's business and a restriction on the
Seller's ability to commence a voluntary case or proceeding under any Insolvency
Law without the unanimous affirmative vote of all of its directors). However,
there can be no assurance that the activities of the Seller would not result in
a court concluding that the assets and liabilities of the Seller should be
consolidated with those of MMCA in a proceeding under any Insolvency Law.
The Seller has received the advice of counsel to the effect that, subject to
certain facts, assumptions and qualifications, it would not be a proper exercise
by a court of its equitable discretion to disregard the separate corporate
existence of the Seller and to require the consolidation of the assets and
liabilities of the Seller with the assets and liabilities of MMCA in the event
of the application of the Federal bankruptcy laws to MMCA. Among other things,
it is assumed by counsel that the Seller will follow certain 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. The Seller intends to follow and has represented
to such counsel that it will follow these and other procedures related to
maintaining its separate corporate identity. However, in the event that the
Seller did not follow these procedures, there can be no assurance that a court
would not conclude that the assets and liabilities of the Seller should be
35
<PAGE>
consolidated with those of MMCA. If a court were to reach such a conclusion, or
a filing were made under any Insolvency Law by or against the Seller, or if an
attempt were made to litigate any of the foregoing issues, delays in payments on
the Notes could occur or reductions in the amounts of such payments could
result.
It is intended by MMCA and the Seller that the transfer of the Receivables
by MMCA to the Seller under the Purchase Agreement constitute a "true sale" of
the Receivables to the Seller. If the transfer constitutes such a "true sale,"
the Receivables and the proceeds thereof would not be part of MMCA's bankruptcy
estate under Section 541 of the United States Bankruptcy Code should MMCA become
the subject of a bankruptcy case subsequent to the transfer of the Receivables
to the Seller.
The Seller has received the advice of counsel to the effect that, subject to
certain facts, assumptions and qualifications, in the event MMCA were to become
the subject of a voluntary or involuntary case under the United States
Bankruptcy Code subsequent to the transfer of the Receivables to the Seller, the
transfer of the Receivables by MMCA to the Seller pursuant to the Purchase
Agreement would be characterized as a "true sale" of the Receivables from MMCA
to the Seller and the Receivables and the proceeds thereof would not form part
of MMCA's bankruptcy estate pursuant to Section 541 of the United States
Bankruptcy Code. See "Risk Factors--Certain Legal Aspects--Bankruptcy
Considerations."
THE SERVICER
Mitsubishi Motors Credit of America, Inc. ("MMCA") primarily provides retail
and wholesale financing, retail leasing and certain other financial services to
authorized Mitsubishi automobile and truck dealers and their customers in the
United States. MMCA was incorporated in the State of Delaware in August 1990 and
commenced operations in March 1991.
MMCA is a wholly-owned subsidiary of Mitsubishi Motor Sales of America, Inc.
("MMSA"), which is engaged in the wholesale distribution of automobiles and
light-duty trucks throughout the United States manufactured by Mitsubishi Motors
Corporation and its affiliates (collectively, "Mitsubishi Motors"). MMSA is a
subsidiary of Mitsubishi Motors Corporation, a Japanese corporation that is a
worldwide manufacturer and distributor of motor vehicles and trucks. Mitsubishi
Motors Corporation owns 97.2% of the stock of MMSA. Mitsubishi Corporation, a
Japanese corporation that is a worldwide general trading company, owns 2.0% 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 0.8% of the stock of MMSA.
The national headquarters of MMCA is located at 6363 Katella Avenue,
Cypress, CA 90630-5205. Its telephone number is (714) 236-1500. MMCA has five
regional offices throughout the United States.
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the Indenture, a form of which has been
filed as an exhibit to the Registration Statement of which this Prospectus forms
a part. The following summary does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the Notes, the Indenture, the
Trust Agreement and the Sale and Servicing Agreement.
The Notes of each class will be offered for purchase in denominations of
$1,000 and integral multiples thereof and will be represented initially by
physical notes registered in the name of Cede as nominee of DTC. No Note Owner
will be entitled to receive a definitive note representing such person's
beneficial ownership interest in the applicable class of Notes except in the
event that Definitive Notes are issued under the limited circumstances described
herein. Unless and until Definitive Notes are issued, all
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references to actions by Noteholders shall refer to actions taken by DTC upon
instructions from its Direct Participants and all references to payments,
notices, reports and statements to Noteholders shall refer to payments, notices,
reports and statements to DTC or Cede, as the registered holder of the Notes,
for payment or distribution to Note Owners in accordance with DTC's procedures
with respect thereto. See "--Book Entry Registration" and "--Definitive Notes."
BOOK ENTRY REGISTRATION
Beneficial owners of Notes may hold their Notes through DTC (in the United
States) or Cedel or Euroclear (in Europe) if they are participants of such
systems, or indirectly through organizations that are participants in such
systems.
DTC is a limited purpose trust company organized under the laws of the State
of New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to Section 17A of the Exchange Act. DTC was created
to hold securities for its participating organizations ("Direct Participants")
and to facilitate the clearance and settlement of securities transactions
between Direct Participants through electronic book-entries, thereby eliminating
the need for physical movement of certificates. Direct Participants include
securities brokers and dealers, banks, trust companies and clearing
corporations, and may include certain other organizations. Indirect access to
the DTC system is also available to others such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ("Indirect Participants" and,
together with Direct Participants, "DTC Participants").
To facilitate subsequent transfers, all Notes deposited with DTC will be
registered in the name of DTC's nominee, Cede. The deposit of Notes with DTC and
their registration in the name of Cede will effect no change in beneficial
ownership. DTC has no knowledge of the actual Note Owners of the Notes; DTC's
records reflect only the identity of the Direct Participants to whose accounts
such Notes are credited, which may or may not be the Note Owners. The DTC
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
No Noteholder will be entitled to receive a certificate representing such
person's interest in a class of Notes. Unless and until Definitive Notes are
issued under the limited circumstances described below, all references herein to
actions by Noteholders shall refer to actions taken by DTC upon instructions
from DTC Participants, and all references herein to distributions, notices,
reports and statements to Noteholders shall refer to distributions, notices,
reports and statements to Cede, as the registered holder of the Notes, for
distribution to Noteholders in accordance with DTC procedures.
Note Owners will receive all payments of principal and interest on the Notes
through Direct Participants or Indirect Participants. DTC will forward such
payments to its Direct Participants which thereafter will forward them to
Indirect Participants or Note Owners. Under a book-entry format, Note Owners may
experience some delay in their receipt of payments, since such payments will be
forwarded to Cede as nominee of DTC. Note Owners will not be recognized by the
Indenture Trustee as Noteholders, as such term is used in the Indenture. Note
Owners will be permitted to exercise the rights of Noteholders only indirectly
through DTC and its Direct Participants and Indirect Participants. Because DTC
can act only on behalf of Direct Participants, who in turn act on behalf of
Indirect Participants, and on behalf of certain banks, trust companies and other
persons approved by it, the ability of a Note Owner to pledge the Notes to
persons or entities that do not participate in the DTC system, or to otherwise
act with respect to such Notes, may be limited due to the absence of physical
notes for such Notes.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to Note Owners will be
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governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payments by DTC Participants
to Note Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name" and will be the responsibility of
such DTC Participant and not of DTC, the Indenture Trustee, the Owner Trustee,
the Seller or the Servicer, subject to any statutory or regulatory requirements
as may be in effect from time to time. Payment of principal and interest to DTC
is the responsibility of the Indenture Trustee, disbursement of such payments to
Direct Participants shall be the responsibility of DTC and disbursement of such
payments to Note Owners shall be the responsibility of Direct Participants and
Indirect Participants.
Purchases of Notes under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Notes on DTC's records. The
ownership interest of each actual Note Owner is in turn to be recorded on the
Direct Participants' and Indirect Participants' records. Note Owners will not
receive written confirmation from DTC of their purchase, but Note Owners are
expected to receive written confirmations providing details of the transaction,
as well as periodic statements of their holdings, from the Direct Participant or
Indirect Participant through which the Note Owner entered into the transaction.
Transfers of ownership interests in the Notes are to be accomplished by entries
made on the books of DTC Participants acting on behalf of Note Owners. Note
Owners will not receive physical notes representing their ownership interest in
Notes, except in the event that use of the book-entry system for the Notes is
discontinued.
Neither DTC nor Cede will comment or vote with respect to the Notes. DTC has
advised the Seller that it will take any action permitted to be taken by a
Noteholder under the Indenture only at the direction of one or more Direct
Participants to whose accounts with DTC the Notes are credited. Additionally,
DTC has advised the Seller that to the extent that the Indenture requires that
any action may be taken only by holders of Notes representing a specified
percentage of the aggregate outstanding principal amount thereof, DTC will take
such action only at the direction of and on behalf of Direct Participants whose
holdings include undivided interests that satisfy such specified percentage.
Under its usual procedures, DTC will mail an "Omnibus Proxy" to the Indenture
Trustee as soon as possible after any applicable record date with respect to a
consent or vote. The Omnibus Proxy will assign Cede's consenting or voting
rights to those Direct Participants to whose accounts the Notes will be credited
on that record date (identified on a listing attached to the Omnibus Proxy).
DTC may discontinue providing its services as securities depository with
respect to the Notes at any time by giving reasonable notice to the Indenture
Trustee. Under such circumstances, in the event that a successor securities
depository is not obtained, Definitive Notes are required to be printed and
delivered. The Seller may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Definitive Notes will be delivered to Noteholders. See "-- Definitive Notes."
Cedel and Euroclear will hold omnibus positions on behalf of the Cedel
Participants and the Euroclear Participants, respectively, through customers'
securities accounts in Cedel's and Euroclear's names on the books of their
respective depositaries (each, a "Depositary" and collectively, the
"Depositaries") which in turn will hold such positions in customers' securities
accounts in the Depositaries' names on the books of DTC.
Transfers between Direct Participants will occur in accordance with DTC
rules. Transfers between Cedel Participants and Euroclear Participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing
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system by its Depositary; however, such cross-market transactions will require
delivery of instructions to the relevant European international clearing system
by the counterparty in such system in accordance with its rules and procedures
and within its established deadlines (European time). The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its Depositary to take action to effect
final settlement on its behalf by delivering or receiving securities in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Cedel Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing day, dated the Business
Day following the DTC settlement date, and such credits or any transactions in
such securities settled during such processing day will be reported to the
relevant Cedel Participant or Euroclear Participant on such Business Day. Cash
received in Cedel or Euroclear as a result of sales of securities by or through
a Cedel Participant or a Euroclear Participant to a DTC Participant will be
received with value on the DTC settlement date but will be available in the
relevant Cedel or Euroclear cash account only as of the Business Day following
settlement in DTC.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Seller believes to be reliable, but the
Seller takes no responsibility for the accuracy thereof.
Cedel Bank, societe anonyme ("Cedel") is incorporated under the laws of
Luxembourg as a professional depository. Cedel holds securities for its
participating organizations ("Cedel Participants") and facilitates the clearance
and settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled in Cedel in any of 36 currencies, including United States dollars. Cedel
provides to its Cedel Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedel interfaces with domestic
markets in several countries. As a professional depository, Cedel is subject to
regulation by the Luxembourg Monetary Institute. Cedel Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the underwriters of the Notes.
Indirect access to Cedel is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Cedel Participant, either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for participants
of the Euroclear System ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Transactions may now be settled in any of 34 currencies,
including United States dollars. The Euroclear System includes various other
services, including securities lending and borrowing and interfaces with
domestic markets in several countries generally similar to the arrangements for
cross-market transfers with DTC described above. The Euroclear System is
operated by Morgan Guaranty Trust Company of New York, Brussels, Belgium office
(the "Euroclear Operator" or "Euroclear"), under contract with Euroclear
Clearance System, S.C., a Belgian cooperative corporation (the "Cooperative").
All operations are conducted by the Euroclear Operator, and all Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with the
Euroclear Operator, not the Cooperative. The Cooperative establishes policy for
the Euroclear System on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include the underwriters of
the Notes. Indirect access to the Euroclear System is also available to
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other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.
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.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific securities
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of or relationship with persons holding through Euroclear Participants.
Payments on Notes held through Cedel or Euroclear will be credited to the
cash accounts of Cedel Participants or Euroclear Participants in accordance with
the relevant system's rules and procedures, to the extent received by its
Depositary. Such payments will be subject to tax reporting in accordance with
relevant United States tax laws and regulations. See "Certain Federal Income Tax
Consequences" and Annex A. Cedel or the Euroclear Operator, as the case may be,
will take any other action permitted to be taken by a Noteholder under the
related agreement on behalf of a Cedel Participant or Euroclear Participant only
in accordance with its relevant rules and procedures and subject to its
Depositary's ability to effect such actions on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures in
order to facilitate transfers of Notes among participants of DTC, Cedel and
Euroclear, they are under no obligation to perform or continue to perform such
procedures and such procedures may be discontinued at any time.
DEFINITIVE NOTES
The Notes of each class will be issued in fully registered, certificated
form ("Definitive Notes") to Noteholders or their nominees, rather than to DTC
or its nominee, only if (i) the Trust, the Administrator or the Servicer advises
the Indenture Trustee in writing that DTC or a successor clearing agency is no
longer willing or able to discharge properly its responsibilities as depository
with respect to the Notes and the Indenture Trustee or the Administrator is
unable to locate a qualified successor, (ii) the Administrator, at its option,
elects to terminate the book-entry system through DTC, or (iii) after the
occurrence of an Event of Default or an Event of Servicing Termination, Note
Owners representing in the aggregate not less than 51% of the aggregate
outstanding principal amount of the Notes advise the Indenture Trustee and DTC
in writing that the continuation of a book-entry system through DTC (or a
successor thereto) is no longer in the best interest of Note Owners.
Upon the occurrence of any event described in the immediately preceding
paragraph, DTC is required to notify all Direct Participants and the Indenture
Trustee of the availability through DTC of Definitive Notes. Upon surrender by
DTC of the definitive notes representing the Notes and receipt by the Indenture
Trustee of instructions for re-registration, the Indenture Trustee will reissue
the Notes as Definitive Notes, and thereafter the Indenture Trustee will
recognize the holders of such Definitive Notes as Noteholders.
Payments of principal of, and interest on, the Definitive Notes will be made
by the Indenture Trustee directly to Noteholders in accordance with the
procedures set forth herein and in the Indenture. Payments of principal and
interest on each Payment Date will be made to Noteholders in whose names the
Definitive
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Notes were registered at the close of business on the preceding Record Date.
Such payments will be made by check mailed to the address of such Noteholder as
it appears on the register maintained by the Indenture Trustee. The final
payment on any Definitive Note, however, will be made only upon presentation and
surrender of such Definitive Note at the office or agency specified in the
notice of final payment mailed to Noteholders.
Definitive Notes 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.
INTEREST
Interest on the outstanding principal amount of each class of the Notes will
accrue at the applicable Note Interest Rate and will be payable to the
applicable Noteholders monthly on each Payment Date, commencing September 15,
1998. Interest will accrue (i) with respect to the Class A-1 Notes, from and
including the Closing Date (in the case of the first Payment Date) or from and
including the most recent Payment Date on which interest has been paid, to but
excluding the following Payment Date and (ii) with respect to the Class A-2
Notes, the Class A-3 Notes and the Class B Notes, from and including the Closing
Date (in the case of the first Payment Date) or from and including the 15th day
of the calendar month preceding each Payment Date to but excluding the 15th day
of the following calendar month (each such period, an "Interest Period").
Interest will be calculated in the case of the Class A-1 Notes on the basis of
the actual number of days elapsed and a 360-day year, and in the case of the
Class A-2 Notes, the Class A-3 Notes and the Class B Notes on the basis of a
360-day year of twelve 30-day months. Interest payable on a Payment Date will be
calculated on the basis of the outstanding principal amount of the Notes of each
class as of the preceding Payment Date, after giving effect to any payments of
principal of the Notes on such preceding Payment Date (or, in the case of the
first Payment Date, on the basis of the initial outstanding principal amount of
the Notes of such class). Interest accrued as of any Payment Date but not paid
on such Payment Date will be due on the next Payment Date, together with
interest on such amount at the applicable Note Interest Rate (to the extent
permitted by law). Interest payments on the Notes will generally be derived from
the Available Funds remaining after the payment of the Total Servicing Fee for
the related Collection Period and, to the extent the Available Funds remaining
are insufficient, from amounts on deposit in the Supplemental Reserve Account
and, to the extent such amounts are insufficient, from amounts on deposit in the
Reserve Account. See "--The Indenture Cash Flows," "--Reserve Account" and
"--Supplemental Reserve Account."
Interest payments to all classes of Notes will have the same priority of
payment. Under certain circumstances, the amount available for interest payments
could be less than the amount of interest payable on the Notes on any Payment
Date, in which case each class of Notes will receive their ratable share (based
upon the aggregate amount of interest due to such class of Noteholders) of the
aggregate amount available to be distributed in respect of interest on the
Notes. An Event of Default will occur if the full amount of interest due to all
classes of Noteholders is not paid within five days.
PRINCIPAL
Principal payments will be made to the Noteholders on each Payment Date in
an amount equal in the aggregate to the Principal Distribution Amount in respect
of such Payment Date, subject to certain limitations. Certificateholders will
not be entitled to receive payments of principal until all classes of Notes have
been paid in full. Following the occurrence and during the continuation of an
Event of Default resulting in an acceleration of the Notes, the Noteholders will
be paid in full before any distributions, including interest, may be made on the
Certificates. See "--The Indenture Cash Flows" , "--Reserve Account" and
"--Supplemental Reserve Account."
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On each Payment Date, an amount equal to the Principal Distribution Amount
will be paid to the holders of the Class A-1 Notes (the "Class A-1 Noteholders")
until the Class A-1 Notes have been paid in full. On each Payment Date on and
after the Payment Date on which the Class A-1 Notes have been paid in full, (a)
an amount equal to the Class A Noteholders' Percentage of the difference between
(x) the Principal Distribution Amount and (y) any portion of the Principal
Distribution Amount applied on such Payment Date to reduce the outstanding
principal amount of the Class A-1 Notes to zero will be paid (i) to the holders
of the Class A-2 Notes (the "Class A-2 Noteholders") until the Class A-2 Notes
have been paid in full and (ii) following payment in full of the Class A-2
Notes, to the holders of the Class A-3 Notes (the "Class A-3 Noteholders" and,
together with the Class A-1 Noteholders and the Class A-2 Noteholders, the
"Class A Noteholders") until the Class A-3 Notes have been paid in full and (b)
an amount equal to the Class B Noteholders' Percentage of the difference between
(x) the Principal Distribution Amount and (y) any portion of the Principal
Distribution Amount applied on such Payment Date to reduce the outstanding
principal amount of the Class A-1 Notes to zero will be paid to the holders of
the Class B Notes (the "Class B Noteholders") until the Class B Notes have been
paid in full; provided, however, that on each Payment Date occurring on or after
the date on which the maturity dates of the Notes have been accelerated
following the occurrence of an Event of Default, an amount equal to the
Principal Distribution Amount will be paid (i) to the Class A-1 Noteholders, the
Class A-2 Noteholders and the Class A-3 Noteholders PRO RATA in proportion to
the respective principal balances of the Class A-1 Notes, the Class A-2 Notes
and the Class A-3 Notes until all of such classes have been paid in full and
(ii) following payment in full of the Class A Notes, to the Class B Noteholders
until the Class B Notes have been paid in full. As used herein, "Class A
Noteholders' Percentage" means 90.44%, the percentage equivalent of a fraction,
the numerator of which is an amount equal to the sum of the initial principal
balances of the Class A-2 Notes and the Class A-3 Notes, and the denominator of
which is an amount equal to the sum of the initial principal balances of the
Class A-2 Notes, the Class A-3 Notes and the Class B Notes. As used herein,
"Class B Noteholders' Percentage" means 9.56%, the percentage equivalent of a
fraction, the numerator of which is the initial principal balance of the Class B
Notes, and the denominator of which is an amount equal to the sum of the initial
principal balances of the Class A-2 Notes, the Class A-3 Notes and the Class B
Notes.
The actual date on which the aggregate outstanding principal amount of any
class of Notes is paid may be earlier or later than the respective Final Payment
Dates based on a variety of factors, including those described under "Risk
Factors--Maturity and Prepayment Considerations" and "The Receivables-- Maturity
and Prepayment Considerations."
OPTIONAL REDEMPTION
The Notes (and the Certificates) will be redeemed in whole, but not in part,
on any Payment Date on which the Servicer exercises its option to purchase the
Receivables. The Servicer may purchase the Receivables on any Payment Date with
respect to which the Pool Balance as of the end of the related Collection Period
is 10% or less of the Initial Pool Balance. The redemption price will be equal
to the unpaid principal amount of the Notes plus accrued and unpaid interest
thereon, together with the unpaid principal amount of the Certificates. The
Seller does not anticipate, although no assurances can be given, that the Pool
Balance will decline to a level permitting the Servicer to purchase the
Receivables while the Notes are outstanding.
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. The
Seller, the Servicer, and their respective affiliates may have other
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banking relationships with the Indenture Trustee and its affiliates in the
ordinary course of their businesses.
THE ACCOUNTS
The Servicer will establish a Collection Account, in the name of the
Indenture Trustee on behalf of the Noteholders and the Certificateholders, into
which payments made on or with respect to the Receivables and Advances made by
the Servicer will be deposited and into which amounts on deposit in the Reserve
Account and the Supplemental Reserve Account may be transferred from time to
time, other than certain amounts payable to the Servicer under the Sale and
Servicing Agreement that are not required to be so deposited or transferred. The
Servicer will also establish and maintain (i) an account, in the name of the
Indenture Trustee on behalf of the Noteholders, in which amounts released from
the Collection Account for distribution to Noteholders will be deposited and
from which all payments to Noteholders will be made (the "Note Payment
Account"), (ii) an account, in the name of the Owner Trustee, on behalf of the
holders of record of the Certificates (the "Certificateholders"), in which
amounts released from the Collection Account for distribution to
Certificateholders will be deposited and from which all distributions to
Certificateholders will be made (the "Certificate Distribution Account") and
(iii) an account, in the name of the Indenture Trustee on behalf of the
Noteholders and the Certificateholders, in which early payments with respect to
Actuarial Receivables by or on behalf of the obligors which constitute neither
current scheduled payments nor full prepayments ("Payaheads") will be deposited
until such time as the payment falls due or until such funds are applied to
shortfalls in the scheduled payments with respect to Actuarial Receivables (the
"Payahead Account", and together with the Collection Account and the Note
Payment Account, the "Trust Accounts"). The Seller will also establish and
maintain the Reserve Account, the Supplemental Reserve Account and the Yield
Supplement Account, each in the name of the Indenture Trustee for the benefit of
the Noteholders and the Certificateholders. The Trust Accounts, the Reserve
Account, the Supplemental Reserve Account and the Yield Supplement Account shall
each be a segregated trust account initially established with the Indenture
Trustee and maintained with the Indenture Trustee so long as permitted by each
Rating Agency. In the event that a Rating Agency no longer permits the Trust
Accounts, the Reserve Account, the Supplemental Reserve Account and the Yield
Supplement Account to be located at the Indenture Trustee, such accounts shall
be moved to either a Qualified Institution or a Qualified Trust Institution. A
"Qualified Institution" is a depository institution organized under the laws of
the United States or any state thereof or incorporated under the laws of a
foreign jurisdiction with a branch or agency located in the United States
authorized to take deposits and subject to supervision and examination by
Federal or state banking authorities, having a short-term deposit rating
acceptable to each Rating Agency, and, if such institution is organized under
the laws of the United States, the deposits of which are insured by the Federal
Deposit Insurance Corporation or any successor thereto. A "Qualified Trust
Institution" is the corporate trust department of an institution organized under
the laws of the United States or any state thereof or incorporated under the
laws of a foreign jurisdiction with a branch or agency located in the United
States and subject to supervision and examination by Federal or state banking
authorities, with authority to act under such laws as trustee or in any other
fiduciary capacity, having not less than $1 billion in assets under fiduciary
management and a long-term deposit rating acceptable to each Rating Agency.
Funds in the Collection Account, the Payahead Account, the Reserve Account,
the Supplemental Reserve Account and the Yield Supplement Account will be
invested in Permitted Investments as provided in the Sale and Servicing
Agreement. "Permitted Investments" generally will be limited to investments
acceptable to each Rating Agency as being consistent with the ratings of the
Notes. Permitted Investments will be limited to obligations or securities that
mature not later than the Business Day immediately preceding the next Payment
Date (or the payment due date, in the case of a Payahead). Any earnings (net of
losses and investment expenses) on amounts on deposit in the Collection Account
will be paid to the Certificateholders. Any earnings (net of losses and
investment expenses) on amounts on deposit in the
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Payahead Account will be paid to the Servicer as additional servicing
compensation and will not be available to Noteholders, and any earnings (net of
losses and investment expenses) on, and any amounts released from the Reserve
Account, the Supplemental Reserve Account and the Yield Supplement Account will
be distributed to the Seller; provided that earnings on amounts on deposit in
the Reserve Account will be distributed to the Seller only to the extent that
the amounts on deposit in the Reserve Account exceed the Specified Reserve
Balance and earnings on amounts on deposit in the Supplemental Reserve Account
will be distributed to the Seller only to the extent that the amounts on deposit
in the Supplemental Reserve Account exceed the Maximum Supplemental Reserve
Amount.
YIELD SUPPLEMENT AGREEMENT
Simultaneously with the sale and assignment of the Receivables by MMCA to
the Seller, MMCA and the Seller will enter into the Yield Supplement Agreement,
pursuant to which MMCA will be obligated to pay the Yield Supplement Amount, if
any, to the Trust on the Business Day prior to each Payment Date. The Seller
will assign the Yield Supplement Agreement to the Trust, and the Trust will
pledge it to the Indenture Trustee for the benefit of the Noteholders.
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 shall initially be a segregated trust deposit
account in the corporate trust department of the Indenture Trustee.
Notwithstanding the foregoing, in the event that MMCA either obtains a letter of
credit (a "Yield Supplement Letter of Credit") securing timely remittance to the
Indenture Trustee of amounts due from MMCA under the Yield Supplement Agreement
or otherwise satisfies certain other conditions satisfactory to each Rating
Agency, then subject to the delivery of certain tax opinions the Yield
Supplement Account may be terminated. The Yield Supplement Account will be
funded on the Closing Date with an initial deposit to be specified in the Sale
and Servicing Agreement. On each Payment Date, the amount required to be on
deposit in such Yield Supplement Account or to be available under such Yield
Supplement Letter of Credit after giving effect to the withdrawal or drawing, as
the case may be, required to be made therefrom on such Payment Date 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 their scheduled Due Dates. The amount on deposit
in the Yield Supplement Account will decrease as payments are made from such
account with respect to the Yield Supplement Amounts and funds in excess of the
maximum required balance are released to the Seller.
The Yield Supplement Letter of Credit, if any, 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 Rating Agency. In the event that
the rating of the letter of credit bank that issues any Yield Supplement Letter
of Credit is reduced below any such rating, the Indenture Trustee will be
required to obtain a suitable replacement Yield Supplement 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 Yield Supplement Letter of Credit
and deposit such funds in the Yield Supplement Account.
THE INDENTURE CASH FLOWS
DEPOSITS TO THE COLLECTION ACCOUNT. On or before the seventh Business Day,
but no later than the tenth calendar day (the "Determination Date"), of the
month in which a Payment Date occurs, the Servicer will calculate the Available
Funds, the Total Servicing Fee, the Accrued Note Interest, the Principal
Distribution Amount, the principal attributable to Last Scheduled Payments, and
the Yield Supplement Amount, if any, in each case with respect to such Payment
Date.
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On or before each Payment Date, the Servicer will cause the Available Funds
for such Payment Date to be deposited into the Collection Account. On each
Payment Date, the Servicer will notify the Indenture Trustee to (a) withdraw
from the Supplemental Reserve Account and deposit in the Collection Account an
amount equal to the lesser of (i) the amount of cash or other immediately
available funds in the Supplemental Reserve Account on such Payment Date (prior
to giving effect to any deposits thereto or withdrawals therefrom relating to
such Payment Date), and (ii) the amount, if any, by which (x) the aggregate
amount of Advances that are due and payable to the Servicer on such Payment Date
exceeds (y) the amount paid to the Servicer with respect to such Advances out of
the Collection Account on such Payment Date and (b) withdraw from the Reserve
Account and deposit in the Collection Account an amount equal to the lesser of
(i) the amount of cash or other immediately available funds in the Reserve
Account on such Payment Date (prior to giving effect to any deposits thereto or
withdrawals therefrom relating to such Payment Date), and (ii) the amount, if
any, by which (x) the aggregate amount of Advances that are due and payable to
the Servicer on such Payment Date exceeds (y) the amount paid to the Servicer
with respect to such Advances out of the Collection Account on such Payment Date
and the amount withdrawn from the Supplemental Reserve Account on such Payment
Date pursuant to clause (a) above.
On or before each Payment Date, the Servicer also notify the Indenture
Trustee to (a) withdraw from the Supplemental Reserve Account for payment to the
Servicer an amount equal to the lesser of (i) the amount of cash or other
immediately available funds in the Supplemental Reserve Account on such Payment
Date (after giving effect to any withdrawals therefrom relating to such Payment
Date to pay all or part of the Advances that are due and payable to the Servicer
on such Payment Date but prior to giving effect to any deposits thereto or any
other withdrawals therefrom relating to such Payment Date), and (ii) the amount,
if any, by which (x) the Total Required Payment for such Payment Date exceeds
(y) the Available Funds for such Payment Date and (b) withdraw from the Reserve
Account for payment to the Servicer an amount equal to the lesser of (i) the
amount of cash or other immediately available funds in the Reserve Account on
such Payment Date (after giving effect to any withdrawals therefrom relating to
such Payment Date to pay all or part of the Advances that are due and payable to
the Servicer on such Payment Date but prior to giving effect to any deposits
thereto or any other withdrawals therefrom relating to such Payment Date), and
(ii) the amount, if any, by which (x) the Total Required Payment for such
Payment Date exceeds (y) an amount equal to the sum of the Available Funds for
such Payment Date exceeds (y) the amount paid to the Servicer with respect to
such Advances out of the Collection Account on such Payment Date and amounts
withdrawn from the Supplemental Reserve Account on such Payment Date pursuant to
clause (a) above.
The "Available Funds" for a Payment Date to be deposited into the Collection
Account shall equal (a) the sum of the following amounts with respect to the
related Collection Period: (i) all collections on the Receivables including
Payaheads withdrawn from the Payahead Account but excluding Payaheads deposited
into the Payahead Account and excluding Rule of 78's Payments (and including the
proceeds of sale by the Trust of any Financed Vehicle sold to the Trust upon
termination, including a prepayment, of a Final Payment Receivable); (ii) all
proceeds of the liquidation of Receivables which became Defaulted Receivables
during the related Collection Period, net of expenses incurred by the Servicer
in connection with such liquidation and any amounts required by law to be
remitted to the obligor on such Defaulted Receivable ("Liquidation Proceeds");
(iii) any recoveries in respect of Receivables that became Defaulted Receivables
in prior Collection Periods ("Recoveries"); (iv) all extension and deferral fees
paid with respect to the Receivables; (v) the Purchase Amount of each Receivable
that was repurchased by the Seller or purchased by the Servicer under an
obligation which arose during or prior to the related Collection Period (net of
applicable expenses); (vi) all Actuarial Advances and Last Scheduled Payment
Advances; (vii) the Yield Supplement Amount; and (viii) partial prepayments of
any refunded item included in the principal balance of a Receivable, such as
extended warranty protection plan costs, or physical damage, credit life,
disability insurance premiums, or any partial prepayment which causes a
reduction in the obligor's periodic payment to an amount below the scheduled
payment as of the Cutoff Date, minus (b) the aggregate amount of the funds
described in clause (a) above that are used in the related Collection Period to
reimburse the Servicer
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for the aggregate amount of Advances previously made by the Servicer that are
due and payable to the Servicer with respect to such Payment Date.
A "Defaulted Receivable" will be a Receivable (other than a Receivable with
respect to which payment of the Purchase Amount has been made by the Seller or
the Servicer) as to which (a) the related Financed Vehicle has been repossessed
and liquidated, (b) a scheduled payment (including, in the case of a Final
Payment Receivable, the amount owed by an obligor with respect to a Last
Scheduled Payment but excluding charges for excess wear and tear or excess
mileage) is, in the case of Motor Vehicles, 120 or more days past due or, in the
case of Trucks, 180 days past due and, in either case, the Servicer has not
repossessed the related Financed Vehicle or (c) the Servicer has determined, in
accordance with its customary standards, policies and procedures, that eventual
payment in full (including, in the case of a Final Payment Receivable, the
amount owed by an obligor with respect to a Last Scheduled Payment but excluding
charges for excess wear and tear or excess mileage) of the Contract is unlikely
and has either repossessed and liquidated the related Financed Vehicle or
repossessed and held the related Financed Vehicle in its repossession inventory
for 90 days, which 90 days shall not, when added to the aggregate number of days
since a scheduled payment was due but not paid, exceed 180 days.
The Available Funds on any Payment Date shall exclude all payments and
proceeds (including Liquidation Proceeds) of any Receivables the Purchase Amount
of which has been included in the Available Funds for a prior Collection Period
(which shall be paid to the Seller or Servicer, as applicable).
MONTHLY WITHDRAWALS FROM COLLECTION ACCOUNT. On each Payment Date, the
Indenture Trustee shall make the following withdrawals of Available Funds in
respect of the related Collection Period from the Collection Account and make
deposits, distributions and payments in the amounts and in the order of priority
specified below:
(i) to the Servicer, the Total Servicing Fee;
(ii) to the Note Payment Account, the Accrued Note Interest for each
class of Notes;
(iii) to the Note Payment Account, the Principal Distribution Amount;
(iv) to the Reserve Account, the amount required to bring the amount in
the Reserve Account up to the Specified Reserve Balance;
(v) 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
(vi) to the Certificate Distribution Account, any remaining portion of
Available Funds.
Notwithstanding the foregoing, following the occurrence and during the
continuation of an Event of Default which has resulted in an acceleration of the
Notes, the Available Funds remaining after the application of clauses (i) and
(ii) above will be deposited in the Note Payment Account to the extent necessary
to reduce the principal amount of the Notes to zero, and the Certificateholders
will not receive any distributions until the principal amount and accrued
interest on the Notes has been paid in full. In such event, the amount available
to make payments of principal of the Notes will be paid in the following order
of priority: (i) to the Class A-1 Noteholders, the Class A-2 Noteholders and the
Class A-3 Noteholders PRO RATA in proportion to the respective principal
balances of the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes
until all of such classes have been paid in full and (ii) then to the Class B
Noteholders until the Class B Notes have been paid in full.
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For purposes hereof, the following terms have the following meanings:
"Accrued Note Interest" means, with respect to any Payment Date and each
class of Notes, the sum of the Monthly Accrued Note Interest and the
Interest Carryover Shortfall for such class for such Payment Date.
"Certificate Balance" equals, initially, $97,669,451.88 and, thereafter,
equals the initial Certificate Balance minus all amounts paid as principal
on the Certificates.
"Interest Carryover Shortfall" means, with respect to any Payment Date
and any class of Notes, the excess of the sum of the Monthly Accrued Note
Interest for the preceding Payment Date and any outstanding Interest
Carryover Shortfall from the close of business on such preceding Payment
Date, over the amount in respect of interest that is actually deposited in
the Note Payment Account on such preceding Payment Date with respect to such
class, plus interest on such excess, to the extent permitted by law, at the
applicable Note Interest Rate for the related Interest Period.
"Monthly Accrued Note Interest" means, with respect to any Payment Date
and (i) any class of Notes, interest accrued for the related Interest Period
at the applicable Note Interest Rate for such class on the aggregate
principal balance of the Notes of such class as of the immediately preceding
Payment Date, after giving effect to all payments of principal to
Noteholders on or prior to such preceding Payment Date (or, in the case of
the first Payment Date, the initial principal amount of the Notes); and (ii)
with respect to the Notes collectively, the sum of Monthly Accrued Note
Interest for each class.
"Note Interest Rate" means in the case of (i) the Class A-1 Notes, %
per annum, (ii) the Class A-2 Notes, % per annum, (iii) the Class A-3
Notes, % per annum and (iv) the Class B Notes, % per annum. Interest on
the Class A-1 Notes will be calculated on the basis of the actual number of
days elapsed and a 360-day year, and interest on the Class A-2 Notes, the
Class A-3 Notes and the Class B Notes will be calculated on the basis of a
360-day year consisting of twelve 30-day months.
"Principal Carryover Shortfall" means, as of the close of business on
any Payment Date, the excess of the Principal Distribution Amount and any
outstanding Principal Carryover Shortfall from the preceding Payment Date
over the amount in respect of principal that is actually deposited in the
Note Payment Account on such Payment Date.
"Realized Losses" means with respect to each Payment Date and each
Receivable that became a Defaulted Receivable during the related Collection
Period, the excess of the principal balance of such Defaulted Receivable
(including the principal of a Last Scheduled Payment) over the Liquidation
Proceeds attributable to the principal balance of such Defaulted Receivable.
"Principal Distribution Amount" means, with respect to any Payment Date,
the sum of (i) the Scheduled Principal for such Payment Date (including, in
the case of a Final Payment Receivable, the amount owed by an obligor with
respect to a Last Scheduled Payment) plus (ii) any outstanding Principal
Carryover Shortfall as of the close of business on the preceding Payment
Date; provided, however, that the Principal Distribution Amount shall not
exceed the outstanding aggregate principal balance of the Notes; and
provided, further, that, on the Final Payment Date for each class of Notes,
the principal required to be deposited in the Note Payment Account will
include the amount necessary (after giving effect to the other amounts to be
deposited in the Note Payment Account on such Payment Date and allocable to
principal) to reduce the outstanding principal amount of such class of Notes
to zero.
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"Scheduled Principal" shall mean, with respect to any Payment Date, the sum
of (a) the sum of (i) collections received during the related Collection Period
of principal on Simple Interest Receivables, including collections of principal
attributable to the Last Scheduled Payment of a Simple Interest Receivable that
is a Final Payment Receivable and charges for excess wear and tear and excess
mileage but excluding collections of principal that would be attributable to the
Last Scheduled Payment of a Simple Interest Receivable that is a Final Payment
Receivable except that a Last Scheduled Payment Advance has been made with
respect to such Last Scheduled Payment and (ii) Last Scheduled Payment Advances
made on such Payment Date with respect to Simple Interest Receivables that are
Final Payment Receivables, (b) the principal portion of each scheduled payment,
including a Last Scheduled Payment on a Final Payment Receivable, due on any
Actuarial Receivable during the related Collection Period, (c) (without
duplication of amounts taken into account under (a) or (b)) the outstanding
principal balance of (i) Receivables prepaid in full during the related
Collection Period, and (ii) Receivables which became Defaulted Receivables
during the related Collection Period, (d) the Purchase Amount of each Receivable
that was repurchased by the Seller or purchased by the Servicer during such
Collection Period, to the extent attributable to principal, (e) the proceeds of
any other sale of a Receivable to the extent allocable to principal, and (f)
partial prepayments attributable to any refunded item included in the amount
financed, such as extended warranty protection plan costs or physical damage,
credit life, disability insurance premiums, or any partial prepayment which
causes a reduction in the obligor's periodic payment to be below the scheduled
payment as of the Cutoff Date; provided, however, that in calculating the
Scheduled Principal, all payments and proceeds (including Liquidation Proceeds)
of any purchased Receivables the Purchase Amount of which has been included in
Scheduled Principal in a prior Collection Period (which shall be paid to the
Seller or Servicer, as applicable) will be excluded.
"Total Required Payment" means, on any Payment Date, the Total Servicing
Fee, the Accrued Note Interest and the Principal Distribution Amount.
On each Payment Date, unless the maturity dates of the Notes have been
accelerated following the occurrence of an Event of Default, all amounts on
deposit in the Note Payment Account will be paid in the following order of
priority:
(a) to the Noteholders of each class, Monthly Accrued Note Interest on
the applicable class of Notes;
(b) to the Class A-1 Noteholders, the Principal Distribution Amount until
the Class A-1 Notes have been paid in full;
(c) following payment in full of the Class A-1 Notes, to the Class A-2
Noteholders, the Class A Noteholders' Percentage of the remaining Principal
Distribution Amount until the Class A-2 Notes have been paid in full;
(d) following payment in full of the Class A-2 Notes, to the Class A-3
Noteholders, the Class A Noteholders' Percentage of the remaining Principal
Distribution Amount until the Class A-3 Notes have been paid in full; and
(e) following payment in full of the Class A-1 Notes, to the Class B
Noteholders, the Class B Noteholders' Percentage of the remaining Principal
Distribution Amount until the Class B Notes have been paid in full.
On each Payment Date, all amounts on deposit in the Certificate Distribution
Account will be distributed to the Certificateholders.
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, all amounts
on deposit in the Note Payment Account will
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be paid: (a) to the Indenture Trustee, certain expenses and other amounts
payable to the Indenture Trustee; (b) to the Noteholders of each class, Monthly
Accrued Note Interest on the applicable class of Notes; (c) to the Class A
Noteholders, the Principal Distribution Amount PRO RATA in proportion to the
respective principal balances of the Class A-1 Notes, the Class A-2 Notes and
the Class A-3 Notes until each of such classes has been paid in full; (d) to the
Class B Noteholders, the Principal Distribution Amount until the Class B Notes
have been paid in full and (e) to the Certificateholders.
RESERVE ACCOUNT
The Reserve Account will be held in the name of the Indenture Trustee for
the benefit of Noteholders and Certificateholders and established by the Seller.
To the extent that amounts on deposit in the Supplemental Reserve Account and
the Reserve Account are exhausted, Noteholders and Certificateholders will have
no recourse to the assets of the Seller as a source of payment.
The Reserve Account will be funded by a deposit by the Seller on the Closing
Date in the amount of the Reserve Initial Deposit. The amount on deposit in the
Reserve Account will increase from time to time by application of certain funds
from the Collection Account up to the Specified Reserve Balance for each Payment
Date and will decrease on each Payment Date by (i) the shortfall, if any,
between (x) the aggregate amount of Advances that are due and payable to the
Servicer on such Payment Date and (y) an amount equal to the sum of the
aggregate amount of the collections on the Receivables and other amounts
received with respect to the Receivables in the related Collection Period that
are paid to the Servicer as reimbursement for such Advances and amounts on
deposit in the Supplemental Reserve Account on such Payment Date (prior to
giving effect to any deposits thereto or withdrawals therefrom on such Payment
Date), (ii) the shortfall, if any, between (x) the Total Required Payment and
(y) an amount equal to the sum of Available Funds allocable to the payment of
the Total Required Payment with respect to such Payment Date and amounts on
deposit in the Supplemental Reserve Account on such Payment Date (after giving
effect to any withdrawals therefrom on such Payment Date to pay the aggregate
amount of Advances due and payable to the Servicer such Payment Date but prior
to giving effect to any deposits thereto or any other withdrawals therefrom on
such Payment Date) and (iii) distribution to the Seller of amounts in the
Reserve Account in excess of the Specified Reserve Balance with respect to such
Payment Date.
On each Payment Date, after payment of the Total Required Payment for such
Payment Date, the Indenture Trustee will withdraw from the Collection Account
and deposit into the Reserve Account, to the extent of funds available in the
Collection Account, the amount, if any, required to bring the amount in the
Reserve Account up to the Specified Reserve Balance. Amounts on deposit in the
Reserve Account will be invested by the Seller in Permitted Investments. On any
Payment Date, after giving effect to all payments required to be made on such
day and to the extent that the amounts on deposit in the Reserve Account
(including amounts attributable to investment income, net of losses and
investment expenses) exceed the Specified Reserve Balance, such excess will be
withdrawn from the Reserve Account and paid to the Seller on such Payment Date.
Upon the distribution of any such amounts from the Reserve Account, the
Noteholders will not have any rights in, or claims to, such amounts.
Amounts on deposit in the Reserve Account from time to time 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 required to be withdrawn from the Reserve Account to cover shortfalls in
Available Funds and to reimburse the Servicer for Advances exceeds the amount on
deposit in the Reserve Account, a temporary shortfall in the amounts distributed
to the Noteholders could result. In addition, depletion of the Reserve Account
ultimately could result in losses to Noteholders.
The "Specified Reserve Balance" with respect to any Payment Date will be an
amount equal to the lesser of (i) $6,976,406 and (ii) an amount equal to (x) the
outstanding principal amount of the Notes as of such Payment Date (after giving
effect to any principal payment made on such Payment Date) less (y) the amounts
on deposit in the Supplemental Reserve Account on such Payment Date (after
giving effect to any
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deposits to or withdrawals from the Supplemental Reserve Account on such Payment
Date). The Servicer may, from time to time after the date of this Prospectus,
request each Rating Agency to approve a reduction in the Specified Reserve
Balance or a change in the manner in by which the Reserve Account is funded. If
each Rating Agency delivers a letter to the Indenture Trustee to the effect that
the reduction in the Specified Reserve Balance or the change in the manner in
which the Reserve Account is funded, as the case may be, will not result in the
qualification, reduction or withdrawal of its then-current rating of any class
of Notes, then subject to delivery of certain tax opinions the Specified Reserve
Balance will be reduced or the Reserve Account will be funded in the manner
proposed by the Servicer, as the case may be. The Indenture will accordingly be
amended to reflect the change in the Specified Reserve Balance or the change in
the manner in which the Reserve Account is funded, as the case may be, without
the consent of any Noteholders.
SUPPLEMENTAL RESERVE ACCOUNT
The Supplemental Reserve Account will be held in the name of the Indenture
Trustee for the benefit of Noteholders and Certificateholders and established by
the Seller. To the extent that amounts on deposit in the Supplemental Reserve
Account and the Reserve Account are exhausted, Noteholders and
Certificateholders will have no recourse to the assets of the Seller as a source
of payment.
The Supplemental Reserve Account will increase on each Payment Date by
deposits thereto of certain funds from the Collection Account up to the Maximum
Supplemental Reserve Amount and will decrease on each Payment Date by (i) the
shortfall, if any, between the aggregate amount of Advances that are due and
payable to the Servicer on such Payment Date and the aggregate amount of the
collections on the Receivables and other amounts received with respect to the
Receivables in the related Collection Period that are paid to the Servicer as
reimbursement for such Advances, (ii) the shortfall, if any, between the Total
Required Payment and Available Funds allocable to the payment of the Total
Required Payment with respect to such Payment Date, and (iii) distribution to
the Seller of amounts in the Supplemental Reserve Account in excess of the
Maximum Supplemental Reserve Amount with respect to such Payment Date.
On each Payment Date, after payment of the Total Required Payment for such
Payment Date and a deposit to the Reserve Account of the amount, if any,
necessary to reinstate the balance in the Reserve Account (after taking into
account the withdrawals therefrom on such Payment Date) to an amount equal to
the Specified Reserve Balance, the Indenture Trustee will withdraw from the
Collection Account and deposit into the Supplemental Reserve Account, to the
extent of funds available in the Collection Account, the amount, if any,
required to bring the amount in the Supplemental Reserve Account up to the
Maximum Supplemental Reserve Amount. Amounts on deposit in the Supplemental
Reserve Account will be invested by the Seller in Permitted Investments. The
Seller will not make a deposit to the Supplemental Reserve Account on the
Closing Date. On any Payment Date, after giving effect to all payments required
to be made on such day, to the extent that the amounts on deposit in the
Supplemental Reserve Account (including amounts attributable to investment
income, net of losses and investment expenses) exceed the Maximum Supplemental
Reserve Amount, such excess will be withdrawn from the Supplemental Reserve
Account and distributed to the Seller on such Payment Date. Upon the
distribution of any such amounts from the Supplemental Reserve Account, the
Noteholders will not have any rights in, or claims to, such amounts.
Amounts on deposit in the Supplemental Reserve Account from time to time 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 required to be withdrawn from the Supplemental Reserve Account to
cover shortfalls in Available Funds on any Payment Date exceeds the amount on
deposit in the Supplemental Reserve Account and the Reserve Account on such
Payment Date, a temporary shortfall in the amounts distributed to the
Noteholders could result. In addition, depletion of the Supplemental Reserve
Account and the Reserve Account ultimately could result in losses to
Noteholders.
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The "Maximum Supplemental Reserve Amount" with respect to any Payment Date
will be an amount equal to the lesser of (i) $18,603,749 and (ii) the
outstanding principal amount of the Notes on such Payment Date (after giving
effect to any principal payment made on such Payment Date). The Servicer may,
from time to time after the date of this Prospectus, request each Rating Agency
to approve a reduction in the Maximum Supplemental Reserve Amount or a change in
the manner in which the Supplemental Reserve Account is funded. If each Rating
Agency delivers a letter to the Indenture Trustee to the effect that the
reduction in the Maximum Supplemental Reserve Amount or the change in the manner
in which the Supplemental Reserve Account is funded, as the case may be, will
not result in the qualification, reduction or withdrawal of its then-current
rating of any class of Notes, then subject to delivery of certain tax opinions
the Specified Reserve Balance will be such reduced amount or the Supplemental
Reserve Account will be funded in the manner proposed by the Servicer, as the
case may be. The Indenture will accordingly be amended to reflect the change in
the Maximum Supplemental Reserve Amount or the change in the manner in which the
Supplemental Reserve Account is funded, as the case may be, without the consent
of any Noteholders.
FINAL PAYMENT RECEIVABLES
Certain of the Motor Vehicle Contracts (the "Final Payment Receivables")
provide for level monthly payments that do not amortize the entire amount
financed over the term of the Receivable, plus one substantially larger payment
(the "Last Scheduled Payment"). MMCA sets the Last Scheduled Payment for a
particular model of Motor Vehicle at the time the related Contract is entered
into. The Final Payment Receivables provide for a series of scheduled payments
which, if each is made on its scheduled Due Date, will amortize the initial
principal amount of the Receivable minus the principal portion of the Last
Scheduled Payment (such amount, the "Level Pay Balance") by the Due Date
immediately preceding the maturity date of the Receivable. Upon maturity of the
Receivable, the obligor thereunder will owe (assuming that all payments have
been made on their scheduled Due Dates) an amount consisting of interest for the
period from the preceding Due Date through the maturity date and the remaining
principal amount of the Receivable. The net amount actually due from an obligor
on a Final Payment Receivable upon maturity may be greater or less than the Last
Scheduled Payment as a result of (i) in the case of a Simple Interest
Receivable, changes in the amortization schedule of the Receivable as a result
of early or late payments by the obligor during the term of the Receivable and
the application of certain day counting conventions, and (ii) additional fees
and charges that may be owed by the obligor with respect to the Receivable or
the Financed Vehicle, including charges for excess wear and tear and excess
mileage on the Financed Vehicle.
The initial aggregate principal amount of the Notes and Certificates will
equal the aggregate principal amount of the Receivables on the Cutoff Date,
including the aggregate of the principal portions of the Last Scheduled Payments
on the Final Payment Receivables. As of the Cutoff Date, the Last Scheduled
Payments had an aggregate principal balance of $305,803,735.76.
Collections attributable to Last Scheduled Payments, plus payments by
related obligors in respect of charges for excess wear and tear and excess
mileage (but not disposition fees, which are payable to the Servicer) with
respect to any Collection Period will be deposited by the Servicer during such
Collection Period into the Collection Account and, on the related Payment Date,
will be available to reimburse the Servicer for Advances, to pay the Total
Required Payment and to make required deposits into the Reserve Account and the
Supplemental Reserve Account. Any amount remaining will be paid in accordance
with the priority of payments described herein. See "--The Indenture Cash
Flows."
Upon maturity of a Final Payment Receivable, an obligor thereunder may
satisfy the amount then owed by the obligor by (1) paying the remaining
principal amount of the Receivable (which, in the case of a Simple Interest
Receivable, may be greater than or less than the Last Scheduled Payment), all
accrued and unpaid interest, plus any fees, charges, and other amounts then
owing on the Due Date of the Last Scheduled Payment; (2) refinancing the net
amount then due, which may be greater or less than the Last Scheduled Payment,
subject to certain conditions; or (3) selling the related Motor Vehicle to MMCA
or its
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assignee for an amount equal to the Last Scheduled Payment (reduced by charges
for excess wear and tear and excess mileage and by a disposition fee payable to
the Servicer) and paying any excess of the total amount owed (calculated as in
clause (1)) over the Last Scheduled Payment to MMCA. MMCA will sell its rights
to the Final Payment Receivables, including the Last Scheduled Payments and
amounts paid in respect of excess wear and tear and excess mileage (but not
disposition fees), to the Seller, which will sell its rights to the Trust. If
the payments by or on behalf of an obligor on a Final Payment Receivable in the
Collection Period in which the Last Scheduled Payment is due that are
attributable to the Last Scheduled Payment and the amounts, if any, in the
Payahead Account allocable to the payment of the Last Scheduled Payment are less
than the amount due with respect to such Last Scheduled Payment, the Servicer
will make a Last Scheduled Payment Advance on the following Payment Date in an
amount equal to such shortfall. The Servicer will be reimbursed for the amount
of the Last Scheduled Payment Advance on each subsequent Payment Date (i) out of
payments by or on behalf of the related obligor in the preceding Collection
Period to the extent such payments are allocable to the reimbursement of the
Last Scheduled Payment Advance and (ii) out of collections on other Receivables
in the preceding Collection Period to the extent of losses on the related
Receivable that the Servicer has recorded in its books and records during the
preceding Collection Period, but only to the extent such losses are allocable to
the Last Scheduled Payment and the Last Scheduled Payment Advance has not
otherwise been reimbursed.
See "--The Indenture Cash Flows," "--Reserve Account" and "--Supplemental
Reserve Account."
If the obligor sells the Motor Vehicle to MMCA (acting on behalf of the
Trust), it is anticipated that the full amount of the Last Scheduled Payment
will not be realized upon the subsequent sale of the Motor Vehicle on behalf of
the Trust. MMCA sets the Last Scheduled Payment for a particular model of Motor
Vehicle at the time the related retail installment sale contract is entered into
by reference to its estimate of the wholesale market value of such model at the
end of the Motor Vehicle Contract's term. However, in connection with sales
incentive programs for particular models, MMCA may increase the Last Scheduled
Payments set forth in Motor Vehicle Contracts to levels above its estimate of
the wholesale market values of the related Motor Vehicles at the end of their
respective Motor Vehicle Contract terms, in order to stimulate sales of
particular models by reducing the amount of the amortizing monthly installments
which would be owed by obligors.
MMCA does not require the obligor under a Final Payment Receivable to pay
the "Gap Amount" in the event there is a total loss of the Motor Vehicle caused
by its theft or physical damage, provided that the obligor has maintained the
insurance required by the Motor Vehicle Contract and is not in default
thereunder. The "Gap Amount" is the difference between the amount owed in
respect of the Final Payment Receivable as of the date of the total loss and
insurance proceeds (including payment by the obligor of any applicable
deductible) received with respect to the Motor Vehicle. In accordance with its
customary servicing practices and procedures, MMCA treats such Gap Amount, if
any, as a non-cash reduction of the principal of the related Last Scheduled
Payment.
In the event that the full amount owed by an obligor under a Final Payment
Receivable is not collected, the shortfall will reduce the Available Funds
available to pay the Total Required Payment and to make required transfers, if
any, from the Collection Account to the Reserve Account and the Supplemental
Reserve Account. None of MMCA, the Servicer, the Seller or the Trust will have
any recourse to the obligor for any shortfall, nor will MMCA, the Servicer or
the Seller be obligated to pay any such shortfall to the Trust.
SUBORDINATION OF THE CLASS B NOTES AND THE CERTIFICATES
The rights of Certificateholders to receive distributions are subordinated
to the rights of Noteholders to receive payments of interest and principal to
the extent set forth herein. Funds on deposit in the Collection Account
(including amounts deposited therein from the Reserve Account and the
Supplemental Reserve Account) will be applied to the payment to the Servicer of
Advances to the extent due and payable to the Servicer and Rule of 78's Payments
due and payable to the Servicer, the payment of the Total Servicing Fee, the
Monthly Accrued Note Interest on the Notes and principal payable on the Notes on
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such Payment Date (including the Principal Distribution Amount) 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 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. The Class B Notes are subordinated to
the Class A Notes to the extent set forth herein. No payments of principal will
be made on the Class B Notes upon an acceleration of the maturity dates of the
Notes following an Event of Default until the Class A Notes have been paid in
full.
ADVANCES
To the extent the collection of interest and principal on an Actuarial
Receivable (other than a Last Scheduled Payment) with respect to a Collection
Period is less than the scheduled payment due thereon, after application of
amounts on deposit in the Payahead Account by the Indenture Trustee against such
shortfall, the Servicer will make an advance of the remaining amount (such an
advance, an "Actuarial Advance") on the related Payment Date. The Servicer will
be reimbursed for each Actuarial Advance (i) on each subsequent Payment Date out
of any payments by or on behalf of the related obligor in the preceding
Collection Period to the extent such payments are allocable to the reimbursement
of the Actuarial Advance and (ii) on the Payment Date following the Collection
Period in which the related Actuarial Receivable becomes a Defaulted Receivable
out of collections on other Receivables in the preceding Collection Period to
the extent the Servicer has not previously been reimbursed for the amount of
such Actuarial Advance. In addition, the Servicer will make an advance for any
portion of a Last Scheduled Payment on an Actuarial Receivable or a Simple
Interest Receivable for the Collection Period in which such payment becomes due
from the related obligor to the extent such payment has not been made by or on
behalf of such obligor, including amounts in the Payahead Account allocable to
such Last Scheduled Payment (such advance, a "Last Scheduled Payment Advance"
and, together with an Actuarial Advance, each an "Advance"). The Servicer will
be reimbursed for the amount of a Last Scheduled Payment Advance on each Payment
Date following the Payment Date on which the Last Scheduled Payment Advance was
made (i) out of any payments by or on behalf of the related obligor in the
preceding Collection Period to the extent such payments are allocable to the
reimbursement of the Last Scheduled Payment Advance and (ii) out of collections
on other Receivables in the preceding Collection Period to the extent of losses
on the related Receivable that the Servicer has recorded in its books and
records during the preceding Collection Period, but only to the extent such
losses are allocable to the Last Scheduled Payment and the Last Scheduled
Payment Advance has not otherwise been reimbursed. If MMCA is replaced in its
capacity as Servicer, the successor Servicer will not be required to make
Advances. In the absence of Advances by the Servicer, Noteholders must rely for
payment of the Notes upon payments on the Receivables (including sales proceeds
of Financed Vehicles returned to the Servicer for sale), payments under the
Yield Supplement Agreement and the Yield Supplement Account and, to the extent
available, amounts on deposit in the Reserve Account and the Supplemental
Reserve Account. See "--The Indenture Cash Flows", "--Reserve Account" and
"--Supplemental Reserve Account" herein.
COLLECTIONS ON THE RECEIVABLES
The Servicer will deposit all payments on the Receivables (from whatever
source) and all proceeds of the Receivables (other than certain amounts payable
to the Servicer under the Sales and Servicing Agreement that are not required to
be deposited in the Collection Account) into the Collection Account not later
than two Business Days after receipt thereof unless (i) the Servicer shall have
a rating acceptable to each Rating Agency with respect to its short-term
indebtedness, MMCA is the Servicer, and no Events of Servicing Termination have
occurred or (ii) the Trust shall have received written notice from each Rating
Agency that no outstanding rating on any class of Notes would be lowered or
withdrawn as a result, in which case such amounts will be paid into the
Collection Account on the Business Day prior to each
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Payment Date. The Seller and the Servicer will also deposit into the Collection
Account on each Payment Date the Purchase Amount of each Receivable required to
be repurchased or purchased by either of them pursuant to an obligation that
arose during the related Collection Period. The Servicer will be entitled to
withhold, or to be reimbursed from amounts otherwise payable into, or on deposit
in, the Collection Account with respect to a Collection Period, 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.
In those cases where a subservicer is servicing a Receivable pursuant to a
subservicing agreement, as described below, the Servicer will cause the
subservicer to remit to the Collection Account the amounts collected by such
subservicer on or with respect to the Receivables being serviced by it, within
the period after receipt, and subject to the limitations, described above.
As an administrative convenience, unless the Servicer is required to remit
collections within two Business Days of receipt thereof, the Servicer will be
permitted to make the deposit of collections and Purchase Amounts for or with
respect to the Collection Period net of distributions to be made to the Servicer
with respect to the Collection Period. 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 such
statement to be delivered to Noteholders will include the following information
as to the Notes with respect to such Payment Date and the related Collection
Period:
(i) the amount of the payment allocable to principal of each class of Notes;
(ii) the amount of the payment allocable to interest on or with respect to each
class of Notes;
(iii) the Yield Supplement Amount;
(iv) the amount of the Total Servicing Fee with respect to such Collection
Period;
(v) the aggregate outstanding principal amount of each class of the Notes and
the applicable Note Pool Factor, after giving effect to payments allocated
to principal reported under clause (i) above;
(vi) the Pool Balance, the Level Pay Pool Balance and the Last Scheduled
Payment Pool Balance (calculated as of the close of business on the last
day of the related Collection Period);
(vii) the amounts of the Interest Carryover Shortfall and the Principal
Carryover Shortfall, if any, for such Payment Date and the portion
thereof attributable to each class of Notes;
(viii) the amount of the aggregate Realized Losses, if any, for such Collection
Period;
(ix) the balance of the Reserve Account on such Payment Date, after giving
effect to changes therein on such Payment Date;
(x) the balance of the Supplemental Reserve Account on such Payment Date, after
giving effect to changes therein on such Payment Date;
(xi) the amount of Actuarial Advances and Last Scheduled Payment Advances, if
any, for such Collection Period; and
(xii) the aggregate Purchase Amount of Receivables repurchased by the Seller or
purchased by the Servicer during such Collection Period.
Each amount set forth pursuant to clauses (i), (ii), (iii), (v) and (vii)
above 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
such statements may be obtained by Note Owners by a request in writing addressed
to the Indenture Trustee.
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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 such calendar year was a
Noteholder a statement containing the sum of the amounts described in clauses
(i), (ii), (iii), (iv) and (vii) above for the purposes of such Noteholder's
preparation of Federal income tax returns. See "Certain Federal Income Tax
Consequences" and "--Book Entry Registration."
INDENTURE
EVENTS OF DEFAULT. The "Events of Default" in the Indenture consist of (i)
a default for five days or more in the payment of interest on any Note when the
same becomes due and payable; (ii) a default in the payment of principal of, or
any installment of principal of, any Note when the same becomes due and payable;
(iii) a default in the observance or performance of any material covenant or
agreement of the Trust made in the Indenture, or any representation or warranty
of the Trust made in the Indenture or in any certificate or writing delivered
pursuant thereto proves to have been incorrect in any material respect as of the
time when made, and the continuation of such default for a period of 60 days or
in the case of a materially incorrect representation or warranty, 30 days, after
notice thereof is given to the Trust by the Indenture Trustee or the Trust and
the Indenture Trustee by the holders of not less than 25% of the aggregate
principal amount of the Notes of all classes; or (iv) certain events of
bankruptcy, insolvency, receivership or liquidation of the Trust. (Indenture,
Section 5.1).
Noteholders holding not less than a majority of the aggregate principal
amount of the Notes outstanding, voting as a group, may waive any past default
or Event of Default prior to the declaration of the acceleration of the maturity
of the Notes, except a default (i) in payment of principal of or interest on any
of the Notes or (ii) in respect 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 such waiver 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. If an Event of Default should occur and be continuing, the
Indenture Trustee or the holders of a majority of the aggregate outstanding
principal amount of the Notes of all classes, voting as a group, may declare the
principal of the Notes to be immediately due and payable. Such declaration may
be rescinded by the holders of a majority of the aggregate principal amount of
the Notes before a judgment or decree for payment of the amount due has been
obtained by the Indenture Trustee if (i) the Trust has deposited with the
Indenture Trustee an amount sufficient to pay (x) all interest on and principal
of the Notes as if the Event of Default giving rise to such declaration had not
occurred and (y) all amounts advanced by the Indenture Trustee and its costs and
expenses and (ii) all Events of Default (other than the nonpayment of principal
of the Notes that has become due solely by such acceleration) have been cured or
waived. (Indenture, Section 5.2). Any such 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, the Indenture Trustee may institute proceedings to collect amounts due,
exercise remedies as a secured party, including foreclosure or sale of the Trust
Property, or elect to maintain the Trust Property and continue to apply proceeds
from the Trust Property as if there had been no declaration of acceleration. The
Indenture Trustee may not, however, sell the Trust Property following an Event
of Default, 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 (i)
100% of the Noteholders consent thereto, (ii) the proceeds of such sale are
sufficient to pay in full the principal of and the accrued interest on the then
outstanding Notes or (iii) the Indenture Trustee determines that the Trust
Property would not be sufficient on an ongoing basis to make all payments on the
Notes as such payments would have become due if such obligations had not been
declared due and payable, and the Indenture Trustee obtains the consent of
holders of 66 2/3% of the aggregate principal amount of the outstanding Notes,
voting as a group, to such sale. The Indenture Trustee may, but need not,
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obtain and rely upon an opinion of an independent accountant or investment
banking firm as to the sufficiency of the Trust Property to pay interest on and
principal of the Notes on an ongoing basis. (Indenture, Sections 5.4 and 5.5).
In the event of a sale of the Trust Property following the occurrence of an
Event of Default under the circumstances described in the preceding paragraph
pursuant to the direction of the Indenture Trustee or the Noteholders, the
proceeds of such sale will be distributed first to the Indenture Trustee for
amounts due as compensation or indemnity payments pursuant to the terms of the
Indenture; second to the Servicer for amounts due in respect of unpaid Total
Servicing Fees; third to the Noteholders for interest which is due and unpaid;
and fourth to the Noteholders for principal which is due and unpaid. Any
remaining amounts will be distributed to the Certificateholders for amounts due
and unpaid in accordance with the terms of the Trust Agreement and the Sale and
Servicing Agreement. (Indenture, Section 5.4).
Subject to the provisions of the Indenture relating to the duties of the
Indenture Trustee, in case an Event of Default occurs and is continuing with
respect to the Notes, the Indenture Trustee will be under no obligation to
exercise any of the rights or powers under the Indenture at the request or
direction of any of the Noteholders, if the Indenture Trustee reasonably
believes it will not be adequately indemnified against the costs, expenses and
liabilities which might be incurred by it in complying with such request.
Subject to such provisions for indemnification and certain limitations contained
in the Indenture, the holders of not less than a majority of the aggregate
principal amount of the outstanding Notes, voting as a group, will have the
right to direct the time, method and place of conducting any proceeding or any
remedy available to the Indenture Trustee with respect to the Notes or
exercising any trust power conferred on the Indenture Trustee, subject to
certain limitations, and the holders of not less than a majority of the
aggregate principal amount of the outstanding Notes, voting as a group, may, in
certain cases, waive any default with respect thereto, except a default in the
payment of principal or interest or a default in respect of a covenant or
provision of the Indenture that cannot be modified without the waiver or consent
of all of the holders of the outstanding Notes. (Indenture, Sections 5.11 and
5.12). Until such time, if any, as Definitive Notes have been issued, the
Indenture Trustee will act only in accordance with the instructions of Cede, as
nominee for DTC. However, under the rules, DTC will act only in accordance with
the instructions of the DTC Participants to whom Notes are credited, which will
in turn act in accordance with the instructions of persons holding beneficial
interests in such Notes through such DTC Participants. Accordingly, although
only Cede will be entitled to vote under the Indenture, Note Owners will be
entitled to instruct DTC as to the manner in which to vote.
No Noteholder will have the right to institute any proceeding with respect
to the Indenture, unless (i) such Noteholder previously has given to the
Indenture Trustee written notice of a continuing Event of Default, (ii) the
holders of not less than 25% of the aggregate principal amount of the Notes
outstanding have made written request of the Indenture Trustee to institute such
proceeding in its own name as Indenture Trustee, (iii) such Noteholder or
Noteholders have offered the Indenture Trustee reasonable indemnity, (iv) the
Indenture Trustee has for 60 days failed to institute such proceeding and (v) no
direction inconsistent with such written request has been given to the Indenture
Trustee during such 60-day period by the holders of a majority of the aggregate
principal amount of the Notes outstanding. (Indenture, Section 5.6).
Neither the Indenture Trustee nor the Owner Trustee in their respective
individual capacities, nor any holder of a Certificate, nor any of their
respective owners, beneficiaries, agents, officers, directors, employees,
successors or assigns will, in the absence of an express agreement to the
contrary, be personally liable for the payment of interest on or principal of
the Notes or for the agreements of the Trust and the Owner Trustee, in its
capacity as trustee, contained in the Indenture.
CERTAIN COVENANTS. The Trust will not, among other things, (i) except as
expressly permitted by the Indenture, the Transfer and Servicing Agreements or
certain related documents (collectively, the "Basic Documents") sell, transfer,
exchange or otherwise dispose of any of the assets of the Trust, (ii) claim any
credit on or make any deduction from the principal or interest payable in
respect of the Notes (other than
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amounts withheld under the Code or applicable state law) or assert any claim
against any present or former holder of Notes because of the payment of taxes
levied or assessed upon the Trust, (iii) dissolve or liquidate in whole or in
part or (iv) permit (w) the validity or effectiveness of the Indenture to be
impaired, (x) any person to be released from any covenants or obligations with
respect to the Notes under the Indenture except as may be expressly permitted
thereby, (y) any lien, charge, excise, claim, security interest, mortgage or
other encumbrance to be created on or extend to or otherwise arise upon or
burden the assets of the Trust or any part thereof, or any interest therein or
the proceeds therefrom or (z) permit the lien of the Indenture not to constitute
a valid, first priority (other than with respect to any such tax, mechanics or
other lien) security interest in the Trust Property. (Indenture, Section 3.8).
The Trust may not engage in any activities other than financing, acquiring,
owning, pledging and managing the Receivables as contemplated by the Basic
Documents and activities incidental thereto. (Indenture, Section 3.12).
The Trust will not incur, assume or guarantee any indebtedness other than
indebtedness incurred pursuant to the Notes, or otherwise in accordance with the
Basic Documents. (Indenture, Section 3.13).
The Trust will not make any payments to Certificateholders in respect of
their Certificates for any Collection Period unless the Accrued Note Interest,
the Principal Distribution Amount, the Total Servicing Fee and the deposits, if
any, required to be made to the Reserve Account and the Supplemental Reserve
Account have been provided for.
The Trust will or will cause the Servicer to deliver to the Indenture
Trustee on or prior to each Payment Date the disbursement and payment
instructions as required pursuant to the Indenture. (Sale and Servicing
Agreement, Section 4.9).
REPLACEMENT OF INDENTURE TRUSTEE. Noteholders holding not less than a
majority of the aggregate principal amount of the outstanding Notes, voting as a
group, may remove the Indenture Trustee without cause by so notifying the
Indenture Trustee and the Trust, and following such removal may appoint a
successor Indenture Trustee. Any successor Indenture Trustee must at all times
satisfy the requirements of Section 310(a) of the Trust Indenture Act of 1939,
as amended, and must have a combined capital and surplus of at least $50,000,000
and a long-term debt rating of investment grade by each Rating Agency or
otherwise acceptable to each Rating Agency. (Indenture, Sections 6.8 and 6.11).
The Indenture Trustee may resign at any time by so notifying the Trust and
the Noteholders. The Trust will be required to remove the Indenture Trustee if
the Indenture Trustee (i) ceases to be eligible to continue as the Indenture
Trustee, (ii) is adjudged to be bankrupt or insolvent, (iii) comes under the
charge of a receiver or other public officer, or (iv) otherwise becomes
incapable of acting. Upon the resignation or required removal of the Indenture
Trustee, or the failure of the Noteholders to appoint a successor Indenture
Trustee following the removal without cause of the Indenture Trustee, the Trust
will be required promptly to appoint a successor Indenture Trustee. (Indenture,
Section 6.8).
DUTIES OF INDENTURE TRUSTEE. Except during the continuance of an Event of
Default, the Indenture Trustee (i) will perform such duties and only such duties
as are specifically set forth in the Indenture, (ii) may in the absence of bad
faith, rely, as to the truth of the statements and the correctness of the
opinions expressed therein, on certificates or opinions furnished to the
Indenture Trustee which conform to the requirements of the Indenture, and (iii)
will examine any such certificates and opinions which are specifically required
to be furnished to the Indenture Trustee by the Indenture to determine whether
or not they conform to the requirements of the Indenture. Upon the continuance
of an Event of Default, the Indenture Trustee will be required to exercise the
rights and powers vested in it by the Indenture and use the same degree of care
and skill in the exercise thereof as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs. (Indenture,
Section 6.1).
COMPENSATION AND INDEMNITY. The Trust will (i) pay to the Indenture Trustee
from time to time reasonable compensation for its services, (ii) reimburse the
Indenture Trustee for all expenses, advances
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and disbursements reasonably incurred and (iii) indemnify the Indenture Trustee
for, and hold it harmless against, any and all losses, liability or expense
(including attorneys' fees) incurred by it in connection with the performance of
its duties. The Indenture Trustee will not be indemnified against any loss,
liability or expense incurred by it through its own willful misconduct,
negligence or bad faith, except that the Indenture Trustee will not be liable
(i) 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, (ii)
with respect to any action it takes or omits to take in good faith in accordance
with a direction received by it from Noteholders in accordance with the terms of
the Indenture, and (iii) for interest on any money received by it except as the
Indenture Trustee and the Trust may agree in writing. The Indenture Trustee will
not be deemed to have knowledge of any Event of Default unless an officer of the
Indenture Trustee has actual knowledge thereof or has received written notice
thereof in accordance with the provisions of the Indenture. (Indenture, Sections
6.1 and 6.7).
ACCESS TO NOTEHOLDER LISTS. If Definitive Notes are issued in the limited
circumstances described herein and the Indenture Trustee is not the registrar
for the Notes, the Trust will furnish or cause to be furnished to the Indenture
Trustee a list of the names and addresses of the Noteholders (i) as of each
Record Date, within five days thereafter and (ii) as of not more than 10 days
prior to the time such list is furnished, within 30 days after receipt by the
Trust of a written request therefor. (Indenture, Section 7.1).
ANNUAL COMPLIANCE STATEMENT. The Trust will be required to file annually
with the Indenture Trustee a written statement as to the fulfillment of its
obligations under the Indenture. (Indenture, Section 3.9).
SATISFACTION AND DISCHARGE OF INDENTURE. The Indenture will be discharged
with respect to the collateral securing the Notes upon the delivery to the
Indenture Trustee for cancellation of all the Notes or, with certain
limitations, including receipt of certain opinions with respect to tax matters,
upon deposit with the Indenture Trustee of funds sufficient for the payment in
full of all of the Notes (including interest and any fees due and payable to the
Owner Trustee or the Indenture Trustee). (Indenture, Section 4.1).
MODIFICATION OF INDENTURE. Without the consent of the Noteholders, the
Owner Trustee, on behalf of the Trust, and the Indenture Trustee, upon request
by the Trust, may execute a supplemental indenture for the purpose of, among
other things, adding to the covenants of the Trust, curing any ambiguity,
correcting or supplementing any provision which may be inconsistent with any
other provision or making any other provision with respect to matters or
questions arising under the Indenture which will not be inconsistent with other
provisions of the Indenture; provided that (x) such action will not, (i) as
evidenced by an opinion of counsel (which may be internal counsel to the Seller
or the Servicer (an "Opinion of Counsel")), materially adversely affect the
interests of any Noteholder and (ii) as confirmed by each Rating Agency rating
any class of Notes, cause the then-current rating assigned to any class of Notes
to be withdrawn, reduced or qualified and (y) an Opinion of Counsel as to
certain tax matters is delivered. (Indenture, Section 9.1).
The Owner Trustee, on behalf of the Trust, and the Indenture Trustee, upon
request by the Trust, may also enter into supplemental indentures, with the
consent of not less than a majority of the aggregate principal amount of the
outstanding Notes, voting as a group, and with prior written notice to each
Rating Agency, 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 (x) such action will not,
(i) as evidenced by an Opinion of Counsel, materially adversely affect the
interests of any Noteholder and (ii) as confirmed by each Rating Agency rating
any class of Notes, cause the then-current rating assigned to any such class of
Notes to be withdrawn, reduced or qualified and (y) an Opinion of Counsel as to
certain tax matters is delivered. (Indenture, Section 9.1).
Without the consent of the holder of each outstanding Note affected thereby,
however, no supplemental indenture may (i) change the Final Payment Date for any
class of Notes or the due date of any installment of principal of or interest on
any Note or reduce the principal amount thereof, the interest rate specified
thereon or the redemption price with respect thereto, change the provisions of
the Indenture
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relating to the application of collections on, or the proceeds of the sale of,
the Trust Property to payment of principal of or interest on the Notes, or
change any place of payment where, or the coin or currency in which, any Note or
any interest thereon is payable, (ii) impair the right to institute suit for the
enforcement of certain provisions of the Indenture regarding payment, (iii)
reduce the percentage of the aggregate outstanding principal amount of the Notes
the consent of the holders of which is required for any such supplemental
indenture or for any waiver of compliance with certain provisions of the
Indenture or of certain defaults thereunder and their consequences as provided
for in the Indenture, (iv) modify or alter the provisions of the Indenture
regarding the voting of Notes held by the Trust, the Seller, the Servicer, an
affiliate of any of them or any obligor on the Notes, (v) reduce the percentage
of the aggregate outstanding principal amount of the Notes the consent of the
holders of which is required to direct the Indenture Trustee to sell or
liquidate the Trust Property if the proceeds of such sale would be insufficient
to pay the principal amount and accrued but unpaid interest on the Notes and the
Certificates, (vi) modify any provision of the Indenture specifying a percentage
of the aggregate principal amount of the Notes necessary to amend the Indenture
or the other Basic Documents except to increase any percentage specified in the
Indenture or to provide that certain additional provisions of the Indenture or
the Basic Documents cannot be modified or waived without the consent of the
holder of each outstanding Note affected thereby, (vii) modify any provisions of
the Indenture in such manner as to affect the calculation of the amount of any
payment of interest or principal due on any Note on any Payment Date or to
affect the rights of the holders of Notes to the benefit of any provisions for
the mandatory redemption of the Notes contained in the Indenture or (viii)
permit the creation of any lien ranking prior to or on a parity with the lien of
the Indenture with respect to any of the Trust Property or, except as otherwise
permitted or contemplated in the Indenture, terminate the lien of the Indenture
on any such 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 is required and provides that the Owner Trustee will not
enter into such amendment unless Certificateholders holding a majority of the
Certificate Balance including, for this purpose, Certificates held by the Seller
or any affiliate of the Seller, consent in writing. (Trust Agreement, Section
4.1).
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The Trust will purchase the Receivables, and the Servicer will undertake to
service the Receivables pursuant to the Sale and Servicing Agreement. The Trust
will be created and the Certificates will be issued pursuant to the Trust
Agreement. MMCA will undertake certain administrative duties with respect to the
Trust pursuant to the Administration Agreement (together with the Sale and
Servicing Agreement and the Trust Agreement, the "Transfer and Servicing
Agreements"). Forms of the Transfer and Servicing Agreements have been filed as
exhibits to the Registration Statement of which this Prospectus forms a part.
The following summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the provisions of the Transfer and
Servicing Agreements.
SALE AND ASSIGNMENT OF THE RECEIVABLES
Prior to the time of issuance of the Notes, pursuant to the Purchase
Agreement MMCA will sell and assign to the Seller, without recourse, its entire
right, title and interest in, to and under the Receivables, including its
security interests in the Financed Vehicles. At the time of issuance of the
Notes, the Seller will sell and assign to the Trustee, without recourse, the
Seller's entire interest in the Receivables, including its security interests in
the Financed Vehicles. Each Receivable conveyed by the Seller to the Trust will
be identified in a schedule attached to the Sale and Servicing Agreement. The
Owner Trustee will, concurrently with such sale and assignment, execute,
authenticate and deliver the Certificates. The net proceeds received from the
sale of the Notes will be applied to the purchase of the Receivables.
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In the Purchase Agreement, MMCA will represent and warrant to the Seller,
and in the Sale and Servicing Agreement the Seller will represent and warrant to
the Owner Trustee, among other things, that (i) the information provided in the
schedule of Receivables is correct in all material respects; (ii) MMCA shall
have determined whether or not the obligor on each Receivable has maintained
physical damage insurance (which shall not be force-placed insurance) covering
the Financed Vehicle in accordance with its normal requirements; (iii) at the
Closing Date, 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; (iv) at the Closing Date, each of
the Receivables is or will be secured by a perfected first priority security
interest in the Financed Vehicle in favor of MMCA; and (v) each Receivable, at
the time it was originated, complied, and at the date of issuance of the Notes,
complies in all material respects with applicable Federal and state laws,
including consumer credit, truth in lending, equal credit opportunity and
disclosure laws.
The only recourse the Noteholders, the Trust, the Indenture Trustee, the
Certificateholders or the Owner Trustee will have against MMCA and the Seller
for breach of any of the foregoing representations and warranties with respect
to a Receivable will be to require MMCA and the Seller to repurchase the
Receivable. See "--Mandatory Repurchase of Receivables." The Owner Trustee, the
Indenture Trustee, the Trust and the Servicer will covenant in the Sale and
Servicing Agreement not to institute or join in the institution of any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding,
or other similar proceeding against the Seller for a period of one year and a
day after any securities rated by a Rating Agency were issued by the Seller or
by a trust for which the Seller was the depositor.
To assure uniform quality in servicing the Receivables and to reduce
administrative costs, the Trust will appoint the Servicer as initial custodian
of the Receivables. The Servicer, in its capacity as custodian, will hold the
Receivables and all documents and instruments relating thereto (each, a
"Receivable File"), either directly or through subservicers, on behalf of the
Trust. The Receivables will not be stamped or otherwise marked to reflect the
sale and assignment of the Receivables to the Trust and will not be segregated
from other receivables held by the Servicer or the subservicers. However,
Uniform Commercial Code financing statements reflecting the sale and assignment
of the Receivables by MMCA to the Seller and by the Seller to the Trust will be
filed, and the Servicer's accounting records and computer systems will be marked
to reflect such sale and assignment. See "The Trust" and "Certain Legal Aspects
of the Receivables."
MANDATORY REPURCHASE OF RECEIVABLES
In the event of a breach or failure to be true of any representation or
warranty with respect to the Receivables described in "--Sale and Assignment of
the Receivables," which breach or failure materially and adversely affects the
interest of the Trust in a Receivable, the Seller, unless such breach or failure
has been cured by the last day of the Collection Period which includes the 60th
day after the date on which the Seller becomes aware of, or receives written
notice from the Owner Trustee or the Servicer of, such breach or failure, will
be required to repurchase the Receivable from the Trust, and MMCA will be
required to repurchase such Receivable from the Seller, for the Purchase Amount.
The Purchase Amount will be payable on the Payment Date immediately following
such Collection Period. The obligation of the Seller to repurchase a Receivable
will not be conditioned on performance by MMCA of its obligation to repurchase a
Receivable. The repurchase obligation will constitute the sole remedy available
to the Noteholders, the Trust, the Indenture Trustee, the Certificateholders or
the Owner Trustee against the Seller and MMCA for any such uncured breach or
failure.
The "Purchase Amount" means, with respect to a Payment Date and a Receivable
to be purchased or repurchased on such Payment Date by the Seller or the
Servicer, an amount equal to the sum of (a) the outstanding principal balance of
such Receivable as of the first day of the related Collection Period and (b) an
amount equal to the amount of accrued and unpaid interest on such principal
balance at the related
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APR from the date a payment was last made by or on behalf of the obligor through
the Due Date for such Receivable in the related Collection Period and in the
case of clauses (a) and (b), after giving effect to the receipt of monies
collected on such Receivable in such Collection Period.
SERVICING PROCEDURES
The Servicer will make reasonable efforts to collect all payments due with
respect to the Receivables in a manner consistent with the Sale and Servicing
Agreement and will exercise the degree of skill and care that the Servicer
exercises with respect to comparable motor vehicle receivables owned and/or
serviced by the Servicer for itself or others.
Although it has no current plans to do so, the Servicer may enter into
subservicing agreements with Eligible Servicers for the subservicing of
Receivables. Any such subservicing agreements will contain provisions
substantially identical to those contained in the Sale and Servicing Agreement
and may contain such other provisions as are not inconsistent with the terms of
the Sale and Servicing Agreement. The Servicer may terminate a subservicing
agreement and either service the related Receivables directly or enter into a
new subservicing agreement for such Receivables with another subservicer,
provided that any such subservicer is an Eligible Servicer. Notwithstanding any
subservicing agreement, the Servicer will remain obligated and liable to the
Trust and the Owner Trustee for servicing and administering the Receivables in
accordance with the Sale and Servicing Agreement as if the Servicer alone were
servicing the Receivables. References herein to actions required or permitted to
be taken, or restrictions on actions to be taken, by the Servicer include such
actions by a subservicer. References herein to amounts received by the Servicer
include amounts received by a subservicer.
"Eligible Servicer" means a person which, at the time of its appointment as
Servicer or as a subservicer, (i) has a net worth of not less than $50,000,000,
(ii) is servicing a portfolio of motor vehicle retail installment sale contracts
and/or motor vehicle loans, (iii) is legally qualified, and has the capacity, to
service the Receivables, (iv) has demonstrated the ability to service a
portfolio of motor vehicle retail installment sale contracts and/or motor
vehicle loans similar to the Receivables professionally and competently in
accordance with standards of skill and care that are consistent with prudent
industry standards, and (v) is qualified and entitled to use pursuant to a
license or other written agreement, and agrees to maintain the confidentiality
of, the software which the Servicer or any subservicer uses in connection with
performing its duties and responsibilities under the Sale and Servicing
Agreement or the related subservicing agreement or obtains rights to use, or
develops 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: (i) the
Financed Vehicle securing each Receivable will not be released from the security
interest granted by the Receivable in whole or in part, except as contemplated
by the Sale and Servicing Agreement; (ii) the Servicer will not (nor will it
permit any subservicer to) impair in any material respect the rights of the
Trust, the Indenture Trustee, the Noteholders, the Owner Trustee or the
Certificateholders in the Receivables, or, subject to clause (iii) below,
otherwise amend or alter the terms thereof if, as a result of such amendment or
alteration, the interests of the Trust, the Noteholders, the Indenture Trustee,
the Owner Trustee, or the Certificateholders under the Sale and Servicing
Agreement would be materially adversely affected; and (iii) the Servicer will
not increase or decrease the number or amount of scheduled payments or the
amount financed under a Receivable, or extend, rewrite or otherwise modify the
payment terms of a Receivable; provided, however, that the Servicer may extend
any Receivable for credit-related reasons that would be acceptable to the
Servicer with respect to comparable motor vehicle receivables that it services
for itself or others in accordance with its customary standards if the
cumulative extensions with respect to any Receivable shall not cause the term of
any such Receivable to extend beyond the Final Scheduled Maturity Date; provided
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further that such extensions, in the aggregate, do not exceed two months for
each twelve months of the original term of the Receivable.
In the event of a breach by the Servicer of any covenant described above
that materially and adversely affects the interests of the Trust in a
Receivable, the Servicer, unless such breach has been cured by the last day of
the Collection Period which includes the 60th day after the date on which the
Servicer becomes aware of, or receives written notice of, such breach, will be
required to purchase the Receivable from the Trust for the Purchase Amount on
the Payment Date immediately following such Collection Period; provided,
however, that with respect to a breach of the covenant described in clause (iii)
of the preceding paragraph, the Servicer will be required to purchase the
related Receivable from the Trust at the end of the Collection Period in which
such breach occurs. The purchase obligation will constitute the sole remedy
available to the Noteholders, the Trust, the Indenture Trustee, the Owner
Trustee, or the Certificateholders against the Servicer for any such uncured
breach, except with respect to certain indemnities of the Servicer under the
Sale and Servicing Agreement related thereto.
The Sale and Servicing Agreement will also generally require the Servicer to
charge off a Receivable in conformity with its normal practice and to follow
such of its normal collection practices and procedures as it deems necessary or
advisable, and 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 Contract at the time that the related Financed Vehicle has been
repossessed and sold, and the proceeds of sale of the Financed Vehicle are
applied against the amount owing on the Contract, or at such time as MMCA
determines that it will not recover the Financed Vehicle. The Servicer may sell
the Financed Vehicle securing such Receivable at judicial sale or take any other
action permitted by applicable law. See "Certain Legal Aspects of the
Receivables." The net proceeds of such 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
Actuarial Advances and Last Scheduled Payment Advances for which the Servicer
will be reimbursed in the manner described under "Description of the
Notes--Advances."
The Sale and Servicing Agreement will provide that the Servicer will defend
and indemnify the Trust, the Indenture Trustee, the Owner Trustee, the
Noteholders, the Certificateholders and the Seller against any and all costs,
expenses, losses, damages, claims, and liabilities, including reasonable fees
and expenses of counsel and expenses of litigation, arising out of or resulting
from the use, ownership or operation by the Servicer or any affiliate thereof of
any Financed Vehicle, or in respect of any negligence, willful misfeasance or
bad faith of the Servicer in the performance of its duties (other than errors in
judgment) or by reason of reckless disregard of its obligations and duties,
under any Basic Document to which it is a party. The Servicer's obligations to
indemnify the Trust, the Indenture Trustee, the Owner Trustee, the Noteholders,
the Seller 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 the Servicing Fee for each
Collection Period, in an amount equal to the product of one-twelfth of the
Servicing Rate and the Pool Balance as of the first day of such Collection
Period. The "Servicing Rate" will equal 1.00% per annum. The Servicer will also
be entitled to receive, as additional servicing compensation, earnings (net of
losses and investment expenses) on amounts on deposit in the Payahead Account,
Rule of 78's Payments, all disposition fees paid with respect to Final Payment
Receivables and all administrative fees and charges and all late payment fees
paid with respect to the Receivables, other than fees paid in connection with
extension or deferral of payments on a Receivable, which will be deposited in
the Collection Account. The Servicing Fee, together with any
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portion of the Servicing Fee that remains unpaid from prior Payment Dates (the
"Total Servicing Fee"), will be paid out of Available Funds prior to
distributions to Noteholders and Certificateholders.
The Servicing Fee and the additional servicing compensation will compensate
the Servicer for performing the functions of a third party servicer of Motor
Vehicle Contracts and Truck Contracts and for administering the Receivables on
behalf of the Noteholders and the Certificateholders, including collecting
payments, accounting for collections, furnishing monthly and annual statements
to the Indenture Trustee and the Owner Trustee with respect to distributions,
responding to inquiries of obligors, investigating delinquencies, and providing
collection and repossession services in cases of obligor default. In addition,
the Servicing Fee and the additional servicing compensation will further
compensate the Servicer for certain 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 AS TO COMPLIANCE
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, the Seller or MMCA, will furnish to the Indenture Trustee and the
Owner Trustee, on or before May 31 of each year, beginning May 31, 1999, a
report of examination as to compliance by the Servicer during the 12 months (or
shorter period in the case of the first such report) ended the preceding
December 31 with certain 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 May 31 of each year,
beginning May 31, 1999, of a certificate signed by an officer of the Servicer
stating that to the best of such 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 such certificate) ended the
preceding December 31 or, if there has been a default in the fulfillment of any
such obligation, describing each such default.
Note Owners may obtain copies of such statements and certificates by written
request addressed to the Indenture Trustee.
CERTAIN MATTERS REGARDING THE SERVICER
The Sale and Servicing Agreement will provide that the Servicer may not
resign from its obligations and duties as Servicer thereunder, except upon a
determination that the Servicer's performance of such duties is no longer
permissible under applicable law. No such resignation 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.
Any corporation or other entity into which the Servicer may be merged or
consolidated, or that may result from any merger, conversion or consolidation to
which the Servicer is a party, or any entity that may succeed by purchase and
assumption to all or substantially all of the business of the Servicer, where
the Servicer is not the surviving entity and where such corporation or other
entity is an Eligible Servicer and assumes the obligations of the Servicer under
the Sale and Servicing Agreement, will be the successor to the Servicer under
the Sale and Servicing Agreement.
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INDEMNIFICATION AND LIMITS ON LIABILITY
The Sale and Servicing Agreement will provide that the Servicer will be
liable only to the extent of the obligations specifically undertaken by it under
the Sale and Servicing Agreement and will have no other obligations or
liabilities thereunder.
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 servicing 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 Sale and
Servicing Agreement and the rights and duties of the parties thereto and the
interests of the Noteholders and the Certificateholders thereunder.
EVENTS OF SERVICING TERMINATION
The following events will constitute "Events of Servicing Termination" under
the Sale and Servicing Agreement: (i) any failure by the Servicer to deliver to
the Owner Trustee or the Indenture Trustee the monthly certificate pursuant to
the Sale and Servicing Agreement detailing the collections and distributions for
any Collection Period (which failure continues beyond the earlier of three
business days from the date such Servicer's certificate was due to be delivered
and the related Payment Date), (ii) 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 following the due date, (iii) 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 such failure is given to the Servicer by the Indenture Trustee or the
Owner Trustee, as applicable (the "Applicable Trustee"), or to the Seller, the
Servicer, the Owner Trustee and the Indenture Trustee by the holders of Notes or
Certificates, as applicable, evidencing not less than 25% in aggregate principal
amount of the outstanding Notes (voting as a group) or Certificates, (iv)
certain events of bankruptcy, receivership, insolvency, readjustment of debt,
marshalling of assets and liabilities, or similar proceedings with respect to
the Seller or the Servicer and certain actions by the Seller or the Servicer
indicating its insolvency or reorganization pursuant to bankruptcy,
receivership, conservatorship, insolvency, or similar proceedings, and (v)
failure of the Servicer to be an Eligible Servicer. The holders of Notes
evidencing not less than 51% of the aggregate principal amount of the
outstanding Notes (voting as a group) (or the holders of Certificates evidencing
not less than a majority of the Certificate Balance, in the case of any default
which does not adversely affect the Indenture Trustee or the Noteholders) may,
on behalf of all Noteholders and Certificateholders, waive any Event of
Servicing Termination except an event resulting from the failure to make any
required deposit to or payment from any account. For purposes of the foregoing,
Notes or Certificates owned by the Seller, the Servicer, or any affiliate of
either shall 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, until after the expiration of any applicable cure period.
RIGHTS UPON AN EVENT OF SERVICING TERMINATION
As long as an Event of Servicing Termination remains unremedied, the
Indenture Trustee or the holders of Notes evidencing not less than a majority of
the aggregate principal amount of the outstanding Notes may terminate the
Servicer's rights and obligations under the Sale and Servicing Agreement,
whereupon the Indenture Trustee or a servicer appointed by the Indenture Trustee
will succeed to all the responsibilities, duties, and liabilities of the
Servicer under the Sale and Servicing Agreement. Thereafter,
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the successor Servicer will be entitled to the compensation otherwise payable to
the Servicer and will be entitled to similar compensation arrangements. In the
event that the Indenture Trustee is unwilling or legally unable so to act, the
Indenture Trustee may appoint, or petition a court of competent jurisdiction for
the appointment of, an Eligible Servicer to act as successor to the outgoing
Servicer under the Sale and Servicing Agreement. In no event may the servicing
compensation to be paid to such 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.
AMENDMENT
The Transfer and Servicing Agreements may be amended by the parties thereto
without the consent of the Noteholders or the Certificateholders, to cure any
ambiguity, to correct or supplement any provision therein which may be
inconsistent with any other provision therein, and to add, change or eliminate
any other provision of the applicable Transfer and Servicing Agreement which are
not inconsistent with the provisions of such Transfer and Servicing Agreement;
provided that such action will not, as evidenced by an Opinion of Counsel to the
Indenture Trustee and the Owner Trustee, materially and adversely affect the
interest of any Noteholder or Certificateholder or, with respect to the Trust
Agreement, have certain adverse tax consequences.
The Transfer and Servicing Agreements may also be amended by the parties
thereto (with, in the case of the Sale and Servicing Agreement, consent of the
Indenture Trustee and with, in the case of the Administration Agreement, the
Seller) with the consent of the holders of Notes evidencing not less than 51% of
the aggregate principal amount of then outstanding Notes, voting as a group, and
the holders of Certificates evidencing not less than 51% of the Certificate
Balance, for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of the Transfer and Servicing Agreements or
of modifying the rights of Noteholders or Certificateholders. However, no such
amendment may (i) 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 Note Interest Rate, rate of interest on the
Certificates, the Specified Reserve Balance or the Maximum Supplemental Reserve
Amount, without the consent of all adversely affected Noteholders or
Certificateholders, (ii) reduce the aforesaid percentage of the Notes and the
Certificates which is required to consent to any such amendment, without the
consent of all Noteholders or Certificateholders affected thereby, or (iii)
adversely affect the ratings of any class of Notes by the Rating Agencies
without the consent, respectively, of holders of Notes evidencing not less than
66 2/3% of the aggregate principal amount of the then outstanding Notes of such
class. Additionally, with respect to an amendment of the Trust Agreement, an
Opinion of Counsel to the effect that such amendment will not have certain
adverse tax consequences shall be furnished to the Indenture Trustee and the
Owner Trustee. See "Description of the Notes--Book Entry Registration."
