REGISTRATION NO. 333-66063
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MMCA AUTO OWNER TRUST 1999-1
(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)
DELAWARE 9999 33-0570905
(State or other (PRIMARY STANDARD (I.R.S. EMPLOYER
jurisdiction of INDUSTRIAL IDENTIFICATION NO.)
incorporation or CLASSIFICATION CODE NO.)
organization)
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)
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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)
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Copies to:
SUSAN M. CURTIS, ESQ. DALE W. LUM, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP BROWN & WOOD LLP
919 THIRD AVENUE 555 CALIFORNIA STREET
NEW YORK, NEW YORK 10022 SAN FRANCISCO, CALIFORNIA 94104
Approximate date of proposed sale to the public: As soon as practicable
after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box. |_|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration number of the earlier effective registration statement for
the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===============================================================================================
PROPOSED
ROPOSED MAXIMUM MAXIMUM
OFFERING PRICE AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO PER UNIT(1) OFFERING REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED P PRICE(1) FEE (2)
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<S> <C> <C> <C> <C>
% Class A-1 Asset
Backed Notes................ $[ ] 100% $[ ] $[ ]
% Class A-2 Asset
Backed Notes................ $[ ] 100% $[ ] $[ ]
% Class A-3 Asset
Backed Notes................ $[ ] 100% $[ ] $[ ]
% Class A-4 Asset
Backed Notes................ $[ ] 100% $[ ] $[ ]
===============================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) $278 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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[FLAG]
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
Subject to Completion
Preliminary Prospectus Dated , 1999
PROSPECTUS
$
MMCA AUTO OWNER TRUST 1999-1
$ % CLASS A-1 ASSET BACKED NOTES
$ % CLASS A-2 ASSET BACKED NOTES
$ % CLASS A-3 ASSET BACKED NOTES
$ % CLASS A-4 ASSET BACKED NOTES
MMCA AUTO RECEIVABLES, INC.
SELLER
[LOGO]
SERVICER
The trust will issue the following notes:
<TABLE>
<CAPTION>
Class A-1 Notes Class A-2 Notes Class A-3 Notes Class A-4 Notes
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Principal Amount $ $ $ $
--------------- ---------------- --------------- ---------------
Price (*) $ ( %) $ ( %) $ ( %) $ ( %)
--------------- ---------------- --------------- ---------------
Underwriting Discounts
and Commissions $ $ $ $
--------------- ---------------- --------------- ---------------
Net Proceeds to the
Seller $ $ $ $
--------------- ---------------- --------------- ---------------
</TABLE>
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(*) The price of the notes will also include any interest accrued on the
notes from the date on which the notes are issued.
Interest and principal on the notes will be payable monthly, on the 15th or
the first business day after the 15th.
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
THE NOTES REPRESENT OBLIGATIONS OF THE TRUST AND ARE BACKED ONLY BY THE
ASSETS OF THE TRUST. THE NOTES DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS
IN MMCA AUTO RECEIVABLES, INC., MITSUBISHI MOTORS CREDIT OF AMERICA, INC.
OR ANY OF THEIR AFFILIATES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The trust is offering the notes subject to availability.
UNDERWRITERS OF THE NOTES
MERRILL LYNCH & CO. [ ]
The date of this Prospectus is , 1999
TABLE OF CONTENTS
Page
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IMPORTANT NOTICE ABOUT INFORMATION
PRESENTED IN THIS PROSPECTUS.............................................iii
SUMMARY OF TERMS.............................................................1
RISK FACTORS.................................................................4
DESCRIPTION OF MMCA AUTO OWNER
TRUST 1999-1...............................................................9
Description of the Limited Purposes and Assets of the Trust..................9
Capitalization of the Trust.................................................10
Description of the Owner Trustee............................................10
DESCRIPTION OF THE PROPERTY OF THE TRUST....................................10
MMCA'S VEHICLE CONTRACT PORTFOLIO...........................................11
Types of Contracts Included in MMCA's Motor Vehicle Contract
Portfolio.................................................................11
MMCA's Underwriting Standards...............................................11
MMCA's Servicing and Collection Procedures..................................12
Physical Damage Insurance on MMCA's Contracts...............................13
Delinquency, Credit Loss and Returned Vehicle Loss Experience
of MMCA's Contracts.......................................................13
DESCRIPTION OF THE RECEIVABLES..............................................16
Selection Criteria for the Receivables......................................17
Certain Characteristics of the Initial Receivables..........................18
Payment Methods of the Receivables..........................................21
Maturity and Prepayment Considerations for the Receivables..................22
POOL FACTORS AND OTHER INFORMATION..........................................29
USE OF PROCEEDS.............................................................29
DESCRIPTION OF THE SELLER...................................................29
DESCRIPTION OF THE SERVICER.................................................30
DESCRIPTION OF THE TERMS OF THE NOTES.......................................30
Principal Amount of and Interest Rates on the Notes.........................30
Registration of the Notes in the Name of Cede as
Nominee of DTC............................................................31
Book Entry Registration of the Notes........................................31
Issuance of Definitive Notes Upon Occurrence of Certain
Circumstances.............................................................34
Interest Payable on the Notes...............................................35
Principal Payable on the Notes..............................................36
Mandatory Redemption of the Notes...........................................37
Optional Redemption of the Notes............................................37
Description of the Indenture Trustee........................................37
Description of the Trust's Bank Accounts....................................37
Description of the Yield Supplement Agreement...............................39
Description of the Yield Supplement Account.................................39
Description of the Indenture Cash Flows.....................................40
Description of the Negative Carry Account...................................45
Description of the Reserve Account and Supplemental
Reserve Account...........................................................45
Description of the Balloon Payment Receivables..............................47
Subordination of the Certificates to the Notes..............................49
Advances by the Servicer of Amounts Payable
on the Receivables........................................................49
Deposit of Collections on the Receivables to
Collection Account........................................................50
Description of the Statements to Noteholders................................50
Description of the Terms of the Indenture...................................51
DESCRIPTION OF THE TRANSFER AND SERVICING
AGREEMENTS................................................................57
Sale and Assignment of the Initial Receivables and the Subsequent
Receivables...............................................................57
Description of the Pre-Funding Period.......................................60
Mandatory Repurchase of Receivables.........................................60
Description of Servicing Procedures.........................................61
Servicing Compensation......................................................62
Evidence to be Provided as to Servicer's Compliance with its
Servicing Obligations.....................................................63
Resignation by the Servicer.................................................63
Consequences of Merger, Conversion, Consolidation or Similar
Actions by Servicer.......................................................63
Limits on Servicer's Liability..............................................64
Limits on Servicer's Obligations in Connection
with Legal Actions........................................................64
Events of Servicing Termination.............................................64
Rights of Indenture Trustee and Noteholders Upon an Event of
Servicing Termination.....................................................65
Requirements for Amendments of the Transfer and Servicing
Agreements................................................................65
Requirements for Termination of the Trust...................................66
Actions to be Taken by Indenture Trustee Upon Termination of the
Trust.....................................................................66
Description of the Administration Agreement.................................66
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES....................................66
Bankruptcy Considerations Relating to the Transfer of the
Receivables by MMCA to the Seller.........................................66
Trust's Rights in the Receivables...........................................67
Trust's Security Interests