TERMINATION
The obligations of the Seller, the Servicer, the Owner Trustee and the
Indenture Trustee pursuant to the Indenture and the Transfer and Servicing
Agreements will, except with respect to certain reporting requirements,
terminate upon the earliest of (i) the Payment Date next succeeding the
Servicer's purchase of the Receivables, as described below, (ii) payment to
Noteholders and Certificateholders of all amounts required to be paid to them
pursuant to the Transfer and Servicing Agreements and (iii) the Payment Date
next succeeding the month which is one year after the maturity or other
liquidation of the last Receivable and the disposition of any amounts received
upon liquidation of any property remaining in the Trust in accordance with the
terms and priorities set forth in the Transfer and Servicing Agreements.
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In order to avoid excessive administrative expense, the Servicer will be
permitted, at its option, in the event that the Pool Balance as of the close of
business on the last day of a Collection Period has declined to 10% or less of
the Initial Pool Balance, to purchase from the Trust, on any Payment Date
occurring in a subsequent Collection Period, all remaining Receivables in the
Trust at a purchase price equal to the outstanding principal amount of the Notes
and the Certificates, in each case plus accrued and unpaid interest thereon. The
exercise of this right will effect early retirement of the Notes and the
Certificates.
The Indenture Trustee will give written notice of termination of the Trust
to each Noteholder of record. The final distribution to any Noteholder will be
made only upon surrender and cancellation of such holder's Note (whether a
Definitive Note or the one or more physical notes representing the Notes) at the
office or agency of the Indenture Trustee specified in the notice of
termination. Any funds remaining in the Trust, after the Indenture Trustee has
taken certain measures to locate a Noteholder and such measures have failed,
will be distributed to the Seller or as otherwise provided in the Transfer and
Servicing Agreements.
ADMINISTRATION AGREEMENT
MMCA, in its capacity as administrator (the "Administrator"), will enter
into an Administration Agreement (as amended and supplemented from time to time,
the "Administration Agreement") with the Trust and the Indenture Trustee
pursuant to which the Administrator will agree, to the extent provided in the
Administration Agreement, 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 thereto, the
Administrator will be entitled to a monthly administration fee, which fee will
be paid by the Servicer.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
RIGHTS IN THE RECEIVABLES
The Receivables are "chattel paper" as defined in the Uniform Commercial
Code (the "UCC"). Pursuant to the UCC, for most purposes, a sale of chattel
paper is treated in a manner similar to a transaction creating a security
interest in chattel paper. MMCA and the Seller will cause financing statements
to be filed with the appropriate governmental authorities to perfect the
interest of the Seller and the Trust, as the case may be, in its purchase of the
Receivables.
Pursuant to the Sale and Servicing Agreement, the Servicer will hold the
Receivables, either directly or through subservicers, as custodian for the
Indenture Trustee and the Trust following the sale and assignment of the
Receivables to the Trust. The Seller will take such action as is required to
perfect the rights of the Indenture Trustee and the Trust in the Receivables.
The Receivables will not be stamped, or otherwise marked, to indicate that they
have been sold to the Trust. If, through inadvertence or otherwise, another
party purchases (or takes a security interest in) the Receivables for new value
in the ordinary course of business and takes possession of the Receivables
without actual knowledge of the Trust's interest, the purchaser (or secured
party) will acquire an interest in the Receivables superior to the interest of
the Trust.
Under the Sale and Servicing Agreement, the Servicer will be obligated from
time to time to take such actions as are necessary to protect and perfect the
Trust's interest in the Receivables and their proceeds.
SECURITY INTERESTS IN THE FINANCED VEHICLES
Generally, retail installment sale contracts such as the Receivables
evidence the credit sale of automobiles and light- and medium-duty trucks by
dealers to obligors; the contracts also constitute
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personal property security agreements and include grants of security interests
in the vehicles under the UCC. Perfection of security interests in motor
vehicles is generally governed by the motor vehicle registration laws of the
state in which the vehicle is located. In most states in which the Receivables
have been originated (including California, Florida and Texas, the states in
which the largest number of Financed Vehicles are located), a security interest
in the vehicle is perfected by notation of the secured party's lien on the
vehicle's certificate of ownership or title.
MMCA's practice is to take such action as is required in order to perfect
its security interest in a Motor Vehicle or Truck under the laws of the
jurisdiction in which the Motor Vehicle or Truck is registered. If MMCA, because
of clerical error or otherwise, has failed to take such action with respect to a
Financed Vehicle, it will not have a perfected security interest in the Financed
Vehicle, and its security interest may be subordinate to the interests of, among
others, subsequent purchasers of the Financed Vehicle that give value without
notice of MMCA's security interest and to whom a certificate of ownership is
issued in such purchaser's name, holders of perfected security interests in the
Financed Vehicle, and the trustee in bankruptcy of the obligor. MMCA's security
interest may also be subordinate to such third parties in the event of fraud or
forgery by the obligor or administrative error by state recording officials or
in the circumstances noted below. As described more fully below, MMCA and the
Seller will warrant in the Purchase Agreement and the Sale and Servicing
Agreement, respectively, that an enforceable first priority perfected security
interest exists for the benefit of the Seller and the Trust, respectively, with
respect to each Financed Vehicle and will be required to repurchase the related
Receivable in the event of an uncured breach of such warranty.
Pursuant to the Purchase Agreement, MMCA will assign its security interests
in the Financed Vehicles, along with the sale and assignment of the Receivables,
to the Seller, and pursuant to the Sale and Servicing Agreement, the Seller will
assign its security interests in the Financed Vehicles, along with the sale and
assignment of the Receivables, to the Trust. The Servicer will hold the
certificates of title relating to the Financed Vehicles, either directly or
through subservicers, as custodian for the Indenture Trustee and the Trust
following such sale and assignment. The certificates of title will not be
endorsed or otherwise amended to identify the Trust as the new secured party,
however, because of the administrative burden and expense involved. The Seller
will assign its rights under the Purchase Agreement to the Trust. See "Risk
Factors--Certain Legal Aspects--The Receivables."
In most states, an assignment of a security interest in a Financed Vehicle
along with the applicable Receivable is an effective conveyance of a security
interest without amendment of any lien noted on a vehicle's certificate of title
or ownership, and the assignee succeeds thereby to the assignor's rights as
secured party. However, because the Trust will not be identified as the secured
party on any such certificate, the security interest of the Trust in any
Financed Vehicle could be defeated through fraud, forgery, negligence or error
and may not be perfected in every state. In most states, in the absence of fraud
or forgery by the vehicle owner or of fraud, forgery, negligence or error by
MMCA or administrative error by state or local agencies, the notation of MMCA's
lien on the certificates of ownership or possession of such certificates with
such notation will be sufficient to protect the Trust against the rights of
subsequent purchasers of a Financed Vehicle or subsequent lenders who take a
security interest in a Financed Vehicle. If there are any Financed Vehicles as
to which the Trust fails to obtain a perfected security interest, its security
interest would be subordinate to, among others, subsequent purchasers of the
Financed Vehicles and holders of perfected security interests.
MMCA and the Seller will warrant in the Purchase Agreement and the Sale and
Servicing Agreement, respectively, as to each Receivable that, on the Closing
Date, there will exist a valid, subsisting, and enforceable first priority
perfected security interest in the Financed Vehicle securing the Receivable
(subject to any statutory or other lien arising by operation of law after the
Closing Date which is prior to such security interest) and, at such time as
enforcement of such security interest is sought, there shall exist a valid,
subsisting, and enforceable first priority perfected security interest in the
Financed Vehicle for the
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benefit of the Seller and the Trust, respectively (subject to any statutory or
other lien arising by operation of law after the Closing Date which is prior to
such security interest). In the event of an uncured breach of such warranty,
MMCA and the Seller, pursuant to the terms of the Purchase Agreement and the
Sale and Servicing Agreement, respectively, will be required to repurchase such
Receivable for its Purchase Amount. This repurchase obligation will constitute
the sole remedy available to the Trust, the Noteholders and the
Certificateholders for such breach. MMCA's and the Seller's warranties with
respect to perfection and enforceability of a security interest in a Financed
Vehicle will not cover statutory or other liens arising after the Closing Date
by operation of law which are prior to such security interest. Accordingly, any
such lien would not by itself give rise to a repurchase obligation on the part
of MMCA and the Seller.
Under the laws of most states, a perfected security interest in a motor
vehicle continues for four months after the motor vehicle is moved to a new
state from the one in which it was initially registered and thereafter until the
motor vehicle owner re-registers the motor vehicle in the new state, but in any
event not beyond the surrender of the certificate. A majority of states require
surrender of a certificate of title to re-register a motor vehicle and require
that notice of such surrender be given to each secured party noted on the
certificate of title. In those states, such as California, that require a
secured party to take possession of a certificate of title to perfect a security
interest, the secured party would learn of the re-registration through the
request from the obligor to surrender possession of the certificate of title. In
those states that require a secured party to note its lien on a certificate of
title to perfect a security interest but do not require possession of the
certificate of title, such as Texas and Florida the secured party would learn of
the re-registration through the notice from the state department of motor
vehicles that the certificate of title had been surrendered. The requirements
that a certificate of title be surrendered and that notices of such surrender be
given to each secured party also apply to re-registrations effected following a
sale of a motor vehicle. MMCA would therefore have the opportunity to re-perfect
its security interest in a Financed Vehicle in the state of re-registration
following relocation of the obligor and would be able to require satisfaction of
the related Receivable following a sale of the Financed Vehicle. 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
Contracts, MMCA takes steps to effect reperfection upon receipt of notice of
re-registration or information from the obligor as to relocation.
Under the laws of many states, including California, Florida and Texas,
liens for repairs performed on a motor vehicle and liens for unpaid taxes take
priority over a perfected security interest in the motor vehicle. MMCA and the
Seller will warrant in the Purchase Agreement and the Sale and Servicing
Agreement, respectively, that, as of the Closing Date, to the best of its
knowledge, no such liens are pending. In the event of a breach of such warranty
which has a material and adverse effect on the interest of the Trust in a
Receivable, MMCA and the Seller, pursuant to the terms of the Purchase Agreement
and the Sale and Servicing Agreement, respectively, will be required to
repurchase the Receivable secured by the Financed Vehicle involved. This
repurchase obligation will constitute the sole remedy available to the Trust,
the Noteholders and the Certificateholders for such breach. Any liens for
repairs or taxes arising at any time after the Closing Date during the term of a
Receivable would not give rise to a repurchase obligation on the part of MMCA
and the Seller.
REPOSSESSION
In the event of a default by an obligor, the holder of a receivable has all
the remedies of a secured party under the UCC, except where specifically limited
by other state laws or by contract. The remedies of a secured party under the
UCC include the right to repossession by means of self-help, unless such means
would constitute a breach of the peace. Self-help repossession is the method
employed by MMCA in most cases, and is accomplished simply by taking possession
of the motor vehicle. Generally, where the obligor objects or raises a defense
to repossession, a court order must be obtained from the appropriate state court
and the motor vehicle must then be repossessed in accordance with that order. In
the event of a default by
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an obligor, many jurisdictions require that the obligor be notified of the
default and be given a time period within which he may cure the default prior to
or after repossession. Generally, this right of reinstatement may be exercised
on a limited number of occasions during the term of a Receivable.
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require the secured party to provide an 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
generally has the right to redeem the collateral prior to actual sale by paying
the secured party the unpaid principal amount of the obligation, accrued and
unpaid interest, plus, in most cases, reasonable expenses for repossessing,
holding, and preparing the collateral for disposition and arranging for its sale
plus, in some jurisdictions, reasonable attorneys' fees. In some states, the
obligor has the right, prior to actual sale, to reinstatement of the original
loan terms and to return of the collateral by payment of delinquent installments
of the unpaid amount and cure any other defaults.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of Financed Vehicles generally will be applied first
to the expenses of repossession and resale and then to the satisfaction of the
indebtedness on the related Receivable. While some states impose prohibitions or
limitations on deficiency judgments if the net proceeds from resale do not cover
the full amount of the indebtedness, a deficiency judgment can be sought in
those states that do not prohibit or limit such judgments. Any such deficiency
judgment would be a personal judgment against the obligor for the shortfall,
however, and a defaulting obligor may have very little capital or few sources of
income available following repossession. Therefore, in many cases, it may not be
useful to seek a deficiency judgment or, if one is obtained, it may be settled
at a significant discount or not paid at all. MMCA generally seeks to recover
any deficiency existing after repossession and sale of a motor vehicle.
Occasionally, after resale of a repossessed motor vehicle and payment of all
expenses and indebtedness, there is a surplus of funds. In that case, the UCC
requires the secured party to remit the surplus to any other holder of a lien
with respect to the motor vehicle or, if no such lienholder exists or funds
remain after paying such other lienholder, to the former owner of the motor
vehicle.
CONSUMER PROTECTION LAWS
Numerous Federal and state consumer protection laws and related regulations
impose substantial requirements upon lenders and servicers involved in consumer
finance. These laws include the Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Federal Trade Commission Act, the Fair Credit Billing Act,
the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B, M and Z,
and other similar acts, state adaptations of the Uniform Consumer Credit Code
and state motor vehicle retail installment sale 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. These requirements impose specific statutory
liabilities upon creditors who fail to comply with their provisions. In some
cases, this liability could affect the ability of an assignee, such as the
Trust, to enforce consumer and commercial finance contracts such as the
Receivables. The "Credit Practices" Rule of the Federal Trade Commission (the
"FTC") imposes additional restrictions on contract provisions and credit
practices.
The FTC's holder-in-due-course rule (the "FTC Rule") has the effect of
subjecting a holder of an obligation created in a consumer credit transaction to
all claims and defenses which the purchaser could assert against the seller of
the goods. Liability under the FTC Rule is limited to the amounts paid by the
purchaser under the contract, and the holder of the contract may also be unable
to collect any balance
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remaining due thereunder from the purchaser. The FTC Rule is generally
duplicated by state statutes or the common law in certain states. Accordingly,
the Indenture Trustee and the Trust, as holders of the Receivables, may be
subject to claims or defenses, if any, that the purchaser of a Financed Vehicle
may assert against the seller of such vehicle.
Under the motor vehicle dealer licensing laws of most states, sellers of
motor vehicles are required to be licensed to sell such vehicles at retail sale
and to originate certain installment sales contracts in connection with such
sales. In addition, with respect to used motor vehicles, the FTC's Rule on Sale
of Used Vehicles requires that all sellers of used motor vehicles prepare,
complete and display a "Buyer's Guide" which explains the warranty coverage for
such vehicles. Federal Odometer Regulations promulgated under the Motor Vehicle
Information and Cost Savings Act require that all sellers of motor 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 either a Buyer's
Guide or Odometer Disclosure Statement was not properly provided to the
purchaser of a Financed Vehicle, such purchaser may be able to assert a defense
as to a retail installment sales contract against the seller of such vehicle or
of a subsequent holder of the retail installment sale contract.
Courts have applied general equitable principles to secured parties pursuing
repossession 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.
MMCA and the Seller will warrant in the Purchase Agreement and the Sale and
Servicing Agreement, respectively, as to each Receivable that such Receivable
complied at the time it was originated and as of the Closing Date in all
material respects with all requirements of applicable law. If, as of the Cutoff
Date, an obligor had a claim against the Trust for violation of any law, and
such claim materially and adversely affected the Trust's interest in a
Receivable, such violation would create an obligation of MMCA and the Seller
under the Purchase Agreement and the Sale and Servicing Agreement, respectively,
to repurchase the Receivable unless the breach were cured. This repurchase
obligation will constitute the sole remedy of the Trust, the Noteholders, and
the Certificateholders, against the Seller in respect of any such uncured
breach. See "Description of the Transfer and Servicing Agreements--Sale and
Assignment of the Receivables."
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including insolvency 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 such vehicle at the time of
bankruptcy (as determined by the court), leaving the party providing financing
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.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes. This
discussion is based upon current provisions of the Internal Revenue Code of
1986, as amended (the "Code"), existing and proposed Treasury regulations
thereunder, current administrative rulings, judicial decisions and other
applicable authorities in effect as of the date hereof, all of which are subject
to change, possibly with retroactive effect. There can be no assurance that the
Internal Revenue Service ("IRS") will not challenge the conclusions reached
herein, 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 Note Owners in light of their personal
investment circumstances nor, except for certain limited discussions of
particular topics, to certain types of Note Owners 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 Note Owners who hold the Notes as "capital assets" within the
meaning of Section 1221 of the Code.
GENERAL
TAX STATUS OF THE NOTES AND THE TRUST. On the Closing Date, Skadden, Arps,
Slate, Meagher & Flom LLP ("Special Tax Counsel") will render its opinion that
for Federal income tax purposes under existing law, and subject to customary
assumptions and qualifications set forth therein: (i) the Notes will be treated
as debt, and (ii) the Trust will not be classified as an association (or
publicly traded partnership) taxable as a corporation. The Seller, the Owner
Trustee and the Indenture Trustee have agreed, and the Noteholders will agree by
their purchase of Notes, to treat the Notes for Federal, state and local income
and franchise tax purposes as indebtedness of the Trust.
STATED INTEREST. Stated interest on the Notes will be taxable as ordinary
income for Federal income tax purposes when received or accrued in accordance
with a Note Owner's method of tax accounting.
ORIGINAL ISSUE DISCOUNT. A Note will be treated as issued with Original
Issue Discount ("OID") if the excess of the Note's "stated redemption price at
maturity" over the issue price equals or exceeds a DE MINIMIS amount equal to
1/4 of 1 percent of the Note's stated redemption price at maturity multiplied by
the number of complete years (based on the anticipated weighted average life of
a Note) to its maturity.
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 such OID in gross income as ordinary interest income as it accrues
under a method taking into account an economic accrual of the discount. In
general, OID must be included in income in advance of the receipt of the cash
representing that income. The amount of OID on a Note will be considered to be
zero if it is less than a DE MINIMIS amount determined as described above.
The issue price of a Note will generally be the initial offering price at
which a substantial amount of the Notes are sold. The Trust intends to treat the
issue price as including, in addition, the amount paid by the Noteholder for
accrued interest that relates to a period prior to the Closing Date. Under
applicable Treasury regulations governing the accrual of OID (the "OID
Regulations"), the stated redemption price at maturity is the sum of all
payments on the Note other than any "qualified stated interest" payments.
Qualified stated interest is defined as any one of a series of payments equal to
the product of the outstanding principal balance of the Note and a single fixed
rate, or certain variable rates of interest that is unconditionally payable at
least annually.
The holder of a Note issued with OID must include in gross income, for all
days during its taxable year on which it holds such Note, the sum of the "daily
portions" of such OID. Such daily portions are computed by allocating to each
day during a taxable year a PRO RATA portion of the OID that accrued during the
relevant accrual period. In the case of an obligation the principal on which is
subject to prepayment as
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a result of prepayments on the underlying collateral (a "Prepayable
Obligation"), such as the Notes, OID is computed by taking into account the
anticipated rate of prepayments assumed in pricing the debt instrument (the
"Prepayment Assumption"). The Prepayment Assumption that will be used in
determining the rate of accrual of original issue discount, premium and market
discount, if any, is 1.5% ABS. The amount of OID that will accrue during an
accrual period (generally the period between interest payments or compounding
dates) is the excess (if any) of the sum of (a) the present value of all
payments remaining to be made on the Note as of the close of the accrual period
and (b) the payments during the accrual period of amounts included in the stated
redemption price of the Note, over the "adjusted issue price" of the Note at the
beginning of the accrual period. An "accrual period" is the period over which
OID accrues, and may be of any length, provided that each accrual period is no
longer than one year and each scheduled payment of interest or principal occurs
on either the last day or the first day of an accrual period. The Issuer intends
to report OID on the basis of an accrual period that corresponds to the interval
between payment dates. 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 such 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: (i) 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), (ii) events which have occurred before
the end of the accrual period and (iii) the assumption that the remaining
payments will be made in accordance with the original Prepayment Assumption.
The effect of this method is to increase the portions of OID required to be
included in income by a Noteholder to take into account prepayments on the
Receivables at a rate that exceeds the Prepayment Assumption, and to decrease
(but not below zero for any period) the portions of OID required to be included
in income by a Noteholder to take into account prepayments with respect to the
Receivables at a rate that is slower than the Prepayment Assumption. Although
OID will be reported to Noteholders based on the Prepayment Assumption, 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 subsequent
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
such a holder who purchases such 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
the excess of (w) the purchaser's adjusted basis in the Note immediately after
purchase thereof over (x) the adjusted issue price of the Note, and the
denominator of which is the excess of (y) all amounts remaining to be paid on
the Note after the purchase date, other than qualified stated interest, over (z)
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 (i) the issue price of the Note were equal to the Noteholder's
adjusted basis in the Note immediately after its acquisition by the Noteholder;
(ii) the Note were issued on the Noteholder's acquisition date; and (iii) none
of the interest payments on the Note were "qualified stated interest." A
Noteholder may make such an election for an 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 original issue
discount, will be subject to the "market discount rules" of section 1276 of the
Code. In general, these rules provide that if the Note Owner purchases a Note at
a market discount (that is, a discount from its stated redemption price at
maturity or, if
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the Notes were issued with OID, its original issue price plus any accrued
original issue discount that exceeds a DE MINIMIS amount specified in the Code)
and thereafter (a) recognizes gain upon a disposition, or (b) receives payments
of principal, the lesser of (i) such gain or principal payment or (ii) the
accrued market discount will be taxed as ordinary interest income. Generally,
the accrued market discount will be the total market discount on the Note
multiplied by a fraction, the numerator of which is the number of days the Note
Owner held the Note and the denominator of which is the number of days from the
date the Note Owner acquired the Note until its maturity date. The Note Owner
may elect, however, to determine accrued market discount under the
constant-yield method.
Limitations imposed by the Code which are intended to match deductions with
the taxation of income may defer deductions for interest on indebtedness
incurred or continued, or short-sale expenses incurred, to purchase or carry a
Note with accrued market discount. A Note Owner may elect to include market
discount in gross income as it accrues and, if the Note Owner makes such an
election, is exempt from this rule. Any such election will apply to all debt
instruments acquired by the taxpayer on or after the first day of the first
taxable year to which such election applies. The adjusted basis of a Note
subject to such election will be increased to reflect market discount included
in gross income, thereby reducing any gain or increasing any loss on a sale or
taxable disposition.
AMORTIZABLE BOND PREMIUM. In general, if a Note Owner purchases a Note at a
premium (that is, an amount in excess of the amount payable upon the maturity
thereof), such Note Owner will be considered to have purchased such Note with
"amortizable bond premium" equal to the amount of such excess. Such Note Owner
may elect to amortize such 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. Such Note Owner's tax basis in the Note will be
reduced by the amount of the amortized bond premium. Any such election shall
apply to all debt instruments (other than instruments the interest on which is
excludible from gross income) held by the Note Owner at the beginning of the
first taxable year for which the election applies or thereafter acquired and is
irrevocable without the consent of the IRS. Bond premium on a Note held by a
Note 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 Note Owner's adjusted tax basis in a Note 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 Note
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. Such 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.
WAIVERS AND AMENDMENTS
The Indenture permits the Noteholders to waive an Event of Default or
rescind an acceleration of the Notes in some circumstances upon a vote of the
requisite percentage of Noteholders. Any such waiver or rescission, 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
The Indenture Trustee will be required to report annually to the IRS, and to
each Note Owner, the amount of interest paid on the Notes (and the amount
withheld for Federal income taxes, if any) for each
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calendar year, except as to exempt recipients (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 Note Owner (other than Note Owners who are not subject
to the reporting requirements) will be required to provide, under penalties of
perjury, a certificate containing the Note Owner's name, address, correct
Federal taxpayer identification number (which includes a social security number)
and a statement that the Note Owner is not subject to backup withholding. Should
a non-exempt Note Owner fail to provide the required certification or should the
IRS notify the Indenture Trustee or the Issuer that the Note 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 Note Owner, and
remit the withheld amounts to the IRS as a credit against the Note 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 (each, a "Foreign Person"). The term
"Foreign Person" means any person other than (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity organized in or
under the laws of the United States, any state or the District of Columbia
(unless, in the case of a partnership, Treasury regulations provide otherwise),
(iii) an estate the income of which is includible in gross income for U.S.
Federal income tax purposes, regardless of its source or (iv) a trust if a U.S.
court is able to exercise primary supervision over the administration of such
trust and one or more U.S. persons has authority to control all substantial
decisions of the trust.
(a) Interest paid or accrued to a Foreign Person that is not effectively
connected with the conduct of a trade or business within the United States
by the Foreign Person will generally be considered "portfolio interest" and
generally will not be subject to United States Federal income tax and
withholding tax, as long as the Foreign Person (i) is not actually or
constructively a "10 percent shareholder" of the Trust or a "controlled
foreign corporation" with respect to which the Trust is a "related person"
within the meaning of the Code, and (ii) provides an appropriate statement,
signed under penalties of perjury, certifying that the Note Owner is a
Foreign Person and providing that Foreign Person's name and address. If the
information provided in this statement changes, the Foreign Person must so
inform the Indenture Trustee within 30 days of such change. The statement
generally must be provided in the year a payment occurs or in either of the
two preceding years. If such interest were not portfolio interest, then it
would be subject to United States Federal income and withholding tax at a
rate of 30 percent unless reduced or eliminated pursuant to an applicable
income tax treaty.
(b) Any capital gain realized on the sale or other taxable disposition
of a Note by a Foreign Person will be exempt from United States Federal
income and withholding tax, provided that (i) the gain is not effectively
connected with the conduct of a trade or business in the United States by
the Foreign Person, and (ii) in the case of an individual Foreign Person,
the Foreign Person is not present in the United States for 183 days or more
in the taxable year and certain other requirements are met.
(c) If the interest, gain or income on a Note held by a Foreign Person
is effectively connected with the conduct of a trade or business in the
United States by the Foreign Person, the Note Owner (although exempt from
the withholding tax previously discussed if a duly executed Form 4224 is
furnished) generally will be subject to United States Federal income tax on
the interest, gain or income at regular Federal income tax rates. In
addition, if the Foreign Person is a foreign corporation, it may be subject
to a branch profits tax under the Code equal to 30 percent of its
"effectively connected earnings and profits" for the taxable year, as
adjusted for certain items, unless it qualified for a lower rate under an
applicable tax treaty.
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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 are not currently
effective but will generally be effective for payments made after December 31,
1998. 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.
CERTAIN STATE TAX CONSEQUENCES
Set forth below is a summary of certain state income tax consequences of the
purchase, ownership and disposition of the Notes. Because of the variation in
each state's income tax laws, it is impossible to predict tax consequences to
Noteholders in all states. Noteholders are urged to consult their tax advisors
with respect to state tax consequences arising out of the purchase, ownership
and disposition of Notes.
The Trust has been organized as a Delaware business trust, and the Seller
and Servicer are headquartered in the State of California; however, in the
opinion of Special Tax Counsel, assuming that the Notes are treated as debt for
federal income tax purposes, (i) the Notes will be treated as debt for Delaware
and California income and franchise tax purposes, (ii) the Trust will not be
subject to Delaware or California income or franchise taxes at the entity level,
and (iii) 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
ADVISERS 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 ("ERISA"),
and the Code impose certain restrictions on (a) employee benefit plans (as
defined in Section 3(3) of ERISA), (b) plans described in Section 4975(e)(1) of
the Code, including individual retirement accounts or Keogh Plans, (c) any
entities whose underlying assets include plan assets by reason of a plan's
investment in such entities (each of (a), (b) and (c) a "Benefit Plan") and (d)
persons who have certain specified relationships to a Benefit Plan
("Parties-in-Interest" under ERISA and "Disqualified Persons" under the Code).
Moreover, based on the reasoning of the United States Supreme Court in JOHN
HANCOCK LIFE INS. CO. V. HARRIS TRUST AND SAV. BANK, 114 S.Ct. 517 (1993), the
general account of an insurance company may be deemed to include assets of
Benefit Plans investing in its general account (e.g., through the purchase of an
annuity contract), and the insurance company might be treated as a
Party-in-Interest with respect to a Benefit Plan by virtue of such an
investment. ERISA also imposes certain duties on persons who are fiduciaries of
Benefit Plans subject to ERISA and prohibits certain transactions between a
Benefit Plan and Parties-in-Interest or Disqualified Persons with respect to
such Benefit Plan.
PLAN ASSET CONSIDERATIONS
Certain transactions involving the Trust might be deemed to constitute
prohibited transactions under ERISA and the Code if assets of the Trust were
deemed to be assets of a Benefit Plan. Under a regulation issued by the United
States Department of Labor (the "Plan Assets Regulation"), the assets of the
Trust would be treated as plan assets of a Benefit Plan for purposes of ERISA
and the Code only if the Benefit Plan acquires an "Equity Interest" in the Trust
and none of the exceptions contained in the Plan Assets Regulation is
applicable. An Equity Interest is defined under the Plan Assets Regulation as an
interest
75
<PAGE>
other than an instrument which is treated as indebtedness under applicable local
law and which has no substantial equity features. The Seller believes that the
Notes should be treated as indebtedness without substantial equity features for
purposes of the Plan Assets Regulation. However, without regard to whether the
Notes are treated as an Equity Interest for such purposes, the acquisition or
holding of Notes by or on behalf of a Benefit Plan could be considered to give
rise to a prohibited transaction if the Trust, the Owner Trustee, the Indenture
Trustee, any holder of the Certificates or any of their respective affiliates,
is or becomes a party in interest or a disqualified person with respect to such
Benefit Plan. In such case, certain exemptions from the prohibited transaction
rules could be applicable depending on the type and circumstances of the Benefit
Plan fiduciary making the decision to acquire a Note. Included among these
exemptions are: Prohibited Transaction Class Exemption ("PTCE") 90-1, regarding
investments by insurance company pooled separate accounts; PTCE 91-38, regarding
investments by bank collective investment funds; PTCE 84-14, regarding
transactions effected by "qualified professional asset managers"; PTCE 95-60,
regarding investments by insurance company general accounts; and PTCE 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 Code, unless one or more statutory or
administrative exemptions is available.
SPECIAL CONSIDERATIONS APPLICABLE TO INSURANCE COMPANY GENERAL ACCOUNTS
It should be noted that the Small Business Job Protection Act of 1996 added
new Section 401(c) of ERISA relating to the status of the assets of insurance
company general accounts under ERISA and Section 4975 of the Code. Pursuant to
Section 401(c), the Department of Labor is required to issue final regulations
(the "General Account Regulations") with respect to insurance policies issued on
or before December 31, 1998 that are supported by an insurer's general account.
The General Account 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 Code. Section 401(c)
also provides that, except in the case of avoidance of the General Account
Regulation and actions brought by the Secretary of Labor relating to certain
breaches of fiduciary duties that also constitute breaches of state or federal
criminal law, until the date that is 18 months after the General Account
Regulations become final, no person shall be subject to liability under the
fiduciary responsibility and prohibited transaction provisions of ERISA and
Section 4975 of the Code on the basis of a claim that the assets of the general
account of an insurance company constitute the assets of any plan. The plan
asset status of insurance company separate accounts is unaffected by new Section
401(c) of ERISA, and separate account assets continue to be treated as the
assets of any plan invested in the separate account. Insurance companies should
consult with their counsel regarding the potential impact of Section 401(c) on
their purchase of Notes.
As of the date hereof, the Department of Labor has issued proposed
regulations under Section 401(c). It should be noted that if the General Account
Regulations are adopted substantially in the form in which proposed, the General
Account 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 PTCE 95-60 to purchases of Notes.
GENERAL INVESTMENT CONSIDERATIONS
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 Code and the potential consequences of such investment with
respect to their specific circumstances. Moreover, each Benefit Plan fiduciary
should take into account, among other considerations, whether the fiduciary has
the authority to make the investment; the composition of the Benefit Plan's
portfolio with respect to diversification by type of asset; the Benefit Plan's
funding objectives; the tax effects of the investment; and whether under the
general fiduciary
76
<PAGE>
standards of investment prudence and diversification an investment in the Notes
is appropriate for the Benefit Plan, taking into account the overall investment
policy of the Benefit Plan and the composition of the Benefit Plan's investment
portfolio.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Seller has agreed to sell to each of the
Underwriters named below (collectively, the "Underwriters"), and each of the
Underwriters, for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated is
acting as representative (the "Representative"), has severally agreed to
purchase from the Seller, the principal amount of the Notes set forth opposite
its name below:
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT AMOUNT AMOUNT PRINCIPAL
OF CLASS OF CLASS OF CLASS AMOUNT
A-1 A-2 A-3 OF CLASS B
UNDERWRITERS NOTES NOTES NOTES NOTES
- ------------------------------------------------------------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................... $ $ $ $
Credit Suisse First Boston Corporation.......................
Lehman Brothers Inc..........................................
J.P. Morgan Securities Inc...................................
----------- ----------- ----------- ----------
Total........................................................ $ $ $ $
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed, subject
to the terms and conditions set forth therein, to purchase all the Notes offered
hereby if any of the Notes are purchased. In the event of a default by any
Underwriter, the Underwriting Agreement provides that, in certain circumstances,
purchase commitments of the non-defaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.
The Seller has been advised by the Representative that the several
Underwriters propose initially to offer the Notes to the public at the public
offering prices set forth on the cover page hereof, and to certain dealers at
such prices less a concession not in excess of % of the principal amount of
the Class A-1 Notes, % of the principal amount of the Class A-2 Notes, % of
the principal amount of the Class A-3 Notes and % of the principal amount of
the Class B Notes. The Underwriters may allow and such dealers may reallow a
discount not in excess of % of the principal amount of the Class A-1 Notes,
% of the principal amount of the Class A-2 Notes, % of the principal amount
of the Class A-3 Notes and % of the principal amount of the Class B Notes on
sales to certain other dealers. After the initial public offering, the public
offering price, concessions and discounts may be changed.
Until the distribution of the Notes is completed, rules of the Commission
may limit the ability of the Underwriters and certain selling group members to
bid for and purchase the Notes. As an exception to these rules, the Underwriters
are permitted to engage in certain transactions that stabilize the price of the
Notes. Such transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of the Notes.
If the Underwriters create a short position in the Notes in connection with
this offering, (i.e., they sell more Notes than are set forth on the cover page
of this Prospectus), the Underwriters may reduce that short position by
purchasing Notes in the open market.
The Underwriters may also impose a penalty bid on certain Underwriters and
selling group members. This means that if the Underwriters purchase Notes in the
open market to reduce the Underwriters' short position or to stabilize the price
of the Notes, they may reclaim the amount of the selling concession from any
Underwriter or selling group member who sold those Notes as part of the
offering.
77
<PAGE>
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
Neither the Seller nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Notes. In addition, neither the
Seller nor any of the Underwriters makes any representation that the
Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
The closing of the sale of the Notes is conditioned on the issuance of the
Certificates.
The Indenture Trustee may, from time to time, invest the funds in the Trust
Accounts, the Yield Supplement Account and the Reserve Account in Permitted
Investments 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 the Seller have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act or to
contribute to payments the Underwriters may be required to make in respect
thereof.
Upon receipt of a request by an investor who has received an electronic
Prospectus from an Underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a Prospectus,
the Seller 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 certain Federal income tax matters will be
passed upon for the Seller by Skadden, Arps, Slate, Meagher & Flom LLP, New
York, New York. Brown & Wood LLP, San Francisco, California, will act as counsel
to the Underwriters.
78
<PAGE>
INDEX OF PRINCIPAL TERMS
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
ABS................................................................................................... 29
ABS Tables............................................................................................ 29
Accrual Period........................................................................................ 72
Accrued Note Interest................................................................................. 47
Actuarial Advance..................................................................................... 11, 53
Actuarial Receivables................................................................................. 27
Administration Agreement.............................................................................. 66
Administrator......................................................................................... 66
Advance............................................................................................... 11, 53
Applicable Trustee.................................................................................... 64
APR................................................................................................... 24
Available Funds....................................................................................... 45
Basic Documents....................................................................................... 56
Benefit Plan.......................................................................................... 75
Business Day.......................................................................................... 5
Capped Receivables.................................................................................... 28
Cede.................................................................................................. 5
Cedel................................................................................................. 39
Cedel Participants.................................................................................... 39
Certificate Balance................................................................................... 47
Certificate Distribution Account...................................................................... 43
Certificateholders.................................................................................... 43
Certificates.......................................................................................... 1, 3
Class A Noteholders................................................................................... 6, 42
Class A Noteholders' Percentage....................................................................... 6, 42
Class A Notes......................................................................................... 3
Class A-1 Final Payment Date.......................................................................... 7
Class A-1 Noteholders................................................................................. 6, 42
Class A-1 Notes....................................................................................... 1, 3
Class A-1 Rate........................................................................................ 5
Class A-2 Final Payment Date.......................................................................... 7
Class A-2 Noteholders................................................................................. 6, 42
Class A-2 Notes....................................................................................... 1, 3
Class A-2 Rate........................................................................................ 5
Class A-3 Final Payment Date.......................................................................... 7
Class A-3 Noteholders................................................................................. 6, 42
Class A-3 Notes....................................................................................... 1, 3
Class A-3 Rate........................................................................................ 5
Class B Final Payment Date............................................................................ 7
Class B Noteholders................................................................................... 6, 42
Class B Noteholders' Percentage....................................................................... 6, 42
Class B Notes......................................................................................... 1, 3
Class B Rate.......................................................................................... 5
Closing Date.......................................................................................... 4
Code.................................................................................................. 71
Collection Account.................................................................................... 10
Collection Period..................................................................................... 4
</TABLE>
79
<PAGE>
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
Commission............................................................................................ 2
Contracts............................................................................................. 19
Cooperative........................................................................................... 39
Cutoff Date........................................................................................... 1, 4
Dealer................................................................................................ 19
Dealer Agreement...................................................................................... 19
Defaulted Receivable.................................................................................. 46
Definitive Notes...................................................................................... 40
Depositaries.......................................................................................... 38
Depositary............................................................................................ 38
Determination Date.................................................................................... 44
Direct Participants................................................................................... 37
Disqualified Persons.................................................................................. 73
DTC................................................................................................... 2
DTC Participants...................................................................................... 37
Due Date.............................................................................................. 20
Eligible Servicer..................................................................................... 61
Equity Interest....................................................................................... 75
ERISA................................................................................................. 75
Euroclear............................................................................................. 39
Euroclear Operator.................................................................................... 39
Euroclear Participants................................................................................ 39
Events of Default..................................................................................... 55
Events of Servicing Termination....................................................................... 64
Exchange Act.......................................................................................... 2
Final Payment Receivables............................................................................. 51
Final Scheduled Maturity Date......................................................................... 4
Final Payment Dates................................................................................... 7
Financed Vehicles..................................................................................... 4
Foreign Person........................................................................................ 74
FTC................................................................................................... 69
FTC Rule.............................................................................................. 69
Gap Amount............................................................................................ 16, 52
Indenture............................................................................................. 3
Indenture Trustee..................................................................................... 3
Indirect Participants................................................................................. 37
Initial Pool Balance.................................................................................. 4
Insolvency Laws....................................................................................... 13
Interest Carryover Shortfall.......................................................................... 47
Interest Period....................................................................................... 41
IRS................................................................................................... 71
Issuer................................................................................................ 3
Last Scheduled Payment................................................................................ 51
Last Scheduled Payment Advance........................................................................ 11, 53
Last Scheduled Payment Pool Balance................................................................... 24
Level Pay Balance..................................................................................... 51
Level Pay Pool Balance................................................................................ 24
Liquidation Proceeds.................................................................................. 45
Maximum Supplemental Reserve Amount................................................................... 9, 51
Mitsubishi Motors..................................................................................... 36
</TABLE>
80
<PAGE>
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
MMCA.................................................................................................. 3, 36
MMSA.................................................................................................. 3, 36
Monthly Accrued Note Interest......................................................................... 47
Moody's............................................................................................... 11
Motor Vehicle......................................................................................... 19
Motor Vehicle Contracts............................................................................... 19
Note Interest Rate.................................................................................... 5, 47
Note Owner............................................................................................ 5
Note Payment Account.................................................................................. 43
Note Pool Factor...................................................................................... 35
Noteholders........................................................................................... 5
Notes................................................................................................. 1, 3
OID................................................................................................... 71
OID Regulations....................................................................................... 71
Opinion of Counsel.................................................................................... 58
Owner Trustee......................................................................................... 3
Parties-in-Interest................................................................................... 75
Payaheads............................................................................................. 43
Payahead Account...................................................................................... 43
Payment Date.......................................................................................... 1, 5
Permitted Investments................................................................................. 43
Plan Assets Regulation................................................................................ 75
Pool Balance.......................................................................................... 4
Prepayable Obligation................................................................................. 72
Prepayment Assumption................................................................................. 72
Principal Carryover Shortfall......................................................................... 47
Principal Distribution Amount......................................................................... 47
PTCE.................................................................................................. 76
Purchase Agreement.................................................................................... 4
Purchase Amount....................................................................................... 60
Qualified Institution................................................................................. 43
Qualified Trust Institution........................................................................... 43
Rating Agency......................................................................................... 12
Realized Losses....................................................................................... 47
Receivable File....................................................................................... 60
Receivables........................................................................................... 1
Record Date........................................................................................... 5
Recoveries............................................................................................ 45
Representative........................................................................................ 77
Reserve Account....................................................................................... 7
Reserve Initial Deposit............................................................................... 7
Rule of 78's.......................................................................................... 27
Rule of 78's Payment.................................................................................. 27
Sale and Servicing Agreement.......................................................................... 4
Scheduled Principal................................................................................... 48
Securities Act........................................................................................ 2
Seller................................................................................................ 1
Servicing Fee......................................................................................... 10
Servicing Rate........................................................................................ 10, 62
Simple Interest Receivables........................................................................... 27
</TABLE>
81
<PAGE>
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
Special Tax Counsel................................................................................... 71
Specified Reserve Balance............................................................................. 8, 49
Standard & Poor's..................................................................................... 12
Supplemental Reserve Account.......................................................................... 8
Terms and Conditions.................................................................................. 40
Total Required Payment................................................................................ 7, 48
Total Servicing Fee................................................................................... 63
Transfer and Servicing Agreements..................................................................... 59
Truck................................................................................................. 19
Truck Contracts....................................................................................... 19
Trust................................................................................................. 1, 3
Trust Accounts........................................................................................ 43
Trust Agreement....................................................................................... 3
Trust Property........................................................................................ 4
UCC................................................................................................... 66
Underwriters.......................................................................................... 77
Underwriting Agreement................................................................................ 77
U.S. Person........................................................................................... A-4
Weighted Average Rate................................................................................. 9
Yield Supplement Account.............................................................................. 9
Yield Supplement Agreement............................................................................ 9
Yield Supplement Amount............................................................................... 9
Yield Supplement Letter of Credit..................................................................... 44
</TABLE>
82
<PAGE>
ANNEX A
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered MMCA Auto
Owner Trust 1998-1 Asset Backed Notes will be available only in book-entry form.
Investors in the Notes may hold such Notes through any of DTC, Cedel, or
Euroclear. The Notes will be tradeable as home market instruments in both the
European and U.S. domestic markets. Initial settlement and all secondary trades
will settle in same-day funds.
Secondary market trading between investors holding Notes through Cedel and
Euroclear will be conducted in the ordinary way in accordance with their normal
rules and operating procedures and in accordance with conventional eurobond
practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Notes directly through
DTC will be conducted according to the rules and procedures applicable to U.S.
corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Notes will be effected on a delivery-against-payment basis
through the respective Depositaries of Cedel and Euroclear (in such capacity)
and as DTC Participants.
Non-U.S. holders (as described below) of Notes will be subject to U.S.
withholding taxes unless such holders meet certain requirements and deliver
appropriate U.S. tax documents to the securities clearing organizations or their
participants.
INITIAL SETTLEMENT
All Notes will be held in book-entry form by DTC in the name of Cede & Co.
as nominee of DTC. Investors' interests in the Notes will be represented through
financial institutions acting on their behalf as direct and indirect
participants in DTC. As a result, Cedel and Euroclear will hold positions on
behalf of their participants through their respective Depositaries, which in
turn will hold such positions in accounts as DTC Participants.
Investors electing to hold their Notes through DTC will follow the
settlement practices applicable to U.S. corporate debt obligations. Investor
securities custody accounts will be credited with their holdings against payment
in same-day funds on the settlement date.
Investors electing to hold their Notes through Cedel or Euroclear accounts
will follow the settlement procedures applicable to conventional eurobonds,
except that there will be no temporary global security and no "lock-up" or
restricted period. Notes will be credited to the securities custody accounts on
the settlement date against payment in the same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC
Participants will be settled using the procedures applicable to U.S. corporate
debt obligations in same-day funds.
TRADING BETWEEN CEDEL AND/OR EUROCLEAR PARTICIPANTS. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
A-1
<PAGE>
TRADING BETWEEN DTC SELLER AND CEDEL OR EUROCLEAR PURCHASER. When Notes are
to be transferred from the account of a DTC Participant to the accounts of a
Cedel Participant or a Euroclear Participant, the purchaser will send
instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. Cedel or Euroclear,
as the case may be, will instruct the respective Depositary to receive the Notes
against payment. Payment will include interest accrued on the Notes from and
including the last coupon payment date to and excluding the settlement date, on
the basis of a 360-day year consisting of twelve 30-day months. Payment will
then be made by the Depositary to the DTC Participant's account against delivery
of the Notes. After settlement has been completed, the Notes will be credited to
the respective clearing system and by the clearing system, in accordance with
its usual procedures, to the Cedel Participant's or Euroclear Participant's
account. The Notes credit will appear the next day (European time) and the cash
debit will be back-valued to, and the interest on the Notes will accrue from,
the value date (which would be the preceding day when settlement occurred in New
York). If settlement is not completed on the intended value date (i.e., the
trade fails), the Cedel or Euroclear cash debit will be valued instead as of the
actual settlement date.
Cedel Participants and Euroclear Participants will need to make available to
the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the Notes are
credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to pre-position
funds and allow that credit line to be drawn upon the finance settlement. Under
this procedure, Cedel Participants or Euroclear Participants purchasing Notes
would incur overdraft charges for one day, assuming they cleared the overdraft
when the Notes were credited to their accounts. However, interest on the Notes
would accrue from the value date. Therefore, in many cases the investment income
on the Notes earned during that one-day period may substantially reduce or
offset the amount of such overdraft charges, although this result will depend on
each Cedel Participant's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Notes to the
respective Depositary for the benefit of Cedel Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participants a cross-market transaction will
settle no differently than a trade between two DTC Participants.
TRADING BETWEEN CEDEL OR EUROCLEAR SELLER AND DTC PURCHASER. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Notes are to be
transferred by the respective clearing system, through the respective
Depositary, to a DTC Participant. The seller will send instructions to Cedel or
Euroclear through a Cedel Participant or Euroclear Participant at least one
business day prior to settlement. In these cases, Cedel or Euroclear will
instruct the respective Depositary, as appropriate, to deliver the bonds to the
DTC Participant's account against payment. Payment will include interest accrued
on the Notes from and including the last coupon payment date to and excluding
the settlement date on the basis of a 360-day year consisting of twelve 30-day
months. The payment will then be reflected in the account of the Cedel
Participant or Euroclear Participant the following day, and receipt of the cash
proceeds in the Cedel Participant's or Euroclear Participant's account would be
back-valued to the value date (which would be the preceding day, when settlement
occurred in New York). Should the Cedel Participant or Euroclear Participant
have a line of credit with its respective clearing system and elect to be in
debt in anticipation of receipt of the sale proceeds in its account, the
back-valuation will extinguish any overdraft charges incurred over that one-day
period. If settlement is not completed on the intended value date (i.e., the
trade fails), receipt of the cash proceeds in the Cedel Participant's or
Euroclear Participant's account would instead be valued as of the actual
settlement date.
A-2
<PAGE>
Finally, day traders that use Cedel or Euroclear and that purchase Notes
from DTC Participants for delivery to Cedel Participants or Euroclear
Participants should note that these trades would automatically fail on the sale
side unless affirmative action were taken. At least three techniques should be
readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the purchase
side of the day trade is reflected in their Cedel or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(b) borrowing the Notes in the U.S. from a DTC Participant no later than
one day prior to settlement, which would give the Notes sufficient time to
be reflected in their Cedel or Euroclear account in order to settle the sale
side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at least
one day prior to the value date for the sale to the Cedel Participant or
Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Notes holding securities through Cedel or Euroclear
(or through DTC if the holder has an address outside the U.S.) will be subject
to the 30% U.S. withholding tax that generally applies to payments of interest
(including original issue discount) on registered debt issued by U.S. Persons,
unless (i) each clearing system, bank, or other financial institution that holds
customers' securities in the ordinary course of its trade or business in the
chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
EXEMPTION FOR NON-U.S. PERSONS (FORM W-8). Beneficial owners of Notes that
are non-U.S. Persons can obtain a complete exemption from the withholding tax by
filing a signed Form W-8 (Certificate of Foreign Status). If the information
shown on Form W-8 changes, a new Form W-8 must be filed within 30 days of such
change.
EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY COUNTRIES
(FORM 1001). Non-U.S. Persons that are Note Owners residing in a country that
has a tax treaty with the United States can obtain an exemption or reduced tax
rate (depending on the treaty terms) by filing Form 1001 (Ownership, Exemption
or Reduced Rate Certificate). If the treaty provides only for a reduced rate,
withholding tax will be imposed at that rate unless the filer alternatively
files Form W-8. Form 1001 may be filed by the Note Owner or his agent.
EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. The Note Owner or, in the case
of a Form 1001 or a Form 4224 filer, his agent, files by submitting the
appropriate form to the person through whom it holds (the clearing agency, in
the case of persons holding directly on the books of the clearing agency). Form
W-8 and Form 1001 are effective for three calendar years and Form 4224 is
effective for one calendar year.
A-3
<PAGE>
The term "U.S. Person" means (i) a citizen or resident of the United States,
(ii) a corporation or partnership (including an entity treated as a corporation
or partnership) organized in or under the laws of the United States or any state
or the District of Columbia (unless, in the case of a partnership, Treasury
regulations provide otherwise), (iii) an estate the income of which is
includible in gross income for United States tax purposes, regardless of its
source, or (iv) a trust if a U.S. court is able to exercise primary supervision
over the administration of such trust and one or more U.S. persons has the
authority to control all substantial decisions of the trust. This summary does
not deal with all aspects of U.S. Federal income tax withholding that may be
relevant to foreign holders of the Notes. Investors are advised to consult their
own tax advisors for specific tax advice concerning their holding and disposing
of the Notes.
Recent Treasury regulations could affect the procedures to be followed by a
non-U.S. Person in complying with the United States federal withholding, backup
withholding, and information reporting rules. The regulations are not currently
effective but, if finalized in their current form, would be effective for
payments made after December 31, 1998. 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.
A-4
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE SELLER, THE SERVICER OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION BY ANYONE IN ANY STATE
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS, NOR ANY SALE MADE HEREUNDER, SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE SELLER OR
THE SERVICER SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
--------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
AVAILABLE INFORMATION........................... 2
REPORTS TO NOTEHOLDERS.......................... 2
SUMMARY......................................... 3
RISK FACTORS.................................... 13
THE TRUST....................................... 17
THE TRUST PROPERTY.............................. 18
MMCA'S VEHICLE CONTRACT PORTFOLIO............... 19
THE RECEIVABLES................................. 24
POOL FACTORS AND OTHER INFORMATION.............. 35
USE OF PROCEEDS................................. 35
THE SELLER...................................... 35
THE SERVICER.................................... 36
DESCRIPTION OF THE NOTES........................ 36
DESCRIPTION OF THE TRANSFER AND SERVICING
AGREEMENTS.................................... 59
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES........ 66
CERTAIN FEDERAL INCOME TAX CONSEQUENCES......... 71
CERTAIN STATE TAX CONSEQUENCES.................. 75
ERISA CONSIDERATIONS............................ 75
UNDERWRITING.................................... 77
LEGAL OPINIONS.................................. 78
INDEX OF PRINCIPAL TERMS........................ 79
ANNEX A......................................... A-1
</TABLE>
--------------------------
UNTIL , 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE NOTES, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. UPON RECEIPT OF A
REQUEST BY AN INVESTOR, OR SUCH INVESTOR'S REPRESENTATIVE, WITHIN THE PERIOD
DURING WHICH THERE IS A PROSPECTUS DELIVERY OBLIGATION, THE SELLER OR THE
UNDERWRITERS WILL TRANSMIT OR CAUSE TO BE TRANSMITTED PROMPTLY, WITHOUT CHARGE
AND IN ADDITION TO ANY SUCH DELIVERY REQUIREMENTS, A PAPER COPY OF THE
PROSPECTUS OR A PROSPECTUS ENCODED IN AN ELECTRONIC FORMAT.
$832,518,000
MMCA
AUTO OWNER TRUST
1998-1
$200,000,000
CLASS A-1
% ASSET BACKED NOTES
$250,000,000
CLASS A-2
% ASSET BACKED NOTES
$322,056,000
CLASS A-3
% ASSET BACKED NOTES
$60,462,000
CLASS B
% ASSET BACKED NOTES
MMCA AUTO
RECEIVABLES, INC.
SELLER
[LOGO]
SERVICER
--------------
PROSPECTUS
--------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
LEHMAN BROTHERS
J.P. MORGAN & CO.
AUGUST , 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Registration Fee............................................... $245,592.81
Printing and Engraving......................................... $84,000.00
Trustee's Fee.................................................. $20,000.00
Legal Fees and Expenses........................................ $215,000.00
Blue Sky Fees and Expenses..................................... $10,000.00
Accountant's Fees and Expenses................................. $94,000.00
Rating Agency Fees............................................. $228,487.00
Miscellaneous Fees and Expenses................................ $ 5,000.00
----------
Total Expenses................................................. $902,079.81
----------
----------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware provides as follows:
145 Indemnification of Officers, Directors, Employees and Agents; Insurance
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of
II-1
<PAGE>
this section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the present or
former director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in subsections
(a) and (b) of this section. Such determination shall be made with respect to a
person who is a director or officer at the time of determination (1) by a
majority vote of the directors who are not parties to such action, suit or
proceeding, even though less than a quorum, (2) by a committee of such directors
designated by majority vote of such directors, even though less than a quorum,
(3) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (4) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative or investigative action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys' fees) incurred
by former directors and officers or other employees and agents may be so paid
upon such terms and conditions, if any, as the corporation deems appropriate.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
II-2
<PAGE>
(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees).
Article VIII of the By-Laws of MMCA Auto Receivables, Inc. provides as
follows:
Section 1. DEFINITIONS. For purposes of this Article VIII: (i)
"Corporation" shall be deemed to mean this Corporation and shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to
indemnify its directors, officers, employees and agents so that any person who
is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another legal entity shall stand in
the same position under the provisions of this Article VIII with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued; (ii) a "legal
entity" is a corporation, partnership, joint venture, trust or other enterprise;
(iii) a "proceeding" is any action, suit, or proceeding, whether civil,
criminal, administrative, arbitrative or investigative, including an action or
suit by or in the right of the Corporation to procure a judgment in its favor,
and any appeal in such an action, suit, or proceeding, and any inquiry or
investigation that could lead to such action, suit or proceeding; and (iv) a
"qualified position" with respect to any legal entity is a position as a
director or an officer of such legal entity or a position held by a director,
officer or employee of such legal entity which does or might constitute him a
fiduciary with respect to any employee benefit plan for the employees of such
legal entity under any Federal or state law regulating employee benefit plans.
Section 2. MANDATORY INDEMNIFICATION. The Corporation shall indemnify each
person who was or is a party or is threatened to be made a party to any
proceeding by reason of the fact that he is serving in a qualified position with
respect to the Corporation or is serving in a similar capacity with respect to
any other legal entity at the request of the Corporation, against all expenses
(including attorneys' fees and costs of investigation and litigation),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with any such proceeding to the maximum extent permitted
under the General Corporation Law of the State of Delaware (the "Delaware Law",
which term shall be deemed to include the General Corporation Law of the State
of Delaware or any successor statute or section thereof, as now written or
hereafter amended). The termination of any proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not of itself create a presumption that such person acted in such a manner
as to make him ineligible for indemnification. The right of a person to be
indemnified hereunder shall be a contract right and shall include the right to
be paid by the Corporation all expenses incurred in defending any such
proceeding in advance of its final disposition upon compliance with the
provisions of Delaware Law then in effect concerning advancement of expenses.
Section 3. PERMISSIVE INDEMNIFICATION. In addition to the indemnification
provided for in Section 2, the Corporation shall have the power to indemnify or
contract in advance to indemnify, to a lesser or the same extent that
indemnification is required under Section 2, any person who was or is a party or
is threatened to be made a party to any proceeding by reason of the fact that he
is serving in any capacity with respect to the Corporation or with respect to
any other legal entity at the request of the Corporation.
Section 4. DETERMINATION THAT INDEMNIFICATION IS PROPER. Any
indemnification under this Article VIII (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
II-3
<PAGE>
determination that such indemnification is permitted under Delaware Law, or, in
the case of indemnification under Section 3, is proper because the requirements
specified by the Corporation with respect to such indemnification have been met.
Such determination shall be made (i) by the Board of Directors by a majority
vote of a quorum consisting of directors who neither are nor were parties to the
proceeding, or (ii) if such a quorum is not obtainable or, even though
obtainable, a majority of disinterested directors so directs, by independent
legal counsel in a written opinion, or (iii) by the stockholders. In making a
determination the directors may rely, as to all questions of law, on the advice
of independent legal counsel.
Section 5. CLAIMS FOR INDEMNIFICATION OR ADVANCES. If a claim for
indemnification or advancement of expenses hereunder is not paid in full by the
Corporation within 60 days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim, and if successful in
whole or in part, the claimant shall be entitled to be paid the expenses of
prosecuting such claim. It shall be a defense to any such action that such
indemnification or advancement of costs of defense are not permitted under
Delaware Law, but the burden of proving such defense shall be on the
Corporation.
Section 6. MISCELLANEOUS. Every reference in this Article VIII to persons
who are entitled to indemnification and advancement of expenses shall include
all persons who formerly occupied any of the positions hereinabove set forth in
this Article VIII, to the extent they would have been entitled to
indemnification and advancement of expenses under the provisions of this Article
VIII if they still held such positions and their respective heirs, executors and
administrators. Indemnification or advancement of expenses provided pursuant to
the foregoing provisions of this Article VIII shall not be exclusive of any
other rights of indemnification or advancement of expenses to which any person
may be entitled. Such rights include, but are not limited to, any and all rights
under insurance policies that may be purchased and maintained by the Corporation
or others, whether or not the Corporation would have the power to indemnify such
person in the particular instance under the provisions of this Article VIII, but
no person shall be entitled to indemnification by the Corporation to the extent
he is indemnified by any other party, including an insurer.
Section 7. INSURANCE. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer or employee of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer or employee of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power or the obligation to
indemnify him against such liability under the provisions of this Article VIII.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Not applicable.
II-4
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------------
<C> <S>
1.1 --Form of Underwriting Agreement
3.1 --Certificate of Incorporation of the Seller*
3.2 --Bylaws of the Seller**
4.1 --Form of Amended and Restated Trust Agreement of the Trust between the Seller and the Owner Trustee
4.2 --Form of Sale and Servicing Agreement among the Seller, the Servicer and the Trust
4.3 --Form of Indenture between the Trust and the Indenture Trustee
4.4 --Form of Administration Agreement among the Trust, the Administrator and the Indenture Trustee
4.5 --Form of Note (contained in Exhibit 4.3)
5.1 --Opinion of Skadden, Arps, Slate, Meagher & Flom LLP re Legality
8.1 --Opinion of Skadden, Arps, Slate, Meagher & Flom LLP re Tax Matters
10.1 --Form of Purchase Agreement between Mitsubishi Motors Credit of America, Inc. and the Seller
10.2 --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***
24.1 --Board Resolutions of the Seller
25 --Form T-1 of Indenture Trustee
</TABLE>
- ------------------------
* Incorporated by reference to Exhibit 3.1 of Registration Statement No.
33-67014.
** Incorporated by reference to Exhibit 3.2 of Registration Statement No.
33-67014.
*** Previously filed.
(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
II-5
<PAGE>
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that 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 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.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Cypress, State of California, on August 7, 1998.
MMCA AUTO RECEIVABLES, INC.
BY: /S/ HIROSHI YAJIMA *
-----------------------------------------
HIROSHI YAJIMA
DIRECTOR AND PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
/s/ HIROSHI YAJIMA * Director and President
- ------------------------------ (principal executive August 7, 1998
Hiroshi Yajima officer)
Secretary and Treasurer
/s/ HIDEYUKI KITAMURA * (principal financial
- ------------------------------ officer and principal August 7, 1998
Hideyuki Kitamura accounting officer)
/s/ JOHN MAYNARD * Director
- ------------------------------ August 7, 1998
John Maynard
/s/ MASAKI TAKAHASHI * Director
- ------------------------------ August 7, 1998
Masaki Takahashi
/s/ CHARLES A. TREDWAY * Director
- ------------------------------ August 7, 1998
Charles A. Tredway
/s/ YASUHIRO HAGIHARA * Director
- ------------------------------ August 7, 1998
Yasuhiro Hagihara
*By: /s/ J. SEAN PLATER
------------------------
J. Sean Plater
ATTORNEY-IN-FACT
II-7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ----------- ------------------------------------------------------------------------------------------- -------------
<C> <S> <C>
1.1 Form of Underwriting Agreement
3.1 Certificate of Incorporation of the Seller*
3.2 Bylaws of the Seller**
4.1 Form of Amended and Restated Trust Agreement of the Trust between the Seller and the Owner
Trustee
4.2 Form of Sale and Servicing Agreement among the Seller, the Servicer and the Trust
4.3 Form of Indenture between the Trust and the Indenture Trustee
4.4 Form of Administration Agreement among the Trust, the Administrator and the Indenture
Trustee
4.5 Form of Note (contained in Exhibit 4.3)
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP re Legality
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP re Tax Matters
10.1 Form of Purchase Agreement between Mitsubishi Motors Credit of America, Inc. and the Seller
10.2 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***
24.1 Board Resolutions of the Seller
25 Form T-1 of Indenture Trustee
</TABLE>
- ------------------------
* Incorporated by reference to Exhibit 3.1 of Registration Statement No.
33-67014.
** Incorporated by reference to Exhibit 3.2 of Registration Statement No.
33-67014.
*** Previously Filed.
<PAGE>
Exhibit 1.1
$____________
MMCA AUTO OWNER TRUST 1998-1
$___________ ____% 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, INC.
UNDERWRITING AGREEMENT
August __, 1998
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
as Representative of the several Underwriters
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281
Dear Sirs:
1. Introductory. MMCA Auto Receivables, Inc., a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
cause MMCA Auto Owner Trust 1998-1 (the "Trust") to issue and sell $___________
aggregate principal amount of ____% Class A-1 Asset Backed Notes (the "Class A-1
Notes"), $___________ aggregate principal amount of ____% Class A-2 Asset Backed
Notes (the "Class A-2 Notes"), $___________ aggregate principal amount of ____%
Class A-3 Asset Backed Notes (the "Class A-3 Notes") and $___________ aggregate
principal amount of ____% Class B Asset Backed Notes (the "Class B Notes," and
together with the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes,
the "Notes"). The Notes will be issued pursuant to the Indenture dated as of
August 1, 1998 (the "Indenture"), between the Trust and Bank of Tokyo-Mitsubishi
Trust Company (the "Indenture Trustee").
1
<PAGE>
Concurrently with the issuance and sale of the Notes as contemplated
herein, the Trust will issue $___________ aggregate principal amount of
certificates of beneficial interest (the "Certificates"), each representing an
interest in the Trust Property. The Company will retain the Certificates. The
Certificates will be issued pursuant to the Amended and Restated Trust
Agreement, dated as of August 1, 1998 (the "Trust Agreement"), between the
Company and Wilmington Trust Company, as Owner Trustee. The Certificates are
subordinated to the Notes.
The assets of the Trust will include, among other things, a pool of motor
vehicle retail installment sale contracts secured by new and used automobiles
and light- and medium-duty trucks (the "Receivables"), with respect to Actuarial
Receivables, certain monies due thereunder on or after August 1, 1998 (the
"Cutoff Date"), and, with respect to Simple Interest Receivables, certain monies
due or received thereunder on or after the Cutoff Date, such Receivables to be
sold to the Trust by the Company and to be serviced for the Trust by Mitsubishi
Motors Credit of America, Inc. ("MMCA" or, in its capacity as servicer, the
"Servicer"). Capitalized terms used but not defined herein have the meanings
ascribed thereto in the Sale and Servicing Agreement to be dated as of August 1,
1998 (the "Sale and Servicing Agreement"), among the Trust, the Company and the
Servicer or, if not defined therein, in the Indenture, the Trust Agreement or
the Purchase Agreement, as the case may be. "Basic Documents" means,
collectively, Basic Documents, as defined in the Trust Agreement and Basic
Documents, as defined in the Indenture. The Company hereby agrees with the
several Underwriters named in Schedule A hereto (the "Underwriters") as follows:
2. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the several Underwriters that:
(a) A registration statement on Form S-1 (No. 333- 58869) relating
to the Notes, including a form of prospectus, has been filed with the
Securities and Exchange Commission (the "Commission") and either (i) has
been declared effective under the Securities Act of 1933, as amended (the
"1933 Act"), and is not proposed to be amended or (ii) is proposed to be
amended by amendment or post-effective amendment. If the Company does not
propose to amend the registration statement and if any post-effective
amendment to the registration statement has been filed with the Commission
prior to the execution and delivery of this Agreement, the most recent
post-effective amendment has been declared effective by the Commission or
has become effective upon filing pursuant to Rule 462(c) under the 1933
Act ("Rule 462(c)"). For purposes of this Agreement, "Effective Time"
means (i) if the Company has advised Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), as representative
of the Underwriters (in such capacity, the "Representative"), that it does
not propose to amend the registration statement, the date and time as of
which the registration statement, or the most recent post-effective
amendment thereto (if any) filed prior to the execution and delivery of
this Agreement, was declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c), or (ii) if the Company has
advised the Representative that it proposes to file an amendment or
post-effective amendment to the registration statement, the date and time
as of which the registration statement, as amended by such amendment or
post-effective amendment, as the case may be, is
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declared effective by the Commission. "Effective Date" means the date of
the Effective Time. The registration statement, as amended at the
Effective Time, including all information (if any) deemed to be a part of
the registration statement as of the Effective Time pursuant to Rule
430A(b) under the 1933 Act ("Rule 430A Information"), is hereinafter
referred to as the "Registration Statement". The form of prospectus
relating to the Notes, as first filed with the Commission pursuant to and
in accordance with Rule 424(b) under the 1933 Act ("Rule 424(b)") or, if
no such filing is required, as included in the Registration Statement, is
hereinafter referred to as the "Prospectus". No document has been or will
be prepared or distributed in reliance on Rule 434 under the 1933 Act.
(b) If the Effective Time is prior to the execution and delivery of
this Agreement: (i) on the Effective Date, the Registration Statement
conformed in all respects to the requirements of the 1933 Act and the
rules and regulations of the Commission thereunder (the "Rules and
Regulations") and did not include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary, to make the statements therein not misleading, and (ii) on the
date of this Agreement, the Registration Statement conforms, and at the
time of filing of the Prospectus pursuant to Rule 424(b) the Registration
Statement and the Prospectus will conform, in all respects to the
requirements of the 1933 Act and the Rules and Regulations, and neither of
such documents includes, or will include, any untrue statement of a
material fact or omits, or will omit, to state any material fact required
to be stated therein or necessary, to make the statements therein not
misleading. If the Effective Time is subsequent to the execution and
delivery of this Agreement: (i) on the Effective Date, the Registration
Statement and the Prospectus will conform in all respects to the
requirements of the 1933 Act and the Rules and Regulations, (ii) neither
of such documents will include any untrue statement of a material fact or
will omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) no
additional registration statement related to the Notes pursuant to Rule
462(b) has been or will be filed. The two preceding sentences do not apply
to statements in or omissions from the Registration Statement or the
Prospectus based upon written information furnished to the Company by any
Underwriter through the Representative specifically for use therein.
(c) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus; and the Company is
duly qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification.
(d) No consent, approval, authorization or order of, or filing with,
any governmental agency or body or any court is required to be obtained or
made by the Company or the Trust for the consummation of the transactions
contemplated by this Agreement and the Basic Documents in connection with
the issuance of the Notes and the Certificates and the sale by the Company
of Notes, except such as have been obtained and made under the 1933 Act,
such as may be required under state securities laws and the
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filing of any financing statements required to perfect the Company's, the
Trust's and the Indenture Trustee's interest in the Receivables, which
financing statements will be filed in the appropriate offices within ten
(10) days of the Closing Date (as such term is defined in Section 3).
(e) The Company is not in violation of its Certificate of
Incorporation or By-laws or in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any
agreement or instrument to which it is a party or by which it or its
properties are bound which could have a material adverse effect on the
transactions contemplated herein or in the Basic Documents. The execution,
delivery and performance of this Agreement and the Basic Documents, and
the issuance of the Notes and the Certificates and the sale by the Company
of the Notes and compliance with the terms and provisions hereof and
thereof will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, any rule,
regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company or any of its
properties, or any agreement or instrument to which the Company is a party
or by which the Company is bound or to which any of the properties of the
Company or any such subsidiary is subject, or the Certificate of
Incorporation or By-laws of the Company, and the Company has full power
and authority to authorize and issue the Notes and the Certificates and to
sell the Notes as contemplated by this Agreement, the Indenture and the
Trust Agreement, to enter into this Agreement and the Basic Documents and
to consummate the transactions contemplated hereby and thereby.
(f) On the Closing Date, the Company will have directed the Owner
Trustee to authenticate and execute the Certificates and, when delivered
and paid for pursuant to the Trust Agreement, the Certificates will have
been duly executed, authenticated, issued and delivered and will
constitute valid and legally binding obligations of the Trust, entitled to
the benefits provided in the Trust Agreement and enforceable in accordance
with their terms.
(g) The Company possesses adequate certificates, authorities and
permits issued by appropriate governmental agencies or bodies necessary to
conduct the business now operated by it and has not received any notice of
proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the
Company, would individually or in the aggregate have a material adverse
effect on the Company.
(h) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Company or any of
its properties that, if determined adversely to the Company, would
individually or in the aggregate have a material adverse effect on the
condition (financial or other), business or results of operations of the
Company, or would materially and adversely affect the ability of the
Company to perform its obligations under this Agreement or the other Basic
Documents to which it is a party, or which are otherwise material in the
context of the issuance and
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sale of the Notes or the issuance of the Certificates; and no such
actions, suits or proceedings are threatened or, to the Company's
knowledge, contemplated.
(i) As of the Closing Date, the representations and warranties of
the Company contained in the Basic Documents will be true and correct.
(j) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, (i) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company, whether or not arising in the ordinary course of
business and (ii) there have been no transactions entered into by the
Company, other than those in the ordinary course of business, which are
material with respect to the Company.
(k) Each of the Basic Documents to which the Company is a party has
been duly authorized by the Company and, when duly executed and delivered
by the Company and the other parties thereto, will constitute a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law).
(l) This Agreement has been duly authorized, executed and delivered
by the Company.
(m) The Company has authorized the conveyance of the Receivables to
the Trust and, as of the Closing Date, the Company has directed the Trust
to execute and issue the Notes and the Certificates and to sell the Notes.
(n) The Company's assignment and delivery of the Receivables to the
Trust as of the Closing Date will vest in the Trust all of the Company's
right, title and interest therein, subject to no prior lien, mortgage,
security interest, pledge, adverse claim, charge or other encumbrance.
(o) The Trust's assignment of the Receivables to the Indenture
Trustee pursuant to the Indenture will vest in the Indenture Trustee, for
the benefit of the Noteholders, a first priority perfected security
interest therein, subject to no prior lien, mortgage, security interest,
pledge, adverse claim, charge or other encumbrance except for any tax
lien, mechanics' lien or other lien or encumbrance that attaches by
operation of law.
(p) The Computer Tape of the Receivables created as of October 1,
1997 and made available to the Representative by the Servicer was complete
and accurate as of the
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date thereof and includes an identifying description of the Receivables
that are listed on Schedule A to the Sale and Servicing Agreement.
(q) Any taxes, fees and other governmental charges in connection
with the execution, delivery and performance of this Agreement, the Basic
Documents, the Notes and the Certificates and any other agreements
contemplated herein or therein shall have been paid or will be paid by the
Company at or prior to the Closing Date to the extent then due.
(r) The consummation of the transactions contemplated by this
Agreement and the Basic Documents, and the fulfillment of the terms hereof
and thereof, will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, or result in the
creation of any lien, charge or encumbrance upon any of the property or
assets of the Company pursuant to the terms of, any indenture, mortgage,
deed of trust, loan agreement, guarantee, lease financing agreement or
similar agreement or instrument under which the Company is a debtor or
guarantor.
(s) The Company is not and, after giving effect to the issuance of
the Certificates and the offering and sale of the Notes and the
application of the proceeds thereof as described in the Prospectus, will
not be required to be registered as an "investment company" as defined in
the Investment Company Act of 1940 (the "Investment Company Act").
3. Purchase, Sale and Delivery of Notes. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Company, at a purchase price of, in the case of (i) the Class A-1
Notes, % of the principal amount thereof; (ii) the Class A-2 Notes, % of the
principal amount thereof; (iii) the Class A-3 Notes, % of the principal amount
thereof; and (iv) the Class B Notes, % of the principal amount thereof, the
respective principal amounts of each Class of the Notes set forth opposite the
names of the Underwriters in Schedule A hereto.
The Company will deliver against payment of the purchase price, the Notes
of each Class in the form of one or more permanent global securities in
definitive form (the "Global Notes") deposited with the Indenture Trustee as
custodian for The Depository Trust Company ("DTC") and registered in the name of
Cede & Co., as nominee for DTC. Interests in any permanent Global Notes will be
held only in book-entry form through DTC, except in the limited circumstances
described in the Prospectus. Payment for the Notes shall be made by the
Underwriters in Federal (same day) funds by official check or checks or wire
transfer to an account in New York previously designated to Merrill Lynch by the
Company at a bank acceptable to Merrill Lynch, at the offices of Skadden, Arps,
Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022 at 10:00
a.m., New York time, on August [20], 1998, or at such other time not later than
seven full business days thereafter as Merrill Lynch and the Company determine,
such time being herein referred to as the "Closing Date", against delivery to
the Indenture Trustee as custodian for DTC of the Global Notes representing all
of the
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Notes. The Global Notes will be made available for checking at the above office
of Skadden, Arps, Slate, Meagher & Flom LLP at least 24 hours prior to the
Closing Date.
The Company will deliver the Certificates to the above office of Skadden,
Arps, Slate, Meagher & Flom LLP on the Closing Date. The certificate for the
Certificates so to be delivered will be in definitive form, in authorized
denominations and registered in the name of the Company and will be made
available for checking at the above office of Skadden, Arps, Slate, Meagher &
Flom LLP at least 24 hours prior to the Closing Date.
Pursuant to Rule 15c6-1(d) under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the parties hereto have agreed that the Closing Date
will be not later than August __, 1998, unless otherwise agreed to as described
above.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Notes for sale to the public (which may
include selected dealers) as set forth in the Prospectus.
5. Certain Agreements of the Company. The Company agrees with the several
Underwriters:
(a) If the Effective Time is prior to the execution and delivery of
this Agreement, the Company will file the Prospectus with the Commission
pursuant to and in accordance with subparagraph (1) (or, if applicable and
if consented to by Merrill Lynch, subparagraph (4)) of Rule 424(b) not
later than the earlier of (i) the second business day following the
execution and delivery of this Agreement or (ii) the fifteenth business
day after the Effective Date. The Company will advise the Representative
promptly of any such filing pursuant to Rule 424(b).
(b) The Company will advise the Representative promptly of any
proposal to amend or supplement the registration statement as filed or the
related prospectus, or the Registration Statement or the Prospectus, and
will not effect such amendment or supplementation without the
Representative's consent; and the Company will also advise the
Representative promptly of the effectiveness of the Registration Statement
(if its Effective Time is subsequent to the execution and delivery of this
Agreement) and of any amendment or supplementation of the Registration
Statement or the Prospectus and of the institution by the Commission of
any stop order proceedings in respect of the Registration Statement and
will use its best efforts to prevent the issuance of any such stop order
and to obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Notes is
required to be delivered under the 1933 Act in connection with sales by
any Underwriter or dealer, any event occurs as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any
time to amend the Prospectus to
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<PAGE>
comply with the 1933 Act, the Company will promptly notify the
Representative of such event and will promptly prepare and file with the
Commission (subject to the Representative's prior review pursuant to
Section 5(b)), at its own expense, an amendment or supplement which will
correct such statement or omission, or an amendment which will effect such
compliance. Neither the Representative's consent to, nor the Underwriters,
delivery of, any such amendment or supplement shall constitute a waiver of
any of the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will cause the Trust to make generally
available to the Noteholders an earnings statement of the Trust covering a
period of at least 12 months beginning after the Effective Date which will
satisfy the provisions of Section 11(a) of the 1933 Act. For the purpose
of the preceding sentence, "Availability Date" means the 90th day after
the end of the Trust's fourth fiscal quarter following the fiscal quarter
that includes such Effective Date.
(e) The Company will furnish to the Representative copies of the
Registration Statement (two of which will be signed and will include all
exhibits), each related preliminary prospectus, and, so long as delivery
of a prospectus relating to the Notes is required to be delivered under
the 1933 Act in connection with sales by any Underwriter or dealer, the
Prospectus and all amendments and supplements to such documents, in each
case as soon as available and in such quantities as the Representative
requests. The Prospectus shall be so furnished on or prior to 3:00 p.m.,
New York time, on the business day following the later of the execution
and delivery of this Agreement or the Effective Time. All other such
documents shall be so furnished as soon as available. The Company will pay
the expenses of printing and distributing to the Underwriters all such
documents.
(f) The Company will arrange for the qualification of the Notes for
offering and sale and the determination of their eligibility for
investment under the laws of such jurisdictions as the Representative
designates and will continue such qualifications in effect so long as
required for the distribution of the Notes.
(g) For a period from the date of this Agreement until the
retirement of the Notes (i) the Company will furnish to the Representative
and, upon request, to each of the other Underwriters, copies of each
certificate and the annual statements of compliance delivered to the
Indenture Trustee pursuant to Section 3.9 of the Indenture and Sections
3.9 and 3.10 of the Sale and Servicing Agreement and the annual
independent certified public accountant's servicing reports furnished to
the Indenture Trustee pursuant to Section 3.11 of the Sale and Servicing
Agreement, by first-class mail as soon as practicable after such
statements and reports are furnished to the Indenture Trustee, and (ii)
such other forms of periodic certificates or reports as may be delivered
to the Indenture Trustee, the Owner Trustee or the Noteholders under the
Indenture, the Sale and Servicing Agreement or the other Basic Documents.
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(h) So long as any Note is outstanding, the Company will furnish to
the Representative by first-class mail as soon as practicable, (i) all
documents distributed, or caused to be distributed, by the Company to
Noteholders, (ii) all documents filed, or caused to be filed, by the
Company with the Commission pursuant to the 1934 Act, any order of the
Commission thereunder and (iii) such other information in the possession
of the Company concerning the Trust as the Representative from time to
time may reasonably request.
(i) The Company will pay all expenses incident to the performance of
its obligations under this Agreement and will reimburse the Underwriters
(if and to the extent incurred by them) for any filing fees and other
expenses (including fees and disbursements of counsel) incurred by them in
connection with qualification of the Notes for sale and determination of
their eligibility for investment under the laws of such jurisdictions as
the Representative designates and the printing of memoranda relating
thereto, for any fees charged by investment rating agencies for the rating
of the Notes, for any travel expenses of the Company's officers and
employees and any other expenses of the Company in connection with
attending or hosting meetings with prospective purchasers of the Notes and
for expenses incurred in distributing the preliminary prospectuses and the
Prospectus (including any amendments and supplements thereto).
(j) To the extent, if any, that the rating provided with respect to
the Notes by Moody's Investors Service, Inc. ("Moody's") and Standard &
Poor's, a Division of The McGraw-Hill Companies, Inc. ("Standard & Poor's"
and, together with Moody's, the "Rating Agencies") is conditional upon the
furnishing of documents or the taking of any other action by the Company,
the Company shall furnish such documents and take any such other action.
(k) On or before the Closing Date, the Company shall cause the
computer records of the Company and MMCA relating to the Receivables to be
marked to show the Trust's absolute ownership of the Receivables, and from
and after the Closing Date neither the Company nor MMCA shall take any
action inconsistent with the Trust's ownership of such Receivables, other
than as permitted by the Sale and Servicing Agreement.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Notes on the Closing Date
will be subject to the accuracy of the representations and warranties on the
part of the Company herein, to the accuracy of the statements of Company
officers made pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions
precedent:
(a) The Representative shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time is prior to the
execution and delivery of this Agreement, shall be on or prior to the date
of this Agreement or, if the Effective Time is subsequent to the execution
and delivery of this Agreement, shall be prior to the filing of
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the amendment or post-effective amendment to the registration statement to
be filed shortly prior to such Effective Time), of Ernst & Young LLP, in
form and substance satisfactory to the Representative and counsel for the
Underwriters, confirming that they are independent public accountants
within the meaning of the 1933 Act and the applicable Rules and
Regulations and stating in effect that (i) they have performed certain
specified procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature (which is
limited to accounting, financial or statistical information derived from
the general accounting records of the Trust, MMCA and the Company) set
forth in the Registration Statement and the Prospectus (and any
supplements thereto), agrees with the accounting records of the Trust,
MMCA and the Company, excluding any questions of legal interpretation, and
(ii) they have performed certain specified procedures with respect to the
Receivables.
For purposes of this subsection, (i) if the Effective Time is
subsequent to the execution and delivery of this Agreement, "Registration
Statement" shall mean the registration statement as proposed to be amended
by the amendment or post-effective amendment to be filed shortly prior to
the Effective Time, including the 430A Information, and (ii) "Prospectus"
shall mean the prospectus included in the Registration Statement. All
financial statements and schedules included in material incorporated by
reference into the Prospectus shall be deemed included in the Registration
Statement for purposes of this subsection.
(b) If the Effective Time is not prior to the execution and delivery
of this Agreement, the Effective Time shall have occurred not later than
10:00 p.m., New York time, on the date of this Agreement or such later
date as shall have been consented to by the Representative. If the
Effective Time is prior to the execution and delivery of this Agreement,
the Prospectus shall have been filed with the Commission in accordance
with the Rules and Regulations and Section 5(a). Prior to the Closing
Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or, to the knowledge of the Company or the
Representative, shall be contemplated by the Commission.
(c) The Representative shall have received an opinion of J. Sean
Plater, Esq., General Counsel of the Company, dated the Closing Date and
satisfactory in form and substance to the Representative and counsel for
the Underwriters, to the effect that:
(i) the Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of
Delaware, with full corporate power and authority to own its
properties and conduct its business as described in the Prospectus;
the Company is duly qualified to do business and is in good standing
in each jurisdiction in which its ownership or lease of property or
the conduct of its business requires such qualification; and the
Company has full power and authority to enter into and perform its
obligations under this Agreement and the Basic Documents to which it
is a party, to direct the Owner Trustee to execute the Notes and the
Certificates, to consummate the transactions
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contemplated hereby and thereby, and had at all times, and now has,
the power, authority and legal right to acquire, own and sell the
Receivables;
(ii) MMCA has been duly incorporated and is an existing
corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own its properties
and conduct its business as described in the Prospectus; MMCA is
duly qualified to do business and is in good standing in each
jurisdiction in which its ownership or lease of property or the
conduct of its business requires such qualification; and MMCA has
full power and authority to enter into and perform its obligations
under this Agreement, the Note Indemnification Agreement dated the
date hereof (the "Note Indemnification Agreement") between MMCA and
the Representative, acting on behalf of itself and as Representative
of the several Underwriters, and the Basic Documents to which it is
a party and to consummate the transactions contemplated hereby and
thereby, and had at all times, and now has, the power, authority and
legal right to acquire, own, sell and service the Receivables;
(iii) each of the direction by the Company to the Indenture
Trustee to authenticate the Notes and the direction by the Company
to the Owner Trustee to execute the Notes has been duly authorized
by the Company and, when the Notes have been duly executed and
delivered by the Owner Trustee and, when authenticated by the
Indenture Trustee in accordance with the terms of the Indenture and
delivered to and paid for by the Underwriters pursuant to this
Agreement, will be duly and validly issued and outstanding and will
be entitled to the benefits of the Indenture;
(iv) the direction by the Company to the Owner Trustee to
authenticate and execute the Certificates has been duly authorized
by the Company and, when the Certificates have been duly executed,
authenticated and delivered in accordance with the terms of the
Trust Agreement and the Certificates have been delivered to and paid
for by the Company pursuant to the Sale and Servicing Agreement and
the Trust Agreement, the Certificates will be duly and validly
issued and outstanding and will be entitled to the benefits of the
Trust Agreement;
(v) each Basic Document to which the Company or MMCA is a
party has been duly authorized, executed and delivered by the
Company and MMCA, respectively;
(vi) no consent, approval, authorization or order of, or
filing with any governmental agency or body or any court is required
for the execution, delivery and performance by the Company of this
Agreement and the Basic Documents to which it is a party, for the
execution, delivery and performance by MMCA of the Note
Indemnification Agreement and the Basic Documents to which it is a
party or for the consummation of the transactions contemplated by
this Agreement, the Basic Documents or the Note Indemnification
Agreement, except for (i) the filing
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of Uniform Commercial Code financing statements in California with
respect to the transfer of the Receivables to the Company pursuant
to the Purchase Agreement and the transfer of the Trust Property to
the Trust pursuant to the Sale and Servicing Agreement and the
filing of a Uniform Commercial Code financing statement in Delaware
with respect to the grant by the Trust of a security interest in the
Trust Property to the Indenture Trustee pursuant to the Indenture,
which financing statements will be filed in the appropriate offices
within ten (10) days of the Closing Date; (ii) such as have been
obtained and made under the 1933 Act; and (iii) such as may be
required under state securities laws;
(vii) the execution, delivery and performance of this
Agreement and the Basic Documents by the Company, the execution,
delivery and performance of the Note Indemnification Agreement and
the Basic Documents by MMCA and the consummation of any other of the
transactions contemplated herein, in the Note Indemnification
Agreement or the Basic Documents will not conflict with or result in
a breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any of the property or assets of MMCA or
the Company pursuant to the terms of the Certificate of
Incorporation or the By-Laws of MMCA or the Company, or any statute,
rule, regulation or order of any governmental agency or body, or any
court having jurisdiction over MMCA or the Company or their
respective properties, or any agreement or instrument known to such
counsel after due investigation to which MMCA or the Company is a
party or by which MMCA or the Company or any of their respective
properties is bound;
(viii) such counsel has no reason to believe that any part of
the Registration Statement or any amendment thereto, as of its
effective date or as of such Closing Date, contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus or any amendment or
supplement thereto, as of its issue date or as of such Closing Date,
contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; the
descriptions in the Registration Statement and the Prospectus of
statutes, legal and governmental proceedings and contracts and other
documents are accurate and fairly present the information required
to be shown; and such counsel does not know of any legal or
governmental proceedings required to be described in the
Registration Statement or the Prospectus which are not described as
required or of any contracts or documents of a character required to
be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement which are not
described and filed as required; it being understood that such
counsel need express no opinion as to the financial statements or
other financial data contained in the Registration Statement or the
Prospectus;
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(ix) there are no actions, proceedings or investigations
pending to which the Company or MMCA is a party or, to the best
knowledge of such counsel, after due inquiry, threatened before any
court, administrative agency or other tribunal having jurisdiction
over MMCA or the Company, (i) that are required to be disclosed in
the Registration Statement, (ii) asserting the invalidity of this
Agreement, the Note Indemnification Agreement, any Basic Document,
the Notes or the Certificates, (iii) seeking to prevent the issuance
of the Notes or the Certificates or the consummation of any of the
transactions contemplated by this Agreement or the Basic Documents,
(iv) which might materially and adversely affect the performance by
the Company or MMCA of its obligations under, or the validity or
enforceability of, this Agreement, the Note Indemnification
Agreement, any Basic Document, the Notes or the Certificates, or (v)
seeking adversely to affect the federal income tax attributes of the
Notes as described in the Prospectus under the heading "CERTAIN
FEDERAL INCOME TAX CONSEQUENCES";
(x) the statements in the Registration Statement under the
heading "CERTAIN LEGAL ASPECTS OF THE RECEIVABLES", to the extent
they constitute statements of matters of law or legal conclusions
with respect thereto, are correct in all material respects;
(xi) each of MMCA and the Company has obtained all necessary
licenses and approvals in each jurisdiction in which failure to
qualify or to obtain such license or approval would render any
Receivable unenforceable by the Company, the Trust, the Owner
Trustee or the Indenture Trustee;
(xii) this Agreement has been duly authorized, executed and
delivered by the Company; and the Note Indemnification Agreement has
been duly authorized, executed and delivered by MMCA;
(xiii) such counsel is familiar with MMCA's standard operating
procedures relating to MMCA's acquisition of a perfected first
priority security interest in the vehicles financed by MMCA pursuant
to retail installment sale contracts in the ordinary course of
MMCA's business; assuming that MMCA's standard procedures are
followed with respect to the perfection of security interests in the
Financed Vehicles (and such counsel has no reason to believe that
MMCA has not or will not continue to follow its standard procedures
in connection with the perfection of security interests in the
Financed Vehicles), MMCA has acquired or will acquire a perfected
first priority security interest in the Financed Vehicles;
(xiv) the Assignment dated as of August 1, 1997 from MMCA to
the Company has been duly authorized, executed and delivered by
MMCA;
(xv) the Receivables are chattel paper as defined in the UCC;
and
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(xvi) immediately prior to the sale of Receivables by MMCA to
the Company pursuant to the Purchase Agreement and the Assignment,
MMCA was the sole owner of all right, title and interest in, to and
under the Receivables and the other property to be transferred by it
to the Company. Immediately prior to the sale of Receivables by the
Company to the Trust pursuant to the Sale and Servicing Agreement,
the Company was the sole owner of all right, title and interest in,
to and under the Receivables and the other property to be sold by it
to the Trust.
(d) The Representative shall have received an opinion of Skadden,
Arps, Slate, Meagher & Flom LLP, special counsel to the Company, dated the
Closing Date, and satisfactory in form and substance to the Representative
and counsel for the Underwriters, to the effect that:
(i) each Receivable is a motor vehicle retail installment
sales contract that constitutes "chattel paper" as defined in
Section 9-105 of the UCC in effect in the States of New York,
Delaware and California;
(ii) the provisions of the Sale and Servicing Agreement are
effective to create, in favor of the Owner Trustee, a valid security
interest (as such term is defined in Section 1-201 of the New York
UCC) in the Company's rights in the Receivables and proceeds
thereof, which security interest, if characterized as a transfer for
security, will secure payment of the Notes;
(iii) the financing statement naming the Company as debtor and
the Trust as secured party in appropriate form for filing in the
relevant filing office under the New York UCC. Upon the filing of
the Financing Statement in the relevant filing office, the security
interest in favor of the Owner Trustee in the Receivables and
proceeds thereof will be perfected, and no other security interest
of any other creditor of the Company will be equal or prior to the
security interest of the Owner Trustee in the Receivables and
proceeds thereof;
(iv) the provisions of the Indenture are effective to create
in favor of the Indenture Trustee, a valid security interest (as
such term is defined in Section 1-201 of the Relevant UCC) in the
Receivables and proceeds thereof to secure payment of the Notes;
(v) assuming that each of the direction by the Company to the
Indenture Trustee to authenticate the Notes and the direction by the
Company to the Owner Trustee to execute and deliver the Notes has
been duly authorized by the Company, when the Notes have been duly
executed and delivered by the Owner Trustee and authenticated by the
Indenture Trustee in accordance with the terms of the Indenture and
delivered to and paid for by the Underwriters pursuant to this
Agreement, the Notes will be duly and validly issued and outstanding
and will be entitled to the benefits of the Indenture;
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(vi) assuming that the direction by the Company to the Owner
Trustee to authenticate and execute the Certificates has been duly
authorized by the Company, when the Certificates have been duly
executed, authenticated and delivered in accordance with the terms
of the Trust Agreement and the Certificates have been delivered to
and paid for by the Company pursuant to the Sale and Servicing
Agreement and the Trust Agreement, the Certificates will be duly and
validly issued and outstanding and will be entitled to the benefits
of the Trust Agreement;
(vii) the statements in the Prospectus under the caption
"CERTAIN LEGAL ASPECTS OF THE RECEIVABLES", to the extent they
constitute matters of law or legal conclusions, are correct in all
material respects;
(viii) the Trust Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act");
(ix) the Indenture has been duly qualified under the Trust
Indenture Act;
(x) no authorization, approval or consent of any court or
governmental agency or authority is necessary under the Federal law
of the United States or the laws of the State of New York in
connection with the execution, delivery and performance by the
Company of this Agreement and the Basic Documents to which it is a
party, the execution, delivery and performance by MMCA of the Note
Indemnification Agreement and the Basic Documents to which it is a
party or for the consummation of the transactions contemplated by
this Agreement, the Note Indemnification Agreement or the Basic
Documents, except such as may be required under state securities
laws and such as have been obtained and made under the 1933 Act;
(xi) the Registration Statement was declared effective under
the 1933 Act as of the date specified in such opinion, the
Prospectus either was filed with the Commission pursuant to the
subparagraph of Rule 424(b) specified in such opinion on the date
specified therein or was included in the Registration Statement,
and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement or any
part thereof has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the 1933
Act, and the Registration Statement and the Prospectus, and each
amendment or supplement thereof, as of their respective effective or
issue dates, complies as to form in all material respects with the
requirements of the 1933 Act and the Rules and Regulations; such
counsel have no reason to believe that any part of the Registration
Statement or any amendment thereto, as of its effective date,
contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectus
or any amendment or supplement thereto, as of its issue date or as
of such Closing Date,
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contained any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; and to the best knowledge of such counsel,
such counsel does not know of any contracts or documents of a
character required to be described in the Registration Statement or
the Prospectus or to be filed as exhibits to the Registration
Statement which are not described and filed as required; it being
understood that such counsel need express no opinion as to the
financial statements or other financial data contained in the
Registration Statement or the Prospectus;
(xii) each of the Trust Agreement, the Sale and Servicing
Agreement, the Administration Agreement, the Yield Supplement
Agreement and the Assignment constitutes the legal, valid and
binding agreement of the Company and MMCA, in each case as to those
documents to which it is a party, enforceable against the Company
and MMCA in accordance with their terms (subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar laws affecting creditors' rights
generally from time to time in effect, and subject, as to
enforceability, to general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity
or at law) except, as applicable, that such counsel need not express
an opinion with respect to indemnification or contribution
provisions which may be deemed to be in violation of the public
policy underlying any law or regulation;
(xiii) assuming due authorization, execution and delivery by
the Indenture Trustee and the Owner Trustee, the Indenture
constitutes the legal, valid and binding agreement of the Trust,
enforceable against the Trust in accordance with its terms (subject
to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws affecting
creditors' rights generally from time to time in effect, and
subject, as to enforceability, to general principles of equity,
regardless of whether such enforceability is considered in a
proceeding in equity or at law) except, as applicable, that such
counsel need not express an opinion with respect to indemnification
or contribution provisions which may be deemed to be in violation of
the public policy underlying any law or regulation;
(xiv) neither the Trust nor the Company is and, after giving
effect to the issuance and sale of the Notes and the Certificates
and the application of the proceeds thereof, as described in the
Prospectus, neither the Trust nor the Company will be, an
"investment company" as defined in the Investment Company Act of
1940, as amended;
(xv) the Notes, the Certificates, the Purchase Agreement, the
Administration Agreement, the Sale and Servicing Agreement, the
Yield Supplement Agreement, the Trust Agreement, this Agreement and
the Indenture each conform
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in all material respects with the descriptions thereof contained in
the Registration Statement and the Prospectus;
(xvi) the Trust Agreement is the legal, valid and binding
agreement of the Company, enforceable against the Company, in
accordance with its terms under the law of the State of Delaware;
and
(xvii) this Agreement has been duly authorized, executed and
delivered by the Company; and the Note Indemnification Agreement has
been duly authorized, executed and delivered by MMCA.
(e) The Representative shall have received an opinion of Skadden,
Arps, Slate, Meagher & Flom LLP, special tax counsel for the Company,
dated the Closing Date and satisfactory in form and substance to the
Representative and counsel for the Underwriters, to the effect that for
federal income tax purposes (i) the Notes will be characterized as
indebtedness of the Trust that is secured by the Receivables, (ii) the
Trust will not be classified as an association (or publicly traded
partnership) taxable as a corporation and (iii) the statements set forth
in the Prospectus under the headings "SUMMARY--ERISA Considerations",
"ERISA CONSIDERATIONS", "SUMMARY--Tax Status", "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES" and "DESCRIPTION OF THE NOTES--Indenture--" (last sentence
of second paragraph under "--Events of Default" and last sentence of first
paragraph under "--Remedies" only), to the extent such statements
constitute matters of law or legal conclusions with respect thereto, are
correct in all material respects.
(f) The Representative shall have received an opinion of Skadden,
Arps, Slate, Meagher & Flom LLP, special tax counsel for the Company,
dated the Closing Date and satisfactory in form and substance to the
Representative and counsel for the Underwriters, to the effect that for
California and Delaware state franchise and California and Delaware state
income tax purposes (i) the Notes will be characterized as indebtedness of
the Trust that is secured by the Receivables, (ii) the Trust will not be
classified as an association (or publicly traded partnership) taxable as a
corporation and (iii) the statements set forth in the Prospectus under the
headings "SUMMARY--Tax Status" and "CERTAIN STATE TAX CONSEQUENCES", to
the extent such statements constitute matters of law or legal conclusions
with respect thereto, are correct in all material respects.
(g) The Representative shall have received from Brown & Wood LLP,
counsel for the Underwriters, such opinion or opinions, dated the Closing
Date, with respect to the validity of the Notes, the Registration
Statement, the Prospectus and other related matters as the Representative
may require, and the Company shall have furnished to such counsel such
documents as it may request for the purpose of enabling it to pass upon
such matters.
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(h) The Representative shall have received a certificate, dated the
Closing Date, of the Chairman of the Board, the President or any
Vice-President and a principal financial or accounting officer of each of
the Company and MMCA in which such officers, to the best of their
knowledge after reasonable investigation, shall state that: the
representations and warranties of the Company in this Agreement are true
and correct; the representations of MMCA in the Note Indemnification
Agreement are true and correct; the Company or MMCA, as applicable, has
complied with all agreements and satisfied all conditions on its part to
be performed or satisfied hereunder at or prior to the Closing Date; the
representations and warranties of the Company or MMCA, as applicable, in
the Basic Documents are true and correct as of the dates specified in such
agreements; the Company or MMCA, as applicable, has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied under such agreements at or prior to the Closing Date; no stop
order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
contemplated by the Commission; and, subsequent to the date of the
Prospectus, there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company or MMCA, whether or not arising in the ordinary
course of business.
(i) The Representative shall have received an opinion of Pryor,
Cashman, Sherman & Flynn, counsel to the Indenture Trustee, dated the
Closing Date and satisfactory in form and substance to the Representative
and counsel for the Underwriters, to the effect that:
(i) the Indenture Trustee is a banking corporation duly
incorporated and validly existing under the laws of the State of New
York;
(ii) the Indenture Trustee has the full corporate trust power
to accept the office of indenture trustee under the Indenture and to
enter into and perform its obligations under the Indenture, the Sale
and Servicing Agreement and the Administration Agreement;
(iii) the execution and delivery of the Indenture and the
Administration Agreement and the acceptance of the Sale and
Servicing Agreement and the performance by the Indenture Trustee of
its obligations under the Indenture, the Sale and Servicing
Agreement and the Administration Agreement have been duly authorized
by all necessary corporate action of the Indenture Trustee and each
has been duly executed and delivered on behalf of the Indenture
Trustee;
(iv) the Indenture, the Sale and Servicing Agreement and the
Administration Agreement constitute valid and binding obligations of
the Indenture Trustee enforceable against the Indenture Trustee in
accordance with their terms under the laws of the State of New York
and the federal law of the United States;
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<PAGE>
(v) the execution and delivery by the Indenture Trustee of the
Indenture and the Administration Agreement and the acceptance of the
Sale and Servicing Agreement do not require any consent, approval or
authorization of, or any registration or filing with, any New York
or United States federal governmental authority, other than the
qualification of the Indenture Trustee under the Trust Indenture
Act;
(vi) each of the Notes has been duly authenticated by the
Indenture Trustee;
(vii) neither the consummation by the Indenture Trustee of the
transactions contemplated in the Sale and Servicing Agreement, the
Indenture or the Administration Agreement nor the fulfillment of the
terms thereof by the Indenture Trustee will conflict with, result in
a breach or violation of, or constitute a default under any law or
the charter, By-laws or other organizational documents of the
Indenture Trustee or the terms of any indenture or other agreement
or instrument known to such counsel and to which the Indenture
Trustee or any of its subsidiaries is a party or is bound or any
judgment, order or decree known to such counsel to be applicable to
the Indenture Trustee or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Indenture Trustee or any of
its subsidiaries;
(viii) to such counsel's knowledge there is no action, suit or
proceeding pending or threatened against the Indenture Trustee (as
trustee under the Indenture or in its individual capacity) before or
by any governmental authority that if adversely decided, would
materially adversely affect the ability of the Indenture Trustee to
perform its obligations under the Indenture, the Sale and Servicing
Agreement or the Administration Agreement; and
(ix) the execution, delivery and performance by the Indenture
Trustee of the Sale and Servicing Agreement, the Indenture and the
Administration Agreement will not subject any of the property or
assets of the Trust or any portion thereof, to any lien created by
or arising with respect to the Indenture Trustee that are unrelated
to the transactions contemplated in such Agreements.
(j) The Representative shall have received an opinion of Richards,
Layton & Finger, P.A., counsel to the Owner Trustee, dated the Closing
Date and satisfactory in form and substance to the Representative and
counsel for the Underwriters, to the effect that:
(i) the Owner Trustee has been duly incorporated and is
validly existing as a banking corporation in good standing under the
laws of the State of Delaware;
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(ii) the Owner Trustee has full corporate trust power and
authority to enter into and perform its obligations under the Trust
Agreement and, on behalf of the Trust, under the other Basic
Documents to which it is a party and has duly authorized, executed
and delivered such Basic Documents and such Basic Documents
constitute the legal, valid and binding agreement of the Owner
Trustee, enforceable in accordance with their terms, except that
certain of such obligations may be enforceable solely against the
Trust Property (subject to applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other similar
laws affecting creditors' rights generally from time to time in
effect, and subject, as to enforceability, to general principles of
equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law);
(iii) the Certificates have been duly executed, authenticated
and delivered by the Owner Trustee as owner trustee and
authenticating agent; each of the Notes has been duly executed and
delivered by the Owner Trustee, on behalf of the Trust;
(iv) the execution and delivery by the Owner Trustee of the
Trust Agreement and, on behalf of the Trust, of the other Basic
Documents to which it is a party and the performance by the Owner
Trustee of its obligations thereunder do not conflict with, result
in a breach or violation of, or constitute a default under the
Articles of Association or By-laws of the Owner Trustee; and
(v) the execution, delivery and performance by the Owner
Trustee of the Trust Agreement and, on behalf of the Trust, of the
other Basic Documents to which it is a party do not require any
consent, approval or authorization of, or any registration or filing
with, any Delaware or United States federal governmental authority
having jurisdiction over the trust power of the owner Trustee, other
than those consents, approvals or authorizations as have been
obtained and the filing of the Certificate of Trust with the
Secretary of State of the State of Delaware.
(k) The Representative shall have received an opinion of Richards,
Layton & Finger, P.A., special Delaware counsel to the Trust, dated the
Closing Date and satisfactory in form and substance to the Representative
and counsel for the Underwriters, to the effect that:
(i) the Trust has been duly formed and is validly existing as
a business trust under the Delaware Business Trust Act, 12 Del.C.
ss.3801 et seq. (the "Delaware Act");
(ii) the Trust has the power and authority under the Delaware
Act and the Trust Agreement, and the Trust Agreement authorizes the
Owner Trustee, to execute, deliver and perform its obligations under
the Sale and Servicing
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Agreement, the Indenture, the Administration Agreement, the Note
Depository Agreement, the Notes and the Certificates;
(iii) to the extent that Article 9 of the UCC as in effect in
the State of Delaware (the "Delaware UCC") is applicable (without
regard to conflict of laws principles), and assuming that the
security interest created by the Indenture in the Receivables has
been duly created and has attached, upon the filing of a financing
statement with the Secretary of State of Delaware the Indenture
Trustee will have a perfected security interest in the Trust's
rights in such Receivables and the proceeds thereof, and such
security interest will be prior to any other security interest
granted by the Trust that is perfected solely by the filing of
financing statements under the Delaware UCC, excluding purchase
money security interests under ss.9-- 312(4) of the Delaware UCC and
temporarily perfected security interests in proceeds under
ss.9-306(3) of the Delaware UCC;
(iv) no re-filing or other action is necessary under the
Delaware UCC in order to maintain the perfection of such security
interest except for the filing of continuation statements at five
year intervals;
(v) assuming that the Certificates have been duly authorized,
executed and authenticated by the Owner Trustee on behalf of the
Trust, when the Certificates have been issued and delivered in
accordance with the instructions of the Company, the Certificates
will be validly issued and entitled to the benefits of the Trust
Agreement; and
(vi) under 12 Del. C. ss.3805(b), no creditor of any
Certificateholder (including creditors of the Company in its
capacity as Certificateholder) shall have any right to obtain
possession of, or otherwise exercise legal or equitable remedies
with respect to, the property of the Trust except in accordance with
the terms of the Trust Agreement.
(l) The Representative shall have received an opinion of Skadden,
Arps, Slate, Meagher & Flom LLP, counsel to the Company, dated the Closing
Date and satisfactory in form and substance to the Representative and
counsel for the Underwriters, (i) with respect to the characterization of
the transfer of the Receivables by MMCA to the Company and from the
Company to the Trust and (ii) to the effect that should MMCA become the
debtor in a case under the Bankruptcy Code, and the Company would not
otherwise properly be a debtor in a case under the Bankruptcy Code, and if
the matter were properly briefed and presented to a court exercising
bankruptcy jurisdiction, the court, exercising reasonable judgment after
full consideration of all relevant factors, should not order, over the
objection of the Certificate-holders or the Noteholders, the substantive
consolidation of the assets and liabilities of the Company with those of
MMCA and such opinion shall be in substantially the form previously
discussed with the Representative and counsel for the Underwriters and in
any event satisfactory in form and in substance to the Representative and
counsel for the Underwriters.
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(m) The Representative shall have received evidence satisfactory to
it and its counsel that, within ten (10) days of the Closing Date, UCC-1
financing statements have been or are being filed in the office of the
Secretary of State of the state of (i) California reflecting the transfer
of the interest of MMCA in the Receivables and the proceeds thereof to the
Company and the transfer of the interest of the Company in the Receivables
and the proceeds thereof to the Trust and (ii) Delaware reflecting the
grant of the security interest by the Trust in the Receivables and the
proceeds thereof to the Indenture Trustee.
(n) The Representative shall have received an opinion of Skadden,
Arps, Slate, Meagher & Flom LLP, special counsel to the Company, dated the
Closing Date and satisfactory in form and substance to the Representative
and the counsel for the Underwriters to the effect that (i) the provisions
of the Indenture are effective to create a valid security interest in
favor of the Indenture Trustee, to secure payment of the Notes, in all
"securities entitlements" (as defined in Section 8-102(a)(17) of the New
York UCC) with respect to "financial assets" (as defined in Section 8-
102(a)(9) of the New York UCC) now or hereafter credited to the Reserve
Account (such securities entitlements, the "Securities Entitlements"),
(ii) the provisions of the control agreement for purposes of Article 8 of
the New York UCC are effective to perfect the security interest of the
Indenture Trustee in the Securities Entitlements and (iii) no security
interest of any other creditor of the Trust will be prior to the security
interest of the Indenture Trustee in such Securities Entitlements.
(o) Each Class of the Class A Notes shall have been rated in the
highest rating category by Moody's and Standard & Poor's and the Class B
Notes shall have been rated in the third highest category by Moody's and
Standard & Poor's.
(p) The Representative shall have received a letter, dated the
Closing Date, of Ernst & Young LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in such subsection will be a date not more than five days prior to such
Closing Date for purposes of this subsection.
(q) On or prior to the Closing Date, the Certificates shall have
been issued to the Company.
(r) The Representative shall have received from Skadden, Arps,
Slate, Meagher & Flom LLP and each other counsel for the Company, a letter
dated the Closing Date to the effect that the Underwriters may rely upon
each opinion rendered by such counsel to either Standard & Poor's or
Moody's in connection with the rating of any Class of the Notes, as if
each such opinion were addressed to the Underwriters.
The Company will furnish the Representative with such conformed copies of
such opinions, certificates, letters and documents as the Representative
reasonably requests.
The Representative may in its sole discretion waive on behalf of the
Underwriters compliance with any conditions to the obligations of the
Underwriters hereunder.
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7. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as
follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the
Rule 430A Information or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any
untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 7(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any
such expense is not paid under clause (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to
the Company by any Underwriter through Merrill Lynch expressly for use in
the Registration Statement (or any amendment thereto), including the Rule
430A Information, or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto). The foregoing indemnity with respect to
any untrue statement contained in or any omission from the Prospectus
shall not inure to the benefit of any Underwriter (or any person
controlling such Underwriter) from whom the person asserting any such
loss, liability, claim, damage or expense purchased any of the Notes that
are the subject thereof if the Company shall sustain the burden of proving
that (i) the
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untrue statement or omission contained in the Prospectus was corrected;
(ii) such person was not sent or given a copy of the Prospectus which
corrected the untrue statement or omission at or prior to the written
confirmation of the sale of such Notes to such person if required by
applicable law; and (iii) the Company satisfied its obligation pursuant to
Section 4(e) of this Agreement to provide a sufficient number of copies of
the Prospectus to the Underwriters.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), including the Rule 430A Information, or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through Merrill Lynch
expressly for use in the Registration Statement (or any amendment thereto)
or such preliminary prospectus or the Prospectus (or any amendment or
supplement thereto).
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but
failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account
of this indemnity agreement. In the case of parties indemnified pursuant
to Section 7(a) above, counsel to the indemnified parties shall be
selected by Merrill Lynch, and, in the case of parties indemnified
pursuant to Section 7(b) above, counsel to the indemnified parties shall
be selected by the Company. An indemnifying party may participate at its
own expense in the defense of any such action; provided, however, that
counsel to the indemnifying party shall not (except with the consent of
the indemnified party) also be counsel to the indemnified party. In no
event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from
their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution
could be sought under this Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii)
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<PAGE>
does not include a statement as to or an admission of fault, culpability
or a failure to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and
expenses of counsel, such indemnifying party agrees that it shall be
liable for any settlement of the nature contemplated by Section 7(a)(ii)
effected without its written consent if (i) such settlement is entered
into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice
of the terms of such settlement at least 30 days prior to such settlement
being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
(e) If the indemnification provided for in Section 6 hereof is for
any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriters on the other hand from the offering of
the Notes pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company on the one
hand and of the Underwriters on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations.
The relative benefits received by the Company on the one hand and
the Underwriters on the other hand in connection with the offering of the
Notes pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Notes pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the
Underwriters, in each case as set forth on the cover of the Prospectus,
bear to the aggregate initial public offering price of the Notes as set
forth on such cover.
The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Underwriters and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of
25
<PAGE>
allocation which does not take account of the equitable considerations
referred to above in this Section 7. The aggregate amount of losses,
liabilities, claims, damages and expenses incurred by an indemnified party
and referred to above in this Section 7 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue or
alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter
shall be required to contribute any amount in excess of the amount by
which the total price at which the Notes underwritten by it and
distributed to the public were offered to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by
reason of any such untrue or alleged untrue statement or omission or
alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company
who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as
the Company. The Underwriters' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the principal
amount of Notes set forth opposite their respective names in Schedule A
hereto (after giving effect to Section 9, if applicable) and not joint.
8. Termination of Agreement. The Representative may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing Date
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the Prospectus, (a) any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company, whether or not
arising in the ordinary course of business, or (b) any change, or any
development or event involving a prospective change, in the condition (financial
or other), business, properties or results of operations or retail motor vehicle
and light-and medium-duty truck financing business of the Trust, the Company,
Mitsubishi Motor Sales of America, Inc., Mitsubishi Motors Corporation or MMCA
which, in the judgment of the Representative, materially impairs the investment
quality of each Class of the Notes or makes it impractical or inadvisable to
proceed with completion of the public offering or the sale of and payment for
each Class of the Notes; (ii) if there has occurred any downgrading in the
rating of the debt securities of the Company by any "nationally recognized
statistical rating organization" (as such term is defined for purposes of Rule
436(g) under the 1933 Act), or any public announcement that such organization
has under surveillance
26
<PAGE>
or review its rating of any debt securities of the Company (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (iii) if there has
occurred any material adverse change in the financial markets in the United
States or the international financial markets, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or development
involving a prospective change in international politicial, financial or
economic conditions, in each case the effect of which is such as to make it, in
the judgment of the Representative, impracticable to market the Notes or to
enforce contracts for the sale of the Notes; (iv) if trading in any securities
of the Company, MMCA or Mitsubishi Motor Sales of America, Inc. has been
suspended or materially limited by the Commission, or if trading generally on
either the American Stock Exchange or the New York Stock Exchange or in the
Nasdaq National Market has been suspended or materially limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices have
been required, by any of said exchanges or by order of the Commission, the
National Association of Securities Dealers, Inc. or any other governmental
authority; or (v) if a banking moratorium has been declared by federal, New York
or California authorities.
9. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Notes hereunder on the Closing Date and the
aggregate principal amount of Notes that such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed 10% of the total
principal amount of Notes that the Underwriters are obligated to purchase on
such Closing Date, the Representative may make arrangements satisfactory to the
Company for the purchase of such Notes by other persons, including any of the
Underwriters, but if no such arrangements are made by such Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Notes that such defaulting
Underwriters agreed but failed to purchase on such Closing Date. If any
Underwriter or Underwriters so default and the aggregate principal amount of
Notes with respect to which such default or defaults occur exceeds 10% of the
total principal amount of Notes that the Underwriters are obligated to purchase
on such Closing Date and arrangements satisfactory to the Representative and the
Company for the purchase of such Notes by other persons are not made within 36
hours after such default, this Agreement will terminate without liability on the
part of any non-defaulting Underwriter or the Company, except as provided in
Section 10. As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section. Nothing herein will
relieve a defaulting Underwriter from liability for its default.
10. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Underwriter or the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Notes. If this Agreement is terminated pursuant to Sections
8 or 9 or if for any reason the purchase of the Notes by the Underwriters is not
consummated, the Company shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 5 and the respective obligations of the
Company and the Underwriters pursuant to Section 7 shall remain in effect, and
if any Notes
27
<PAGE>
have been purchased hereunder the representations and warranties in Section 2
and all obligations under Section 5 shall also remain in effect. If the purchase
of the Notes by the Underwriters is not consummated for any reason other than
solely because of the termination of this Agreement pursuant to Section 9 or the
occurrence of any event specified in clause (ii), (iii) or (iv) of Section 8(c),
the Company will reimburse the Underwriters for all out-of-pocket expenses
(including fees and disbursements of counsel) reasonably incurred by them in
connection with the offering of the Notes.
11. Notices. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed, delivered or sent by facsimile and
confirmed to the Representative at Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, North Tower, World Financial Center, New York, New
York, 10281-1201, Attention: Theodore F. Breck, Director (facsimile number (212)
449-9015), or, if sent to the Company, will be mailed, delivered or sent by
facsimile and confirmed to it at P.O. Box 6038, Cypress, California 90630-5205,
Attention: Secretary/Treasurer, Telecopy: (714) 236-1300; provided, however,
that any notice to an Underwriter pursuant to Section 7 will be mailed,
delivered or telecopied and confirmed to such Underwriter.
12. No Bankruptcy Petition. Each Underwriter agrees that, prior to the
date which is one year and one day after the payment in full of all securities
issued by the Company or by a trust for which the Company was the depositor
which securities were rated by any nationally recognized statistical rating
organization, it will not institute against, or join any other person in
instituting against, the Company any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other proceedings under any Federal or
state bankruptcy or similar law.
13. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 7, and no other person
will have any right or obligation hereunder.
14. Representation of Underwriters. The Representative will act for the
several Underwriters in connection with this financing, and any action under
this Agreement taken by the Representative will be binding upon all the
Underwriters.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all such
counterparts shall together constitute one and the same Agreement.
16. Applicable Law; Submission to Jurisdiction.
(a) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.
28
<PAGE>
(b) The Company hereby submits to the nonexclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
29
<PAGE>
If the foregoing is in accordance with the Representative's understanding
of our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement between the Company and the
several Underwriters in accordance with its terms.
Very truly yours,
MMCA AUTO RECEIVABLES, INC.
By:
-------------------------------
Name:
Title:
The foregoing Underwriting Agreement is hereby
confirmed and accepted as of the date first above
written.
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
-----------------------------------
Name:
Title:
Acting on behalf of itself and as the Representative
of the several Underwriters.
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Amount of Amount of Amount of Amount of
Class A-1 Class A-2 Class A-3 Class B
Underwriter Notes Notes Notes Notes
----------- ----- ----- ----- -----
<S> <C> <C> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated $ $ $ $
Credit Suisse First Boston Corporation
Lehman Brothers Inc.
J.P. Morgan & Co.
Total $ $ $ $
====== ====== ====== ======
</TABLE>
SA-1
<PAGE>
Exhibit 4.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
TRUST AGREEMENT
between
MMCA AUTO RECEIVABLES, INC.,
as Depositor,
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
Dated as of August 1, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS............................................1
SECTION 1.1. Capitalized Terms..................................................1
SECTION 1.2. Other Definitional Provisions......................................4
ARTICLE II
ORGANIZATION OF THE TRUST.....................................6
SECTION 2.1. Name...............................................................6
SECTION 2.2. Office.............................................................6
SECTION 2.3. Purposes and Powers................................................6
SECTION 2.4. Appointment of Owner Trustee. .....................................7
SECTION 2.5. Initial Capital Contribution of Owner Trust Estate.................7
SECTION 2.6. Declaration of Trust...............................................7
SECTION 2.7. [Reserved.]........................................................8
SECTION 2.8. Title to Trust Property............................................8
SECTION 2.9. Situs of Trust.....................................................8
SECTION 2.10 Representations and Warranties of the Depositor....................8
SECTION 2.11 Federal Income Tax Matters.........................................9
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS...........................11
SECTION 3.1. Initial Ownership.................................................11
SECTION 3.2. The Certificates..................................................11
SECTION 3.3. Authentication of Certificates....................................12
SECTION 3.4. Registration of Certificates; Transfer and Exchange of
Certificates......................................................12
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates.................18
SECTION 3.6. Persons Deemed Owners of Certificate..............................19
SECTION 3.7. Access to List of Certificateholders' Names and
Addresses.........................................................19
SECTION 3.8. Maintenance of Office or Agency...................................19
SECTION 3.9. Appointment of Paying Agent.......................................20
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE IV
ACTIONS BY OWNER TRUSTEE.....................................21
SECTION 4.1. Prior Notice to Certificateholders with Respect to
Certain Matters...................................................21
SECTION 4.2. Action by Certificateholders with Respect to
Certain Matters...................................................22
SECTION 4.3. Action by Certificateholders with Respect to
Bankruptcy........................................................22
SECTION 4.4. Restrictions on Certificateholders' Power.........................22
SECTION 4.5. Majority Control..................................................22
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES............................23
SECTION 5.1. Establishment of Certificate Distribution Account.................23
SECTION 5.2. Application of Trust Funds........................................23
SECTION 5.3. Method of Payment.................................................24
SECTION 5.4. No Segregation of Monies; No Interest.............................24
SECTION 5.5. Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue Service
and Others........................................................24
SECTION 5.6. Signature on Returns; Tax Matters Partner.........................25
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE..............................26
SECTION 6.1. General Authority.................................................26
SECTION 6.2. General Duties....................................................26
SECTION 6.3. Action upon Instruction...........................................26
SECTION 6.4. No Duties Except as Specified in this Agreement
or in Instructions................................................28
SECTION 6.5. No Action Except Under Specified Documents or
Instructions......................................................28
SECTION 6.6. Restrictions......................................................28
ARTICLE VII
REGARDING THE OWNER TRUSTEE...................................29
SECTION 7.1. Acceptance of Trusts and Duties...................................29
SECTION 7.2. Furnishing of Documents...........................................30
SECTION 7.3. Representations and Warranties....................................30
SECTION 7.4. Reliance; Advice of Counsel.......................................31
SECTION 7.5. Not Acting in Individual Capacity.................................32
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 7.6. Owner Trustee Not Liable for Certificates or
Receivables.......................................................32
SECTION 7.7. Owner Trustee May Own Certificates and Notes......................32
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE..................................34
SECTION 8.1. Owner Trustee's Fees and Expenses.................................34
SECTION 8.2. Indemnification...................................................34
SECTION 8.3. Payments to the Owner Trustee.....................................34
ARTICLE IX
TERMINATION...........................................35
SECTION 9.1. Termination of Trust Agreement....................................35
SECTION 9.2. Dissolution upon Bankruptcy of the Depositor......................36
SECTION 9.3. Prepayment of the Certificates....................................36
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES...............39
SECTION 10.1. Eligibility Requirements for Owner Trustee.......................39
SECTION 10.2. Resignation or Removal of Owner Trustee..........................39
SECTION 10.3. Successor Owner Trustee..........................................40
SECTION 10.4. Merger or Consolidation of Owner Trustee.........................41
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee....................41
ARTICLE XI
MISCELLANEOUS.........................................43
SECTION 11.1. Supplements and Amendments.......................................43
SECTION 11.2. No Legal Title to Owner Trust Estate in
Certificateholders...............................................44
SECTION 11.3. Limitation on Rights of Others...................................45
SECTION 11.4. Notices..........................................................45
SECTION 11.5. Severability.....................................................45
SECTION 11.6. Separate Counterparts............................................45
SECTION 11.7. Successors and Assigns...........................................46
SECTION 11.8. Covenants of the Depositor.......................................46
SECTION 11.9. No Petition......................................................46
SECTION 11.10. No Recourse......................................................47
SECTION 11.11. Headings.........................................................47
SECTION 11.12. Governing Law....................................................47
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
EXHIBITS
EXHIBIT A Form of Certificate
EXHIBIT B [Reserved]
EXHIBIT C Form of Certificate of Trust
EXHIBIT D Form of Rule 144A Transferor
Certificate
EXHIBIT E Form of Investment Letter --
Qualified Institutional Buyer
EXHIBIT F Form of Investment Letter --
Institutional Accredited Investor
</TABLE>
iv
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT, dated as of August 1, 1998 (as
the same may be further amended, supplemented or otherwise modified and in
effect from time to time, this "Agreement"), between MMCA AUTO RECEIVABLES,
INC., a Delaware corporation, as depositor (the "Depositor"), having its
principal executive office at 6363 Katella Avenue, Cypress, California
90630-5205; and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as
trustee under this agreement (in such capacity, together with any successor or
permitted assign, the "Owner Trustee"), having its principal corporate trust
office at Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-0001.
WHEREAS, the parties hereto intend to amend and restate that certain
Trust Agreement, dated as of July 9, 1998 between the Depositor and the Owner
Trustee, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Depositor and the Owner
Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Capitalized Terms. For all purposes of this Agreement,
the following terms shall have the meanings set forth below:
"Agreement" shall have the meaning specified in the recitals hereto.
"Basic Documents" shall mean this Agreement, the Purchase Agreement,
the Sale and Servicing Agreement, the Indenture, the Yield Supplement Agreement,
the Note Depository Agreement, the Administration Agreement and the other
documents and certificates delivered in connection therewith.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as the same may be amended,
supplemented or otherwise modified and in effect from time to time.
<PAGE>
"Certificate" shall mean a physical certificate evidencing the
beneficial interest of a Certificateholder in the property of the Trust,
substantially in the form of Exhibit A attached hereto. Such certificate shall
entitle the Holder thereof to distributions pursuant to this Agreement from
collections and other proceeds in respect of the Owner Trust Estate; provided,
however, that the Owner Trust Estate has been pledged to the Indenture Trustee
to secure payment of the Notes and that the rights of Certificateholders to
receive distributions on the Certificates are subordinated to the rights of the
Noteholders as described in the Sale and Servicing Agreement and the Indenture.
"Certificate Distribution Account" shall have the meaning assigned to
such term in Section 5.1.
"Certificate of Trust" shall mean the Certificate of Trust in the form
of Exhibit C filed for the Trust pursuant to Section 3810(a) of the Business
Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the
register mentioned and the registrar appointed pursuant to Section 3.4.
"Certificateholder" shall mean a Holder of a Certificate.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001;
or at such other address as the Owner Trustee may designate by notice to the
Certificateholders and the Depositor, or the principal corporate trust office of
any successor Owner Trustee (the address of which the successor Owner Trustee
will notify the Certificateholders and the Company).
"Depositor" shall mean MMCA Auto Receivables, Inc., a Delaware
corporation.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
2
<PAGE>
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Expenses" shall have the meaning assigned to such term in Section
8.2.
"Holder" shall mean a Person in whose name a Certificate is registered
in the Certificate Register.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.2.
"Indenture" shall mean the Indenture, dated as of August 1, 1998,
between the Trust and Bank of Tokyo - Mitsubishi Trust Company, a New York
banking corporation, as indenture trustee, as the same may be amended,
supplemented or otherwise modified and in effect from time to time.
"Initial Certificate Balance" shall mean $[ ].
"MMCA" shall mean Mitsubishi Motors Credit of America, Inc., a
Delaware corporation, and its successors and assigns.
"Owner Trust Estate" shall mean all right, title and interest of the
Trust in, to and under the property and rights assigned to the Trust pursuant to
Article II of the Sale and Servicing Agreement.
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as owner trustee
under this Agreement, and any successor Owner Trustee hereunder.
"Paying Agent" shall mean any paying agent or co-paying agent
appointed pursuant to Section 3.9 and shall initially be Wilmington Trust
Company.
"Prepayment Date" shall mean the Payment Date specified by the
Servicer pursuant to Section 9.3(a).
"Prepayment Price" means an amount equal to the Certificate Balance.
3
<PAGE>
"Qualified Institutional Buyer" has the meaning specified in Rule
144A.
"Record Date" shall mean, with respect to any Payment Date, the close
of business on the fourteenth day of the calendar month in which such Payment
Date occurs.
"Rule 144A" shall have the meaning assigned to such term in Section
3.4(c).
"Rule 144A Information" shall have the meaning assigned to such term
in Section 3.4(e).
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement, dated as of August 1, 1998, by and among the Trust, the Depositor, as
seller, and MMCA, as servicer, as the same may be amended, supplemented or
otherwise modified and in effect from time to time.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Transfer" shall have the meaning assigned to such term in Section
3.2.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean the trust established by this Agreement.
"Void Transfer" shall have the meaning assigned to such term in
Section 3.2.
SECTION 1.2. Other Definitional Provisions.
4
<PAGE>
(a) Capitalized terms used herein and not otherwise defined have the
meanings assigned to them in the Sale and Servicing Agreement or, if not defined
therein, in the Indenture.
(b) All terms in this Agreement shall have the defined meanings when
used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
documents made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(d) The words "hereof", "herein", "hereunder", and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation".
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
5
<PAGE>
ARTICLE II
ORGANIZATION OF THE TRUST
SECTION 2.1. Name. The Trust created hereby shall be known as "MMCA
Auto Owner Trust 1998-1", in which name the Owner Trustee may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
SECTION 2.2. Office. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in the
State of Delaware as the Owner Trustee may designate by written notice to the
Certificateholders and the Depositor.
SECTION 2.3. Purposes and Powers. (a) The purpose of the Trust is,
and the Trust shall have the power and authority, to engage solely in the
following activities:
(i) to issue the Notes pursuant to the Indenture, and the Certificates
pursuant to this Agreement, and to sell the Notes upon the written order of
the Depositor;
(ii) with the proceeds of the sale of the Notes to fund the Reserve
Account and the Yield Supplement Account, to pay the organizational,
start-up and transactional expenses of the Trust, and to pay the balance to
the Depositor pursuant to the Sale and Servicing Agreement;
(iii) to pay interest on and principal of the Notes and distributions
on the Certificates.
(iv) to assign, grant, transfer, pledge, mortgage and convey the Owner
Trust Estate (other than the Certificate Distribution Account and the
proceeds thereof) to the Indenture Trustee pursuant to the Indenture;
(v) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
6
<PAGE>
(vi) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(vii) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with conservation of
the Owner Trust Estate and the making of distributions to the Noteholders
and the Certificateholders.
The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the other
Basic Documents.
SECTION 2.4. Appointment of Owner Trustee. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein and in the
Business Trust Statute.
SECTION 2.5. Initial Capital Contribution of Owner Trust Estate. As of
July 9, 1998, the Depositor sold, assigned, transferred, conveyed and set over
to the Owner Trustee the sum of $1. The Owner Trustee hereby acknowledges
receipt in trust from the Depositor, as of such date, of the foregoing
contribution, which shall constitute the initial Owner Trust Estate and shall be
deposited in the Certificate Distribution Account. The Depositor shall pay
organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee.
SECTION 2.6. Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Certificateholders,
subject to the obligations of the Trust under the Basic Documents. It is the
intention of the parties hereto that (i) the Trust constitute a business trust
under the Business Trust Statute and that this Agreement constitute the
governing instrument of such business trust and (ii) solely for income and
franchise tax purposes, the Trust shall be treated (a) if it has a single
beneficial owner, as a non-entity and if has more than one beneficial owner, as
a partnership, with the assets of the partnership being the Receivables and
other assets held by the Trust, the partners of the partnership being the
Certificateholders and the Notes constituting indebtedness of the partnership.
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The parties agree that, unless otherwise required by the appropriate tax
authorities, the Trust will file or cause to be filed annual or other necessary
returns, reports and other forms consistent with the characterization of the
Trust either as a nonentity or as a partnership for such tax purposes. Effective
as of the date hereof, the Owner Trustee shall have all rights, powers and
duties set forth herein and in the Business Trust Statute with respect to
accomplishing the purposes of the Trust. The Owner Trustee has filed the
Certificate of Trust with the Secretary of State of Delaware.
SECTION 2.7. [Reserved.]
SECTION 2.8. Title to Trust Property. Legal title to the entirety of
the Owner Trust Estate shall be vested at all times in the Trust as a separate
legal entity, except where applicable law in any jurisdiction requires title to
any part of the Owner Trust Estate to be vested in a trustee or trustees, in
which case title shall be deemed to be vested in the Owner Trustee, a co-trustee
and/or a separate trustee, as the case may be.
SECTION 2.9. Situs of Trust. The Trust shall be located and
administered in the State of Delaware. All bank accounts maintained by the Owner
Trustee on behalf of the Trust shall be located in the State of Delaware or the
State of New York. The Trust shall not have any employees in any state other
than the State of Delaware; provided, however, that nothing herein shall
restrict or prohibit the Owner Trustee from having employees within or without
the State of Delaware. Payments will be received by the Trust only in Delaware
or New York, and payments will be made by the Trust only from Delaware or New
York. The only office of the Trust will be at the Corporate Trust Office in the
State of Delaware.
SECTION 2.10. Representations and Warranties of the Depositor. The
Depositor hereby represents and warrants to the Owner Trustee that:
(a) The Depositor is duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware, with power
and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted.
(b) The Depositor is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of property or
the conduct of its business shall require such qualifications.
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(c) The Depositor has the power and authority to execute and deliver
this Agreement and to carry out its terms, and the Depositor has full power and
authority to sell and assign the property to be sold and assigned to, and
deposited with, the Trust, and the Depositor has duly authorized such sale and
assignment and deposit to the Trust by all necessary corporate action; and the
execution, delivery and performance of this Agreement has been duly authorized
by the Depositor by all necessary corporate action.
(d) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default under, the articles of
incorporation or by-laws of the Depositor, or any indenture, agreement or other
instrument to which the Depositor is a party or by which it is bound; nor result
in the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement or other instrument (other than
pursuant to the Basic Documents); nor violate any law or, to the best of the
Depositor's knowledge, any order, rule or regulation applicable to the Depositor
of any court or of any Federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over the Depositor or
its properties.
(e) There are no proceedings or investigations pending or, to the
Depositor's best knowledge, threatened before any court, regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Depositor or its properties: (i) asserting the invalidity of this
Agreement, the Indenture, any of the other Basic Documents, the Notes or the
Certificates (ii) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transactions contemplated by this
Agreement, the Indenture or any of the other Basic Documents, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Depositor of its obligations under, or the validity or
enforceability of, this Agreement or (iv) which might adversely affect the
Federal income tax attributes, or Applicable Tax State franchise or income tax
attributes, of the Notes.
(f) The representations and warranties of the Depositor in Section 3.1
of the Purchase Agreement are true and correct.
SECTION 2.11. Federal Income Tax Matters. The Certificateholders
acknowledge that it is their intent and that they understand it is the intent of
the
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Depositor and the Servicer that, for purposes of Federal income, state and local
income and franchise tax and any other income taxes, the Trust will be treated
either as a "nonentity" under Treas. Reg. Section 301.7701-3 or as a
partnership, and the Certificateholders (including the Depositor) will be
treated as partners in that partnership. The Depositor and the other
Certificateholders by acceptance of a Certificate agree to such treatment and
agree to take no action inconsistent with such treatment. For each taxable year
(or portion thereof), other than periods in which there is only one
Certificateholder and with respect to which the Depositor has received an
opinion of counsel that the Trust will be characterized as a "nonentity" under
Treas. Reg. Section 301.7701-3 for Federal, state and all other income tax
purposes,
(a) amounts paid to the Depositor pursuant to Section 4.7(a) of the
Sale and Servicing Agreement or clause (i) of the fourth paragraph of
Section 5.1(a) of the Sale and Servicing Agreement for such year (or other
period) shall be treated as a guaranteed payment within the meaning of
Section 707(c) of the Code;
(b) all remaining net income or net loss, as the case may be, of the
Trust for such year (or other period) as determined for Federal income tax
purposes (and each item of income, gain, credit, loss or deduction entering
into the computation thereof) shall be allocated to the Certificateholders
pro rata in accordance with the outstanding principal balances of their
respective Certificates.
The Depositor is authorized to modify the allocations in this paragraph if
necessary or appropriate, in its sole discretion, for the allocations to fairly
reflect the economic income, gain or loss to the Depositor or the
Certificateholders or as otherwise required by the Code.
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ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. Initial Ownership. Upon the formation of the Trust by
the contribution by the Depositor pursuant to Section 2.5 and until the issuance
of the Certificates , the Depositor shall be the sole beneficiary of the Trust.
SECTION 3.2. The Certificates. The Certificates shall be issued in one
or more registered, definitive, physical certificates, in the form set forth in
Exhibit A, in minimum denominations of at least $1,000,000 and multiples of
$1,000 in excess thereof; provided, however, that a single Certificate may be
issued in a denomination equal to the Initial Certificate Balance less the
aggregate denominations of all other Certificates or a denomination less than
$1,000. No Certificate may be sold, transferred, assigned, participated,
pledged, or otherwise disposed of (any such act, a "Transfer") to any Person
except in accordance with the provisions of Section 3.4, and any attempted
Transfer in violation of this section or Section 3.4 shall be null and void
(each, a "Void Transfer"). Notwithstanding the foregoing, following the delivery
to the Owner Trustee of an Opinion of Counsel to the effect that the elimination
of restrictions on transfer will not cause the Trust to be taxable as a
corporation for federal income tax purposes or for purposes of the tax laws of
any Applicable Tax State, this Agreement may be amended to modify or delete
transfer restrictions in accordance with such Opinion of Counsel.
The Certificates may be in printed or typewritten form and shall be
executed on behalf of the Trust by manual or facsimile signature of an
authorized officer of the Owner Trustee. Certificates bearing the manual or
facsimile signatures of individuals who were, at the time when such signatures
shall have been affixed, authorized to sign on behalf of the Trust, shall be
validly issued and entitled to the benefits of this Agreement, notwithstanding
that such individuals or any of them shall have ceased to be so authorized prior
to the authentication and delivery of such Certificates or did not hold such
offices at the date of authentication and delivery of such Certificates.
If Transfer of the Certificates is permitted pursuant to this Section
3.2 and Section 3.4, a transferee of a Certificate shall become a
Certificateholder, and shall be entitled to the rights and subject to the
obligations of a Certificateholder hereunder upon such transferee's acceptance
of a Certificate duly registered in such transferee's name pursuant to Section
3.4.
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SECTION 3.3. Authentication of Certificates. Concurrently with the
initial sale of the Receivables to the Trust pursuant to the Sale and Servicing
Agreement, the Owner Trustee shall cause the Certificates, in an aggregate
principal amount equal to the Initial Certificate Balance, to be executed on
behalf of the Trust, authenticated and delivered to or upon the written order of
the Depositor, signed by its chairman of the board, its president, any executive
vice president, any vice president, its secretary or its treasurer, without
further corporate action by the Depositor, in authorized denominations. No
Certificate shall entitle its Holder to any benefit under this Agreement, or
shall be valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication substantially in the form set forth in Exhibit A
attached hereto executed by the Owner Trustee or Wilmington Trust Company, as
the Owner Trustee's authenticating agent, by manual signature; such
authentication shall constitute conclusive evidence that such Certificate shall
have been duly authenticated and delivered hereunder. All Certificates shall be
dated the date of their authentication.
SECTION 3.4. Registration of Certificates; Transfer and Exchange of
Certificates. (a) The Certificate Registrar shall keep or cause to be kept, at
the office or agency maintained pursuant to Section 3.8, a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, the Trust
shall provide for the registration of Certificates and of Transfers and
exchanges of Certificates as herein provided. Wilmington Trust Company shall be
the initial Certificate Registrar. No Transfer of a Certificate shall be
recognized except upon registration of such Transfer in the Certificate
Register.
(b)No Certificateholder shall Transfer any Certificate initially held
by it unless such transfer is made pursuant to an effective registration
statement or otherwise in accordance with the requirements under the Securities
Act of 1933, as amended (the "1933 Act"), and effective registration or
qualification under applicable state securities laws, or is made in a
transaction which does not require such registration or qualification. If a
transfer is to be made in reliance upon an exemption from the 1933 Act, and
under the applicable state securities laws, (i) the Certificate Registrar shall
require an Opinion of Counsel reasonably satisfactory to the Certificate
Registrar and the Depositor that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from the
1933 Act, applicable state securities laws and other relevant laws, which
Opinion of Counsel shall not be an expense of the Certificate Registrar, the
Depositor or the Trustee, and (ii) the Certificate Registrar shall require the
transferee to execute a
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certification acceptable to and in form and substance satisfactory to the
Certificate Registrar setting forth the facts surrounding such transfer.
(c) No Transfer of any Certificate shall be permitted, recognized or
recorded unless the Depositor has consented in writing to such Transfer, which
consent may be withheld in the sole discretion of the Depositor, provided,
however, that no such consent of the Depositor shall be required where the
proposed transferee is, and at the time of the Transfer will be, a
Certificateholder. Each Certificate (other than the Retained Certificate) shall
bear a legend to the following effect unless determined otherwise by the
Administrator (as certified to the Certificate Registrar in an Officer's
Certificate) consistent with applicable law:
"THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE
SECURITIES OR BLUE SKY LAW OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF,
BY PURCHASING THIS CERTIFICATE, AGREES FOR THE BENEFIT OF THE TRUST AND THE
DEPOSITOR THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN A DENOMINATION OF AT LEAST $1,000,000, ONLY IN COMPLIANCE
WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS, AND ONLY (1) PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, WITHIN THE MEANING OF
RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB,
WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE, OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, SUBJECT TO (A) THE
RECEIPT BY THE TRUST AND THE CERTIFICATE REGISTRAR OF A CERTIFICATE
SUBSTANTIALLY IN THE FORM ATTACHED AS EXHIBIT D TO THE TRUST AGREEMENT AND (B)
THE RECEIPT BY THE TRUST AND THE CERTIFICATE REGISTRAR OF A LETTER SUBSTANTIALLY
IN THE FORM ATTACHED AS EXHIBIT E TO THE TRUST AGREEMENT, (2) PURSUANT TO AN
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE), SUBJECT TO THE RECEIPT BY THE TRUST, AND THE CERTIFICATE REGISTRAR
OF SUCH EVIDENCE ACCEPTABLE TO THE TRUST THAT SUCH REOFFER, RESALE, PLEDGE OR
TRANSFER IS IN COMPLIANCE WITH THE TRUST AGREEMENT AND THE SECURITIES ACT AND
OTHER APPLICABLE LAWS, (3)
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TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO
ANY OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO (A) THE RECEIPT BY THE TRUST AND THE CERTIFICATE REGISTRAR OF A
LETTER SUBSTANTIALLY IN THE FORM ATTACHED AS EXHIBIT F TO THE TRUST AGREEMENT OR
(B) THE RECEIPT BY THE TRUST AND THE CERTIFICATE REGISTRAR OF SUCH OTHER
EVIDENCE ACCEPTABLE TO THE TRUST THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER
IS IN COMPLIANCE WITH THE TRUST AGREEMENT AND THE SECURITIES ACT AND OTHER
APPLICABLE LAWS, OR (4) TO THE DEPOSITOR OR ITS AFFILIATES, IN EACH CASE IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND
SECURITIES AND BLUE SKY LAWS OF THE STATES OF THE UNITED STATES. IN ADDITION,
EXCEPT IN THE CASE OF TRANSFERS TO EXISTING CERTIFICATEHOLDERS, THIS CERTIFICATE
MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY WITH THE EXPRESS
WRITTEN CONSENT OF THE DEPOSITOR (WHICH CONSENT MAY BE WITHHELD FOR ANY REASON
OR FOR NO REASON)."
As a condition to the registration of any Transfer of a Certificate,
the prospective transferee of such a Certificate shall represent to the Owner
Trustee and the Certificate Registrar the following:
(i) It has neither acquired nor will it Transfer any Certificate it
purchases (or any interest therein) or cause any such Certificates (or any
interest therein) to be marketed on or through an "established securities
market" within the meaning of section 7704(b)(1) of the Code, including,
without limitation, an over-the-counter-market or an interdealer quotation
system that regularly disseminates firm buy or sell quotations.
(ii) It either (A) is not, and will not become, a partnership,
Subchapter S corporation, or grantor trust for U.S. Federal income tax
purposes, or (B) is such an entity, but none of the direct or indirect
beneficial owners of any of the interests in such transferee have allowed
or caused, or will allow or cause, 80% or more (or such other percentage as
the Depositor may establish prior to the time of such proposed Transfer) of
the value of such interests to be attributable to such transferee's
ownership of Certificates.
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(iii) It understands that no subsequent Transfer of the Certificates
is permitted unless (A) such Transfer is of a Certificate with a
denomination of at least $1,000,000 and (B) the Depositor consents in
writing (which consent may be withheld for any reason or for no reason) to
the proposed Transfer; provided, however, that no such consent shall be
required where the proposed transferee is, and at the time of the Transfer
will be, a Holder of a Certificate.
(iv) It understands that the opinion of tax counsel that the Trust is
not a publicly traded partnership taxable as a corporation is dependent in
part on the accuracy of the representations in paragraphs (i), (ii) and
(iii) above.
(v) If it is acquiring any Certificates as a fiduciary or agent for
one or more investor accounts, it has sole investment discretion with
respect to each such account and it has full power to make the
acknowledgments, representations and agreements contained herein on behalf
of each such account.
(vi) It is not (A) an employee benefit plan, as defined in Section
3(3) of ERISA, that is subject to Title I of ERISA, (B) a plan described in
Section 4975(e)(1) of the Code, (C) a governmental plan, as defined in
Section 3(32) of ERISA, subject to any Federal, state or local law which
is, to a material extent, similar to the provisions of Section 406 of ERISA
or Section 4975 of the Code, (D) an entity whose underlying assets include
plan assets by reason of a plan's investment in the entity (within the
meaning of Department of Labor Regulation 29 C.F.R. Section 2510.3-101) or
(E) a person investing "plan assets" of any such plan (excluding, for
purposes of this clause (E), any entity registered under the Investment
Company Act of 1940, as amended).
(vii) It is a Person who is either (A) (1) a citizen or resident of
the United States, (2) a corporation, partnership or other entity organized
in or under the laws of the United States or any political subdivision
thereof or (3) a Person not described in (1) or (2) whose ownership of the
Certificates is effectively connected with such Person's conduct of a trade
or business within the United States (within the meaning of the Code) and
who provides the Depositor and the Owner Trustee an IRS Form 4224 (and such
other certifications, representations or opinions of counsel as may be
requested by the Depositor or the Owner Trustee) or (B) an estate or trust
the income of which is includible in gross income for United States Federal
income tax purposes, regardless of source.
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(viii) It understands that any purported Transfer of any Certificate
(or any interest therein) in contravention of any of the restrictions and
conditions (including any violation of the representation in paragraph (ii)
above by an investor who continues to hold such Certificates occurring any
time after the Transfer in which it acquired such Certificates) in this
Section 3.4 shall be a Void Transfer, and the purported transferee in a
Void Transfer shall not be recognized by the Trust or any other Person as a
Certificateholder for any purpose.
(ix) It agrees that if it determines to Transfer any of the
Certificates it will cause its proposed transferee to provide to the Trust
and the Certificate Registrar a letter substantially in the form of Exhibit
E or F hereof, as applicable, or such other written statement as the
Depositor shall prescribe.
(d) By acceptance of any Certificate, the Certificateholder thereof
specifically agrees with and represents to the Depositor, the Certificate
Registrar and the Trust that no Transfer of such Certificate shall be made
unless the registration requirements of the Securities Act and any applicable
state securities laws are complied with, or such Transfer is exempt from the
registration requirements under the Securities Act because the Transfer
satisfies one of the following:
(i)such Transfer is in compliance with Rule 144A under the
Securities Act ("Rule 144A"), to a transferee who the transferor
reasonably believes is a Qualified Institutional Buyer that is
purchasing for its own account or for the account of a Qualified
Institutional Buyer and to whom notice is given that such transfer is
being made in reliance upon Rule 144A under the Securities Act and (x)
the transferor executes and delivers to the Trust and the Certificate
Registrar a Rule 144A transferor certificate substantially in the form
attached as Exhibit D and (y) the transferee executes and delivers to
the Trust and the Certificate Registrar an investment letter
substantially in the form attached as Exhibit E.
(ii) after the appropriate holding period, such Transfer is
pursuant to an exemption from registration under the Securities Act
provided by Rule 144 under the Securities Act and the transferee, if
requested by the Trust or the Certificate Registrar, delivers an
Opinion of Counsel in form and substance satisfactory to the Trust and
the Depositor; and
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(iii)such Transfer is to an institutional accredited investor as
defined in rule 501(a)(1), (2), (3) or (7) of Regulation D promulgated
under the Securities Act in a transaction exempt from the registration
requirements of the Securities Act, such Transfer is in accordance
with any applicable securities laws of any state of the United States
or any other jurisdiction, and such investor executes and delivers to
the Trust and the Certificate Registrar an investment letter
substantially in the form attached as Exhibit F.
(e) The Trust shall make available to the prospective transferor and
transferee information requested to satisfy the requirements of paragraph (d)(4)
of Rule 144A (the "Rule 144A Information"). The Rule 144A Information shall
include any or all of the following items requested by the prospective
transferee:
(i) each statement delivered to Certificateholders pursuant to
Section 4.9 of the Sale and Servicing Agreement on each Payment Date
preceding such request; and
(ii)such other information as is reasonably available to the
Owner Trustee in order to comply with requests for information
pursuant to Rule 144A under the Securities Act.
None of the Depositor, the Certificate Registrar or the Trust is under
an obligation to register any Certificate under the Securities Act or any other
securities law.
(f) Upon surrender for registration of Transfer of any Certificate at
the office or agency maintained pursuant to Section 3.8 and upon compliance with
any provisions of this Agreement relating to such Transfer, the Owner Trustee
shall execute, authenticate and deliver (or shall cause Wilmington Trust
Company, as its authenticating agent, to authenticate and deliver), in the name
of the designated transferee or transferees, one or more new Certificates in
authorized denominations of a like aggregate amount dated the date of
authentication by the Owner Trustee or any authenticating agent.
Subject to Sections 3.4(b) and 3.4(c), at the option of a
Certificateholder, Certificates may be exchanged for other Certificates of
authorized denominations of a like aggregate amount upon surrender of the
Certificates to be exchanged at the office or agency maintained pursuant to
Section 3.8.
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Every Certificate presented or surrendered for registration of
Transfer or exchange shall be accompanied by a written instrument of transfer
and accompanied by IRS Form 4224 or W-9 in form satisfactory to the Owner
Trustee and the Certificate Registrar, duly executed by the Certificateholder or
his attorney duly authorized in writing. Each Certificate surrendered for
registration of Transfer or exchange shall be cancelled and subsequently
disposed of by the Certificate Registrar in accordance with its customary
practice.
No service charge shall be made for any registration of Transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any Transfer or exchange of Certificates.
(g) The provisions of this Section 3.4 and of this Agreement generally
are intended to prevent the Trust from being characterized as a "publicly traded
partnership" within the meaning of Section 7704 of the Code, in reliance on
Treas. Reg. Sections 1.7704-1(e) and (h), and the Depositor shall take such
intent into account in determining whether or not to consent to any proposed
Transfer of any Certificate.
The preceding provisions of this Section 3.4 notwithstanding, the
Owner Trustee shall not make and the Certificate Registrar shall not register
any Transfer or exchange of Certificates for a period of fifteen (15) days
preceding the due date for any payment with respect to the Certificates.
Notwithstanding anything contained herein to the contrary, the Owner
Trustee shall not be responsible for ascertaining whether any transfer complies
with the registration provisions or exemptions from the Securities Act of 1933,
as amended, the Securities Act of 1934, as amended applicable state securities
law or the Investment Company Act; provided however, that if a certification is
specifically required to be delivered to the Owner Trustee by a purchaser or
transferee of a Certificate, the Owner Trustee shall be under a duty to examine
the same to determine whether it conforms to the requirements of this Trust
Agreement and to register transfers only upon receipt of documents and
certifications specified herein and shall promptly notify the party delivering
the same if such certification does not so conform.
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss
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or theft of any Certificate and (b) there shall be delivered to the Certificate
Registrar and the Owner Trustee such security or indemnity as may be required by
them to save each of them harmless, then, in the absence of notice that such
Certificate shall have been acquired by a bona fide purchaser, the Owner Trustee
on behalf of the Trust shall execute and the Owner Trustee, or Wilmington Trust
Company, as the Owner Trustee's authenticating agent, shall authenticate and
deliver, in exchange for, or in lieu of, any such mutilated, destroyed, lost or
stolen Certificate, as the case may be, a new Certificate , as the case may be,
of like tenor and denomination. In connection with the issuance of any new
Certificate under this Section 3.5, the Owner Trustee or the Certificate
Registrar may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section 3.5 shall constitute conclusive
evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
SECTION 3.6. Persons Deemed Owners of Certificates. Prior to due
presentation of a Certificate for registration of transfer, the Owner Trustee,
the Certificate Registrar and any Paying Agent may treat the Person in whose
name any Certificate shall be registered in the Certificate Register as the
owner of such Certificate for the purpose of receiving distributions pursuant to
Section 5.2 and for all other purposes whatsoever, and none of the Owner
Trustee, the Certificate Registrar or any Paying Agent shall be bound by any
notice to the contrary.
SECTION 3.7. Access to List of Certificateholders' Names and
Addresses. The Owner Trustee shall furnish or cause to be furnished to the
Servicer and the Depositor, or to the Indenture Trustee, within fifteen (15)
days after receipt by the Owner Trustee of a written request therefor from the
Servicer, the Depositor, or the Indenture Trustee, as the case may be, a list,
in such form as the requesting party may reasonably require, of the names and
addresses of the Certificateholders as of the most recent Record Date. If three
or more Certificateholders or one or more Holders of Certificates evidencing not
less than 25% of the Certificate Balance apply in writing to the Owner Trustee,
and such application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Owner Trustee
shall, within five (5) Business Days after the receipt of such application,
afford such applicants access during normal business hours to the current list
of Certificateholders. Each Certificateholder, by receiving and holding a
Certificate, shall be deemed to have agreed not to hold any of the Depositor,
the Certificate
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Registrar or the Owner Trustee accountable by reason of the disclosure of its
name and address, regardless of the source from which such information was
derived.
SECTION 3.8. Maintenance of Office or Agency. The Owner Trustee shall
maintain in Wilmington, Delaware, an office or offices or agency or agencies
where Certificates may be surrendered for registration of Transfer or exchange
and where notices and demands to or upon the Owner Trustee in respect of the
Certificates and the Basic Documents may be served. The Owner Trustee shall give
prompt written notice to the Depositor and to the Certificateholders of any
change in the location of the Certificate Registrar or any such office or
agency.
SECTION 3.9. Appointment of Paying Agent. The Paying Agent shall make
distributions to Certificateholders from the Certificate Distribution Account
pursuant to Section 5.2 and shall report the amounts of such distributions to
the Owner Trustee. Any Paying Agent shall have the revocable power to withdraw
funds from the Certificate Distribution Account for the purpose of making the
distributions referred to above. The Owner Trustee may revoke such power and
remove the Paying Agent if the Owner Trustee determines in its sole discretion
that the Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. The Paying Agent shall initially be
Wilmington Trust Company, and any co-paying agent chosen by the Owner Trustee.
Wilmington Trust Company shall be permitted to resign as Paying Agent upon
thirty (30) days' written notice to the Owner Trustee. In the event that
Wilmington Trust Company shall no longer be the Paying Agent, the Owner Trustee
shall appoint a successor to act as Paying Agent (which shall be a bank or trust
company). The Owner Trustee shall cause such successor Paying Agent or any
additional Paying Agent appointed by the Owner Trustee to execute and deliver to
the Owner Trustee an instrument in which such successor Paying Agent or
additional Paying Agent shall agree with the Owner Trustee that as Paying Agent,
such successor Paying Agent or additional Paying Agent will hold all sums, if
any, held by it for payment to the Certificateholders in trust for the benefit
of the Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders. The Paying Agent shall return all unclaimed funds to the
Owner Trustee and upon removal of a Paying Agent such Paying Agent shall also
return all funds in its possession to the Owner Trustee. The provisions of
Sections 7.1, 7.3, 7.4 and 8.1 shall apply to the Owner Trustee also in its role
as Paying Agent, for so long as the Owner Trustee shall act as Paying Agent and,
to the extent applicable, to any other paying agent appointed hereunder. Any
reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise.
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ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1. Prior Notice to Certificateholders with Respect to
Certain Matters. With respect to the following matters, the Owner Trustee shall
not take action unless, (i) at least thirty (30) days before the taking of such
action, the Owner Trustee shall have notified the Certificateholders and the
Rating Agencies in writing of the proposed action and (ii) Certificateholders
holding not less than a majority of the aggregate Certificate Balance shall not
have notified the Owner Trustee in writing prior to the 30th day after such
notice is given that such Certificateholders have withheld consent or provided
alternative direction:
(a) the initiation of any claim or lawsuit by the Trust (except claims
or lawsuits brought by the Servicer in connection with the collection of
the Receivables) and the settlement of any action, claim or lawsuit brought
by or against the Trust (except with respect to the aforementioned claims
or lawsuits for collection by the Servicer of the Receivables);
(b) the election by the Trust to file an amendment to the Certificate
of Trust (unless such amendment is required to be filed under the Business
Trust Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interests of the
Certificateholders;
(e) the amendment, change or modification of the Sale and Servicing
Agreement or the Administration Agreement, except to cure any ambiguity or
to amend or supplement any provision in a manner or add any provision that
would not materially adversely affect the interests of the
Certificateholders; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent for the Notes or Indenture Trustee or pursuant to
this Agreement of a successor Certificate Registrar, or the consent to the
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assignment by the Note Registrar, Paying Agent for the Notes or Indenture
Trustee or Certificate Registrar of its obligations under the Indenture or
this Agreement, as applicable.
SECTION 4.2. Action by Certificateholders with Respect to Certain
Matters. The Owner Trustee may not, except upon the occurrence of an Event of
Servicing Termination subsequent to the payment in full of the Notes and in
accordance with the written direction of Certificateholders holding not less
than a majority of the aggregate Certificate Balance, (a) remove the Servicer
under the Sale and Servicing Agreement pursuant to Article VIII thereof, (b)
appoint a successor Servicer pursuant to Article VIII of the Sale and Servicing
Agreement, (c) remove the Administrator under the Administration Agreement
pursuant to Section 8 thereof, (d) appoint a successor Administrator pursuant to
Section 8 of the Administration Agreement or (e) sell the Receivables after the
termination of the Indenture, except as expressly provided in the Basic
Documents.
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy.
The Owner Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust unless the Notes have been paid in full and
each Certificateholder approves of such commencement in advance and delivers to
the Owner Trustee a certificate certifying that such Certificateholder
reasonably believes that the Trust is insolvent.
SECTION 4.4. Restrictions on Certificateholders' Power. The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Agreement or any of the other Basic
Documents or would be contrary to Section 2.3, nor shall the Owner Trustee be
obligated to follow any such direction, if given.
SECTION 4.5. Majority Control. Except as expressly provided herein,
any action that may be taken by the Certificateholders under this Agreement may
be taken by the Holders of Certificates evidencing not less than a majority of
the Certificate Balance. Except as expressly provided herein, any written notice
of the Certificateholders delivered pursuant to this Agreement shall be
effective if signed by Holders of Certificates evidencing not less than a
majority of the Certificate Balance at the time of the delivery of such notice.
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ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1. Establishment of Certificate Distribution Account.
Pursuant to Section 4.1(c) of the Sale and Servicing Agreement, there has been
established and there shall be maintained a segregated trust account in the name
of the Owner Trustee at which shall be designated as the "Certificate
Distribution Account." The Certificate Distribution Account shall be held in
trust in the name of the Owner Trustee for the benefit of the
Certificateholders. Except as expressly provided in Section 3.9, the Certificate
Distribution Account shall be under the sole dominion and control of the Owner
Trustee. All monies deposited from time to time in the Certificate Distribution
Account pursuant to the Sale and Servicing Agreement or the Indenture shall be
applied as provided in this Agreement and the Sale and Servicing Agreement or
the Indenture.
SECTION 5.2. Application of Trust Funds.
(a) On each Payment Date, the Owner Trustee (if other than the Paying
Agent) shall, based on the information contained in the Servicer's Certificate
delivered on the relevant Determination Date pursuant to Section 3.9 of the Sale
and Servicing Agreement, transfer the amount deposited in the Certificate
Distribution Account pursuant to Section 2.8(a) of the Indenture on such Payment
Date to the Paying Agent, or the Paying Agent, based upon such information,
shall withdraw from the Certificate Distribution Account, for distribution to
the Certificateholders pro rata based on the outstanding principal balance of
the Certificates funds available therein.
(b) Amounts, if any, distributed to the Depositor pursuant to Section
4.7(a) and clause (i) of the fourth paragraph of Section 5.1(a) of the Sale and
Servicing Agreement shall be deemed to be distributions on the Retained
Certificates.
(c) On each Payment Date, the Owner Trustee shall, or shall cause the
Paying Agent to, send to each Certificateholder the statement provided to the
Owner Trustee by the Servicer pursuant to Section 4.9 of the Sale and Servicing
Agreement with respect to such Payment Date.
(d) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Certificateholder, such tax shall reduce
the
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amount otherwise distributable to the Certificateholder in accordance with this
Section 5.2. The Owner Trustee and each Paying Agent is hereby authorized and
directed to retain from amounts otherwise distributable to the
Certificateholders sufficient funds for the payment of any such withholding tax
that is legally owed by the Trust (but such authorization shall not prevent the
Owner Trustee from contesting any such tax in appropriate proceedings, and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The amount of any withholding tax imposed with respect to a
Certificateholder shall be treated as cash distributed to such Certificateholder
at the time it is withheld by the Trust and remitted to the appropriate taxing
authority. If there is a possibility that withholding tax is payable with
respect to a distribution (such as a distribution to a non-U.S.
Certificateholder ), the Owner Trustee may, in its sole discretion, withhold
such amounts in accordance with this paragraph (d). In the event that a
Certificateholder wishes to apply for a refund of any such withholding tax, the
Owner Trustee shall reasonably cooperate with such Certificateholder in making
such claim so long as such Certificateholder agrees to reimburse the Owner
Trustee for any out-of-pocket expenses incurred.
SECTION 5.3. Method of Payment. Subject to Section 9.1(c),
distributions required to be made to Certificateholders on any Payment Date
shall be made to each Certificateholder of record on the preceding Record Date
either by wire transfer, in immediately available funds, to the account of such
Holder at a bank or other entity having appropriate facilities therefor, if (i)
such Certificateholder shall have provided to the Certificate Registrar
appropriate written instructions at least five (5) Business Days prior to such
Payment Date, or (ii) such Certificateholder is the Depositor or, if not, by
check mailed to such Certificateholder at the address of such Holder appearing
in the Certificate Register. Notwithstanding the foregoing, the final
distribution in respect of any Certificate (whether on the Certificateholders'
Final Scheduled Payment Date or otherwise) will be payable only upon
presentation and surrender of such Certificate at the office or agency
maintained for that purpose by the Owner Trustee pursuant to Section 3.8.
SECTION 5.4. No Segregation of Monies; No Interest. Subject to
Sections 5.1 and 5.2, monies received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law, the Indenture or
the Sale and Servicing Agreement and may be deposited under such general
conditions as may be prescribed by law, and the Owner Trustee shall not be
liable for any interest thereon.
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SECTION 5.5. Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. The Owner Trustee
shall, based on information provided by the Depositor, (a) maintain (or cause to
be maintained) the books of the Trust on the basis of a fiscal year ending
December 31 and based on the accrual method of accounting, (b) deliver to each
Certificateholder, as may be required by the Code and applicable Treasury
Regulations, such information as may be required (including Schedule K-1) to
enable each Certificateholder to prepare its Federal and state income tax
returns, (c) file such tax returns relating to the Trust (including a
partnership information return, IRS Form 1065), and make such elections as may
from time to time be required or appropriate under any applicable state or
Federal statute or rule or regulation thereunder so as to maintain the Trust's
characterization as a partnership for Federal income tax purposes, (d) cause
such tax returns to be signed in the manner required by law and (e) collect or
cause to be collected any withholding tax as described in and in accordance with
Section 5.2(d) with respect to income or distributions to Certificateholders.
The Owner Trustee shall elect under Section 1278 of the Code to include in
income currently any market discount that accrues with respect to the
Receivables. The Owner Trustee shall not make the election provided under
Section 754 of the Code.
The Owner Trustee may satisfy its obligations with respect to this
Section 5.5 by retaining, at the expense of the Depositor, a firm of independent
public accountants (the "Accountants") chosen by the Depositor which shall
perform the filing obligations of the Owner Trustee hereunder. The Accountants
will provide prior to November 17, 1997, a letter in form and substance
satisfactory to the Owner Trustee as to whether any federal tax withholding on
Certificates is then required and, if required, the procedures to be followed
with respect thereto to comply with the requirements of the Internal Revenue
Code of 1986, as amended. The Accountants shall be required to update the letter
in each instance that any additional tax withholding is subsequently required or
any previously required tax withholding shall no longer be required. The Owner
Trustee shall be deemed to have discharged its obligations pursuant to this
Section upon its retention of the Accountants, and the Owner Trustee shall not
have any liability with respect to the default or misconduct of the Accountants.
SECTION 5.6. Signature on Returns; Tax Matters Partner. (a) The
Depositor, as general partner for income tax purposes, shall sign, on behalf of
the Trust, the tax returns of the Trust.
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(b) The Depositor shall be designated the "tax matters partner" of the
Trust pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations.
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ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Trust is to be
a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is to be a party and any
amendment or other agreement, in each case, in such form as the Depositor shall
approve, as evidenced conclusively by the Owner Trustee's execution thereof and
the Depositor's execution of this Agreement, and to direct the Indenture Trustee
to authenticate and deliver Notes in the aggregate principal amount of $[ ]
(comprised of $[ ] in aggregate principal amount of Class A-1 Notes, $[ ] in
aggregate principal amount of Class A-2 Notes, $[ ] in aggregate principal
amount of Class A-3 Notes, $[ ] in aggregate principal amount of Class A-4 Notes
and $[ ] in aggregate principal amount of Class B Notes). In addition to the
foregoing, the Owner Trustee is authorized to take all actions required of the
Trust pursuant to the Basic Documents. The Owner Trustee is further authorized
from time to time to take such action on behalf of the Trust as is permitted by
the Basic Documents and which the Servicer or the Administrator recommends with
respect to the Basic Documents, except to the extent that this Agreement
expressly requires the consent of Certificateholders for such action.
SECTION 6.2. General Duties. It shall be the duty of the Owner Trustee
to discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and the other Basic Documents to which the Trust is
a party and to administer the Trust in the interest of the Certificateholders ,
subject to the lien of the Indenture and in accordance with the provisions of
this Agreement and the other Basic Documents. Notwithstanding the foregoing, the
Owner Trustee shall be deemed to have discharged its duties and responsibilities
hereunder and under the Basic Documents to the extent the Administrator is
required in the Administration Agreement to perform any act or to discharge such
duty of the Owner Trustee or the Trust hereunder or under any other Basic
Document, and the Owner Trustee shall not be held liable for the default or
failure of the Administrator to carry out its obligations under the
Administration Agreement.
SECTION 6.3. Action upon Instruction. (a) Subject to Article IV, and
in accordance with the terms of the Basic Documents, the Certificateholders
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may, by written instruction, direct the Owner Trustee in the management of the
Trust.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or any
other Basic Document, the Owner Trustee shall promptly give notice (in such form
as shall be appropriate under the circumstances) to the Certificateholders
requesting instruction as to the course of action to be adopted, and to the
extent the Owner Trustee acts in good faith in accordance with any written
instruction of the Certificateholders received, the Owner Trustee shall not be
liable on account of such action to any Person. If the Owner Trustee shall not
have received appropriate instruction within ten (10) days of such notice (or
within such shorter period of time as reasonably may be specified in such notice
or may be necessary under the circumstances) it may, but shall be under no duty
to, take or refrain from taking such action, not inconsistent with this
Agreement or the other Basic Documents, as it shall deem to be in the best
interests of the Certificateholders, and shall have no liability to any Person
for such action or inaction.
(d) In the event the Owner Trustee is unsure as to the application of
any provision of this Agreement or any other Basic Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the
Certificateholders requesting instruction and, to the extent that the Owner
Trustee acts or refrains from acting in good faith in accordance with any such
instruction received, the Owner Trustee shall not be liable, on account of such
action or inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within ten (10) days of such notice (or within such
shorter period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to, take
or refrain from taking such action not inconsistent with this Agreement or the
other Basic
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Documents, as it shall deem to be in the best interests of the
Certificateholders and shall have no liability to any Person for such action or
inaction.
SECTION 6.4. No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee or the Trust is a party, except as expressly provided
by the terms of this Agreement or in any document or written instruction
received by the Owner Trustee pursuant to Section 6.3; and no implied duties or
obligations shall be read into this Agreement or any other Basic Document
against the Owner Trustee. The Owner Trustee shall have no responsibility for
filing any financing or continuation statement in any public office at any time
or to otherwise perfect or maintain the perfection of any security interest or
lien granted to it hereunder or to prepare or file any Securities and Exchange
Commission filing for the Trust or to record this Agreement or any other Basic
Document. The Owner Trustee nevertheless agrees that it will, at its own cost
and expense, promptly take all action as may be necessary to discharge any lien
(other than the lien of the Indenture) on any part of the Owner Trust Estate
that results from actions by, or claims against, the Owner Trustee that are not
related to the ownership or the administration of the Owner Trust Estate.
SECTION 6.5. No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (ii) in accordance with the other Basic
Documents to which the Trust or the Owner Trust is a party and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3.
SECTION 6.6. Restrictions. The Owner Trustee shall not take any action
(a) that is inconsistent with the purposes of the Trust set forth in Section 2.3
or (b) that, to the actual knowledge of the Owner Trustee, would (i) affect the
treatment of the Notes as indebtedness for Federal income or Delaware or
California income or franchise tax purposes, (ii) be deemed to cause a taxable
exchange of the Notes for Federal income or Delaware or California income or
franchise tax purposes or (iii) cause the Trust or any portion thereof to be
taxable as an association or publicly traded partnership taxable as a
corporation for Federal income or Delaware or
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California income or franchise tax purposes. The Certificateholders shall not
direct the Owner Trustee to take action that would violate the provisions of
this Section 6.6.
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ARTICLE VII
REGARDING THE OWNER TRUSTEE
SECTION 7.1. Acceptance of Trusts and Duties. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all monies actually received by it constituting
part of the Owner Trust Estate upon the terms of this Agreement to which the
Trust or Owner Trustee is a party and the other Basic Documents. The Owner
Trustee shall not be answerable or accountable hereunder or under any other
Basic Document under any circumstances, except (i) for its own willful
misconduct, bad faith or negligence or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.3 expressly made by the Owner
Trustee, in its individual capacity. In particular, but not by way of limitation
(and subject to the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment
made by a responsible officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the provisions of
this Agreement at the instructions of any Certificateholder , the Indenture
Trustee, the Depositor, the Administrator or the Servicer;
(c) no provision of this Agreement or any other Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers
hereunder or under any other Basic Document if the Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or
provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes or the Certificates.
(e) the Owner Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement or for the due execution
hereof
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by the Depositor or for the form, character, genuineness, sufficiency,
value or validity of any of the Owner Trust Estate or for or in respect of
the validity or sufficiency of the other Basic Documents, other than the
certificate of authentication on the Certificates , and the Owner Trustee
shall in no event assume or incur any liability, duty, or obligation to any
Noteholder or to any Certificateholder , other than as expressly provided
for herein and in the other Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Servicer, the Administrator, the Depositor or the
Indenture Trustee under any of the Basic Documents or otherwise and the
Owner Trustee shall have no obligation or liability to perform the
obligations of the Trust under this Agreement or the other Basic Documents
that are required to be performed by the Administrator under the
Administration Agreement, the Servicer under the Sale and Servicing
Agreement or the Indenture Trustee under the Indenture; and
(g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any other Basic Document, at the request,
order or direction of any of the Certificateholders , unless such
Certificateholders have offered to the Owner Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities that may be
incurred by the Owner Trustee therein or thereby. The right of the Owner
Trustee to perform any discretionary act enumerated in this Agreement or in
any other Basic Document shall not be construed as a duty, and the Owner
Trustee shall not be answerable for other than its willful misconduct, bad
faith or negligence in the performance of any such act.
SECTION 7.2. Furnishing of Documents. The Owner Trustee shall furnish
to the Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Basic Documents.
SECTION 7.3. Representations and Warranties. The Owner Trustee, in
its individual capacity, hereby represents and warrants to the Depositor, for
the benefit of the Certificateholders, that:
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(a) It is a banking corporation duly organized and validly existing in
good standing under the laws of the State of Delaware. It has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to
execute and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement,
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will contravene
any Federal or Delaware law, governmental rule or regulation governing the
banking or trust powers of the Owner Trustee or any judgment or order
binding on it, or constitute any default under its charter documents or
by-laws or any indenture, mortgage, contract, agreement or instrument to
which it is a party or by which any of its properties may be bound.
SECTION 7.4. Reliance; Advice of Counsel. (a) The Owner Trustee may
rely upon, shall be protected in relying upon, and shall incur no liability to
anyone in acting upon any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond, or other document or paper
believed by it to be genuine and believed by it to be signed by the proper party
or parties. The Owner Trustee may accept a certified copy of a resolution of the
board of directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect. As to any fact or matter the method of the
determination of which is not specifically prescribed herein, the Owner Trustee
may for all purposes hereof rely on a certificate, signed by the president or
any vice president or by the treasurer or other authorized officers of the
relevant party, as to such fact or matter and such certificate shall constitute
full protection to the Owner Trustee for any action taken or omitted to be taken
by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the other
Basic Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents
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or attorneys shall have been selected by the Owner Trustee with reasonable care,
and (ii) may consult with counsel, accountants and other skilled Persons to be
selected with reasonable care and employed by it. The Owner Trustee shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the written opinion or advice of any such counsel, accountants or other
such Persons and not contrary to this Agreement or any other Basic Document.
SECTION 7.5. Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created, Wilmington Trust
Company acts solely as Owner Trustee hereunder and not in its individual
capacity, and all Persons having any claim against the Owner Trustee by reason
of the transactions contemplated by this Agreement or any other Basic Document
shall look only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.6. Owner Trustee Not Liable for Certificates or Receivables.
The recitals contained herein and in the Certificates (other than the signature
and countersignature of the Owner Trustee on the Certificates) shall be taken as
the statements of the Depositor, and the Owner Trustee assumes no responsibility
for the correctness thereof. The Owner Trustee makes no representations as to
the validity or sufficiency of this Agreement, of any other Basic Document or of
the Certificates(other than the signature and countersignature of the Owner
Trustee on the Certificates) or the Notes, or of any Receivable or related
documents. The Owner Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity and enforceability of
any Receivable, or the perfection and priority of any security interest created
by any Receivable in any Financed Vehicle or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Owner
Trust Estate or its ability to generate the payments to be distributed to
Certificateholders under this Agreement or the Noteholders under the Indenture,
including, without limitation: the existence, condition and ownership of any
Financed Vehicle; the existence and enforceability of any insurance thereon; the
existence and contents of any Receivable on any computer or other record
thereof; the validity of the assignment of any Receivable to the Trust or any
intervening assignment; the completeness of any Receivable; the performance or
enforcement of any Receivable; the compliance by the Depositor or the Servicer
with any warranty or representation made under any Basic Document or in any
related document, or the accuracy of any such warranty or representation or any
action of the Indenture Trustee, the Administrator or the Servicer or any
subservicer taken in the name of the Owner Trustee.
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SECTION 7.7. Owner Trustee May Own Certificates and Notes. The Owner
Trustee, in its individual or any other capacity, may become the owner or
pledgee of Certificates or Notes and may deal with the Depositor, the Servicer,
the Administrator and the Indenture Trustee in banking transactions with the
same rights as it would have if it were not Owner Trustee.
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ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1. Owner Trustee's Fees and Expenses. The Owner Trustee
shall receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Depositor and the
Owner Trustee, and the Owner Trustee shall be entitled to and reimbursed by the
Depositor for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder.
SECTION 8.2. Indemnification. The Depositor shall be liable as prime
obligor for, and shall indemnify Wilmington Trust Company and the Owner Trustee
and its successors, assigns, agents and servants (collectively, the "Indemnified
Parties") from and against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all reasonable costs,
expenses and disbursements (including reasonable legal fees and expenses) of any
kind and nature whatsoever (collectively, "Expenses") which may at any time be
imposed on, incurred by, or asserted against Wilmington Trust Company or the
Owner Trustee or any Indemnified Party in any way relating to or arising out of
this Agreement, the other Basic Documents, the Owner Trust Estate, the
administration of the Owner Trust Estate or the action or inaction of the Owner
Trustee hereunder; provided that the Depositor shall not be liable for or
required to indemnify an Indemnified Party from and against Expenses arising or
resulting from any of the matters described in the third sentence of Section
7.1. The Depositor will in no event be entitled to make any claim upon the Trust
Property for the payment or reimbursement of any Expenses. The indemnities
contained in this Section 8.2 shall survive the resignation or termination of
the Owner Trustee or the termination of this Agreement. In the event of any
claim, action or proceeding for which indemnity will be sought pursuant to this
Section 8.2, the Owner Trustee's choice of legal counsel shall be subject to the
approval of the Depositor, which approval shall not be unreasonably withheld.
SECTION 8.3. Payments to the Owner Trustee. Any amounts paid to the
Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.
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ARTICLE IX
TERMINATION
SECTION 9.1. Termination of Trust Agreement. (a) This Agreement (other
than the provisions of Article VIII) and the Trust shall terminate and be of no
further force or effect (i) upon the payment to the Noteholders and the
Certificateholders of all amounts required to be paid to them pursuant to the
terms of the Indenture, the Sale and Servicing Agreement and Article V or (ii)
the Payment Date next succeeding the month which is one year after the maturity
or other liquidation of the last Receivable and the disposition of any amounts
received upon liquidation of any property remaining in the Trust. The
bankruptcy, liquidation, dissolution, death or incapacity of any
Certificateholder shall not (x) operate to terminate this Agreement or the
Trust, nor (y) entitle such Certificateholder's legal representatives or heirs
to claim an accounting or to take any action or proceeding in any court for a
partition or winding up of all or any part of the Trust or Owner Trust Estate
nor (z) otherwise affect the rights, obligations and liabilities of the parties
hereto.
(b) No Certificateholder shall be entitled to revoke or terminate the
Trust.
(c) Notice of any termination of the Trust, specifying the Payment
Date upon which the Certificateholders shall surrender their Certificates, to
the Paying Agent for payment of the final distribution and cancellation, shall
be given by the Owner Trustee by letter to Certificateholders mailed within five
(5) Business Days of receipt of notice of such termination from the Servicer,
stating (i) the Payment Date upon or with respect to which final payment of the
Certificates shall be made upon presentation and surrender of the Certificates,
at the office of the Paying Agent therein designated, (ii) the amount of any
such final payment and (iii) that the Record Date otherwise applicable to such
Payment Date is not applicable, payments being made only upon presentation and
surrender of the Certificates at the office of the Paying Agent therein
specified. The Owner Trustee shall give such notice to the Certificate Registrar
(if other than the Owner Trustee) and the Paying Agent at the time such notice
is given to Certificateholders. Upon presentation and surrender of the
Certificates, the Paying Agent shall cause to be distributed to
Certificateholders , amounts distributable on such Payment Date pursuant to
Section 5.2. In addition, upon the presentation and surrender of the Retained
Certificate issued by the Depositor pursuant to a termination in accordance with
Section
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9.1(a)(i), the Owner Trustee shall distribute any remaining assets of the Trust
(after giving effect to any distributions made pursuant to the preceding
sentence) to the Depositor, in its capacities as Depositor and as Holder of such
Certificate.
In the event that all of the Certificateholders shall not surrender
their Certificates, as the case may be, for cancellation within six (6) months
after the date specified in the above mentioned written notice, the Owner
Trustee shall give a second written notice to the remaining Certificateholders
to surrender their Certificates, respectively, for cancellation and receive the
final distribution with respect thereto. If within one year after the second
notice all the Certificates shall not have been surrendered for cancellation,
the Owner Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders, as the case may
be, concerning surrender of their Certificates as the case may be, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement. Subject to applicable escheat laws, any funds
remaining in the Trust after exhaustion of such remedies shall be distributed by
the Owner Trustee to the Depositor.
(d) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be cancelled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
SECTION 9.2. Dissolution upon Bankruptcy of the Depositor. Promptly
after the occurrence of any Insolvency Event with respect to the Depositor, (A)
the Depositor shall give the Indenture Trustee and the Owner Trustee written
notice of such Insolvency Event, (B) the Owner Trustee shall, upon the receipt
of such written notice from the Depositor, give prompt written notice to the
Certificateholders, holders of interests, if any, in the Reserve Account and the
Indenture Trustee, of the occurrence of such event and (C) the Indenture Trustee
shall, upon receipt of written notice of such Insolvency Event from the Owner
Trustee or the Depositor, give prompt written notice to the Noteholders of the
occurrence of such event;
SECTION 9.3. Prepayment of the Certificates. (a) The Certificates
shall be prepaid in whole, but not in part, at the direction of the Servicer
pursuant to Section 9.1(a) of the Sale and Servicing Agreement, on any Payment
Date on which the Servicer exercises its option to purchase the assets of the
Trust pursuant to said Section 9.1(a), and the amount paid by the Servicer shall
be treated as collections of
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Receivables and applied to pay the unpaid principal amount of the Notes plus
accrued and unpaid interest thereon, together with the unpaid principal amount
of the Certificates. The Servicer shall furnish the Rating Agencies and the
Certificateholders notice of such prepayment. If the Certificates are to be
prepaid pursuant to this Section 9.3(a), the Servicer shall furnish notice of
such election to the Owner Trustee not later than twenty (20) days prior to the
Prepayment Date and the Trust shall deposit by 10:00 A.M. (New York City time)
on the Prepayment Date in the Certificate Distribution Account the Prepayment
Price of the Certificate to be prepaid, whereupon all such Certificates shall be
due and payable on the Prepayment Date.
(b) In addition, following payment in full of the Notes, the Holders
of 100% of the Certificate Balance may agree to liquidate the Trust and prepay
the Certificates.
(c) Notice of prepayment under Section 9.3(a) shall be given by the
Owner Trustee by first-class mail, postage prepaid, or by facsimile mailed or
transmitted immediately following receipt of notice from the Trust or Servicer
pursuant to Section 9.3(a), but not later than ten (10) days prior to the
applicable Prepayment Date, to each Holder of Certificate as of the close of
business on the Record Date preceding the applicable Prepayment Date, at such
Holder's address or facsimile number appearing in the Certificate Register.
All notices of prepayment shall state:
(i) the Prepayment Date;
(ii) the Prepayment Price; and
(iii) the place where such Certificates are to be surrendered for
payment of the Prepayment Price (which shall be the office or agency
of the Owner Trustee to be maintained as provided in Section 3.8).
Notice of prepayment of the Certificates shall be given by the Owner Trustee in
the name and at the expense of the Trust. Failure to give notice of prepayment,
or any defect therein, to any Holder of any Certificate shall not impair or
affect the validity of the prepayment of any other Certificate.
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(d) The Certificates to be prepaid shall, following notice of
prepayment as required by Section 9.3(b), on the Prepayment Date be paid by the
Trust at the Prepayment Price and (unless the Trust shall default in the payment
of the Prepayment Price) no interest shall accrue on the Prepayment Price for
any period after the date to which accrued interest is calculated for purposes
of calculating the Prepayment Price. Following payment in full of the Prepayment
Price, this Agreement and the Trust shall terminate.
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ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times (i) be a corporation satisfying the provisions of
Section 3807(a) of the Business Trust Statute; (ii) be authorized to exercise
corporate trust powers; (iii) have a combined capital and surplus of at least
$50,000,000 and shall be subject to supervision or examination by Federal or
state authorities; and (iv) shall have (or shall have a parent that has) a
long-term debt rating of investment grade by each of the Rating Agencies or be
otherwise acceptable to the Rating Agencies. If such corporation shall publish
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purpose of
this Section 10.1, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Owner Trustee shall
cease to be eligible in accordance with the provisions of this Section 10.1, the
Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 10.2.
SECTION 10.2. Resignation or Removal of Owner Trustee. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Administrator. Upon receiving such
notice of resignation, the Administrator shall promptly appoint a successor
Owner Trustee by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Owner Trustee and one copy to the successor
Owner Trustee. If no successor Owner Trustee shall have been so appointed and
have accepted appointment within thirty (30) days after the giving of such
notice of resignation, the resigning Owner Trustee may petition any court of
competent jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Administrator, or if at any time the Owner
Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Administrator may remove the Owner
Trustee. If the Administrator shall remove the Owner Trustee under the authority
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of the immediately preceding sentence, the Administrator shall promptly appoint
a successor Owner Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the outgoing Owner Trustee so removed and one
copy to the successor Owner Trustee and payment of all fees owed to the outgoing
Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section 10.2
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 10.3 and payment of all fees and expenses owed
to the outgoing Owner Trustee. The Administrator shall provide notice of such
resignation or removal of the Owner Trustee to the Certificateholders, the
Indenture Trustee, the Noteholders and each of the Rating Agencies.
SECTION 10.3. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Administrator and to its predecessor Owner Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Owner Trustee shall become effective, and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties, and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall, upon payment of its fees and expenses, deliver
to the successor Owner Trustee all documents and statements and monies held by
it under this Agreement, and the Administrator and the predecessor Owner Trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in
this Section 10.3 unless, at the time of such acceptance, such successor Owner
Trustee shall be eligible pursuant to Section 10.1.
Any successor Owner Trustee appointed pursuant to this Section 10.3
shall file an amendment to the Certificate of Trust reflecting the name and
principal place of business of such succession in the state of Delaware.
Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section 10.3, the Administrator shall mail notice of the successor of
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such Owner Trustee to all Certificateholders, the Indenture Trustee, the
Noteholders and the Rating Agencies. If the Administrator shall fail to mail
such notice within ten (10) days after acceptance of appointment by the
successor Owner Trustee, the successor Owner Trustee shall cause such notice to
be mailed at the expense of the Administrator.
SECTION 10.4. Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder; provided that such corporation shall be eligible pursuant to Section
10.1, without the execution or filing of any instrument or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided further, however, that the Owner Trustee shall mail
notice of such merger or consolidation to the Rating Agencies.
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Owner Trust Estate or any Financed Vehicle may at the time be located, the
Administrator and the Owner Trustee acting jointly shall at any time have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Owner Trustee to act as co-trustee, jointly with the
Owner Trustee, or separate trustee or separate trustees, of all or any part of
the Owner Trust Estate, and to vest in such Person, in such capacity, such title
to the Trust, or any part thereof, and, subject to the other provisions of this
Section 10.5, such powers, duties, obligations, rights and trusts as the
Administrator and the Owner Trustee may consider necessary or desirable. If the
Administrator shall not have joined in such appointment within fifteen (15) days
after the receipt by it of a request so to do, the Owner Trustee alone shall
have the power to make such appointment. No co-trustee or separate trustee under
this Agreement shall be required to meet the terms of eligibility as a successor
trustee pursuant to Section 10.1 and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
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(i) all rights, powers, duties, and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed
by the Owner Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not authorized
to act separately without the Owner Trustee joining in such act), except to
the extent that under any law of any jurisdiction in which any particular
act or acts are to be performed, the Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties, and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate trustee or co-trustee, but solely at
the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(iii) the Administrator and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article X. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Supplements and Amendments. (a) This Agreement may be
amended by the Depositor and the Owner Trustee, with prior written notice to the
Rating Agencies, without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement inconsistent with any other provision of this
Agreement or for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions in this Agreement; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel
satisfactory to the Owner Trustee and the Indenture Trustee adversely affect in
any material respect the interests of any Noteholder or Certificateholder and
provided further that an Opinion of Counsel shall be furnished to the Indenture
Trustee and the Owner Trustee to the effect that such amendment (A) will not
materially adversely affect the Federal or any Applicable Tax State income or
franchise taxation of any outstanding Note or Certificate, or any Holder thereof
and (B) will not cause the Trust to be taxable as a corporation for Federal or
any Applicable Tax State income or franchise tax purposes.
(b) This Agreement may also be amended from time to time by the
Depositor and the Owner Trustee, with prior written notice to the Rating
Agencies, with the consent of the Holders (as defined in the Indenture) of Notes
evidencing not less than 51% of the aggregate principal amount of the then
outstanding Notes, voting as a group, and the consent of the Holders of
Certificates evidencing not less than 51% of the Certificate Balance, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Noteholders or the Certificateholders; provided, however, that no such
amendment shall (i) 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 Note Interest Rate, or (ii)
reduce the aforesaid percentage of the principal amount of the then outstanding
Notes and the Certificate Balance required to consent to any such amendment,
without the consent of the holders of all the outstanding Notes and Certificates
affected thereby or (iii) adversely affect the ratings of any Class of Notes by
the Rating Agencies without the consent, respectively, of holders of Notes
evidencing not less than 66 2/3% of the aggregate principal amount of the then
outstanding Notes of such Class; and provided further that an Opinion of Counsel
shall be
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furnished to the Indenture Trustee and the Owner Trustee to the effect that such
amendment (A) will not materially adversely affect the Federal or any Applicable
Tax State income or franchise taxation of any outstanding Note or Certificate,
or any Holder thereof and (B) will not cause the Trust to be taxable as a
corporation for Federal or any Applicable Tax State income or franchise tax
purposes.
(c) Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and each
of the Rating Agencies.
(d) It shall not be necessary for the consent of Certificateholders,
the Noteholders or the Indenture Trustee pursuant to this Section 11.1 to
approve the particular form of any proposed amendment or consent, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents (and any other consents of Certificateholders provided
for in this Agreement or in any other Basic Document) and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Owner Trustee may prescribe.
(e) Promptly after the execution of any amendment to the Certificate
of Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
(f) The Owner Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.
(g) Prior to the execution of any amendment to this Trust Agreement or
any amendment to any other agreement to which the Issuer is a party, the Owner
Trustee shall be entitled to receive and conclusively rely upon an Opinion of
Counsel to the effect that such amendment is authorized or permitted by the
Basic Documents and that all conditions precedent in the Basic Documents for the
execution and delivery thereof by the Issuer or the Owner Trustee, as the case
may be, have been satisfied.
SECTION 11.2. No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions
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with respect to their undivided beneficial interest therein only in accordance
with Articles V and IX. No transfer, by operation of law or otherwise, of any
right, title, or interest of the Certificateholders to and in their beneficial
interest in the Owner Trust Estate shall operate to terminate this Agreement or
the trusts hereunder or entitle any transferee to an accounting or to the
transfer to it of legal title to any part of the Owner Trust Estate.
SECTION 11.3. Limitation on Rights of Others. Except for Section 2.7,
the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Depositor, the Administrator, the Certificateholders the Servicer
and, to the extent expressly provided herein, the Indenture Trustee and the
Noteholders, and nothing in this Agreement (other than Section 2.7), whether
express or implied, shall be construed to give to any other Person any legal or
equitable right, remedy or claim in the Owner Trust Estate or under or in
respect of this Agreement or any covenants, conditions or provisions contained
herein.
SECTION 11.4. Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt by the intended recipient or three Business Days after
mailing if mailed by certified mail, postage prepaid (except that notice to the
Owner Trustee shall be deemed given only upon actual receipt by the Owner
Trustee), if to the Owner Trustee, addressed to the Corporate Trust Office; if
to the Depositor, addressed to MMCA Auto Receivables, Inc. at the address of its
principal executive office first above written; or, as to each party, at such
other address as shall be designated by such party in a written notice to each
other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
SECTION 11.5. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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SECTION 11.6. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Depositor, the Owner Trustee and its successors and each Certificateholder and
its successors and permitted assigns, all as herein provided. Any request,
notice, direction, consent, waiver or other instrument or action by a
Certificateholder shall bind the successors and assigns of such
Certificateholder.
SECTION 11.8. Covenants of the Depositor. In the event that (a) the
principal balance of Receivables underlying the Certificates shall be reduced by
Realized Losses and (b) any litigation with claims in excess of $1,000,000 to
which the Depositor is a party which shall be reasonably likely to result in a
material judgment against the Depositor that the Depositor will not be able to
satisfy shall be commenced by a Certificateholder, during the period beginning
nine (9) months following the commencement of such litigation and continuing
until such litigation is dismissed or otherwise terminated (and, if such
litigation has resulted in a final judgment against the Depositor, such judgment
has been satisfied), the Depositor shall not pay any dividend to MMCA, or make
any distribution on or in respect of its capital stock to MMCA, or repay the
principal amount of any indebtedness of the Depositor held by MMCA, unless (i)
after giving effect to such payment, distribution or repayment, the Depositor's
liquid assets shall not be less than the amount of actual damages claimed in
such litigation or (ii) the Rating Agency Condition shall have been satisfied
with respect to any such payment, distribution or repayment. The Depositor will
not at any time institute against the Trust any bankruptcy proceedings under any
United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Certificates, the Notes, this Agreement or any of
the other Basic Documents.
SECTION 11.9. No Petition. The Owner Trustee (not in its individual
capacity but solely as Owner Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Certificate,, and the Indenture Trustee and
each Noteholder by accepting the benefits of this Agreement, hereby covenant and
agree that they will not at any time institute against the Depositor or the
Trust, or join in any institution against the Depositor or the Trust of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any
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United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Certificates, the Notes, this Agreement or any of
the other Basic Documents.
SECTION 11.10. No Recourse. Each Certificateholder, by accepting a
Certificate, acknowledges that such Certificateholder's Certificates, as the
case may be, represent beneficial interests in the Trust only and do not
represent interests in or obligations of the Depositor, the Servicer, the
Administrator, the Owner Trustee, the Indenture Trustee or any Affiliate
thereof, and no recourse may be had against such parties or their assets, except
as may be expressly set forth or contemplated in this Agreement, the
Certificates, or the other Basic Documents.
SECTION 11.11. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.12. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Delaware and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
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IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Trust Agreement to be duly executed by their respective officers
hereunto duly authorized, as of the day and year first above written.
MMCA AUTO RECEIVABLES, INC.,
as Depositor
By:
-----------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Owner Trustee
By:
-----------------------------
Name:
Title:
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EXHIBIT A
NUMBER $[ ]
R-1
THIS CERTIFICATE MAY
NOT BE TRANSFERRED
BY A STOCK POWER BUT
ONLY AS SET FORTH
BELOW.
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE
SECURITIES OR BLUE SKY LAW OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF,
BY PURCHASING THIS CERTIFICATE, AGREES FOR THE BENEFIT OF THE TRUST AND THE
DEPOSITOR THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN A DENOMINATION OF AT LEAST $1,000,000, ONLY IN COMPLIANCE
WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS, AND ONLY (1) PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, WITHIN THE MEANING OF
RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB,
WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE, OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, SUBJECT TO (A) THE
RECEIPT BY THE TRUST AND THE CERTIFICATE REGISTRAR OF A CERTIFICATE
SUBSTANTIALLY IN THE FORM ATTACHED AS EXHIBIT D TO THE TRUST AGREEMENT REFERRED
TO BELOW AND (B) THE RECEIPT BY THE TRUST AND THE CERTIFICATE REGISTRAR OF A
LETTER SUBSTANTIALLY IN THE FORM ATTACHED AS EXHIBIT E TO THE TRUST AGREEMENT,
(2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), SUBJECT TO THE RECEIPT BY THE TRUST AND THE
CERTIFICATE REGISTRAR OF SUCH EVIDENCE ACCEPTABLE TO THE
A-1
<PAGE>
TRUST THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
TRUST AGREEMENT AND THE SECURITIES ACT AND OTHER APPLICABLE LAWS, (3) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO
ANY OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO (A) THE RECEIPT BY THE TRUST AND THE CERTIFICATE REGISTRAR OF A
LETTER SUBSTANTIALLY IN THE FORM ATTACHED AS EXHIBIT F TO THE TRUST AGREEMENT OR
(B) THE RECEIPT BY THE TRUST AND THE CERTIFICATE REGISTRAR OF SUCH OTHER
EVIDENCE ACCEPTABLE TO THE TRUST THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER
IS IN COMPLIANCE WITH THE TRUST AGREEMENT AND THE SECURITIES ACT AND OTHER
APPLICABLE LAWS, OR (4) TO THE DEPOSITOR OR ITS AFFILIATES, IN EACH CASE IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND
SECURITIES AND BLUE SKY LAWS OF THE STATES OF THE UNITED STATES. IN ADDITION,
EXCEPT IN THE CASE OF TRANSFERS TO EXISTING CERTIFICATEHOLDERS, THIS CERTIFICATE
MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY WITH THE EXPRESS
WRITTEN CONSENT OF THE DEPOSITOR (WHICH CONSENT MAY BE WITHHELD FOR ANY REASON
OR FOR NO REASON).
THE PRINCIPAL OF THIS CERTIFICATE IS DISTRIBUTABLE AS SET FORTH IN THE
TRUST AGREEMENT. ACCORDINGLY, THE OUTSTANDING PRINCIPAL OF THIS CERTIFICATE AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
A-2
<PAGE>
MMCA AUTO OWNER TRUST 1998-1
ASSET BACKED CERTIFICATE
evidencing a beneficial interest in the property of the Trust, as defined below,
which property includes a pool of retail installment sales contracts secured by
new and used automobiles and light- or medium-duty trucks sold to MMCA Auto
Receivables, Inc. by Mitsubishi Motors Credit of America, Inc. and sold by MMCA
Auto Receivables, Inc. to the Trust. The property of the Trust (other than the
Certificate Distribution Account and the proceeds thereof) has been pledged to
the Indenture Trustee pursuant to the Indenture to secure the payment of the
Notes issued thereunder.
(This Certificate does not represent an interest in or obligation of Mitsubishi
Motors Credit of America, Inc., MMCA Auto Receivables, Inc. or any of their
respective affiliates, except to the extent described below.)
THIS CERTIFIES THAT MMCA AUTO RECEIVABLES, INC. is the registered
owner of a [ ] nonassessable, fully-paid, beneficial interest in Certificates of
MMCA Auto Owner Trust 1998-1 (the "Trust") formed by MMCA Auto Receivables,
Inc., a Delaware corporation (the "Depositor"). The Certificates have an
aggregate Initial Certificate Balance of $[ ].
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
Dated: August , 1998
WILMINGTON TRUST COMPANY WILMINGTON TRUST COMPANY
as Owner Trustee or as Owner Trustee
By: By: WILMINGTON TRUST COMPANY
---------------------
Authorized Officer as Authenticating Agent
By:
------------------------
Authorized Officer
A-3
<PAGE>
The Trust was created pursuant to an Amended and Restated Trust
Agreement, dated as of August 1, 1998 (as amended, supplemented or otherwise
modified and in effect from time to time, the "Trust Agreement"), by and between
the Depositor and Wilmington Trust Company, as owner trustee (the "Owner
Trustee"), a summary of certain of the pertinent provisions of which is set
forth below. To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in the Trust Agreement or the
Sale and Servicing Agreement, dated as of August 1, 1998 (as amended,
supplemented or otherwise modified and in effect from time to time, the "Sale
and Servicing Agreement"), by and among the Trust, the Depositor, as seller (in
such capacity, the "Seller"), and Mitsubishi Motors Credit of America, Inc., as
servicer (the "Servicer"), as applicable.
This Certificate is one of the duly authorized Certificates designated
as "Asset Backed Certificates" (herein called the "Certificates"). This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the Holder of this
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound. The property of the Trust includes (i) a pool of retail installment
sales contracts for new and used automobiles and light- or medium-duty trucks
and certain rights and obligations thereunder (the "Receivables"), (ii) with
respect to Actuarial Receivables, monies due thereunder on or after the Cutoff
Date (including Payaheads) and, with respect to Simple Interest Receivables,
monies due or received thereunder on or after the Cutoff Date; (iii) the
security interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of the Trust in the Financed Vehicles; (iv)
rights to receive proceeds with respect to the Receivables from claims on any
physical damage, theft, credit life or disability insurance policies covering
the Financed Vehicles or Obligors; (v) rights to receive proceeds with respect
to the Receivables from recourse to Dealers thereon pursuant to the Dealer
Agreements; (vi) all of the Seller's rights to the Receivable Files; (vii) the
Trust Accounts, the Certificate Distribution Account, the Reserve Account, the
Supplemental Reserve Account and the Yield Supplement Account and all amounts,
securities, investments in financial assets and other property deposited in or
credited to any of the foregoing and all proceeds thereof; (viii) all of the
Seller's rights under the Yield Supplement Agreement and the Purchase Agreement,
including the right of the Seller to cause MMCA to repurchase Receivables from
the Seller; (ix) payments and proceeds with respect to the Receivables held by
the Servicer; (x) all property (including the right to receive Liquidation
Proceeds and Recoveries and Financed Vehicles and the proceeds thereof acquired
by the Trust pursuant to the terms of the Final Payment Receivables), guarantees
and other collateral securing a Receivable (other than a Receivable repurchased
by the Servicer or purchased by the Seller); (xi) rebates of premiums and other
A-4
<PAGE>
amounts relating to insurance policies and other items financed under the
Receivables in effect as of the Cutoff Date; and (xii) all present and future
claims, demands, causes of action and choses in action in respect of any or all
of the foregoing and all payments on or under and all proceeds of every kind and
nature whatsoever in respect of any or all of the foregoing, including all
proceeds of the conversion thereof, voluntary or involuntary, into cash or other
liquid property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind and other
forms of obligations and receivables, instruments and other property which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing. The rights of the Trust in the foregoing property of the Trust (other
than the Certificate Distribution Account and the proceeds thereof) have been
pledged to the Indenture Trustee to secure the payment of the Notes.
Under the Trust Agreement, there will be distributed on the fifteenth
day of each month or, if such fifteenth day is not a Business Day, the next
Business Day (each, a "Payment Date"), commencing September 15, 1998, to the
Person in whose name this Certificate is registered at the close of business on
the fourteenth day of such calendar month (the "Record Date") such
Certificateholder's percentage interest in the amount to be distributed to
Certificateholders on such Payment Date; provided, however, that principal will
be distributed to the Certificateholders on each Payment Date (to the extent of
funds remaining after the Total Servicing Fee, all required payments on Notes
and any required deposit to the Reserve Account and the Supplemental Reserve
Account have been made on such Payment Date). Notwithstanding the foregoing,
following the occurrence and during the continuation of an Event of Default
under the Indenture which has resulted in an acceleration of the Notes or
following certain events of insolvency with respect to the Depositor, no
distributions of principal or interest will be made on the Certificates until
all the Notes have been paid in full.
The Holder of this Certificate acknowledges and agrees that its rights
to receive distributions in respect of this Certificate are subordinated to the
rights of the Noteholders as described in the Sale and Servicing Agreement, the
Indenture and the Trust Agreement.
It is the intent of the Depositor, the Servicer and the
Certificateholders that, for purposes of Federal income, state and local income
tax and any other income taxes, the Trust will be treated as a partnership and
the Certificateholders (including the Depositor) will be treated as partners in
that partnership. The Depositor and the other Certificateholders by acceptance
of a Certificate, agree to treat, and to take no action
A-5
<PAGE>
inconsistent with the treatment of, the Certificates for such tax purposes as
partnership interests in the Trust.
Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
the Depositor or the Trust, or join in any institution against the Depositor or
the Trust of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Notes, the Certificates, the Trust Agreement or any of the other Basic
Documents.
Distributions on this Certificate will be made as provided in the
Trust Agreement by the Owner Trustee or the Paying Agent by wire transfer or
check mailed to the Certificateholder of record in the Certificate Register
without the presentation or surrender of this Certificate or the making of any
notation hereon. Except as otherwise provided in the Trust Agreement and
notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Owner Trustee of the pendency of such distribution
and only upon presentation and surrender of this Certificate at the office or
agency maintained for the purpose by the Owner Trustee in Wilmington, Delaware.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual signature,
this Certificate shall not entitle the Holder hereof to any benefit under the
Trust Agreement or the Sale and Servicing Agreement or be valid for any purpose.
This Certificate shall be construed in accordance with the laws of the
State of Delaware, and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
A-6
<PAGE>
In WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Certificate to be duly executed.
MMCA AUTO OWNER TRUST 1998-1
By: WILMINGTON TRUST COMPANY, not
in its individual capacity but solely as
Owner Trustee
By:
---------------------------------
Authorized Officer
A-7
<PAGE>
[REVERSE OF CERTIFICATE]
The Certificates do not represent an obligation of, or an interest in,
the Depositor, the Servicer, the Administrator, the Owner Trustee or any
Affiliates of any of them and no recourse may be had against such parties or
their assets, except as may be expressly set forth or contemplated herein, in
the Trust Agreement or in the other Basic Documents. In addition, this
Certificate is not guaranteed by any governmental agency or instrumentality and
is limited in right of payment to certain collections with respect to the
Receivables (and certain other amounts), all as more specifically set forth
herein and in the Sale and Servicing Agreement. The Trust will furnish, upon the
request of any holder of a Certificate, such information as is specified in
paragraph (d)(4) of Rule 144A of the Securities Act of 1933, as amended with
respect to the Trust. A registration statement, which includes the Trust
Agreement as an exhibit thereto, has been filed with the Securities and Exchange
Commission with respect to the Notes of the Trust issued concurrently with this
Certificate.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Trust Agreement at
any time by the Depositor and the Owner Trustee with the consent of the Holders
of the Notes and the Holders of the Certificates each voting as a class
evidencing not less than a majority of the principal amount of the then
outstanding Notes and the Certificate Balance, respectively. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and on all future Holders of this Certificate and of any Certificate issued upon
the registration of Transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such consent is made upon this Certificate. The Trust
Agreement also permits the amendment thereof, in certain limited circumstances,
without the consent of the Holders of any of the Certificates.
This Certificate may be Transferred only under the circumstances
described in Section 3.4 of the Trust Agreement, which, among other things,
requires that each prospective transferee represent in writing in the form
provided as an exhibit to the Trust Agreement that it will not acquire or
Transfer the Certificates through an established securities market, is not and
will not become, except in certain circumstances, a partnership, Subchapter S
corporation or grantor trust for U.S. Federal income tax purposes, and will not
acquire the Certificates for or on behalf of an employee benefit plan, except in
certain limited circumstances. Any attempted Transfer in contravention of the
restrictions and conditions of Section 3.4 of the Trust Agreement
A-8
<PAGE>
shall be null and void. As provided in the Trust Agreement, the Transfer of this
Certificate is registerable in the Certificate Register upon surrender of this
Certificate for registration of Transfer at the offices or agencies of the
Certificate Registrar maintained by the Owner Trustee in Wilmington, Delaware,
accompanied by the written representations required by the Trust Agreement and,
if the Depositor has consented to such transfer, a written instrument of
transfer in form satisfactory to the Certificate Registrar duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of authorized denominations evidencing
the same aggregate interest in the Trust will be issued to the designated
transferee. The initial Certificate Registrar appointed under the Trust
Agreement is Wilmington Trust Company.
Except for Certificates issued to the Depositor, the Certificates are
issuable only as registered Certificates without coupons in denominations of
$1,000,000 and in integral multiples of $1,000 in excess thereof. Certificates
are exchangeable for new Certificates of authorized denominations evidencing the
same aggregate denomination, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of Transfer or
exchange, but the Owner Trustee or the Certificate Registrar may require payment
of a sum sufficient to cover any tax or governmental charge payable in
connection therewith.
The Owner Trustee, the Certificate Registrar and any agent of the
Owner Trustee or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Owner Trustee, the Certificate Registrar or any such agent shall be affected
by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement
and the Trust created thereby shall terminate upon the payment to the
Noteholders and the Certificateholders of all amounts required to be paid to
them pursuant to the Indenture, the Trust Agreement and the Sale and Servicing
Agreement and any remaining assets of the Trust shall be distributed to the
Depositor, in its capacity as Depositor. The Servicer of the Receivables may at
its option purchase the assets of the Trust at a price specified in the Sale and
Servicing Agreement, and such purchase of the Receivables and other property of
the Trust will effect early retirement of the Notes and the Certificates;
however, such right of purchase is exercisable only as of the last day of any
Collection Period as of which the Pool Balance is less than or equal to 10% of
the Initial Pool Balance.
A-9
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
- --------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney to transfer said
- ----------------------------------------------Certificate on the books of the
Certificate Registrar, with full power of substitution in the premises.
Dated:
*/
-------------------------------
Signature Guaranteed:
*/
*/ NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration,
A-10
<PAGE>
enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
A-11
<PAGE>
EXHIBIT B
[RESERVED]
B-1
<PAGE>
EXHIBIT C
[FORM OF CERTIFICATE OF TRUST]
CERTIFICATE OF TRUST OF
MMCA AUTO OWNER TRUST 1998-1
----------------------------
This Certificate of Trust of MMCA AUTO OWNER TRUST 1998-1 (the
"Trust") is being duly executed and filed by the Undersigned as trustee, to form
a business trust under the Delaware Business Trust Act (12 Del. Code, Section
3801 et seq.) (the "Act").
1. Name. The name of the business trust formed hereby is MMCA AUTO
OWNER TRUST 1998-1.
2. Delaware Trustee. The name and business address of the trustee of
the Trust in the State of Delaware is Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration.
3. Effective Date. This Certificate of Trust shall be effective upon
filing.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust in accordance with Section 3811 of
the Act.
Wilmington, Trust Company
as trustee
By:
----------------------------
Name:
Title:
C-1
<PAGE>
EXHIBIT D
[FORM OF RULE 144A TRANSFEROR CERTIFICATE]
[Date]
Wilmington Trust Company
as Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Wilmington Trust Company
as Certificate Registrar
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Ladies and Gentlemen:
This is to notify you as to the transfer of $ [(*)] in denomination of
Asset Backed Certificates (the "Certificates") of MMCA Auto Owner Trust 1998-1
(the "Issuer").
The undersigned is the holder of the Certificates and with this
notice hereby deposits with the Owner Trustee $ [*] in denomination of
Certificates and requests that Certificates in the same aggregate
denomination be issued, executed and authenticated and registered to the
purchaser on , , as specified in the Amended and Restated Trust
Agreement dated as of August 1, 1998 relating to the Certificates, as follows:
Name: Denominations: [*]
Address:
Taxpayer I.D. No:
The undersigned represents and warrants that the undersigned (i)
reasonably believes the purchaser is a "qualified institutional buyer," as
defined in Rule 144A under the Securities Act
- ----------------------------
[(*) minimum of $1,000,000]
D-1
<PAGE>
of 1933 (the "Act"), (ii) such purchaser has acquired the Certificates in a
transaction effected in accordance with the exemption from the registration
requirements of the Act provided by Rule 144A and, (iii) if the purchaser has
purchased the Certificates for one or more accounts for which it is acting as
fiduciary or agent, (A) each such account is a qualified institutional buyer and
(B) the purchaser is acquiring Certificates for its own account or for one or
more institutional accounts for which it is acting as fiduciary or agent in a
minimum amount equivalent to at least $1,000,000 for each such account.
Very truly yours,
[NAME OF HOLDER
OF CERTIFICATES]
By:
----------------------------------
Name:
Title:
D-2
<PAGE>
EXHIBIT E
[FORM OF INVESTMENT LETTER --
QUALIFIED INSTITUTIONAL BUYER]
[Date]
MMCA Auto Owner Trust 1997-1
as Issuer
Wilmington Trust Company
as Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Wilmington Trust Company
as Certificate Registrar
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Ladies and Gentlemen:
In connection with our proposed purchase of the Asset Backed
Certificates (the "Certificates") of MMCA Auto Owner Trust 1998-1 (the
"Issuer"), a trust formed by MMCA Auto Receivables, Inc. (the "Depositor" or
"Seller"), we confirm that:
1. We agree to be bound by the restrictions and conditions set forth
in the Amended and Restated Trust Agreement dated as of August 1, 1998 (the
"Trust Agreement") relating to the Certificates and we agree to be bound by, and
not to resell, transfer, assign, participate, pledge, or otherwise dispose of
(any such act, a "Transfer") the Certificates except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended (the
"Securities Act").
2. We have neither acquired nor will we Transfer any Certificate we
purchase (or any interest therein) or cause any such Certificates (or any
interest therein) to be marketed on or through an "established securities
market" within the meaning of section 7704(b)(1) of the Internal Revenue Code of
1986, as amended (the "Code"), including, without limitation, an
over-the-counter-market or an interdealer quotation system that regularly
disseminates firm buy or sell quotations.
E-1
<PAGE>
3. We either (a) are not, and will not become, a partnership,
Subchapter S corporation, or grantor trust for U.S. Federal income tax purposes
or (b) are such an entity, but none of the direct or indirect beneficial owners
of any of the interests in us have allowed or caused, or will allow or cause,
80% or more (or such other percentage as the Seller may establish prior to the
time of such proposed Transfer) of the value of such interests to be
attributable to our ownership of Certificates.
4. We understand that no subsequent Transfer of the Certificates is
permitted unless (i) such Transfer is of a Certificate with a denomination of at
least $1,000,000 and (ii) the Depositor consents in writing (which consent may
be withheld for any reason or for no reason) to the proposed Transfer; provided,
however, that no such consent shall be required where the proposed transferee
is, and at the time of the Transfer will be, a holder of a Certificate.
5. We understand that the opinion of tax counsel that the Issuer is
not a publicly traded partnership taxable as a corporation is dependent in part
on the accuracy of the representations in paragraphs 2, 3 and 4.
6. We are a "qualified institutional buyer" (within the meaning of
Rule 144A under the Securities Act) (a "QIB") and we are acquiring the
Certificates for our own account or for the account of a QIB for investment
purposes and not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act, and have such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of our investment in the Certificates, and we and any accounts
for which we are acting are each able to bear the economic risk of our or their
investment. We acknowledge that the sale of the Certificates to us is being made
in reliance on Rule 144A.
7. We are acquiring each of the Certificates purchased by us for our
own account or for a single account (which is a QIB and from which no resale,
pledge, or other transfer may be made) as to which we exercise sole investment
discretion.
8. We are not (A) an employee benefit plan (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to Title I of ERISA, (B) a plan described in
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the
"Code"), (C) a governmental plan, as defined in Section 3(32) of ERISA,
subject to any Federal, state or local law which is, to a material extent,
similar to the provisions of Section 406 of ERISA or Section 4975 of the
Code, (D) an entity whose underlying assets include plan assets by reason of
a plan's investment in the entity (within the meaning of Department of Labor
Regulation 29 C.F.R. Section 2510.3-101) or (E) a person investing "plan
assets" of any such plan (excluding, for purposes of this clause (E), any
entity registered under the Investment Company Act of 1940, as amended).
E-2
<PAGE>
9. We are a person who is either (A) (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity organized in or
under the laws of the United States or any political subdivision thereof or
(iii) a person not described in (i) or (ii) whose ownership of the Certificates
is effectively connected with such person's conduct of a trade or business
within the United States (within the meaning of the Code) and who provides the
Depositor and the Issuer an IRS Form 4224 (and such other certifications,
representations or opinions of counsel as may be requested by the Depositor or
the Issuer) or (B) an estate or trust the income of which is includible in gross
income for United States Federal income tax purposes, regardless of source.
10. We understand that any purported Transfer of any Certificate (or
any interest therein) in contravention of the restrictions and conditions
(including any violation of the representation in paragraph 3 by an investor who
continues to hold such Certificates occurring any time after the Transfer in
which it acquired such Certificates) in paragraphs 1 through 9 above shall be
null and void (each, a "Void Transfer"), and the purported transferee in a Void
Transfer shall not be recognized by the Issuer or any other person as a
Certificateholder for any purpose.
11. We agree that if we determine to Transfer any of the Certificates
we will cause our proposed transferee to provide to the Issuer and the
Certificate Registrar a letter substantially in the form of this Exhibit F or
Exhibit G to the Trust Agreement, as applicable.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
By:
----------------------------------
Name:
Title:
Securities To Be Purchased:
$ principal balance of Certificates
E-3
<PAGE>
EXHIBIT F
[FORM OF INVESTMENT LETTER --
INSTITUTIONAL ACCREDITED INVESTOR]
[Date]
MMCA Auto Owner Trust 1998-1
as Issuer
Wilmington Trust Company
as Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Wilmington Trust Company
as Certificate Registrar
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Ladies and Gentlemen:
In connection with our proposed purchase of the Asset Backed
Certificates (the "Certificates") of MMCA Auto Owner Trust 1998 (the "Issuer"),
a trust formed by MMCA Auto Receivables, Inc. (the "Depositor" or "Seller"), we
confirm that:
1. We agree to be bound by the restrictions and conditions set forth
in the Amended and Restated Trust Agreement dated as of August 1, 1998 (the
"Trust Agreement") relating to the Certificates and we agree to be bound by, and
not to resell, transfer, assign, participate, pledge, or otherwise dispose of
(any such act, a "Transfer") the Certificates except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended (the
"Securities Act").
2. We have neither acquired nor will we Transfer any Certificate we
purchase (or any interest therein) or cause any such Certificates (or any
interest therein) to be marketed on or through an "established securities
market" within the meaning of section 7704(b)(1) of the Internal Revenue Code of
1986, as amended (the "Code"), including, without limitation, an
over-the-counter-market or an interdealer quotation system that regularly
disseminates firm buy or sell quotations.
3. We either (a) are not, and will not become, a partnership,
Subchapter S corporation, or grantor trust for U.S. Federal income tax purposes
or (b) are such an entity, but none of the direct or indirect beneficial owners
of any of the interests in us have allowed or caused, or will allow or cause,
80% or more (or such other percentage as the Depositor may establish prior to
the time of such proposed Transfer) of the value of such interests to be
attributable to our ownership of Certificates.
F-1
<PAGE>
4. We understand that no subsequent Transfer of the Certificates is
permitted unless (i) such Transfer is of a Certificate with a denomination of at
least $1,000,000 and (ii) the Depositor consents in writing (which consent may
be withheld for any reason or for no reason) to the proposed Transfer; provided,
however, that no such consent shall be required where the proposed transferee
is, and at the time of the Transfer will be, a holder of a Certificate.
5. We understand that the opinion of tax counsel that the Issuer is
not a publicly traded partnership taxable as a corporation is dependent in part
on the accuracy of the representations in paragraphs 2, 3 and 4 and that in
addition to being subject to having its purchase rescinded, it will be liable
for damages.
6. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) and we are acquiring the
Certificates for investment purposes and not with a view to, or for offer or
sale in connection with, any distribution in violation of the Securities Act,
and have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Certificates, and we and any accounts for which we are acting are each able to
bear the economic risk of our or their investment.
7. We are acquiring each of the Certificates purchased by us for our
own account or for a single account (each of which is an institutional
"accredited investor" and from which no resale, pledge or other transfer may be
made) as to which we exercise sole investment discretion.
8. We are not (A) an employee benefit plan (as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
that is subject to Title I of ERISA, (B) a plan described in Section 4975(e)(1)
of the Internal Revenue Code of 1986, as amended (the "Code"), (C) a
governmental plan, as defined in Section 3(32) of ERISA, subject to any Federal,
state or local law which is, to a material extent, similar to the provisions of
Section 406 of ERISA or Section 4975 of the Code, (D) an entity whose underlying
assets include plan assets by reason of a plan's investment in the entity
(within the meaning of Department of Labor Regulation 29 C.F.R. Section
2510.3-101) or (E) a person investing "plan assets" of any such plan
(excluding, for purposes of this clause (E), any entity registered under the
Investment Company Act of 1940, as amended).
9. We are a person who is either (A) (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity organized in or
under the laws of the United States or any political subdivision thereof or
(iii) a person not described in (i) or (ii) whose ownership of the Certificates
is effectively connected with such person's conduct of a trade or business
within the United States (within the meaning of the Code) and who provides the
Depositor and the Issuer an IRS Form 4224 (and such other certifications,
representations or opinions of counsel as may be requested
F-2
<PAGE>
by the Depositor or the Issuer) or (B) an estate or trust the income of which is
includible in gross income for United States Federal income tax purposes,
regardless of source.
10. We understand that any purported Transfer of any Certificate (or
any interest therein) in contravention of the restrictions and conditions
(including any violation of the representation in paragraph 3 by an investor who
continues to hold such Certificates occurring any time after the Transfer in
which it acquired such Certificates) in paragraphs 1 through 9 above shall be
null and void (each, a "Void Transfer"), and the purported transferee in a Void
Transfer shall not be recognized by the Issuer or any other person as a
Certificateholder for any purpose.
11. We agree that if we determine to Transfer any of the Certificates,
we will cause our proposed transferee to provide to the Issuer and the
Certificate Registrar a letter substantially in the form of this Exhibit F or
Exhibit E to the Trust Agreement, as applicable.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
By:
----------------------------------
Name:
Title:
F-3
<PAGE>
Exhibit 4.2
================================================================================
SALE AND SERVICING AGREEMENT
BY AND AMONG
MMCA AUTO OWNER TRUST 1998-1,
as Issuer,
MMCA AUTO RECEIVABLES, INC.,
as Seller
AND
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.,
as Servicer
Dated as of August 1, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . 1
SECTION 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Other Definitional Provisions. . . . . . . . . . . . . . 25
SECTION 1.3. Business Day Certificate . . . . . . . . . . . . . . . . 25
ARTICLE II
TRUST PROPERTY . . . . . . . . . . . . . 27
SECTION 2.1. Conveyance of Trust Property . . . . . . . . . . . . . . 27
SECTION 2.2. Representations and Warranties of the Seller as to the
Receivables. . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.3. Repurchase upon Breach . . . . . . . . . . . . . . . . . 33
SECTION 2.4. Custody of Receivable Files. . . . . . . . . . . . . . . 33
SECTION 2.5. Duties of Servicer as Custodian. . . . . . . . . . . . . 34
SECTION 2.6. Instructions; Authority to Act . . . . . . . . . . . . . 35
SECTION 2.7. Custodian's Indemnification. . . . . . . . . . . . . . . 36
SECTION 2.8. Effective Period and Termination . . . . . . . . . . . . 36
ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND TRUST PROPERTY . . . . . . . . . 38
SECTION 3.1. Duties of Servicer . . . . . . . . . . . . . . . . . . . 38
SECTION 3.2. Collection and Allocation of Receivable Payments . . . . 42
SECTION 3.3. Realization upon Receivables . . . . . . . . . . . . . . 44
SECTION 3.4. Physical Damage Insurance. . . . . . . . . . . . . . . . 45
SECTION 3.5. Maintenance of Security Interests in Financed Vehicles . 45
SECTION 3.6. Covenants of Servicer. . . . . . . . . . . . . . . . . . 45
SECTION 3.7. Purchase by Servicer upon Breach . . . . . . . . . . . . 46
SECTION 3.8. Servicing Compensation . . . . . . . . . . . . . . . . . 46
i
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Page
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SECTION 3.9. Servicer's Certificate . . . . . . . . . . . . . . . . . 47
SECTION 3.10. Annual Statement as to Compliance; Notice of Event of
Servicing Termination. . . . . . . . . . . . . . . . . . 47
SECTION 3.11. Annual Independent Certified Public Accountants'
Reports. . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 3.12. Access to Certain Documentation and Information
Regarding Receivables. . . . . . . . . . . . . . . . . . 49
SECTION 3.13. Reports to the Commission. . . . . . . . . . . . . . . . 49
SECTION 3.14. Reports to Rating Agencies . . . . . . . . . . . . . . . 49
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS
AND NOTEHOLDERS . . . . . . . . . . . . . 50
SECTION 4.1. Accounts . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 4.2. Collections. . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 4.3. Application of Collections . . . . . . . . . . . . . . . 55
SECTION 4.4. Advances . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 4.5. Additional Deposits. . . . . . . . . . . . . . . . . . . 58
SECTION 4.6. Allocation of Available Funds. . . . . . . . . . . . . . 59
SECTION 4.7. Reserve Account; Supplemental Reserve Account. . . . . . 60
SECTION 4.8. Net Deposits . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 4.9. Statements to Noteholders and Certificateholders . . . . 63
SECTION 4.10. Control of Securities Accounts . . . . . . . . . . . . . 65
ARTICLE V
YIELD SUPPLEMENT LETTER OF CREDIT. . . . . . . . . 66
SECTION 5.1. Yield Supplement Letter of Credit and the Yield
Supplement Account . . . . . . . . . . . . . . . . . . . 66
ii
<PAGE>
Page
----
ARTICLE VI
THE SELLER . . . . . . . . . . . . . . 70
SECTION 6.1. Representations, Warranties and Covenants of Seller. . . 70
SECTION 6.2. Liability of Seller; Indemnities . . . . . . . . . . . . 72
SECTION 6.3. Merger or Consolidation of, or Assumption of the
Obligations of, Seller . . . . . . . . . . . . . . . . . 73
SECTION 6.4. Limitation on Liability of Seller and Others . . . . . . 74
SECTION 6.5. Seller May Own Notes or Certificates . . . . . . . . . . 74
ARTICLE VII
THE SERVICER. . . . . . . . . . . . . . 75
SECTION 7.1. Representations and Warranties of Servicer . . . . . . . 75
SECTION 7.2. Liability of Servicer; Indemnities . . . . . . . . . . . 76
SECTION 7.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer . . . . . . . . . . . . . . . . 78
SECTION 7.4. Limitation on Liability of Servicer and Others . . . . . 79
SECTION 7.5. Servicer Not to Resign . . . . . . . . . . . . . . . . . 80
SECTION 7.6. Servicer May Own Notes or Certificates . . . . . . . . . 80
ARTICLE VIII
SERVICING TERMINATION. . . . . . . . . . . . 81
SECTION 8.1. Events of Servicing Termination. . . . . . . . . . . . . 81
SECTION 8.2. Indenture Trustee to Act; Appointment of Successor
Servicer . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 8.3. Effect of Servicing Transfer . . . . . . . . . . . . . . 84
SECTION 8.4. Notification to Noteholders and Certificateholders . . . 84
SECTION 8.5. Waiver of Past Events of Servicing Termination . . . . . 85
ARTICLE IX
TERMINATION . . . . . . . . . . . . . . 86
SECTION 9.1. Optional Purchase of All Receivables . . . . . . . . . . 86
iii
<PAGE>
Page
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ARTICLE X
MISCELLANEOUS PROVISIONS. . . . . . . . . . . 88
SECTION 10.1. Amendment. . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 10.2. Protection of Title to Trust . . . . . . . . . . . . . . 89
SECTION 10.3. Governing Law. . . . . . . . . . . . . . . . . . . . . . 92
SECTION 10.4. Notices. . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 10.5. Severability of Provisions . . . . . . . . . . . . . . . 93
SECTION 10.6. Assignment . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 10.7. Further Assurances . . . . . . . . . . . . . . . . . . . 93
SECTION 10.8. No Waiver; Cumulative Remedies . . . . . . . . . . . . . 93
SECTION 10.9. Third-Party Beneficiaries. . . . . . . . . . . . . . . . 94
SECTION 10.10. Actions by Noteholder or Certificateholders. . . . . . . 94
SECTION 10.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 10.12. Agent for Service. . . . . . . . . . . . . . . . . . . . 94
SECTION 10.13. No Bankruptcy Petition . . . . . . . . . . . . . . . . . 94
SECTION 10.14. Limitation of Liability of Owner Trustee and Indenture
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . 95
SCHEDULES
SCHEDULE A Schedule of Receivables
SCHEDULE B Location of Receivable Files
EXHIBITS
EXHIBIT A Servicer's Certificate
EXHIBIT B Report to Noteholders
EXHIBIT C Report to Certificateholders
EXHIBIT D Form of Yield Supplement Agreement
iv
<PAGE>
SALE AND SERVICING AGREEMENT, dated as of August 1, 1998 (as amended,
supplemented or otherwise modified and in effect from time to time, this
"AGREEMENT"), by and among MMCA AUTO OWNER TRUST 1998-1, a Delaware business
trust (the "ISSUER"), MMCA AUTO RECEIVABLES, INC., a Delaware corporation (the
"SELLER"), and MITSUBISHI MOTORS CREDIT OF AMERICA, INC., a Delaware corporation
(the "SERVICER").
WHEREAS, the Issuer desires to purchase a portfolio of receivables
arising in connection with motor vehicle retail installment sale contracts
generated by Mitsubishi Motors Credit of America, Inc. in the ordinary course of
its business and sold to the Seller;
WHEREAS, the Seller is willing to sell such receivables to the Issuer;
and
WHEREAS, Mitsubishi Motors Credit of America, Inc. is willing to
service such receivables on behalf of the Issuer;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, whenever
capitalized shall have the following meanings:
"ACCRUED NOTE INTEREST" shall mean, with respect to any Payment Date
and each Class of Notes, the sum of the Monthly Accrued Note Interest and the
Interest Carryover Shortfall for such Class for such Payment Date.
"ACTUARIAL ADVANCE" shall mean, with respect to an Actuarial
Receivable, the amount, as of the last day of a Collection Period, which is
required
<PAGE>
to be advanced with respect to such Actuarial Receivable by the Servicer
pursuant to Section 4.4(a).
"ACTUARIAL METHOD" shall mean the method of allocating a fixed level
payment on a Receivable between principal and interest, pursuant to which the
portion of such payment that is allocated to interest is the product of
one-twelfth (1/12) of the APR on the Receivable multiplied by the scheduled
principal balance of the Receivable.
"ACTUARIAL RECEIVABLE" shall mean any Receivable under which the
portion of a payment with respect thereto allocable to interest and the portion
of a payment with respect thereto allocable to principal is determined in
accordance with the Actuarial Method.
"ADVANCE" shall mean an Actuarial Advance or a Last Scheduled Payment
Advance, as the context may require.
"AFFILIATE" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For purposes of this definition,
"CONTROL" when used with respect to any specified Person shall mean the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "CONTROLLING" and "CONTROLLED" have meanings correlative to the
foregoing.
"AGREEMENT" shall have the meaning specified in the recitals hereto.
"AMOUNT FINANCED" shall mean, with respect to a Receivable, the
aggregate amount advanced under such Receivable toward the purchase price of the
Financed Vehicle and any related costs.
"APPLICABLE TAX STATE" shall mean, as of any date of determination,
each state as to which any of the following is then applicable: (a) a state in
which the Owner Trustee maintains the Corporate Trust Office, (b) a state in
which the Owner Trustee maintains its principal executive offices, and (c) a
state in which the Servicer regularly conducts servicing and collection
operations other than purely ministerial activities and which relate to a
material portion of the Receivables.
2
<PAGE>
"APR" of a Receivable shall mean the annual percentage rate of
interest stated in the Contract related to such Receivable.
"AUTHORIZED OFFICER" shall mean any officer within the Corporate Trust
Office of the Indenture Trustee or the Owner Trustee, as the case may be,
including any vice president, assistant vice president, secretary, assistant
secretary, financial services officer or any other officer of the Indenture
Trustee or the Owner Trustee, as the case may be, customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject and shall also mean, with respect to the Owner Trustee, any
officer of the Administrator.
"AVAILABLE FUNDS" shall mean, for any Payment Date, an amount equal to
(a) the sum of the following amounts with respect to the related Collection
Period: (i) all collections on Receivables (including amounts withdrawn from the
Payahead Account but excluding amounts deposited into the Payahead Account and
excluding Rule of 78's Payments (and including the proceeds of sale by the
Servicer of any Financed Vehicle upon termination, including a prepayment, of a
Final Payment Receivable)); (ii) all Liquidation Proceeds on Defaulted
Receivables and any Recoveries; (iii) all extension and deferral fees paid with
respect to the Receivables; (iv) the Purchase Amount of each Receivable that
became a Purchased Receivable during the related Collection Period (net of
applicable expenses); (v) all Actuarial Advances and Last Scheduled Payment
Advances; (vi) amounts paid pursuant to the Yield Supplement Agreement
(including amounts, if any, withdrawn from the Yield Supplement Account, the
Supplemental Reserve Account or the Reserve Account pursuant to Section
5.1(a)(ii)); and (vii) partial prepayments attributable to any refunded item
included in the Amount Financed, such as extended warranty protection plan costs
or physical damage, credit life or 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 Cutoff Date; PROVIDED, HOWEVER, that in
calculating the Available Funds, all payments and proceeds (including
Liquidation Proceeds) of any Purchased Receivables the Purchase Amount of which
has been included in the Available Funds in a prior Collection Period (which
shall be paid to the Seller or the Servicer, as applicable) will be excluded,
minus (b) the aggregate amount of funds described in clause (a) above that are
used in the related Collection Period to reimburse the Servicer for the
aggregate amount of Advances that are due and payable to the Servicer on such
Payment Date.
3
<PAGE>
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or
a day on which banking institutions or trust companies in New York, New York,
Wilmington, Delaware or Los Angeles, California shall be authorized or obligated
by law, executive order, or governmental decree to remain closed.
"CAPPED RECEIVABLE" shall mean a Simple Interest Receivable that is
subject to a cap on the aggregate amount of interest to be paid by the related
Obligor during the term of such Receivable.
"CERTIFICATE" shall have the meaning assigned thereto in the Trust
Agreement.
"CERTIFICATE BALANCE" shall mean, as the context so requires, (i) with
respect to all of the Certificates, an amount equal to, initially, the Initial
Certificate Balance and, thereafter, an amount equal to the Initial Certificate
Balance, as reduced from time to time by all amounts allocable to principal
previously distributed to Certificateholders or (ii) with respect to any
Certificate, an amount equal to, initially, the initial denomination of such
Certificate and, thereafter, an amount equal to such initial denomination, as
reduced from time to time by all amounts allocable to principal previously
distributed in respect of such Certificate; provided, that in determining
whether the Holders of the requisite portion or percentage of the Certificate
Balance of all of the Certificates have given any request, demand,
authorization, direction, notice, consent, or waiver hereunder or under any
other Basic Document, Certificates owned by the Issuer, any other obligor upon
the Certificates, the Seller, the Servicer or any Affiliate of any of the
foregoing Persons shall be disregarded and deemed to be excluded from the
Certificate Balance (unless such Persons own 100% of the Certificate Balance of
the Certificates), except that, in determining whether the Indenture Trustee and
Owner Trustee shall be protected in relying on any such request, demand,
authorization, direction, notice, consent, or waiver, only Certificates that a
Responsible Officer of the Indenture Trustee, if applicable, and an Authorized
Officer of the Owner Trustee with direct responsibility for the administration
of the Trust Agreement, if applicable, knows to be so owned shall be so
disregarded; PROVIDED, HOWEVER, that for purposes of determining whether the
Receivables will be sold upon the occurrence of an Insolvency Event with respect
to the Seller, Certificates beneficially owned by any legal entity other than
the Seller shall be entitled to vote. Certificates so owned that have been
pledged in good faith may be regarded as included in the Certificate Balance if
the pledgee establishes to the satisfaction of the Indenture Trustee or the
Owner Trustee, as applicable, the
4
<PAGE>
pledgee's right so to act with respect to such Certificates and that the pledgee
is not the Issuer, any other obligor upon the Certificates, the Seller, the
Servicer or any Affiliate of any of the foregoing Persons.
"CERTIFICATE DISTRIBUTION ACCOUNT" shall mean the account established
and maintained as such pursuant to Section 4.1(c).
"CERTIFICATE POOL FACTOR" shall mean, as of the close of business on
the last day of a Collection Period, a seven-digit decimal figure equal to the
Certificate Balance (after giving effect to any reductions therein to be made on
the immediately following Payment Date) divided by the Initial Certificate
Balance. The Certificate Pool Factor will be 1.0000000 as of the Closing Date;
thereafter, the Certificate Pool Factor will decline to reflect reductions in
the Certificate Balance.
"CERTIFICATEHOLDER" shall have the meaning assigned thereto in the
Trust Agreement.
"CLOSING DATE" shall mean August [ ], 1998.
"COLLECTION ACCOUNT" shall mean the account or accounts established
and maintained as such pursuant to Section 4.1(a).
"COLLECTION PERIOD" shall mean each calendar month during the term of
this Agreement or, in the case of the initial Collection Period, the period from
the Cutoff Date to and including the last day of the month in which the Cutoff
Date occurred.
"COMMISSION" shall mean the Securities and Exchange Commission.
"COMPUTER TAPE" shall mean the computer tape generated by the Seller
which provides information relating to the Receivables and which was used by the
Seller in selecting the Receivables conveyed to the Trust hereunder.
"CONTRACT" shall mean a motor vehicle retail installment sale
contract, including a retail installment contract relating to the sale of an
automobile or a light- or medium-duty truck for commercial use.
5
<PAGE>
"CORPORATE TRUST OFFICE" shall mean, as applicable, (i) the principal
office of the Indenture Trustee at which at any particular time its corporate
trust business shall be administered, which office at the date of the execution
of this Agreement is located at 1251 Avenue of the Americas, New York, New York
10020-1104, Attention: Corporate Trust Department, or at such other address as
the Indenture Trustee may designate from time to time by notice to the
Noteholders and the Seller, or the principal corporate trust office of any
successor Indenture Trustee (of which address such successor Indenture Trustee
will notify the Noteholders and the Seller) or (ii) the principal office of the
Owner Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of the execution of this Agreement is
located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware,
19890-0001, Attn: Corporate Trust Administration or at such other address as
the Owner Trustee may designate from time to time by notice to the
Certificateholders and the Seller, or the principal corporate trust office of
any successor Owner Trustee (of which address such successor Owner Trustee will
notify the Certificateholders and the Seller).
"CUTOFF DATE" shall mean August 1, 1998.
"DEALER" shall mean, with respect to any Receivable, the seller of the
related Financed Vehicle who originated and assigned the Receivable relating to
such Financed Vehicle to MMCA under a Dealer Agreement.
"DEALER AGREEMENT" shall mean an agreement between MMCA and a Dealer
relating to the assignment of Receivables to MMCA and all documents and
instruments relating thereto, as the same may from time to time be amended,
supplemented or otherwise modified and in effect.
"DEFAULTED RECEIVABLE" shall mean a Receivable (other than a Purchased
Receivable) as to which (i) the related Financed Vehicle has been repossessed
and liquidated, (ii) a scheduled payment (including, in the case of a Final
Payment Receivable, the amount owed by an Obligor with respect to a Last
Scheduled Payment but excluding in each case any Excess Wear and Tear or Excess
Mileage) is, in the case of a Contract relating to an automobile or light-duty
truck, 120 or more days past due or, in the case of a Contract relating to a
medium-duty truck, 180 or more days past due and, in either case, the Servicer
has not repossessed the related Financed Vehicle or (iii) the Servicer has
determined, in accordance with its customary servicing standards, policies and
procedures, that
6
<PAGE>
eventual payment in full (including, in the case of a Final Payment Receivable,
the amount owed by an Obligor with respect to a Last Scheduled Payment but
excluding in each case any Excess Wear and Tear or Excess Mileage) on the
Receivable is unlikely and the Servicer has either (x) repossessed and
liquidated the related Financed Vehicle or (y) repossessed and held the related
Financed Vehicle in its repossession inventory for 90 days, which 90 days shall
not be more than 180 days after the date on which a Scheduled Payment was due.
"DEPOSITOR" shall mean the Seller, in its capacity as Depositor under
the Trust Agreement.
"DETERMINATION DATE" shall mean, with respect to any Collection
Period, the seventh Business Day of the next succeeding calendar month (but not
later than the tenth calendar day of such month).
"ELIGIBLE SERVICER" shall mean a Person which, at the time of its
appointment as Servicer or as a subservicer, (i) has a net worth of not less
than $50,000,000, (ii) is servicing a portfolio of motor vehicle retail
installment sale contracts and/or motor vehicle loans, (iii) is legally
qualified, and has the capacity, to service the Receivables, (iv) has
demonstrated the ability to service a portfolio of motor vehicle retail
installment sale contracts and/or motor vehicle loans similar to the Receivables
professionally and competently in accordance with standards of skill and care
that are consistent with prudent industry standards, and (v) is qualified and
entitled to use pursuant to a license or other written agreement, and agrees to
maintain the confidentiality of, the software which the Servicer or any
subservicer uses in connection with performing its duties and responsibilities
under this Agreement or the related subservicing agreement or obtains rights to
use, or develops at its own expense, software which is adequate to perform its
duties and responsibilities under this Agreement or the related subservicing
agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EVENT OF SERVICING TERMINATION" or "SERVICER DEFAULT" shall mean an
event specified in Section 8.1.
"EXCESS MILEAGE" shall mean, with respect to any Financed Vehicle
securing a Final Payment Receivable, the amounts payable by the related Obligor
relating to the excess of the number of miles by which such Financed Vehicle has
7
<PAGE>
been driven over the number of miles such Financed Vehicle may be driven during
the term of the related Final Payment Receivable (as specified in the Contract
related to such Final Payment Receivable) without incurring an excess mileage
charge pursuant to the related Contract, net of the amount, if any, payable to a
third party collection agency as payment of its fees and expenses in connection
with collecting such amounts from the related Obligor.
"EXCESS WEAR AND TEAR" shall mean, with respect to any Financed
Vehicle securing a Final Payment Receivable, all amounts payable by the related
Obligor relating to damages to such Financed Vehicle that are not the result of
normal wear and tear, as more specifically described in the Contract related to
such Final Payment Receivable, net of the amount, if any, payable to a third
party collection agency as payment of its fees and expenses in connection with
collecting such amounts from the related Obligor.
"FINAL PAYMENT RECEIVABLE" shall mean all rights and obligations
arising under a Contract listed on the Schedule of Receivables which provides
for a series of scheduled payments which, if each is made on its scheduled due
date, will amortize the initial Level Pay Balance by the due date immediately
preceding the maturity date of the Receivable. At maturity of the Final Payment
Receivable, the Obligor thereunder will owe (assuming that all payments have
been made on their scheduled due dates) an amount consisting of interest for the
period from the preceding due date through the maturity date and the remaining
Principal Balance of the Receivable. At maturity of the Final Payment
Receivable, the Obligor may either (i) pay the remaining Principal Balance of
the Receivable, all accrued and unpaid interest, plus any fees, charges, and
other amounts then owing, (ii) refinance the amount then due, subject to certain
conditions or (iii) sell the Financed Vehicle to MMCA on behalf of the Trust for
an amount equal to the Last Scheduled Payment (reduced by charges for Excess
Wear and Tear and Excess Mileage and a disposition fee payable to the Servicer)
and pay any excess of the total amount owed by the Obligor (calculated as in
clause (i)) over the sale price to MMCA on behalf of the Trust, and satisfy all
other conditions stated under the terms of the Contract.
"FINANCED VEHICLE" shall mean a new or used automobile or light- or
medium-duty truck, together with all accessions thereto, securing an Obligor's
indebtedness under the respective Receivable.
8
<PAGE>
"HOLDER" shall mean a Noteholder or a Certificateholder, as the case
may be.
"INDENTURE" shall mean the Indenture, dated as of August [ ], 1998,
between the Issuer and the Indenture Trustee, as the same may be amended,
supplemented or otherwise modified and in effect from time to time.
"INDENTURE TRUSTEE" shall mean Bank of Tokyo - Mitsubishi Trust
Company, a New York banking corporation, as Indenture Trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
"INITIAL CERTIFICATE BALANCE" shall mean, as the context so requires,
(i) with respect to all of the Certificates, $[ ] or (ii) with
respect to any Certificate, an amount equal to the initial denomination of such
Certificate.
"INITIAL POOL BALANCE" shall mean $[ ].
"INITIAL YIELD SUPPLEMENT AMOUNT" shall mean $[ ].
"INSOLVENCY EVENT" shall mean, with respect to any Person, (i) the
making of a general assignment for the benefit of creditors, (ii) the filing of
a voluntary petition in bankruptcy, (iii) being adjudged a bankrupt or
insolvent, or having had entered against such Person an order for relief in any
bankruptcy or insolvency proceeding, (iv) the filing by such Person of a
petition or answer seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute, law
or regulation, (v) the filing by such Person of an answer or other pleading
admitting or failing to contest the material allegations of a petition filed
against such Person in any proceeding specified in (vii) below, (vi) seeking,
consenting to or acquiescing in the appointment of a trustee, receiver or
liquidator of such Person or of all or any substantial part of the assets of
such Person or (vii) the failure to obtain dismissal within 60 days of the
commencement of any proceeding against such Person seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation, or the entry of any order
appointing a trustee, liquidator or receiver of such Person or of such Person's
assets or any substantial portion thereof.
"INTEREST ACCRUAL PERIOD" shall mean, with respect to any Payment
Date, (i) with respect to the Class A-1 Notes, the period from and including the
previous Payment Date (or, in the case of the first Payment Date, the Closing
Date)
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to but excluding such Payment Date and (ii) with respect to the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes and the Class B Notes, the period from
and including the 15th day of the calendar month immediately preceding such
Payment Date (or, in the case of the first Payment Date, the Closing Date), to
but excluding the 15th day of the calendar month in which such Payment Date
occurs.
"INTEREST CARRYOVER SHORTFALL" shall mean, with respect to any Payment
Date and any Class of Notes, the excess of the sum of the Monthly Accrued Note
Interest for the preceding Payment Date and any outstanding Interest Carryover
Shortfall from the close of business on such preceding Payment Date, over the
amount in respect of interest that is actually deposited in the Note Payment
Account on such preceding Payment Date, plus interest on such excess to the
extent permitted by law, at the applicable Note Interest Rate for the related
Interest Accrual Period.
"ISSUER" shall mean MMCA Auto Owner Trust 1998-1, a Delaware business
trust.
"LAST SCHEDULED PAYMENT" shall mean, with respect to each Final
Payment Receivable, the amount referred to in the Contract related to such Final
Payment Receivable as the "LAST SCHEDULED PAYMENT."
"LAST SCHEDULED PAYMENT ADVANCE" shall mean, with respect to a Final
Payment Receivable, the amount, as of the close of business on the last day of a
Collection Period, which is required to be advanced by the Servicer with respect
to such Final Payment Receivable pursuant to Section 4.4(c).
"LAST SCHEDULED PAYMENT POOL BALANCE" shall mean, for any Payment
Date, the aggregate principal balance of Last Scheduled Payments of Final
Payment Receivables as of the close of business on the last day of the preceding
Collection Period.
"LAST SCHEDULED PAYMENT PRINCIPAL COLLECTIONS" shall mean (a)
collections of principal on a Final Payment Receivable that are attributable to
Last Scheduled Payments, which includes any collection attributable to principal
on a Final Payment Receivable in excess of the initial Level Pay Balance of
that Receivable, whether or not such payment is made on the due date of the
related Last Scheduled Payment, and including the proceeds of sale (net of
expenses) of any Financed Vehicle purchased by MMCA on behalf of the Trust
pursuant to the terms of the Receivable and subsequently sold on behalf of the
Trust, minus (b) with respect to any Final
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Payment Receivable with respect to which the Obligor exercises its right to have
MMCA, on behalf of the Trust, purchase the related Financed Vehicle, the excess
of the purchase price from the Obligor of such Financed Vehicle over the
remaining amount owed by the Obligor.
"LETTER OF CREDIT BANK" shall mean any Person having the Required
Rating that has provided a Yield Supplement Letter of Credit in accordance with
Section 5.1.
"LEVEL PAY BALANCE" shall mean, with respect to each Final Payment
Receivable, (i) initially the Amount Financed under such Final Payment
Receivable minus the principal portion of the Last Scheduled Payment thereon and
(ii) thereafter, shall be the amount set forth in clause (i) minus all
collections on or with respect to principal on such Receivable other than
amounts on deposit in the Payahead Account with respect to future due dates;
PROVIDED that such Level Pay Balance for any Final Payment Receivable shall not
be less than zero.
"LEVEL PAY POOL BALANCE" shall mean, for any Payment Date, the sum of
(i) the aggregate Level Pay Balance of Final Payment Receivables and (ii) the
aggregate Principal Balance of the Receivables other than Final Payment
Receivables, as of the close of business on the last day of the preceding
Collection Period.
"LIEN" shall mean a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' or materialmen's
liens, judicial liens and any liens that may attach to a Financed Vehicle by
operation of law.
"LIQUIDATION PROCEEDS" shall mean, with respect to a Defaulted
Receivable, the monies collected from whatever source during the Collection
Period in which such Receivable became a Defaulted Receivable, net of the sum of
(i) any expenses incurred by the Servicer in connection with collection of such
Receivable and the disposition of the Financed Vehicle and (ii) any amounts
required by law to be remitted to the Obligor.
"MAXIMUM SUPPLEMENTAL RESERVE AMOUNT" shall mean an amount equal to
the lesser of (i) $18,603,749 and (ii) the outstanding principal amount of the
Notes on such Payment Date (after giving effect to any principal payment made on
such Payment Date), as such amount may be reduced from time to time upon
satisfaction of the Rating Agency Condition.
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"MMCA" shall mean Mitsubishi Motors Credit of America, Inc., a
Delaware corporation, and its successors and assigns.
"MONTHLY ACCRUED NOTE INTEREST" shall mean, with respect to any
Payment Date and (i) any Class of Notes, interest accrued for the related
Interest Accrual Period at the applicable Note Interest Rate on the aggregate
principal amount of the Notes of such Class as of the immediately preceding
Payment Date, after giving effect to all payments of principal to Noteholders on
or prior to such preceding Payment Date (or, in the case of the first Payment
Date, the initial principal amount of the Notes); and (ii) with respect to the
Notes collectively, the sum of Monthly Accrued Note Interest for each Class.
"MONTHLY REMITTANCE CONDITION" shall have the meaning assigned thereto
in Section 4.1(e).
"MOODY'S" shall mean Moody's Investors Service, Inc., or its
successors and assigns.
"NOTE PAYMENT ACCOUNT" shall mean the account established and
maintained as such pursuant to Section 4.1(b).
"NOTE POOL FACTOR" shall mean, with respect to any Class of Notes, as
of the close of business on the last day of a Collection Period, a seven-digit
decimal figure equal to the outstanding principal balance of such Class of Notes
(after giving effect to any reductions thereof to be made on the immediately
following Payment Date) divided by the original outstanding principal balance of
such Class of Notes. Each Note Pool Factor will be 1.0000000 as of the Closing
Date; thereafter, the Note Pool Factor will decline to reflect reductions in the
outstanding principal amount of such Class of Notes.
"NOTEHOLDER" shall mean a Person in whose name a Note is registered on
the Note Register.
"OBLIGOR" on a Receivable shall mean the purchaser or co-purchasers of
the related Financed Vehicle purchased in part or in whole by the execution and
delivery of such Receivable, or any other Person who owes or may be liable for
payments under such Receivable.
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"OFFICER'S CERTIFICATE" shall mean a certificate signed by the
chairman, the president, any executive vice president, vice president or the
treasurer of the Seller or the Servicer, as the case may be, and delivered to
the Owner Trustee and the Indenture Trustee.
"OPINION OF COUNSEL" shall mean a written opinion of counsel (who, in
the case of counsel to the Seller or the Servicer, may be an employee of, or
outside counsel to, the Seller or the Servicer), which counsel shall be
acceptable to the Indenture Trustee, the Owner Trustee or the Rating Agencies,
as applicable.
"OPTIONAL PURCHASE PERCENTAGE" shall mean 10%.
"OWNER TRUST ESTATE" shall have the meaning assigned thereto in the
Trust Agreement.
"OWNER TRUSTEE" shall mean Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as Owner Trustee
under the Trust Agreement, its successors in interest and any successor trustee
under the Trust Agreement.
"PAYAHEAD" shall mean, with respect to an Actuarial Receivable, the
amount, as of the close of business on the last day of a Collection Period, so
designated in accordance with Section 4.3 with respect to such Receivable.
"PAYAHEAD ACCOUNT" shall mean the account established and maintained
as such pursuant to Section 4.1(d).
"PAYAHEAD BALANCE", with respect to an Actuarial Receivable, shall
mean the sum, as of the close of business on the last day of a Collection
Period, of all Payaheads made by or on behalf of the Obligor with respect to
such Actuarial Receivable (including any amount paid by or on behalf of the
Obligor prior to the Cutoff Date that is due on or after the Cutoff Date and was
not used to reduce the principal balance of such Actuarial Receivable), as
reduced by applications of previous Payaheads with respect to such Actuarial
Receivable, pursuant to Sections 4.3 and 4.4.
"PAYMENT DATE" shall mean the 15th day of each month, or if such day
is not a Business Day, the immediately following Business Day, commencing on
September 15, 1998.
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"PERMITTED INVESTMENTS" shall mean, on any date of determination,
book-entry securities, negotiable instruments or securities represented by
instruments in bearer or registered form with maturities not exceeding the next
Payment Date which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any state thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or
State banking or depository institution authorities; PROVIDED, HOWEVER,
that at the time of the investment or contractual commitment to invest
therein, the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of which is based on
the credit of a Person other than such depository institution or trust
company) thereof shall have a credit rating from each of the Rating
Agencies in the highest investment category granted thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each of the Rating
Agencies in the highest investment category granted thereby;
(d) investments in money market funds having a rating from each of the
Rating Agencies in the highest investment category granted thereby
(including funds for which the Indenture Trustee or the Owner Trustee or
any of their respective Affiliates is investment manager or advisor);
(e) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America
or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States of America, in
either case entered into with a depository institution or trust company
(acting as principal) described in clause (b); and
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(g) any other investment with respect to which the Issuer or the
Servicer has received written notification from the Rating Agencies that
the acquisition of such investment as a Permitted Investment will not
result in a withdrawal or downgrading of the ratings on any Class of Notes
or the Certificates.
"PERSON" shall mean a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, limited liability partnership, trust,
unincorporated organization, or government or any agency or political
subdivision thereof, or any other entity of whatever nature.
"POOL BALANCE" shall mean, as of any date of determination, the
aggregate Principal Balance of the Receivables (including the aggregate
Principal Balance of Last Scheduled Payments) as of the close of business on the
last day of the preceding Collection Period after giving effect to, with respect
to such Collection Period, (i) all payments received from Obligors (other than
Payaheads), (ii) all Advances to be made by the Servicer and (iii) all Purchase
Amounts to be remitted by the Seller or the Servicer, in each case for such
Collection Period, and reduced by the aggregate Principal Balance of Receivables
that became Defaulted Receivables during such Collection Period.
"PRINCIPAL BALANCE" shall mean, with respect to any Receivable as of
any date of determination, the Amount Financed minus the sum of the following
amounts: (i) in the case of an Actuarial Receivable, that portion of all
Scheduled Payments due on or prior to such date allocable to principal computed
in accordance with the Actuarial Method (to the extent collected or advanced),
(ii) in the case of a Simple Interest Receivable, that portion of all Scheduled
Payments actually received on or prior to such date allocable to principal using
the Simple Interest Method (to the extent collected or advanced), (iii) any
refunded portion of extended warranty protection plan costs, or of physical
damage, credit life, or disability insurance premiums included in the Amount
Financed, and (iv) any prepayment in full or partial prepayment applied to
reduce the unpaid principal balance of such Receivable. The Principal Balance
of a Defaulted Receivable shall be zero as of the beginning of the Collection
Period following the Collection Period in which it became a Defaulted
Receivable.
"PRINCIPAL CARRYOVER SHORTFALL" shall mean, as of the close of
business on any Payment Date, the excess of the Principal Distribution Amount
and any
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outstanding Principal Carryover Shortfall from the preceding Payment Date over
the amount in respect of principal that is actually deposited in the Note
Payment Account on such Payment Date.
"PRINCIPAL DISTRIBUTION AMOUNT" shall mean, with respect to any
Payment Date, the sum of (i) the Scheduled Principal for such Payment Date
(including, in the case of a Final Payment Receivable, the amount owed by an
Obligor with respect to a Last Scheduled Payment) plus (ii) any outstanding
Principal Carryover Shortfall as of the close of business on the preceding
Payment Date; PROVIDED, HOWEVER, that the Principal Distribution Amount shall
not exceed the outstanding aggregate principal amount of the Notes; and
PROVIDED, FURTHER, that, on the Final Payment Date for each Class of Notes, the
principal required to be deposited in the Note Payment Account will include the
amount necessary (after giving effect to the other amounts to be deposited in
the Note Payment Account on such Payment Date and allocable to principal) to
reduce the outstanding principal amount of the Notes of such Class to zero.
"PROGRAM" shall have the meaning assigned thereto in Section 3.11.
"PURCHASE AGREEMENT" shall mean the Purchase Agreement, dated as of
September 1, 1998, between the Seller and MMCA, as the same may be amended,
supplemented or otherwise modified and in effect from time to time.
"PURCHASE AMOUNT" shall mean, with respect to a Payment Date and a
Receivable to be repurchased by the Seller or purchased by the Servicer on such
Payment Date, an amount equal to the sum of (a) the Principal Balance of such
Receivable as of the first day of the Collection Period preceding the Collection
Period in which such Payment Date occurs and (b) an amount equal to the amount
of accrued and unpaid interest on such Principal Balance at the related APR from
the date a payment was last made by or on behalf of the Obligor through the due
date for payment of such Receivable in the Collection Period preceding the
Collection Period in which such Payment Date occurs and, in the case of clauses
(a) and (b), after giving effect to the receipt of monies collected on such
Receivable in such preceding Collection Period.
"PURCHASED RECEIVABLE" shall mean, on any date of determination, a
Receivable as to which payment of the Purchase Amount has been made by the
Seller pursuant to Section 2.3 hereof or the Servicer pursuant to Section 3.7 or
9.1 hereof.
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"QUALIFIED INSTITUTION" shall mean Bank of Tokyo - Mitsubishi Trust
Company, a New York banking corporation or any depository institution organized
under the laws of the United States of America or any one of the states thereof
or incorporated under the laws of a foreign jurisdiction with a branch or agency
located in the United States of America or one of the states thereof qualified
to take deposits and subject to supervision and examination by federal or state
banking authorities which at all times has a short-term deposit rating of P-1 by
Moody's and A-1+ by S&P and, in the case of any such institution organized under
the laws of the United States of America, whose deposits are insured by the
Federal Deposit Insurance Corporation or any successor thereto.
"QUALIFIED TRUST INSTITUTION" shall mean the corporate trust
department of Bank of Tokyo - Mitsubishi Trust Company, a New York banking
corporation, or any institution organized under the laws of the United States of
America or any one of the states thereof or incorporated under the laws of a
foreign jurisdiction with a branch or agency located in the United States of
America or one of the states thereof qualified to take deposits and subject to
supervision and examination by federal or state banking authorities which at all
times (i) is authorized under such laws to act as a trustee or in any other
fiduciary capacity, (ii) has not less than one billion dollars in assets under
fiduciary management, and (iii) has a long-term deposit rating that satisfies
the Rating Agency Condition.
"RATING AGENCY" shall mean either S&P or Moody's, and together, the
"RATING AGENCIES." If no such organization or successor is any longer in
existence, "RATING AGENCY" shall be a nationally recognized statistical rating
organization or other comparable Person designated by the Issuer, notice of
which designation shall be given to the Indenture Trustee, the Owner Trustee and
the Servicer.
"RATING AGENCY CONDITION" shall mean, with respect to any action, that
each Rating Agency shall have been given prior notice thereof and that each of
the Rating Agencies shall have notified the Seller, the Servicer, the Owner
Trustee and the Indenture Trustee in writing that such action will not result in
a reduction or withdrawal of the then current rating of the Notes or the
Certificates.
"REALIZED LOSSES" shall mean, with respect to each Payment Date and
each Receivable that became a Defaulted Receivable during the related Collection
Period, the excess of the Principal Balance of such Defaulted Receivable
(including the principal of a Last Scheduled Payment) over the Liquidation
Proceeds attributable to the Principal Balance of such Defaulted Receivable.
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"RECEIVABLE" shall mean any Standard Receivable or Final Payment
Receivable.
"RECEIVABLE FILE" shall mean, with respect to a Receivable, the
electronic entries, documents, instruments and writings specified in Section
2.4.
"RECEIVABLE YIELD SUPPLEMENT AMOUNT" shall mean, with respect to any
Receivable and the related Payment Date (other than a Defaulted Receivable or a
Purchased Receivable, for Collection Periods after the Collection Period in
which such Receivable became a Defaulted Receivable or a Purchased Receivable),
for any Collection Period the amount (if positive) calculated by the Servicer
equal to the product of one-twelfth (1/12) times (i) interest at a rate equal to
the sum of (A) the Weighted Average Rate, (B) the Servicing Rate and (C) 2.0%,
minus (ii) interest on such Receivable at its APR, multiplied by such
Receivable's Principal Balance as of the first day of the related Collection
Period.
"RECORD DATE" shall mean, with respect to any Payment Date, the close
of business on the day immediately preceding such Payment Date or, if Definitive
Notes have been issued, the fifteenth (15th) day of the calendar month preceding
such Payment Date.
"RECOVERIES" shall mean, with respect to any Collection Period
following the Collection Period in which such Receivable became a Defaulted
Receivable, all monies received by the Servicer with respect to any Defaulted
Receivable during any Collection Period, net of the sum of (i) any expenses
incurred by the Servicer in connection with the collection of such Receivable
and the disposition of the Financed Vehicle (to the extent not previously
reimbursed) and (ii) any payments on such Receivable required by law to be
remitted to the Obligor.
"RELEVANT UCC" shall mean the Uniform Commercial Code as in effect in
any relevant jurisdiction.
"REQUIRED RATING" shall mean a rating on (i) short-term unsecured debt
obligations of P-1 by Moody's and (ii) short-term unsecured debt obligations of
A-1+ by S&P; and any requirement that short-term unsecured debt obligations have
the "REQUIRED RATING" shall mean that such short-term unsecured debt obligations
have the foregoing required ratings from each of such Rating Agencies.
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"RESERVE ACCOUNT" shall mean the account established and maintained as
such pursuant to Section 4.7(a).
"RESERVE ACCOUNT AMOUNT" shall mean, with respect to any Payment Date,
the amount on deposit in the Reserve Account after giving effect to all deposits
and withdrawals therefrom on the prior Payment Date (or, in the case of the
first Payment Date, the Closing Date).
"RESERVE ACCOUNT DRAW AMOUNT" shall have the meaning assigned thereto
in Section 4.6(b).
"RESERVE ACCOUNT PROPERTY" shall have the meaning assigned thereto in
Section 4.7(a).
"RESERVE INITIAL DEPOSIT" shall mean, with respect to the Closing
Date, $1,395,281.
"RULE OF 78'S PAYMENT" shall mean, with respect to any Actuarial
Receivable which provides that, if such Receivable is prepaid in full, the
amount payable will be determined according to the Rule of 78's method specified
in the related Contract, an amount (if positive) equal to (i) the amount due
allocating payments between principal and interest based upon the Rule of 78's
minus (ii) the amount that would be due allocating payments between principal
and interest from the date of origination of the Receivable using the Actuarial
Method.
"S&P" shall mean Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, or its successors and assigns.
"SCHEDULE OF RECEIVABLES" shall mean the list identifying the
Receivables attached hereto as Schedule A (which list may be in the form of
microfiche), as supplemented or amended from time to time.
"SCHEDULED PAYMENT" shall mean, for any Collection Period for any
Receivable, the amount indicated in such Receivable as required to be paid by
the Obligor in such Collection Period (without giving effect to deferrals of
payments pursuant to Section 3.2 or any rescheduling in any insolvency or
similar proceedings).
"SCHEDULED PRINCIPAL" shall mean, with respect to any Payment Date,
the sum of (a) the sum of (i) collections received during the related Collection
Period
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of principal on Simple Interest Receivables, including collections of principal
attributable to the Last Scheduled Payment of a Simple Interest Receivable that
is a Final Payment Receivable, and including any charges for Excess Wear and
Tear and Excess Mileage but excluding collections received during the related
Collection Period of principal on Simple Interest Receivables that would be
attributable to a Last Scheduled Payment pursuant to Section 4.3(a) except that
a Last Scheduled Payment Advance has been made with respect to such Last
Scheduled Payment, and (ii) Last Scheduled Payment Advances made during the
related Collection Period with respect to Simple Interest Receivables that are
Final Payment Receivables, (b) the principal portion of each Scheduled Payment
(including a Last Scheduled Payment on a Final Payment Receivable) due on any
Actuarial Receivable during the related Collection Period, (c) the Principal
Balance (without duplication of amounts taken into account under (a) or (b)) of
(i) each Receivable prepaid in full during the related Collection Period and
(ii) Receivables which became Defaulted Receivables during the related
Collection Period, (d) the Purchase Amount of each Receivable that was
repurchased by the Seller or purchased by the Servicer during such Collection
Period to the extent attributable to principal, (e) the proceeds of any other
sale of a Receivable, to the extent allocable to principal, and (f) partial
prepayments attributable to any refunded item included in the Amount Financed,
such as extended warranty protection plan costs or physical damage, credit life
or 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 Cutoff Date; PROVIDED, HOWEVER, that in calculating the Scheduled
Principal, all payments and proceeds (including Liquidation Proceeds) of any
Purchased Receivables the Purchase Amount of which has been included in
Scheduled Principal in a prior Collection Period (which shall be paid to the
Seller or Servicer, as applicable) will be excluded.
"SELLER" shall mean MMCA Auto Receivables, Inc., a Delaware
corporation, in its capacity as seller of the Receivables to the Trust under
this Agreement, and each successor thereto (in the same capacity) pursuant to
Section 6.3.
"SERVICER" shall mean MMCA, in its capacity as Servicer of the
Receivables under this Agreement, each successor thereto (in the same capacity)
pursuant to Section 7.3, and each successor Servicer appointed and acting
pursuant to Section 8.2.
"SERVICER'S CERTIFICATE" shall have the meaning assigned thereto in
Section 3.9.
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"SERVICING FEE" shall mean, with respect to any Payment Date, the fee
payable to the Servicer for services rendered during the related Collection
Period, determined pursuant to and defined in Section 3.8.
"SERVICING OFFICER" shall mean any officer of the Servicer involved
in, or responsible for, the administration and servicing of the Receivables,
whose name appears on a list of servicing officers attached to an Officer's
Certificate furnished on the Closing Date to the Owner Trustee and the Indenture
Trustee by the Servicer, as such list may be amended from time to time by the
Servicer in writing.
"SERVICING RATE" shall mean 1.0% per annum.
"SIMPLE INTEREST METHOD" shall mean the method of allocating a fixed
level payment between principal and interest, pursuant to which the portion of
such payment that is allocated to interest is equal to the product of the APR
multiplied by the unpaid principal balance multiplied by the period of time
(expressed as a fraction of a year, based on the actual number of days in the
calendar month and a 365-day year) elapsed since the preceding payment was made
and the remainder of such payment is allocable to principal.
"SIMPLE INTEREST RECEIVABLE" shall mean any Receivable under which the
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"SPECIFIED RESERVE BALANCE" shall mean, with respect to any Payment
Date, an amount equal to the lesser of (i) $6,976,406 and (ii) an amount equal
to (x) the outstanding principal amount of the Notes as of such Payment Date
(after giving effect to any principal payment made on such Payment Date) less
(y) the amounts on deposit in the Supplemental Reserve Account on such Payment
Date (after giving effect to any deposits to or withdrawals from the
Supplemental Reserve Account on such Payment Date). Notwithstanding the
foregoing, if (i) each Rating Agency delivers a letter to the Indenture Trustee
that the use of any new formulation requested by the Seller would not cause a
downgrade, qualification or withdrawal of the then current rating on any Class
of Notes, and (ii) an Opinion of Counsel to the effect that the proposed change
will not adversely affect the status of the Notes as debt is delivered to the
Indenture Trustee, then the Specified Reserve Balance may be reduced in
accordance with such letters without an amendment hereto.
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"SPECIFIED YIELD SUPPLEMENT ACCOUNT BALANCE" shall mean, on the
Closing Date, $[ ] and, as of the close of business on any Payment
Date, an amount equal to the sum of all projected Yield Supplement Amounts for
all future Payment Dates, assuming that future Scheduled Payments on the
Receivables are made on their scheduled due dates; PROVIDED that if, on any
date, MMCA shall fail to pay the amount payable under the Yield Supplement
Agreement in accordance with the terms thereof, then, in such event, the
Specified Yield Supplement Account Balance shall not be reduced thereafter.
"STANDARD RECEIVABLE" shall mean all rights and obligations under a
Contract which is not a Final Payment Receivable listed on the Schedule of
Receivables.
"SUPPLEMENTAL RESERVE ACCOUNT" shall mean the account established and
maintained as such pursuant to Section 4.7(b).
"SUPPLEMENTAL RESERVE ACCOUNT AMOUNT" shall mean, with respect to any
Payment Date, the amount on deposit in the Supplemental Reserve Account after
giving effect to all deposits and withdrawals therefrom on the prior Payment
Date (or, in the case of the first Payment Date, the Closing Date).
"SUPPLEMENTAL RESERVE ACCOUNT DRAW AMOUNT" shall have the meaning
assigned thereto in Section 4.6(b).
"SUPPLEMENTAL RESERVE ACCOUNT PROPERTY" shall have the meaning
assigned thereto in Section 4.7(b).
"SUPPLEMENTAL SERVICING FEE" shall mean, with respect to any Payment
Date, the fee payable to the Servicer for services rendered during the related
Collection Period, determined pursuant to and defined in Section 3.8.
"TOTAL REQUIRED PAYMENT" shall mean, with respect to any Payment Date,
the sum of (i) the Total Servicing Fee, (ii) the Accrued Note Interest and (iii)
the Principal Distribution Amount with respect to such Payment Date.
"TOTAL SERVICING FEE" shall mean, with respect to any Payment Date,
the sum of (i) the Servicing Fee for the related Collection Period plus (ii) all
accrued and unpaid Servicing Fees for prior Collection Periods.
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"TRUST" shall mean the Issuer.
"TRUST ACCOUNTS" shall have the meaning assigned thereto in Section
4.1(d).
"TRUST AGREEMENT" shall mean the Amended and Restated Trust Agreement,
dated as of August 1, 1998, between the Seller and the Owner Trustee, as the
same may be amended, supplemented or otherwise modified and in effect from time
to time.
"TRUST OFFICER" shall mean, in the case of the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee with direct
responsibility for the administration of the Indenture and the other Basic
Documents on behalf of the Indenture Trustee and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject and,
with respect to the Owner Trustee, any officer in the Corporate Trust
Administration Department of the Owner Trustee with direct responsibility for
the administration of the Trust Agreement and the other Basic Documents on
behalf of the Owner Trustee.
"TRUST PROPERTY" shall mean, collectively, (i) the Receivables; (ii)
with respect to Actuarial Receivables, monies due thereunder on or after the
Cutoff Date (including Payaheads) and, with respect to Simple Interest
Receivables, monies due or received thereunder on or after the Cutoff Date;
(iii) the security interests in the Financed Vehicles granted by Obligors
pursuant to the Receivables and any other interest of the Issuer in the Financed
Vehicles; (iv) rights to receive proceeds with respect to the Receivables from
claims on any physical damage, theft, credit life or disability insurance
policies covering the Financed Vehicles or Obligors; (v) rights to receive
proceeds with respect to the Receivables from recourse to Dealers thereon
pursuant to the Dealer Agreements; (vi) all of the Seller's rights to the
Receivable Files; (vii) the Trust Accounts, the Certificate Distribution
Account, the Reserve Account, the Supplemental Reserve Account and the Yield
Supplement Account and all amounts, securities, investments in financial assets,
and other property deposited in or credited to any of the foregoing and all
proceeds thereof; (viii) all of the Seller's rights under the Yield Supplement
Agreement and the Purchase Agreement, including the right of the Seller to cause
MMCA to repurchase Receivables from the Seller; (ix) payments and proceeds with
respect to the Receivables held by the Servicer; (x) all property (including the
right to receive Liquidation Proceeds and Recoveries and Financed Vehicles and
the proceeds thereof acquired by the Seller pursuant to the
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terms of a Final Payment Receivable), guarantees and other collateral securing a
Receivable (other than a Receivable repurchased by the Servicer or purchased by
the Seller); (xi) rebates of premiums and other amounts relating to insurance
policies and other items financed under the Receivables in effect as of the
Cutoff Date; and (xii) all present and future claims, demands, causes of action
and choses in action in respect of any or all of the foregoing and all payments
on or under and all proceeds of every kind and nature whatsoever in respect of
any or all of the foregoing, including all proceeds of the conversion thereof,
voluntary or involuntary, into cash or other liquid property, all cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, insurance proceeds, condemnation awards, rights to
payment of any and every kind and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part of or
are included in the proceeds of any of the foregoing.
"WEIGHTED AVERAGE RATE" shall mean, with respect to any Collection
Period, a per annum rate equal to the product of (i) twelve and (ii) the
aggregate amount of the Monthly Accrued Interest for the Notes as of the
preceding Payment Date divided by the sum of the outstanding principal amount of
the Notes and the Certificate Balance as of the preceding Payment Date (after
giving effect to any principal payment made on such Payment Date) or, with
respect to the first Payment Date, as of the Closing Date.
"YIELD SUPPLEMENT ACCOUNT" shall have the meaning assigned thereto in
Section 5.1(a).
"YIELD SUPPLEMENT AGREEMENT" shall mean the Yield Supplement
Agreement, dated as of [ ], 1998, by and between the Seller and MMCA,
as amended, modified or supplemented from time to time, substantially in the
form of Exhibit D hereto.
"YIELD SUPPLEMENT AMOUNT" shall mean, with respect to any Payment
Date, the sum of all Receivable Yield Supplement Amounts for the related
Collection Period.
"YIELD SUPPLEMENT LETTER OF CREDIT" shall mean any letter of credit
issued by the Letter of Credit Bank, as permitted by Section 5.1, to support
payments of the Yield Supplement Amount under the Yield Supplement Agreement.
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SECTION 1.2. OTHER DEFINITIONAL PROVISIONS. (a) Capitalized terms
used herein and not otherwise defined herein have the meanings assigned to them
in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Article, Section, Schedule
and Exhibit references contained in this Agreement are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified, and the term "including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
SECTION 1.3. BUSINESS DAY CERTIFICATE. On or prior to [ ],
1998 (with respect to the remainder of calendar year 1998 and calendar year
1999)
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and thereafter, within 15 days prior to the end of each calendar year while this
Agreement remains in effect (with respect to the succeeding calendar years), the
Servicer shall deliver to the Owner Trustee and the Indenture Trustee an
Officer's Certificate specifying the days on which banking institutions or trust
companies in New York, New York, Wilmington, Delaware or Los Angeles, California
are authorized or obligated by law, executive order or governmental decree to
remain closed.
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ARTICLE II
TRUST PROPERTY
SECTION 2.1. CONVEYANCE OF TRUST PROPERTY. In consideration of the
Issuer's delivery to, or upon the written order of, the Seller of authenticated
Notes and Certificates, in authorized denominations in aggregate principal
amounts equal to the initial principal amount of the Notes and the Initial
Certificate Balance, respectively, the Seller hereby irrevocably sells,
transfers, assigns and conveys to the Issuer all right, title and interest of
the Seller, whether now owned or hereafter acquired, in, to and under the Trust
Property, without recourse (subject to the obligations herein). The sale,
transfer, assignment and conveyance made hereunder shall not constitute and is
not intended to result in an assumption by the Issuer of any obligation of the
Seller to the Obligors, the Dealers or any other Person in connection with the
Receivables and the other Trust Property or any agreement, document or
instrument related thereto.
It is the intention of the Seller and the Issuer that the transfer of
the Trust Property contemplated herein constitute a sale of the Trust Property,
conveying good title to the Trust Property from the Seller to the Issuer.
However, in the event that such transfer is deemed to be a pledge to secure the
payment of the Notes and the Certificates, the Seller hereby grants to the
Issuer a first priority security interest in all of the Seller's right, title
and interest in, to and under the Trust Property, and all proceeds thereof, to
secure the payment of the Notes and the Certificates, and in such event, this
Agreement shall constitute a security agreement under applicable law.
SECTION 2.2. REPRESENTATIONS AND WARRANTIES OF THE SELLER AS TO THE
RECEIVABLES. The Seller makes the following representations and warranties as
to the Receivables on which the Issuer relies in accepting the Receivables.
Such representations and warranties speak as of the execution and delivery of
this Agreement, but shall survive the sale, transfer and assignment of the
Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(i) CHARACTERISTICS OF RECEIVABLES. Each Receivable (a) shall have
been originated in the United States of America by a Dealer for the consumer or
commercial sale of a Financed Vehicle in the ordinary course of such Dealer's
business, shall have been fully and properly executed by the parties thereto,
shall
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have been purchased by the Seller from MMCA, which in turn shall have purchased
such Receivable from such Dealer under a Dealer Agreement with MMCA, and shall
have been validly assigned by such Dealer to MMCA in accordance with its terms,
which in turn shall have been validly assigned by MMCA to the Seller in
accordance with its terms, (b) shall have created or shall create a valid,
binding, subsisting and enforceable first priority security interest in favor of
MMCA on the related Financed Vehicle, which security interest has been validly
assigned by MMCA to the Seller, which in turn shall be validly assigned by the
Seller to the Issuer and by the Issuer to the Indenture Trustee, (c) shall
contain customary and enforceable provisions such that the rights and remedies
of the holder thereof shall be adequate for realization against the collateral
of the benefits of the security, (d) in the case of Standard Receivables, shall
provide for level monthly payments (PROVIDED that the payment in the last month
in a life of the Receivable may be different from the level payment) that fully
amortize the Amount Financed by maturity and yield interest at the APR, (e) in
the case of Final Payment Receivables, shall provide for a series of fixed level
monthly payments and a larger payment due after such level monthly payments that
fully amortize the Amount Financed by maturity and yield interest at the APR,
(f) shall provide for, in the event that such contract is prepaid, a prepayment
that fully pays the Principal Balance, (g) is a retail installment sale
contract, (h) is secured by a new or used automobile or light-or medium-duty
truck, and (i) is an Actuarial Receivable or a Simple Interest Receivable (and
may also be a Final Payment Receivable).
(ii) SCHEDULE OF RECEIVABLES. The information set forth in the
Schedule of Receivables shall be true and correct in all material respects as of
the opening of business on the Cutoff Date, and no selection procedures believed
to be adverse to the Noteholders and/or the Certificateholders shall have been
utilized in selecting the Receivables from those receivables which meet the
criteria contained herein and in the Purchase Agreement. The computer tape or
other listing regarding the Receivables made available to the Issuer and its
assigns (which computer tape or other listing is required to be delivered as
specified herein) is true and correct in all respects.
(iii) COMPLIANCE WITH LAW. Each Receivable and the sale of the
related Financed Vehicle shall have complied, at the time it was originated or
made, and shall comply at the execution of this Agreement, in all material
respects with all requirements of applicable Federal, state, and local laws, and
regulations thereunder, including, without limitation, usury laws, the Federal
Truth-in-
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Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act,
the Fair Credit Billing Act, the Fair Debt Collection Practices Act, the Federal
Trade Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve
Board's Regulations B, M and Z, the Soldiers' and Sailors' Civil Relief Act of
1940, the Texas Consumer Credit Code, and State adaptations of the Uniform
Consumer Credit Code, and other consumer credit laws and equal credit
opportunity and disclosure laws.
(iv) BINDING OBLIGATION. Each Receivable shall represent the genuine,
legal, valid and binding payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, or
other similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity.
(v) NO GOVERNMENT OBLIGOR. None of the Receivables is due from the
United States of America or any state or from any agency, department or
instrumentality of the United States of America or any state.
(vi) SECURITY INTEREST IN FINANCED VEHICLE. Immediately prior to the
sale, assignment, and transfer thereof by MMCA to the Seller, each Receivable
shall be secured by a validly perfected first priority security interest in the
Financed Vehicle in favor of MMCA as secured party and, at such time as
enforcement of such security interest is sought, there shall exist a valid,
subsisting and enforceable first priority perfected security interest in the
Financed Vehicle for the benefit of the Seller and the Issuer, respectively
(subject to any statutory or other lien arising by operation of law after the
Closing Date which is prior to such security interest).
(vii) RECEIVABLES IN FORCE. No Receivable shall have been satisfied,
subordinated, or rescinded, nor shall any Financed Vehicle have been released
from the Lien granted by the related Receivable in whole or in part, which
security interest shall be assignable by MMCA to the Seller and by the Seller to
the Issuer.
(viii) NO WAIVER. No provision of a Receivable shall have been waived
in such a manner that such Receivable fails to meet all of the representations
and warranties made by the Seller in this Section 2.2 with respect thereto.
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(ix) NO DEFENSES. No right of rescission, setoff, counterclaim, or
defense shall have been asserted or threatened with respect to any Receivable.
(x) NO LIENS. To the best of the Seller's knowledge, no liens or
claims shall have been filed for work, labor, or materials relating to a
Financed Vehicle that shall be liens prior to, or equal or coordinate with, the
security interest in the Financed Vehicle granted by the Receivable.
(xi) NO DEFAULT; REPOSSESSION. Except for payment defaults continuing
for a period of not more than thirty (30) days as of the Cutoff Date or the
failure of the Obligor to maintain satisfactory physical damage insurance
covering the Financed Vehicle, no default, breach, violation, or event
permitting acceleration under the terms of any Receivable shall have occurred;
no continuing condition that with notice or the lapse of time or both would
constitute a default, breach, violation, or event permitting acceleration under
the terms of any Receivable shall have arisen; the Seller shall not have waived
any of the foregoing; and no Financed Vehicle shall have been repossessed as of
the Cutoff Date.
(xii) INSURANCE. MMCA, in accordance with its customary procedures,
shall have determined whether or not the Obligor has maintained physical damage
insurance (which insurance shall not be force placed insurance) covering the
Financed Vehicle.
(xiii) TITLE. It is the intention of the Seller that the transfer and
assignment of the Receivables herein contemplated constitute a sale of the
Receivables from the Seller to the Issuer and that the beneficial interest in,
and title to, the Receivables not be part of the Seller's estate in the event of
the filing of a bankruptcy petition by or against the Seller under any
bankruptcy law. No Receivable has been sold, transferred, assigned, or pledged
by the Seller to any Person other than the Issuer. Immediately prior to the
transfer and assignment herein contemplated, the Seller had good and marketable
title to each Receivable free and clear of all Liens, encumbrances, security
interests, and rights of others and, immediately upon the transfer thereof, the
Issuer shall have good and marketable title to each Receivable, free and clear
of all Liens, encumbrances, security interests, and rights of others; and the
transfer has been perfected by all necessary action under the Relevant UCC.
(xiv) VALID ASSIGNMENT. No Receivable shall have been originated in,
or shall be subject to the laws of, any jurisdiction under which the sale,
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transfer, and assignment of such Receivable under this Agreement or the
Indenture or pursuant to transfers of the Certificates shall be unlawful, void,
or voidable. The Seller has not entered into any agreement with any account
debtor that prohibits, restricts or conditions the assignment of any portion of
the Receivables.
(xv) ALL FILINGS MADE. All filings (including, without limitation,
filings under the Relevant UCC) necessary in any jurisdiction to give the Issuer
a first priority perfected security interest in the Receivables, and to give the
Indenture Trustee a first priority perfected security interest therein, shall be
made within ten (10) days of the Closing Date.
(xvi) CHATTEL PAPER. Each Receivable constitutes "CHATTEL PAPER" as
defined in the Relevant UCC.
(xvii) ONE ORIGINAL. There shall be only one original executed copy
of each Receivable.
(xviii) PRINCIPAL BALANCE. Each Receivable had an original principal
balance (net of unearned precomputed finance charges) of not more than
$60,000.00, and a remaining Principal Balance as of the Cutoff Date of not less
than $100.00.
(xix) NO BANKRUPT OBLIGORS. As of the Cutoff Date, no Receivable was
due from an Obligor that was the subject of a proceeding under the Bankruptcy
Code of the United States or was bankrupt.
(xx) NEW AND USED VEHICLES. Approximately [ ]% of the Pool Balance
of the Receivables, constituting approximately [ ]% of the total number of
the Receivables, as of the Cutoff Date, relate to new automobiles and light- or
medium-duty trucks financed at new vehicle rates. Approximately [ ]% of the
Pool Balance of the Receivables, constituting approximately [ ]% of the total
number of Receivables included in the Trust, as of the Cutoff Date, relate to
used automobiles and light- or medium-duty trucks. Of the new and used
vehicles, approximately [ ]% of the Pool Balance of the Receivables,
constituting approximately [ ]% of the total number of Receivables as of the
Cutoff Date, relate to program automobiles and light-duty trucks manufactured in
the current and immediately preceding model years which are financed at new
vehicle rates. Of the used vehicles, approximately [ ]% of the Pool Balance
of the Receivables, constituting approximately [ ]% of the total number of
Receivables
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as of the Cutoff Date, relate to refinanced program automobiles and light- or
medium-duty trucks manufactured in prior model years which are financed at the
original rates set forth in the related Contracts or at used vehicle rates.
(xxi) ORIGINATION. Each Receivable shall have an origination date
during or after April 1994.
(xxii) MATURITY OF RECEIVABLES. Each Receivable shall have a
remaining maturity, as of the Cutoff Date, of not more than sixty (60) months,
and an original maturity of not more than sixty (60) months.
(xxiii)ANNUAL PERCENTAGE RATE. Each Receivable shall have an APR of
at least 0%. Each Receivable shall have an APR of not more than 30%.
(xxiv) SCHEDULED PAYMENTS. Each Receivable shall have a first
Scheduled Payment due on or prior to August 31, 1998, and no Receivable shall
have a payment of which more than 10% of such payment is thirty (30) days
overdue as of the Cutoff Date.
(xxv) LOCATION OF RECEIVABLE FILES. The Receivable Files shall be
kept at one or more of the locations listed in Schedule B hereto.
(xxvi) CAPPED RECEIVABLES AND SIMPLE INTEREST RECEIVABLES. Except to
the extent that there has been no material adverse effect on Noteholders or
Certificateholders, each Capped Receivable has been treated consistently by the
Seller and the Servicer as a Simple Interest Receivable and payments with
respect to each Simple Interest Receivable have been allocated consistently in
accordance with the Simple Interest Method.
(xxvii) AGREEMENT. The representations and warranties of the Seller
in Section 6.1 are true and correct.
(xxviii) NO RECEIVABLES ORIGINATED IN ALABAMA. No Receivable shall
have been originated in Alabama.
(xxix) OTHER DATA. The tabular data and the numerical data relating
to the characteristics of the Receivables contained in the Prospectus (as
defined in the Purchase Agreement) is true and correct in all material respects.
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SECTION 2.3. REPURCHASE UPON BREACH. The Seller, the Servicer, or
the Owner Trustee, as the case may be, shall inform the other parties to this
Agreement, the Indenture Trustee and MMCA promptly, in writing, upon the
discovery of any breach or failure to be true of the representations and
warranties made by the Seller pursuant to Section 2.2. If the breach or failure
shall not have been cured by the close of business on the last day of the
Collection Period which includes the sixtieth (60th) day after the date on which
the Seller becomes aware of, or receives written notice from the Owner Trustee
or the Servicer of, such breach or failure, and such breach or failure
materially and adversely affects the interest of the Issuer in a Receivable, the
Seller shall repurchase from the Issuer such Receivable, on the Payment Date
immediately following such Collection Period. In consideration of the
repurchase of a Receivable hereunder, the Seller shall remit the Purchase Amount
of such Receivable in the manner specified in Section 4.5. The sole remedy of
the Issuer, the Owner Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders with respect to a breach or failure to be true of the
representations and warranties made by the Seller pursuant to Section 2.2 shall
be to require the Seller to repurchase Receivables pursuant to this Section 2.3
and to enforce the obligation of MMCA to the Seller to repurchase such
Receivable pursuant to the Purchase Agreement. Neither the Owner Trustee nor
the Indenture Trustee shall have any duty to conduct an affirmative
investigation as to the occurrence of any condition requiring the repurchase of
any Receivable pursuant to this Section 2.3 or the eligibility of any Receivable
for purposes of this Agreement.
SECTION 2.4. CUSTODY OF RECEIVABLE FILES. To assure uniform quality
in servicing the Receivables and to reduce administrative costs, the Issuer,
upon the execution and delivery of this Agreement, hereby revocably appoints the
Servicer as its agent, and the Servicer hereby accepts such appointment, to act
as custodian on behalf of the Issuer and the Indenture Trustee of the following
documents or instruments, which are hereby constructively delivered to the
Indenture Trustee, as pledgee of the Issuer pursuant to the Indenture, with
respect to each Receivable (collectively, a "RECEIVABLE FILE"):
(i) the single original of the Receivable;
(ii) the original credit application fully executed by the Obligor or
a photocopy thereof or a record thereof on a computer file or disc or on
microfiche;
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(iii) the original certificate of title or such other documents that
the Servicer or MMCA shall keep on file, in accordance with its customary
practices and procedures, evidencing the security interest of MMCA in the
Financed Vehicle;
(iv) documents evidencing the existence of any insurance covering the
Financed Vehicle; and
(v) any and all other documents (including any computer file or disc
or microfiche) that the Servicer or the Seller shall keep on file, in accordance
with its customary procedures, relating to a Receivable, an Obligor, or a
Financed Vehicle.
On the Closing Date, the Servicer shall provide an Officer's
Certificate to the Issuer and the Indenture Trustee confirming that the Servicer
has received, on behalf of the Issuer and the Indenture Trustee, all the
documents and instruments necessary for the Servicer to act as the agent of the
Issuer and the Indenture Trustee for the purposes set forth in this Section 2.4,
including the documents referred to herein, and the Issuer, the Owner Trustee
and the Indenture Trustee are hereby authorized to rely on such Officer's
Certificate.
SECTION 2.5. DUTIES OF SERVICER AS CUSTODIAN.
(a) SAFEKEEPING. The Servicer, in its capacity as custodian, shall
hold the Receivable Files for the benefit of the Issuer and the Indenture
Trustee and maintain such accurate and complete accounts, records, and computer
systems pertaining to each Receivable File as shall enable the Servicer and the
Issuer to comply with the terms and provisions of this Agreement, and the
Indenture Trustee to comply with the terms and conditions of the Indenture. In
performing its duties as custodian, the Servicer shall act with reasonable care,
using that degree of skill and attention that the Servicer exercises with
respect to the receivable files relating to all comparable motor vehicle
receivables that the Servicer services for itself or others. In accordance with
its customary practices and procedures with respect to its retail installment
sale contracts, the Servicer shall conduct, or cause to be conducted, periodic
audits of the Receivable Files held by it under this Agreement, and of the
related accounts, records, and computer systems, in such a manner as shall
enable the Issuer or the Indenture Trustee to verify the accuracy of the
Servicer's recordkeeping. The Servicer shall promptly report to the Owner
Trustee and the Indenture Trustee any failure on its part to hold the Receivable
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Files and maintain its accounts, records, and computer systems as herein
provided and promptly take appropriate action to remedy any such failure.
Nothing herein shall be deemed to require an initial review or any periodic
review by the Issuer, the Owner Trustee or the Indenture Trustee of the
Receivable Files and none of the Issuer, the Owner Trustee and the Indenture
Trustee shall be liable or responsible for any action or failure to act by the
Servicer in its capacity as custodian hereunder.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall maintain
each Receivable File at one of its offices specified in Schedule B to this
Agreement, or at such other office as shall be specified to the Issuer and the
Indenture Trustee by written notice not later than ninety (90) days after any
change in location. The Servicer shall make available to the Issuer and the
Indenture Trustee or its duly authorized representatives, attorneys, or auditors
a list of locations of the Receivable Files, the Receivable Files, and the
related accounts, records, and computer systems maintained by the Servicer at
such times as the Issuer or the Indenture Trustee shall instruct.
(c) RELEASE OF DOCUMENTS. Upon written instructions from the
Indenture Trustee, the Servicer shall release any document in the Receivable
Files to the Indenture Trustee, the Indenture Trustee's agent, or the Indenture
Trustee's designee, as the case may be, at such place or places as the Indenture
Trustee may designate, as soon thereafter as is practicable. Any document so
released shall be handled by the Indenture Trustee with due care and returned to
the Servicer for safekeeping as soon as the Indenture Trustee or its agent or
designee, as the case may be, shall have no further need therefor.
(d) TITLE TO RECEIVABLES. The Servicer agrees that, in respect of any
Receivable held by the Servicer as custodian hereunder, the Servicer will not at
any time have or in any way attempt to assert any interest in such Receivable or
the related Receivable File, other than for collecting or enforcing the
Receivable for the benefit of the Issuer and that the entire equitable interest
in such Receivable and the related Receivable File shall at all times be vested
in the Issuer.
SECTION 2.6. INSTRUCTIONS; AUTHORITY TO ACT. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by an Authorized Officer of the
Indenture Trustee. A certified copy of excerpts of authorizing resolutions of
the Board of Directors of the Indenture Trustee shall constitute conclusive
evidence of
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the authority of any such Authorized Officer to act and shall be considered in
full force and effect until receipt by the Servicer of written notice to the
contrary given by the Indenture Trustee.
SECTION 2.7. CUSTODIAN'S INDEMNIFICATION. The Servicer, in its
capacity as custodian, shall indemnify and hold harmless the Issuer, the Owner
Trustee and the Indenture Trustee and each of their respective officers,
directors, employees and agents from and against any and all liabilities,
obligations, losses, compensatory damages, payments, costs or expenses
(including legal fees if any) of any kind whatsoever that may be imposed on,
incurred, or asserted against the Issuer, the Owner Trustee and the Indenture
Trustee or any of their respective officers, directors, employees and agents as
the result of any act or omission by the Servicer relating to the maintenance
and custody of the Receivable Files; PROVIDED, HOWEVER, that the Servicer shall
not be liable hereunder to the Owner Trustee to the extent, but only to the
extent, that such liabilities, obligations, losses, compensatory damages,
payments, costs or expenses result from the willful misfeasance, bad faith, or
negligence of the Owner Trustee and shall not be liable hereunder to the
Indenture Trustee to the extent, but only to the extent, that such liabilities,
obligations, losses, compensatory damages, payments, costs or expenses result
from the willful misfeasance, bad faith, or negligence of the Indenture Trustee.
SECTION 2.8. EFFECTIVE PERIOD AND TERMINATION. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section 2.8.
If the Servicer shall resign as Servicer under Section 7.5, or if all of the
rights and obligations of the Servicer shall have been terminated under Section
8.1, the appointment of the Servicer as custodian hereunder may be terminated by
the Indenture Trustee or by the Holders of Notes evidencing not less than 25% of
the principal amount of the then Outstanding Notes or, with the consent of
Holders of Notes evidencing not less than 25% of the principal amount of the
then Outstanding Notes, by the Owner Trustee or by Holders of Certificates
evidencing not less than 25% of the Certificate Balance, in the same manner as
the Indenture Trustee or such Holders may terminate the rights and obligations
of the Servicer under Section 8.1. As soon as practicable after any termination
of such appointment, the Servicer shall deliver, or cause to be delivered, the
Receivable Files and the related accounts and records maintained by the Servicer
to the Indenture Trustee, the Indenture Trustee's agent or the Indenture
Trustee's
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designee at such place or places as the Indenture Trustee may reasonably
designate.
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ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND TRUST PROPERTY
SECTION 3.1. DUTIES OF SERVICER. (a) The Servicer, acting alone
and/or through subservicers as provided in this Section 3.1, shall administer
the Receivables with reasonable care. The Servicer's duties shall include, but
not be limited to, the collection and posting of all payments, responding to
inquiries by Obligors on the Receivables, or by federal, state, or local
governmental authorities, investigating delinquencies, reporting tax information
to Obligors, furnishing monthly and annual statements to the Owner Trustee and
the Indenture Trustee with respect to distributions, providing collection and
repossession services in the event of Obligor default, coordinating or arranging
inspection of Financed Vehicles relating to Final Payment Receivables at the end
of the related Contract term, refinancing or selling Financed Vehicles relating
to Final Payment Receivables at the end of the related Contract term depending
upon the options chosen by the Obligors and making Advances pursuant to Sections
4.4(a) and (c). The Servicer shall also administer and enforce all rights and
responsibilities of the holder of the Receivables provided for in the Dealer
Agreements, to the extent that such Dealer Agreements relate to the Receivables,
the Financed Vehicles or the Obligors. In performing its duties as Servicer
hereunder, the Servicer will exercise that degree of skill and attention that
the Servicer exercises with respect to all comparable motor vehicle receivables
that it services for itself or others. Subject to Section 3.2, the Servicer
shall follow its customary standards, policies, practices and procedures in
performing its duties hereunder as Servicer. Without limiting the generality of
the foregoing, the Servicer is hereby authorized and empowered to execute and
deliver, on behalf of itself, the Issuer, the Owner Trustee, the Indenture
Trustee, the Certificateholders, the Noteholders or any one or more of them,
any and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the
Receivables or to the Financed Vehicles, all in accordance with this Agreement;
PROVIDED, HOWEVER, that notwithstanding the foregoing, the Servicer shall not,
except pursuant to an order from a court of competent jurisdiction, release an
Obligor from payment of any unpaid amount under any Receivable or waive the
right to collect the unpaid balance (including accrued interest) of any
Receivable from the Obligor, except in connection with a DE MINIMIS deficiency,
Excess Wear and Tear or Excess Mileage which the Servicer would not attempt to
collect in accordance with its customary procedures, in which event the Servicer
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shall indemnify the Issuer for such deficiency, Excess Wear and Tear or Excess
Mileage. If the Servicer shall commence a legal proceeding to enforce a
Receivable, the Owner Trustee shall thereupon be deemed to have automatically
assigned such Receivable to the Servicer, which assignment shall be solely for
purposes of collection. If in any enforcement suit or legal proceeding it shall
be held that the Servicer may not enforce a Receivable on the ground that it
shall not be a real party in interest or a holder entitled to enforce the
Receivable, the Owner Trustee shall, at the Servicer's expense and direction,
take steps to enforce the Receivable, including bringing suit in its name or the
names of the Indenture Trustee, the Certificateholders, the Noteholders or any
of them. The Owner Trustee shall execute and deliver to the Servicer any powers
of attorney and other documents as shall be prepared by the Servicer and
reasonably necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder. The Servicer, at its expense,
shall obtain on behalf of the Issuer or the Owner Trustee all licenses, if any,
required by the laws of any jurisdiction to be held by the Issuer or the Owner
Trustee in connection with ownership of the Receivables, and shall make all
filings and pay all fees as may be required in connection therewith during the
term hereof.
The Servicer may enter into subservicing agreements with one or more
subservicers for the servicing and administration of certain of the Receivables;
PROVIDED, HOWEVER, that the Servicer shall remain fully liable hereunder for the
performance of the duties of Servicer and any such subservicer shall be and
shall remain, for so long as it is acting as subservicer, an Eligible Servicer,
and any fees paid to such subservicer shall be paid by the Servicer and not out
of the proceeds of the Trust, and any such subservicer shall agree to service
the Receivables in a manner consistent with the terms of this Agreement.
(b) References in this Agreement to actions taken, to be taken,
permitted to be taken, or restrictions on actions permitted to be taken by the
Servicer in servicing the Receivables and other actions taken, to be taken,
permitted to be taken, or restrictions on actions to be taken with respect to
the Trust Property shall include actions taken, to be taken, permitted to be
taken, or restrictions on actions permitted to be taken by a subservicer on
behalf of the Servicer and references herein to payments received by the
Servicer shall include payments received by a subservicer, irrespective of
whether such payments are actually deposited in the Collection Account by such
subservicer. Any such subservicing agreement will contain terms and provisions
substantially identical to the terms and provisions of this Agreement and such
other terms and provisions as
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are not inconsistent with this Agreement and as the Servicer and the subservicer
have agreed.
(c) The Servicer shall be entitled to terminate any subservicing
agreement in accordance with the terms and conditions of such subservicing
agreement and without any limitation by virtue of this Agreement; PROVIDED,
HOWEVER, that, in the event of termination of any subservicing agreement by the
Servicer, the Servicer shall either act directly as Servicer of the related
Receivables or enter into a subservicing agreement with a successor subservicer
which will be bound by the terms of the related subservicing agreement.
(d) As a condition to the appointment of any subservicer, the Servicer
shall notify the Owner Trustee, the Indenture Trustee and the Rating Agencies in
writing before such assignment becomes effective and such subservicer shall be
required to execute and deliver an instrument in which it agrees that, for so
long as it acts as subservicer of the Receivables and the other Trust Property
being serviced by it, the covenants, conditions, indemnities, duties,
obligations and other terms and provisions of this Agreement applicable to the
Servicer hereunder shall be applicable to it as subservicer, that it shall be
required to perform its obligations as subservicer for the benefit of the Issuer
as if it were Servicer hereunder (subject, however, to the right of the Servicer
to direct the performance of such obligations in accordance with this Agreement)
and that, notwithstanding any provision of a subservicing agreement to the
contrary, such subservicer shall be directly liable to the Owner Trustee and the
Issuer (notwithstanding any failure by the Servicer to perform its duties and
obligations hereunder) for the failure by such subservicer to perform its
obligations hereunder or under any subservicing agreement, and that
(notwithstanding any failure by the Servicer to perform its duties and
obligations hereunder) the Owner Trustee may enforce the provisions of this
Agreement and any subservicing agreement against the subservicer for the benefit
of the Issuer, without diminution of such obligations or liabilities by virtue
of any subservicing agreement, by virtue of any indemnification provided
thereunder or by virtue of the fact that the Servicer is primarily responsible
hereunder for the performance of such duties and obligations, as if a
subservicer alone were servicing and administering, under this Agreement, the
Receivables and the other Trust Property being serviced by it under the
subservicing agreement.
(e) Notwithstanding any subservicing agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer or
a subservicer or reference to actions taken through such Persons or
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otherwise, the Servicer shall remain obligated and liable to the Issuer and the
Owner Trustee for the servicing and administering of the Receivables and the
other Trust Property in accordance with the provisions of this Agreement
(including for the deposit of payments received by a subservicer, irrespective
of whether such payments are actually remitted to the Servicer or deposited in
the Collection Account by such subservicer; PROVIDED that if such amounts are so
deposited, the Servicer shall have no further obligation to do so) without
diminution of such obligation or liability by virtue of such subservicing
agreements or arrangements or by virtue of indemnification from a subservicer,
to the same extent and under the same terms and conditions as if the Servicer
alone were servicing and administering the Receivables and the other Trust
Property. The Servicer shall be entitled to enter into any agreement with a
subservicer for indemnification of the Servicer and nothing contained in this
Agreement shall be deemed to limit or modify such indemnification.
(f) In the event the Servicer shall for any reason no longer be acting
as such (including by reason of the occurrence of an Event of Servicing
Termination), the successor Servicer may, in its discretion, thereupon assume
all of the rights and obligations of the outgoing Servicer under a subservicing
agreement. In such event, the successor Servicer shall be deemed to have
assumed all of the Servicer's interest therein and to have replaced the outgoing
Servicer as a party to such subservicing agreement to the same extent as if such
subservicing agreement had been assigned to the successor Servicer, except that
the outgoing Servicer shall not thereby be relieved of any liability or
obligation on the part of the outgoing Servicer to the subservicer under such
subservicing agreement. The outgoing Servicer shall, upon request of the
Indenture Trustee, but at the expense of the outgoing Servicer, deliver to the
successor Servicer all documents and records relating to each such subservicing
agreement and the Receivables and the other Trust Property then being serviced
thereunder and an accounting of amounts collected and held by it and otherwise
use its best efforts to effect the orderly and efficient transfer of the
subservicing agreement to the successor Servicer. In the event that the
successor Servicer elects not to assume a subservicing agreement, such
subservicing agreement shall be immediately cancellable by the successor
Servicer upon written notice to the subservicer and the outgoing Servicer, at
its expense, shall cause the subservicer to deliver to the successor Servicer
all documents and records relating to the Receivables and the other Trust
Property being serviced thereunder and all amounts held (or thereafter received)
by such subservicer (together with an accounting of such amounts) and shall
otherwise use its best efforts to effect the orderly and efficient transfer of
servicing of the
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Receivables and the other Trust Property being serviced by such subservicer to
the successor Servicer.
SECTION 3.2. COLLECTION AND ALLOCATION OF RECEIVABLE PAYMENTS. (a)
The Servicer shall make reasonable efforts to collect all payments called for
under the terms and provisions of the Receivables as and when the same shall
become due and shall follow such collection procedures as it follows with
respect to all comparable motor vehicle receivables that it services for itself
or others. The Servicer shall allocate collections between principal and
interest in accordance with the customary servicing practices and procedures it
follows with respect to all comparable motor vehicle receivables that it
services for itself or others. The Servicer will not increase or decrease the
number or amount of any Scheduled Payment, or the Amount Financed under a
Receivable or the APR of a Receivable, or extend, rewrite or otherwise modify
the payment terms of a Receivable; PROVIDED, HOWEVER, that the Servicer may
extend the due date for one or more payments due on a Receivable for
credit-related reasons that would be acceptable to the Servicer with respect to
comparable motor vehicle receivables that it services for itself and others and
in accordance with its customary standards, policies, practices and procedures
if the cumulative extensions with respect to any Receivable shall not cause the
term of such Receivable to extend beyond the Final Scheduled Maturity Date; and
PROVIDED FURTHER that such extensions, in the aggregate, do not exceed two (2)
months for each twelve (12) months of the original term of the Receivable. In
the event that the Servicer fails to comply with the provisions of the preceding
sentence, the Servicer shall be required to purchase the Receivable or
Receivables affected thereby, for the Purchase Amount, in the manner specified
in Section 3.7, as of the close of the Collection Period in which such failure
occurs. The Servicer may, in its discretion, (but only in accordance with its
customary standards, policies, practices and procedures), waive any late payment
charge or any other fee that may be collected in the ordinary course of
servicing a Receivable.
(b) With respect to each Final Payment Receivable, the Servicer, in
accordance with its customary servicing standards, policies, practices and
procedures, shall contact the Obligor on or before the due date of the Last
Scheduled Payment specified in the related Contract. If, at such time, the
Obligor under the Final Payment Receivable has notified MMCA on behalf of the
Trust that it elects to sell the Financed Vehicle to MMCA on behalf of the Trust
in accordance with the terms of the Receivable, the Servicer shall, upon
delivery of the Financed Vehicle by the Obligor to MMCA on behalf of the Trust,
inspect the
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Financed Vehicle for Excess Wear and Tear and Excess Mileage, and to determine
the necessity of any repairs. If the Servicer determines that such Financed
Vehicle requires repairs as a result of Excess Wear and Tear, the Servicer shall
require the Obligor to pay the estimated cost of such repairs to the Servicer.
If the Obligor disputes the Servicer's estimate of the cost of such repairs, the
Obligor may obtain, at the Obligor's own expense, a professional appraisal of
the Financed Vehicle's value by an independent third-party appraiser acceptable
to both the Obligor and the Servicer, and the cost of repairs for Excess Wear
and Tear as determined by such appraisal shall be binding on the Obligor and the
Servicer. The Servicer shall, pursuant to the related Contract, offset (x) the
cost of repairs for Excess Wear and Tear as determined by the appraisal, any
charges for Excess Mileage and the disposition fee payable to the Servicer
pursuant to the related Contract, and the Principal Balance, accrued interest
and any other amounts owed by the Obligor on the Receivable against (y) the
purchase price otherwise due to the Obligor for the Financed Vehicle, and shall
collect any excess of (x) over (y) from the Obligor.
(c) In connection with an Obligor's transfer of a Financed Vehicle to
MMCA on behalf of the Trust in satisfaction of its obligation to pay the Last
Scheduled Payment under a Final Payment Receivable, pursuant to the terms of the
Contract related to such Last Scheduled Payment, the Servicer shall require the
Obligor to pay a disposition fee (which the Servicer will retain as servicing
compensation), whereupon the Servicer shall take possession of the related
Financed Vehicle and shall prepare such Financed Vehicle for sale at auction or
otherwise in accordance with the Servicer's customary servicing standards,
policies, practices and procedures.
(d) Proceeds received by the Servicer from the payment by an Obligor
of a Financed Vehicle of amounts attributable to Last Scheduled Payments and
other amounts (including Excess Wear and Tear and Excess Mileage) owed by the
Obligor and from the sale of a Financed Vehicle at auction or otherwise
constitute proceeds of Last Scheduled Payments and collections on the
Receivables, and shall be deposited into the Collection Account. Following the
sale of the Financed Vehicle, the Servicer, on behalf of the Trust, shall
deliver the related certificate of title to the purchaser of such Financed
Vehicle. Following the Servicer's receipt of proceeds from the sale of such
Financed Vehicle and amounts to be paid by the Obligor pursuant to subparagraph
(b) above, the Servicer shall record on its books and records the termination of
the Trust's ownership and security interest in the related Final Payment
Receivable (with copies to the Indenture Trustee and the Owner Trustee).
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(e) If the Obligor under any Final Payment Receivable has notified the
Dealer that it desires to refinance the amount that it owes on termination of
the Receivable, MMCA will, in accordance with its customary servicing standards,
policies, practices and procedures, make a decision to grant or deny credit,
except for Contracts for which the Obligors have the right to refinance without
such an assessment, in which case MMCA shall honor the Obligor's right to
refinance. If credit is denied, the Servicer shall require the Obligor to
satisfy its obligation to pay the remaining amounts owed in accordance with the
terms of the Final Payment Receivable. If credit is granted, MMCA shall deposit
an amount equal to the total amount owed by the Obligor on the Receivable to the
Collection Account. Upon deposit of such amount into the Collection Account,
the Trust's ownership and security interest in the related Financed Vehicle
shall terminate, and the Trust will assign all interest in, to and under the
Receivable and the related Financed Vehicle to MMCA. The Servicer shall record
such termination on its books and records (and shall deliver copies thereof to
the Indenture Trustee and the Owner Trustee upon written request with ten days
of receipt of such request). If MMCA is no longer the Servicer, the Issuer or
any Holder of the Certificates may make arrangements for the successor Servicer
or another party to provide refinancing of Last Scheduled Payments to Obligors
who desire to satisfy the Last Scheduled Payment through refinancing and who
meet such party's credit criteria, and any reasonable costs and expenses of the
successor Servicer or such third party in determining whether to provide such
refinancing shall be payable from amounts, if any, which would otherwise be
released from the Supplemental Reserve Account and paid to the Seller and to the
extent of any shortfall in such amounts in the Supplemental Reserve Account
shall be payable from amounts, if any, which would otherwise be released from
the Reserve Account and paid to the Seller.
SECTION 3.3. REALIZATION UPON RECEIVABLES. (a)On behalf of the
Issuer, the Servicer shall use reasonable efforts, in accordance with the
standard of care required by Section 3.1, to repossess or otherwise convert the
ownership of each Financed Vehicle securing a Defaulted Receivable. In taking
such action, the Servicer shall follow such customary and usual practices and
procedures as it shall deem necessary or advisable in its servicing of
comparable automotive receivables, and as are otherwise consistent with the
standard of care required under Section 3.1, which shall include the exercise of
any rights of recourse to Dealers under the Dealer Agreements. The Servicer
shall be entitled to recover all reasonable expenses incurred by it in the
course of repossessing and liquidating a Financed Vehicle into cash proceeds,
but only out of the cash proceeds of such Financed Vehicle and any deficiency
obtained from the Obligor. The foregoing shall be
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subject to the provision that, in any case in which a Financed Vehicle shall
have suffered damage, the Servicer shall not expend funds in connection with the
repair or the repossession of such Financed Vehicle unless it shall determine in
its discretion that such repair and/or repossession will increase the
Liquidation Proceeds (or Recoveries) of the related Receivable by an amount
equal to or greater than the amount of such expenses.
(b) If the Servicer elects to commence a legal proceeding to enforce a
Dealer Agreement, the act of commencement shall be deemed to be an automatic
assignment from the Issuer to the Servicer of the rights of recourse under such
Dealer Agreement. If, however, in any enforcement suit or legal proceeding, it
is held that the Servicer may not enforce a Dealer Agreement on the grounds that
it is not a real party in interest or a Person entitled to enforce the Dealer
Agreement, the Owner Trustee, at the Servicer's expense and direction, shall
take such steps as the Servicer deems necessary to enforce the Dealer Agreement,
including bringing suit in its name or the names of the Indenture Trustee, the
Certificateholders, the Noteholders or any of them.
SECTION 3.4. PHYSICAL DAMAGE INSURANCE. The Servicer shall follow
its customary servicing procedures to determine whether or not each Obligor
shall have maintained physical damage insurance covering the related Financed
Vehicle.
SECTION 3.5. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES.
The Servicer, in accordance with the standard of care required under Section
3.1, shall take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle.
The Issuer hereby authorizes the Servicer, and the Servicer hereby agrees, to
take such steps as are necessary to re-perfect such security interest on behalf
of the Issuer and the Indenture Trustee in the event the Servicer receives
notice of, or otherwise has actual knowledge of, the relocation of a Financed
Vehicle or for any other reason.
SECTION 3.6. COVENANTS OF SERVICER. The Servicer hereby makes the
following covenants:
(a) SECURITY INTEREST TO REMAIN IN FORCE. The Financed Vehicle
securing each Receivable will not be released from the security interest granted
by the Receivable in whole or in part, except as contemplated herein.
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(b) NO IMPAIRMENT. The Servicer will not (nor will it permit any
subservicer to) impair in any material respect the rights of the Issuer, the
Owner Trustee, the Indenture Trustee, the Certificateholders or the Noteholders
in the Receivables or, subject to clause (c) below, otherwise amend or alter the
terms thereof if, as a result of such amendment or alteration, the interests of
the Issuer, the Owner Trustee, the Indenture Trustee, the Certificateholders or
the Noteholders hereunder would be materially adversely affected.
(c) AMENDMENTS. The Servicer will not increase or decrease the number
or amount of Scheduled Payments or the Amount Financed under a Receivable, or
extend, rewrite or otherwise modify the payment terms of a Receivable, except
pursuant to Section 3.2(a).
SECTION 3.7. PURCHASE BY SERVICER UPON BREACH. The Seller, the
Servicer or the Owner Trustee, as the case may be, shall inform the other
parties to this Agreement promptly, in writing, upon the discovery of any breach
of Section 3.2(a), 3.5 or 3.6. If the breach shall not have been cured by the
last day of the Collection Period which includes the sixtieth (60th) day after
the date on which the Servicer becomes aware of, or receives written notice of,
such breach, and such breach materially and adversely affects the interests of
the Trust in a Receivable, the Servicer shall purchase such Receivable or
Receivables on the immediately succeeding Payment Date; PROVIDED, HOWEVER, that
with respect to a breach of Section 3.2(a), the Servicer shall repurchase the
affected Receivable from the Trust at the end of the Collection Period in which
such breach occurs. In consideration of the purchase of a Receivable hereunder,
the Servicer shall remit the Purchase Amount of such Receivable in the manner
specified in Section 4.5. Except as provided in Section 7.2, the sole remedy of
the Issuer, the Owner Trustee, the Indenture Trustee, the Certificateholders or
the Noteholders against the Servicer with respect to a breach pursuant to
Section 3.2, 3.5 or 3.6 shall be to require the Servicer to repurchase
Receivables pursuant to this Section 3.7. Neither the Owner Trustee nor the
Indenture Trustee shall have any duty to conduct an affirmative investigation as
to the occurrence of any condition requiring the repurchase of any Receivable
pursuant to this Section 3.7 or the eligibility of any Receivable for purposes
of this Agreement.
SECTION 3.8. SERVICING COMPENSATION. The "SERVICING FEE" with
respect to a Collection Period shall be an amount equal to the product of
one-twelfth (1/12) of the Servicing Rate and the Pool Balance as of the first
day of such Collection Period. As additional servicing compensation, the
Servicer shall also be
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entitled to earnings on amounts on deposit in the Payahead Account, disposition
fees paid with respect to Final Payment Receivables, Rule of 78's Payments, and
any administrative fees and charges and all late payment fees actually collected
(from whatever source) on the Receivables other than fees paid in connection
with the extension or deferral of payments on a Receivable (the "SUPPLEMENTAL
SERVICING FEE"). The Servicer shall be required to pay all expenses incurred by
it in connection with its activities hereunder (including fees and expenses of
the Owner Trustee and the Indenture Trustee (and any custodian appointed by the
Owner Trustee and the Indenture Trustee) and independent accountants, any
subservicer, taxes imposed on the Servicer or any subservicer (to the extent not
paid by such subservicer), and expenses incurred in connection with
distributions and reports to the Certificateholders and the Noteholders), except
expenses incurred in connection with realizing upon Receivables under Section
3.3.
SECTION 3.9. SERVICER'S CERTIFICATE. On or before the Determination
Date immediately preceding each Payment Date, the Servicer shall deliver to the
Owner Trustee, each Paying Agent, the Indenture Trustee and the Seller, with a
copy to the Rating Agencies, a certificate of a Servicing Officer substantially
in the form of Exhibit A hereto (a "SERVICER'S CERTIFICATE") and attached to a
Servicer's report containing all information necessary to make the transfers and
distributions pursuant to Sections 4.3, 4.4, 4.5, 4.6 and 4.7, together with the
written statements to be furnished by the Owner Trustee to Certificateholders
pursuant to Section 4.9 and by the Indenture Trustee to the Noteholders pursuant
to Section 4.9 hereof and Section 6.6 of the Indenture. The Servicer also shall
separately identify (by account number of the Receivable as it appears in the
related Schedule of Receivables) in a written notice to the Owner Trustee and
the Indenture Trustee the Receivables to be repurchased by the Seller or to be
purchased by the Servicer, as the case may be, on the related Payment Date, and,
upon request of one of the foregoing parties, each Receivable which became a
Defaulted Receivable during the related Collection Period. The Servicer shall
deliver to the Rating Agencies any information, to the extent it is available to
the Servicer, that the Rating Agencies reasonably request in order to monitor
the Issuer.
SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF EVENT OF
SERVICING TERMINATION. (a) The Servicer shall deliver to the Owner Trustee and
the Indenture Trustee, on or before May 31 of each year, commencing May 31,
1999, an Officer's Certificate, stating that (i) a review of the activities of
the Servicer during the preceding calendar year (or shorter period, in the case
of
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the first such Officer's Certificate) and of its performance of its obligations
under this Agreement has been made under such officer's supervision and (ii) to
the best of such officer's knowledge, based on such review, the Servicer has
fulfilled all its obligations under this Agreement throughout such year (or
longer period, in the case of the first such certificate), or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof. A copy of such
certificate may be obtained by any Certificateholder by a request in writing to
the Owner Trustee, or by any Noteholder or Person certifying that it is a Note
Owner by a request in writing to the Indenture Trustee, in either case addressed
to the applicable Corporate Trust Office. Upon the telephone request of the
Owner Trustee, the Indenture Trustee shall promptly furnish the Owner Trustee a
list of Noteholders as of the date specified by the Owner Trustee.
(b) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and the Rating Agencies, promptly upon having knowledge thereof, but in
no event later than five (5) Business Days thereafter, written notice in an
Officer's Certificate 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 Section 8.1.
SECTION 3.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
REPORTS. The Servicer shall cause a firm of independent certified public
accountants (who may also render other services to the Servicer, the Seller or
to MMCA) to deliver to the Owner Trustee and the Indenture Trustee on or before
May 31 of each year, commencing May 31, 1999, a report addressed to the Board of
Directors of the Servicer with respect to the preceding calendar year (or
shorter period, in the case of the first such report) to the effect that such
firm has audited the financial statements of the Servicer and issued its report
thereon and that such audit (1) was made in accordance with generally accepted
auditing standards, (2) included tests relating to motor vehicle loans serviced
for others in accordance with the requirements of the Uniform Single Attestation
Program for Mortgage Bankers (the "PROGRAM"), to the extent the procedures in
such Program are applicable to the servicing obligations set forth in this
Agreement, and (3) except as described in the report, disclosed no exceptions or
errors in the records relating to automobile and light- or medium-duty truck
loans serviced for others that such firm is required to report under the
Program. Such report shall also indicate that the firm is independent with
respect to the Seller and the Servicer within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants.
A copy of such report may be obtained by any
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Certificateholder by a request in writing to the Owner Trustee, or by any
Noteholder or Person certifying that it is a Note Owner by a request in writing
to the Indenture Trustee, in either case addressed to the applicable Corporate
Trust Office.
SECTION 3.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING RECEIVABLES. The Servicer shall provide the Certificateholders, the
Indenture Trustee and the Noteholders with access to the Receivable Files in the
cases where the Certificateholders, the Indenture Trustee or the Noteholders
shall be required by applicable statutes or regulations to have access to such
documentation. Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the
Servicer. Nothing in this Section 3.12 shall affect the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors, and the failure of the Servicer to provide access to
information as a result of such obligation shall not constitute a breach of this
Section 3.12. Any Certificateholder or Noteholder, by its acceptance of a
Certificate or Note, as the case may be, shall be deemed to have agreed to keep
any information obtained by it pursuant to this Section confidential, except as
may be required by applicable law.
SECTION 3.13. REPORTS TO THE COMMISSION. The Servicer shall, on
behalf of the Issuer, cause to be filed with the Commission any periodic reports
required to be filed under the provisions of the Exchange Act , and the rules
and regulations of the Commission thereunder. The Seller shall, at its expense,
cooperate in any reasonable request made by the Servicer in connection with such
filings.
SECTION 3.14. REPORTS TO RATING AGENCIES. The Servicer shall deliver
to each Rating Agency, at such address as each Rating Agency may request, a copy
of all reports or notices furnished or delivered pursuant to this Article and a
copy of any amendments, supplements or modifications to this Agreement and any
subservicing agreement and any other information reasonably requested by such
Rating Agency to monitor this transaction.
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ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS
AND NOTEHOLDERS
SECTION 4.1. ACCOUNTS. (a) The Servicer shall, prior to the Closing
Date, establish and maintain a segregated trust account in the name of the
Indenture Trustee, at a Qualified Institution or Qualified Trust Institution
(which shall initially be the corporate trust department of Bank of Tokyo -
Mitsubishi Trust Company), which shall be designated as the "COLLECTION
ACCOUNT". The Collection Account shall be held in trust for the benefit of the
Noteholders and the Certificateholders. The Collection Account shall be under
the sole dominion and control of the Indenture Trustee; PROVIDED, that the
Servicer may make deposits to and direct the Indenture Trustee in writing to
make withdrawals from the Collection Account in accordance with the terms of
this Agreement, the Indenture and the Trust Agreement. All monies deposited
from time to time in the Collection Account shall be held by the Indenture
Trustee as part of the Trust Property and all deposits to and withdrawals
therefrom shall be made only upon the terms and conditions of the Basic
Documents.
If the Servicer is required to remit collections pursuant to the first
sentence of Section 4.2, all amounts held in the Collection Account shall, to
the extent permitted by applicable law, rules and regulations, be invested, as
directed in writing by the Servicer, by the bank or trust company then
maintaining the Collection Account in Permitted Investments that mature not
later than the Business Day immediately prior to the Payment Date for the
Collection Period to which such amounts relate and such Permitted Investments
shall be held to maturity. All interest and other income (net of losses and
investment expenses) on funds on deposit in the Collection Account shall be
withdrawn from the Collection Account at the written direction of the Servicer
and shall be deposited in the Certificate Distribution Account. In the event
that the Collection Account is no longer to be maintained at the corporate trust
department of Bank of Tokyo - Mitsubishi Trust Company, the Servicer shall, with
the Indenture Trustee's or Owner Trustee's assistance as necessary, cause the
Collection Account to be moved to a Qualified Institution or a Qualified Trust
Institution within ten (10) Business Days (or such longer period not to exceed
thirty (30) calendar days as to which each Rating Agency may consent).
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(b) The Servicer shall, prior to the Closing Date, establish and
maintain a segregated trust account in the name of the Indenture Trustee at a
Qualified Institution or Qualified Trust Institution (which shall initially be
the corporate trust department of Bank of Tokyo - Mitsubishi Trust Company),
which shall be designated as the "NOTE PAYMENT ACCOUNT". The Note Payment
Account shall be held in trust for the benefit of the Noteholders. The Note
Payment Account shall be under the sole dominion and control of the Indenture
Trustee. All monies deposited from time to time in the Note Payment Account
pursuant to this Agreement and the Indenture shall be held by the Indenture
Trustee as part of the Trust Property and shall be applied as provided in this
Agreement and the Indenture. In the event that the Note Payment Account is no
longer to be maintained at the corporate trust department of Bank of Tokyo -
Mitsubishi Trust Company, the Servicer shall, with the Indenture Trustee's
assistance as necessary, cause the Note Payment Account to be moved to a
Qualified Institution or a Qualified Trust Institution within ten (10) Business
Days (or such longer period not to exceed thirty (30) calendar days as to which
each Rating Agency may consent).
(c) The Servicer shall, prior to the Closing Date, establish and
maintain a segregated trust account in the name of the Owner Trustee at a
Qualified Institution or Qualified Trust Institution (which shall initially be
Wilmington Trust Company), which shall be designated as the "CERTIFICATE
DISTRIBUTION ACCOUNT". Except as provided in the Trust Agreement, the
Certificate Distribution Account shall be held in trust for the benefit of the
Certificateholders. The Certificate Distribution Account shall be under the
sole dominion and control of the Owner Trustee; PROVIDED that the Indenture
Trustee may make deposits to such account in accordance with the directions of
the Servicer pursuant to this Agreement and the Indenture. All monies deposited
from time to time in the Certificate Distribution Account pursuant to this
Agreement and the Indenture shall be held by the Owner Trustee as part of the
Trust Property and shall be applied as provided in this Agreement and the Trust
Agreement. In the event that the Certificate Distribution Account is no longer
to be maintained at Wilmington Trust Company, the Servicer shall, with the Owner
Trustee's assistance as necessary, cause the Certificate Distribution Account to
be moved to a Qualified Institution or a Qualified Trust Institution within ten
(10) Business Days (or such longer period not to exceed thirty (30) calendar
days as to which each Rating Agency may consent) and shall promptly notify the
Indenture Trustee of the account number and location of such account.
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(d) The Servicer shall, prior to the Closing Date, establish and
maintain a segregated trust account in the name of the Indenture Trustee at a
Qualified Institution or Qualified Trust Institution (which shall initially be
the corporate trust department of Bank of Tokyo - Mitsubishi Trust Company),
which shall be designated as the "PAYAHEAD ACCOUNT" (the Payahead Account,
together with the Collection Account and the Note Payment Account, the "TRUST
ACCOUNTS"). The Payahead Account shall be held in trust for the benefit of the
Noteholders and the Certificateholders. The Payahead Account shall be under the
sole dominion and control of the Indenture Trustee PROVIDED, that the Servicer
may make deposits to and direct the Indenture Trustee in writing to make
withdrawals from the Payahead Account in accordance with this Agreement and the
Indenture. All monies deposited from time to time in the Payahead Account shall
be held by the Indenture Trustee as part of the Trust Property and all deposits
to and withdrawals therefrom shall be made only upon the terms and conditions of
the Basic Documents.
If the Servicer is required to remit collections pursuant to the first
sentence of Section 4.2, all amounts held in the Payahead Account shall, to the
extent permitted by applicable law, rules and regulations, be invested, as
directed in writing by the Servicer, by the bank or trust company then
maintaining the Payahead Account in Permitted Investments that mature not later
than the Business Day immediately prior to the Payment Date for the Collection
Period to which such amounts relate and such Permitted Investments shall be held
to maturity. All interest and other income (net of losses and investment
expenses) on funds on deposit in the Payahead Account shall be withdrawn from
the Payahead Account at the direction of the Servicer and shall be paid to the
Servicer as additional servicing compensation. In the event that the Payahead
Account is no longer to be maintained at the corporate trust department of Bank
of Tokyo - Mitsubishi Trust Company, the Servicer shall, with the Indenture
Trustee's or Owner Trustee's assistance as necessary, cause the Payahead Account
to be moved to a Qualified Institution or a Qualified Trust Institution within
ten (10) Business Days (or such longer period not to exceed thirty (30) calendar
days as to which each Rating Agency may consent).
(e) Notwithstanding the provisions of clause (d) above and of Section
4.6(a)(ii), for so long as (i) MMCA is the Servicer, (ii) the rating of MMCA's
short-term unsecured debt is at least P-1 by Moody's and is at least A-1 by S&P
and (iii) no Events of Servicing Termination shall have occurred (each, a
"MONTHLY REMITTANCE CONDITION"), Payaheads need not be remitted to and
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deposited in the Payahead Account but instead may be remitted to and held by the
Servicer. So long as such Monthly Remittance Conditions are met, the Servicer
shall not be required to segregate or otherwise hold separate any Payaheads
remitted to the Servicer as aforesaid but shall be required to remit Payaheads
to the Collection Account in accordance with Section 4.6(a)(i). At all times as
such Monthly Remittance Conditions are not met, the Servicer shall deposit in
the Payahead Account the amount of any Payaheads then held or received by it.
Notwithstanding the foregoing, if a Monthly Remittance Condition is not
satisfied, the Servicer may utilize, with respect to Payaheads, an alternative
remittance schedule (which may include the remittance schedule utilized by the
Servicer before the Monthly Remittance Condition became unsatisfied), if the
Servicer provides to the Owner Trustee and the Indenture Trustee written
confirmation from the Rating Agencies that such alternative remittance schedule
will not result in the downgrading or withdrawal by the Rating Agencies of the
ratings then assigned to the Notes and the Certificates. The Owner Trustee and
the Indenture Trustee shall not be deemed to have knowledge of any event or
circumstance under clauses (ii) or (iii) of the first sentence of this Section
4.1(e) that would require remittance of the Payaheads to the Payahead Account
unless the Owner Trustee or the Indenture Trustee has received notice of such
event or circumstance from the Seller or the Servicer in an Officer's
Certificate or from the Holders of Notes evidencing not less than 25% of the
principal balance of the then Outstanding Notes or from the Holders of
Certificates evidencing not less than 25% of the Certificate Balance or unless
an Authorized Officer in the Corporate Trust Office with knowledge hereof and
familiarity herewith has actual knowledge of such event or circumstance.
(f) The Servicer shall be permitted to remit to any Obligor, upon the
request of such Obligor, the Payahead Balance with respect to such Obligor's
Receivable or such lesser amount as is requested by such Obligor, in accordance
with the Servicer's customary standards, policies, practices and procedures, to
the extent that such amount is not then due on such Receivable. Upon any such
remittance, the Payahead Balance with respect to such Receivable shall be
reduced by the amount of such remittance.
SECTION 4.2. COLLECTIONS. (a) Subject to the provisions of
subsection (b) below, the Servicer shall remit to the Collection Account (i) all
payments by or on behalf of the Obligors (including, subject to the next two
sentences, Payaheads on the Receivables and Rule of 78's Payments, but excluding
payments with respect to Purchased Receivables and amounts included in the
Supplemental Servicing Fee other than Rule of 78's Payments), including amounts
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treated as collections on Final Payment Receivables pursuant to Section 3.2(d)
and (ii) all Liquidation Proceeds and all Recoveries, received by the Servicer
during any Collection Period, as soon as practicable, but in no event after the
close of business on the second Business Day after receipt thereof. Collections
of Payaheads and Rule of 78's Payments shall be deposited in the Collection
Account, pursuant to the preceding sentence for purposes of administrative
convenience only, pending, with respect to Payaheads, determination of the
amount to be deposited in the Payahead Account (or in the event that the Monthly
Remittance Conditions are satisfied, remitted to the Servicer pursuant to
Section 4.1(e)), which amount shall be deposited in the Payahead Account as soon
as practicable but in no event later than the Payment Date immediately following
collection, and such amounts shall not be transferred to the Collection Account
until due, and with respect to Rule of 78's Payments, determination of such
payments, which payments upon determination shall be made to the Servicer, and
the Trust shall not be entitled to such amounts.
MMCA, for so long as it is acting as the Servicer, may make
remittances of collections on a less frequent basis than that specified in the
immediately preceding sentence. It is understood that such less frequent
remittances may be made only on the specific terms and conditions set forth
below in this Section 4.2 and only for so long as such terms and conditions are
fulfilled. Accordingly, notwithstanding the provisions of the first sentence of
this Section 4.2, the Servicer shall remit collections received during a
Collection Period to the Collection Account in immediately available funds on
the Business Day prior to the related Payment Date but only for so long as each
Monthly Remittance Condition is satisfied. Notwithstanding the foregoing, if a
Monthly Remittance Condition is not satisfied, the Servicer may utilize an
alternative remittance schedule (which may include the remittance schedule
utilized by the Servicer before the Monthly Remittance Condition became
unsatisfied), if the Servicer provides to the Owner Trustee and the Indenture
Trustee written confirmation from the Rating Agencies that such alternative
remittance schedule will not result in the downgrading or withdrawal by the
Rating Agencies of the ratings then assigned to the Notes and the Certificates.
The Owner Trustee or the Indenture Trustee shall not be deemed to have knowledge
of any event or circumstance under clauses (ii) or (iii) of the definition of
Monthly Remittance Condition that would require daily remittance by the Servicer
to the Collection Account unless the Owner Trustee or the Indenture Trustee has
received notice of such event or circumstance from the Seller or the Servicer in
an Officer's Certificate or written notice from the Holders of Notes evidencing
not less than 25% of the principal balance of the then outstanding Notes
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or from the Holders of Certificates evidencing not less than 25% of the
Certificate Balance or an Authorized Officer in the Corporate Trust Office with
knowledge hereof or familiarity herewith has actual knowledge of such event or
circumstance.
(b) In those cases where a subservicer is servicing a Receivable, the
Servicer shall cause the subservicer to remit to the Collection Account, as soon
as practicable, but in no event after the close of business on the second
Business Day after receipt thereof by the subservicer (but subject to the
provisions of Section 4.2(a)) the amounts referred to in Section 4.2(a) in
respect of a Receivable being serviced by the subservicer.
SECTION 4.3. APPLICATION OF COLLECTIONS.(a) For the purposes of this
Agreement, as of the close of business on the last day of each Collection
Period, all collections received pursuant to Section 4.2 for such Collection
Period for each Receivable (excluding amounts received by the Servicer with
respect to Rule of 78's Payments, the amounts actually collected with respect to
the Supplemental Servicing Fee, amounts collected with respect to a Purchased
Receivable) shall be applied by the Servicer, in the case of (i) a Simple
Interest Receivable that is a Standard Receivable, to interest and principal on
the Receivable in accordance with the Simple Interest Method, (ii) a Simple
Interest Receivable that is a Final Payment Receivable, to interest and
principal in accordance with the Simple Interest Method FIRST, to accrued but
unpaid interest, SECOND, to the Level Pay Balance of such Receivable, THIRD, to
the principal portion of the Last Scheduled Payment to the extent a Last
Scheduled Payment Advance has not been made by the Servicer with respect to such
Last Scheduled Payment and FOURTH, to the extent of any unreimbursed Last
Scheduled Payment Advance with respect to such Simple Interest Receivable, to
reimburse the Servicer for such Last Scheduled Payment Advance and (iii) an
Actuarial Receivable, FIRST, to the Scheduled Payment of such Actuarial
Receivable, SECOND to the extent of any unreimbursed Actuarial Advances with
respect to such Actuarial Receivable, to reimburse the Servicer for any such
Actuarial Advances, THIRD, to the extent of any unreimbursed Last Scheduled
Payment Advance with respect to such Actuarial Receivable, to reimburse the
Servicer for such Last Scheduled Payment Advance and FOURTH, to the extent that
any amounts are remaining then due to a prepayment of such Actuarial Receivable,
if the sum of such remaining amount and the previous Payahead Balance shall be
sufficient to prepay the Actuarial Receivable in full, and otherwise to the
Payahead Account (or, if all Monthly Remittance Conditions are satisfied, to the
Servicer) as a Payahead.
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(b) All Liquidation Proceeds and any Recoveries, and any proceeds
realized upon the liquidation, sale or dissolution of the Owner Trust Estate (or
any part thereof) upon the occurrence of an Event of Default under the Indenture
or an Insolvency Event with respect to the Seller shall, with respect to any
Final Payment Receivable be applied FIRST to accrued but unpaid interest
thereon, SECOND, to the Level Pay Balance of such Receivable and THIRD, to the
principal portion of the related Last Scheduled Payment.
SECTION 4.4. ADVANCES. (a) As of the close of business on the last
day of each Collection Period, if the payments during such Collection Period by
or on behalf of the Obligor on or in respect of an Actuarial Receivable (other
than a Purchased Receivable) after application under Section 4.3 shall be less
than the Scheduled Payment, the Payahead Balance of such Receivable shall be
applied by the Indenture Trustee to the extent of the shortfall, and such
Payahead Balance shall be reduced accordingly. On the related Payment Date,
subject to the following sentence, an advance shall be made by the Servicer to
the extent of any remaining shortfall in respect of such Actuarial Receivable
(such advance, an "ACTUARIAL ADVANCE"); PROVIDED that an Actuarial Advance shall
not be made with respect to the Last Scheduled Payment on an Actuarial
Receivable that is a Final Payment Receivable; PROVIDED FURTHER, that a Last
Scheduled Payment Advance shall be made with respect to an Actuarial Receivable
that is a Final Payment Receivable upon the occurrence of the circumstances set
forth in Section 4.4(c). All applications of the Payahead Balance of a
Receivable by the Indenture Trustee and all Actuarial Advances by the Servicer,
in each case pursuant to this Section 4.4(a), shall be made based on the
information set forth in the Servicer's report attached to the Servicer's
Certificate delivered pursuant to Section 3.9; PROVIDED FURTHER, that no
successor Servicer shall be required to make Actuarial Advances.
(b) (i) Upon either the written instructions of the Servicer or
based solely upon the information contained in the Servicer's
Certificate delivered on the related Determination Date pursuant to
Section 3.9, the Indenture Trustee shall release from amounts
available in the Payahead Account, the amounts required to be released
from amounts available in the Payahead Account pursuant to Section
4.4(a) with respect to each Collection Period and shall deposit such
amounts in the Collection Account on the related Payment Date pursuant
to Section 4.5(a).
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(ii) On each Payment Date, the Servicer shall deposit into the
Collection Account an amount equal to the aggregate amount of
Actuarial Advances required to be made with respect to related
Collection Period .
(c) As of the last day of the Collection Period in which the Last
Scheduled Payment with respect to a Final Payment Receivable is due, if the
payments during such Collection Period by or on behalf of the related Obligor on
or in respect of such Last Scheduled Payment after application under Section
4.3(a) and the amounts, if any, in the Payahead Account allocable to such Last
Scheduled Payment shall be less than the amount of such Last Scheduled Payment,
the Servicer shall advance an amount equal to the shortfall in the payment of
such Last Scheduled Payment (such advance, a "LAST SCHEDULED PAYMENT ADVANCE"),
by depositing an amount equal to the Last Scheduled Payment into the Collection
Account on the related Payment Date. Notwithstanding anything in this Agreement
to the contrary, no successor Servicer shall be required to make Last Scheduled
Payment Advances.
(d) On each Payment Date, the Servicer shall instruct the Indenture
Trustee to withdraw from the Collection Account for distribution to the
Servicer, in immediately available funds, an amount equal to the sum of (i) the
aggregate amount of collections on Actuarial Receivables with respect to which
the Servicer has made Actuarial Advances in a prior Collection Period that are
allocable to the reimbursement of such Actuarial Advances pursuant to Section
4.3(a) and (ii) the aggregate amount of Actuarial Advances that the Servicer has
not been reimbursed for pursuant to this Section 4.4(d), Section 4.5(b) or
Section 4.5(c) that are with respect to Actuarial Receivables that became
Defaulted Receivables in the related Collection Period.
(e)On each Payment Date, the Servicer shall instruct the Indenture
Trustee to withdraw from the Collection Account for distribution to the
Servicer, in immediately available funds, an amount equal to the sum of (i) the
aggregate amount of collections on Final Payment Receivables in the related
Collection Period that are allocable to the reimbursement of Last Scheduled
Payment Advances pursuant to Section 4.3(a) and (ii) the aggregate amount of
losses on Last Scheduled Payments that the Servicer has recorded in its books
and records during the related Collection Period to the extent such losses are
allocable to Last Scheduled Payments with respect to which the Servicer has made
Last Scheduled Payment Advances, but only to the extent such Last Scheduled
Payment Advances
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have not already been reimbursed pursuant to this Section 4.4(e) or Section
4.5(b) or (c).
SECTION 4.5. ADDITIONAL DEPOSITS. (a) The Indenture Trustee shall
deposit in the Collection Account amounts required pursuant to Section 4.4(b).
The Servicer shall deposit in the Collection Account amounts required to be paid
by the Servicer pursuant to Sections 4.4(a) and (c). The Seller and the
Servicer shall deposit or cause to be deposited in the Collection Account the
aggregate Purchase Amount with respect to Purchased Receivables pursuant to
Section 2.3, 3.7 or 9.1. The Indenture Trustee shall deposit in the Collection
Account the aggregate of any amounts received pursuant to the Yield Supplement
Agreement and any amounts received from the Letter of Credit Bank or the Yield
Supplement Account pursuant to Article V on the date of receipt thereof. All
such deposits with respect to a Collection Period shall be made in immediately
available funds no later than 10:00 a.m., New York City time, on the Payment
Date related to such Collection Period.
(b)The Indenture Trustee shall, on or prior to 10:00 a.m., New York
City time, on the Payment Date relating to each Collection Period make the
following withdrawals from the Supplemental Reserve Account in the following
order of priority: (i) an amount equal to the Supplemental Reserve Account Draw
Amount, if any, calculated by the Servicer pursuant to Section 4.6(b) (as set
forth in the Servicer's Certificate for such Payment Date) and shall deposit
such funds into the Collection Account and (ii) an amount equal to the amount,
if any, by which the aggregate amount payable to the Servicer out of the
Collection Account on such Payment Date pursuant to Sections 4.4(d) and (e)
exceeds the amount paid to the Servicer out of the Collection Account on such
Payment Date pursuant to Sections 4.4(d) and (e).
(c) The Indenture Trustee shall, on or prior to 10:00 a.m., New York
City time, on the Payment Date relating to each Collection Period make the
following withdrawals from the Reserve Account in the following order of
priority: (i) an amount equal to the Reserve Account Draw Amount, if any,
calculated by the Servicer pursuant to Section 4.6(b) (as set forth in the
Servicer's Certificate for such Payment Date) and shall deposit such funds into
the Collection Account and (ii) an amount equal to the amount, if any, by which
the sum of the aggregate amount payable to the Servicer out of the Collection
Account on such Payment Date pursuant to Sections 4.4(d) and (e) and out of the
Supplemental Reserve Account pursuant to Section 4.5(b) exceeds the sum of the
amounts paid to
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the Servicer out of the Collection Account on such Payment Date pursuant to
Sections 4.4(d) and (e) and out of the Supplemental Reserve Account on such
Payment Date pursuant to Section 4.5(b).
SECTION 4.6. ALLOCATION OF AVAILABLE FUNDS. (a) On each Payment
Date, the Indenture Trustee shall cause to be made the following transfers and
distributions in the amounts set forth in the Servicer's Certificate for such
Payment Date:
(i) If the Monthly Remittance Conditions are not then satisfied,
from the Payahead Account, and otherwise from amounts paid by the Servicer
pursuant to Section 4.1(e), to the Collection Account in immediately
available funds, (x) the aggregate portion of Payaheads constituting
Scheduled Payments or prepayments in full, required by Sections 4.3 and
4.4(a), and (y) the Payahead Balance, if any, relating to any Purchased
Receivable.
(ii) From the Collection Account to the Payahead Account, or to
the Servicer in the event that the Monthly Remittance Conditions are then
satisfied, in immediately available funds, the aggregate Payaheads required
by Section 4.3 for the Collection Period related to such Payment Date.
(b) On each Determination Date, the Servicer shall calculate the
Available Funds, the Total Servicing Fee, the Accrued Note Interest for each
Class of Notes, the Scheduled Principal, the Principal Distribution Amount, the
Principal Distribution Amount, the Last Scheduled Payment Principal Collections,
the Reserve Account Amount, the Supplemental Reserve Account Amount and the
Yield Supplement Amount, if any, in each case with respect to the next
succeeding Payment Date.
In addition, the Servicer shall calculate on each Determination Date
(i) the positive difference, if any, between the Total Required Payment and
Available Funds for such Payment Date (the "SUPPLEMENTAL RESERVE ACCOUNT DRAW
AMOUNT") and (ii) the positive difference, if any, between the Supplemental
Reserve Account Draw Amount and the Supplemental Reserve Account Amount for such
Payment Date (the "RESERVE ACCOUNT DRAW AMOUNT").
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(c) On each Payment Date, the Servicer shall instruct the Indenture
Trustee (based on the information contained in the Servicer's Certificate
delivered on the related Determination Date pursuant to Section 3.9) to withdraw
all Available Funds on deposit in the Collection Account for the related
Collection Period and make the following payments and deposits for such Payment
Date in the following order of priority:
(i) to the Servicer, the Total Servicing Fee;
(ii) to the Note Payment Account, the Accrued Note Interest for each
Class of Notes;
(iii) to the Note Payment Account, the Principal Distribution Amount;
(iv) to the Reserve Account, the amount, if any, necessary to
reinstate the balance in the Reserve Account up to the Specified Reserve
Balance;
(v) to the Supplemental Reserve Account, all remaining Available Funds
until the Supplemental Reserve Amount is equal to the Maximum Supplemental
Reserve Amount; and
(vi)to the Certificate Distribution Account, any remaining portion of
Available Funds.
SECTION 4.7. RESERVE ACCOUNT; SUPPLEMENTAL RESERVE ACCOUNT. (a) The
Seller shall, prior to the Closing Date, establish and maintain a segregated
trust account in the name of the Indenture Trustee at a Qualified Institution or
Qualified Trust Institution (which shall initially be the corporate trust
department of Bank of Tokyo - Mitsubishi Trust Company), which shall be
designated as the "RESERVE ACCOUNT". The Reserve Account shall be under the
sole dominion and control of the Indenture Trustee; PROVIDED, that the Servicer
may make deposits to the Reserve Account in accordance with this Agreement and
the Indenture. On the Closing Date, the Seller will deposit the Reserve Initial
Deposit into the Reserve Account from the net proceeds of the sale of the Notes.
The Reserve Account and all amounts, securities, investments, financial assets
and other property deposited in or credited to the Reserve Account (the "RESERVE
ACCOUNT PROPERTY") has been conveyed by the Seller to the Trust pursuant to
Section 2.1. Pursuant to the
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Indenture, the Trust will pledge all of its right, title and interest in, to and
under the Reserve Account and the Reserve Account Property to the Indenture
Trustee on behalf of the Noteholders to secure its obligations under the Notes
and the Indenture.
The Reserve Account Property shall, to the extent permitted by
applicable law, rules and regulations, be invested, as directed in writing by
the Servicer, by the bank or trust company then maintaining the Reserve Account
in Permitted Investments that mature not later than the Business Day immediately
preceding the next Payment Date, and such Permitted Investments shall be held to
maturity. All interest and other income (net of losses and investment expenses)
on funds on deposit in the Reserve Account shall, upon the written direction of
the Servicer, be paid to the Seller on any Payment Date to the extent that funds
on deposit therein, as certified by the Servicer, exceed the Specified Reserve
Balance. In the event the Reserve Account is no longer to be maintained at the
corporate trust department of Bank of Tokyo - Mitsubishi Trust Company, the
Servicer shall, with the Indenture Trustee's or Owner Trustee's assistance as
necessary, cause the Reserve Account to be moved to a Qualified Institution or a
Qualified Trust Institution within ten (10) Business Days (or such longer period
not to exceed thirty (30) calendar days as to which each Rating Agency may
consent).
(b) The Seller shall, prior to the Closing Date, establish and
maintain a segregated trust account in the name of the Indenture Trustee at a
Qualified Institution or Qualified Trust Institution (which shall initially be
the corporate trust department of Bank of Tokyo - Mitsubishi Trust Company),
which shall be designated as the "SUPPLEMENTAL RESERVE ACCOUNT." The
Supplemental Reserve Account shall be under the sole dominion and control of the
Indenture Trustee; PROVIDED, that the Servicer may make deposits to the
Supplemental Reserve Account in accordance with this Agreement and the
Indenture. The Supplemental Reserve Account and all amounts, securities,
investments, financial assets and other property deposited in or credited to the
Supplemental Reserve Account (the "SUPPLEMENTAL RESERVE ACCOUNT PROPERTY") has
been conveyed by the Seller to the Trust pursuant to Section 2.1. Pursuant to
the Indenture, the Trust will pledge all of its right, title and interest in, to
and under the Supplemental Reserve Account and the Supplemental Reserve Account
Property to the Indenture Trustee on behalf of the Noteholders to secure its
obligations under the Notes and the Indenture.
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The Supplemental Reserve Account Property shall, to the extent
permitted by applicable law, rules and regulations, be invested, as directed in
writing by the Servicer, by the bank or trust company then maintaining the
Supplemental Reserve Account in Permitted Investments that mature not later than
the Business Day immediately preceding the next Payment Date, and such Permitted
Investments shall be held to maturity. All interest and other income (net of
losses and investment expenses) on funds on deposit in the Supplemental Reserve
Account shall, upon the written direction of the Servicer, be paid to the Seller
on any Payment Date to the extent that funds on deposit therein prior to making
any deposits or withdrawals therefrom on such Payment Date, as certified by the
Servicer, exceed the Maximum Supplemental Reserve Amount. In the event the
Supplemental Reserve Account is no longer to be maintained at the corporate
trust department of Bank of Tokyo - Mitsubishi Trust Company, the Servicer
shall, with the Indenture Trustee's or Owner Trustee's assistance as necessary,
cause the Supplemental Reserve Account to be moved to a Qualified Institution or
a Qualified Trust Institution within ten (10) Business Days (or such longer
period not to exceed thirty (30) calendar days as to which each Rating Agency
may consent).
(c) With respect to any Reserve Account Property or Supplemental
Reserve Account Property:
(i) any Reserve Account Property or Supplemental Reserve Account
Property that is a "financial asset" as defined in Section 8-102(a)(9) of
the UCC shall be physically delivered to, or credited to an account in the
name of, the Qualified Institution or Qualified Trust Institution
maintaining the Reserve Account or Supplemental Reserve Account, as
applicable, in accordance with such institution's customary procedures such
that such Institution establishes a "securities entitlement" in favor of
the Indenture Trustee with respect thereto;
(ii) any Reserve Account Property or Supplemental Reserve Account
Property that is held in deposit accounts shall be held solely in the name
of the Indenture Trustee at one or more depository institutions having the
Required Rating and each such deposit account shall be subject to the
exclusive custody and control of the Indenture Trustee and the Indenture
Trustee shall have sole signature authority with respect thereto; and
(iii) except for any deposit accounts specified in clause (ii) above,
the Reserve Account and the Supplemental Reserve Account shall only be
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invested in securities or in other assets which the Qualified Institution
or Qualified Trust Institution maintaining the Reserve Account or
Supplemental Reserve Account, as applicable, agrees to treat as "financial
assets" as defined in Section 8-102(a)(9) of the UCC.
(d) If the amount on deposit in the Reserve Account on any Payment
Date (after giving effect to all deposits thereto or withdrawals therefrom on
such Payment Date) is greater than the Specified Reserve Balance for such
Payment Date, the Servicer shall instruct the Indenture Trustee to distribute
the amount of such excess to the Seller; PROVIDED that the Indenture Trustee and
the Owner Trustee hereby release, on each Payment Date, their security interest
in, to and under Reserve Account Property distributed to the Seller.
(e) If the amount on deposit in the Supplemental Reserve Account on
any Payment Date (after giving effect to all deposits thereto or withdrawals
therefrom on such Payment Date) is greater than the Maximum Supplemental Reserve
Amount, the Servicer shall instruct the Indenture Trustee to deposit the amount
of such excess in the Certificate Distribution Account; PROVIDED that the
Indenture Trustee hereby releases, on each Payment Date, its security interest,
in, to and under the Supplemental Reserve Account Property deposited in the
Certificate Distribution Account.
(f) Following the payment in full of the aggregate principal balance
of the Notes and the Certificate Balance and of all other amounts owing or to be
distributed hereunder or under the Indenture or the Trust Agreement to
Noteholders or Certificateholders and the termination of the Trust, any
remaining Reserve Account Property and Supplemental Reserve Account Property
shall be distributed to the Seller.
SECTION 4.8. NET DEPOSITS. As an administrative convenience only, unless
the Servicer is required to remit collections pursuant to the first sentence of
Section 4.2, the Seller and the Servicer may make any remittance pursuant to
this Article IV with respect to a Collection Period net of distributions to be
made to the Seller or the Servicer with respect to such Collection Period.
Nonetheless, such obligations shall remain separate obligations, no party shall
have a right of offset, and each such party shall account for all of the above
described remittances and distributions as if the amounts were deposited and/or
transferred separately.
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SECTION 4.9. STATEMENTS TO NOTEHOLDERS AND CERTIFICATEHOLDERS. On or
prior to each Payment Date, the Servicer shall provide to the Indenture Trustee
(with copies to the Rating Agencies and each Paying Agent) for the Indenture
Trustee to forward to each Noteholder of record as of the most recent Record
Date and to the Owner Trustee (with copies to the Rating Agencies and to each
Paying Agent) for the Owner Trustee to forward to each Certificateholder of
record as of the most recent Record Date a statement in substantially the forms
of Exhibits B and C, respectively, setting forth at least the following
information as to the Notes and the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal paid
to each Class of Notes and to the Certificates;
(ii) the amount of such distribution allocable to interest paid
to each Class of Notes;
(iii) the Yield Supplement Amount;
(iv) the amount of the Total Servicing Fee with respect to the
related Collection Period;
(v) the aggregate outstanding principal balance of each Class of
Notes, the applicable Note Pool Factor, the Certificate Balance and the
Certificate Pool Factor as of the close of business on the last day of the
preceding Collection Period, after giving effect to payments allocated to
principal reported under clause (i) above;
(vi) the Pool Balance, the Level Pay Pool Balance and the Last
Scheduled Payment Pool Balance, in each case as of the close of business on
the last day of the related Collection Period;
(vii) the amounts of the Interest Carryover Shortfall and the
Principal Carryover Shortfall, if any, for such Payment Date and the
portion thereof attributable to each Class of Notes;
(viii) the amount of the aggregate Realized Losses, if any, with
respect to the related Collection Period;
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(ix) the balance of the Reserve Account on such Payment Date,
after giving effect to changes therein on such Payment Date;
(x)the balance of the Supplemental Reserve Account on such
Payment Date, after giving effect to changes therein on such Payment Date;
(xi) the aggregate Purchase Amount of Receivables repurchased by
the Seller or purchased by the Servicer, if any, with respect to the
related Collection Period;
(xii) the amount of Actuarial Advances and Last Scheduled Payment
Advances, if any, with respect to the related Collection Period.
Each amount set forth on the Payment Date statement pursuant to
clauses (i), (ii), (iii), (v) and (vii) above shall be expressed as a dollar
amount per $1,000 of original principal balance of a Certificate or Note, as
applicable.
SECTION 4.10. CONTROL OF SECURITIES ACCOUNTS. Notwithstanding
anything else contained herein, the Issuer agrees that with respect to each of
the Collection Account, the Note Payment Account, the Reserve Account, the
Supplemental Reserve Account and the Yield Supplement Account will only be
established at a Qualified Institution or Qualified Trust Institution which
agrees substantially as follows: (i) it will comply with "entitlement orders"
(as defined in Section 8-102(a)(8) of the UCC; I.E. orders directing the
transfer or redemption of any financial asset) relating to such accounts issued
by the Indenture Trustee without further consent by the Issuer; (ii) until the
termination of the Indenture, it will not enter into any other agreement
relating to any such account pursuant to which it agrees to comply with
entitlement orders of any Person other than the Indenture Trustee; and (iii) all
assets delivered or credited to it in connection with such accounts and all
investments thereof will be promptly credited to such accounts.
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ARTICLE V
YIELD SUPPLEMENT LETTER OF CREDIT
SECTION 5.1. YIELD SUPPLEMENT LETTER OF CREDIT AND THE YIELD
SUPPLEMENT ACCOUNT. (a) The Servicer shall, prior to the Closing Date,
establish and maintain a segregated trust account in the name of the Indenture
Trustee at a Qualified Institution or Qualified Trust Institution (which shall
initially be the corporate trust department of Bank of Tokyo - Mitsubishi Trust
Company), which shall be designated as the "YIELD SUPPLEMENT ACCOUNT." Amounts
on deposit in the Yield Supplement Account will be used for the payment of any
Yield Supplement Amounts required to be paid on any Payment Date pursuant to the
Yield Supplement Agreement which MMCA has not paid as of such Payment Date. The
Yield Supplement Account shall be under the sole dominion and control of the
Indenture Trustee PROVIDED, that the Servicer may make deposits to and direct
the Indenture Trustee to make withdrawals from the Yield Supplement Account in
accordance with this Agreement and the Yield Supplement Agreement. On the
Closing Date, the Seller will deposit the initial Specified Yield Supplement
Account Balance into the Yield Supplement Account from the net proceeds of the
sale of the Notes and Certificates. To the extent, on any Payment Date, the
amount on deposit in the Yield Supplement Account (after giving effect to any
withdrawals to be made on such Payment Date, but exclusive of net investment
income) is greater than the Specified Yield Supplement Account Balance, then, in
such event, the Servicer shall instruct the Indenture Trustee in writing to pay
such excess amount to the Seller.
All amounts held in the Yield Supplement Account shall be invested, as
directed in writing by the Servicer, by the bank or trust company then
maintaining the Yield Supplement Account in Permitted Investments that mature
not later than the Business Day immediately preceding the next Payment Date and
such Permitted Investments shall be held to maturity. All interest and other
income (net of losses and investment expenses) on funds on deposit in the Yield
Supplement Account shall be withdrawn from the Yield Supplement Account at the
written direction of the Servicer and shall be paid to the Seller. In the event
that the Yield Supplement Account is no longer to be maintained at the corporate
trust department of Bank of Tokyo - Mitsubishi Trust Company, the Servicer
shall, with the Indenture Trustee's assistance as necessary, cause the Yield
Supplement Account to be moved to a Qualified Institution or a Qualified Trust
Institution
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within ten (10) Business Days (or such longer period not to exceed thirty (30)
calendar days as to which each Rating Agency may consent).
The Seller hereby sells, conveys and transfers to the Trust the Yield
Supplement Account, all funds and investments on deposit therein or credited
thereto and all proceeds thereof, subject, however, to the limitations set forth
below.
Pursuant to the Indenture, the Trust will pledge its rights under the
Yield Supplement Agreement (including its rights to amounts on deposit in the
Yield Supplement Account) to the Indenture Trustee to secure its obligations
under the Notes and the Indenture. Such sale, conveyance and transfer of the
Yield Supplement Account by the Seller to the Trust, and such pledge by the
Trust of its rights to amounts in the Yield Supplement Account to the Indenture
Trustee, shall be subject to the following limitations:
(i) All or a portion of the Yield Supplement Account may be
invested and reinvested in the manner specified in Section 5.1(a) in
accordance with written instructions from the Servicer. All such
investments shall be made in the name of the Indenture Trustee and all
income and gain realized thereon shall be solely for the benefit of
the Seller and shall be payable by the Indenture Trustee to the Seller
upon written direction of the Servicer as specified in Section 5.1(a);
(ii) If, with respect to any Collection Period, MMCA shall
have failed to make or cause to be made in full the remittance of the
Yield Supplement Amount on the date required by the Yield Supplement
Agreement, the Indenture Trustee not later than 10:00 a.m. (New York
City time) on the Payment Date, shall, upon the written direction of
the Servicer, withdraw from the Yield Supplement Account and deposit
into the Collection Account the amount of the shortfall between the
amount of funds that are required to be remitted by MMCA with respect
to the Yield Supplement Agreement as set forth in the Servicer's
Certificate and the amount of funds actually so remitted and to the
extent of any remaining shortfall, the Indenture Trustee shall
withdraw an amount equal thereto from the Supplemental Reserve
Account, and to the
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extent of any remaining shortfall from the Reserve Account, and deposit
such amounts in the Collection Account; and
(iii) Upon termination of this Agreement in accordance with
Section 9.1 or (a) in the event that the Seller obtains a Yield
Supplement Letter of Credit or (b) the Seller otherwise satisfies the
requirements with respect to the Yield Supplement Agreement
established by the Rating Agencies, in either case as evidenced by
satisfaction of the Rating Agency Condition and, in either case,
delivers to the Indenture Trustee an Opinion of Counsel to the effect
that the contemplated action will not adversely affect the status of
the Trust as a partnership for Federal income and Applicable Tax State
income and franchise tax purposes and an Officer's Certificate of the
Seller that all conditions precedent to the liquidation of the Yield
Supplement Account have been satisfied, any amounts on deposit in the
Yield Supplement Account shall, upon written request of the Seller, be
paid to the Seller.
(b) If a Yield Supplement Letter of Credit has been obtained by MMCA,
and if, with respect to any Collection Period, MMCA shall have failed to make or
cause to be made in full the remittance of the Yield Supplement Amount, upon
written notice by the Servicer of such failure (which notice shall be given no
later than 10:00 a.m. (New York City time) on the Payment Date for such
Collection Period), the Indenture Trustee shall draw on the Yield Supplement
Letter of Credit in accordance with the terms thereof, in the amount of the
shortfall between the amount of funds with respect to the Yield Supplement
Amount that are required to be remitted by MMCA with respect to the Yield
Supplement Agreement as set forth in the Servicer's Certificate and the amount
of funds actually so remitted as set forth in the Servicer's Certificate. Any
such draw on the Yield Supplement Letter of Credit shall be made after receipt
of the related Servicer's Certificate on or before 11:00 a.m. (New York City
time) on the Payment Date for such Collection Period. Upon receipt of a request
for a draw by the Indenture Trustee under the Yield Supplement Letter of Credit,
the Letter of Credit Bank is to promptly make a payment to the Indenture Trustee
in an amount equal to the Yield Supplement Amount (minus payments made on the
Yield Supplement Agreement), and the Indenture Trustee shall deposit into the
Collection Account pursuant to Section 4.5 the amount received from the Letter
of Credit Bank in respect of such drawing. The Servicer shall include in each
Servicer's Certificate, or in an Officer's Certificate provided to the Indenture
Trustee with
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each Servicer's Certificate, the Stated Amount (as defined in the Yield
Supplement Letter of Credit) of the Yield Supplement Letter of Credit as of the
close of business on the last day of the Collection Period preceding the date of
such Servicer's Certificate. In the event that the rating of the Letter of
Credit Bank declines below the Required Rating, the Servicer shall promptly
notify the Indenture Trustee in writing of such decline, and upon receipt of
such notification, the Indenture Trustee shall, unless a suitable replacement
letter of credit shall have been delivered, promptly draw the full amount
available under the Yield Supplement Letter of Credit and deposit such amount in
the Yield Supplement Account or obtain funds in the amount required for deposit
from the Yield Supplement Account.
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ARTICLE VI
THE SELLER
SECTION 6.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER.
The Seller makes the following representations, warranties and covenants on
which the Issuer is deemed to have relied in acquiring the Trust Property. The
representations, warranties and covenants speak as of the execution and delivery
of this Agreement and shall survive the sale of the Trust Property to the Issuer
and the pledge thereof by the Issuer to the Indenture Trustee pursuant to the
Indenture:
(a) ORGANIZATION AND GOOD STANDING. The Seller has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware, with power and authority to own its properties
and to conduct its business as such properties shall be currently owned and such
business is presently conducted, and had at all relevant times, and shall have,
power, authority, and legal right to acquire and own the Receivables.
(b) DUE QUALIFICATION. The Seller is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of property
or the conduct of its business shall require such qualifications.
(c) POWER AND AUTHORITY. The Seller has the power and authority to
execute and deliver this Agreement and the other Basic Documents to which it is
a party and to carry out their terms. The Seller has full power and authority
to sell and assign the property to be sold and assigned to and deposited with
the Issuer and has duly authorized such sale and assignment to the Issuer by all
necessary corporate action; and the execution, delivery, and performance of this
Agreement and the other Basic Documents to which it is a party have been duly
authorized by the Seller by all necessary corporate action.
(d) VALID SALE; BINDING OBLIGATION. This Agreement effects a valid
sale, transfer and assignment of the Receivables and the other Trust Property
conveyed by the Seller to the Issuer hereunder, enforceable against creditors of
and purchasers from the Seller; and this Agreement and the other Basic Documents
to which the Seller is a party constitute legal, valid, and binding obligations
of the Seller, enforceable against the Seller in accordance with their terms,
subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization,
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conservatorship, receivership, liquidation and other similar laws and to general
equitable principles.
(e) NO VIOLATION. The execution, delivery and performance by the
Seller of this Agreement and the other Basic Documents to which the Seller is a
party and the consummation of the transactions contemplated hereby and thereby
and the fulfillment of the terms hereof and thereof will not conflict with,
result in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time or both) a default under, the certificate of
incorporation or bylaws of the Seller, or conflict with, or breach any of the
terms or provisions of, or constitute (with or without notice or lapse of time
or both) a default under, any indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by which the Seller is bound
or any of its properties are subject, or result in the creation or imposition of
any lien upon any of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument (other than this
Agreement), or violate any law, order, rule, or regulation, applicable to the
Seller or its properties, of any federal or state regulatory body, any court,
administrative agency, or other governmental instrumentality having jurisdiction
over the Seller or any of its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending, or, to the best knowledge of the Seller, threatened, before any court,
regulatory body, administrative agency, or other tribunal or governmental
instrumentality having jurisdiction over the Seller or its properties: (i)
asserting the invalidity of this Agreement, the Indenture, any of the other
Basic Documents, the Notes or the Certificates, (ii) seeking to prevent the
issuance of the Notes, the Certificates or the consummation of any of the
transactions contemplated by this Agreement, the Indenture or any of the other
Basic Documents, (iii) seeking any determination or ruling that might materially
and adversely affect the performance by the Seller of its obligations under, or
the validity or enforceability of, this Agreement, the Indenture, any of the
other Basic Documents, the Notes or the Certificates, or (iv) that may adversely
affect the Federal or Applicable Tax State income, excise, franchise or similar
tax attributes of the Notes or the Certificates.
(g) FLORIDA SECURITIES AND INVESTOR PROTECTION ACT. In connection
with the offering of the Notes in the State of Florida, the Seller hereby
certifies that it has complied with all provisions of Section 517.075 of the
Florida Securities and Investor Protection Act.
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(h) OFFICER'S CERTIFICATES. Each representation and warranty made by
the Seller in each of the Seller Officer's Certificates attached as exhibits to
the Purchase Agreement is true and correct as of the Closing Date, and the
Seller covenants to fulfill each covenant made by it in such Seller Officer's
Certificates.
SECTION 6.2. LIABILITY OF SELLER; INDEMNITIES. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement, and hereby agrees to the
following:
(a) The Seller shall indemnify, defend, and hold harmless the Issuer,
the Owner Trustee and the Indenture Trustee from and against any taxes that may
at any time be asserted against any such Person with respect to, and as of the
date of, the sale of the Receivables to the Issuer or the issuance and original
sale of the Notes, the Certificates, including any sales, gross receipts,
general corporation, tangible personal property, privilege, or license taxes
(but, in the case of the Issuer, not including any taxes asserted with respect
to ownership of the Receivables or Federal or other Applicable Tax State income
taxes arising out of the transactions contemplated by this Agreement and the
other Basic Documents) and costs and expenses in defending against the same.
(b) The Seller shall indemnify, defend, and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders from and against any loss, liability or expense incurred by
reason of (i) the Seller's willful misfeasance, bad faith, or negligence (other
than errors in judgment) in the performance of its duties under this Agreement,
or by reason of reckless disregard of its obligations and duties under this
Agreement and (ii) the Seller's violation of Federal or state securities laws in
connection with the registration or the sale of the Notes or the Certificates.
(c) The Seller shall indemnify, defend and hold harmless the Owner
Trustee and the Indenture Trustee and their respective officers, directors,
employees and agents from and against all costs, expenses, losses, claims,
damages and liabilities arising out of or incurred in connection with the
acceptance or performance of the trusts and duties contained herein and in the
Trust Agreement, in the case of the Owner Trustee, and in the Indenture, in the
case of the Indenture Trustee, except to the extent that such cost, expense,
loss, claim, damage or liability: (i) shall be due to the willful misfeasance,
bad faith or negligence (except for errors in judgment) of the Owner Trustee or
the Indenture Trustee, as applicable; (ii) in the case of the Owner Trustee
shall arise from the breach by the
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Owner Trustee of any of its representations or warranties set forth in Section
7.3 of the Trust Agreement or (iii) in the case of the Indenture Trustee shall
arise from the breach by the Indenture Trustee of any of its representations and
warranties set forth in the Indenture.
(d) The Seller shall pay any and all taxes levied or assessed upon all
or any part of the Owner Trust Estate.
(e) Indemnification under this Section 6.2 shall survive the
resignation or removal of the Owner Trustee or the Indenture Trustee and the
termination of this Agreement and shall include reasonable fees and expenses of
counsel and expenses of litigation. If the Seller shall have made any indemnity
payments pursuant to this Section 6.2 and the Person to or on behalf of whom
such payments are made thereafter shall collect any of such amounts from others,
such Person shall promptly repay such amounts to the Seller, without interest.
SECTION 6.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SELLER. Any Person (i) into which the Seller may be merged or
consolidated, (ii) resulting from any merger, conversion, or consolidation to
which the Seller shall be a party or (iii) that may succeed by purchase and
assumption to all or substantially all of the business of the Seller, which
Person in any of the foregoing cases executes an agreement of assumption to
perform every obligation of the Seller under this Agreement, will be the
successor to the Seller under this Agreement without the execution or filing of
any document or any further act on the part of any of the parties to this
Agreement; PROVIDED, HOWEVER, that (x) the Seller shall have delivered to the
Owner Trustee and the Indenture Trustee an Officer's Certificate and an Opinion
of Counsel each stating that such merger, conversion, consolidation or
succession and such agreement of assumption comply with this Section 6.3, and
(y) the Seller shall have delivered to the Owner Trustee and the Indenture
Trustee an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary to fully preserve and
protect the interest of the Issuer and the Indenture Trustee, respectively, in
the Receivables and the other Trust Property, and reciting the details of such
filings, or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to fully preserve and protect such interest. The Seller
shall provide notice of any merger, conversion, consolidation, or succession
pursuant to this Section 6.3 to the Rating Agencies. Notwithstanding anything
herein to the contrary, the execution of the foregoing agreement of assumption
and
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compliance with clauses (x) or (y) above shall be conditions to the consummation
of the transactions referred to in clauses (i), (ii) or (iii) above.
SECTION 6.4. LIMITATION ON LIABILITY OF SELLER AND OTHERS. The
Seller, and any director or officer or employee or agent of the Seller, may rely
in good faith on the advice of counsel or on any document of any kind, PRIMA
FACIE properly executed and submitted by any Person respecting any matters
arising hereunder. The Seller shall not be under any obligation to appear in,
prosecute, or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 6.5. SELLER MAY OWN NOTES OR CERTIFICATES . The Seller, and
any Affiliate of the Seller, may in its individual or any other capacity become
the owner or pledgee of Notes or Certificates with the same rights as it would
have if it were not the Seller or an Affiliate thereof, except as otherwise
expressly provided herein or in the other Basic Documents. Except as set forth
herein or in the other Basic Documents, Notes and Certificates so owned by or
pledged to the Seller or such controlling, controlled or commonly controlled
Person shall have an equal and proportionate benefit under the provisions of
this Agreement and the other Basic Documents, without preference, priority, or
distinction as among all of the Notes and Certificates.
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ARTICLE VII
THE SERVICER
SECTION 7.1. REPRESENTATIONS AND WARRANTIES OF SERVICER. The
Servicer makes the following representations and warranties on which the Issuer
is deemed to have relied in acquiring the Trust Property, and such
representations and warranties speak as of the execution and delivery of this
Agreement and shall survive the sale of the Trust Property to the Issuer and the
pledge thereof by the Issuer pursuant to the Indenture:
(a) ORGANIZATION AND GOOD STANDING. The Servicer has been duly
organized and is validly existing as a corporation in good standing under the
laws of the state of its incorporation, with power and authority to own its
properties and to conduct its business as such properties shall be currently
owned and such business is presently conducted, and had at all relevant times,
and shall have, power, authority, and legal right to acquire, own, sell, and
service the Receivables and to hold the Receivable Files as custodian on behalf
of the Trustee.
(b) DUE QUALIFICATION. The Servicer is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business (including the servicing of the
Receivables as required by this Agreement) shall require such qualifications.
(c) POWER AND AUTHORITY. The Servicer has the power and authority to
execute and deliver this Agreement and the other Basic Documents to which it is
a party and to carry out their terms, and the execution, delivery and
performance of this Agreement and the other Basic Documents to which it is a
party have been duly authorized by the Servicer by all necessary corporate
action.
(d) BINDING OBLIGATION. This Agreement and the other Basic Documents
to which it is a party constitute legal, valid, and binding obligations of the
Servicer, enforceable against the Servicer in accordance with their terms,
subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization, conservatorship, receivership, liquidation and other similar
laws and to general equitable principles.
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(e) NO VIOLATION. The execution, delivery and performance by the
Servicer of this Agreement and the other Basic Documents to which it is a party,
the consummation of the transactions contemplated hereby and thereby and the
fulfillment of the terms hereof and thereof will not conflict with, result in
any breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time or both) a default under, the certificate of
incorporation or bylaws of the Servicer, or conflict with, or breach any of the
terms or provisions of, or constitute (with or without notice or lapse of time
or both) a default under, any indenture, agreement, mortgage, deed of trust or
other instrument to which the Servicer is a party or by which the Servicer is
bound or to which any of its properties are subject, or result in the creation
or imposition of any lien upon any of its properties pursuant to the terms of
any such indenture, agreement, mortgage, deed of trust or other instrument
(other than this Agreement), or violate any law, order, rule, or regulation
applicable to the Servicer or its properties of any Federal or state regulatory
body, any court, administrative agency, or other governmental instrumentality
having jurisdiction over the Servicer or any of its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending, or, to the Servicer's knowledge, threatened, before any court,
regulatory body, administrative agency, or tribunal or other governmental
instrumentality having jurisdiction over the Servicer or its properties: (a)
asserting the invalidity of this Agreement, the Indenture, any of the other
Basic Documents, the Notes, or the Certificates, (b) seeking to prevent the
issuance of the Notes or the Certificates or the consummation of any of the
transactions contemplated by this Agreement, the Indenture or any of the other
Basic Documents, (c) seeking any determination or ruling that might materially
and adversely affect the performance by the Servicer of its obligations under,
or the validity or enforceability of, this Agreement, the Indenture, any of the
other Basic Documents, the Notes or the Certificates, or (d) that may adversely
affect the Federal or Applicable Tax State income, excise, franchise or similar
tax attributes of the Notes or the Certificates.
SECTION 7.2. LIABILITY OF SERVICER; INDEMNITIES. The Servicer shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Servicer under this Agreement, and hereby agrees
to the following:
(a) The Servicer shall defend, indemnify and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders and the Seller from and against any and all costs, expenses,
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losses, damages, claims and liabilities, arising out of or resulting from the
use, ownership or operation by the Servicer or any Affiliate thereof of a
Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee and the Indenture Trustee from and against any taxes that may
at any time be asserted against any such Person with respect to the transactions
contemplated herein or in the other Basic Documents, if any, including, without
limitation, any sales, gross receipts, general corporation, tangible personal
property, privilege or license taxes (but, in the case of the Issuer, not
including any taxes asserted with respect to, and as of the date of, the sale of
the Receivables to the Issuer or the issuance and original sale of the Notes and
the Certificates and the issuance of the Certificates, or asserted with respect
to ownership of the Receivables, or Federal or other Applicable Tax State income
taxes arising out of the transactions contemplated by this Agreement and the
other Basic Documents) and costs and expenses in defending against the same.
(c) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders and the Seller from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent that such cost, expense,
loss, claim, damage or liability arose out of, or was imposed upon any such
Person through, the negligence, willful misfeasance or bad faith of the Servicer
in the performance of its duties under this Agreement or any other Basic
Document to which it is a party (except for errors in judgment), or by reason of
reckless disregard of its obligations and duties under this Agreement or any
other Basic Document to which it is a party.
(d) The Servicer shall indemnify, defend and hold harmless the Owner
Trustee and the Indenture Trustee, as applicable, from and against all costs,
expenses, losses, claims, damages and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties contained
herein and in the other Basic Documents, if any, except to the extent that such
cost, expense, loss, claim, damage or liability: (a) shall be due to the
willful misfeasance, bad faith or negligence (except for errors in judgment) of
the Owner Trustee or the Indenture Trustee, as applicable; (b) relates to any
tax other than the taxes with respect to which either the Seller or the Servicer
shall be required to indemnify the Owner Trustee or the Indenture Trustee, as
applicable; (c) in the case of the Owner Trustee, shall arise from the Owner
Trustee's breach of any of
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its representations or warranties set forth in Section 7.3 of the Trust
Agreement or, in the case of the Indenture Trustee, from the Indenture Trustee's
breach of any of its representations or warranties set forth in the Indenture;
or (d) in the case of the Indenture Trustee, shall arise out of or be incurred
in connection with the performance by the Indenture Trustee of the duties of
successor Servicer hereunder.
In addition to the foregoing indemnities, if the Owner Trustee or the
Indenture Trustee is entitled to indemnification by the Seller pursuant to
Section 6.2 and the Seller is unable for any reason to provide such
indemnification to the Owner Trustee or the Indenture Trustee, then the Servicer
shall be liable for any indemnification that the Owner Trustee or the Indenture
Trustee is entitled to under Section 6.2.
For purposes of this Section 7.2, in the event of the termination of
the rights and obligations of MMCA (or any successor thereto pursuant to Section
8.2) as Servicer pursuant to Section 8.1, or a resignation by such Servicer
pursuant to this Agreement, such Servicer shall be deemed to be the Servicer
pending appointment of a successor Servicer (other than the Indenture Trustee)
pursuant to Section 8.2.
Indemnification under this Section 7.2 by MMCA (or any successor
thereto pursuant to Section 8.2) as Servicer, with respect to the period such
Person was (or was deemed to be) the Servicer, shall survive the termination of
such Person as Servicer or a resignation by such Person as Servicer as well as
the termination of this Agreement or the resignation or removal of the Owner
Trustee or the Indenture Trustee and shall include reasonable fees and expenses
of counsel and expenses of litigation. If the Servicer shall have made any
indemnity payments pursuant to this Section and the recipient thereafter
collects any of such amounts from others, the recipient shall promptly repay
such amounts to the Servicer, without interest.
SECTION 7.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SERVICER. Any Person (i) into which the Servicer may be merged
or consolidated, (ii) resulting from any merger, conversion, or consolidation to
which the Servicer shall be a party, or (iii) that may succeed by purchase and
assumption to all or substantially all of the business of the Servicer, which
Person in any of the foregoing cases is an Eligible Servicer and executes an
agreement of assumption to perform every obligation of the Servicer under this
Agreement, will
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be the successor to the Servicer under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties to this
Agreement; PROVIDED, HOWEVER, that (x) the Servicer shall have delivered to the
Owner Trustee and the Indenture Trustee an Officer's Certificate and an Opinion
of Counsel each stating that such merger, conversion, consolidation or
succession and such agreement of assumption comply with this Section 7.3, and
(y) the Servicer shall have delivered to the Owner Trustee and the Indenture
Trustee an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary to fully preserve and
protect the interest of the Issuer and the Indenture Trustee, respectively, in
the Receivables, and reciting the details of such filings, or (B) stating that,
in the opinion of such Counsel, no such action shall be necessary to fully
preserve and protect such interests. The Servicer shall provide notice of any
merger, conversion, consolidation or succession pursuant to this Section 7.3 to
the Rating Agencies. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement or assumption and compliance with clauses
(x) and (y) above shall be conditions to the consummation of the transactions
referred to in clauses (i), (ii) or (iii) above.
SECTION 7.4. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Issuer, the Noteholders or the
Certificateholders, except as provided under this Agreement, for any action
taken or for refraining from the taking of any action pursuant to this Agreement
or for errors in judgment; PROVIDED, HOWEVER, that this provision shall not
protect the Servicer or any such Person against any liability that would
otherwise be imposed by reason of willful misfeasance or bad faith in the
performance of duties or by reason of reckless disregard of obligations and
duties under this Agreement, or by reason of negligence in the performance of
its duties under this Agreement (except for errors in judgment). The Servicer
and any director, officer or employee or agent of the Servicer may rely in good
faith on any document of any kind PRIMA FACIE properly executed and submitted by
any Person in respect of any matters arising under this Agreement.
(b) Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Receivables in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability;
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PROVIDED, HOWEVER, that the Servicer may undertake any reasonable action that it
may deem necessary or desirable in respect of this Agreement and the rights and
duties of the parties to this Agreement and the interests of the Noteholders and
Certificateholders under this Agreement. In such event, the legal expenses and
costs of such action and any liability resulting therefrom shall be expenses,
costs and liabilities of the Servicer.
SECTION 7.5. SERVICER NOT TO RESIGN. Subject to the provisions of
Section 7.3, the Servicer shall not resign from its obligations and duties under
this Agreement except upon a determination that the performance of its duties is
no longer permissible under applicable law. Any such determination permitting
the resignation of the Servicer shall be evidenced by an Opinion of Counsel to
such effect delivered to the Owner Trustee and the Indenture Trustee. No such
resignation shall become effective until the Indenture Trustee or a successor
Servicer shall have (i) assumed the responsibilities and obligations of the
Servicer in accordance with Section 8.2 and (ii) become the Administrator under
the Administration Agreement pursuant to Section 8 thereof.
SECTION 7.6. SERVICER MAY OWN NOTES OR CERTIFICATES. The Servicer,
and any Affiliate of the Servicer, may, in its individual or any other capacity,
become the owner or pledgee of Notes or Certificates with the same rights as it
would have if it were not the Servicer or an Affiliate thereof, except as
otherwise expressly provided herein or in the other Basic Documents. Except as
set forth herein or in the other Basic Documents, Notes and Certificates so
owned by or pledged to the Servicer or such Affiliate shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority or distinction as among all of the Notes and Certificates.
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ARTICLE VIII
SERVICING TERMINATION
SECTION 8.1. EVENTS OF SERVICING TERMINATION. (a) The occurrence of
any one of the following events shall constitute an event of servicing
termination hereunder (each, an "EVENT OF SERVICING TERMINATION"):
(i) Any failure by the Servicer to deliver to the Owner Trustee or the
Indenture Trustee the Servicer's Certificate for any Collection Period,
which shall continue beyond the earlier of three (3) Business Days from the
date such Servicer's Certificate was due to be delivered and the related
Payment Date, or any failure by the Servicer to make any required payment
or deposit under this Agreement, which shall continue unremedied for a
period of five (5) Business Days following the due date therefor (or, in
the case of a payment or deposit to be made no later than a Payment Date,
the failure to make such payment or deposit by such Payment Date); or
(ii) Any failure on the part of the Servicer duly to observe or to
perform in any material respect any other covenant or agreement set forth
in the Notes, the Certificates, or in this Agreement, which failure shall
materially and adversely affect the rights of Noteholders or
Certificateholders and continue unremedied for a period of thirty (30) days
after the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Servicer by the Owner Trustee
or the Indenture Trustee or to the Owner Trustee, the Indenture Trustee,
the Seller and the Servicer by the Holders of Notes or Certificates, as
applicable, evidencing not less than 25% of the principal balance of the
then Outstanding Notes, in the aggregate, or 25% of the Certificate
Balance; or
(iii) The entry of a decree or order by a court or agency or
supervisory authority of competent jurisdiction for the appointment of a
conservator, receiver, liquidator or trustee for the Seller or the Servicer
in any bankruptcy, insolvency, readjustment of debt, marshalling of assets
and liabilities, or similar proceedings, or for the winding up or
liquidation of its affairs, and any such decree or order continues unstayed
and in effect for a period of sixty (60) consecutive days; or
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(iv) The consent by the Seller or the Servicer to the appointment of a
conservator, receiver, liquidator or trustee in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities, or similar
proceedings of or relating to the Seller or the Servicer or relating to
substantially all of its property, the admission in writing by the Servicer
of its inability to pay its debts generally as they become due, the filing
by the Seller or the Servicer of a petition to take advantage of any
applicable bankruptcy, insolvency or reorganization statute, the making by
the Seller or the Servicer of an assignment for the benefit of its
creditors or the voluntary suspension by the Seller or the Servicer of
payment of its obligations; or
(v) The failure by the Servicer to be an Eligible Servicer;
then, and in each and every case and for so long as an Event of Servicing
Termination shall not have been remedied, either the Indenture Trustee, or the
Holders of Notes evidencing not less than a majority of the Outstanding Amount
of the Notes, voting as a group, or if no Notes are Outstanding, the Owner
Trustee pursuant to the Trust Agreement by notice then given in writing to the
Servicer (with a copy to the Indenture Trustee and the Owner Trustee if given by
the Noteholders), may terminate all of the rights and obligations of the
Servicer under this Agreement. On or after the receipt by the Servicer of such
written notice, all authority and power of the Servicer under this Agreement,
whether with respect to the Notes, the Certificates, or the Trust Property or
otherwise, shall pass to and be vested in the Indenture Trustee or a successor
Servicer appointed under Section 8.2; and, without limitation, the Indenture
Trustee and the Owner Trustee shall be authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the Receivable
Files, the certificates of title to the Financed Vehicles, or otherwise. The
Servicer shall cooperate with the Indenture Trustee, the Owner Trustee and such
successor Servicer in effecting the termination of its responsibilities and
rights as Servicer under this Agreement, including the transfer to the Indenture
Trustee or such successor Servicer for administration of all cash amounts that
are at the time held by the Servicer for deposit or thereafter shall be received
with respect to a Receivable, all Receivable Files and all information or
documents that the Indenture Trustee or such successor Servicer may require. In
addition, the Servicer shall transfer its electronic records relating to the
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Receivables to the successor Servicer in such electronic form as the successor
Servicer may reasonably request. All reasonable costs and expenses incurred by
the successor Servicer, including allowable compensation of employees and
overhead costs, in connection with the transfer of servicing shall be paid by
the outgoing Servicer (or by the initial Servicer if the outgoing Servicer is
the Indenture Trustee acting on an interim basis) upon presentation of
reasonable documentation of such costs and expenses.
(b) If any of the foregoing Events of Servicing Termination occur, the
Indenture Trustee and the Owner Trustee shall have no obligation to notify
Noteholders, Certificateholders or any other Person of such occurrence prior to
the continuance of such event through the end of any cure period specified in
Section 8.1(a).
SECTION 8.2. INDENTURE TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR
SERVICER. Upon the Servicer's resignation pursuant to Section 7.5 or upon the
Servicer's receipt of notice of termination as Servicer pursuant to Section 8.1,
the Indenture Trustee shall be the successor in all respects to the Servicer in
its capacity as Servicer under this Agreement (PROVIDED that neither the
Indenture Trustee nor any other successor Servicer shall have any obligation,
but may elect, to make available to an Obligor any refinancing of a Last
Scheduled Payment in the manner specified in the last sentence of Section 3.2(e)
hereof), and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
of this Agreement. As compensation therefor, the Indenture Trustee shall be
entitled to such compensation (whether payable out of the Collection Account or
otherwise) as the Servicer would have been entitled to under this Agreement if
no such notice of termination or resignation had been given, except that all
collections shall be deposited in the Collection Account within two (2) Business
Days of receipt and shall not be retained by the Servicer. Notwithstanding the
above, the Indenture Trustee may, if it shall be unwilling so to act, or shall,
if it is legally unable so to act, appoint, or petition a court of competent
jurisdiction to appoint, an Eligible Servicer as the successor to the terminated
Servicer under this Agreement. In connection with such appointment, the
Indenture Trustee may make such arrangements for the compensation of such
successor Servicer out of payments on Receivables as it and such successor shall
agree, which, in no event, shall be greater than that payable to MMCA as
Servicer hereunder. The Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession including, but not limited to, making arrangements in respect
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of the last sentence of Section 3.2(e) of this Agreement. The Indenture Trustee
shall not be relieved of its duties as successor Servicer under this Section 8.2
until a newly appointed Servicer shall have assumed the responsibilities and
obligations of the terminated Servicer under this Agreement.
SECTION 8.3. EFFECT OF SERVICING TRANSFER. (a) After the transfer of
servicing hereunder, the Indenture Trustee or successor Servicer shall notify
Obligors to make directly to the successor Servicer payments that are due under
the Receivables after the effective date of such transfer.
(b) Except as provided in Section 8.2 after the transfer of servicing
hereunder, the outgoing Servicer shall have no further obligations with respect
to the administration, servicing, custody or collection of the Receivables and
the successor Servicer shall have all of such obligations, EXCEPT that the
outgoing Servicer will transmit or cause to be transmitted directly to the
successor Servicer for its own account, promptly on receipt and in the same form
in which received, any amounts held by the outgoing Servicer (properly endorsed
where required for the successor Servicer to collect any such items) received as
payments upon or otherwise in connection with the Receivables and the outgoing
Servicer shall continue to cooperate with the successor Servicer by providing
information and in the enforcement of the Dealer Agreements.
(c) Any successor Servicer shall provide the Seller with access to the
Receivable Files and to the successor Servicer's records (whether written or
automated) with respect to the Receivable Files. Such access shall be afforded
without charge, but only upon reasonable request and during normal business
hours at the offices of the successor Servicer. Nothing in this Section 8.3
shall affect the obligation of the successor Servicer to observe any applicable
law prohibiting disclosure of information regarding the Obligors, and the
failure of the Servicer to provide access to information as a result of such
obligation shall not constitute a breach of this Section 8.3.
SECTION 8.4. NOTIFICATION TO NOTEHOLDERS AND CERTIFICATEHOLDERS. Upon
any notice of an Event of Servicing Termination or upon any termination of, or
appointment of a successor to, the Servicer pursuant to this Article VIII, the
Indenture Trustee shall give prompt written notice thereof to Noteholders, and
the Owner Trustee shall give prompt written notice thereof to Certificateholders
at their addresses of record and to the Rating Agencies.
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SECTION 8.5. WAIVER OF PAST EVENTS OF SERVICING TERMINATION. The
Holders of Notes evidencing not less than 51% of the Outstanding Amount (as
defined in the Indenture) of the Notes or the Holders of Certificates evidencing
not less than a majority of the Certificate Balance (in the case of an Event of
Servicing Termination which does not adversely affect the Indenture Trustee or
the Noteholders) may, on behalf of all Noteholders and Certificateholders, waive
any Event of Servicing Termination hereunder and its consequences, except an
event resulting from the failure to make any required deposits to, or payments
from, any of the Trust Accounts, the Certificate Distribution Account, the Yield
Supplement Account, the Supplemental Reserve Account or the Reserve Account in
accordance with this Agreement. Upon any such waiver of a past Event of
Servicing Termination, such event shall cease to exist, and shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other event or impair any right arising therefrom,
except to the extent expressly so waived.
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ARTICLE IX
TERMINATION
SECTION 9.1. OPTIONAL PURCHASE OF ALL RECEIVABLES. (a) On each
Payment Date following the last day of a Collection Period as to which the Pool
Balance shall be less than or equal to the Optional Purchase Percentage
(expressed as a seven-digit decimal) multiplied by the Initial Pool Balance, the
Servicer shall have the option to purchase the Owner Trust Estate, other than
the Trust Accounts, the Certificate Distribution Account, the Reserve Account,
the Supplemental Reserve Account and the Yield Supplement Account. To exercise
such option, the Servicer shall notify the Owner Trustee and the Indenture
Trustee no later than the fifteenth day of the month immediately preceding the
month in which such repurchase is to be effected and shall deposit an amount
equal to the aggregate Purchase Amount for the Receivables, plus the appraised
value of any other property held in the Trust other than in the Trust Accounts,
the Certificate Distribution Account, the Reserve Account, the Supplemental
Reserve Account and the Yield Supplement Account, such value to be determined by
an appraiser mutually agreed upon by the Servicer, the Owner Trustee and the
Indenture Trustee, into the Collection Account on the Payment Date occurring in
the month in which such repurchase is to be effected. Upon such payment, the
Servicer shall succeed to and own all interests in and to the Trust.
Notwithstanding the foregoing, the Servicer shall not be permitted to exercise
such option unless the amount to be deposited in the Collection Account pursuant
to the second preceding sentence is greater than or equal to the sum of the
outstanding principal balance of the Notes and all accrued but unpaid interest
(including any overdue interest) thereon and the Certificate Balance. The
Purchase Amount and any Yield Supplement Amounts for such Payment Date, PLUS to
the extent necessary all amounts in the Supplemental Reserve Account, PLUS to
the extent necessary all amounts in the Reserve Account, shall be used to make
payments in full to Noteholders and Certificateholders in the manner set forth
in Article IV.
(b) Unless otherwise required by the Rating Agencies as set forth in
writing delivered to the Owner Trustee and the Indenture Trustee, if at the time
the Servicer exercises its purchase option hereunder the Servicer's long-term
unsecured debt has a rating lower than investment grade by the Rating Agencies,
the Servicer shall deliver to the Owner Trustee and the Indenture Trustee on
such Payment Date a letter from an Independent investment bank or an Independent
public accountant to the effect that the price paid by the Servicer for the
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Receivables at the time of transfer pursuant to such purchase option represented
a fair market price for such Receivables.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes and the
Certificateholders will succeed to the rights of the Noteholders hereunder, and
the Indenture Trustee will continue to carry out its obligations hereunder with
respect to the Certificateholders, including without limitation making
distributions from the Payahead Account and the Collection Account in accordance
with Section 4.6 and making withdrawals from the Supplemental Reserve Account in
accordance with Sections 4.5(b) and 4.7 and the Reserve Account in accordance
with Sections 4.5(c) and 4.7.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. AMENDMENT. (a) This Agreement may be amended by the
Seller, the Servicer and the Issuer, with the consent of the Indenture Trustee,
but without the consent of any of the Noteholders or the Certificateholders to
cure any ambiguity, to correct or supplement any provisions in this Agreement
which may be inconsistent with any other provisions in this Agreement, or to
add, change or eliminate any other provisions with respect to matters or
questions arising under this Agreement that shall not be inconsistent with the
provisions of this Agreement; PROVIDED, HOWEVER, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Owner Trustee and the
Indenture Trustee, materially and adversely affect the interests of any
Noteholder or Certificateholder.
(b) This Agreement may also be amended from time to time by the
Seller, the Servicer and the Issuer, with the consent of the Indenture Trustee,
the consent of the Holders of Notes evidencing not less than 51% of Outstanding
Amount of the Notes and the consent of the Holders of Certificates evidencing
not less than 51% of the Certificate Balance for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, or of modifying in any manner the rights of the Noteholders or
the Certificateholders; PROVIDED, HOWEVER, that no such amendment shall (a)
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 shall be required to be made on any Note or
Certificate or change the Note Interest Rate or the Certificate Rate, the
Specified Reserve Balance or the Maximum Supplemental Reserve Amount, without
the consent of all adversely affected Noteholders or Certificateholders, (b)
reduce the aforesaid percentage required to consent to any such amendment,
without the consent of the Holders of all Notes and Certificates affected
thereby or (c) adversely affect the rating of any Class of Notes by the Rating
Agencies without the consent, as applicable, of Noteholders evidencing not less
than 66-2/3% of the Notes of such Class Outstanding.
(c) Prior to the execution of any amendment or consent pursuant to
Section 10.1(b), the Servicer shall provide written notification of the
substance of such amendment or consent to each Rating Agency.
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(d) Promptly after the execution of any amendment or consent pursuant
to this Section 10.1, the Owner Trustee shall furnish written notification of
the substance of such amendment or consent to each Certificateholder, the
Indenture Trustee and each of the Rating Agencies. It shall not be necessary
for the consent of Noteholders or the Certificateholders pursuant to this
Section 10.1 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any other consents of
Noteholders and Certificateholders provided for in this Agreement) and of
evidencing the authorization of the execution thereof by Noteholders and
Certificateholders shall be subject to such reasonable requirements as the Owner
Trustee and the Indenture Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the
Owner Trustee and the Indenture Trustee shall be entitled to receive and rely
upon (i) an Opinion of Counsel stating that the execution of such amendment (A)
is authorized or permitted by this Agreement, (B) will not materially adversely
affect the Federal or any Applicable Tax State income or franchise taxation of
any Outstanding Note or Certificate or any Holder thereof, and (C) will not
cause the Trust to be taxable as a corporation for Federal or any Applicable Tax
State income or franchise tax purposes and (ii) an Officer's Certificate of the
Servicer that all conditions precedent to the execution of such amendment have
been complied with. The Owner Trustee or the Indenture Trustee may, but shall
not be obligated to, enter into any such amendment which affects such Owner
Trustee's or Indenture Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 10.2. PROTECTION OF TITLE TO TRUST. (a) The Seller or
Servicer, or both, shall execute and file such financing statements and cause to
be executed and filed such continuation statements, all in such manner and in
such places as may be required by law fully to preserve, maintain, and protect
the interest of the Issuer and the Indenture Trustee for the benefit of the
Noteholders in the Receivables and in the proceeds thereof. The Seller or
Servicer, or both, shall deliver (or cause to be delivered) to the Owner Trustee
and the Indenture Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity, or corporate structure in any manner that would, could, or might make
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any financing statement or continuation statement filed by the Seller or the
Servicer in accordance with paragraph (a) above seriously misleading within the
meaning of Section 9-402(7) of the Relevant UCC, unless it shall have given the
Owner Trustee and the Indenture Trustee at least sixty (60) days' prior written
notice thereof and shall have promptly filed appropriate amendments to all
previously filed financing statements or continuation statements.
(c) The Seller and the Servicer shall give the Owner Trustee and the
Indenture Trustee at least sixty (60) days' prior written notice of any
relocation of its principal executive office if, as a result of such relocation,
the applicable provisions of the Relevant UCC would require the filing of any
amendment of any previously filed financing or continuation statement or of any
new financing statement and shall promptly file any such amendment, continuation
statement or any new financing statement. The Servicer shall at all times
maintain each office from which it shall service Receivables, and its principal
executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection
Account, Payahead Account, the Yield Supplement Account, the Reserve Account and
the Supplemental Reserve Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the Issuer,
the Servicer's master computer records (including any back-up archives) that
refer to a Receivable shall indicate clearly the interest of the Issuer and the
Indenture Trustee in such Receivable and that such Receivable is owned by the
Issuer and has been pledged to the Indenture Trustee pursuant to the Indenture.
Indication of the Issuer's and the Indenture Trustee's interest in a Receivable
shall be deleted from or modified on the Servicer's computer systems when, and
only when, the Receivable shall have been paid in full or repurchased by the
Seller or purchased by the Servicer.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in any
automobile or
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light- or medium-duty truck receivables to any prospective purchaser, lender, or
other transferee, the Servicer shall give to such prospective purchaser, lender,
or other transferee computer tapes, records, or print-outs (including any
restored from back-up archives) that, if they shall refer in any manner
whatsoever to any Receivable, shall indicate clearly that such Receivable has
been sold and is owned by the Issuer and has been pledged to the Indenture
Trustee unless such Receivable has been paid in full or repurchased by the
Seller or purchased by the Servicer.
(g) The Servicer shall permit the Owner Trustee, the Indenture Trustee
and their respective agents at any time during normal business hours to inspect,
audit, and make copies of and abstracts from the Servicer's records regarding
any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee and
the Indenture Trustee, within ten (10) Business Days, a list of all Receivables
(by contract number and name of Obligor) then held as part of the Trust,
together with a reconciliation of such list to the Schedule of Receivables and
to each of the Servicer's Certificates furnished before such request indicating
removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee:
(1) promptly after the execution and delivery of each
amendment to any financing statement, an Opinion of Counsel either (A)
stating that, in the opinion of such Counsel, all financing statements
and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Issuer and
the Indenture Trustee in the Receivables, and reciting the details of
such filings or referring to prior Opinions of Counsel in which such
details are given, or (B) stating that, in the opinion of such
Counsel, no such action shall be necessary to preserve and protect
such interest; and
(2) within ninety (90) days after the beginning of each
calendar year beginning with the first calendar year beginning more
than three months after the Cutoff Date, an Opinion of Counsel, dated
as of a date during such 90-day period, either (A) stating that, in
the opinion of such Counsel, all financing statements and
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continuation statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Issuer and the Indenture
Trustee in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or
(B) stating that, in the opinion of such Counsel, no such action shall be
necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i)(1) or (i)(2) above
shall specify any action necessary (as of the date of such opinion) to be taken
in the following year to preserve and protect such interest.
(j) The Seller shall, to the extent required by applicable law, cause
the Notes to be registered with the Commission pursuant to Section 12(b) or
Section 12(g) of the Exchange Act within the time periods specified in such
sections.
SECTION 10.3. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of New York and the obligations, rights,
and remedies of the parties under this Agreement shall be determined in
accordance with such laws.
SECTION 10.4. NOTICES. All demands, notices, and communications
under this Agreement shall be in writing, personally delivered, sent by
telecopier, overnight courier or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) in the
case of the Seller or the Servicer, to the agent for service as specified in
Section 10.12 hereof, or at such other address as shall be designated by the
Seller or the Servicer in a written notice to the Owner Trustee and the
Indenture Trustee, (b) in the case of the Owner Trustee, at the Corporate Trust
Office of the Owner Trustee, (c) in the case of the Indenture Trustee, at the
Corporate Trust Office of the Indenture Trustee, (d) in the case of Moody's, at
the following address: Moody's Investors Service, Inc., ABS Monitoring
Department, 99 Church Street, New York, New York 10007, and (e) in the case of
S&P, at the following address: Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, 25 Broadway, 20th Floor, New York, New York 10004,
Attention: Asset Backed Surveillance Department. Any notice required or
permitted to be mailed to a Noteholder or Certificateholder shall be given by
first class mail, postage prepaid, at the address of such Holder as shown in the
Note Register or the
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<PAGE>
Certificate Register, as applicable. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Noteholder or Certificateholder shall receive such
notice.
SECTION 10.5. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the Notes, the
Certificates, or the rights of the Holders thereof.
SECTION 10.6. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.3 and 8.2 and as provided in
the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Seller or the Servicer without the
prior written consent of the Owner Trustee, the Indenture Trustee, the Holders
of Notes evidencing not less than 66-2/3% of the Outstanding Amount of the Notes
and the Holders of Certificates evidencing not less than 66-2/3% of the
Certificate Balance.
SECTION 10.7. FURTHER ASSURANCES. The Seller and the Servicer agree
to do and perform, from time to time, any and all acts and to execute any and
all further instruments required or reasonably requested by the Owner Trustee or
the Indenture Trustee more fully to effect the purposes of this Agreement,
including, without limitation, the execution of any financing statements or
continuation statements relating to the Receivables for filing under the
provisions of the Relevant UCC of any applicable jurisdiction.
SECTION 10.8. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise
and no delay in exercising, on the part of the Owner Trustee, the Indenture
Trustee, the Noteholders or the Certificateholders, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges therein
provided are cumulative and not exhaustive of any rights, remedies, powers and
privileges provided by law.
93
<PAGE>
SECTION 10.9. THIRD-PARTY BENEFICIARIES. This Agreement will inure
to the benefit of and be binding upon the parties hereto, the Noteholders, the
Certificateholders, and their respective successors and permitted assigns.
Except as otherwise provided in this Article X, no other Person will have any
right or obligation hereunder. The parties hereto hereby acknowledge and
consent to the pledge of this Agreement by the Issuer to the Indenture Trustee
for the benefit of Noteholders pursuant to the Indenture.
SECTION 10.10. ACTIONS BY NOTEHOLDER OR CERTIFICATEHOLDERS. (a)
Wherever in this Agreement a provision is made that an action may be taken or a
notice, demand, or instruction given by Noteholders or Certificateholders, such
action, notice, or instruction may be taken or given by any Noteholder or
Certificateholder, as applicable, unless such provision requires a specific
percentage of Noteholders or Certificateholders.
(b) Any request, demand, authorization, direction, notice, consent,
waiver, or other act by a Noteholder or Certificateholder shall bind such
Noteholder or Certificateholder and every subsequent holder of such Note or
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done or omitted to be done by
the Owner Trustee, the Indenture Trustee or the Servicer in reliance thereon,
whether or not notation of such action is made upon such Note or Certificate.
SECTION 10.11. COUNTERPARTS. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
SECTION 10.12. AGENT FOR SERVICE. The agent for service of the
Seller and the Servicer in respect of this Agreement shall be Executive Vice
President, Finance and Corporate Planning, Mitsubishi Motors Credit of America,
Inc., 6363 Katella Avenue, Cypress, California 90630-5205, mailing address:
P.O. Box 6038, Cypress, California 90630-0038.
SECTION 10.13. NO BANKRUPTCY PETITION. The Owner Trustee, the
Indenture Trustee, the Issuer and the Servicer each covenants and agrees that,
prior to the date which is one year and one day after the payment in full of all
securities issued by the Seller or by a trust for which the Seller was the
depositor which
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<PAGE>
securities were rated by any nationally recognized statistical rating
organization it will not institute against, or join any other Person in
instituting against, the Seller any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any federal or
state bankruptcy or similar law. This Section 10.13 shall survive the
resignation or removal of the Owner Trustee under the Trust Agreement or the
Indenture Trustee under the Indenture or the termination of such Agreement.
SECTION 10.14. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE
TRUSTEE. (a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Wilmington Trust Company, not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or,
except as expressly provided in the Trust Agreement, as beneficial owner of the
Issuer, have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer. For all
purposes of this Agreement, in the performance of its duties or obligations
hereunder or in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by Bank of Tokyo - Mitsubishi Trust Company, not in
its individual capacity but solely as Indenture Trustee, and in no event shall
Bank of Tokyo - Mitsubishi Trust Company have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer.
95
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Sale and Servicing
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
MMCA AUTO RECEIVABLES, INC.,
as Seller
By:
---------------------------------------------
Name:
Title:
MMCA AUTO OWNER TRUST 1998-1,
as Issuer
By: WILMINGTON TRUST COMPANY
not in its individual capacity but solely
as Owner Trustee
By:
---------------------------------------------
Name:
Title:
MITSUBISHI MOTORS CREDIT OF
AMERICA, INC., as Servicer
By:
---------------------------------------------
Name:
Title:
96
<PAGE>
Accepted and agreed:
BANK OF TOKYO - MITSUBISHI TRUST COMPANY,
as Indenture Trustee
By:
-----------------------------------
Name:
Title:
97
<PAGE>
SCHEDULE A
----------
[SCHEDULE OF RECEIVABLES]
Delivered to Indenture Trustee at Closing
<PAGE>
SCHEDULE B
----------
LOCATIONS OF RECEIVABLES FILES
CORPORATE OFFICE
6363 Katella Avenue
P.O. Box 6038
Cypress, CA 90630-5205
NATIONAL SERVICE CENTER
10805 Holder Street, Third Floor
P.O. Box 6043
Cypress, CA 90630-0040
NORTH CENTRAL REGION
1101 Perimeter Drive, Suite 650
Schaumburg, IL 60173
NORTHEASTERN REGION
2700 Westchester Avenue, Suite 400
Purchase, NY 10577-0600
SOUTHEASTERN REGION
1211 Semoran Boulevard, Suite 149
Casselberry, FL 32707
SOUTHWESTERN REGION
690 East Lamar Boulevard, Suite 350
Arlington, TX 76011
WESTERN REGION
10855 Business Center Drive, Suite B
Cypress, CA 90630
<PAGE>
EXHIBIT A
---------
[FORM OF SERVICER'S CERTIFICATE]
The undersigned certifies that he is a [title] of Mitsubishi Motors
Credit of America, Inc., a corporation in good standing under the laws of the
state of its incorporation (the "COMPANY"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Company
pursuant to Section 3.9 of the Sale and Servicing Agreement, dated as of
[ ], 1998, by and among the Company, as Servicer, MMCA Auto Receivables,
Inc., as Seller, and MMCA Auto Owner Trust 1997, as Issuer (the "SALE AND
SERVICING AGREEMENT") (all capitalized terms used herein without definition have
the respective meanings specified in the Sale and Servicing Agreement), and
further certifies that:
(a) The Servicer's report for the period from __________ to
____________ attached to this certificate is complete and accurate and
contains all information required by Section 3.9 of the Sale and Servicing
Agreement; and
(b) As of the date hereof, no Event of Servicing Termination or
event that with notice or lapse of time or both would become an Event of
Servicing Termination has occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature and the
corporate seal of the Company this ______ day of ____________, 19__.
MITSUBISHI MOTORS CREDIT
OF AMERICA, INC.
By:
-------------------------
Name:
Title:
<PAGE>
EXHIBIT B
---------
[FORM OF REPORT TO NOTEHOLDERS]
<PAGE>
EXHIBIT C
---------
[FORM OF REPORT TO CERTIFICATEHOLDERS]
<PAGE>
EXHIBIT D
---------
[FORM OF YIELD SUPPLEMENT AGREEMENT]
_______,___
MMCA Auto Receivables, Inc.
6363 Katella Avenue
Cypress, California 90630-5205
Re: MMCA Auto Owner Trust 1998-1
----------------------------
Ladies and Gentlemen:
We hereby confirm arrangements made as of the date hereof with you to
be effective upon (i) receipt by us of the enclosed copy of this letter
agreement (as amended, supplemented or otherwise modified and in effect from
time to time, the "YIELD SUPPLEMENT AGREEMENT"), executed by you, and (ii)
execution of the Purchase Agreement referred to below and payment of the
purchase price specified thereunder. Capitalized terms used and not otherwise
defined herein shall have the meanings assigned to such terms in, or
incorporated by reference into, the Purchase Agreement, dated as of [ ],
1998 (as amended, supplemented or otherwise modified and in effect from
time to time, the "PURCHASE AGREEMENT"), between Mitsubishi Motors Credit of
America, Inc., as seller (the "SELLER"), and MMCA Auto Receivables, Inc., as
purchaser (the "PURCHASER").
1. On or prior to the Determination Date preceding each Payment
Date, the Servicer shall notify the Purchaser and the Seller of the Yield
Supplement Amount for such Payment Date.
2. In consideration for the Purchaser entering into the Purchase
Agreement and the purchase price paid to the Seller for the Receivables under
the Purchase Agreement, we agree to make a payment of the Yield Supplement
Amount to the Purchaser, or to the pledgee of the assignee of the Purchaser
referred to in Section 5 hereof, on the Business Day prior to each Payment Date.
<PAGE>
MMCA Auto Receivables, Inc.
Page 2
3. All payments pursuant hereto shall be made by federal wire
transfer (same day) funds or in immediately available funds, to such account as
the Purchaser or the pledgee of the assignee of the Purchaser referred to in
Section 5 hereof, may designate in writing to the Seller, prior to the relevant
Payment Date.
4. Our agreements set forth in this Yield Supplement Agreement are
our primary obligations and such obligations are irrevocable, absolute and
unconditional, shall not be subject to any counterclaim, setoff or defense and
shall remain in full force and effect without regard to, and shall not be
released, discharged or in any way affected by, any circumstances or condition
whatsoever.
5. Pursuant to the Sale and Servicing Agreement, the Purchaser will
sell, transfer, assign and convey its interest in this Yield Supplement
Agreement to MMCA Auto Owner Trust 1998-1 (the "TRUST"), and the Seller hereby
acknowledges and consents to such sale, transfer, assignment and conveyance.
Concurrent with such sale, transfer, assignment and conveyance, pursuant to the
Indenture, the Trust will pledge its rights under this Yield Supplement
Agreement, along with certain other assets of the Trust, to Bank of Tokyo -
Mitsubishi Trust Company, as Indenture Trustee, to secure its obligations under
the Notes and the Indenture, and the Seller hereby acknowledges and consents to
such pledge. The Seller hereby agrees, for the benefit of the Trust, that
following such sale, transfer, assignment, conveyance and pledge, this Yield
Supplement Agreement shall not be amended, modified or terminated without the
consent of Wilmington Trust Company, as Owner Trustee on behalf of the Trust,
and, prior to the payment in full of the Notes, the Indenture Trustee.
6. This Yield Supplement Agreement will be governed by, and
construed in accordance with, the laws of the State of New York.
7. Except as otherwise provided herein, all notices pursuant to this
Yield Supplement Agreement shall be in writing and shall be effective upon
receipt thereof. All notices shall be directed as set forth below, or to such
other address or to the attention of such other person as the relevant party
shall have designated for such purpose in a written notice.
<PAGE>
MMCA Auto Receivables, Inc.
Page 3
IF TO THE PURCHASER:
MMCA Auto Receivables, Inc.
6363 Katella Avenue
Cypress, California 90630-5205
Attention: Secretary/Treasurer
Telephone: (714) 236-1592
Telecopy: (714) 236-1300
IF TO THE SELLER:
Mitsubishi Motors Credit of America, Inc.
6363 Katella Avenue
Cypress, California 90630-5205
Attention: Vice President, Secretary and
Treasurer
Telephone: (714) 236-1500
Telecopy: (714) 236-1300
8. This Yield Supplement Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, all
of which shall be deemed to be one and the same document.
<PAGE>
MMCA Auto Receivables, Inc.
Page 4
If the foregoing satisfactorily sets forth the terms and conditions of
our agreement, please indicate your acceptance thereof by signing in the space
provided below and returning to us the enclosed duplicate original of this
letter.
Very truly yours,
MITSUBISHI MOTORS CREDIT
OF AMERICA, INC., as
Seller
By:
-----------------------
Name:
Title:
Agreed and accepted as of
the date first above written:
MMCA AUTO RECEIVABLES, INC.,
as Purchaser
By:
-----------------------
Name:
Title:
<PAGE>
Exhibit 4.3
================================================================================
INDENTURE
between
MMCA AUTO OWNER TRUST 1998-1,
as Issuer,
and
BANK OF TOKYO - MITSUBISHI TRUST COMPANY,
as Indenture Trustee
Dated as of August 1, 1998
===========================
$[ ] [ ]% Class A-1 Asset Backed Notes
$[ ] [ ]% Class A-2 Asset Backed Notes
$[ ] [ ]% Class A-3 Asset Backed Notes
$[ ] [ ]% Class B Asset Backed Notes
===========================
================================================================================
<PAGE>
CROSS REFERENCE TABLE(1)
TIA Indenture
Section Section
- ------- -------
310 (a)(1)..................................................... 6.11
(a)(2)..................................................... 6.11
(a)(3)..................................................... 6.10
(a)(4)................................................... N.A.(2)
(a)(5)..................................................... 6.11
(b) ................................................... 6.8;6.11
(c) ...................................................... N.A.
311 (a) ...................................................... 6.12
(b) ...................................................... 6.12
(c) ...................................................... N.A.
312 (a) ...................................................... 7.1
(b) ...................................................... 7.2
(c) ...................................................... 7.2
313 (a) ...................................................... 7.4
(b)(1)..................................................... 7.4
(b)(2).................................................. 7.4;11.5
(c) ...................................................... 7.4
(d) ...................................................... 7.3
314 (a) ...................................................... 7.3
(b) ...................................................... 11.15
(c)(1)..................................................... 11.1
(c)(2)..................................................... 11.1
(c)(3)..................................................... 11.1
(d) ...................................................... 11.1
(e) ...................................................... 11.1
(f) ...................................................... 11.1
315 (a) ...................................................... 6.1
(b) ................................................... 6.5;11.5
(c) ...................................................... 6.1
(d) ...................................................... 6.1
(e) ...................................................... 5.13
316 (a) (last sentence)........................................ 1.1
(a)(1)(A).................................................. 5.11
<PAGE>
(a)(1)(B).................................................. 5.12
(a)(2)..................................................... N.A.
(b) ...................................................... 5.7
(c) ...................................................... N.A
317 (a)(1)..................................................... 5.3
(a)(2)..................................................... 5.3
(b) ...................................................... 3.3
318 (a) ...................................................... 11.7
- ---------
(1) Note: This Cross Reference Table shall not, for any purpose, be deemed to
be part of this Indenture.
(2) N.A. means Not Applicable.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE..................2
SECTION 1.1. Definitions...................................................2
SECTION 1.2. Incorporation by Reference of Trust
Indenture Act................................................15
SECTION 1.3. Rules of Construction........................................16
ARTICLE II
THE NOTES.................................16
SECTION 2.1. Form.........................................................16
SECTION 2.2. Execution, Authentication and Delivery.......................17
SECTION 2.3. Temporary Notes..............................................18
SECTION 2.4. Tax Treatment................................................18
SECTION 2.5. Registration; Registration of Transfer and
Exchange.....................................................18
SECTION 2.6. Mutilated, Destroyed, Lost or Stolen Notes...................20
SECTION 2.7. Persons Deemed Owner.........................................21
SECTION 2.8. Payments.....................................................22
SECTION 2.9. Cancellation.................................................26
SECTION 2.10. Release of Collateral........................................26
SECTION 2.11. Book-Entry Notes.............................................26
SECTION 2.12. Notices to Clearing Agency...................................28
SECTION 2.13. Definitive Notes.............................................28
SECTION 2.14. Authenticating Agents........................................28
ARTICLE III
COVENANTS.................................30
SECTION 3.1. Payment Covenant.............................................30
SECTION 3.2. Maintenance of Office or Agency..............................30
SECTION 3.3. Money for Payments To Be Held in Trust.......................30
SECTION 3.4. Existence....................................................32
i
<PAGE>
SECTION 3.5. Protection of Trust Estate...................................33
SECTION 3.6. Opinions as to Trust Estate..................................33
SECTION 3.7. Performance of Obligations; Servicing of
Receivables..................................................34
SECTION 3.8. Negative Covenants...........................................36
SECTION 3.9. Annual Statement as to Compliance............................37
SECTION 3.10. Issuer May Consolidate, etc., Only on
Certain Terms................................................38
SECTION 3.11. Successor of Transferee......................................40
SECTION 3.12. No Other Business............................................41
SECTION 3.13. No Borrowing.................................................41
SECTION 3.14. Servicer's Obligations.......................................41
SECTION 3.15. Guarantees, Loans, Advances and Other
Liabilities..................................................41
SECTION 3.16. Capital Expenditures.........................................41
SECTION 3.17. Further Instruments and Acts.................................41
SECTION 3.18. Restricted Payments..........................................41
SECTION 3.19. Notice of Events of Default..................................42
SECTION 3.20. Removal of Administrator.....................................42
ARTICLE IV
SATISFACTION AND DISCHARGE.........................43
SECTION 4.1. Satisfaction and Discharge of Indenture......................43
SECTION 4.2. Satisfaction, Discharge and Defeasance of
the Notes....................................................44
SECTION 4.3. Application of Trust Money...................................46
SECTION 4.4. Repayment of Monies Held by Paying Agent.....................46
ARTICLE V
REMEDIES..................................47
SECTION 5.1. Events of Default............................................47
SECTION 5.2. Acceleration of Maturity; Rescission and
Annulment....................................................49
SECTION 5.3. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee.............................50
SECTION 5.4. Remedies; Priorities.........................................53
SECTION 5.5. Optional Preservation of the Receivables.....................54
ii
<PAGE>
SECTION 5.6. Limitation of Suits..........................................54
SECTION 5.7. Unconditional Rights of Noteholders To
Receive Principal and Interest...............................55
SECTION 5.8. Restoration of Rights and Remedies...........................56
SECTION 5.9. Rights and Remedies Cumulative...............................56
SECTION 5.10. Delay or Omission Not a Waiver...............................56
SECTION 5.11. Control by Noteholders.......................................56
SECTION 5.12. Waiver of Past Defaults......................................57
SECTION 5.13. Undertaking for Costs........................................58
SECTION 5.14. Waiver of Stay or Extension Laws.............................58
SECTION 5.15. Action on Notes..............................................59
SECTION 5.16. Performance and Enforcement of Certain
Obligations..................................................59
ARTICLE VI
THE INDENTURE TRUSTEE...........................61
SECTION 6.1. Duties of Indenture Trustee..................................61
SECTION 6.2. Rights of Indenture Trustee..................................63
SECTION 6.3. Individual Rights of Indenture Trustee.......................64
SECTION 6.4. Indenture Trustee's Disclaimer...............................64
SECTION 6.5. Notice of Defaults...........................................64
SECTION 6.6. Reports by Indenture Trustee to Holders......................64
SECTION 6.7. Compensation and Indemnity...................................65
SECTION 6.8. Replacement of Indenture Trustee.............................65
SECTION 6.9. Successor Indenture Trustee by Merger........................67
SECTION 6.10. Appointment of Co-Indenture Trustee or
Separate Indenture Trustee...................................67
SECTION 6.11. Eligibility; Disqualification................................69
SECTION 6.12. Preferential Collection of Claims Against
Issuer.......................................................69
SECTION 6.13. Pennsylvania Motor Vehicle Sales
Finance Act Licenses.........................................69
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS.......................70
SECTION 7.1. Issuer To Furnish Indenture Trustee Names
and Addresses of Noteholders.................................70
SECTION 7.2. Preservation of Information; Communications
iii
<PAGE>
to Noteholders...............................................70
SECTION 7.3. Reports by Issuer............................................70
SECTION 7.4. Reports by Indenture Trustee.................................71
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES....................72
SECTION 8.1. Collection of Money..........................................72
SECTION 8.2. Trust Accounts, the Reserve Account, the
Supplemental Reserve Account and the Yield
Supplement Account...........................................72
SECTION 8.3. General Provisions Regarding Accounts........................73
SECTION 8.4. Release of Trust Estate......................................74
SECTION 8.5. Opinion of Counsel...........................................74
ARTICLE IX
SUPPLEMENTAL INDENTURES..........................76
SECTION 9.1. Supplemental Indentures Without Consent
of Noteholders...............................................76
SECTION 9.2. Supplemental Indentures with Consent
of Noteholders...............................................78
SECTION 9.3. Execution of Supplemental Indentures.........................80
SECTION 9.4. Effect of Supplemental Indenture.............................81
SECTION 9.5. Conformity with Trust Indenture Act..........................81
SECTION 9.6. Reference in Notes to Supplemental
Indentures...................................................81
ARTICLE X
REDEMPTION OF NOTES............................82
SECTION 10.1. Redemption...................................................82
SECTION 10.2. Form of Redemption Notice....................................82
SECTION 10.3. Notes Payable on Redemption Date.............................83
iv
<PAGE>
ARTICLE XI
MISCELLANEOUS...............................84
SECTION 11.1. Compliance Certificates and Opinions, etc. ..................84
SECTION 11.2. Form of Documents Delivered to
Indenture Trustee............................................86
SECTION 11.3. Acts of Noteholders..........................................87
SECTION 11.4. Notices, etc., to Indenture Trustee, Issuer
and Rating Agencies..........................................88
SECTION 11.5. Notices to Noteholders; Waiver...............................89
SECTION 11.6. Alternate Payment and Notice Provisions......................89
SECTION 11.7. Conflict with Trust Indenture Act............................90
SECTION 11.8. Effect of Headings and Table of Contents.....................90
SECTION 11.9. Successors and Assigns.......................................90
SECTION 11.10. Separability.................................................90
SECTION 11.11. Benefits of Indenture........................................90
SECTION 11.12. Legal Holiday................................................90
SECTION 11.13. Governing Law................................................91
SECTION 11.14. Counterparts.................................................91
SECTION 11.15. Recording of Indenture.......................................91
SECTION 11.16. Trust Obligation.............................................91
SECTION 11.17. No Petition..................................................92
SECTION 11.18. Inspection...................................................92
SCHEDULE A..................................................................SA-1
SCHEDULE I..................................................................SI-1
EXHIBIT A-1..................................................................A-1
EXHIBIT A-2..................................................................A-2
EXHIBIT A-3..................................................................A-3
EXHIBIT A-4..................................................................A-4
EXHIBIT B....................................................................B-1
v
<PAGE>
INDENTURE, dated as of August 1, 1998 (as amended, supplemented or
otherwise modified and in effect from time to time, this "Indenture"), between
MMCA AUTO OWNER TRUST 1998-1, a Delaware business trust (the "Issuer"), and BANK
OF TOKYO - MITSUBISHI TRUST COMPANY, a New York banking corporation, as trustee
and not in its individual capacity (in such capacity, the "Indenture Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the holders of the Issuer's Class A-1 [ ]%
Asset Backed Notes (the "Class A-1 Notes"), Class A-2 [ ]% Asset Backed Notes
(the "Class A-2 Notes"), Class A-3 [ ]% Asset Backed Notes (the "Class A-3
Notes" and, together with the Class A-1 Notes and the Class A-2 Notes, the
"Class A Notes") and Class B [ ]% Asset Backed Notes (the "Class B Notes" and,
together with the Class A Notes, the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing
Date, as Indenture Trustee for the benefit of the Holders of the Notes, all of
the Issuer's right, title and interest in, to and under, whether now owned or
existing or hereafter acquired or arising (a) the Receivables; (b) with respect
to Actuarial Receivables, monies due thereunder on or after the Cutoff Date
(including Payaheads) and, with respect to Simple Interest Receivables, monies
due or received thereunder on or after the Cutoff Date; (c) the security
interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of the Issuer in the Financed Vehicles; (d)
rights to receive proceeds with respect to the Receivables from claims on any
physical damage, theft, credit life or disability insurance policies covering
the Financed Vehicles or Obligors; (e) rights to receive proceeds with respect
to the Receivables from recourse to Dealers thereon pursuant to the Dealer
Agreements; (f) all of the Seller's rights to the Receivable Files; (g) the
Trust Accounts, the Reserve Account, the Supplemental Reserve Account and the
Yield Supplement Account and all amounts, securities, financial assets,
investments and other property deposited in or credited to any of the foregoing
and all proceeds thereof; (h) the Sale and Servicing Agreement and the Yield
Supplement Agreement; (i) all of the Seller's rights under the Purchase
Agreement, including the right of the Seller to cause MMCA to repurchase
Receivables from the Seller; (j) payments and proceeds with respect to the
Receivables held by the Servicer; (k) all property (including the right to
receive Liquidation Proceeds and Recoveries and Financed Vehicles and the
proceeds thereof
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acquired by the Issuer pursuant to the terms of a Final Payment Receivable),
guarantees and other collateral securing a Receivable (other than a Receivable
repurchased by the Servicer or purchased by the Seller) acquired by or on behalf
of the Issuer; (l) rebates of premiums and other amounts relating to insurance
policies and other items financed under the Receivables in effect as of the
Cutoff Date; and (m) all present and future claims, demands, causes of action
and choses in action in respect of any or all of the foregoing and all payments
on or under and all proceeds of every kind and nature whatsoever in respect of
any or all of the foregoing, including all proceeds of the conversion thereof,
voluntary or involuntary, into cash or other liquid property, all cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, insurance proceeds, condemnation awards, rights to
payment of any and every kind and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part of or
are included in the proceeds of any of the foregoing (collectively, the
"Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction, and to
secure compliance with the provisions of this Indenture, all as provided in this
Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Holders
of the Notes, acknowledges such Grant, accepts the trusts under this Indenture
in accordance with the provisions of this Indenture and agrees to perform its
duties required in this Indenture to the best of its ability to the end that the
interests of the Holders of the Notes may be adequately and effectively
protected.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1.(a) Definitions. Except as otherwise specified herein or
as the context may otherwise require, the following terms have the respective
meanings set forth below for all purposes of this Indenture.
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"Accrued Note Interest" shall mean, with respect to any Payment Date
and each Class of Notes, the sum of the Monthly Accrued Note Interest and the
Interest Carryover Shortfall for such Class for such Payment Date.
"Act" shall have the meaning specified in Section 11.3(a).
"Administration Agreement" shall mean the Administration Agreement,
dated as of August 1, 1998, by and among the Administrator, the Issuer and the
Indenture Trustee, as the same may from time to time be amended, supplemented or
otherwise modified and in effect.
"Administrator" shall mean Mitsubishi Motors Credit of America,
Inc., a Delaware corporation, or any successor Administrator under the
Administration Agreement.
"Authenticating Agent" shall have the meaning specified in Section
2.14.
"Authorized Officer" shall mean, with respect to the Issuer, any
officer of the Owner Trustee who is authorized to act for or on behalf of the
Owner Trustee in matters relating to the Issuer and who is identified on the
list of Authorized Officers delivered by the Owner Trustee to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented from
time to time thereafter) and, for so long as the Administration Agreement is in
full force and effect, any officer of the Administrator who is authorized to act
for the Administrator in matters relating to the Issuer and to be acted upon by
the Administrator pursuant to the Administration Agreement.
"Basic Documents" shall mean this Indenture, the Certificate of
Trust, the Trust Agreement, the Assignment, the Sale and Servicing Agreement,
the Purchase Agreement, the Administration Agreement, the Note Depository
Agreement, the Yield Supplement Agreement, the Control Agreement and other
documents and certificates delivered in connection therewith as the same may
from time to time be amended, supplemented or otherwise modified and in effect.
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"Book-Entry Notes" shall mean a beneficial interest in the Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.11.
"Business Day" shall mean any day other than a Saturday, a Sunday or
a day on which banking institutions or trust companies in New York, New York,
Wilmington, Delaware or Los Angeles, California are authorized or obligated by
law, executive order or governmental decree to remain closed.
"Certificate of Trust" shall mean the certificate of trust of the
Issuer substantially in the form of Exhibit C to the Trust Agreement.
"Class" shall mean a class of Notes, which may be the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes or the Class B Notes.
"Class A Notes" shall mean the Class A-1 Notes, the Class A-2 Notes
and the Class A-3 Notes, collectively.
"Class A Noteholders' Percentage" shall mean [ ]%, the percentage
equivalent of a fraction, the numerator of which is an amount equal to the sum
of the initial principal balances of the Class A-2 Notes and the Class A-3
Notes, and the denominator of which is an amount equal to the sum of the initial
principal balances of the Class A-2 Notes, the Class A-3 Notes and the Class B
Notes.
"Class A-1 Final Payment Date" shall mean the [ ] Payment Date.
"Class A-1 Noteholder" shall mean the Person in whose name a Class
A-1 Note is registered on the Note Register.
"Class A-1 Notes" shall mean the $[ ] aggregate initial
principal amount of [ ]% Class A-1 Asset Backed Notes issued by the Trust
pursuant to this Indenture, substantially in the form of Exhibit A-1 to this
Indenture.
"Class A-1 Rate" shall mean [ ]% per annum.
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"Class A-2 Final Payment Date" shall mean the [ ] Payment Date.
"Class A-2 Noteholder" shall mean the Person in whose name a Class
A-2 Note is registered on the Note Register.
"Class A-2 Notes" shall mean the $[ ] aggregate initial
principal amount of [ ]% Class A-2 Asset Backed Notes issued by the Trust
pursuant to this Indenture, substantially in the form of Exhibit A-2 to this
Indenture.
"Class A-2 Rate" shall mean [ ]% per annum.
"Class A-3 Final Payment Date" shall mean the [ ] Payment Date.
"Class A-3 Noteholder" shall mean the Person on whose name a Class
A-3 Note is registered on the Note Register.
"Class A-3 Notes" shall mean the $[ ] aggregate initial
principal amount of [ ]% Class A-3 Asset Backed Notes issued by the Trust
pursuant to this Indenture, substantially in the form of Exhibit A-3 to this
Indenture.
"Class A-3 Rate" shall mean [ ]% per annum.
"Class B Final Payment Date" shall mean the [ ] Payment Date.
"Class B Noteholder" shall mean the person in whose name a Class B
Note is registered on the Note Register.
"Class B Noteholders' Percentage" shall mean [ ]%, the percentage
equivalent of a fraction, the numerator of which is the initial principal
balance of the Class B Notes, and the denominator of which is an amount equal to
the sum of the initial principal balances of the Class A-2 Notes, the Class A-3
Notes and the Class B Notes.
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"Class B Notes" shall mean the $[ ] aggregate initial
principal amount of [ ]% Class B Asset Backed Notes issued by the Trust
pursuant to this Indenture, substantially in the form of Exhibit A-5 to this
Indenture.
"Class B Rate" shall mean [ ]% per annum.
"Clearing Agency" shall mean an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" shall mean a broker, dealer, bank,
other financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of securities deposited
with the Clearing Agency.
"Closing Date" shall mean August [ ], 1998.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and Treasury Regulations promulgated thereunder.
"Collateral" shall have the meaning specified in the Granting Clause
of this Indenture.
"Commission" shall mean the Securities and Exchange Commission.
"Control Agreement" shall mean the Securities Account Control
Agreement, dated as of August [ ], 1998, by and among the Seller, the Issuer,
the Indenture Trustee and Bank of Tokyo - Mitsubishi Trust Company in its
capacity as a securities intermediary, as the same may from time to time be
amended, supplemented or otherwise modified and in effect.
"Corporate Trust Office" shall mean the principal office of the
Indenture Trustee at which at any particular time its corporate trust business
shall be administered, which office at date of execution of this Indenture is
located at 1251 Avenue of the Americas, New York, New York 10020-1104,
Attention: Corporate Trust Department, or at such other address as the Indenture
Trustee may designate from time to time by notice to the Noteholders and the
Issuer, or the principal corporate trust office of any successor Indenture
Trustee at
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the address designated by such successor Indenture Trustee by notice to the
Noteholders and the Issuer.
"Default" shall mean any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"Definitive Notes" shall have the meaning specified in Section 2.11.
"Event of Default" shall have the meaning specified in Section 5.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Executive Officer" shall mean, with respect to any corporation, the
Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation and, with respect to any partnership, any general
partner thereof.
"Final Payment Date" shall mean the Class A-1 Final Payment Date,
the Class A-2 Final Payment Date, the Class A-3 Final Payment Date and the Class
B Final Payment Date, collectively, or any of them, as the context requires.
"Final Scheduled Maturity Date" shall mean [ ].
"Grant" shall mean to mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, and to grant a lien
upon and a security interest in and right of set-off against, and to deposit,
set over and confirm pursuant to this Indenture. A Grant of the Collateral or of
any other agreement or instrument shall include all rights, powers and options
(but none of the obligations) of the granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and give receipt
for principal and interest payments in respect of the Collateral and all other
monies payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights and
options, to bring Proceedings in the
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name of the granting party or otherwise, and generally to do and receive
anything that the granting party is or may be entitled to do or receive
thereunder or with respect thereto.
"Holder" or "Noteholder" shall mean the Person in whose name a Note
is registered on the Note Register.
"Indenture Trustee" shall mean Bank of Tokyo - Mitsubishi Trust
Company, a New York banking corporation, as Indenture Trustee under this
Indenture, or any successor Indenture Trustee under this Indenture.
"Independent" shall mean, when used with respect to any specified
Person, that such Person (a) is in fact independent of the Issuer, any other
obligor on the Notes, the Seller and any Affiliate of any of the foregoing
Persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the Seller or
any Affiliate of any of the foregoing Persons and (c) is not connected with the
Issuer, any such other obligor, the Seller or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
"Independent Certificate" shall mean a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1, made by
an Independent appraiser or other expert appointed by an Issuer Order and
approved by the Indenture Trustee in the exercise of reasonable care, and such
opinion or certificate shall state that the signer has read the definition of
"Independent" in this Indenture and that the signer is Independent within the
meaning thereof.
"Interest Accrual Period" shall mean, with respect to any Payment
Date, (i) with respect to the Class A-1 Notes, the period from and including the
previous Payment Date (or, in the case of the first Payment Date, the Closing
Date) to but excluding such Payment Date and (ii) with respect to the Class A-2
Notes, the Class A-3 Notes and the Class B Notes, the period from and including
the 15th day of the calendar month immediately preceding such Payment Date (or,
in the case of the first Payment Date, the Closing Date), to but excluding the
15th day of the calendar month in which such Payment Date occurs.
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"Interest Carryover Shortfall" shall mean, with respect to any
Payment Date and any Class of Notes, the excess of the sum of the Monthly
Accrued Note Interest for the preceding Payment Date and any outstanding
Interest Carryover Shortfall from the close of business on such preceding
Payment Date, over the amount in respect of interest that is actually deposited
in the Note Payment Account on such preceding Payment Date, plus interest on
such excess to the extent permitted by law, at the applicable Note Interest Rate
for the related Interest Accrual Period.
"Issuer" shall mean MMCA Auto Owner Trust 1998-1, unless a successor
replaces it and, thereafter, means the successor and for purposes of any
provision contained herein and required by the TIA, each other obligor on the
Notes.
"Issuer Order" and "Issuer Request" shall mean a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Indenture Trustee.
"Monthly Accrued Note Interest" shall mean, with respect to any
Payment Date and (i) any Class of Notes, interest accrued for the related
Interest Accrual Period at the applicable Note Interest Rate on the aggregate
principal amount of the Notes of such Class as of the immediately preceding
Payment Date, after giving effect to all payments of principal to Noteholders on
or prior to such preceding Payment Date (or, in the case of the first Payment
Date, the initial principal amount of the Notes); and (ii) with respect to the
Notes collectively, the sum of Monthly Accrued Note Interest for each Class.
"Note Depository Agreement" shall mean the agreement dated August
[ ], 1998, among the Issuer, the Indenture Trustee and The Depository Trust
Company, as the initial Clearing Agency, relating to the Notes.
"Note Interest Rate" shall mean, in the case of the Class A-1 Notes,
the Class A-1 Rate, in the case of the Class A-2 Notes, the Class A-2 Rate, in
the case of the Class A-3 Notes, the Class A-3 Rate and in the case of the Class
B Notes, the Class B Rate.
"Note Owner" shall mean, with respect to any Book-Entry Note, the
Person who is the beneficial owner of such Book-Entry Note, as reflected on the
books of the Clearing Agency or on the books of a Person main-
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taining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Note Register" and "Note Registrar" shall have the respective
meanings specified in Section 2.5.
"Noteholders" shall mean the Class A-1 Noteholders, the Class A-2
Noteholders, the Class A-3 Noteholders and the Class B Noteholders,
collectively.
"Notes" shall mean the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes and the Class B Notes, collectively.
"Officer's Certificate" shall mean a certificate signed by any
Authorized Officer of the Issuer, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1, and
delivered to the Indenture Trustee. Unless otherwise specified, any reference in
this Indenture to an Officer's Certificate shall be to an Officer's Certificate
of any Authorized Officer of the Issuer.
"Opinion of Counsel" shall mean one or more written opinions of
counsel who may, except as otherwise expressly provided in this Indenture, be
employees of or counsel to the Issuer, MMCA or the Servicer and who shall be
satisfactory to the Indenture Trustee, and which opinion or opinions shall be
addressed to the Indenture Trustee as Indenture Trustee, shall comply with any
applicable requirements of Section 11.1 and shall be in form and substance
satisfactory to the Indenture Trustee.
"Outstanding" shall mean, as of the date of determination, all
Notes theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the
Indenture Trustee or any Paying Agent in trust for the Holders of
such Notes (provided,
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however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or
provision for such notice has been made, satisfactory to the
Indenture Trustee); and
(iii) Notes in exchange for or in lieu of which other Notes
have been authenticated and delivered pursuant to this Indenture
unless proof satisfactory to the Indenture Trustee is presented that
any such Notes are held by a protected purchaser;
provided, that in determining whether the Holders of the requisite principal
amount of the Notes Outstanding have given any request, demand, authorization,
direction, notice, consent, or waiver hereunder or under any Basic Document,
Notes owned by the Issuer, any other obligor upon the Notes, the Seller, the
Servicer or any Affiliate of any of the foregoing Persons shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Indenture Trustee shall be protected in relying on any such request, demand,
authorization, direction, notice, consent, or waiver, only Notes that a
Responsible Officer of the Indenture Trustee knows to be so owned shall be so
disregarded. Notes so owned that have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the Indenture
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Issuer, any other obligor upon the Notes, the Seller, the
Servicer or any Affiliate of any of the foregoing Persons.
"Outstanding Amount" shall mean the aggregate principal amount of
all Notes Outstanding at the date of determination.
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as Owner Trustee
under the Trust Agreement, or any successor Owner Trustee under the Trust
Agreement.
"Paying Agent" shall mean the Indenture Trustee or any other Person
that meets the eligibility standards for the Indenture Trustee specified in
Section 6.11 and is authorized by the Issuer to make payments to and
distributions from the Collection Account and the Note Payment Account,
including payment of principal of or interest on the Notes on behalf of the
Issuer.
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"Payment Date" shall mean the 15th day of each month, or if any such
day is not a Business Day, the immediately following Business Day, commencing on
September 15, 1998.
"Predecessor Note" shall mean, with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note and, for purposes of this definition, any Note
authenticated and delivered under Section 2.6 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Principal Carryover Shortfall" shall mean, as of the close of
business on any Payment Date, the excess of the Principal Distribution Amount
and any outstanding Principal Carryover Shortfall from the preceding Payment
Date over the amount in respect of principal that is actually deposited in the
Note Payment Account on such Payment Date.
"Proceeding" shall mean any suit in equity, action at law or other
judicial or administrative proceeding.
"Rating Agency" shall mean either S&P or Moody's, and together, the
"Rating Agencies". If no such organization or successor is any longer in
existence, "Rating Agency" shall be a nationally recognized statistical rating
organization or other comparable Person designated by the Issuer, notice of
which designation shall be given to the Indenture Trustee, the Owner Trustee and
the Servicer.
"Rating Agency Condition" shall mean, with respect to any action,
that each Rating Agency shall have been given prior notice thereof and that each
of the Rating Agencies shall have notified the Seller, the Servicer, the
Indenture Trustee and the Owner Trustee that such action shall not result in a
reduction or withdrawal of the then current rating assigned to any Class of
Notes.
"Record Date" shall mean, with respect to a Payment Date or
Redemption Date, the close of business on the day immediately preceding such
Payment Date or Redemption Date or, if Definitive Notes have been issued
pursuant to Section 2.13, the fifteenth (15th) day of the preceding month.
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"Redemption Date" shall mean the Payment Date specified by the
Servicer pursuant to Section 10.1(a) or (b), as applicable, on which date the
Indenture Trustee shall withdraw any amount remaining in the Supplemental
Reserve Account and the Reserve Account and deposit the applicable amount
thereof payable to the Notes in the Note Payment Account first from the any
amount remaining in the Supplemental Reserve Account and then to the extent of
any remaining shortfall from the Reserve Account.
"Redemption Price" shall mean an amount equal to the unpaid
principal amount of the Notes redeemed plus accrued and unpaid interest thereon.
"Registered Holder" shall mean the Person in whose name a Note is
registered on the Note Register on the applicable Record Date.
"Responsible Officer" shall mean, with respect to the Indenture
Trustee, any officer within the Corporate Trust Office of the Indenture Trustee
with direct responsibility for the administration of this Indenture and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Sale and Servicing Agreement" shall mean that certain Sale and
Servicing Agreement, dated as of, August 1, 1998, by and among the Issuer, the
Seller and the Servicer, as from time to time amended, supplemented or otherwise
modified and in effect.
"Scheduled Principal" shall mean, with respect to any Payment Date,
the sum of (a) the sum of (i) collections received during the related Collection
Period of principal on Simple Interest Receivables, including collections of
principal attributable to the Last Scheduled Payment of a Simple Interest
Receivable that is a Final Payment Receivable, and including any charges for
Excess Wear and Tear and Excess Mileage but excluding collections received
during the related Collection Period of principal on Simple Interest Receivables
that would be attributable to a Last Scheduled Payment pursuant to Section
4.3(a) except that a Last Scheduled Payment Advance has been made with respect
to such Last Scheduled Payment, and (ii) Last Scheduled Payment Advances made
during the related Collection Period with respect to Simple Interest Receivables
that are Final Payment Receivables, (b) the principal portion of each Scheduled
Payment
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(including a Last Scheduled Payment on a Final Payment Receivable) due on any
Actuarial Receivable during the related Collection Period, (c) the Principal
Balance (without duplication of amounts taken into account under (a) or (b)) of
(i) each Receivable prepaid in full during the related Collection Period and
(ii) Receivables which became Defaulted Receivables during the related
Collection Period, (d) the Purchase Amount of each Receivable that was
repurchased by the Seller or purchased by the Servicer during such Collection
Period to the extent attributable to principal, (e) the proceeds of any other
sale of a Receivable (including pursuant to Section 9.2 of the Trust Agreement),
to the extent allocable to principal, and (f) partial prepayments attributable
to any refunded item included in the Amount Financed, such as extended warranty
protection plan costs or physical damage, credit life or 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 Cutoff Date;
provided, however, that in calculating the Scheduled Principal, all payments
and proceeds (including Liquidation Proceeds) of any Purchased Receivables the
Purchase Amount of which has been included in Scheduled Principal in a prior
Collection Period (which shall be paid to the Seller or Servicer, as applicable)
will be excluded.
"Schedule of Receivables" shall mean the listing of Receivables set
forth in Schedule A (which Schedule may be in the form of microfiche).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" shall mean MMCA Auto Receivables, Inc., a Delaware
corporation, in its capacity as seller under the Sale and Servicing Agreement,
and its successors-in-interest.
"Servicer" shall mean Mitsubishi Motors Credit of America, Inc., a
Delaware corporation, in its capacity as servicer under the Sale and Servicing
Agreement, and any successor Servicer thereunder.
"State" shall mean any of the fifty States of the United States of
America or the District of Columbia.
"Successor Servicer" shall have the meaning specified in Section
3.7(e).
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"Total Required Payment" shall mean, on any Payment Date, the Total
Servicing Fee, the Accrued Note Interest and the Principal Distribution Amount.
"Trust Estate" shall mean all money, instruments, rights and other
property that are subject or intended to be subject to the lien and security
interest of this Indenture for the benefit of the Noteholders (including,
without limitation, all property and interests Granted to the Indenture
Trustee), including all proceeds thereof.
"Trust Indenture Act" or "TIA" shall mean the Trust Indenture Act of
1939, as amended, unless otherwise specifically provided.
(b) Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used but not otherwise defined herein have
the respective meanings set forth in, or incorporated by reference into, the
Sale and Servicing Agreement for all purposes of this Indenture.
SECTION 1.2. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Indenture securities" shall mean the Notes.
"Indenture security holder" shall mean a Noteholder.
"Indenture to be qualified" shall mean this Indenture.
"Indenture trustee" or "Institutional trustee" shall mean the
Indenture Trustee.
"Obligor" on the indenture securities shall mean the Issuer and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined in the
TIA, defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
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SECTION 1.3. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the plural
include the singular; and
(vi) any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection
herewith means such agreement, instrument or statute as from time to time
amended, modified or supplemented and includes (in the case of agreements
or instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
ARTICLE II
THE NOTES
SECTION 2.1. Form. (a) The Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes and the Class B Notes, together with the Indenture Trustee's
Certificates of Authentication, shall be substantially the form set forth in
Exhibit A-1, Exhibit A-2, Exhibit A-3 and Exhibit A-4, respectively, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may, consistently herewith, be determined by the officers executing such Notes,
as evidenced by their execution thereof. Any portion of the text of any Note may
be
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set forth on the reverse thereof, with an appropriate reference thereto on the
face of the Note.
(b) The Definitive Notes shall be typewritten, printed, lithographed
or engraved or produced by any combination of these methods (with or without
steel engraved borders), all as determined by the officers executing such Notes,
as evidenced by their execution of such Notes.
(c) Each Note shall be dated the date of its authentication. The
terms of the Notes set forth in Exhibits A-1 through A-4 hereto are part of the
terms of this Indenture and are incorporated herein by reference.
SECTION 2.2. Execution, Authentication and Delivery. (a) The Notes
shall be executed on behalf of the Issuer by any of its Authorized Officers.
The signature of any such Authorized Officer on the Notes may be manual or
facsimile.
(b) Notes bearing the manual or facsimile signature of individuals
who were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
(c) The Indenture Trustee shall, upon Issuer Order, authenticate and
deliver Class A-1 Notes for original issue in an aggregate principal amount of
$[ ], Class A-2 Notes for original issue in an aggregate principal
amount of $[ ], Class A-3 Notes for original issue in an aggregate
principal amount of $[ ] and Class B Notes for original issue in an
aggregate principal amount of $[ ]. The aggregate principal amounts of
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class B Notes outstanding
at any time may not exceed those respective amounts except as provided in
Section 2.6.
(d) Each Note shall be dated the date of its authentication. The
Notes shall be issuable as registered Notes in minimum denominations of $1,000
and integral multiples thereof.
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(e) No Note shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
SECTION 2.3. Temporary Notes. (a) Pending the preparation of
definitive Notes, the Issuer may execute, and upon receipt of an Issuer Order
the Indenture Trustee shall authenticate and deliver, temporary Notes that are
printed, lithographed, typewritten, mimeographed or otherwise produced, of the
tenor of the Definitive Notes in lieu of which they are issued and with such
variations not inconsistent with the terms of this Indenture as the officers
executing such Notes may determine, as evidenced by their execution of such
Notes.
If temporary Notes are issued, the Issuer shall cause Definitive
Notes to be prepared without unreasonable delay. After the preparation of
Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes
upon surrender of the temporary Notes at the office or agency of the Issuer to
be maintained as provided in Section 3.2, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute, and the Indenture Trustee shall authenticate and deliver in exchange
therefor, a like principal amount of Definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as Definitive Notes.
SECTION 2.4. Tax Treatment. The Issuer has entered into this
Indenture, and the Notes shall be issued, with the intention that, for federal,
state and local income and franchise tax purposes, the Notes shall qualify as
indebtedness of the Issuer secured by the Trust Estate. The Issuer, by entering
into this Indenture, and each Noteholder, by its acceptance of a Note (and each
Note Owner by its acceptance of an interest in the applicable Book-Entry Note),
agree to treat the Notes for federal, state and local income and franchise tax
purposes as indebtedness of the Issuer.
SECTION 2.5. Registration; Registration of Transfer and Exchange.
(a) The Issuer shall cause to be kept a register (the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the
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Issuer shall provide for the registration of Notes and the registration of
transfers of Notes. The Indenture Trustee initially shall be the "Note
Registrar" for the purpose of registering Notes and transfers of Notes as herein
provided. Upon any resignation of any Note Registrar, the Issuer shall promptly
appoint a successor or, if it elects not to make such an appointment, assume the
duties of Note Registrar.
(b) If a Person other than the Indenture Trustee is appointed by the
Issuer as Note Registrar, (i) the Issuer shall give the Indenture Trustee prompt
written notice of the appointment of such Note Registrar and of the location and
any change in the location, of the Note Register, (ii) the Indenture Trustee
shall have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof and (iii) the Indenture Trustee shall have the right to
rely upon a certificate executed on behalf of the Note Registrar by an Executive
Officer thereof as to the names and addresses of the Holders of the Notes and
the principal amounts and number of such Notes.
(c) Upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section 3.2, if
the requirements of Section 8-401 of the Relevant UCC are met, the Issuer shall
execute, and the Indenture Trustee shall authenticate and the Noteholder shall
obtain from the Indenture Trustee, in the name of the designated transferee or
transferees, one or more new Notes of the same Class in any authorized
denomination, of a like aggregate principal amount. The Indenture Trustee may
rely upon the Administrator with respect to the determination of whether the
requirements of Section 8-401 of the Relevant UCC are met.
(d) At the option of the Noteholder, Notes may be exchanged for
other Notes of the same Class in any authorized denominations, of a like
aggregate principal amount, upon surrender of the Notes to be exchanged at such
office or agency. Whenever any Notes are so surrendered for exchange, if the
requirements of Section 8-401 of the Relevant UCC are met, the Issuer shall
execute, the Indenture Trustee shall authenticate, and the Noteholder shall
obtain from the Indenture Trustee, the Notes which the Noteholder making such
exchange is entitled to receive. The Indenture Trustee may rely upon the
Administrator with respect to the determination of whether the requirements of
Section 8-401 of the Relevant UCC are met.
(e) All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Issuer, evidenc-
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ing the same debt, and entitled to the same benefits under this Indenture as the
Notes surrendered upon such registration of transfer or exchange.
(f) Every Note presented or surrendered for registration of transfer
or exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the Indenture Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar.
(g) No service charge shall be made to a Holder for any registration
of transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.3 or 9.6 not involving any transfer.
(h) The preceding provisions of this Section 2.5 notwithstanding,
the Issuer shall not be required to make and the Note Registrar need not
register transfers or exchanges of Notes selected for redemption or of any Note
for a period of fifteen (15) days preceding the due date for any payment with
respect to such Note.
SECTION 2.6. Mutilated, Destroyed, Lost or Stolen Notes. (a) If (i)
any mutilated Note is surrendered to the Indenture Trustee, or the Indenture
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, and (ii) there is delivered to the Indenture Trustee such security
or indemnity as may be required by it to hold the Issuer and the Indenture
Trustee harmless, then, in the absence of notice to the Issuer, the Note
Registrar or the Indenture Trustee that such Note has been acquired by a
protected purchaser, and provided that the requirements of Section 8-405 of the
Relevant UCC are met, the Issuer shall execute, and upon its request the
Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Note, a replacement Note of the
same Class; provided, however, that if any such destroyed, lost or stolen Note,
but not a mutilated Note, shall have become or within seven (7) days of the
Indenture Trustee's receipt of evidence to its satisfaction of such
destruction, loss or theft shall be due and payable, or shall have been called
for redemption, instead of issuing a replacement Note of the same Class, the
Issuer may pay such destroyed, lost or stolen Note when so due or payable or
upon
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the Redemption Date without surrender thereof. The Indenture Trustee may rely
upon the Administrator with respect to the determination of whether the
requirements of Section 8-405 of the Relevant UCC are met. If, after the
delivery of such replacement Note or payment of a destroyed, lost or stolen Note
pursuant to the proviso to the preceding sentence, a protected purchaser of the
original Note in lieu of which such replacement Note was issued presents for
payment such original Note, the Issuer and the Indenture Trustee shall be
entitled to recover such replacement Note (or such payment) from the Person to
whom it was delivered or any Person taking such replacement Note from such
Person to whom such replacement Note was delivered or any assignee of such
Person, except a protected purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer or the Indenture Trustee in connection
therewith.
(b) Upon the issuance of any replacement Note under this Section
2.6, the Issuer may require the payment by the Holder of such Note of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and
expenses of the Indenture Trustee) connected therewith.
(c) Every replacement Note issued pursuant to this Section 2.6 in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
(d) The provisions of this Section 2.6 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.7. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and any
agent of the Issuer or the Indenture Trustee may treat the Person in whose name
any Note is registered (as of the day of determination) as the owner of such
Note for the purpose of receiving payments of principal of and interest, if any,
on such Note and for all other purposes whatsoever, whether or not such Note
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be overdue, and none of the Issuer, the Indenture Trustee or any agent of the
Issuer or the Indenture Trustee shall be affected by notice to the contrary.
SECTION 2.8. Payments
(a) On each Payment Date, upon receipt of instructions from the Servicer
pursuant to Section 4.6(c) of the Sale and Servicing Agreement, the Indenture
Trustee will withdraw all Available Funds on deposit in the Collection Account
for the related Collection Period and make the following payments and deposits
for such Payment Date in the following order of priority:
(i) to the Servicer, the Total Servicing Fee;
(ii) to the Note Payment Account, the Accrued Note Interest for each
Class of Notes;
(iii) to the Note Payment Account, the Principal Distribution
Amount;
(iv) to the Reserve Account, the amount, if any, necessary to
reinstate the balance in the Reserve Account up to the Specified Reserve
Balance;
(v) to the Supplemental Reserve Account, all remaining Available
Funds until the Supplemental Reserve Amount is equal to the Maximum
Supplemental Reserve Amount; and
(vi) to the Certificate Distribution Account, any remaining portion
of Available Funds.
Notwithstanding the foregoing, following the occurrence and during the
continuation of an Event of Default which has resulted in an acceleration of the
Notes, the Available Funds remaining after the application of clauses (i) and
(ii) above will be deposited in the Note Payment Account and applied in
accordance with Section 2.8(g).
(b) The principal of each Note shall be payable in installments on each
Payment Date in an aggregate amount (unless the Notes have been accelerated in
accordance with Section 5.2 following the occurrence of an Event of Default) for
all Classes of Notes equal to the Principal Distribution Amount with respect to
such Payment Date. On each Payment Date, unless the Notes have been accelerated
in accordance with Section 5.2 following the occurrence of an Event of
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Default, the Issuer shall cause to be paid all amounts on deposit in the Note
Payment Account with respect to the related Collection Period in the following
order of priority;
(i) to the Noteholders of each Class, Accrued Note Interest (and, if
amounts on deposit in the Note Payment Account are insufficient for such
purpose, payments shall be made to each Class of Noteholders pro rata in
proportion to the Accrued Note Interest for each Class);
(ii) to the Noteholders of the Class A-1 Notes, 100% of the
Principal Distribution Amount in reduction of principal until the
principal amount of the Class A-1 Notes has been paid in full;
(iii) following payment in full of the Class A-1 Notes, to the Class
A-2 Noteholders, the Class A Noteholders' Percentage of the Principal
Distribution Amount in reduction of principal until the principal amount
of the Class A-2 Notes has been paid in full;
(iv) following payment in full of the Class A-2 Notes, to the Class
A-3 Noteholders, the Class A Noteholders' Percentage of the Principal
Distribution Amount in reduction of principal until the principal amount
of the Class A-3 Notes has been paid in full; and
(v) following payment in full of the Class A-1 Notes, to the Class B
Noteholders, the Class B Noteholders' Percentage of the Principal
Distribution Amount in reduction of principal until the principal amount
of the Class B Notes has been paid in full.
(c) The principal amount of the Class A-1 Notes, to the extent not
previously paid, will be due on the Class A-1 Final Payment Date, the principal
amount of the Class A-2 Notes, to the extent not previously paid, will be due on
the Class A-2 Final Payment Date, the principal amount of the Class A-3 Notes,
to the extent not previously paid, will be due on the Class A-3 Final Payment
Date and the principal amount of the Class B Notes, to the extent not previously
paid, will be due on the Class B Final Payment Date.
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(d) The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes
and the Class B Notes shall accrue interest at the Class A-1 Rate, the Class A-2
Rate, the Class A-3 Rate and the Class B Rate, respectively, and such interest
shall be due and payable on each Payment Date. Interest on the Class A-1 Notes
will be calculated on the basis of actual days elapsed and a 360-day year.
Interest on the Class A-2 Notes, the Class A-3 Notes and the Class B Notes will
be calculated on the basis of a 360-day year of twelve 30-day months. Subject to
Section 3.1, any installment of interest or principal, if any, payable on any
Note that is punctually paid or duly provided for by the Issuer on the
applicable Payment Date shall be paid to the Person in whose name such Note (or
one or more Predecessor Notes) is registered on the Record Date by check mailed
first-class postage prepaid to such Person's address as it appears on the Note
Register on such Record Date; provided that, unless Definitive Notes have been
issued pursuant to Section 2.13, with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payment shall be made by wire transfer in immediately
available funds to the account designated by such nominee, and except for the
final installment of principal payable with respect to such Note on a Payment
Date or on the related Final Payment Date (and except for the Redemption Price
for any Note called for redemption pursuant to Section 10.1), which shall be
payable as provided below. The funds represented by any such checks returned
undelivered shall be held in accordance with Section 3.3. The Issuer shall pay
all Accrued Note Interest, including Interest Carryover Shortfalls, to the
Persons who are Noteholders on the Record Date for a particular Payment Date
even if a portion of such Accrued Note Interest relates to a different Payment
Date.
(e) All principal payments on the Notes shall be made pro rata to
the Noteholders entitled thereto. The Indenture Trustee shall notify the Person
in whose name a Note is registered at the close of business on the Record Date
preceding the Payment Date on which the Issuer expects that the final
installment of principal of and interest on such Note shall be paid. Such notice
shall be mailed or transmitted by facsimile prior to such final Payment Date and
shall specify that such final installment shall be payable only upon
presentation and surrender of such Note and shall specify the place where such
Note may be presented and surrendered for payment of such installment. Notices
in connection with redemption of Notes shall be mailed to Noteholders as
provided in Section 10.2.
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(f) [Reserved.]
(g) Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes shall be due and payable, if not previously paid, on the
date on which an Event of Default shall have occurred and be continuing, if the
Indenture Trustee or the Holders of Notes representing not less than a majority
of the principal amount of the Notes Outstanding have declared the Notes to be
immediately due and payable in the manner provided in Section 5.2. On each
Payment Date following acceleration of the Notes, all amounts on deposit in the
Note Payment Account shall be paid in the following order of priority.
(i) first, to the Indenture Trustee for amounts due under
Section 6.7;
(ii) second, to the Servicer for amounts due and unpaid in
respect of Total Servicing Fees;
(iii) third, to Noteholders of each Class, Accrued Note
Interest ratably in proportion to Accrued Note Interest for each
Class, without preference or priority of any kind, according to the
amounts due and payable on the Notes for interest;
(iv) fourth, to the Class A-1 Noteholders, the Class A-2
Noteholders and the Class A-3 Noteholders, the outstanding principal
amount of the Class A-1 Notes, the Class A-2 Notes and the Class A-3
Notes, respectively, pro rata in proportion to the respective
principal balances of each of such Classes in reduction of principal
until the principal amount of each of such Classes has been paid in
full;
(v) fifth, to the Class B Noteholders, the outstanding
principal amount of the Class B Notes in reduction of principal
until the principal amount of the Class B Notes has been paid in
full; and
(vi) sixth, to the Certificateholders.
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SECTION 2.9. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly cancelled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes cancelled as provided in this Section 2.9, except as expressly
permitted by this Indenture. All cancelled Notes may be held or disposed of by
the Indenture Trustee in accordance with its standard retention or disposal
policy as in effect at the time unless the Issuer shall direct by an Issuer
Order that they be destroyed or returned to it, provided, that such Issuer Order
is timely and the Notes have not been previously disposed of by the Indenture
Trustee.
SECTION 2.10. Release of Collateral. Subject to Section 11.1 and the
terms of the Basic Documents, the Indenture Trustee shall release property from
the lien of this Indenture only upon receipt of an Issuer Request accompanied by
an Officer's Certificate, an Opinion of Counsel and Independent Certificates in
accordance with TIA Sections 314(c) and 314(d)(1) or an Opinion of Counsel in
lieu of such Independent Certificates to the effect that the TIA does not
require any such Independent Certificates. If the Commission shall issue an
exemptive order under TIA Section 304(d) modifying the Owner Trustee's
obligations under TIA Sections 314(c) and 314(d)(1), the Indenture Trustee shall
release property from the lien of this Indenture in accordance with the
conditions and procedures set forth in such exemptive order.
SECTION 2.11. Book-Entry Notes. The Notes, upon original issuance,
shall be issued in the form of typewritten Notes representing the Book-Entry
Notes, to be delivered to The Depository Trust Company, the initial Clearing
Agency, by, or on behalf of, the Issuer. The Book-Entry Notes shall be
registered initially on the Note Register in the name of Cede & Co., the nominee
of the initial Clearing Agency, and no Note Owner thereof shall receive a
definitive Note representing such Note Owner's interest in such Note, except as
provided in Section 2.13. Unless and until definitive, fully registered Notes
(the "Definitive Notes") have been issued to such Note Owners pursuant to
Section 2.13:
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(i) the provisions of this Section 2.11 shall be in full force
and effect;
(ii) the Note Registrar and the Indenture Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the
Notes and the giving of instructions or directions hereunder) as the
sole Holder of the Notes, and shall have no obligation to the Note
Owners;
(iii) to the extent that the provisions of this Section 2.11
conflict with any other provisions of this Indenture, the
provisions of this Section shall control;
(iv) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law
and agreements between such Note Owners and the Clearing Agency
and/or the Clearing Agency Participants pursuant to the Note
Depository Agreement; unless and until Definitive Notes are issued
pursuant to Section 2.13, the initial Clearing Agency shall make
book-entry transfers among the Clearing Agency Participants and
receive and transmit payments of principal of and interest on the
Notes to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the principal amount of the
Notes or any Class of Notes Outstanding, the Clearing Agency shall
be deemed to represent such percentage only to the extent that it
has received instructions to such effect from Note Owners and/or
Clearing Agency Participants owning or representing, respectively,
such required percentage of the beneficial interest in the Notes or
such Class of Notes and has delivered such instructions to the
Indenture Trustee.
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SECTION 2.12. Notices to Clearing Agency. Whenever a notice or
other communication to the Noteholders is required under this Indenture, unless
and until Definitive Notes shall have been issued to such Note Owners pursuant
to Section 2.13, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Notes to the
Clearing Agency, and shall have no obligation to such Note Owners.
SECTION 2.13. Definitive Notes. If (i) the Issuer, the Administrator
or the Servicer advises the Indenture Trustee in writing that the Clearing
Agency is no longer willing or able to properly discharge its responsibilities
with respect to the Book-Entry Notes and the Indenture Trustee or the
Administrator is unable to locate a qualified successor, (ii) the Administrator,
at its option, advises the Indenture Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of an Event of Default or an Event of Servicing Termination, Note
Owners of the Book-Entry Notes representing beneficial interests aggregating not
less than 51% of the principal amount of such Notes advise the Indenture Trustee
and the Clearing Agency in writing that the continuation of a book-entry system
through the Clearing Agency is no longer in the best interests of such Note
Owners, then the Clearing Agency shall notify all Note Owners and the Indenture
Trustee of the occurrence of such event and of the availability of Definitive
Notes to Note Owners requesting the same. Upon surrender to the Indenture
Trustee of the typewritten Notes representing the Book-Entry Notes by the
Clearing Agency, accompanied by registration instructions, the Issuer shall
execute and the Indenture Trustee shall authenticate the Definitive Notes in
accordance with the instructions of the Clearing Agency. None of the Issuer, the
Note Registrar or the Indenture Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Notes, the Indenture Trustee shall recognize the Holders of the Definitive Notes
as Noteholders.
SECTION 2.14. Authenticating Agents. The Indenture Trustee may
appoint one or more Persons (each, an "Authenticating Agent") with power to act
on its behalf and subject to its direction in the authentication of Notes in
connection with issuance, transfers and exchanges under Sections 2.2, 2.3, 2.5
and 2.6, as fully to all intents and purposes as though each such Authenticating
Agent had been expressly authorized by those Sections to authenticate such
Notes. For all purposes of this Indenture, the authentication of Notes by an
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Authenticating Agent pursuant to this Section 2.14 shall be deemed to be the
authentication of Notes "by the Indenture Trustee."
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of any Authenticating Agent, shall be the successor
of such Authenticating Agent hereunder, without the execution or filing of any
further act on the part of the parties hereto or such Authenticating Agent or
such successor corporation.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Indenture Trustee and the Owner Trustee. The
Indenture Trustee may at any time terminate the agency of any Authenticating
Agent by giving written notice of termination to such Authenticating Agent and
the Owner Trustee. Upon receiving such notice of resignation or upon such a
termination, the Indenture Trustee may appoint a successor Authenticating Agent
and shall give written notice of any such appointment to the Owner Trustee.
The Administrator agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services. The provisions of
Sections 2.9 and 6.4 shall be applicable to any Authenticating Agent.
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ARTICLE III
COVENANTS
SECTION 3.1. Payment Covenant. The Issuer shall duly and punctually
pay the principal of and interest, if any, on the Notes in accordance with the
terms of the Notes and this Indenture. Amounts properly withheld under the Code
by any Person from a payment to any Noteholder of interest and/or principal
shall be considered as having been paid by the Issuer to such Noteholder for all
purposes of this Indenture.
SECTION 3.2. Maintenance of Office or Agency. The Issuer shall
maintain in the Borough of Manhattan, The City of New York, an office or agency
where Notes may be surrendered for registration of transfer or exchange, and
where notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer hereby initially appoints the Indenture
Trustee to serve as its agent for the foregoing purposes. The Issuer shall give
prompt written notice to the Indenture Trustee of the location, and of any
change in the location, of any such office or agency. If, at any time, the
Issuer shall fail to maintain any such office or agency or shall fail to furnish
the Indenture Trustee with the address thereof, such surrenders, notices and
demands may be made or served at the Corporate Trust Office, and the Issuer
hereby appoints the Indenture Trustee as its agent to receive all such
surrenders, notices and demands.
SECTION 3.3. Money for Payments To Be Held in Trust. (a) As provided
in Section 8.2, all payments of amounts due and payable with respect to any
Notes that are to be made from amounts withdrawn from the Collection Account,
the Reserve Account, the Supplemental Reserve Account, the Yield Supplement
Account and the Note Payment Account shall be made on behalf of the Issuer by
the Indenture Trustee or by another Paying Agent, and no amounts so withdrawn
from the Collection Account, the Reserve Account, the Supplemental Reserve
Account, the Yield Supplement Account and the Note Payment Account for payments
of Notes shall be paid over to the Issuer, except as provided in this Section
3.3.
(b) On or before each Payment Date and Redemption Date, the Issuer
shall deposit or cause to be deposited in the Note Payment Account an aggregate
sum sufficient to pay the amounts then becoming due under
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the Notes, such sum to be held in trust for the benefit of the Persons entitled
thereto, and (unless the Paying Agent is the Indenture Trustee) shall promptly
notify the Indenture Trustee of its action or failure so to act.
(c) The Issuer shall cause each Paying Agent other than the
Indenture Trustee to execute and deliver to the Indenture Trustee an instrument
in which such Paying Agent shall agree with the Indenture Trustee (and if the
Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to the
provisions of this Section 3.3, that such Paying Agent shall:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Indenture Trustee notice of any default by the
Issuer (or any other obligor upon the Notes) of which it has actual
knowledge in the making of any payment required to be made with
respect to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to
the Indenture Trustee all sums so held in trust by such Paying
Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Indenture Trustee all sums held by it in trust for the payment
of Notes if at any time it ceases to meet the standards required to
be met by a Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code and any state or
local tax law with respect to the withholding from any payments
made by it on any Notes of any applicable withholding taxes imposed
thereon and with respect to any applicable reporting requirements in
connection therewith.
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(d) The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
(e) Subject to applicable laws with respect to escheat of funds, any
money held by the Indenture Trustee or any Paying Agent in trust for the payment
of any amount due with respect to any Note and remaining unclaimed for two (2)
years after such amount has become due and payable shall be discharged from such
trust and be paid to the Issuer on Issuer Request; and the Holder of such Note
shall thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Indenture
Trustee or such Paying Agent, before being required to make any such repayment,
shall at the expense and direction of the Issuer cause to be published once, in
a newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than thirty (30) days from the date of such publication, any
unclaimed balance of such money then remaining shall be repaid to the Issuer.
The Indenture Trustee shall also adopt and employ, at the expense and direction
of the Issuer, any other reasonable means of notification of such repayment
(including, but not limited to, mailing notice of such repayment to Holders
whose Notes have been called but have not been surrendered for redemption or
whose right to or interest in monies due and payable but not claimed is
determinable from the records of the Indenture Trustee or of any Paying Agent,
at the last address of record for each such Holder).
SECTION 3.4. Existence. The Issuer shall keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other State or of the United States of America,
in which case the Issuer shall keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and shall obtain and
preserve
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its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collateral and each other
instrument or agreement included in the Trust Estate.
SECTION 3.5. Protection of Trust Estate. The Issuer shall from time
to time execute and deliver all such supplements and amendments hereto and all
such financing statements, continuation statements, instruments of further
assurance and other instruments, and shall take such other action necessary or
advisable to:
(i) maintain or preserve the lien and security interest (and
the priority thereof) of this Indenture or carry out more
effectively the purposes hereof;
(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Indenture Trustee and the Noteholders in such Trust
Estate against the claims of all Persons.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section 3.5.
SECTION 3.6. Opinions as to Trust Estate. (a) On the Closing Date,
the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel
substantially in the form attached hereto as Exhibit B.
(b) On or before May 31, in each calendar year, beginning in 1999,
the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording, filing, re-recording and refiling of this Indenture,
any indentures supplemental hereto and any other requisite documents and with
respect to the execution and filing of any financing statements and continuation
statements as is necessary to maintain the lien and security interest
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created by this Indenture and reciting the details of such action or stating
that in the opinion of such counsel no such action is necessary to maintain such
lien and security interest. Such Opinion of Counsel shall also describe the
recording, filing, re-recording and refiling of this Indenture, any indentures
supplemental hereto and any other requisite documents and the execution and
filing of any financing statements and continuation statements that shall, in
the opinion of such counsel, be required to maintain the lien and security
interest of this Indenture until May 31 in the following calendar year.
SECTION 3.7. Performance of Obligations; Servicing of Receivables.
(a) The Issuer shall not take any action and shall use its best efforts not to
permit any action to be taken by others that would release any Person from any
of such Person's material covenants or obligations under any instrument or
agreement included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture and the other Basic Documents.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officer's Certificate of
the Issuer shall be deemed to be action taken by the Issuer. Initially, the
Issuer has contracted with the Servicer and the Administrator to assist the
Issuer in performing its duties under this Indenture.
(c) The Issuer shall punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Estate, including, but
not limited to, filing or causing to be filed all financing statements and
continuation statements required to be filed under the Relevant UCC by the terms
of this Indenture and the Sale and Servicing Agreement in accordance with and
within the time periods provided for herein and therein. Except as otherwise
expressly provided therein, the Issuer shall not waive, amend, modify,
supplement or terminate any Basic Document or any provision thereof without the
consent of the Indenture Trustee or the Holders of at least a majority of the
principal amount of the Notes Outstanding.
(d) If the Issuer shall have knowledge of the occurrence of an
Event of Servicing Termination under the Sale and Servicing Agree-
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ment, the Issuer shall promptly notify the Indenture Trustee and the Rating
Agencies thereof and shall specify in such notice the action, if any, the Issuer
is taking in respect of such default. If an Event of Servicing Termination shall
arise from the failure of the Servicer to perform any of its duties or
obligations under the Sale and Servicing Agreement with respect to the
Receivables, the Issuer shall take all reasonable steps available to it to
remedy such failure.
(e) As promptly as possible after the giving of notice of
termination to the Servicer of the Servicer's rights and powers pursuant to
Section 8.1 of the Sale and Servicing Agreement, the Issuer shall (subject to
the rights of the Indenture Trustee to direct such appointment pursuant to
Section 8.2 of the Sale and Servicing Agreement) appoint a successor servicer
(the "Successor Servicer"), and such Successor Servicer shall accept its
appointment by a written assumption in a form acceptable to the Indenture
Trustee. In the event that a Successor Servicer has not been appointed and has
not accepted its appointment at the time when the Servicer ceases to act as
Servicer, the Indenture Trustee, without further action, shall automatically be
appointed the Successor Servicer. The Indenture Trustee may resign as the
Servicer by giving written notice of such resignation to the Issuer and in such
event shall be released from such duties and obligations, such release not to be
effective until the date a new servicer enters into a servicing agreement with
the Issuer as provided below. Upon delivery of any such notice to the Issuer,
the Issuer shall obtain a new servicer as the Successor Servicer under the Sale
and Servicing Agreement. Any Successor Servicer (other than the Indenture
Trustee) shall (i) be an established financial institution having a net worth of
not less than $50,000,000 and whose regular business includes the servicing of
Contracts and (ii) enter into a servicing agreement with the Issuer having
substantially the same provisions as the provisions of the Sale and Servicing
Agreement applicable to the Servicer. If, within thirty (30) days after the
delivery of the notice referred to above, the Issuer shall not have obtained
such a new servicer, the Indenture Trustee may appoint, or may petition a court
of competent jurisdiction to appoint, a Successor Servicer. In connection with
any such appointment, the Indenture Trustee may make such arrangements for the
compensation of such successor as it and such successor shall agree, subject to
the limitations set forth below and in the Sale and Servicing Agreement, and in
accordance with Section 8.2 of the Sale and Servicing Agreement, the Issuer
shall enter into an agreement with such successor for the servicing of the
Receivables (such agreement to be in form and substance satisfactory to the
Indenture Trustee). If the Indenture Trustee shall succeed to the Servicer's
duties as servicer of the Receivables as provided herein, it shall do so in its
individual capacity and not in its
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capacity as Indenture Trustee and, accordingly, the provisions of Article VI
hereof shall be inapplicable to the Indenture Trustee in its duties as the
successor to the Servicer and the servicing of the Receivables. In case the
Indenture Trustee shall become successor to the Servicer under the Sale and
Servicing Agreement, the Indenture Trustee shall be entitled to appoint as
Servicer any one of its Affiliates; provided that the Indenture Trustee, in its
capacity as the Servicer, shall be fully liable for the actions and omissions of
such Affiliate in such capacity as Successor Servicer.
(f) Upon any termination of the Servicer's rights and powers
pursuant to the Sale and Servicing Agreement, the Issuer shall promptly notify
the Indenture Trustee. As soon as a Successor Servicer is appointed by the
Issuer, the Issuer shall notify the Indenture Trustee of such appointment,
specifying in such notice the name and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer hereby agrees that it shall not, without
the prior written consent of the Indenture Trustee or the Holders of at least a
majority in principal amount of the Notes Outstanding, amend, modify, waive,
supplement, terminate or surrender, or agree to any amendment, modification,
supplement, termination, waiver or surrender of, the terms of any Collateral
(except to the extent otherwise provided in the Sale and Servicing Agreement or
the Basic Documents).
SECTION 3.8. Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture, the
Trust Agreement, the Purchase Agreement or the Sale and Servicing
Agreement, sell, transfer, exchange or otherwise dispose of any of
the properties or assets of the Issuer, including those included in
the Trust Estate, unless directed to do so by the Indenture Trustee;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such
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payments under the Code) or assert any claim against any present or
former Noteholder by reason of the payment of the taxes levied or
assessed upon the Trust;
(iii) dissolve or liquidate in whole or in part; or
(iv) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien of this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations
with respect to the Notes under this Indenture except as may be
expressly permitted hereby, (B) permit any lien, charge, excise,
claim, security interest, mortgage or other encumbrance (other than
the lien of this Indenture) to be created on or extend to or
otherwise arise upon or burden the assets of the Trust or any part
thereof or any interest therein or the proceeds thereof or (C)
permit the lien of this Indenture not to constitute a valid first
priority (other than with respect to any such tax, mechanics' or
other lien) security interest in the Trust Estate.
SECTION 3.9. Annual Statement as to Compliance. The Issuer shall
deliver to the Indenture Trustee, within 120 days after the end of each calendar
year (commencing with the year 1999), an Officer's Certificate stating, as to
the Authorized Officer signing such Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year
and of its performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge,
based on such review, the Issuer has complied with all conditions
and covenants under this Indenture throughout such year, or, if
there has been a default in its compliance with any such condition
or covenant,
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specifying each such default known to such Authorized Officer and
the nature and status thereof.
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other Person,
unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized
and existing under the laws of the United States of America or any
State and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Indenture Trustee, in form
satisfactory to the Indenture Trustee, the due and punctual payment
of the principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture on the
part of the Issuer to be performed or observed, all as provided
herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee) to the
effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
and
(vi) the Issuer shall have delivered to the Indenture Trustee
an Officer's Certificate and an Opinion of Counsel each stating that
such consolidation or merger
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and such supplemental indenture comply with this Article III and
that all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing required
by the Exchange Act).
(b) Other than as specifically contemplated by the Basic Documents,
the Issuer shall not convey or transfer any of its properties or assets,
including those included in the Trust Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of
which is hereby restricted shall (A) be a United States citizen or a
Person organized and existing under the laws of the United States of
America or any State, (B) expressly assumes, by an indenture
supplemental hereto, executed and delivered to the Indenture
Trustee, in form satisfactory to the Indenture Trustee, the due and
punctual payment of the principal of and interest on all Notes and
the performance or observance of every agreement and covenant of
this Indenture on the part of the Issuer to be performed or
observed, all as provided herein, (C) expressly agrees by means of
such supplemental indenture that all right, title and interest so
conveyed or transferred shall be subject and subordinate to the
rights of Holders of the Notes, (D) unless otherwise provided in
such supplemental indenture, expressly agrees to indemnify, defend
and hold harmless the Issuer against and from any loss, liability or
expense arising under or related to this Indenture and the Notes,
and (E) expressly agrees by means of such supplemental indenture
that such Person (or if a group of Persons, then one specified
Person) shall make all filings with the Commission (and any other
appropriate Person) required by the Exchange Act in connection with
the Notes;
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(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee) to the
effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
and
(vi) the Issuer shall have delivered to the Indenture Trustee
an Officer's Certificate and an Opinion of Counsel each stating that
such conveyance or transfer and such supplemental indenture comply
with this Article III and that all conditions precedent herein
provided for relating to such transaction have been complied with
(including any filing required by the Exchange Act).
SECTION 3.11. Successor of Transferee. (a) Upon any consolidation or
merger of the Issuer in accordance with Section 3.10(a), the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties
of the Issuer pursuant to Section 3.10(b), the Issuer shall be released from
every covenant and agreement of this Indenture to be observed or performed on
the part of the Issuer with respect to the Notes immediately upon the delivery
of written notice to the Indenture Trustee stating that the Issuer is to be so
released.
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SECTION 3.12. No Other Business. The Issuer shall not engage in any
business other than financing, acquiring, owning and pledging the Receivables in
the manner contemplated by this Indenture and the other Basic Documents and
activities incidental thereto.
SECTION 3.13. No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes and the Certificates.
SECTION 3.14. Servicer's Obligations. The Issuer shall cause the
Servicer to comply with the Sale and Servicing Agreement, including Sections
3.7, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14 and 4.9 and Article VII thereof.
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by this Indenture and the other Basic Documents, the
Issuer shall not make any loan or advance or credit to, or guarantee (directly
or indirectly or by an instrument having the effect of assuring another's
payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
SECTION 3.16. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17. Further Instruments and Acts. Upon request of the
Indenture Trustee, the Issuer shall execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.
SECTION 3.18. Restricted Payments. The Issuer shall not, directly or
indirectly, (i) make any distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, to the Owner
Trustee or any owner of a beneficial interest in the Issuer or otherwise with
respect to any ownership or equity interest or security in or of the Issuer or
to
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the Servicer, (ii) redeem, purchase, retire or otherwise acquire for value any
such ownership or equity interest or security or (iii) set aside or otherwise
segregate any amounts for any such purpose; provided, however, that the Issuer
may make, or cause to be made, (x) payments to the Servicer, the Owner Trustee
and the Certificateholders as contemplated by, and to the extent funds are
available for such purpose under, the Sale and Servicing Agreement or the Trust
Agreement and (y) payments to the Indenture Trustee pursuant to Section 1(a)(ii)
of the Administration Agreement. The Issuer shall not, directly or indirectly,
make payments to or distributions from the Collection Account except in
accordance with this Indenture and the other Basic Documents.
SECTION 3.19. Notice of Events of Default. The Issuer shall give the
Indenture Trustee and the Rating Agencies prompt written notice of each Event of
Default hereunder and of each default on the part of any party to the Sale and
Servicing Agreement or the Purchase Agreement with respect to any of the
provisions thereof.
SECTION 3.20. Removal of Administrator. For so long as any Notes are
Outstanding, the Issuer shall not remove the Administrator without cause unless
the Rating Agency Condition shall have been satisfied in connection therewith.
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ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect with respect to the Notes except
as to (i) rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal thereof and interest thereon, (iv) Sections 3.3,
3.4, 3.5, 3.8, 3.10, 3.12 and 3.13 hereof, (v) the rights, obligations and
immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.7 and the obligations of the Indenture Trustee
under Section 4.3), and (vi) the rights of Noteholders as beneficiaries hereof
with respect to the property so deposited with the Indenture Trustee payable to
all or any of them, and the Indenture Trustee, on demand of and at the expense
of the Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Notes, when:
(A) either
(1) all Notes of all Classes theretofore authenticated and delivered
(other than (i) Notes that have been destroyed, lost or stolen and
that have been replaced or paid as provided in Section 2.6 and (ii)
Notes for whose payment money has theretofore been irrevocably
deposited in trust or segregated and held in trust by the Issuer and
thereafter repaid to the Issuer or discharged from such trust, as
provided in Section 3.3) have been delivered to the Indenture
Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee for
cancellation have become due and payable and the Issuer has
irrevocably deposited or caused to be irrevocably deposited with the
Indenture Trustee cash or direct obligations of or obligations
guaranteed by the United States of America (which will mature prior
to the date such amounts are payable), in trust for such purpose, in
an amount sufficient to pay and discharge the entire indebtedness on
such Notes not theretofore
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delivered to the Indenture Trustee for cancellation when due to the
applicable Final Payment Date or Redemption Date (if Notes shall
have been called for redemption pursuant to Section 10.1(a)), as
the case may be;
(B) the Issuer has paid or caused to be paid all other sums payable
by the Issuer hereunder and under the other Basic Documents;
(C) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or
the Indenture Trustee) an Independent Certificate from a firm of
certified public accountants, each meeting the applicable
requirements of Section 11.1(a) and, subject to Section 11.2, each
stating that all conditions precedent herein provided for relating
to the satisfaction and discharge of this Indenture have been
complied with; and
(D) the Issuer has delivered to the Indenture Trustee an Opinion of
Counsel to the effect that the satisfaction and discharge of the
Notes pursuant to this Section 4.1 will not cause any Noteholder to
be treated as having sold or exchanged any of its Notes for purposes
of Section 1001 of the Code.
SECTION 4.2. Satisfaction, Discharge and Defeasance of the Notes.
(a) Upon satisfaction of the conditions set forth in subsection (b)
below, the Issuer shall be deemed to have paid and discharged the entire
indebtedness on all the Notes Outstanding, and the provisions of this Indenture,
as it relates to such Notes, shall no longer be in effect (and the Indenture
Trustee, at the expense of the Issuer, shall execute proper instruments
acknowledging the same), except as to:
(i) the rights of Holders of Notes to receive, from the trust funds
described in subsection (b)(i) hereof, payment of the princi-
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pal of and interest on the Notes Outstanding at maturity of such principal
or interest;
(ii) the obligations of the Issuer with respect to the Notes under
Sections 2.5, 2.6, 3.2 or 3.3 hereof;
(iii) the obligations of the Issuer to the Indenture Trustee under
Section 6.7 hereof; and
(iv) the rights, powers, trusts and immunities of the Indenture
Trustee hereunder and the duties of the Indenture Trustee hereunder.
(b) The satisfaction, discharge and defeasance of the Notes pursuant
to subsection (a) of this Section 4.2 is subject to the satisfaction of all of
the following conditions:
(i) the Issuer has deposited or caused to be deposited irrevocably
(except as provided in Section 4.4 hereof) with the Indenture Trustee as
trust funds in trust, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the Notes, which, through the
payment of interest and principal in respect thereof in accordance with
their terms will provide, not later than one day prior to the due date of
any payment referred to below, money in an amount sufficient, in the
opinion of a nationally recognized firm of independent certified public
accountants expressed in a written certification thereof delivered to the
Indenture Trustee, to pay and discharge the entire indebtedness on the
Notes Outstanding, for principal thereof and interest thereon to the date
of such deposit (in the case of Notes that have become due and payable) or
to the maturity of such principal and interest, as the case may be;
(ii) such deposit will not result in a breach or violation of, or
constitute an event of default under, any other agreement or instrument to
which the Issuer is bound;
(iii) no Event of Default with respect to the Notes shall have
occurred and be continuing on the date of such deposit or on the
ninety-first (91st) day after such date;
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(iv) the Issuer has delivered to the Indenture Trustee an Opinion of
Counsel to the effect that the satisfaction, discharge and defeasance of
the Notes pursuant to this Section 4.2 will not cause any Noteholder to be
treated as having sold or exchanged any of its Notes for purposes of
Section 1001 of the Code; and
(v) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent relating to the defeasance contemplated by this Section 4.2 have
been complied with.
SECTION 4.3. Application of Trust Money. All monies deposited with
the Indenture Trustee pursuant to Section 4.1 shall be held in trust and applied
by it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Indenture Trustee
may determine, to the Holders of the particular Notes for the payment or
redemption of which such monies have been deposited with the Indenture Trustee,
of all sums due and to become due thereon for principal and interest, but such
monies need not be segregated from other funds except to the extent required
herein or in the Sale and Servicing Agreement or required by law.
SECTION 4.4. Repayment of Monies Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all monies then held by any Paying Agent other than the Indenture Trustee under
the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Indenture Trustee to be held and applied according
to Section 3.3 and thereupon such Paying Agent shall be released from all
further liability with respect to such monies.
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ARTICLE V
REMEDIES
SECTION 5.1. Events of Default. "Event of Default," wherever used
herein, means the occurrence of any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) default in the payment of any interest on any Note when
the same becomes due and payable, and such default shall continue
for a period of five (5) days or more; or
(ii) default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due
and payable, including with respect to each Class of Notes, the
Final Payment Date for such Class; or
(iii) default in the observance or performance of any material
covenant or agreement of the Issuer made in this Indenture (other
than a covenant or agreement, a default in the observance or
performance of which is elsewhere in this Section 5.1 specifically
dealt with), or any representation or warranty of the Issuer made in
this Indenture or in any certificate or other writing delivered
pursuant hereto or in connection herewith proving to have been
incorrect in any material respect as of the time when the same shall
have been made, and such default shall continue or not be cured, or
the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been
eliminated or otherwise cured, for a period of sixty (60) days or in
the case of a materially incorrect representation and warranty
thirty (30) days, after there shall have been given, by registered
or certified mail,
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to the Issuer by the Indenture Trustee or to the Issuer and the
Indenture Trustee by the Holders of not less than 25% of the
principal amount of the Notes Outstanding, a written notice
specifying such default or incorrect representation or warranty and
requiring it to be remedied and stating that such notice is a notice
of Default hereunder; or
(iv) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any
substantial part of the Trust Estate in an involuntary case under
any applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Issuer or for any substantial part of the Trust
Estate, or ordering the winding-up or liquidation of the Issuer's
affairs, and such decree or order shall remain unstayed and in
effect for a period of sixty (60) consecutive days; or
(v) the commencement by the Issuer of a voluntary case under
any applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by the Issuer
to the entry of an order for relief in an involuntary case under any
such law, or the consent by the Issuer to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any
substantial part of the Trust Estate, or the making by the Issuer of
any general assignment for the benefit of creditors, or the failure
by the Issuer generally to pay its debts as such debts become due,
or the taking of any action by the Issuer in furtherance of any of
the foregoing.
The Issuer shall deliver to the Indenture Trustee, within five (5) days after
the occurrence thereof, written notice in the form of an Officer's Certificate
of any Default which with the giving of notice and the lapse of time would
become an
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Event of Default under clause (iii), its status and what action the Issuer is
taking or proposes to take with respect thereto.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment. (a)
If an Event of Default should occur and be continuing, then and in every such
case the Indenture Trustee or the Holders of Notes representing not less than a
majority of the principal amount of the Notes Outstanding may declare all the
Notes to be immediately due and payable, by a notice in writing to the Issuer
(and to the Indenture Trustee if given by Noteholders), and upon any such
declaration the unpaid principal amount of such Notes, together with accrued and
unpaid interest thereon through the date of acceleration, shall become
immediately due and payable.
(b) At any time after a declaration of acceleration of maturity has
been made and before a judgment or decree for payment of the amount due has been
obtained by the Indenture Trustee as hereinafter provided in this Article V, the
Holders of Notes representing a majority of the principal amount of the Notes
Outstanding, by written notice to the Issuer and the Indenture Trustee, may
rescind and annul such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture
Trustee a sum sufficient to pay:
(A) all payments of principal of and interest on all
Notes and all other amounts that would then be due hereunder or upon
such Notes if the Event of Default giving rise to such acceleration
had not occurred; and
(B) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements
and advances of the Indenture Trustee and its agents and counsel and
other amounts due and owing to the Indenture Trustee pursuant to
Section 6.7; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely
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by such acceleration, have been cured or waived as provided in
Section 5.12.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. (a) The Issuer covenants that if (i) default is made in the
payment of any interest on any Note when the same becomes due and payable, and
such default continues for a period of five (5) days, or (ii) default is made in
the payment of the principal of or any installment of the principal of any Note
when the same becomes due and payable, the Issuer shall, upon demand of the
Indenture Trustee, pay to the Indenture Trustee, for the benefit of the Holders
of the Notes, the whole amount then due and payable on such Notes for principal
and interest, with interest upon the overdue principal at the applicable Note
Interest Rate and, to the extent payment at such rate of interest shall be
legally enforceable, upon overdue installments of interest at the applicable
Note Interest Rate and in addition thereto such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee and its agents and counsel and other amounts due and owing to the
Indenture Trustee pursuant to Section 6.7.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee, in its own name and as trustee of an express
trust, may institute a Proceeding for the collection of the sums so due and
unpaid, and may prosecute such Proceeding to judgment or final decree, and may
enforce the same against the Issuer or other obligor upon such Notes and collect
in the manner provided by law out of the property of the Issuer or other obligor
upon such Notes, wherever situated, the monies adjudged or decreed to be
payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may, as more particularly provided in Section 5.4, in its discretion,
proceed to protect and enforce its rights and the rights of the Noteholders, by
such appropriate Proceedings as the Indenture Trustee shall deem most effective
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in the Indenture Trustee by this Indenture or by law.
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(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, Proceedings under Title 11 of the United States
Code or any other applicable federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial Proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the Indenture Trustee,
irrespective of whether the principal of any Notes shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of whether
the Indenture Trustee shall have made any demand pursuant to the provisions of
this Section 5.3, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount
of principal and interest owing and unpaid in respect of the Notes
and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Indenture Trustee
(including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective
agents, attorneys and counsel, and all other amounts due and owing
to the Trustee pursuant to Section 6.7) and of the Noteholders
allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Notes in any election of a trustee,
a standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any monies or other property
payable or deliverable on any such claims and to pay all amounts
received with respect to the claims of the Noteholders and of the
Indenture Trustee on their behalf; and
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(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the
claims of the Indenture Trustee or the Holders of Notes allowed in
any judicial proceedings relative to the Issuer, its creditors and
its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other amounts due and
owing to the Trustee pursuant to Section 6.7.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Indenture Trustee
without the possession of any of the Notes or the production thereof in any
trial or other Proceedings relative thereto, and any such action or Proceedings
instituted by the Indenture Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents and attorneys, shall
be for the ratable benefit of the Holders of the Notes.
(g) In any Proceedings brought by the Indenture Trustee (and also
any Proceedings involving the interpretation of any provision of this Indenture
to which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make any
Noteholder a party to any such Proceedings.
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SECTION 5.4. Remedies; Priorities. (a) If an Event of Default shall
have occurred and be continuing, the Indenture Trustee may do one or more of the
following (subject to Section 5.5):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer and any other obligor upon such Notes monies
adjudged due;
(ii) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust
Estate;
(iii) exercise any remedies of a secured party under the
Relevant UCC and take any other appropriate action to protect and
enforce the rights and remedies of the Indenture Trustee and the
Noteholders; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default, other than an Event of
Default described in Section 5.1(i) or (ii), unless (A) the Holders of 100% of
the principal amount of the Notes Outstanding consent thereto, (B) the proceeds
of such sale or liquidation are sufficient to pay in full the principal of and
the accrued interest on the outstanding Notes or (C) the Indenture Trustee
determines that the Trust Estate will not continue to provide sufficient funds
for the payment of principal of and interest on the Notes as they would have
become due if the Notes had not been declared due and payable, and the Indenture
Trustee obtains the consent of Holders of 66-2/3% of the principal amount of the
Notes Outstanding. In determining such sufficiency or insufficiency with respect
to clauses (B) and (C) above, the Indenture Trustee may, but need not, obtain
and rely upon an opinion of an Independent investment banking or accounting firm
of national reputation as to the feasibility of
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such proposed action and as to the sufficiency of the Trust Estate for such
purpose.
(b) If the Indenture Trustee collects any money or property pursuant
to this Article V, it shall pay out the money or property in the order of
priority set forth in Section 2.8.
The Indenture Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section 5.4. At least fifteen (15) days before such
record date, the Issuer shall mail to each Noteholder and the Indenture Trustee
a notice that states the record date, the payment date and the amount to be
paid.
SECTION 5.5. Optional Preservation of the Receivables. If the Notes
have been declared to be due and payable under Section 5.2 following an Event of
Default, and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee may, but need not, elect to maintain possession
of the Trust Estate and apply proceeds as if there had been no declaration of
acceleration; provided, however, that Available Funds shall be applied in
accordance with such declaration of acceleration in the manner specified in
Section 4.6(c) of the Sale and Servicing Agreement. It is the desire of the
parties hereto and the Noteholders that there be at all times sufficient funds
for the payment of principal of and interest on the Notes, and the Indenture
Trustee shall take such desire into account when determining whether or not to
maintain possession of the Trust Estate. In determining whether to maintain
possession of the Trust Estate, the Indenture Trustee may, but need not, obtain
and rely upon an opinion of an Independent investment banking or accounting firm
of national reputation as to the feasibility of such proposed action and as to
the sufficiency of the Trust Estate for such purpose.
SECTION 5.6. Limitation of Suits. No Holder of any Note shall have
any right to institute any Proceeding, judicial or otherwise, with respect to
this Indenture or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(a) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
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(b) the Holders of not less than 25% of the principal amount
of the Notes Outstanding have made written request to the Indenture
Trustee to institute such Proceeding in respect of such Event of
Default in its own name as Indenture Trustee hereunder;
(c) such Holder or Holders have offered to the Indenture
Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in complying with such request;
(d) the Indenture Trustee for sixty (60) days after its
receipt of such notice, request and offer of indemnity has failed to
institute such Proceedings; and
(e) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the
Holders of a majority of the principal amount of the Notes
Outstanding.
It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the principal amount of the Notes
Outstanding, the Indenture Trustee in its sole discretion may determine what
action, if any, shall be taken, notwithstanding any other provisions of this
Indenture.
SECTION 5.7. Unconditional Rights of Noteholders To Receive
Principal and Interest. Notwithstanding any other provisions in this Indenture,
the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any, on
such Note on or after the respective due dates thereof expressed in such Note or
in this Indenture (or, in the case of redemption, on or after the Redemption
Date) and to
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institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Holder.
SECTION 5.8. Restoration of Rights and Remedies. If the Indenture
Trustee or any Noteholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Indenture
Trustee and the Noteholders shall continue as though no such Proceeding had been
instituted.
SECTION 5.9. Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Indenture Trustee or to the Noteholders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.10. Delay or Omission Not a Waiver. No delay or omission
of the Indenture Trustee or any Holder of any Note to exercise any right or
remedy accruing upon any Default or Event of Default shall impair any such right
or remedy or constitute a waiver of any such Default or Event of Default or any
acquiescence therein. Every right and remedy given by this Article V or by law
to the Indenture Trustee or to the Noteholders may be exercised from
time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
SECTION 5.11. Control by Noteholders. The Holders of a majority of
the principal amount of the Notes Outstanding shall have the right to direct the
time, method and place of conducting any Proceeding for any
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remedy available to the Indenture Trustee with respect to the Notes or
exercising any trust or power conferred on the Indenture Trustee; provided that:
(a) such direction shall not be in conflict with any rule of
law or with this Indenture;
(b) subject to the express terms of Section 5.4, any direction
to the Indenture Trustee to sell or liquidate the Trust Estate shall
be by Holders of Notes representing not less than 100% of the
principal amount of the Notes Outstanding;
(c) if the conditions set forth in Section 5.5 have been
satisfied and the Indenture Trustee elects to retain the Trust
Estate pursuant to such Section, then any direction to the Indenture
Trustee by Holders of Notes representing less than 100% of the
principal amount of the Notes Outstanding to sell or liquidate the
Trust Estate shall be of no force and effect; and
(d) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.1, the Indenture Trustee need not take any action that it reasonably
believes might involve it in costs, expenses and liabilities for which it will
not be adequately indemnified or might materially adversely affect the rights of
any Noteholders not consenting to such action.
SECTION 5.12. Waiver of Past Defaults. Prior to the declaration of
the acceleration of the maturity of the Notes as provided in Section 5.2, the
Holders of Notes representing not less than a majority of the principal amount
of the Notes Outstanding may waive any past Default or Event of Default and its
consequences except a Default or Event of Default (a) in the payment of
principal of or interest on any of the Notes or (b) in respect of a covenant or
provision hereof that cannot be amended, supplemented or modified without the
consent of the Holder of each Note. In the case of any such waiver, the Issuer,
the Indenture Trustee and the Holders of the Notes shall be restored to their
former
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positions and rights hereunder, respectively; but no such waiver shall extend to
any subsequent or other Default or Event of Default or impair any right
consequent thereto.
Upon any such waiver, such Default or Event of Default shall cease
to exist and be deemed to have been cured and not to have occurred, and any
Event of Default arising therefrom shall be deemed to have been cured and not to
have occurred, for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereto.
SECTION 5.13. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorney's fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.13 shall not apply to (a) any suit instituted by
the Indenture Trustee, (b) any suit instituted by any Noteholder or group of
Noteholders, in each case holding in the aggregate more than 10% of the
principal amount of the Notes Outstanding or (c) any suit instituted by any
Noteholder for the enforcement of the payment of principal of or interest on any
Note on or after the respective due dates expressed in such Note and in this
Indenture (or, in the case of redemption, on or after the Redemption Date).
SECTION 5.14. Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture, and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
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SECTION 5.15. Action on Notes. The Indenture Trustee's right to seek
and recover judgment on the Notes or under this Indenture shall not be affected
by the seeking, obtaining or application of any other relief under or with
respect to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Indenture Trustee or the Noteholders shall be impaired by the
recovery of any judgment by the Indenture Trustee against the Issuer or by the
levy of any execution under such judgment upon any portion of the Trust Estate
or upon any of the assets of the Issuer. Any money or property collected by the
Indenture Trustee shall be applied in accordance with Section 5.4(b).
SECTION 5.16. Performance and Enforcement of Certain Obligations.
Promptly following a request from the Indenture Trustee to do so, and at the
Administrator's expense, the Issuer shall take all such lawful action as the
Indenture Trustee may request to compel or secure the performance and observance
by the Seller and the Servicer, as applicable, of each of their obligations to
the Issuer under or in connection with the Sale and Servicing Agreement or by
the Seller of each of its obligations under or in connection with the Purchase
Agreement, and to exercise any and all rights, remedies, powers and privileges
lawfully available to the Issuer under or in connection with the Sale and
Servicing Agreement to the extent and in the manner directed by the Indenture
Trustee, including the transmission of notices of default on the part of the
Seller or the Servicer thereunder and the institution of legal or administrative
actions or proceedings to compel or secure performance by the Seller or the
Servicer of each of their obligations under the Sale and Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and at the direction (which direction shall be in writing
or by telephone, confirmed in writing promptly thereafter) of the Holders of
66-2/3% of the principal amount of the Notes Outstanding shall, exercise all
rights, remedies, powers, privileges and claims of the Issuer against the Seller
or the Servicer under or in connection with the Sale and Servicing Agreement, or
against the Seller under or in connection with the Purchase Agreement, including
the right or power to take any action to compel or secure performance or
observance by the Seller or the Servicer, as the case may be, of each of their
obligations to the Issuer thereunder and to give any consent, request, notice,
direction, approval, extension, or waiver under the Sale and Servicing Agreement
or the Purchase Agreement, as the case may be, and any right of the Issuer to
take such action shall be suspended.
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(c) Promptly following a request from the Indenture Trustee to do so
and at the Administrator's expense, the Issuer agrees to take all such lawful
action as the Indenture Trustee may request to compel or secure the performance
and observance by MMCA of each of its obligations to the Seller under or in
connection with the Purchase Agreement in accordance with the terms thereof, and
to exercise any and all rights, remedies, powers and privileges lawfully
available to the Issuer under or in connection with the Purchase Agreement to
the extent and in the manner directed by the Indenture Trustee, including the
transmission of notices of default on the part of the Seller thereunder and the
institution of legal or administrative actions or proceedings to compel or
secure performance by MMCA of each of its obligations under the Purchase
Agreement.
(d) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and, at the direction (which direction shall be in
writing or by telephone (confirmed in writing promptly thereafter)) of the
Holders of 66-2/3% of the principal amount of the Notes Outstanding shall,
exercise all rights, remedies, powers, privileges and claims of the Seller
against MMCA under or in connection with the Purchase Agreement, including the
right or power to take any action to compel or secure performance or observance
by MMCA of each of its obligations to the Seller thereunder and to give any
consent, request, notice, direction, approval, extension or waiver under the
Purchase Agreement, and any rights of the Seller to take such action shall be
suspended.
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ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1. Duties of Indenture Trustee. If an Event of Default has
occurred and is continuing, the Indenture Trustee shall exercise the rights and
powers vested in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture
and no implied covenants or obligations shall be read into this
Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Indenture Trustee and, if
required by the terms of this Indenture, conforming to the
requirements of this Indenture; however, the Indenture Trustee shall
examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section 6.1;
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible
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Officer unless it is proved that the Indenture Trustee was negligent
in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 5.11.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this Section
6.1.
(e) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
(f) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law or the terms of
this Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section 6.1 and to the provisions of
the TIA.
(i) The Indenture Trustee shall not be charged with knowledge of any
Event of Default unless either (1) a Responsible Officer shall have actual
knowledge of such Event of Default or (2) written notice of such Event of
Default shall have been given to the Indenture Trustee in accordance with the
provisions of this Indenture.
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SECTION 6.2. Rights of Indenture Trustee. The Indenture Trustee may
rely on any document believed by it to be genuine and to have been signed or
presented by the proper Person. The Indenture Trustee need not investigate any
fact or matters stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it
may require an Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on an Officer's Certificate or Opinion of Counsel unless it is
proved that the Indenture Trustee was negligent in such reliance.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that such action or omission by
the Indenture Trustee does not constitute willful misconduct, negligence or bad
faith.
(e) The Indenture Trustee may consult with counsel, and the advice
or opinion of counsel with respect to legal matters relating to this Indenture
and the Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) The Indenture Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Noteholders pursuant to this Indenture, unless such
Noteholders shall have offered to the Indenture Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction.
(g) The Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order,
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bond, debenture or other paper or document, but the Indenture Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Indenture Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Issuer, personally or by agent or attorney.
SECTION 6.3. Individual Rights of Indenture Trustee. The Indenture
Trustee, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Issuer or its Affiliates with
the same rights it would have if it were not Indenture Trustee. Any Paying
Agent, Note Registrar, co-registrar or co-paying agent hereunder may do the same
with like rights.
SECTION 6.4. Indenture Trustee's Disclaimer. The Indenture Trustee
(i) shall not be responsible for, and makes no representation, as to the
validity or adequacy of this Indenture or the Notes and (ii) shall not be
accountable for the Issuer's use of the proceeds from the Notes, or responsible
for any statement of the Issuer in this Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Indenture
Trustee's certificate of authentication.
SECTION 6.5. Notice of Defaults. If a Default occurs and is
continuing and if it is known to a Responsible Officer of the Indenture
Trustee, the Indenture Trustee shall mail to each Noteholder notice of such
Default within ninety (90) days after it occurs. Except in the case of a Default
in payment of principal of or interest on any Note (including payments pursuant
to the mandatory redemption provisions of such Note), the Indenture Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of
Noteholders.
SECTION 6.6. Reports by Indenture Trustee to Holders. Within a
reasonable period of time after the end of each calendar year, but not later
than the latest date permitted by law, in each case as determined by the
Servicer, the Indenture Trustee shall deliver to each Person who at any time
during the preceding calendar year was a Noteholder a statement prepared by the
Servicer pursuant to Section 3.9 of the Sale and Servicing Agreement containing
the information which is required to be expressed in the Payment Date statements
as a dollar amount per $1,000 of original denomination of the Notes or Class of
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Notes, as applicable, aggregated for such calendar year, for the purposes of
such Noteholder's preparation of Federal income tax returns.
SECTION 6.7. Compensation and Indemnity. The Issuer shall, or shall
cause the Administrator to, pay to the Indenture Trustee from time to time
reasonable compensation for its services. The Indenture Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Issuer shall, or shall cause the Administrator to, reimburse the
Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by
it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Indenture Trustee's agents, counsel,
accountants and experts. The Issuer shall, or shall cause the Administrator to,
indemnify the Indenture Trustee against any and all loss, liability or expense
(including attorneys' fees) incurred by it in connection with the administration
of this trust and the performance of its duties hereunder. The Indenture Trustee
shall notify the Issuer and the Administrator promptly of any claim for which it
may seek indemnity. Failure by the Indenture Trustee to so notify the Issuer and
the Administrator shall not relieve the Issuer or the Administrator of its
obligations hereunder. The Issuer shall, or shall cause the Servicer to, defend
any such claim, and the Indenture Trustee may have separate counsel and the
Issuer shall, or shall cause the Servicer to, pay the fees and expenses of such
counsel. Neither the Issuer nor the Administrator need reimburse any expense or
indemnity against any loss, liability or expense incurred by the Indenture
Trustee through the Indenture Trustee's own willful misconduct, negligence or
bad faith.
(b) The Issuer's payment obligations to the Indenture Trustee
pursuant to this Section 6.7 shall survive the resignation or removal of the
Indenture Trustee and the discharge of this Indenture. When the Indenture
Trustee incurs expenses after the occurrence of a Default specified in Section
5.1(iv) or (v) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or similar law.
SECTION 6.8. Replacement of Indenture Trustee. No resignation or
removal of the Indenture Trustee, and no appointment of a successor Indenture
Trustee, shall become effective until the acceptance of appointment by the
successor Indenture Trustee pursuant to this Section 6.8. The Indenture Trustee
may resign at any time by so notifying the Issuer. The Holders of a
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majority in principal amount of the Notes Outstanding may remove the Indenture
Trustee without cause by so notifying the Indenture Trustee and the Issuer and
may appoint a successor Indenture Trustee. The Issuer shall remove the Indenture
Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) the Indenture Trustee is adjudged a bankrupt or
insolvent;
(iii) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of
acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in the
office of Indenture Trustee for any reason (the Indenture Trustee in such event
being referred to herein as the retiring Indenture Trustee), the Issuer shall
promptly appoint a successor Indenture Trustee.
(b) Any successor Indenture Trustee shall deliver a written
acceptance of its appointment to the retiring Indenture Trustee and to the
Issuer. Thereupon, the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the Indenture Trustee under this Indenture. The
successor Indenture Trustee shall mail a notice of its succession to
Noteholders. The retiring Indenture Trustee shall promptly transfer all property
held by it as Indenture Trustee to the successor Indenture Trustee.
(c) If a successor Indenture Trustee does not take office within
sixty (60) days after the retiring Indenture Trustee resigns or is removed, the
retiring Indenture Trustee, the Issuer or the Holders of a majority in principal
amount of the Notes Outstanding may petition any court of competent jurisdiction
for the appointment of a successor Indenture Trustee. If the Indenture Trustee
fails to comply with Section 6.11, any Noteholder may petition any court of
competent jurisdiction for the removal of the Indenture Trustee and the
appointment of a successor Indenture Trustee.
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(d) Notwithstanding the replacement of the Indenture Trustee
pursuant to this Section 6.8, the Issuer's and the Administrator's obligations
under Section 6.7 shall continue for the benefit of the retiring Indenture
Trustee.
SECTION 6.9. Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation or
banking association without any further act shall be the successor Indenture
Trustee; provided, that such corporation or banking association shall be
otherwise qualified and eligible under Section 6.11. The Indenture Trustee shall
provide the Rating Agencies with prior written notice of any such transaction.
(b) In case at the time such successor or successors by merger,
conversion or consolidation to the Indenture Trustee shall succeed to the trusts
created by this Indenture, any of the Notes shall have been authenticated but
not delivered, any such successor to the Indenture Trustee may adopt the
certificate of authentication of any predecessor trustee, and deliver such Notes
so authenticated, and in case at that time any of the Notes shall not have been
authenticated, to any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee. In all such cases such certificates shall
have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee. Notwithstanding any other provisions of this Indenture, at
any time, for the purpose of meeting any legal requirement of any jurisdiction
in which any part of the Trust Estate may at the time be located, the Indenture
Trustee shall have the power and may execute and deliver an instrument to
appoint one or more Persons to act as a co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person or Persons, in such capacity and for the benefit of the Noteholders,
such title to the Trust Estate, or any part hereof, and, subject to the other
provisions of this Section, such powers, duties, obligations, rights and trusts
as the Indenture Trustee may consider necessary or desirable. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee
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under Section 6.11 and no notice to Noteholders of the appointment of any
co-trustee or separate trustee shall be required under Section 6.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed
upon and exercised or performed by the Indenture Trustee and such
separate trustee or co-trustee jointly (it being understood that
such separate trustee or co-trustee shall not be authorized to act
separately without the Indenture Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed the Indenture Trustee
shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including
the holding of title to the Trust Estate or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by
such separate trustee or co-trustee, but solely at the direction of
the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property
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specified in its instrument of appointment, either jointly with the Indenture
Trustee or separately, as may be provided therein, subject to all the provisions
of this Indenture, specifically including every provision of this Indenture
relating to the conduct of, affecting the liability of, or affording protection
to, the Indenture Trustee. Every such instrument shall be filed with the
Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute
the Indenture Trustee its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 6.11. Eligibility; Disqualification. The Indenture Trustee
shall at all times satisfy the requirements of TIA Section 310(a). The Indenture
Trustee or its parent shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of condition
and shall have a long-term debt rating of investment grade by each of the Rating
Agencies or shall otherwise be acceptable to each of the Rating Agencies. The
Indenture Trustee shall comply with TIA Section 310(b).
SECTION 6.12. Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
SECTION 6.13. Pennsylvania Motor Vehicle Sales Finance Act Licenses.
The Indenture Trustee shall use its best efforts to maintain the effectiveness
of all licenses required under the Pennsylvania Motor Vehicle Sales Finance Act
in connection with this Indenture and the transactions contemplated hereby
until the lien and security interest of this Indenture shall no longer be in
effect in accordance with the terms hereof.
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ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1. Issuer To Furnish Indenture Trustee Names and Addresses
of Noteholders. The Issuer shall furnish or cause to be furnished to the
Indenture Trustee (a) not more than five (5) days after each Record Date, a
list, in such form as the Indenture Trustee may reasonably require, of the names
and addresses of the Holders of Notes as of such Record Date and (b) at such
other times as the Indenture Trustee may request in writing, within thirty (30)
days after receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than ten (10) days prior to the time such list is
furnished; provided, however, that so long as (i) the Indenture Trustee is the
Note Registrar or (ii) the Notes are issued as Book-Entry Notes, no such list
shall be required to be furnished.
SECTION 7.2. Preservation of Information; Communications to
Noteholders. The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as provided
in Section 7.1 and the names and addresses of Holders of Notes received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.1 upon receipt of
a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA Section 312(c).
SECTION 7.3. Reports by Issuer. The Issuer shall:
(i) file with the Indenture Trustee, within fifteen (15) days
after the Issuer is required to file the same with the Commission,
copies of the annual reports and of the information, documents and
other reports (or
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copies of such portions of any of the foregoing as the Commission
may from time to time by rules and regulations prescribe) that the
Issuer may be required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with the rules and regulations prescribed from time to
time by the Commission such additional information, documents and
reports with respect to compliance by the Issuer with the conditions
and covenants of this Indenture as may be required from time to time
by such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA
Section 313(c)) such summaries of any information, documents and
reports required to be filed by the Issuer pursuant to clauses (i)
and (ii) of this Section 7.3(a) and by rules and regulations
prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall correspond to the calendar year.
SECTION 7.4. Reports by Indenture Trustee. If required by TIA
Section 313(a), within sixty (60) days after each March 31, beginning with March
31, 1999, the Indenture Trustee shall mail to each Noteholder as required by TIA
Section 313(c) a brief report dated as of such date that complies with TIA
Section 313(a). The Indenture Trustee also shall comply with TIA Section 313(b).
(b) A copy of each report at the time of its mailing to Noteholders
shall be filed by the Indenture Trustee with the Commission and each stock
exchange, if any, on which the Notes are listed. The Issuer shall notify the
Indenture Trustee if and when the Notes are listed on any stock exchange.
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ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1. Collection of Money. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Indenture Trustee pursuant to this Indenture and the Sale
and Servicing Agreement. The Indenture Trustee shall apply all such money
received by it as provided in this Indenture and the Sale and Servicing
Agreement. Except as otherwise expressly provided in this Indenture, if any
default occurs in the making of any payment or performance under any agreement
or instrument that is part of the Trust Estate, the Indenture Trustee may take
such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate Proceedings. Any such
action shall be without prejudice to any right to claim a Default or Event of
Default under this Indenture and any right to proceed thereafter as provided in
Article V.
SECTION 8.2. Trust Accounts, the Reserve Account, the Supplemental
Reserve Account and the Yield Supplement Account. On or prior to the Closing
Date, the Issuer shall cause the Servicer to establish and maintain, in the name
of the Indenture Trustee, for the benefit of the Noteholders and the
Certificateholders, the Trust Accounts, the Reserve Account, the Supplemental
Reserve Account and the Yield Supplement Account as provided in Sections 4.1,
4.7, 4.10 and 5.1 of the Sale and Servicing Agreement.
(b) On or before each Payment Date, the Servicer shall deposit in
the Collection Account all amounts required to be deposited therein with respect
to the related Collection Period as provided in Section 4.2 of the Sale and
Servicing Agreement. On or before each Payment Date, all amounts required to be
deposited in the Note Payment Account with respect to the related Collection
Period pursuant to Sections 4.6 and 4.7 of the Sale and Servicing Agreement
shall be withdrawn by the Indenture Trustee from the Collection Account, the
Supplemental Reserve Account and/or the Reserve Account and deposited to the
Note Payment Account for payment to Noteholders in accordance with Section 2.8
on such Payment Date.
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SECTION 8.3. General Provisions Regarding Accounts. So long as no
Default or Event of Default shall have occurred and be continuing, all or a
portion of the funds in the Collection Account, the Payahead Account, the
Reserve Account, the Supplemental Reserve Account and the Yield Supplement
Account shall be invested by the Indenture Trustee at the direction of the
Servicer in Permitted Investments as provided in Sections 4.1, 4.7 and 5.1 of
the Sale and Servicing Agreement. All income or other gain (net of losses and
investment expenses) from investments of monies deposited in the Collection
Account, the Payahead Account, the Reserve Account, the Supplemental Reserve
Account and the Yield Supplement Account shall be withdrawn by the Indenture
Trustee from such accounts and distributed (but only under the circumstances set
forth in the Sale and Servicing Agreement in the case of the Reserve Account,
the Supplemental Reserve Account and the Yield Supplement Account) as provided
in Sections 4.1, 4.7 and 5.1 of the Sale and Servicing Agreement. The Servicer
shall not direct the Indenture Trustee to make any investment of any funds or to
sell any investment held in any of the Trust Accounts, the Reserve Account, the
Supplemental Reserve Account or the Yield Supplement Account unless the
security interest Granted and perfected in such account will continue to be
perfected in such investment or the proceeds of such sale, in either case
without any further action by any Person, and, in connection with any direction
to the Indenture Trustee to make any such investment or sale, if requested by
the Indenture Trustee, the Issuer shall deliver to the Indenture Trustee an
Opinion of Counsel, acceptable to the Indenture Trustee, to such effect.
(b) Subject to Section 6.1(c), the Indenture Trustee shall not in
any way be held liable by reason of any insufficiency in any of the Trust
Accounts, the Reserve Account, the Supplemental Reserve Account or the Yield
Supplement Account resulting from any loss on any Permitted Investment included
therein, except for losses attributable to the Indenture Trustee's failure to
make payments on such Permitted Investments issued by the Indenture Trustee, in
its commercial capacity as principal obligor and not as trustee, in accordance
with their terms.
(c) If (i) the Servicer shall have failed to give investment
directions for any funds on deposit in the Collection Account, the Payahead
Account, the Reserve Account, the Supplemental Reserve Account or the Yield
Supplement Account to the Indenture Trustee by 11:00 a.m., New York Time (or
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such other time as may be agreed by the Issuer and Indenture Trustee), on the
Business Day preceding each Payment Date, (ii) to the knowledge of a Responsible
Officer of the Indenture Trustee, a Default or Event of Default shall have
occurred and be continuing with respect to the Notes but the Notes shall not
have been declared due and payable pursuant to Section 5.2 or (iii) if such
Notes shall have been declared due and payable following an Event of Default,
amounts collected or receivable from the Trust Estate are being applied in
accordance with Section 5.4 as if there had not been such a declaration, then
the Indenture Trustee shall, to the fullest extent practicable, invest and
reinvest funds in such Trust Accounts, the Reserve Account, the Supplemental
Reserve Account or the Yield Supplement, as the case may be, in one or more
Permitted Investments as set forth in Schedule I hereto.
SECTION 8.4. Release of Trust Estate. Subject to the payment of its
fees and expenses pursuant to Section 6.7, the Indenture Trustee may, and when
required by the provisions of this Indenture shall, execute instruments to
release property from the lien of this Indenture, or convey the Indenture
Trustee's interest in the same, in a manner and under circumstances that are not
inconsistent with the provisions of this Indenture. No party relying upon an
instrument executed by the Indenture Trustee as provided in this Article VIII
shall be bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
monies.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due the Indenture Trustee pursuant to Section 6.7 have
been paid in full, release any remaining portion of the Trust Estate that
secured the Notes from the lien of this Indenture and release to the Issuer or
any other Person entitled thereto any funds then on deposit in the Trust
Accounts. The Indenture Trustee shall release property from the lien of this
Indenture pursuant to this Section 8.4(b) only upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of Counsel and (if required
by the TIA) Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(1) meeting the applicable requirements of Section 11.1.
SECTION 8.5. Opinion of Counsel. The Indenture Trustee shall receive
at least seven (7) days notice when requested by the Issuer to take any action
pursuant to Section 8.4(a), accompanied by copies of any instruments involved,
and the Indenture Trustee shall also require, except in connection with any
action contemplated by Section 8.4(b), as a condition to such action, an
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Opinion of Counsel, in form and substance satisfactory to the Indenture Trustee,
stating the legal effect of any such action, outlining the steps required to
complete the same, and concluding that all conditions precedent to the taking of
such action have been complied with and such action will not materially and
adversely impair the security for the Notes or the rights of the Noteholders in
contravention of the provisions of this Indenture; provided, however, that such
Opinion of Counsel shall not be required to express an opinion as to the fair
value of the Trust Estate. Counsel rendering any such opinion may rely, without
independent investigation, on the accuracy and validity of any certificate or
other instrument delivered to the Indenture Trustee in connection with any such
action.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders.
Without the consent of the Holders of any Notes but with prior notice to the
Rating Agencies, the Issuer and the Indenture Trustee, when authorized by an
Issuer Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject
or required to be subjected to the lien of this Indenture, or to
subject to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and
the assumption by any such successor of the covenants of the Issuer
herein and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Holders of the Notes, or to surrender any right or power
herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture that may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions
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arising under this Indenture which will not be inconsistent with
other provisions of the Indenture;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the
Notes and to add to or change any of the provisions of this
Indenture as shall be necessary to facilitate the administration of
the trusts hereunder by more than one trustee, pursuant to the
requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA;
provided, however, that (i) such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Noteholder, (ii) the Rating Agency Condition shall have been satisfied with
respect to such action and (iii) such action shall not, as evidenced by an
Opinion of Counsel, cause the Issuer to be characterized for Federal or any then
Applicable Tax State income tax purposes as an association taxable as a
corporation or otherwise have any material adverse impact on the Federal or any
then Applicable Tax State income taxation of any Notes Outstanding or
outstanding Certificates or any Noteholder or Certificateholder. The Indenture
Trustee is hereby authorized to join in the execution of any such supplemental
indenture and to make any further appropriate agreements and stipulations that
may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, may, with the consent of not less than a majority of the principal
amount of the Notes Outstanding and with prior notice to the Rating Agencies,
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that (i) such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Noteholder, (ii) the Rating Agency
Condition shall have
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been satisfied with respect to such action and (iii) such action shall not, as
evidenced by an Opinion of Counsel, cause the Issuer to be characterized for
Federal or any then Applicable Tax State income tax purposes as an association
taxable as a corporation or otherwise have any material adverse impact on the
Federal or any then Applicable Tax State income taxation of any Notes
Outstanding or outstanding Certificates or any Noteholder or Certificateholder.
SECTION 9.2. Supplemental Indentures with Consent of Noteholders.
The Issuer and the Indenture Trustee, when authorized by an Issuer Order, also
may, with prior notice to the Rating Agencies and with the consent of the
Holders of not less than a majority of the principal amount of the Notes
Outstanding, by Act of such Holders delivered to the Issuer and the Indenture
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or modifying in any manner the rights
of the Holders of the Notes under this Indenture; provided, however, that (i)
such action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Noteholder, (ii) the Rating Agency
Condition shall have been satisfied with respect to such action and (iii) such
action shall not, as evidenced by an Opinion of Counsel, cause the Issuer to be
characterized for Federal or any then Applicable Tax State income tax purposes
as an association taxable as a corporation or otherwise have any material
adverse impact on the Federal or any then Applicable Tax State income taxation
of any Notes Outstanding or outstanding Certificates or any Noteholder or
Certificateholder; and provided, further, that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Note affected
thereby:
(i) change any Final Payment Date or the date of payment of
any installment of principal of or interest on any Note, or reduce
the principal amount thereof, the interest rate thereon or the
Redemption Price with respect thereto, change the provisions of this
Indenture relating to the application of collections on, or the
proceeds of the sale of, the Trust Estate 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 the interest thereon is
payable, or impair the right to institute suit for the enforcement
of the provisions of this Indenture requiring the applica-
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tion of funds available therefor, as provided in Article V, to the
payment of any such amount due on the Notes on or after the
respective due dates thereof (or, in the case of redemption, on or
after the Redemption Date);
(ii) reduce the percentage of the principal amount of the
Notes Outstanding, the consent of the Holders of which is required
for any such supplemental indenture, or the consent of the Holders
of which is required for any waiver of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences provided for in this Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(iv) reduce the percentage of the principal amount of the
Notes Outstanding required to direct the Indenture Trustee to sell
or liquidate the Trust Estate pursuant to Section 5.4 if the
proceeds of such sale would be insufficient to pay the principal
amount and accrued but unpaid interest on the Notes and the
Certificates;
(v) modify any provision of this Indenture specifying a
percentage of the aggregate principal amount of the Notes necessary
to amend this Indenture or the other Basic Documents except to
increase any percentage specified herein or to provide that certain
additional provisions of this Indenture or the Basic Documents
cannot be modified or waived without the consent of the Holder of
each Outstanding Note affected thereby;
(vi) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Payment Date (including
the calculation of any of the individual components of such
calculation) or to affect the rights of the Holders of Notes to
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the benefit of any provisions for the mandatory redemption of the
Notes contained herein; or
(vii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of
the Trust Estate or, except as otherwise permitted or contemplated
herein, terminate the lien of this Indenture on any such collateral
at any time subject hereto or deprive the Holder of any Note of the
security provided by the lien of this Indenture.
The Indenture Trustee may in its discretion determine whether or not any Notes
would be affected by any supplemental indenture and any such determination shall
be conclusive upon the Holders of all Notes, whether theretofore or thereafter
authenticated and delivered hereunder. The Indenture Trustee shall not be liable
for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this
Section 9.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Promptly after the execution by the Issuer and the Indenture Trustee
of any supplemental indenture pursuant to this Section 9.2, the Indenture
Trustee shall mail to the Holders of the Notes to which such amendment or
supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
SECTION 9.3. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive and,
subject to Sections 6.1 and 6.2, shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture and that all conditions precedent to
the execution and delivery of such supplemental indenture have been satisfied.
The Indenture Trustee may, but shall not be obligated to, enter into any such
supple-
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mental indenture that affects the Indenture Trustee's own rights, duties,
liabilities or immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and shall be deemed to be modified and amended in accordance therewith
with respect to the Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the Issuer and the Holders of the Notes
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 9.5. Conformity with Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.6. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
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ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1. Redemption. The Notes are subject to redemption in
whole, but not in part, at the direction of the Servicer pursuant to Section
9.1(a) of the Sale and Servicing Agreement, on any Payment Date on which the
Servicer exercises its option to purchase the assets of the Issuer pursuant to
said Section 9.1(a), and the amount paid by the Servicer shall be treated as
collections of Receivables and applied to pay the unpaid principal amount of the
Notes plus accrued and unpaid interest thereon and the Certificate Balance. The
Servicer or the Issuer shall furnish the Rating Agencies and the Noteholders
notice of such redemption. If the Notes are to be redeemed pursuant to this
Section 10.1(a), the Servicer or the Issuer shall furnish notice of such
election to the Indenture Trustee not later than twenty (20) days prior to the
Redemption Date and the Issuer shall deposit by 10:00 A.M. (New York City time)
on the Redemption Date with the Indenture Trustee in the Note Payment Account
the Redemption Price of the Notes to be redeemed, whereupon all such Notes shall
be due and payable on the Redemption Date.
(b) In the event that the assets of the Issuer are sold pursuant to
Section 9.2 of the Trust Agreement, all amounts on deposit in the Note Payment
Account shall be paid to the Noteholders up to the unpaid principal amount of
the Notes and all accrued and unpaid interest thereon. If the amounts are to be
paid to Noteholders pursuant to this Section 10.1(b), the Servicer or the Issuer
shall, to the extent practicable, furnish notice of such event to the Indenture
Trustee not later than twenty (20) days prior to the Redemption Date, whereupon
all such amounts shall be payable on the Redemption Date.
SECTION 10.2. Form of Redemption Notice. Notice of redemption under
Section 10.1(a) shall be given by the Indenture Trustee by first-class mail,
postage prepaid, or by facsimile mailed or transmitted promptly following
receipt of notice from the Issuer or Servicer pursuant to Section 10.1(a), but
not later than ten (10) days prior to the applicable Redemption Date, to each
Holder of Notes as of the close of business on the Record Date preceding the
applicable Redemption Date, at such Holder's address or facsimile number
appearing in the Note Register.
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All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Price (which shall be the office or agency
of the Issuer to be maintained as provided in Section 3.2).
Notice of redemption of the Notes shall be given by the Indenture Trustee in the
name and at the expense of the Issuer. Failure to give notice of redemption, or
any defect therein, to any Holder of any Note shall not impair or affect the
validity of the redemption of any other Note.
SECTION 10.3. Notes Payable on Redemption Date. The Notes to be
redeemed shall, following notice of redemption as required by Section 10.2 (in
the case of redemption pursuant to Section 10.1(a)), on the Redemption Date
become due and payable at the Redemption Price and (unless the Issuer shall
default in the payment of the Redemption Price) no interest shall accrue on the
Redemption Price for any period after the date to which accrued interest is
calculated for purposes of calculating the Redemption Price.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Compliance Certificates and Opinions, etc. Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee (i) an Officer's Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with, (ii) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with and (iii)
(if required by the TIA) an Independent Certificate from a firm of certified
public accountants meeting the applicable requirements of this Section 11.1,
except that, in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(A) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(B) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(C) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(D) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b)(i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis
for the release of any property or securities subject to the lien of
this
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Indenture, the Issuer shall, in addition to any obligation imposed
in Section 11.1(a) or elsewhere in this Indenture, furnish to the
Indenture Trustee an Officer's Certificate certifying or stating
the opinion of each person signing such certificate as to the fair
value (within ninety (90) days of such deposit) to the Issuer of the
Collateral or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause
(i) above, the Issuer shall also deliver to the Indenture Trustee an
Independent Certificate as to the same matters, if the fair value to
the Issuer of the property or securities to be so deposited and of
all other such property or securities made the basis of any such
withdrawal or release since the commencement of the then-current
fiscal year of the Issuer, as set forth in the certificates
delivered pursuant to clause (i) above and this clause (ii), is ten
percent (10%) or more of the principal amount of the Notes
Outstanding, but such a certificate need not be furnished with
respect to any property or securities so deposited, if the fair
value thereof to the Issuer as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent (1%) of
the principal amount of the Notes Outstanding.
(iii) Whenever any property or securities are to be released
from the lien of this Indenture, the Issuer shall also furnish to
the Indenture Trustee an Officer's Certificate certifying or stating
the opinion of each person signing such certificate as to the fair
value (within ninety (90) days of such release) of the property or
securities proposed to be released and stating that in the opinion
of such person the proposed release will not impair the security
under this Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause
(iii) above, the Issuer shall also furnish to the Indenture Trustee
an Independent Certificate as to the same matters if the fair value
of the property or securities and of all other property, other than
property as contemplated by clause (v) below or securities released
from the
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lien of this Indenture since the commencement of the then-current
calendar year, as set forth in the certificates required by clause
(iii) above and this clause (iv), equals ten percent (10%) or more
of the principal amount of the Notes Outstanding, but such
certificate need not be furnished in the case of any release of
property or securities if the fair value thereof as set forth in the
related Officer's Certificate is less than $25,000 or less than one
percent (1%) of the principal amount of the then Outstanding Notes.
(v) Notwithstanding Section 2.10 or any other provisions of
this Section 11.1, the Issuer may, without compliance with the
requirements of the other provisions of this Section 11.1, (A)
collect, liquidate, sell or otherwise dispose of Receivables and
Financed Vehicles as and to the extent permitted or required by the
Basic Documents and (B) make cash payments out of the Trust Accounts
as and to the extent permitted or required by the Basic Documents.
SECTION 11.2. Form of Documents Delivered to Indenture Trustee. In
any case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and say such Person may certify or give an opinion
as to such matters in one or several documents.
(b) Any certificate or opinion of an Authorized Officer of the
Issuer may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer's
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Servicer, the Seller, the Administrator or the
Issuer, stating that the information with respect to such factual matters is in
the possession of the Servicer, the Seller, the Administrator or the Issuer,
unless such Authorized Officer or counsel knows, or in the exercise of
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reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
(c) Where any Person is required to make, give or execute two or
more applications, requests, comments, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
(d) Whenever in this Indenture, in connection with any application
or certificate or report to the Indenture Trustee, it is provided that the
Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of the Issuer's compliance with any term hereof, it
is intended that the truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or report (as the case
may be), of the facts and opinions stated in such document shall in such case be
conditions precedent to the right of the Issuer to have such application granted
or to the sufficiency of such certificate or report. The foregoing shall not,
however, be construed to affect the Indenture Trustee's right to rely upon the
truth and accuracy of any statement or opinion contained in any such document as
provided in Article VI.
SECTION 11.3. Acts of Noteholders. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the Indenture Trustee, and, where it
is hereby expressly required, to the Issuer. Such instrument or instruments (and
the action embodied herein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Noteholders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
6.1) conclusive in favor of the Indenture Trustee and the Issuer, if made in the
manner provided in this Section 11.3.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be provided by the Note Register.
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(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
SECTION 11.4. Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or permitted by this Indenture
shall be in writing and if such request, demand, authorization, direction,
notice, consent, waiver or Act of Noteholders is to be made upon, given or
furnished to or filed with:
(i) the Indenture Trustee by any Noteholder or by the Issuer,
shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Indenture Trustee at
its Corporate Trust Office; or
(ii) the Issuer by the Indenture Trustee or by any Noteholder,
shall be sufficient for every purpose hereunder if in writing and
mailed first-class, postage prepaid to the Issuer addressed to:
MMCA Auto Owner Trust 1998-1, in care of Wilmington Trust Company,
Attention: Corporate Trust Department, with a copy to the
Administrator at 6363 Katella Avenue, Cypress, California
90630-5205, Attention: Executive Vice President, Finance and
Corporate Planning, or at any other address previously furnished in
writing to the Indenture Trustee by the Issuer or the Administrator.
The Issuer shall promptly transmit any notice received by it from
the Noteholders to the Indenture Trustee.
Notices required to be given to the Rating Agencies by the Issuer,
the Indenture Trustee or the Owner Trustee shall be in writing, personally
delivered, telecopied or mailed by certified mail, return receipt requested, to
(i) in the case of Moody's, at the following address: Moody's Investors Service,
Inc., ABS Monitoring Department, 99 Church Street, New York, New York 10007 and
(ii) in case of S&P, at the following address: Standard & Poor's Ratings
Services, a
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division of The McGraw-Hill Companies, 25 Broadway (20th Floor), New York, New
York 10004, Attention of Asset Backed Surveillance Department.
SECTION 11.5. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
(b) Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
(c) In case, by reason of the suspension of regular mail service as
a result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
(d) Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
SECTION 11.6. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Indenture Trustee or any
Paying Agent to such Holder, that is different from the methods provided for in
this
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Indenture for such payments or notices. The Issuer shall furnish to the
Indenture Trustee a copy of each such agreement and the Indenture Trustee shall
cause payments to be made and notices to be given in accordance with such
agreements.
SECTION 11.7. Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.8. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 11.9. Successors and Assigns. All covenants and agreements
in this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors, co-trustees and agents.
SECTION 11.10. Separability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 11.11. Benefits of Indenture. Nothing in this Indenture or
in the Notes, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Noteholders, and any
other party secured hereunder, and any other Person with an ownership interest
in any part of the Trust Estate, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 11.12. Legal Holiday. In any case where the date on which
any payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force
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and effect as if made on the date on which nominally due, and no interest shall
accrued for the period from and after any such nominal date.
SECTION 11.13. Governing Law. This Indenture shall be construed in
accordance with the laws of the State of New York.
SECTION 11.14. Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15. Recording of Indenture. If this Indenture is subject
to recording in any appropriate public recording offices, such recording is to
be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or any other
Person secured hereunder or for the enforcement of any right or remedy granted
to the Indenture Trustee under this Indenture.
SECTION 11.16. Trust Obligation. No recourse may be taken, directly
or indirectly, with respect to the obligations of the Issuer, the Owner Trustee
or the Indenture Trustee on the Notes or under this Indenture or any certificate
or other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacities), and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Article VI, VII and VIII of the Trust Agreement.
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SECTION 11.17. No Petition. The Indenture Trustee, by entering into
this Indenture, and each Noteholder or Note Owner, by accepting a Note or
beneficial interest in a Note, as the case may be, hereby covenant and agree
that they will not at any time institute against the Seller or the Issuer, or
join in any institution against the Seller or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, this Indenture or any
of the Basic Documents.
SECTION 11.18. Inspection. The Issuer agrees that, with reasonable
prior notice, it will permit any representative of the Indenture Trustee, during
the Issuer's normal business hours, to examine all the books of account,
records, reports and other papers of the Issuer, to make copies and extracts
therefrom, to cause such books to be audited by Independent certified public
accountants, and to discuss the Issuer's affairs, finances and accounts with the
Issuer's officers, employees, and Independent certified public accountants, all
at such reasonable times and as often as may be reasonably requested. The
Indenture Trustee shall and shall cause its representatives to hold in
confidence all such information except to the extent disclosure may be required
by law (and all reasonable applications for confidential treatment are
unavailing) and except to the extent that the Indenture Trustee may reasonably
determine that such disclosure is consistent with its obligations hereunder.
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IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers, thereunto duly
authorized and duly attested, all as of the day and year first above written.
MMCA AUTO OWNER TRUST 1998-1
By: WILMINGTON TRUST COMPANY
not in its individual
capacity but solely as Owner Trustee
By:
----------------------------------------
Name:
Title:
BANK OF TOKYO - MITSUBISHI
TRUST COMPANY
not in its individual
capacity but solely as Indenture Trustee
By:
----------------------------------------
Name:
Title:
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, a Notary Public in and for
said county and state, on this day personally appeared [ ], known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said [ ], a [ ] of
Wilmington Trust Company, an Owner Trustee of MMCA AUTO OWNER TRUST 1998-1, a
Delaware business trust, for the purpose and consideration therein expressed,
and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this _______ day of ______,
1998.
-------------------------
Notary Public in and for
the State of New York.
[Seal]
My commission expires:
- -----------------------
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, a Notary Public in and for
said county and state, on this day personally appeared [ ], known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of BANK OF TOKYO - MITSUBISHI TRUST
COMPANY, a New York banking corporation, and that such person executed the same
as the act of said corporation for the purpose and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this _________ day of
________, 1998.
---------------------------
Notary Public in and for
the State of New York.
[Seal]
My commission expires:
- ---------------------
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SCHEDULE A
[Provided to the Indenture Trustee at the Closing]
SA-1
<PAGE>
SCHEDULE I
List of Permitted Investments
Account(s) Permitted Investments
Reserve Account [Certificates of Deposit of Bank of Tokyo-Mitsubishi
Ltd., New York Branch]
Supplemental Reserve [Certificates of Deposit of Bank of Tokyo-Mitsubishi
Account Ltd., New York Branch]
Collection Account, [Time deposits of Bank of Tokyo-Mitsubishi
Yield Supplement Trust Company]
Account, Payahead
Account
SI-1
<PAGE>
EXHIBIT A-1
Form of Class A-1 Note
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
REGISTERED $[ ]
No. R-1 CUSIP NO. [ ]
MMCA AUTO OWNER TRUST 1998-1
[ ]% CLASS A-1 ASSET BACKED NOTES
MMCA Auto Owner Trust 1998-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] DOLLARS payable on each Payment
Date in the aggregate amount, if any, payable from the Note Payment Account in
respect of principal on the Class A-1 Notes pursuant to Section 2.8 of the
Inden-
A-1-1
<PAGE>
ture dated as of August 1, 1998 (as amended, supplemented or otherwise modified
and in effect from time to time, the "Indenture"), between the Issuer and Bank
of Tokyo-Mitsubishi Trust Company, a New York banking corporation, as Indenture
Trustee (in such capacity the "Indenture Trustee"); provided, however, that if
not paid prior to such date, the entire unpaid principal amount of this Class
A-1 Note shall be due and payable on the earlier of the August 1999 Payment Date
(the "Class A-1 Final Payment Date") and the Redemption Date, if any, pursuant
to Section 10.1 of the Indenture. Capitalized terms used but not defined herein
are defined in Article I of the Indenture, which also contains rules as to
construction that shall be applicable herein.
The Issuer shall pay interest on this Class A-1 Note at the rate per
annum shown above on each Payment Date until the principal of this Class A-1
Note is paid or made available for payment, on the principal amount of this
Class A-1 Note outstanding on the preceding Payment Date (after giving effect to
all payments of principal made on the preceding Payment Date), subject to
certain limitations contained in Section 3.1 of the Indenture. Interest on this
Class A-1 Note will accrue for each Payment Date from and including the previous
Payment Date (or, in the case of the initial Payment Date or if no interest has
been paid, from the Closing Date) to but excluding such Payment Date. Interest
will be computed on the basis of actual days elapsed and a 360-day year. Such
principal of and interest on this Class A-1 Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Class A-1 Note are payable in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts. All payments made by
the Issuer with respect to this Class A-1 Note shall be applied first to
interest due and payable on this Class A-1 Note as provided above and then to
the unpaid principal of this Class A-1 Note.
Reference is made to the further provisions of this Class A-1 Note
set forth on the reverse hereof, which shall have the same effect as though
fully set forth on the face of this Class A-1 Note.
A-1-2
<PAGE>
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Class
A-1 Note shall not be entitled to any benefit under the Indenture referred to on
the reverse hereof, or be valid or obligatory for any purpose.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK.]
A-1-3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer, as of the date set
forth below.
Date:
MMCA AUTO OWNER TRUST 1998-1,
By: WILMINGTON TRUST COMPANY
not in its individual capacity but solely
as Owner Trustee under the Trust
Agreement
By:
--------------------------------------
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date:
BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
not in its individual capacity but solely
as Indenture Trustee
By:
--------------------------------------
Authorized Officer
A-1-4
<PAGE>
This Class A-1 Note is one of a duly authorized issue of Notes of
the Issuer, designated as its [ ]% Class A-1 Asset Backed Notes, which,
together with the [ ]% Class A-2 Asset-Backed Notes, the [ ]% Class A-3
Asset-Backed Notes and the [ ]% Class B Asset-Backed Notes (collectively, the
"Notes"), are issued under the Indenture, to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Holders of the Notes. The Notes are subject to all terms of the Indenture.
The Class A-1 Notes are and will be equally and ratably secured by
the collateral pledged as security therefor as provided in the Indenture.
Principal of the Class A-1 Notes will be payable on each Payment
Date in an amount described on the face hereof. "Payment Date" means the
fifteenth day of each month or, if any such day is not a Business Day, the next
succeeding Business Day, commencing September 15, 1998.
As described above, the entire unpaid principal amount of this Class
A-1 Note shall be due and payable on the earlier of the Class A-1 Final Payment
Date and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which an Event of Default shall have
occurred and be continuing and the Indenture Trustee or the Holders of the Notes
representing not less than a majority of the outstanding principal amount of the
Notes of all classes have declared the Notes to be immediately due and payable
in the manner provided in Section 5.2 of the Indenture. All principal payments
on the Notes shall be made pro rata to the Holders entitled thereto.
Payments of interest on this Class A-1 Note due and payable on each
Payment Date, together with the installment of principal, if any, to the extent
not in full payment of this Class A-1 Note, shall be made by check mailed to the
Person whose name appears as the Registered Holder of this Class A-1 Note (or
one or more Predecessor Notes) on the Note Register as of the close of business
on each Record Date, except that with respect to Class A-1 Notes registered on
the Record Date in the name of the nominee of the Clearing Agency (initially,
such nominee to be Cede & Co.), payments will be made by wire transfer in
immediately available funds to the account designated by such nominee. Such
checks shall be mailed to the Person entitled thereto at the address of such
Person as it appears on the Note Register as of the applicable Record Date
without requiring that this Class A-1 Note
A-1-5
<PAGE>
be submitted for notation of payment. Any reduction in the principal amount of
this Class A-1 Note (or any one or more Predecessor Notes) effected by any
payments made on any Payment Date shall be binding upon all future Holders of
this Class A-1 Note and of any Class A-1 Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not noted
hereon. If funds are expected to be available, as provided in the Indenture, for
payment in full of the then remaining unpaid principal amount of this Class A-1
Note on a Payment Date, then the Indenture Trustee, in the name of and on behalf
of the Issuer, will notify the Person who was the Registered Holder hereof as of
the Record Date preceding such Payment Date by notice mailed or transmitted by
facsimile prior to such Payment Date, and the amount then due and payable shall
be payable only upon presentation and surrender of this Class A-1 Note at the
Indenture Trustee's Corporate Trust Office or at the office of the Indenture
Trustee's agent appointed for such purposes located in New York, New York.
The Issuer shall pay interest on overdue installments of interest at
the Class A-1 Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed, in whole or
in part, in the manner and to the extent described in the Indenture and the Sale
and Servicing Agreement.
As provided in the Indenture, and subject to certain limitations set
forth therein, the transfer of this Class A-1 Note may be registered on the Note
Register upon surrender of this Class A-1 Note for registration of transfer at
the office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, and thereupon one or more new Class A-1 Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Class A-1 Note, but the transferor
may be required to pay a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any such registration of transfer
or exchange.
Each Noteholder or Note Owner, by its acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note, covenants and agrees
that
A-1-6
<PAGE>
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee,
each in its individual capacity, (ii) any owner of a beneficial interest in the
Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Indenture Trustee or the Owner Trustee, each in its individual
capacity, any holder of a beneficial interest in the Issuer, the Owner Trustee
or the Indenture Trustee or of any successor or assign of the Indenture Trustee
or the Owner Trustee, each in its individual capacity, except as any such Person
may have expressly agreed and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Seller, or the Issuer, or join in any
institution against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Class A-1 Note is
issued with the intention that, for federal, state and local income, and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by its acceptance of a Note (and
each Note Owner by its acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this
Class A-1 Note, the Issuer, the Indenture Trustee and any agent of the Issuer or
the Indenture Trustee may treat the Person in whose name this Class A-1 Note (as
of the day of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not
this Class A-1 Note be overdue, and none of the Issuer, the Indenture Trustee
or any such agent shall be affected by notice to the contrary.
A-1-7
<PAGE>
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes, voting as a group. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Class A-1
Note (or any one or more Predecessor Notes) shall be conclusive and binding upon
such Holder and upon all future Holders of this Class A-1 Note and of any Class
A-1 Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof whether or not notation of such consent or waiver is made upon
this Class A-1 Note. The Indenture also permits the Indenture Trustee to amend
or waive certain terms and conditions set forth in the Indenture without the
consent of Holders of the Notes issued thereunder.
The term "Issuer", as used in this Note, includes any successor to
the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Class A-1 Note and the Indenture shall be governed by, and
construed in accordance with the laws of the State of New York, and the
obligations, rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws.
No reference herein to the Indenture, and no provision of this Note
or of the Indenture, shall alter or impair the obligation of the Issuer, which
is absolute and unconditional, to pay the principal of and interest on this Note
at the times, place and rate, and in the coin or currency herein prescribed.
A-1-8
<PAGE>
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of Bank of Tokyo-Mitsubishi Trust Company,
in its individual capacity, Wilmington Trust Company, in its individual
capacity, any owner of a beneficial interest in the Issuer, or any of their
respective partners, beneficiaries, agents, officers, directors, employees or
successors or assigns shall be personally liable for, nor shall recourse be had
to any of them for, the payment of principal or of interest on this Class A-1
Note or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in the Indenture. The Holder of this
Note, by his acceptance hereof, agrees that, except as expressly provided in the
Basic Documents, in the case of an Event of Default under the Indenture, the
Holder shall have no claim against any of the foregoing for any deficiency, loss
or claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the Issuer
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Class A-1 Note.
A-1-9
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
______________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
___________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _________________, attorney, to transfer said Note on the books
kept for registration thereof, with full power of substitution in the premises.
Dated: ________________ ____________________________*/
Signature Guaranteed
____________________________*/
- ----------
*/ NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar.
A-1-10
<PAGE>
EXHIBIT A-2
Form of Class A-2 Note
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
REGISTERED $[ ]
No. R-1 CUSIP NO. [ ]
MMCA AUTO OWNER TRUST 1998-1
[ ]% CLASS A-2 ASSET BACKED NOTES
MMCA Auto Owner Trust 1998-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] DOLLARS payable on each Payment
Date in the aggregate amount, if any, payable from the Note Payment Account in
respect of principal on the Class A-2 Notes pursuant to Section 2.8 of the
Indenture dated as
A-2-1
<PAGE>
of August 1, 1998 (as amended, supplemented or otherwise modified and in effect
from time to time, the "Indenture"), between the Issuer and Bank of
Tokyo-Mitsubishi Trust Company, a New York banking corporation, as Indenture
Trustee (in such capacity the "Indenture Trustee"); provided, however, that if
not paid prior to such date, the entire unpaid principal amount of this Class
A-2 Note shall be due and payable on the earlier of the August 2004 Payment Date
(the "Class A-2 Final Payment Date") and the Redemption Date, if any, pursuant
to Section 10.1 of the Indenture. Capitalized terms used but not defined herein
are defined in Article I of the Indenture, which also contains rules as to
construction that shall be applicable herein.
The Issuer shall pay interest on this Class A-2 Note at the rate per
annum shown above on each Payment Date until the principal of this Class A-2
Note is paid or made available for payment, on the principal amount of this
Class A-2 Note outstanding on the preceding Payment Date (after giving effect to
all payments of principal made on the preceding Payment Date), subject to
certain limitations contained in Section 3.1 of the Indenture. Interest on this
Class A-2 Note will accrue for each Payment Date from and including the 15th day
of the calendar month preceding each Payment Date (or, in the case of the
initial Payment Date or if no interest has been paid, from the Closing Date) to
but excluding the 15th day of the following calendar month. Interest will be
computed on the basis of a 360-day year of twelve 30-day months. Such principal
of and interest on this Class A-2 Note shall be paid in the manner specified on
the reverse hereof.
The principal of and interest on this Class A-2 Note are payable in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts. All payments made by
the Issuer with respect to this Class A-2 Note shall be applied first to
interest due and payable on this Class A-2 Note as provided above and then to
the unpaid principal of this Class A-2 Note.
Reference is made to the further provisions of this Class A-2 Note
set forth on the reverse hereof, which shall have the same effect as though
fully set forth on the face of this Class A-2 Note.
A-2-2
<PAGE>
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Class
A-2 Note shall not be entitled to any benefit under the Indenture referred to on
the reverse hereof, or be valid or obligatory for any purpose.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK.]
A-2-3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer, as of the date set
forth below.
Date:
MMCA AUTO OWNER TRUST 1998-1,
By: WILMINGTON TRUST COMPANY
not in its individual capacity but solely
as Owner Trustee under the Trust
Agreement
By:
----------------------------------
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date:
BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
not in its individual capacity but solely
as Indenture Trustee
By:
----------------------------------
Authorized Officer
A-2-4
<PAGE>
This Class A-2 Note is one of a duly authorized issue of Notes of
the Issuer, designated as its [ ]% Class A-2 Asset Backed Notes, which,
together with the [ ]% Class A-1 Asset-Backed Notes, the [ ]% Class A-3
Asset-Backed Notes and the [ ]% Class B Asset-Backed Notes (collectively, the
"Notes"), are issued under the Indenture, to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Holders of the Notes. The Notes are subject to all terms of the Indenture.
The Class A-2 Notes are and will be equally and ratably secured by
the collateral pledged as security therefor as provided in the Indenture.
Principal of the Class A-2 Notes will be payable on each Payment
Date in an amount described on the face hereof. "Payment Date" means the
fifteenth day of each month or, if any such day is not a Business Day, the next
succeeding Business Day, commencing September 15, 1998.
As described above, the entire unpaid principal amount of this Class
A-2 Note shall be due and payable on the earlier of the Class A-2 Final Payment
Date and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which an Event of Default shall have
occurred and be continuing and the Indenture Trustee or the Holders of the Notes
representing not less than a majority of the outstanding principal amount of the
Notes of all classes have declared the Notes to be immediately due and payable
in the manner provided in Section 5.2 of the Indenture. All principal payments
on the Notes shall be made pro rata to the Holders entitled thereto.
Payments of interest on this Class A-2 Note due and payable on each
Payment Date, together with the installment of principal, if any, to the extent
not in full payment of this Class A-2 Note, shall be made by check mailed to the
Person whose name appears as the Registered Holder of this Class A-2 Note (or
one or more Predecessor Notes) on the Note Register as of the close of business
on each Record Date, except that with respect to Class A-2 Notes registered on
the Record Date in the name of the nominee of the Clearing Agency (initially,
such nominee to be Cede & Co.), payments will be made by wire transfer in
immediately available funds to the account designated by such nominee. Such
checks shall be mailed to the Person entitled thereto at the address of such
Person as it appears on the Note Register as of the applicable Record Date
without requiring that this Class A-2 Note
A-2-5
<PAGE>
be submitted for notation of payment. Any reduction in the principal amount of
this Class A-2 Note (or any one or more Predecessor Notes) effected by any
payments made on any Payment Date shall be binding upon all future Holders of
this Class A-2 Note and of any Class A-2 Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not noted
hereon. If funds are expected to be available, as provided in the Indenture, for
payment in full of the then remaining unpaid principal amount of this Class A-2
Note on a Payment Date, then the Indenture Trustee, in the name of and on behalf
of the Issuer, will notify the Person who was the Registered Holder hereof as of
the Record Date preceding such Payment Date by notice mailed or transmitted by
facsimile prior to such Payment Date, and the amount then due and payable shall
be payable only upon presentation and surrender of this Class A-2 Note at the
Indenture Trustee's Corporate Trust Office or at the office of the Indenture
Trustee's agent appointed for such purposes located in New York, New York.
The Issuer shall pay interest on overdue installments of interest at
the Class A-2 Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed, in whole or
in part, in the manner and to the extent described in the Indenture and the Sale
and Servicing Agreement.
As provided in the Indenture, and subject to certain limitations set
forth therein, the transfer of this Class A-2 Note may be registered on the Note
Register upon surrender of this Class A-2 Note for registration of transfer at
the office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, and thereupon one or more new Class A-2 Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Class A-2 Note, but the transferor
may be required to pay a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any such registration of transfer
or exchange.
Each Noteholder or Note Owner, by its acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note, covenants and agrees
that
A-2-6
<PAGE>
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee,
each in its individual capacity, (ii) any owner of a beneficial interest in the
Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Indenture Trustee or the Owner Trustee, each in its individual
capacity, any holder of a beneficial interest in the Issuer, the Owner Trustee
or the Indenture Trustee or of any successor or assign of the Indenture Trustee
or the Owner Trustee, each in its individual capacity, except as any such Person
may have expressly agreed and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Seller, or the Issuer, or join in any
institution against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Class A-2 Note is
issued with the intention that, for federal, state and local income, and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by its acceptance of a Note (and
each Note Owner by its acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this
Class A-2 Note, the Issuer, the Indenture Trustee and any agent of the Issuer or
the Indenture Trustee may treat the Person in whose name this Class A-2 Note (as
of the day of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not
this Class A-2 Note be overdue, and none of the Issuer, the Indenture Trustee
or any such agent shall be affected by notice to the contrary.
A-2-7
<PAGE>
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes, voting as a group. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Class A-2
Note (or any one or more Predecessor Notes) shall be conclusive and binding upon
such Holder and upon all future Holders of this Class A-2 Note and of any Class
A-2 Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof whether or not notation of such consent or waiver is made upon
this Class A-2 Note. The Indenture also permits the Indenture Trustee to amend
or waive certain terms and conditions set forth in the Indenture without the
consent of Holders of the Notes issued thereunder.
The term "Issuer", as used in this Note, includes any successor to
the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Class A-2 Note and the Indenture shall be governed by, and
construed in accordance with the laws of the State of New York, and the
obligations, rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws.
No reference herein to the Indenture, and no provision of this Note
or of the Indenture, shall alter or impair the obligation of the Issuer, which
is absolute and unconditional, to pay the principal of and interest on this Note
at the times, place and rate, and in the coin or currency herein prescribed.
A-2-8
<PAGE>
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of Bank of Tokyo-Mitsubishi Trust Company,
in its individual capacity, Wilmington Trust Company, in its individual
capacity, any owner of a beneficial interest in the Issuer, or any of their
respective partners, beneficiaries, agents, officers, directors, employees or
successors or assigns shall be personally liable for, nor shall recourse be had
to any of them for, the payment of principal or of interest on this Class A-2
Note or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in the Indenture. The Holder of this
Note, by his acceptance hereof, agrees that, except as expressly provided in the
Basic Documents, in the case of an Event of Default under the Indenture, the
Holder shall have no claim against any of the foregoing for any deficiency, loss
or claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the Issuer
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Class A-2 Note.
A-2-9
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
______________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
___________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _________________, attorney, to transfer said Note on the books
kept for registration thereof, with full power of substitution in the premises.
Dated: ________________ ____________________________*/
Signature Guaranteed
____________________________*/
- ----------
*/ NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar.
A-2-10
<PAGE>
EXHIBIT A-3
Form of Class A-3 Note
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
REGISTERED $[ ]
No. R-1 CUSIP NO. [ ]
MMCA AUTO OWNER TRUST 1998-1
[ ]% CLASS A-3 ASSET BACKED NOTES
MMCA Auto Owner Trust 1998-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] DOLLARS payable on each
Payment Date in the aggregate amount, if any, payable from the Note Payment
Account in respect of principal on the Class A-3 Notes pursuant to Section 2.8
of the Indenture dated as
A-3-1
<PAGE>
of August 1, 1998 (as amended, supplemented or otherwise modified and in effect
from time to time, the "Indenture"), between the Issuer and Bank of
Tokyo-Mitsubishi Trust Company, a New York banking corporation, as Indenture
Trustee (in such capacity the "Indenture Trustee"); provided, however, that if
not paid prior to such date, the entire unpaid principal amount of this Class
A-3 Note shall be due and payable on the earlier of the August 2004 Payment Date
(the "Class A-3 Final Payment Date") and the Redemption Date, if any, pursuant
to Section 10.1 of the Indenture. Capitalized terms used but not defined herein
are defined in Article I of the Indenture, which also contains rules as to
construction that shall be applicable herein.
The Issuer shall pay interest on this Class A-3 Note at the rate per
annum shown above on each Payment Date until the principal of this Class A-3
Note is paid or made available for payment, on the principal amount of this
Class A-3 Note outstanding on the preceding Payment Date (after giving effect to
all payments of principal made on the preceding Payment Date), subject to
certain limitations contained in Section 3.1 of the Indenture. Interest on this
Class A-3 Note will accrue for each Payment Date from and including the 15th day
of the calendar month preceding each Payment Date (or, in the case of the
initial Payment Date or if no interest has been paid, from the Closing Date) to
but excluding the 15th day of the following calendar month. Interest will be
computed on the basis of a 360-day year of twelve 30-day months. Such principal
of and interest on this Class A-3 Note shall be paid in the manner specified on
the reverse hereof.
The principal of and interest on this Class A-3 Note are payable in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts. All payments made by
the Issuer with respect to this Class A-3 Note shall be applied first to
interest due and payable on this Class A-3 Note as provided above and then to
the unpaid principal of this Class A-3 Note.
Reference is made to the further provisions of this Class A-3 Note
set forth on the reverse hereof, which shall have the same effect as though
fully set forth on the face of this Class A-3 Note.
A-3-2
<PAGE>
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Class
A-3 Note shall not be entitled to any benefit under the Indenture referred to on
the reverse hereof, or be valid or obligatory for any purpose.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK.]
A-3-3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer, as of the date set
forth below.
Date:
MMCA AUTO OWNER TRUST 1998-1,
By: WILMINGTON TRUST COMPANY
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By:
----------------------------------------------
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date:
BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
not in its individual capacity but solely as
Indenture Trustee
By:
----------------------------------------------
Authorized Officer
A-3-4
<PAGE>
This Class A-3 Note is one of a duly authorized issue of Notes of
the Issuer, designated as its [ ]% Class A-3 Asset Backed Notes, which,
together with the [ ]% Class A-1 Asset-Backed Notes, the [ ]% Class
A-3 Asset-Backed Notes and the [ ]% Class B Asset-Backed Notes
(collectively, the "Notes"), are issued under the Indenture, to which Indenture
and all indentures supplemental thereto reference is hereby made for a statement
of the respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture.
The Class A-3 Notes are and will be equally and ratably secured by
the collateral pledged as security therefor as provided in the Indenture.
Principal of the Class A-3 Notes will be payable on each Payment
Date in an amount described on the face hereof. "Payment Date" means the
fifteenth day of each month or, if any such day is not a Business Day, the next
succeeding Business Day, commencing September 15, 1998.
As described above, the entire unpaid principal amount of this Class
A-3 Note shall be due and payable on the earlier of the Class A-3 Final Payment
Date and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which an Event of Default shall have
occurred and be continuing and the Indenture Trustee or the Holders of the Notes
representing not less than a majority of the outstanding principal amount of the
Notes of all classes have declared the Notes to be immediately due and payable
in the manner provided in Section 5.2 of the Indenture. All principal payments
on the Notes shall be made pro rata to the Holders entitled thereto.
Payments of interest on this Class A-3 Note due and payable on each
Payment Date, together with the installment of principal, if any, to the extent
not in full payment of this Class A-3 Note, shall be made by check mailed to the
Person whose name appears as the Registered Holder of this Class A-3 Note (or
one or more Predecessor Notes) on the Note Register as of the close of business
on each Record Date, except that with respect to Class A-3 Notes registered on
the Record Date in the name of the nominee of the Clearing Agency (initially,
such nominee to be Cede & Co.), payments will be made by wire transfer in
immediately available funds to the account designated by such nominee. Such
checks shall be mailed to the Person entitled thereto at the address of such
Person as it appears on the Note Register as of the applicable Record Date
without requiring that this Class A-3 Note
A-3-5
<PAGE>
be submitted for notation of payment. Any reduction in the principal amount of
this Class A-3 Note (or any one or more Predecessor Notes) effected by any
payments made on any Payment Date shall be binding upon all future Holders of
this Class A-3 Note and of any Class A-3 Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not noted
hereon. If funds are expected to be available, as provided in the Indenture, for
payment in full of the then remaining unpaid principal amount of this Class A-3
Note on a Payment Date, then the Indenture Trustee, in the name of and on behalf
of the Issuer, will notify the Person who was the Registered Holder hereof as of
the Record Date preceding such Payment Date by notice mailed or transmitted by
facsimile prior to such Payment Date, and the amount then due and payable shall
be payable only upon presentation and surrender of this Class A-3 Note at the
Indenture Trustee's Corporate Trust Office or at the office of the Indenture
Trustee's agent appointed for such purposes located in New York, New York.
The Issuer shall pay interest on overdue installments of interest at
the Class A-3 Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed, in whole or
in part, in the manner and to the extent described in the Indenture and the Sale
and Servicing Agreement.
As provided in the Indenture, and subject to certain limitations set
forth therein, the transfer of this Class A-3 Note may be registered on the Note
Register upon surrender of this Class A-3 Note for registration of transfer at
the office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, and thereupon one or more new Class A-3 Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Class A-3 Note, but the transferor
may be required to pay a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any such registration of transfer
or exchange.
Each Noteholder or Note Owner, by its acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note, covenants and agrees
that
A-3-6
<PAGE>
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee,
each in its individual capacity, (ii) any owner of a beneficial interest in the
Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Indenture Trustee or the Owner Trustee, each in its individual
capacity, any holder of a beneficial interest in the Issuer, the Owner Trustee
or the Indenture Trustee or of any successor or assign of the Indenture Trustee
or the Owner Trustee, each in its individual capacity, except as any such Person
may have expressly agreed and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Seller, or the Issuer, or join in any
institution against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Class A-3 Note is
issued with the intention that, for federal, state and local income, and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by its acceptance of a Note (and
each Note Owner by its acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this
Class A-3 Note, the Issuer, the Indenture Trustee and any agent of the Issuer or
the Indenture Trustee may treat the Person in whose name this Class A-3 Note (as
of the day of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not
this Class A-3 Note be overdue, and none of the Issuer, the Indenture Trustee or
any such agent shall be affected by notice to the contrary.
A-3-7
<PAGE>
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes, voting as a group. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Class A-3
Note (or any one or more Predecessor Notes) shall be conclusive and binding upon
such Holder and upon all future Holders of this Class A-3 Note and of any Class
A-3 Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof whether or not notation of such consent or waiver is made upon
this Class A-3 Note. The Indenture also permits the Indenture Trustee to amend
or waive certain terms and conditions set forth in the Indenture without the
consent of Holders of the Notes issued thereunder.
The term "Issuer", as used in this Note, includes any successor to
the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Class A-3 Note and the Indenture shall be governed by, and
construed in accordance with the laws of the State of New York, and the
obligations, rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws.
No reference herein to the Indenture, and no provision of this Note
or of the Indenture, shall alter or impair the obligation of the Issuer, which
is absolute and unconditional, to pay the principal of and interest on this Note
at the times, place and rate, and in the coin or currency herein prescribed.
A-3-8
<PAGE>
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of Bank of Tokyo-Mitsubishi Trust Company,
in its individual capacity, Wilmington Trust Company, in its individual
capacity, any owner of a beneficial interest in the Issuer, or any of their
respective partners, beneficiaries, agents, officers, directors, employees or
successors or assigns shall be personally liable for, nor shall recourse be had
to any of them for, the payment of principal or of interest on this Class A-3
Note or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in the Indenture. The Holder of this
Note, by his acceptance hereof, agrees that, except as expressly provided in the
Basic Documents, in the case of an Event of Default under the Indenture, the
Holder shall have no claim against any of the foregoing for any deficiency, loss
or claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the Issuer
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Class A-3 Note.
A-3-9
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- -----------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
- --------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _________________, attorney, to transfer said Note on the books
kept for registration thereof, with full power of substitution in the premises.
Dated: */
------------------------ ------------------------------------------
Signature Guaranteed
*/
------------------------------------------
- ----------
*/ NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar.
A-3-10
<PAGE>
EXHIBIT A-4
Form of Class B Note
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
REGISTERED $[ ]
No. R-1 CUSIP NO. [ ]
MMCA AUTO OWNER TRUST 1998-1
[ ]% CLASS B ASSET BACKED NOTES
MMCA Auto Owner Trust 1998-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] DOLLARS payable on each
Payment Date in the aggregate amount, if any, payable from the Note Payment
Account in respect of principal on the Class B Notes pursuant to Section 2.8 of
the Indenture dated as of
A-4-1
<PAGE>
August 1, 1998 (as amended, supplemented or otherwise modified and in effect
from time to time, the "Indenture"), between the Issuer and Bank of
Tokyo-Mitsubishi Trust Company, a New York banking corporation, as Indenture
Trustee (in such capacity the "Indenture Trustee"); provided, however, that if
not paid prior to such date, the entire unpaid principal amount of this Class B
Note shall be due and payable on the earlier of the August 2004 Payment Date
(the "Class B Final Payment Date") and the Redemption Date, if any, pursuant to
Section 10.1 of the Indenture. Capitalized terms used but not defined herein are
defined in Article I of the Indenture, which also contains rules as to
construction that shall be applicable herein.
The Issuer shall pay interest on this Class B Note at the rate per
annum shown above on each Payment Date until the principal of this Class B Note
is paid or made available for payment, on the principal amount of this Class B
Note outstanding on the preceding Payment Date (after giving effect to all
payments of principal made on the preceding Payment Date), subject to certain
limitations contained in Section 3.1 of the Indenture. Interest on this Class B
Note will accrue for each Payment Date from and including the 15th day of the
calendar month preceding each Payment Date (or, in the case of the initial
Payment Date or if no interest has been paid, from the Closing Date) to but
excluding the 15th day of the following calendar month. Interest will be
computed on the basis of a 360-day year of twelve 30-day months. Such principal
of and interest on this Class B Note shall be paid in the manner specified on
the reverse hereof.
The principal of and interest on this Class B Note are payable in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts. All payments made by
the Issuer with respect to this Class B Note shall be applied first to interest
due and payable on this Class B Note as provided above and then to the unpaid
principal of this Class B Note.
Reference is made to the further provisions of this Class B Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Class B Note.
A-4-2
<PAGE>
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Class B
Note shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK.]
A-4-3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer, as of the date set
forth below.
Date:
MMCA AUTO OWNER TRUST 1998-1,
By: WILMINGTON TRUST COMPANY
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By:
----------------------------------------------
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date:
BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
not in its individual capacity but solely as
Indenture Trustee
By:
----------------------------------------------
Authorized Officer
A-4-4
<PAGE>
This Class B Note is one of a duly authorized issue of Notes of the
Issuer, designated as its [ ]% Class B Asset Backed Notes, which, together
with the [ ]% Class A-1 Asset-Backed Notes, the [ ]% Class A-3
Asset-Backed Notes and the [ ]% Class B Asset-Backed Notes (collectively,
the "Notes"), are issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture.
The Class B Notes are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal of the Class B Notes will be payable on each Payment Date
in an amount described on the face hereof. "Payment Date" means the fifteenth
day of each month or, if any such day is not a Business Day, the next succeeding
Business Day, commencing September 15, 1998.
As described above, the entire unpaid principal amount of this Class
B Note shall be due and payable on the earlier of the Class B Final Payment Date
and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which an Event of Default shall have
occurred and be continuing and the Indenture Trustee or the Holders of the Notes
representing not less than a majority of the outstanding principal amount of the
Notes of all classes have declared the Notes to be immediately due and payable
in the manner provided in Section 5.2 of the Indenture. All principal payments
on the Notes shall be made pro rata to the Holders entitled thereto.
Payments of interest on this Class B Note due and payable on each
Payment Date, together with the installment of principal, if any, to the extent
not in full payment of this Class B Note, shall be made by check mailed to the
Person whose name appears as the Registered Holder of this Class B Note (or one
or more Predecessor Notes) on the Note Register as of the close of business on
each Record Date, except that with respect to Class B Notes registered on the
Record Date in the name of the nominee of the Clearing Agency (initially, such
nominee to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Class B Note be submitted
A-4-5
<PAGE>
for notation of payment. Any reduction in the principal amount of this Class B
Note (or any one or more Predecessor Notes) effected by any payments made on any
Payment Date shall be binding upon all future Holders of this Class B Note and
of any Class B Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Class B Note on a Payment
Date, then the Indenture Trustee, in the name of and on behalf of the Issuer,
will notify the Person who was the Registered Holder hereof as of the Record
Date preceding such Payment Date by notice mailed or transmitted by facsimile
prior to such Payment Date, and the amount then due and payable shall be payable
only upon presentation and surrender of this Class B Note at the Indenture
Trustee's Corporate Trust Office or at the office of the Indenture Trustee's
agent appointed for such purposes located in New York, New York.
The Issuer shall pay interest on overdue installments of interest at
the Class B Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed, in whole or
in part, in the manner and to the extent described in the Indenture and the Sale
and Servicing Agreement.
As provided in the Indenture, and subject to certain limitations set
forth therein, the transfer of this Class B Note may be registered on the Note
Register upon surrender of this Class B Note for registration of transfer at the
office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, and thereupon one or more new Class B Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Class B Note, but the transferor
may be required to pay a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any such registration of transfer
or exchange.
Each Noteholder or Note Owner, by its acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note, covenants and agrees
that
A-4-6
<PAGE>
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee,
each in its individual capacity, (ii) any owner of a beneficial interest in the
Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Indenture Trustee or the Owner Trustee, each in its individual
capacity, any holder of a beneficial interest in the Issuer, the Owner Trustee
or the Indenture Trustee or of any successor or assign of the Indenture Trustee
or the Owner Trustee, each in its individual capacity, except as any such Person
may have expressly agreed and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Seller, or the Issuer, or join in any
institution against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Class B Note is
issued with the intention that, for federal, state and local income, and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by its acceptance of a Note (and
each Note Owner by its acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this
Class B Note, the Issuer, the Indenture Trustee and any agent of the Issuer or
the Indenture Trustee may treat the Person in whose name this Class B Note (as
of the day of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not
this Class B Note be overdue, and none of the Issuer, the Indenture Trustee or
any such agent shall be affected by notice to the contrary.
A-4-7
<PAGE>
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes, voting as a group. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Class B
Note (or any one or more Predecessor Notes) shall be conclusive and binding upon
such Holder and upon all future Holders of this Class B Note and of any Class B
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Class B Note. The Indenture also permits the Indenture Trustee to amend or waive
certain terms and conditions set forth in the Indenture without the consent of
Holders of the Notes issued thereunder.
The term "Issuer", as used in this Note, includes any successor to
the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Class B Note and the Indenture shall be governed by, and
construed in accordance with the laws of the State of New York, and the
obligations, rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws.
No reference herein to the Indenture, and no provision of this Note
or of the Indenture, shall alter or impair the obligation of the Issuer, which
is absolute and unconditional, to pay the principal of and interest on this Note
at the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of Bank of Tokyo-Mitsubishi Trust Com-
A-4-8
<PAGE>
pany, in its individual capacity, Wilmington Trust Company, in its individual
capacity, any owner of a beneficial interest in the Issuer, or any of their
respective partners, beneficiaries, agents, officers, directors, employees or
successors or assigns shall be personally liable for, nor shall recourse be had
to any of them for, the payment of principal or of interest on this Class B Note
or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The Holder of this Note, by his
acceptance hereof, agrees that, except as expressly provided in the Basic
Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be taken
to prevent recourse to, and enforcement against, the assets of the Issuer for
any and all liabilities, obligations and undertakings contained in the Indenture
or in this Class B Note.
A-4-9
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- -----------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
- --------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _________________, attorney, to transfer said Note on the books
kept for registration thereof, with full power of substitution in the premises.
Dated: */
------------------------ ------------------------------------------
Signature Guaranteed
*/
------------------------------------------
- ----------
*/ NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar.
A-4-10
<PAGE>
EXHIBIT B
Form of Opinion of Counsel
Pursuant to Section 3.6(a)
B-1
<PAGE>
Exhibit 4.4
This ADMINISTRATION AGREEMENT, dated as of August 1, 1998, is by and
among MMCA AUTO OWNER TRUST 1998-1, a Delaware business trust (the "Issuer"),
MITSUBISHI MOTORS CREDIT OF AMERICA, INC., a Delaware corporation, as
administrator (the "Administrator"), and BANK OF TOKYO - MITSUBISHI TRUST
COMPANY, a New York banking corporation, not in its individual capacity but
solely as Indenture Trustee (the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS, the Issuer is issuing [ ]% Class A-1 Asset Backed Notes,
[ ]% Class A-2 Asset Backed Notes, [ ]% Class A-3 Asset Backed Notes, [ ]%
Class A-4 Backed Notes and [ ]% Class B Asset Backed Notes (collectively,
the "Notes") pursuant to the Indenture, dated as of [ ], 1998 (as
amended, supplemented or otherwise modified and in effect from time to time, the
"Indenture"), between the Issuer and the Indenture Trustee (capitalized terms
used and not otherwise defined herein shall have the meanings assigned to such
terms in, or incorporated by reference into, the Indenture);
WHEREAS, the Issuer has entered into certain agreements in connection
with the issuance of the Notes and of certain beneficial interests in the
Issuer, including (i) a Sale and Servicing Agreement, dated as of August 1,
1998 (as amended, supplemented or otherwise modified and in effect from time to
time, the "Sale and Servicing Agreement"), among the Issuer, Mitsubishi Motors
Credit of America Inc., as servicer, and MMCA Auto Receivables, Inc., as seller
(the "Seller"), (ii) a Letter of Representations dated August [ ], 1998 (as
amended, supplemented or otherwise modified and in effect from time to time, the
"Note Depository Agreement"), among the Issuer, the Indenture Trustee, the
Administrator and The Depository Trust Company ("DTC") relating to the Notes,
and (iii) the Indenture (the Sale and Servicing Agreement, the Note Depository
Agreement and the Indenture being referred to hereinafter collectively as the
"Related Agreements");
WHEREAS, pursuant to the Related Agreements, the Issuer and the Owner
Trustee are required to perform certain duties in connection with (a) the Notes
and the collateral therefor pledged pursuant to the Indenture (the "Collateral")
and (b) the beneficial interests in the Issuer (the registered holders of such
interests being referred to herein as the "Owners");
<PAGE>
WHEREAS, the Issuer and the Owner Trustee desire to have the
Administrator perform certain of the duties of the Issuer and the Owner Trustee
referred to in the preceding clause and to provide such additional services
consistent with the terms of this Agreement and the Related Agreements as the
Issuer and the Owner Trustee may from time to time request; and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and the
Owner Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Duties of the Administrator. (a) Duties with Respect to the Related
Agreements. (i) The Administrator agrees to perform all its duties as
Administrator under the Note Depository Agreement. In addition, the
Administrator shall consult with the Owner Trustee regarding the duties of the
Issuer or the Owner Trustee under the Related Agreements. The Administrator
shall monitor the performance of the Issuer and shall advise the Owner Trustee
when action is necessary to comply with the Issuer's or the Owner Trustee's
duties under the Related Agreements. The Administrator shall prepare for
execution by the Issuer or the Owner Trustee, or shall cause the preparation by
other appropriate persons of, all such documents, reports, filings, instruments,
certificates and opinions that it shall be the duty of the Issuer or the Owner
Trustee to prepare, file or deliver pursuant to the Related Agreements. In
furtherance of the foregoing, the Administrator shall take all appropriate
action that is the duty of the Issuer or the Owner Trustee to take pursuant to
the Indenture including, without limitation, such of the foregoing as are
required with respect to the following matters under the Indenture (references
are to sections of the Indenture):
(A) the duty to cause the Note Register to be kept and to give the
Indenture Trustee notice of any appointment of a new Note Registrar and the
location, or change in location, of the Note Register (Section 2.5);
(B) the notification of Noteholders of the final principal payment on
their Notes (Section 2.8(e));
(C) reserved;
2
<PAGE>
(D) the preparation of or obtaining of the documents and instruments
required for authentication of the Notes and delivery of the same to the
Indenture Trustee (Section 2.2);
(E) the preparation, obtaining or filing of the instruments, opinions
and certificates and other documents required for the release of collateral
(Section 2.10);
(F) the maintenance of an office in the Borough of Manhattan, City of
New York, for registration of transfer or exchange of Notes (Section 3.2);
(G) the duty to cause newly appointed Paying Agents, if any, to
deliver to the Indenture Trustee the instrument specified in the Indenture
regarding funds held in trust (Section 3.3);
(H) the direction to the Indenture Trustee to deposit monies with
Paying Agents, if any, other than the Indenture Trustee (Section 3.3);
(I) the obtaining and preservation of the Issuer's qualification to
do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture, the
Notes, the Collateral and each other instrument and agreement included in
the Trust Estate (Section 3.4);
(J) the preparation of all supplements and amendments to the
Indenture and all financing statements, continuation statements,
instruments of further assurance and other instruments and the taking of
such other action as is necessary or advisable to protect the Trust Estate
(Section 3.5);
(K) the delivery of the Opinion of Counsel on the Closing Date and
the annual delivery of Opinions of Counsel as to the Trust Estate, and the
annual delivery of the Officer's Certificate and certain other statements
as to compliance with the Indenture (Sections 3.6 and 3.9);
(L) the identification to the Indenture Trustee in an Officer's
Certificate of a Person with whom the Issuer has contracted to perform its
duties under the Indenture (Section 3.7(b));
3
<PAGE>
(M) the notification of the Indenture Trustee and the Rating Agencies
of a Servicer Default under the Sale and Servicing Agreement and, if such
Servicer Default arises from the failure of the Servicer to perform any of
its duties under the Sale and Servicing Agreement with respect to the
Receivables, the taking of all reasonable steps available to remedy such
failure (Section 3.7(d));
(N) the duty to cause the Servicer to comply with Sections 3.9, 3.10,
3.11, 3.12, 3.13, 3.14, and 4.9 and Article VII of the Sale and Servicing
Agreement (Section 3.14);
(O) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its properties or assets
(Section 3.10(b));
(P) the delivery of written notice to the Indenture Trustee and the
Rating Agencies of each Event of Default under the Indenture and each
default by the Issuer, the Servicer or the Seller under the Sale and
Servicing Agreement and by the Seller or the Company under the Purchase
Agreement (Section 3.19);
(Q) the monitoring of the Issuer's obligations as to the satisfaction
and discharge of the Indenture and the preparation of an Officer's
Certificate and the obtaining of the Opinion of Counsel and the Independent
Certificate relating thereto (Section 4.1);
(R) the compliance with any written directive of the Indenture
Trustee with respect to the sale of the Trust Estate at one or more public
or private sales called and conducted in any manner permitted by law if an
Event of Default shall have occurred and be continuing (Section 5.4);
(S) the preparation and delivery of notice to Noteholders of the
removal of the Indenture Trustee and the appointment of a successor
Indenture Trustee (Section 6.8);
(T) the preparation of any written instruments required to confirm
more fully the authority of any co-trustee or separate trustee and any
written instruments necessary in connection with the resignation or removal
of any co-trustee or separate trustee (Sections 6.8 and 6.10);
4
<PAGE>
(U) the furnishing of the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture Trustee is
not the Note Registrar (Section 7.1);
(V) the preparation and, after execution by the Issuer, the filing
with the Securities and Exchange Commission, (the "Commission") any
applicable state agencies and the Indenture Trustee of documents required
to be filed on a periodic basis with, and summaries thereof as may be
required by rules and regulations prescribed by, the Commission and any
applicable state agencies and the transmission of such summaries, as
necessary, to the Noteholders (Section 7.3);
(W) the opening of one or more accounts in the Issuer's name, the
preparation and delivery of Issuer Orders, Officer's Certificates and
Opinions of Counsel and all other actions necessary with respect to
investment and reinvestment of funds in the Trust Accounts, the Reserve
Account, the Supplemental Reserve Account and the Yield Supplement Account
(Sections 8.2 and 8.3);
(X) the preparation of an Issuer Request and Officer's Certificate
and the obtaining of an Opinion of Counsel and Independent Certificates, if
necessary, for the release of the Trust Estate (Sections 8.4 and 8.5);
(Y) the preparation of Issuer Orders and the obtaining of Opinions of
Counsel with respect to the execution of supplemental indentures and the
mailing to the Noteholders of notices with respect to such supplemental
indentures (Sections 9.1, 9.2 and 9.3);
(Z) the execution and delivery of new Notes conforming to any
supplemental indenture (Section 9.6);
(A) the duty to notify Noteholders of redemption of the Notes or to
cause the Indenture Trustee to provide such notification (Section 10.2);
(B) the preparation and delivery of all Officer's Certificates,
Opinions of Counsel and Independent Certificates with respect to any
requests by the Issuer to the Indenture Trustee to take any action under
the Indenture (Section 11.1(a));
5
<PAGE>
(C) the preparation and delivery of Officer's Certificates and the
obtaining of Independent Certificates, if necessary, for the release of
property from the lien of the Indenture (Section 11.1(b));
(D) the notification of the Rating Agencies, upon the failure of the
Indenture Trustee to give such notification, of the information required
pursuant to Section 11.4 of the Indenture (Section 11.4);
(E) the preparation and delivery to Noteholders and the Indenture
Trustee of any agreements with respect to alternate payment and notice
provisions (Section 11.6);
(F) the recording of the Indenture, if applicable (Section 11.15);
and
(G) the preparation of Definitive Notes in accordance with the
instructions of the Clearing Agency (Section 2.13).
(ii) The Administrator will:
(A) pay the Indenture Trustee from time to time reasonable
compensation for all services rendered by the Indenture Trustee under the
Indenture (which compensation shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust);
(B) except as otherwise expressly provided in the Indenture,
reimburse the Indenture Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Indenture
Trustee in accordance with any provision of the Indenture (including the
reasonable compensation, expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith;
(C) indemnify the Indenture Trustee and its agents for, and hold them
harmless against, any losses, liability or expense incurred without
negligence or bad faith on their part, arising out of or in connection with
the acceptance or administration of the transactions contemplated by the
Indenture, including the reasonable costs and expenses of defending
themselves against any claim or liability in connection with the exercise
or performance of any of their powers or duties under the Indenture; and
6
<PAGE>
(D) indemnify the Owner Trustee (in its individual and trust
capacities) and its agents for, and hold them harmless against, any losses,
liability or expense incurred without negligence or bad faith on their
part, arising out of or in connection with the acceptance or administration
of the transactions contemplated by the Trust Agreement, including the
reasonable costs and expenses of defending themselves against any claim or
liability in connection with the exercise or performance of any of their
powers or duties under the Trust Agreement.
(b) Additional Duties. (i) In addition to the duties of the Administrator
set forth above, the Administrator shall perform such calculations and shall
prepare or shall cause the preparation by other appropriate persons of, and
shall execute on behalf of the Issuer or the Owner Trustee, all such documents,
reports, filings, instruments, certificates and opinions that it shall be the
duty of the Issuer or the Owner Trustee to prepare, file or deliver pursuant to
the Related Agreements or Section 5.5(a), (b), (c) or (d) of the Trust
Agreement, and at the request of the Owner Trustee shall take all appropriate
action that it is the duty of the Issuer or the Owner Trustee to take pursuant
to the Related Agreements. In furtherance thereof, the Owner Trustee shall, on
behalf of itself and of the Issuer, execute and deliver to the Administrator and
to each successor Administrator appointed pursuant to the terms hereof, one or
more powers of attorney substantially in the form of Exhibit A hereto,
appointing the Administrator the attorney-in-fact of the Owner Trustee and the
Issuer for the purpose of executing on behalf of the Owner Trustee and the
Issuer all such documents, reports, filings, instruments, certificates and
opinions. Subject to Section 5 of this Agreement, and in accordance with the
directions of the Owner Trustee, the Administrator shall administer, perform or
supervise the performance of such other activities in connection with the
Collateral (including the Related Agreements) as are not covered by any of the
foregoing provisions and as are expressly requested by the Owner Trustee and are
reasonably within the capability of the Administrator. Such responsibilities
shall include the obtainment and maintenance of any licenses required to be
obtained or maintained by the Trust under the Pennsylvania Motor Vehicle Sales
Finance Act. In addition, the Administrator shall promptly notify the Indenture
Trustee and the Owner Trustee in writing of any amendment to the Pennsylvania
Motor Vehicle Sales Finance Act that would affect the duties or obligations of
the Indenture Trustee or the Owner Trustee under any Basic Document and shall
assist the Indenture Trustee or the Owner Trustee in its obtainment and
maintenance of any licenses required to be obtained or maintained by the
Indenture Trustee or the Owner Trustee thereunder. In connection
7
<PAGE>
therewith, the Administrator shall cause the Seller to pay all fees and expenses
under such Act.
(ii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for promptly
notifying the Owner Trustee in the event that any withholding tax is imposed on
the Trust's payments (or allocations of income) to an Owner as contemplated in
Section 5.2(d) of the Trust Agreement. Any such notice shall specify the amount
of any withholding tax required to be withheld by the Owner Trustee pursuant to
such provision.
(iii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
performance of the duties of the Trust or the Owner Trustee set forth in Section
3.4(b) and (c), Section 5.5(a), (b), (c) and (d), the penultimate sentence of
Section 5.5 and Section 5.6(a) of the Trust Agreement with respect to, among
other things, accounting and reports to Owners.
(iv) The Administrator will provide prior to January 15, 1998, a
certificate of an Authorized Officer in form and substance satisfactory to the
Owner Trustee as to whether any tax withholding is then required and, if
required, the procedures to be followed with respect thereto to comply with the
requirements of the Code. The Administrator shall be required to update the
letter in each instance that any additional tax withholding is subsequently
required or any previously required tax withholding shall no longer be required.
(v) The Administrator shall perform the duties of the Administrator
specified in Section 10.2 of the Trust Agreement required to be performed in
connection with the resignation or removal of the Owner Trustee, and any other
duties expressly required to be performed by the Administrator under the Trust
Agreement or any other Related Agreement.
(vi) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into transactions
or otherwise deal with any of its affiliates; provided, however, that the terms
of any such transactions or dealings shall be in accordance with any directions
received from the Issuer and shall be, in the Administrator's opinion, no less
favorable to the Issuer than would be available from unaffiliated parties.
8
<PAGE>
(c) Non-Ministerial Matters. (i) With respect to matters that in the
reasonable judgment of the Administrator are non-ministerial, the Administrator
shall not take any action unless within a reasonable time before the taking of
such action, the Administrator shall have notified the Owner Trustee of the
proposed action and the Owner Trustee shall not have withheld consent or
provided an alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include, without limitation:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or against the Issuer
(other than in connection with the collection of the Receivables or
Permitted Investments);
(C) the amendment, change or modification of the Related Agreements;
(D) the appointment of successor Note Registrars, successor Paying
Agents and successor Indenture Trustees pursuant to the Indenture or the
appointment of successor Administrators or Successor Servicers, or the
consent to the assignment by the Note Registrar, Paying Agent or Indenture
Trustee of its obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this Agreement, the
Administrator shall not be obligated to, and shall not, (x) make any payments to
the Noteholders under the Related Agreements or (y) take any other action that
the Issuer directs the Administrator not to take on its behalf.
2. Records. The Administrator shall maintain appropriate books of
account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Issuer and the
Company at any time during normal business hours.
3. Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement and, as reimbursement for its
expenses related thereto, the Administrator shall be entitled to $500 per month
which shall be solely an obligation of the Seller.
9
<PAGE>
4. Additional Information To Be Furnished to the Issuer. The
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
5. Independence of the Administrator. For all purposes of this
Agreement, the Administrator shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Owner Trustee with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Administrator shall
have no authority to act for or represent the Issuer or the Owner Trustee in any
way and shall not otherwise be deemed an agent of the Issuer or the Owner
Trustee.
6. No Joint Venture. Nothing contained in this Agreement (i) shall
constitute the Administrator and either of the Issuer or the Owner Trustee as
members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others,
7. Other Activities of Administrator. Nothing herein shall prevent the
Administrator or its Affiliates from engaging in other businesses or, in its
sole discretion, from acting in a similar capacity as an administrator for any
other person or entity even though such person or entity may engage in business
activities similar to those of the Issuer, the Owner Trustee or the Indenture
Trustee.
8. Term of Agreement; Resignation and Removal of Administrator. (a) This
Agreement shall continue in force until the dissolution of the Issuer, upon
which event this Agreement shall automatically terminate.
(b) Subject to Sections 8(e) and 8(f), the Administrator may resign its
duties hereunder by providing the Issuer with at least sixty (60) days' prior
written notice.
(c) Subject to Sections 8(e) and 8(f), the Issuer may remove the
Administrator without cause by providing the Administrator with at least sixty
(60) days' prior written notice.
10
<PAGE>
(d) Subject to Sections 8(e) and 8(f), at the sole option of the Issuer,
the Administrator may be removed immediately upon written notice of termination
from the Issuer to the Administrator if any of the following events shall occur:
(i) the Administrator shall default in the performance of any of its
duties under this Agreement and, after notice of such default, shall not cure
such default within ten (10) days (or, it such default cannot be cured in such
time, shall not give within ten (10) days such assurance of cure as shall be
reasonably satisfactory to the Issuer);
(ii) a court having jurisdiction in the premises shall enter a decree
or order for relief, and such decree or order shall not have been vacated within
sixty (60) days, in respect of the Administrator in any involuntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter in
effect or appoint a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for the Administrator or any substantial part
of its property or order the winding-up or liquidation of its affairs; or
(iii) the Administrator shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, shall consent to the appointment of a receiver, liquidator,
assignee, trustee, custodian, sequestrator or similar official for the
Administrator or any substantial part of its property, shall consent to the
taking of possession by any such official of any substantial part of its
property, shall make any general assignment for the benefit of creditors or
shall fail generally to pay its debts as they become due.
The Administrator agrees that if any of the events specified in clauses
(ii) or (iii) of this Section 8 shall occur, it shall give written notice
thereof to the Issuer and the Indenture Trustee within seven (7) days after the
happening of such event.
(e) No resignation or removal of the Administrator pursuant to this
Section shall be effective until (i) a successor Administrator shall have been
appointed by the Issuer and (ii) such successor Administrator shall have agreed
in writing to be bound by the terms of this Agreement in the same manner as the
Administrator is bound hereunder.
11
<PAGE>
(f) The appointment of any successor Administrator shall be effective only
after satisfaction of the Rating Agency Condition with respect to the proposed
appointment.
(g) Subject to Section 8(e) and 8(f), the Administrator acknowledges that
upon the appointment of a Successor Servicer pursuant to the Sale and Servicing
Agreement, the Administrator shall immediately resign and such Successor
Servicer shall automatically become the Administrator under this Agreement.
9. Action upon Termination, Resignation or Removal. Promptly upon the
effective date of termination of this Agreement pursuant to Section 8(a), the
resignation of the Administrator pursuant to Section 8(b) or the removal of the
Administrator pursuant to Section 8(c) or (d), the Administrator shall be
entitled to be paid all fees and reimbursable expenses accruing to it to this
date of such termination, resignation or removal. The Administrator shall
forthwith upon such termination pursuant to Section 8(a) deliver to the Issuer
all property and documents of or relating to the Collateral then in the custody
of the Administrator. In the event of the resignation of the Administrator
pursuant to Section 8(b) or the removal of the Administrator pursuant to Section
8(c) or (d), the Administrator shall cooperate with the Issuer and take all
reasonable steps requested to assist the Issuer in making an orderly transfer of
the duties of the Administrator.
10. Notices. Any notice, report or other communication given hereunder
shall be in writing and addressed of follows:
(a) if to the Issuer or the Owner Trustee, to:
MMCA Auto Owner Trust 1998-1
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration Department
Telephone: (302) 651-1000
Telecopy: (302) 651-8882
(b) if to the Administrator, to:
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<PAGE>
Mitsubishi Motors Credit of America, Inc.
6363 Katella Avenue
Cypress, California 90630-5205
Attention: Executive Vice President, Finance and Corporate Planning
Telephone: (714) 236-1500
Telecopy: (714) 236-1600
(c) If to the Indenture Trustee, to:
Bank of Tokyo - Mitsubishi Trust Company
1251 Avenue of the Americas
New York, NY 10020
Attention: Corporate Trust Administration
Telephone: (212) 782-5909
Telecopy: (212) 782-5900
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed
given if such notice is mailed by certified mail, postage prepaid, or
hand-delivered to the address of such party as provided above.
11. Amendments. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Issuer, the Administrator
and the Indenture Trustee, with the written consent of the Owner Trustee but
without the consent of the Noteholders and the Certificateholders, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Noteholders or Certificateholders; provided that such amendment will not, as
set forth in an Opinion of Counsel satisfactory to the Indenture Trustee and the
Owner Trustee, materially and adversely affect the interest of any Noteholder or
Certificateholder. This Agreement may also be amended by the Issuer, the
Administrator and the Indenture Trustee with the written consent of the Owner
Trustee and the holders of Notes evidencing at least a majority of the
Outstanding Amount of the Notes and the holders of Certificates evidencing at
least a majority of the Certificate Balance for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of Noteholders or the
Certificateholders;
13
<PAGE>
provided, however, that no such amendment may (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions that are required to be made for the
benefit of the Noteholders or Certificateholders or (ii) reduce the aforesaid
percentage of the holders of Notes and Certificates which are required to
consent to any such amendment, without the consent of the holders of all the
outstanding Notes and Certificates. Notwithstanding the foregoing, the
Administrator may not amend this Agreement without the consent of the Seller,
which permission shall not be unreasonably withheld.
12. Successors and Assigns. This Agreement may not be assigned by the
Administrator unless such assignment is previously consented to in writing by
the Issuer and the Owner Trustee and subject to the satisfaction of the Rating
Agency Condition in respect thereof. An assignment with such consent and
satisfaction, if accepted by the assignee, shall bind the assignee hereunder in
the same manner as the Administrator is bound hereunder. Notwithstanding the
foregoing, this Agreement may be assigned by the Administrator without the
consent of the Issuer or the Owner Trustee to a corporation or other
organization that is a successor (by merger, consolidation or purchase of
assets) to the Administrator; provided that such successor organization executes
and delivers to the Issuer, the Owner Trustee and the Indenture Trustee an
agreement in which such corporation or other organization agrees to be bound
hereunder by the terms of said assignment in the same manner as the
Administrator is bound hereunder. Subject to the foregoing, this Agreement
shall bind any successors or assigns of the parties hereto.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
14. Headings. The Section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or affect of this Agreement.
15. Counterparts. This Agreement may be executed in counterparts, each of
which when so executed shall be an original, but all of which together shall
constitute but one and the same agreement.
14
<PAGE>
16. Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
17. Not Applicable to Mitsubishi Motors Credit of America, Inc. in Other
Capacities. Nothing in this Agreement shall affect any obligation Mitsubishi
Motors Credit of America, Inc. may have in any other capacity.
18. Limitation of Liability of Owner Trustee and Indenture Trustee. (a)
Notwithstanding anything contained herein to the contrary, this instrument has
been countersigned by Wilmington Trust Company not in its individual capacity
but solely in its capacity as Owner Trustee of the Issuer and in no event shall
Wilmington Trust Company in its individual capacity or any beneficial owner of
the Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder, as to all of which
recourse shall be had solely to the assets of the Issuer. For all purposes of
this Agreement, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Bank of Tokyo - Mitsubishi Trust Company not
in its individual capacity but solely as Indenture Trustee and in no event shall
Bank of Tokyo - Mitsubishi Trust Company have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer.
19. Third-Party Beneficiary. The Owner Trustee is a third-party
beneficiary to this Agreement and is entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party hereto.
20. Successor Servicer and Administrator. The Administrator shall
undertake, as promptly as possible after the giving of notice of termination to
the Servicer of the Servicer's rights and powers pursuant to Section 8.2 of the
Sale and Servicing Agreement, to enforce the provisions of Section 8.2 with
respect to the appointment of a successor Servicer. Such successor Servicer
shall, upon
15
<PAGE>
compliance with the last sentence of Section 8.2 of the Sale and Servicing
Agreement, become the successor Administrator hereunder; provided, however, that
if the Indenture Trustee shall become such successor Administrator, the
Indenture Trustee shall not be required to perform any obligations or duties or
conduct any activities as successor Administrator that would be prohibited by
law and not within the banking and trust powers of the Indenture Trustee. In
such event, the Indenture Trustee may appoint a sub-administrator to perform
such obligations and duties.
21. Nonpetition Covenants. (a) Notwithstanding any prior termination of
this Agreement, the Seller, the Administrator, the Owner Trustee and the
Indenture Trustee shall not, prior to the date which is one year and one day
after the termination of this Agreement with respect to the Issuer, acquiesce,
petition or otherwise invoke or cause the Issuer to invoke the process of any
court or government authority for the purpose of commencing or sustaining a case
against the Issuer under any Federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of the
Issuer.
(b) Notwithstanding any prior termination of this Agreement, the
Issuer, the Administrator, the Owner Trustee and the Indenture Trustee shall
not, prior to the date which is one year and one day after the termination of
this Agreement with respect to the Seller, acquiesce, petition or otherwise
invoke or cause the Seller to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the Seller
under any Federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Seller or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Seller.
16
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
MMCA AUTO OWNER TRUST 1998-1
By: Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee
By:
--------------------------------
Name:
Title:
BANK OF TOKYO - MITSUBISHI TRUST COMPANY , not in its
individual capacity but solely as Indenture Trustee
By:
--------------------------------
Name:
Title:
MITSUBISHI MOTORS CREDIT OF AMERICA, INC., as
Administrator
By:
--------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
STATE OF NEW YORK }
}
COUNTY OF NEW YORK }
KNOW ALL MEN BY THESE PRESENTS, that Wilmington Trust Company, a banking
corporation, not in its individual capacity but solely as owner trustee (the
"Owner Trustee") for MMCA AUTO OWNER TRUST 1998-1 (the "Trust"), does hereby
make, constitute and appoint Mitsubishi Motors Credit of America, Inc., as
administrator under the Administration Agreement dated as of August 1, 1998 (the
"Administration Agreement"), among the Trust, Mitsubishi Motors Credit of
America, Inc. and Bank of Tokyo - Mitsubishi Trust Company, as Indenture
Trustee, as the same may be amended from time to time, and its agents and
attorneys, as Attorneys-in-Fact to execute on behalf of the Owner Trustee or the
Trust all such documents, reports, filings, instruments, certificates and
opinions as it should be the duty of the Owner Trustee or the Trust to prepare,
file or deliver pursuant to the Related Agreements, or pursuant to Section
5.5(a), (b), (c) or (d) of the Trust Agreement, including, without limitation,
to appear for and represent the Owner Trustee and the Trust in connection with
the preparation, filing and audit of federal, state and local tax returns
pertaining to the Trust, and with full power to perform any and all acts
associated with such returns and audits that the Owner Trustee could perform,
including without limitation, the right to distribute and receive confidential
information, defend and assert positions in response to audits, initiate and
defend litigation, and to execute waivers of restrictions on assessments of
deficiencies, consents to the extension of any statutory or regulatory time
limit, and settlements.
All powers of attorney for this purpose heretofore filed or executed by the
Owner Trustee are hereby revoked.
Capitalized terms that are used and not otherwise defined herein shall have
the meanings ascribed thereto in the Administration Agreement.
EXECUTED this day of , 1998.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee
Name:
Title:
A-1
<PAGE>
STATE OF __________ }
}
COUNTY OF __________ }
Before me, the undersigned authority, on this day personally appeared
______________, known to me to be the person whose name is subscribed to the
foregoing instruments, and acknowledged to me that he/she signed the same for
the purposes and considerations therein expressed.
Sworn to before me this
---
day of , 199 .
---------- --
- ------------------------------
Notary Public - State of
--------------
A-2
<PAGE>
Exhibit 5.1
[LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP]
August 7, 1998
MMCA Auto Receivables, Inc.
P.O. Box 6038
Cypress, California 90630
Re: Registration Statement on Form S-1
Registration No. 333-58869
----------------------------------
Ladies and Gentlemen:
We are members of the Bar of the State of New York and have acted as
special counsel to MMCA Auto Receivables, Inc., as seller ( the "Seller"), and
Mitsubishi Motors Credit of America, Inc., as Servicer (the "Servicer"), in
connection with the issuance of the __% Class A-1 Asset Backed Notes, __% Class
A-2 Asset Backed Notes, __% Class A-3 Asset Backed Notes and __% Class B Asset
Backed Notes (collectively, the "Notes") by MMCA Auto Owner Trust 1998-1 (the
"Issuer") pursuant to the terms of an Indenture, dated as of August 1, 1998 (the
"Indenture"), between the Issuer and Bank of Tokyo-Mitsubishi Trust Company, as
Indenture Trustee (the "Indenture Trustee"). The Notes will be sold to the
underwriters (the "Underwriters") who are parties to an underwriting agreement
(the "Underwriting Agreement") between the Seller and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as representative of the several Underwriters.
Terms not otherwise defined herein have the meaning assigned to them in the
Prospectus (as defined below).
In this connection, we have examined and relied upon the registration
statement for the Notes on Form S-1, Registration No. 333-58869, filed with the
Securities and Exchange Commission (the "SEC") on July 10, 1998 and Amendment
No. 1 thereto filed with the SEC on August 7, 1998
<PAGE>
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
as Representative of the
several Underwriters
August 7, 1998
Page 2
(collectively, the "Prospectus"), the form of the Indenture and the forms of the
other documents to be executed in connection therewith, and we have assumed that
the parties to such documents will comply with the terms thereof. In addition,
we have examined and considered executed originals or counterparts, or certified
or other copies identified to our satisfaction as being true copies of such
certificates, instruments, documents and other corporate records of the Seller
and the Servicer and matters of fact and law as we deem necessary for the
purpose of the opinion expressed below.
In our examination we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the conformity
to original documents of all documents submitted to us as certified or
photostatic copies and the authenticity of the original of such latter
documents. As to any facts material to the opinions expressed herein that we
did not independently establish or verify, we have relied upon statements and
representations of officers and other representatives of the Seller, the
Servicer and others.
We express no opinion as to the laws of any jurisdiction other than
the laws of the State of New York, the General Corporation Law of the State of
Delaware and the laws of the United States of America to the extent specifically
referred to herein.
Based upon and subject to the foregoing, we are of the opinion that
when the Indenture is executed and delivered by the parties thereto, when the
Notes to be issued pursuant to the Indenture have been duly and validly
authorized and executed by the Owner Trustee on behalf of the Issuer and have
been authenticated by the Indenture Trustee in accordance with the provisions of
the Indenture, and when the Notes are paid for by the Underwriters pursuant to
<PAGE>
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
as Representative of the
several Underwriters
August 7, 1998
Page 3
the Underwriting Agreement, the Notes will be legally issued, fully paid and
non-assessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to Skadden, Arps, Slate, Meagher &
Flom LLP under the caption "Legal Opinions" in the Prospectus included in the
Registration Statement.
Very truly yours,
<PAGE>
Exhibit 8.1
[LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOW LLP]
August 7, 1998
MMCA Auto Receivables, Inc.
P.O. Box 6038
Cypress, California 90630
Re: MMCA Auto Owner Trust 1998-1
Asset Backed Notes
----------------------------
Ladies and Gentlemen:
We have acted as special counsel to MMCA Auto Receivables, Inc. as Seller
(the "Seller") in connection with the issuance of the __% Class A-1 Asset Backed
Notes, __% Class A-2 Asset Backed Notes, __% Class A-3 Asset Backed Notes and
__% Class B Asset Backed Notes (collectively, the "Notes") and the Asset Backed
Certificates (the "Certificates") by MMCA Auto Owner Trust 1998-1 (the "Issuer")
pursuant to the terms of, (a) with respect to the Notes, an Indenture dated as
of August 1, 1998 (the "Indenture") between the Issuer and Bank of
Tokyo-Mitsubishi Trust Company, as Indenture Trustee, and (b) with respect to
the Certificates, an Amended and Restated Trust Agreement dated as of August 1,
1998 (the "Trust Agreement") between MMCA Auto Receivables, Inc., as Depositor,
and Wilmington Trust Company, as Owner Trustee. The Notes will be sold to the
underwriters (the "Underwriters") who are parties to an underwriting agreement
(the "Underwriting Agreement") between the Seller and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as representative of the Underwriters. Terms not
otherwise defined herein have the meanings assigned to them in the Prospectus
(as defined below).
In this connection, we have examined and relied upon the registration
statement for the Notes on Form S-1, Registration No. 333-58869, filed with the
Securities and Exchange Commission (the "SEC") on July 10, 1998 and Amendment
No. 1 thereto filed with the SEC on August 7, 1998 (collectively, the
"Registration Statement"), including (i) the form of prospectus included therein
(the "Prospectus"), (ii) the form of the Indenture, (iii) the form of the Trust
Agreement, (iv) the form of the Purchase Agreement, (v) the form of the Sale and
Servicing Agreement and (vi) such other documents as we have deemed necessary or
appropriate as a basis for the opinion set forth below, and we have assumed (i)
that such documents will not be amended and (ii) that the parties to such
documents will comply with the terms thereof.
<PAGE>
MMCA Auto Receivables, Inc.
August 7, 1998
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such latter documents. As to
any facts material to the opinions expressed herein which were not independently
established or verified, we have relied upon statements, representations, and
certifications of officers and other representatives of the Seller, the
Servicer, the Underwriters, and others, including, in particular, (i) certain
calculations performed by Merrill Lynch, Pierce, Fenner & Smith Incorporated and
(ii) a representation of the Servicer regarding the reasonableness of certain
fees payable to it.
In rendering our opinion, we have also considered and relied upon the
Internal Revenue Code of 1986, as amended, and administrative rulings, judicial
decisions, regulations, and such other authorities as we have deemed
appropriate, all as in effect as of the date hereof. The statutory provisions,
regulations, interpretations, and other authorities upon which our opinion is
based are subject to change, and such changes could apply retroactively. In
addition, there can be no assurance that positions contrary to those stated in
our opinion will not be taken by the Internal Revenue Service.
We express no opinions as to the laws of any jurisdiction other than the
federal laws of the United States of America to the extent specifically referred
to herein.
Based upon and subject to the foregoing, we are of the opinion that the
statements in the Prospectus under the headings "Summary-Tax Status" and
"Certain Federal Income Tax Consequences," subject to the qualifications set
forth therein, accurately describe the material federal income tax consequences
to holders of Notes, under existing law and the assumptions stated therein.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to Skadden, Arps, Slate Meagher & Flom LLP under
the caption "Certain Federal Income Tax Consequences" in the Prospectus.
Very truly yours,
2
<PAGE>
Exhibit 10.1
PURCHASE AGREEMENT
This PURCHASE AGREEMENT, dated as of August 1, 1998 (as amended,
supplemented or otherwise modified and in effect from time to time, this
"Agreement"), by and between MITSUBISHI MOTORS CREDIT OF AMERICA, INC., a
Delaware corporation (the "Seller"), having its principal executive office at
6363 Katella Avenue, Cypress, California 90630-5205, and MMCA AUTO RECEIVABLES,
INC., a Delaware corporation (the "Purchaser"), having its principal executive
office at 6363 Katella Avenue, Cypress, California 90630-5205.
WHEREAS, in the regular course of its business, the Seller purchases
certain motor vehicle retail installment sale contracts secured by new and used
automobiles and light- and medium-duty trucks from motor vehicle dealers.
WHEREAS, the Seller and the Purchaser wish to set forth the terms
pursuant to which the Receivables (as hereinafter defined) are to be sold by the
Seller to the Purchaser, which Receivables will be transferred by the Purchaser,
pursuant to the Sale and Servicing Agreement (as hereinafter defined) to the
MMCA Auto Owner Trust 1998-1 to be created pursuant to the Trust Agreement (as
hereinafter defined), which Trust will issue notes secured by a portion of such
Receivables and certain other property of the Trust, pursuant to the Indenture
(as hereinafter defined), and certificates representing interests in certain
property of the Trust, pursuant to the Trust Agreement.
NOW, THEREFORE, in consideration of the foregoing, other good and
valuable consideration, and the mutual terms and covenants contained herein, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
the parties hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
Terms not defined in this Agreement shall have the meaning set forth
in, or incorporated by reference into, the Sale and Servicing Agreement or, if
not defined therein, in the Indenture. As used in this Agreement, the following
terms shall, unless the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms of the
terms defined):
"Agreement" shall have the meaning specified in the recitals hereto.
"Assignment" shall mean the document of assignment attached to this
Agreement as Exhibit A.
"Closing" shall have the meaning specified in Section 2.2.
"Closing Date" shall mean August [ ], 1998.
"Cutoff Date" shall mean August 1, 1998.
"Indenture" shall mean the Indenture, dated as of August 1, 1998,
between the Trust and Bank of Tokyo - Mitsubishi Trust Company, a New York
banking corporation, as Indenture Trustee, as the same may from time to time be
amended, supplemented or otherwise modified and in effect.
"Prospectus" shall have the meaning assigned to such term in the
Underwriting Agreement.
"Purchaser" shall mean MMCA Auto Receivables, Inc., a Delaware
corporation, and its successors and assigns.
"Receivable" shall mean, for the purposes of this Agreement, each
retail installment sale contract for a Financed Vehicle described in the
Schedule of Receivables and all rights and obligations thereunder which appears
on Exhibit B hereto and any amendments, modifications or supplements to such
retail installment sales contract.
2
<PAGE>
"Receivables Purchase Price" shall mean $[ ].
"Relevant UCC" shall mean the Uniform Commercial Code, as in effect
from time to time in the relevant jurisdictions.
"Repurchase Event" shall have the meaning specified in Section 6.2.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement, dated as of August 1, 1998, among Mitsubishi Motors Credit of
America, Inc., as servicer, the Purchaser, as seller, and the Trust, as
purchaser, as the same may from time to time be amended, supplemented or
otherwise modified and in effect.
"Schedule of Receivables" shall mean the list of Receivables annexed
hereto as Exhibit B.
"Seller Officer's Certificates" shall have the meaning ascribed
thereto in Section 3.2 hereof.
"Seller" shall mean Mitsubishi Motors Credit of America, Inc., a
Delaware corporation, and its successors and assigns.
"Trust" shall mean the MMCA Auto Owner Trust 1998-1 created by the
Trust Agreement.
"Trust Agreement" shall mean the Amended and Restated Trust Agreement,
dated as of August 1, 1998, between the Purchaser, as depositor, and Wilmington
Trust Company, as Owner Trustee, as the same may be from time to time amended,
supplemented or otherwise modified and in effect.
"Underwriting Agreement" shall mean the Underwriting Agreement by and
between Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of
the several underwriters, and the Purchaser, dated August [ ], 1998.
"Yield Supplement Agreement" shall mean the Yield Supplement Agreement
to be entered into by the Seller and the Purchaser on the Closing Date, as the
same may from time to time be amended, supplemented or otherwise modified and in
effect.
3
<PAGE>
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
SECTION 2.1. Purchase and Sale of Receivables.
On the Closing Date, subject to the terms and conditions of this
Agreement, the Seller agrees to sell to the Purchaser, and the Purchaser agrees
to purchase from the Seller, the Receivables and the other property relating
thereto (as described below).
(a) Sale of Receivables. On the Closing Date, and
simultaneously with the transactions to be consummated pursuant to the
Indenture, the Sale and Servicing Agreement and the Trust Agreement, the Seller
shall sell, transfer, assign and otherwise convey to the Purchaser, without
recourse (subject to the obligations herein), all right, title and interest of
the Seller, whether now owned or hereafter acquired, in, to and under the
following, collectively: (i) the Receivables; (ii) with respect to Actuarial
Receivables, monies due thereunder on or after the Cutoff Date (including
Payaheads) and, with respect to Simple Interest Receivables, monies due or
received thereunder on or after the Cutoff Date; (iii) the security interests in
the Financed Vehicles granted by Obligors pursuant to the Receivables and any
other interest of the Seller in the Financed Vehicles; (iv) rights to receive
proceeds with respect to the Receivables from claims on any physical damage,
theft, credit life or disability insurance policies covering the Financed
Vehicles or Obligors; (v) rights to receive proceeds with respect to the
Receivables from recourse to Dealers thereon pursuant to the Dealer Agreements;
(vi) all of the Seller's rights to the Receivable Files; (vii) all payments and
proceeds with respect to the Receivables held by the Seller; (viii) all property
(including the right to receive Liquidation Proceeds and Recoveries and Financed
Vehicles and the proceeds thereof acquired by the Seller pursuant to the terms
of a Final Payment Receivable), guarantees and other collateral securing a
Receivable (other than a Receivable repurchased by the Servicer or purchased by
the Seller); (ix) rebates of premiums and other amounts relating to insurance
policies and other items financed under the Receivables in effect as of the
Cutoff Date; and (x) all present and future claims, demands, causes of action
and choses in action in respect of any or all of the foregoing and all payments
on or under and all proceeds of every kind and nature whatsoever in respect of
any or all of the foregoing, including all proceeds of the conversion thereof,
voluntary or involuntary, into cash or other liquid property, all cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts,
4
<PAGE>
insurance proceeds, condemnation awards, rights to payment of any and every kind
and other forms of obligations and receivables, instruments and other property
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing.
(b) Receivables Purchase Price. In consideration for the
Receivables, the other property described in Section 2.1(a) and delivery of
the Yield Supplement Agreement, the Purchaser shall, on the Closing Date, pay
to the Seller the Receivables Purchase Price. An amount equal to $[ ]
of the Receivables Purchase Price shall be paid to the Seller in cash. The
remainder of the Receivables Purchase Price shall be paid by (i) delivery to
the Seller of a Certificate representing approximately 2% of the aggregate
percentage interest in the Certificates and (ii) crediting the Seller with a
contribution to the capital of the Purchaser. The portion of the Receivables
Purchase Price to be paid in cash shall be by federal wire transfer (same
day) funds.
SECTION 2.2. The Closing. The sale and purchase of the Receivables
shall take place at a closing (the "Closing") at the offices of Skadden, Arps,
Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022 on the
Closing Date, simultaneously with the closings under: (a) the Sale and
Servicing Agreement pursuant to which the Purchaser will assign all of its
right, title and interest in, to and under the Receivables, the Yield Supplement
Agreement and other property described in Section 2.1(a) to the Trust in
exchange for the Notes and the Certificates; (b) the Indenture, pursuant to
which the Trust will issue the Notes and pledge all of its right, title and
interest in, to and under the Receivables, the Yield Supplement Agreement and
certain other property described in Section 2.1(a) to secure the Notes; (c) the
Trust Agreement, pursuant to which the Trust will issue the Certificates; and
(d) the Underwriting Agreement, pursuant to which the Purchaser will sell to the
underwriters named therein the Notes.
5
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Purchaser. The
Purchaser hereby represents and warrants to the Seller as of the date hereof and
as of the Closing Date:
(a) Organization, etc. The Purchaser has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
State of Delaware, with the power and authority to own its properties and to
conduct its business as such properties are currently owned and such business is
presently conducted, and had at all relevant times, and has, the power,
authority and legal right to acquire and own the Receivables, and has full
corporate power and authority to execute and deliver this Agreement and to carry
out its terms.
(b) Due Qualification. The Purchaser is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business shall require such
qualifications.
(c) Due Authorization and Binding Obligation. This Agreement
has been duly authorized, executed and delivered by the Purchaser, and is the
valid, binding and enforceable obligation of the Purchaser except as the same
may be limited by insolvency, bankruptcy, reorganization or other laws relating
to or affecting the enforcement of creditors' rights or by general equity
principles.
(d) No Violation. The execution, delivery and performance by
the Purchaser of this Agreement and the consummation of the transactions
contemplated hereby and the fulfillment of the terms hereof will not conflict
with, result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time or both) a default under, the
certificate of incorporation or bylaws of the Purchaser, or conflict with, or
breach any of the terms or provisions of, or constitute (with or without notice
or lapse of time or both) a default under, any indenture, agreement, mortgage,
deed of trust or other instrument to which the Purchaser is a party or by which
the Purchaser is bound or to which any of its properties are subject, or result
in the creation or imposition of any lien upon any of its properties pursuant to
the terms of any such indenture, agreement, mortgage, deed of trust or other
instrument (other than this Agreement), or violate any law,
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order, rule, or regulation, applicable to the Purchaser or its properties, of
any federal or state regulatory body, any court, administrative agency, or other
governmental instrumentality having jurisdiction over the Purchaser or any of
its properties.
(e) No Proceedings. No proceedings or investigations are
pending to which the Purchaser is a party or of which any property of the
Purchaser is the subject, and, to the best knowledge of the Purchaser, no such
proceedings or investigations are threatened or contemplated by governmental
authorities or threatened by others, other than such proceedings or
investigations which will not have a material adverse effect upon the general
affairs, financial position, net worth or results of operations (on an annual
basis) of the Purchaser and do not (i) assert the invalidity of this Agreement,
(ii) seek to prevent the consummation of any of the transactions contemplated by
this Agreement and (iii) seek any determinations or ruling that might materially
and adversely affect the performance by the Purchaser of its obligations under,
or the validity and enforceability of, this Agreement.
SECTION 3.2. Representations and Warranties of the Seller.
(a) The Seller hereby represents and warrants to the Purchaser
as of the date hereof and as of the Closing Date:
(i) Organization, etc. The Seller has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with the power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is presently conducted, and is duly
qualified to transact business and is in good standing in each jurisdiction
in the United States of America in which the conduct of its business or the
ownership or lease of its property requires such qualification.
(ii) Power and Authority; Binding Obligation. The Seller
has full power and authority to sell and assign the property sold and
assigned to the Purchaser hereunder and has duly authorized such sale and
assignment to the Purchaser by all necessary corporate action. This
Agreement has been duly authorized, executed and delivered by the Seller
and shall constitute the legal, valid, binding and enforceable obligation
of the Seller except as the same may be limited by insolvency, bankruptcy,
reorganization or other laws relating to or affecting the enforcement of
creditors' rights or by general equity principles.
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(iii) No Violation. The execution, delivery and
performance by the Seller of this Agreement and the consummation of the
transactions contemplated hereby and the fulfillment of the terms hereof
will not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time or
both) a default under, the certificate of incorporation or bylaws of the
Seller, or conflict with, or breach any of the terms or provisions of, or
constitute (with or without notice or lapse of time or both) a default
under, any indenture, agreement, mortgage, deed of trust or other
instrument to which the Seller is a party or by which the Seller is bound
or any of its properties are subject, or result in the creation or
imposition of any lien upon any of its properties pursuant to the terms of
any such indenture, agreement, mortgage, deed of trust or other instrument
(other than this Agreement), or violate any law, order, rule or regulation,
applicable to the Seller or its properties, of any federal or state
regulatory body, any court, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or any of its
properties.
(iv) No Proceedings. No proceedings or investigations are
pending to which the Seller is a party or of which any property of the
Seller is the subject, and, to the best knowledge of the Seller, no such
proceedings or investigations are threatened or contemplated by
governmental authorities or threatened by others, other than such
proceedings or investigations which will not have a material adverse effect
upon the general affairs, financial position, net worth or results of
operations (on an annual basis) of the Seller and do not (i) assert the
invalidity of this Agreement, (ii) seek to prevent the consummation of any
of the transactions contemplated by this Agreement and (iii) seek any
determinations or ruling that might materially and adversely affect the
performance by the Seller of its obligations under, or the validity and
enforceability of, this Agreement.
(v) Florida Securities and Investor Protection Act. In
connection with the offering of the Notes in the State of Florida, the
Seller hereby certifies that it has complied with all provisions of Section
517.075 of the Florida Securities and Investor Protection Act.
(vi) Officer's Certificates. Each representation and
warranty made by the Seller in each of two Officer's Certificates of the
Seller,
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dated the Closing Date and attached hereto as Exhibits C and D (the "Seller
Officer's Certificates"), is true and correct as of the Closing Date.
(b) The Seller makes the following representations and
warranties as to the Receivables on which the Purchaser relies in accepting the
Receivables. Such representations and warranties speak as of the execution and
delivery of this Agreement, but shall survive the sale, transfer, and assignment
of the Receivables to the Purchaser hereunder and the subsequent assignment and
transfer of the Receivables pursuant to the Sale and Servicing Agreement:
(i) Characteristics of Receivables. Each Receivable (a)
shall have been originated in the United States of America by a Dealer for
the consumer or commercial sale of a Financed Vehicle in the ordinary
course of such Dealer's business, shall have been fully and properly
executed by the parties thereto, shall have been purchased by the Seller
from such Dealer under an existing Dealer Agreement with the Seller, and
shall have been validly assigned by such Dealer to the Seller in accordance
with its terms, (b) shall have created or shall create a valid, binding,
subsisting, and enforceable first priority security interest in favor of
the Seller in the related Financed Vehicle, which security interest shall
be assignable by the Seller to the Purchaser, (c) shall contain customary
and enforceable provisions such that the rights and remedies of the holder
thereof shall be adequate for realization against the collateral of the
benefits of the security, (d) in the case of Standard Receivables, shall
provide for level monthly payments (provided that the payment in the last
month in the life of the Receivable may be different from the level
payment) that fully amortize the Amount Financed by maturity and yield
interest at the APR, (e) in the case of Final Payment Receivables, shall
provide for a series of fixed level monthly payments and a larger payment
due after such level monthly payments that fully amortize the Amount
Financed by maturity and yield interest at the APR, (f) shall provide for,
in the event that such contract is prepaid, a prepayment that fully pays
the Principal Balance, (g) is a retail installment sales contract, (h) is
secured by a new or used automobile or light- or medium-duty truck, and (i)
is an Actuarial Receivable or a Simple Interest Receivable (and may also be
a Final Payment Receivable).
(ii) Schedule of Receivables. The information set forth in
the Schedule of Receivables shall be true and correct in all material
respects as of the opening of business on the Cutoff Date, and no selection
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procedures believed to be adverse to the Noteholders or the
Certificateholders shall have been utilized in selecting the Receivables
from those receivables which meet the criteria contained herein. The
computer tape or other listing regarding the Receivables made available to
the Purchaser and its assigns is true and correct in all respects.
(iii) Compliance with Law. Each Receivable and the sale of
the related Financed Vehicle shall have complied at the time it was
originated or made, and shall comply at the execution of this Agreement, in
all material respects with all requirements of applicable Federal, state,
and local laws, and regulations thereunder, including, without limitation,
usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity
Act, the Fair Credit Reporting Act, the Fair Credit Billing Act, the Fair
Debt Collection Practices Act, the Federal Trade Commission Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B, M
and Z, the Soldiers' and Sailors' Civil Relief Act of 1940, the Texas
Consumer Credit Code, and State adaptations of the Uniform Consumer Credit
Code, and other consumer credit laws and equal credit opportunity and
disclosure laws.
(iv) Binding Obligation. Each Receivable shall represent
the genuine, legal, valid and binding payment obligation in writing of the
Obligor, enforceable by the holder thereof in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity.
(v) No Government Obligor. None of the Receivables is due
from the United States of America or any state or from any agency,
department, or instrumentality of the United States of America or any
state.
(vi) Security Interest in Financed Vehicle. Immediately
prior to the sale, assignment, and transfer thereof, each Receivable shall
be secured by a valid, subsisting and enforceable perfected first priority
security interest in the Financed Vehicle in favor of the Seller as secured
party and, at such time as enforcement of such security interest is sought,
there shall exist a valid, subsisting and enforceable first priority
perfected security interest in the Financed Vehicle for the benefit of the
Purchaser and the Trust, respectively (subject to any statutory or other
lien arising by
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operation of law after the Closing Date which is prior to such security
interest).
(vii) Receivables in Force. No Receivable shall have been
satisfied, subordinated, or rescinded, nor shall any Financed Vehicle have
been released from the Lien granted by the related Receivable in whole or
in part, which security interest is assignable from the Seller to the
Purchaser.
(viii) No Waiver. No provision of a Receivable shall have
been waived in such a manner that such Receivable fails to meet all of the
representations and warranties made by the Seller in this Section 3.2(b)
with respect thereto.
(ix) No Defenses. No right of rescission, setoff,
counterclaim, or defense shall have been asserted or threatened with
respect to any Receivable.
(x) No Liens. To the best of the Seller's knowledge, no
liens or claims shall have been filed for work, labor, or materials
relating to a Financed Vehicle that shall be liens prior to, or equal or
coordinate with, the security interest in the Financed Vehicle granted by
the Receivable.
(xi) No Default; Repossession. Except for payment defaults
continuing for a period of not more than thirty (30) days as of the Cutoff
Date or the failure of the Obligor to maintain satisfactory physical damage
insurance covering the Financed Vehicle, no default, breach, violation, or
event permitting acceleration under the terms of any Receivable shall have
occurred; no continuing condition that with notice or the lapse of time
would constitute a default, breach, violation, or event permitting
acceleration under the terms of any Receivable shall have arisen; the
Seller shall not have waived any of the foregoing; and no Financed Vehicle
shall have been repossessed as of the Cutoff Date.
(xii) Insurance. The Seller, in accordance with its
customary procedures, shall have determined whether or not the Obligor has
maintained physical damage insurance (which insurance shall not be force
placed insurance) covering the Financed Vehicle.
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(xiii) Title. It is the intention of the Seller that the
transfer and assignment of the Receivables herein contemplated constitute a
sale of the Receivables from the Seller to the Purchaser and that the
beneficial interest in and title to the Receivables not be part of the
Seller's estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. No Receivable has been sold,
transferred, assigned, or pledged by the Seller to any Person other than
the Purchaser. Immediately prior to the transfer and assignment of the
Receivables herein contemplated, the Seller had good and marketable title
to each Receivable free and clear of all Liens, encumbrances, security
interests, and rights of others and, immediately upon the transfer thereof,
the Purchaser shall have good and marketable title to each Receivable, free
and clear of all Liens, encumbrances, security interests, and rights of
others; and the transfer has been perfected by all necessary action under
the Relevant UCC.
(xiv) Valid Assignment. No Receivable shall have been
originated in, or shall be subject to the laws of, any jurisdiction under
which the sale, transfer, and assignment of such Receivable under this
Agreement shall be unlawful, void, or voidable. The Seller has not entered
into any agreement with any account debtor that prohibits, restricts or
conditions the assignment of any portion of the Receivables.
(xv) All Filings Made. All filings (including, without
limitation, filings under the Relevant UCC) necessary in any jurisdiction
to give the Purchaser a first priority perfected security interest in the
Receivables shall be made within ten (10) days of the Closing Date.
(xvi) Chattel Paper. Each Receivable constitutes "chattel
paper" as defined in the Relevant UCC.
(xvii) One Original. There shall be only one original
executed copy of each Receivable in existence.
(xviii) Principal Balance. Each Receivable had an original
principal balance (net of unearned precomputed finance charges) of not more
than $60,000, and a remaining Principal Balance as of the Cutoff Date of
not less than $100.
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(xix) No Bankrupt Obligors. None of the Receivables shall
be due from any Obligor who, as of the Cutoff Date, was the subject of a
proceeding under the Bankruptcy Code of the United States or was bankrupt.
(xx) New and Used Vehicles. Approximately [ ]% of the
Pool Balance of the Receivables, constituting approximately [ ]% of the
total number of the Receivables, as of the Cutoff Date, relate to new
automobiles and light- or medium-duty trucks financed at new vehicle rates.
Approximately [ ]% of the Pool Balance of the Receivables, constituting
approximately [ ]% of the total number of Receivables included in the
Trust, as of the Cutoff Date, relate to used automobiles and light- or
medium-duty trucks. Of the used vehicles, approximately [ ]% of the
Pool Balance of the Receivables, constituting approximately [ ]% of the
total number of the Receivables, as of the Cutoff Date, relate to program
automobiles and light-duty trucks manufactured in the current and
immediately preceding model years which are financed at new vehicle rates.
Of the used vehicles, approximately [ ]% of the Pool Balance of the
Receivables, constituting approximately [ ]% of the total number of
Receivables as of the Cutoff Date, relate to refinanced program automobiles
and light- or medium-duty trucks manufactured in prior model years which
are financed at the original rates set forth in the related Contracts or at
used vehicle rates.
(xxi) Origination. Each Receivable shall have an
origination during or after April 1994.
(xxii) Maturity of Receivables. Each Receivable shall have
a remaining maturity, as of the Cutoff Date, of not more than sixty (60)
months, and an original maturity of not more than sixty (60) months.
(xxiii) Annual Percentage Rate. Each Receivable shall have
an APR of at least 0% and not more than 30%.
(xxiv) Scheduled Payments. Each Receivable shall have a
first Scheduled Payment due on or prior to August 31, 1998 and no
Receivable shall have a payment of which more than 10% of such payment is
more than 30 days overdue as of the Cutoff Date.
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(xxv) Location of Receivable Files. The Receivable Files
shall be kept at one or more of the locations listed in Schedule A hereto.
(xxvi) Capped Receivables and Simple Interest Receivables.
Except to the extent that there has been no material adverse effect on
Noteholders or Certificateholders, each Capped Receivable has been treated
consistently by the Seller as a Simple Interest Receivable and payments
with respect to each Simple Interest Receivable have been allocated
consistently in accordance with the Simple Interest Method.
(xxvii) No Receivables Originated in Alabama. No
Receivable shall have been originated in Alabama.
(xxviii) Other Data. The tabular data and the numerical
data relating to the characteristics of the Receivables contained in the
Prospectus and is true and correct in all material respects.
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ARTICLE IV
CONDITIONS
SECTION 4.1. Conditions to Obligation of the Purchaser. The
obligation of the Purchaser to purchase the Receivables is subject to the
satisfaction of the following conditions:
(a) Representations and Warranties True. The representations
and warranties of the Seller hereunder shall be true and correct on the Closing
Date with the same effect as if then made, and the Seller shall have performed
all obligations to be performed by it hereunder on or prior to the Closing Date.
(b) Computer Files Marked. The Seller shall, at its own
expense, on or prior to the Closing Date, indicate in its computer files that
the Receivables have been sold to the Purchaser pursuant to this Agreement and
deliver to the Purchaser the Schedule of Receivables certified by an officer of
the Seller to be true, correct and complete.
(c) Documents to be delivered by the Seller at the Closing.
(i) The Assignment. At the Closing, the Seller will
execute and deliver the Assignment in substantially the form of Exhibit A
hereto.
(ii) The Yield Supplement Agreement. At the Closing, the
Seller will execute and deliver the Yield Supplement Agreement. The Yield
Supplement Agreement shall be substantially in the form of Exhibit D to the
Sale and Servicing Agreement.
(iii) Evidence of UCC Filing. Within ten (10) days of the
Closing Date, the Seller shall record and file, at its own expense, a UCC-1
financing statement in each jurisdiction in which required by applicable
law, executed by the Seller, as seller or debtor, and naming the Purchaser,
as purchaser or secured party, naming the Receivables and the other
property conveyed hereunder as collateral, meeting the requirements of the
laws of each such jurisdiction and in such manner as is necessary to
perfect the sale, transfer, assignment and conveyance of such Receivables
to the Purchaser. The Seller shall deliver a file-stamped copy, or other
evidence satisfactory to
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the Purchaser of such filing, to the Purchaser within ten (10) days of the
Closing Date.
(iv) Other Documents. Such other documents as the
Purchaser may reasonably request.
(d) Other Transactions. The transactions contemplated by the
Sale and Servicing Agreement, the Indenture, the Trust Agreement and the
Underwriting Agreement shall be consummated on the Closing Date.
SECTION 4.2. Conditions to Obligation of the Seller. The obligation
of the Seller to sell the Receivables to the Purchaser is subject to the
satisfaction of the following conditions:
(a) Representations and Warranties True. The representations
and warranties of the Purchaser hereunder shall be true and correct on the
Closing Date with the same effect as if then made, and the Purchaser shall have
performed all obligations to be performed by it hereunder on or prior to the
Closing Date.
(b) Receivables Purchase Price. At the Closing Date, the
Purchaser shall deliver to the Seller the Receivables Purchase Price, as
provided in Section 2.1(b).
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ARTICLE V
COVENANTS OF THE SELLER
The Seller agrees with the Purchaser as follows; provided, that to the
extent that any provision of this Article V conflicts with any provision of the
Sale and Servicing Agreement, the Sale and Servicing Agreement shall govern:
SECTION 5.1. Protection of Right, Title and Interest.
(a) The Seller shall execute and file such financing statements
and cause to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve, maintain,
and protect the interest of the Purchaser under this Agreement in, to and under
the Receivables and the other property conveyed hereunder and in the proceeds
thereof. The Seller shall deliver (or cause to be delivered) to the Purchaser
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) The Seller shall not change its name, identity, or corporate
structure in any manner that would, could, or might make any financing statement
or continuation statement filed by the Seller in accordance with paragraph (a)
above seriously misleading within the meaning of Section 9-402(7) of the
Relevant UCC, unless it shall have given the Purchaser at least sixty (60) days'
prior written notice thereof and shall have promptly filed appropriate
amendments to all previously filed financing statements or continuation
statements.
(c) The Seller shall give the Purchaser at least sixty (60)
days' prior written notice of any relocation of its principal executive office
if, as a result of such relocation, the applicable provisions of the Relevant
UCC would require the filing of any amendment of any previously filed financing
or continuation statement or of any new financing statement and shall promptly
file any such amendment, continuation statement or new financing statement. The
Seller shall at all times maintain each office from which it shall service
Receivables, and its principal executive office, within the United States of
America.
(d) The Seller shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit the reader thereof to
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know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each).
(e) The Seller shall maintain its computer systems so that, from
and after the time of sale hereunder of the Receivables to the Purchaser, the
Seller's master computer records (including any back-up archives) that refer to
a Receivable shall indicate clearly the interest of the Purchaser in such
Receivable and that such Receivable is owned by the Purchaser (or, upon sale of
the Receivables to the Trust, by the Trust). Indication of the Purchaser's
ownership of a Receivable shall be deleted from or modified on the Seller's
computer systems when, and only when, the Receivable shall have been paid in
full or repurchased.
(f) If at any time the Seller shall propose to sell, grant a
security interest in, or otherwise transfer any interest in any automobile or
light- or medium-duty truck receivables (other than the Receivables) to any
prospective purchaser, lender, or other transferee, the Seller shall give to
such prospective purchaser, lender, or other transferee computer tapes, records,
or print-outs (including any restored from back-up archives) that, if they shall
refer in any manner whatsoever to any Receivable, shall indicate clearly that
such Receivable has been sold and is owned by the Purchaser or its assignee
unless such Receivable has been paid in full or repurchased.
(g) The Seller shall permit the Purchaser and its agents at any
time during normal business hours to inspect, audit, and make copies of and
abstracts from the Seller's records regarding any Receivable.
(h) Upon request, the Seller shall furnish to the Purchaser,
within ten (10) Business Days, a list of all Receivables (by contract number and
name of Obligor) then owned by the Purchaser, together with a reconciliation of
such list to the Schedule of Receivables.
SECTION 5.2. Other Liens or Interests. Except for the conveyances
hereunder, the Seller will not sell, pledge, assign or transfer any Receivable
to any other Person, or grant, create, incur, assume or suffer to exist any Lien
on any interest therein, and the Seller shall defend the right, title, and
interest of the Purchaser in, to and under the Receivables against all claims of
third parties claiming through or under the Seller; provided, however, that the
Seller's obligations under this Section 5.2 shall terminate upon the termination
of the Trust pursuant to the Trust Agreement.
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SECTION 5.3. Seller Officer's Certificates. The Seller covenants to
fulfill each covenant made by it in the Seller Officer's Certificates.
SECTION 5.4. Costs and Expenses. The Seller agrees to pay all
reasonable costs and disbursements in connection with the perfection, as against
all third parties, of the Purchaser's right, title and interest in, to and under
the Receivables.
SECTION 5.5. Indemnification.
(a) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against any and all costs, expenses, losses, damages, claims,
and liabilities, arising out of or resulting from the failure of a Receivable to
be originated in compliance with all requirements of law and for any breach of
any of the Seller's representations and warranties contained herein.
(b) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against any and all costs, expenses, losses, damages, claims,
and liabilities, arising out of or resulting from the use, ownership, or
operation by the Seller or any Affiliate thereof of a Financed Vehicle.
(c) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against any and all taxes, except for taxes on the net income
of the Purchaser, that may at any time be asserted against the Purchaser with
respect to the transactions contemplated herein and in the Yield Supplement
Agreement, including, without limitation, any sales, gross receipts, general
corporation, tangible personal property, privilege, or license taxes and costs
and expenses in defending against the same.
(d) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against any and all costs, expenses, losses, damages, claims
and liabilities to the extent that such cost, expense, loss, damage, claim or
liability arose out of, or was imposed upon the Purchaser through, the
negligence, willful misfeasance, or bad faith of the Seller in the performance
of its duties under this Agreement or the Yield Supplement Agreement, as the
case may be, or by reason of reckless disregard of the Seller's obligations and
duties under the Agreement or the Yield Supplement Agreement, as the case may
be.
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(e) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against all costs, expenses, losses, damages, claims and
liabilities arising out of or incurred in connection with the acceptance or
performance of the Seller's trusts and duties as Servicer under the Sale and
Servicing Agreement, except to the extent that such cost, expense, loss, damage,
claim or liability shall be due to the willful misfeasance, bad faith, or
negligence (except for errors in judgment) of the Purchaser.
These indemnity obligations shall be in addition to any
obligation that the Seller may otherwise have.
SECTION 5.6. Sale. Seller agrees to treat this conveyance for all
purposes (including without limitation tax and financial accounting purposes) as
an absolute transfer on all relevant books, records, tax returns, financial
statements and other applicable documents.
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ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1. Obligations of Seller. The obligations of the Seller
under this Agreement shall not be affected by reason of any invalidity,
illegality or irregularity of any Receivable.
SECTION 6.2. Repurchase Events. The Seller hereby covenants and
agrees with the Purchaser for the benefit of the Purchaser, the Indenture
Trustee, the Owner Trustee, the Noteholders and the Certificateholders, that the
occurrence of a breach of any of the Seller's representations and warranties
contained in Section 3.2(b) shall constitute an event obligating the Seller to
repurchase Receivables hereunder (each, a "Repurchase Event") at a price equal
to the Purchase Amount from the Purchaser or from the Trust. Subject to Section
5.4(a), the repurchase obligation of the Seller shall constitute the sole remedy
to the Purchaser, the Indenture Trustee, the Owner Trustee, the Noteholders and
the Certificateholders against the Seller with respect to any Repurchase Event.
SECTION 6.3. Purchaser's Assignment of Repurchased Receivables. With
respect to all Receivables repurchased by the Seller pursuant to Section 6.2 of
this Agreement, the Purchaser shall assign, without recourse, representation or
warranty, to the Seller all the Purchaser's right, title and interest in, to and
under such Receivables, and all security and documents relating thereto.
SECTION 6.4. Trust. The Seller acknowledges that:
(a) The Purchaser will, pursuant to the Sale and Servicing
Agreement, sell the Receivables to the Trust and assign its rights under this
Agreement and the Yield Supplement Agreement to the Owner Trustee for the
benefit of the Noteholders and the Certificateholders, and that the
representations and warranties contained in this Agreement and the rights of the
Purchaser under this Agreement, including under Sections 6.2 and 6.3 are
intended to benefit the Trust, the Noteholders and the Certificateholders. The
Seller hereby consents to such sale and assignment.
(b) The Trust will, pursuant to the Indenture, pledge the
Receivables and its rights under this Agreement and the Yield Supplement
Agreement to the Indenture Trustee for the benefit of the Noteholders, and the
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representations and warranties contained in this Agreement and the rights of the
Purchaser under this Agreement, including under Sections 6.2 and 6.3, are
intended to benefit the Noteholders. The Seller hereby consents to such pledge.
SECTION 6.5. Amendment. This Agreement may be amended from time to
time by a written amendment duly executed and delivered by the Seller and the
Purchaser; provided, however, that any such amendment that materially adversely
affects the rights of the Noteholders or the Certificateholders under the
Indenture, Sale and Servicing Agreement or Trust Agreement shall be consented to
by the Holders of Notes evidencing not less than 51% of the then Outstanding
Notes and the Holders of Certificates evidencing not less than 51% of the
Certificate Balance.
SECTION 6.6. Accountants' Letters.
(a) Ernst & Young LLP will perform certain procedures regarding
the characteristics of the Receivables described in the Schedule of Receivables
set forth as Exhibit B hereto and will compare those characteristics to the
information with respect to the Receivables contained in the Prospectus.
(b) Seller will cooperate with the Purchaser and Ernst & Young
LLP in making available all information and taking all steps reasonably
necessary to permit such accountants to complete the procedures set forth in
Section 6.6(a) above and to deliver the letters required of them under the
Underwriting Agreement.
(c) Ernst & Young LLP will deliver to the Purchaser a letter,
dated the date of the Prospectus, in the form previously agreed to by the Seller
and the Purchaser, with respect to the financial and statistical information
contained in the Prospectus under the caption "Delinquency and Loss Experience"
and with respect to such other information as may be agreed in the forms of such
letters.
SECTION 6.7. Waivers. No failure or delay on the part of the
Purchaser in exercising any power, right or remedy under this Agreement or
Assignment shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or remedy preclude any other or further
exercise thereof or the exercise of any other power, right or remedy.
22
<PAGE>
SECTION 6.8. Notices. All communications and notices pursuant hereto
to either party shall be in writing or by confirmed facsimile or telecopy or
telex and addressed or delivered to it at its address (or in case of telex, at
its telex number at such address) shown in the opening portion of this Agreement
or at such other address as may be designated by it by notice to the other party
and, if mailed or sent by telecopy, facsimile, or telex, shall be deemed given
when mailed, electronic confirmation of the telecopy or facsimile is received,
or when the notice is transmitted by telex.
SECTION 6.9. Costs and Expenses. The Seller will pay all expenses
incident to the performance of its obligations under this Agreement and the
Seller agrees to pay all reasonable out-of-pocket costs and expenses of the
Purchaser, excluding fees and expenses of counsel, in connection with the
perfection as against third parties of the Purchaser's right, title and interest
in, to and under the Receivables and the enforcement of any obligation of the
Seller hereunder.
SECTION 6.10. Representations of the Seller and the Purchaser. The
respective agreements, representations, warranties and other statements by the
Seller and the Purchaser set forth in or made pursuant to this Agreement shall
remain in full force and effect and will survive the Closing.
SECTION 6.11. Confidential Information. The Purchaser agrees that it
will neither use nor disclose to any Person the names and addresses of the
Obligors, except in connection with the enforcement of the Purchaser's rights
hereunder, under the Receivables, the Sale and Servicing Agreement or as
required by law.
SECTION 6.12. Headings and Cross-References. The various headings in
this Agreement are included for convenience only and shall not affect the
meaning or interpretation of any provision of this Agreement. References in
this Agreement to Section names or numbers are to such Sections of this
Agreement.
SECTION 6.13. Governing Law. This Agreement and the Assignment shall
be governed by, and construed in accordance with, the internal laws of the State
of New York.
SECTION 6.14. Agreements of Purchaser.
(a) The Purchaser will not commingle any of its assets with
those of the Seller or the ultimate parent of the Purchaser.
23
<PAGE>
(b) The Purchaser will maintain separate corporate records and
books of account from those of the Seller or the ultimate parent of the
Purchaser.
(c) The Purchaser will conduct its business from an office
separate from the Seller or the ultimate parent of the Purchaser.
SECTION 6.15. Counterparts. This Agreement may be executed in two or
more counterparts and by different parties on separate counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
24
<PAGE>
IN WITNESS WHEREOF, the parties hereby have caused this Purchase
Agreement to be executed by their respective officers thereunto duly authorized
as of the date and year first above written.
MITSUBISHI MOTORS CREDIT OF
AMERICA, INC., as Seller
By:
--------------------------
Name:
Title:
MMCA AUTO RECEIVABLES, INC.,
as Purchaser
By:
--------------------------
Name:
Title:
25
<PAGE>
EXHIBIT A
---------
[Form of Assignment]
ASSIGNMENT
For value received, in accordance with the Purchase Agreement dated as
of August 1, 1998, between the undersigned and MMCA AUTO RECEIVABLES, INC. (the
"Purchaser") (as amended, supplemented or otherwise modified and in effect from
time to time, the "Purchase Agreement"), the undersigned does hereby sell,
assign, transfer and otherwise convey unto the Purchaser, without recourse
(subject to the obligations in the Purchase Agreement), all right, title and
interest of the undersigned, whether now owned or hereafter acquired, in, to and
under the following, collectively: (i) the Receivables; (ii) with respect to
Actuarial Receivables, monies due thereunder on or after the Cutoff Date
(including Payaheads) and, with respect to Simple Interest Receivables, monies
due or received thereunder on or after the Cutoff Date; (iii) the security
interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of the Seller in the Financed Vehicles; (iv)
rights to receive proceeds with respect to the Receivables from claims on any
physical damage, theft, credit life or disability insurance policies covering
the Financed Vehicles or Obligors; (v) all rights to receive proceeds with
respect to the Receivables from recourse to Dealers thereon pursuant to the
Dealer Agreements; (vi) all of the Seller's rights to the Receivable Files;
(vii) all payments and proceeds with respect to the Receivables held by the
Seller; (viii) all property (including the right to receive Liquidation Proceeds
and Recoveries and Financed Vehicles and the proceeds thereof acquired by the
Seller pursuant to the terms of a Final Payment Receivable), guarantees and
other collateral securing a Receivable (other than a Receivable repurchased by
the Servicer or purchased by the Seller); (ix) rebates of premiums and other
amounts relating to insurance policies and other items financed under the
Receivables in effect as of the Cutoff Date; and (x) all present and future
claims, demands, causes of action and choses in action in respect of any or all
of the foregoing and all payments on or under and all proceeds of every kind and
nature whatsoever in respect of any or all of the foregoing, including all
proceeds of the conversion thereof, voluntary or involuntary, into cash or other
liquid property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind and other
forms of obligations and receivables, instruments and other property which at
any time constitute all or part of or are
A-1
<PAGE>
included in the proceeds of any of the foregoing. The foregoing sale does not
constitute and is not intended to result in any assumption by the Purchaser of
any obligation of the undersigned to the Obligors, insurers or any other Person
in connection with the Receivables, Receivable Files, any insurance policies or
any agreement or instrument relating to any of them.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the
Purchase Agreement and is to be governed by the Purchase Agreement.
Capitalized terms used and not otherwise defined herein shall have the
meanings assigned to such terms in, or incorporated by reference into, the
Purchase Agreement.
A-2
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of August [ ], 1998.
MITSUBISHI MOTORS CREDIT
OF AMERICA, INC.
By:
--------------------------
Name:
Title:
A-3
<PAGE>
EXHIBIT B
---------
[SCHEDULE OF RECEIVABLES]
Delivered to Indenture Trustee at Closing
B-1
<PAGE>
EXHIBIT C
---------
Form of Seller's Officer's Certificate
--------------------------------------
Pursuant to Section 3.2(a)(vi)
------------------------------
[To be Included]
C-1
<PAGE>
EXHIBIT D
---------
Form of Seller's Officer's Certificate
--------------------------------------
Pursuant to Section 3.2(a)(vi)
------------------------------
[To be Included]
D-1
<PAGE>
SCHEDULE A
----------
Locations of Receivables Files
Corporate Office
- ----------------
6363 Katella Avenue
P.O. Box 6038
Cypress, CA 90630-5205
National Service Center
- -----------------------
10805 Holder Street, Third Floor
P.O. Box 6043
Cypress, CA 90630-0040
North Central Region
- --------------------
1101 Perimeter Drive, Suite 650
Schaumburg, IL 60173
Northeastern Region
- -------------------
2700 Westchester Avenue, Suite 400
Purchase, NY 10577-0600
Southeastern Region
- -------------------
1211 Semoran Boulevard, Suite 149
Casselberry, FL 32707
Southwestern Region
- -------------------
690 East Lamar Boulevard, Suite 350
Arlington, TX 76011
Western Region
- --------------
10855 Business Center Drive, Suite B
Cypress, CA 90630
SA-1
<PAGE>
Exhibit 10.2
August , 1998
MMCA Auto Receivables, Inc.
6363 Katella Avenue
Cypress, California 90630-5205
Re: MMCA Auto Owner Trust 1998-1
----------------------------
Ladies and Gentlemen:
We hereby confirm arrangements made as of the date hereof with
you to be effective upon (i) receipt by us of the enclosed copy of this letter
agreement (as amended, supplemented or otherwise modified and in effect from
time to time, the "Yield Supplement Agreement"), executed by you, and (ii)
execution of the Purchase Agreement referred to below and payment of the
purchase price specified thereunder. Capitalized terms used and not otherwise
defined herein shall have the meanings assigned to such terms in, or
incorporated by reference into, the Purchase Agreement, dated as of August 1,
1998 (as amended, supplemented or otherwise modified and in effect from time to
time, the "Purchase Agreement"), between Mitsubishi Motors Credit of America,
Inc., as seller (the "Seller"), and MMCA Auto Receivables, Inc., as purchaser
(the "Purchaser").
1. On or prior to the Determination Date preceding each
Payment Date, the Servicer shall notify the Purchaser and the Seller of the
Yield Supplement Amount for such Payment Date.
2. In consideration for the Purchaser entering into the
Purchase Agreement and the purchase price paid to the Seller for the Receivables
under the Purchase Agreement, we agree to make a payment of the Yield Supplement
Amount to the Purchaser, or to the pledgee of the assignee of the Purchaser
referred to in Section 5 hereof, on the Business Day prior to each Payment Date.
3. All payments pursuant hereto shall be made by federal wire
transfer (same day) funds or in immediately available funds, to such account as
the Purchaser or the pledgee of the assignee of the Purchaser referred to in
Section 5 hereof, may designate in writing to the Seller, prior to the relevant
Payment Date.
4. Our agreements set forth in this Yield Supplement Agreement
are our primary obligations and such obligations are irrevocable, absolute and
unconditional, shall not be subject to any counterclaim, setoff or defense and
shall
<PAGE>
MMCA Auto Receivables, Inc.
Page 2
remain in full force and effect without regard to, and shall not be released,
discharged or in any way affected by, any circumstances or condition whatsoever.
5. Pursuant to the Sale and Servicing Agreement, the Purchaser
will sell, transfer, assign and convey its interest in this Yield Supplement
Agreement to MMCA Auto Owner Trust 1998-1 (the "Trust"), and the Seller hereby
acknowl edges and consents to such sale, transfer, assignment and conveyance.
Concurrent with such sale, transfer, assignment and conveyance, pursuant to the
Indenture, the Trust will pledge its rights under this Yield Supplement
Agreement, along with certain other assets of the Trust, to Bank of Tokyo -
Mitsubishi Trust Company, as Indenture Trustee, to secure its obligations under
the Notes and the Indenture, and the Seller hereby acknowledges and consents to
such pledge. The Seller hereby agrees, for the benefit of the Trust, that
following such sale, transfer, assignment, conveyance and pledge, this Yield
Supplement Agreement shall not be amended, modified or terminated without the
consent of Wilmington Trust Company, as Owner Trustee on behalf of the Trust,
and, prior to the payment in full of the Notes, the Indenture Trustee.
6. This Yield Supplement Agreement will be governed by, and
construed in accordance with, the laws of the State of New York.
7. Except as otherwise provided herein, all notices pursuant
to this Yield Supplement Agreement shall be in writing and shall be effective
upon receipt thereof. All notices shall be directed as set forth below, or to
such other address or to the attention of such other person as the relevant
party shall have designated for such purpose in a written notice.
If to the Purchaser:
MMCA Auto Receivables, Inc.
6363 Katella Avenue
Cypress, California 90630-5205
Attention: Secretary/Treasurer
Telephone: (714) 236-1592
<PAGE>
MMCA Auto Receivables, Inc.
Page 3
Telecopy: (714) 236-1300
If to the Seller:
-----------------
Mitsubishi Motors Credit of America, Inc.
6363 Katella Avenue
Cypress, California 90630-5205
Attention: Vice President, Secretary and
Treasurer
Telephone: (714) 236-1500
Telecopy: (714) 236-1300
8. This Yield Supplement Agreement may be executed in one or
more counterparts and by the different parties hereto on separate counterparts,
all of which shall be deemed to be one and the same document.
<PAGE>
MMCA Auto Receivables, Inc.
Page 4
If the foregoing satisfactorily sets forth the terms and
conditions of our agreement, please indicate your acceptance thereof by signing
in the space provided below and returning to us the enclosed duplicate original
of this letter.
Very truly yours,
MITSUBISHI MOTORS CREDIT
OF AMERICA, INC., as
Seller
By:
-----------------------
Name:
Title:
Agreed and accepted as of
the date first above written:
MMCA AUTO RECEIVABLES, INC.,
as Purchaser
By:
---------------------------
Name:
Title:
<PAGE>
Exhibit 24.1
MMCA AUTO RECEIVABLES, INC.
Unanimous Written Consent of the Board of Directors
- -------------------------------------------------------------------------------
Pursuant to Section 141(f) of the
General Corporation Law of the State of Delaware
- -------------------------------------------------------------------------------
The undersigned, being all of the Directors of MMCA Auto Receivables,
Inc., a Delaware Corporation ("Company"), do hereby consent to the adoption of,
and do hereby adopt, the resolutions hereinafter set forth as the action of the
Board of Directors of the Company pursuant to Section 141(f) of the General
Corporation Law of the State of Delaware with the same force and effect as if
said resolutions had been approved and adopted at a special meeting of the Board
of Directors of the Company, duly called and held for such purpose, and do
hereby direct the Secretary of the Company to insert this Consent in the minute
books of the Company:
RESOLVED, that the Company is hereby authorized to enter into an agreement
("Purchase Agreement") with Mitsubishi Motors Credit of America, Inc., providing
for the purchase by the Company of consumer and commercial vehicle retail
installment sale contracts and assets relating thereto, upon such terms and
conditions as may be approved by any two of the following officers: the
President, any Executive Vice President and the Treasurer.
RESOLVED, that the President, any Executive Vice President, and the
Treasurer, and each of them, be and hereby are authorized, in the name and on
behalf of the Company, at any time, to take such action, and to execute (by
either manual or facsimile signature) and deliver the Purchase Agreement and
such agreements, documents or other instruments in connection therewith or
related thereto as they, or any of them, may determine necessary, appropriate or
desirable, the taking of such action or the execution of the Purchase Agreement
or agreements, documents or other instruments in connection therewith or related
thereto to be conclusive evidence of such determination with respect thereto.
RESOLVED, that the Company is hereby authorized to issue and sell in (i) a
public offering required to be registered with the Securities and Exchange
Commission (the "Commission") pursuant to the applicable provisions of the
Securities Act of 1933, as amended (the "Act"), and/or (ii) in a private
placement or offshore offering exempt from registration under the Act,
certificates or securities ("Receivables Securities") relating to or
representing an undivided interest in consumer and commercial vehicle retail
installment sale contracts ("Receivables") acquired by the Company, in an
aggregate principal amount not to exceed the aggregate principal amount
authorized for registration under the Act pursuant to the next succeeding
resolution, upon such terms and conditions as may be fixed by the Board of
Directors or by the President, the Treasurer and any
<PAGE>
Executive Vice President, and the President, the Treasurer and any Executive
Vice President be and hereby are authorized to determine the terms and
conditions of the Receivables Securities.
RESOLVED, that the preparation of a Registration Statement on such form as
may be appropriate (the "Registration Statement") covering the Receivables
Securities, including a prospectus, exhibits and other documents, to be filed
with the Commission, for the purpose of registering the offer and sale of the
Receivables Securities under the Act in principal amount not to exceed in the
aggregate $950 million be and it hereby is in all respects approved; that the
directors and proper officers of the Company, and each of them, be and hereby
are authorized to sign and execute on their own behalf, or in the name and on
behalf of the Company, or both, as the case may be, the Registration Statement,
with such changes, if any, therein, including amendments to the prospectus and
the addition or amendment of exhibits and other documents relating thereto or
required by law or regulation in connection therewith, all in such form as such
directors and officers may deem necessary, appropriate or desirable, as
conclusively evidenced by their execution thereof, and that the appropriate
officers of the Company, and each of them, be and hereby are authorized to cause
the Registration Statement, so executed, to be filed with the Commission.
RESOLVED, that the directors and appropriate officers of the Company, and
each of them, be and hereby are authorized to sign and execute on their own
behalf, or in the name and on behalf of the Company, or both, as the case may
be, any and all amendments (including post-effective amendments ) to the
Registration Statement, including amendments to the prospectus and the addition
of amendment of exhibits and other documents relating thereto or required by law
or regulation in connection therewith, all in such form, with such changes, if
any, therein as such directors and officers may deem necessary, appropriate or
desirable, as conclusively evidenced by their execution thereof, and that the
appropriate officers of the Company, and each of them, be or hereby are
authorized to cause such amendment or amendments, so executed to be filed with
the Commission.
RESOLVED, that each officer and director who may be required to sign and
execute the Registration Statement or any amendment thereto or document in
connection therewith (whether on behalf of the Company, or as an officer or
director of the Company, or otherwise), be and hereby is authorized to execute a
power of attorney appointing Eric L. Eckes, J. Sean Plater and Tatsuo Nonaka,
and each of them, severally, as true and lawful attorney or attorneys to sign in
his name, place and stead in any such capacity the Registration Statement and
any and all amendments (including post-effective amendments) thereto and
documents in connection therewith, and to file the same with the Commission,
each of said attorneys to have power to act with or without the other, and to
have full power and authority to do and perform, in the name and on behalf of
each of said officers and directors who shall have executed such a power of
attorney, every act whatsoever which such attorneys, or any of them, may deem
necessary, appropriate or desirable to be done in connection therewith as fully
and to all intents and purposes as such officers or directors might or could do
in person.
RESOLVED, that the proper officers of the Company be and hereby are
authorized in the name and on behalf of the Company to take any and all action
which such persons, or any of them,
<PAGE>
may deem necessary, appropriate or desirable in order to obtain a permit,
register or qualify the Receivables Securities for issuance and sale or to
request an exemption from registration of such securities or to register or
obtain a license for the Company as a dealer or broker under the securities laws
of such jurisdictions as such person, or any of them, may deem necessary,
appropriate or desirable, and in connection with such registrations, permits,
licenses, qualifications and exemptions to execute, acknowledge, verify,
deliver, file and publish all such applications, reports, resolutions,
irrevocable consents to service of process, powers of attorney and other papers
and instruments as may be required under such laws, and to take any and all
further action which such persons, or any of them, may deem necessary,
appropriate or desirable in order to maintain such registrations in effect for
as long as such persons or any of them, may deem to be in the best interests of
the Company.
RESOLVED, that any and all in haec verba resolutions which may be required
by the Blue Sky or securities laws of any state in which the Company intends to
offer to sell the Receivables Securities be, and they hereby are, adopted; that
the proper officers of the Company be, and they hereby are, authorized to
certify that such resolutions were duly adopted by virtue of this Unanimous
Written Consent of the Board of Directors of the Company, and that the Secretary
of the Company shall cause a copy of each resolution so certified to be attached
to this Consent.
RESOLVED, that the President, the Treasurer and any Executive Vice
President of the Company be, and each of them hereby is, in the name and on
behalf of the Company, authorized, empowered and directed to select one or more
underwriters of the Receivables Securities and to negotiate the terms and
provisions of an underwriting agreement (the "Underwriting Agreement") between
the Company and such underwriters relating to the public offering described in
and contemplated by the Registration Statement.
RESOLVED, that the President, the Treasurer and any Executive Vice
President of the Company be, and each of them hereby is, in the name and on
behalf of the Company, authorized, empowered and directed to select one or more
purchasers or placement agents of the Receivables Securities and to negotiate
the terms and provisions of one or more purchase agreements (each, a "Securities
Purchase Agreement") between the Company and such purchasers or placement agents
relating to the sale and distribution of the Receivables Securities.
RESOLVED, that the President, the Treasurer and any Executive Vice
President of the Company be, and each of them hereby is, in the name and on
behalf of the Company, authorized, empowered and directed to negotiate the terms
and provisions of one or more trust agreements (each, a "Trust Agreement")
between the Company, as Depositor, and an entity qualified to act in such
capacity, as Owner Trustee, relating to the establishment of MMCA Auto Trust
1998-1 (the "Trust").
RESOLVED, that the President, the Treasurer and any Executive Vice
President of the Company be, and each of them hereby is, in the name and on
behalf of the Company, authorized, empowered and directed to negotiate the terms
and provisions of one or more sale and servicing agreements (each, a "Sale and
Servicing Agreement") among the Company, as Seller, Mitsubishi
<PAGE>
Motors Credit of America, Inc., as Servicer, and the Trust, relating to the
transactions described in and contemplated by the Registration Statement.
RESOLVED, that the President, the Treasurer and any Executive Vice
President of the Company be, and each of them hereby is, in the name and on
behalf of the Company, authorized, empowered and directed to enter into one or
more limited quaranty or similar credit enhancement agreements (each, a "Limited
Guaranty Agreement") relating to the Receivables Securities providing for the
issuance by the Company of a limited guaranty of certain amounts ("Covered
Amounts") that may become due with respect to the Receivables Securities and the
pledge of certain assets of the Company to secure such limited guaranty, the
Covered Amounts under such Limited Guaranty Agreements not to exceed in the
aggregate $200 million.
RESOLVED, that the President, the Treasurer and any Executive Vice
President of the Company be, and each of them hereby is, in the name and on
behalf of the Company, authorized, empowered and directed to select one or more
domestic or foreign clearing corporations and to enter into one or more
agreements (each, a "Clearing Agreement") with a bank, financial institution or
other corporation or entity, providing for the settlement and clearance of any
Receivable Security through the facilities of any such clearing corporation.
RESOLVED, that the President, the Treasurer and any Executive Vice
President of the Company be, and each of them hereby is, in the name and on
behalf of the Company, authorized, empowered and directed to execute and deliver
the Underwriting Agreement, Securities Purchase Agreements, Trust Agreements,
Sale and Servicing Agreements, Limited Guaranty Agreements and Clearing
Agreements and to perform the obligations of the Company under the terms of the
Underwriting Agreement, Securities Purchase Agreements, Trust Agreements, Sale
and Servicing Agreements, Limited Guaranty Agreements and Clearing Agreements,
and Eric L. Eckes is authorized to execute the Underwriting Agreement.
RESOLVED, that the Company is authorized to sell, transfer, and assign the
Receivables, in a principal amount not to exceed $950 million, to the Trust and
to have Receivables sold, transferred, and assigned back to it by the Trust in
such amounts, at such times and as otherwise described in or contemplated by the
Registration Statement and the Sale and Servicing Agreements, and that the
President, the Treasurer and any Executive Vice President of the Company be, and
each of them hereby is, in the name and on behalf of the Company, authorized,
empowered and directed to execute and deliver to the Trust such papers and
documents, including without limitation assignment documents, bills of sale,
Uniform Commercial Code financing statements and such other documents as are
necessary or desirable to evidence the sale, transfer and assignment of the
Receivables to or the transfer and assignment of Receivables from the Trust as
heretofore provided as described in and contemplated by the Registration
Statement and the Sale and Servicing Agreements and all exhibits thereto.
RESOLVED, the President, the Treasurer and any Executive Vice President of
the Company be, and each of them hereby is authorized, empowered and directed,
in the name and on behalf of the Company and under its corporate seal (which may
be a facsimile of such seal), to
<PAGE>
execute (by manual or facsimile signature) Receivables Securities (and, in
addition, Receivables Securities to replace any of the Receivables Securities
which are lost, stolen, mutilated or destroyed and Receivable Securities
required for exchange, substitution or transfer, all as provided in one or more
indentures relating to the Receivables Securities (each, an "Indenture"), the
Trust Agreements or other agreements) in fully registered form in substantially
the forms of Receivables Securities to be set forth in the Indentures, Trust
Agreements or other agreements with such changes therein and additions thereto
as such officer or officers executing the Receivables Securities may deem
necessary, appropriate or desirable, as conclusively evidenced by his or their
execution thereof.
RESOLVED, that the President, the Treasurer and any Executive Vice
President of the Company be, and each of them hereby is, in the name and on
behalf of the Company, authorized to appoint one or more paying agents,
registrars, transfer agents, and other agents and functionaries, and to execute
and deliver, in the name and on behalf of the Company, any agreements,
instruments or documents relating to any such appointment, for the purpose of
the implementing and giving effect to the respective provisions of the
Indentures, Trust Agreements, Receivables Securities or other agreements which
shall be executed and delivered pursuant to the foregoing resolutions.
RESOLVED, that the retention of the law firm of Skadden, Arps, Slate,
Meagher & Flom LLP, and any other firm chosen by the President, the Treasurer,
or any Executive Vice President, as special counsel to the Company in connection
with the establishment of the Trust and the preparation of documents relating to
the issuance and sale of the Receivables Securities, and any and all related
matters, be, and it hereby is, ratified and approved.
RESOLVED, that the President, the Treasurer and any Executive Vice
President of the Company be, and each of them hereby is, authorized and
empowered to retain such other counsel, accountants, investment advisors, and
such other professionals and advisors as he shall deem necessary or desirable in
order to accomplish the purpose and intent of these resolutions.
RESOLVED, that the President, the Treasurer and any Executive Vice
President of the Company be, and each of them hereby is, authorized to pay any
and all expenses and fees arising in connection with the issuance and sale of
the Receivables Securities, any registration, qualification or exemption under
securities laws of any state or other jurisdiction, including Federal, and
otherwise in connection with matters encompassed by these resolutions.
RESOLVED, that the President, the Treasurer and any Executive Vice
President of the Company be, and each of them hereby is, authorized and directed
to execute and deliver or cause to be executed and delivered such additional or
other documents, certificates, and instruments, and to take any and all such
other action as may be deemed by each such officer necessary, desirable or
appropriate in order to carry out the purpose and intent of the foregoing
resolutions.
RESOLVED, that the President, the Treasurer and any Executive Vice
President of the Company be, and each of them hereby is, in the name and on
behalf of the Company, authorized, empowered and directed to do and perform, or
cause to be done and performed, all such acts,
<PAGE>
deeds, and things and to make, execute, and deliver, or cause to be made,
executed, and delivered, all such agreements, undertakings, documents,
instruments, or certificates in the name and on behalf of the Company, or
otherwise as such officer may deem necessary or appropriate to effectuate or
carry out fully the purposes and intent of the foregoing resolutions, including,
without limitation, the performance of the obligations of the Company under the
Registration Statement, Purchase Agreement, Underwriting Agreement, Securities
Purchase Agreements, Trust Agreements, Sale and Servicing Agreements, Limited
Guaranty Agreements, Clearing Agreements, and all agreements that are exhibits
to the aforementioned agreements and documents, or any other agreement,
certificate, or instrument referred to or contemplated herein or therein.
RESOLVED, that any and all actions taken or contracts entered into
heretofore by any of the President, the Treasurer, or any Executive Vice
President of the Company, as well as any and all actions taken or contracts
entered into by said person as an individual acting for the Company, with
respect to the Registration Statement, Purchase Agreement, Underwriting
Agreement, Securities Purchase Agreements, Trust Agreements, Sale and Servicing
Agreements, Limited Guaranty Agreements, Clearing Agreements, and all agreements
that are exhibits to the aforementioned agreements and documents, or the
transactions and events contemplated hereby or thereby, be and the same hereby
are ratified, approved and confirmed, and all such actions and contracts are
hereby adopted as though said individuals had at such time full power and
authority to act for and on behalf of the Company and in the same manner as if
each and every act had been done pursuant to the specific authorization of the
Board of Directors of the Company.
RESOLVED, that for the purpose of facilitating the execution of this
Unanimous Written Consent of the Board of Directors, this document may be
executed in one or more counterparts, each of which counterpart shall be deemed
to be an original and all of which counterparts shall constitute but one and the
same instrument.
FURTHER RESOLVED, that these resolutions are effective as of the 3lst day
of July, 1998.
IN WITNESS WHEREOF, the undersigned, being all the directors of MMCA Auto
Receivables, Inc., have executed this Unanimous Written Consent of the Board of
Directors.
- -------------------------------- --------------------------------
Charles A. Tredway Hiroshi Yajima
- -------------------------------- --------------------------------
Masaki Takahashi Yasuhiro Hagihara
- --------------------------------
John Maynard
<PAGE>
Exhibit 25
- --------------------------------------------------------------------------------
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
-----------------------
Bank of Tokyo-Mitsubishi Trust Company
(Exact name of trustee as specified in its charter)
New York 13-5643426
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
1251 Avenue of the Americas 10020
(Address of principal executive office) (Zip Code)
Robert E. Hand
General Counsel
Bank of Tokyo-Mitsubishi Trust Company
1251 Avenue of the Americas
New York, New York 10020
(Name, address and telephone number of agent for service)
-----------------------
MMCA Auto Receivables, Inc.
(Exact name of obligor as specified in its charter)
Delaware 333-58869
(State of other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
6363 Katella Avenue
Cypress, CA 90630-5205
<PAGE>
(Address of principal executive offices) (Zip Code)
-----------------------
....% Asset Backed Notes...
(Title of the indenture securities)
- --------------------------------------------------------------------------------
1. General Information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Name Address
---- -------
Superintendent of Banks of 2 Rector Street, New York, NY,
the State of New York 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, NY,
10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
(b) Whether it is authorized to exercise corporate trust powers.
Yes
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Attached herewith pursuant to Rule 7a-29 under the Trust Indenture Act of
1939 (the "Act") and 17 C.F.R. 229.10 (d).
1. A copy of the Organization Certificate of Bank of Tokyo-Mitsubishi
Trust Company as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers.*
- ----------
* Exhibit previously filed with the Securities and Exchange Commission with
Regis-
(continued...)
2
<PAGE>
4. A copy of the existing By-laws of the Trustee.*
6. The consent of the Trustee required by Section 321(b) of the Act.*
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
- ----------
* (...continued)
tration No. 333-32937 and incorporated herein by reference thereto.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, Bank of
Tokyo-Mitsubishi Trust Company, a corporation organized and existing under the
laws of the State of New York, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
The City of New York, and State of New York, on the 5th day of August, 1998.
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By:
--------------------------------
Name:
Title:
4
<PAGE>
EXHIBIT 7 TO FORM T-1
BANK OF TOKYO-MITSUBISHI TRUST COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1997 and 1996
- -----------------------------------------------------------------------------------
($ In thousands, except share data) 1997 1996
- -----------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Cash and due from banks $ 692,239 $ 607,218
Interest-bearing deposits placed (note 10) 1,386,691 1,514,135
Federal funds sold 167,000 --
Available for sale securities (note 2) 503,301 530,329
Loans, net of unearned Income (note 3) 4,632,042 4,486,341
Less allowance for loan losses (note 3) 119,907 110,382
- -----------------------------------------------------------------------------------
Loans, net 4,512,135 4,375,959
- -----------------------------------------------------------------------------------
Bank premises and equipment net of accumulated
depreciation of $6,627 and $6,168, respectively 9,305 5,729
Customers' liability on acceptances 541 3,836
Accrued interest receivable 64,818 78,125
Other assets 33,441 40,705
- -----------------------------------------------------------------------------------
Total assets $7,369,471 $7,159,036
- -----------------------------------------------------------------------------------
LIABILITIES:
Deposits:
Noninterest-bearing deposits in domestic offices $1,35l,563 $1,280,248
Interest-bearing deposits in domestic offices (note 6) 519,102 562,538
lnterest-bearing deposits in overseas offices (note 6) 1,989,833 1,794,506
- -----------------------------------------------------------------------------------
Total deposits: 3,860,498 3,637,292
- -----------------------------------------------------------------------------------
Federal funds purchased (overnight) and securities sold
under agreements to repurchase 265,406 355,474
Other borrowed funds (including term Federal funds
purchased of $150,000 in 1997 & $149,000 in 1996) 1,946,274 2,016,381
Acceptances outstanding 541 3,836
Accrued interest payable 42,353 50,092
Accrued taxes and other liabilities (note 5) 186,866 122,673
- -----------------------------------------------------------------------------------
Liabilities other than capital notes 6,301,938 6,185,748
Capital notes and subordinated debt (note 7) 313,286 277,281
- -----------------------------------------------------------------------------------
Total liabilities 6,615,224 6,463,029
- -----------------------------------------------------------------------------------
STOCKHOLDERS EQUITY (NOTE 4):
Preferred stock (par value $100); 1,000,000 shares
authorized, none outstanding -- --
Common stock (par value $100); authorized 1,485,000
shares; issued 1,329,219 shares: 132,922 132,922
Surplus 311,494 311,494
Undivided profits 303,912 248,266
Net unrealized gain on available-for-sale securities 5,919 3,325
- -----------------------------------------------------------------------------------
Total stockholders equity 754,247 696,007
- -----------------------------------------------------------------------------------
Total liabilities and stockholder's equity $7,369,471 $7,159,036
- -----------------------------------------------------------------------------------
</TABLE>
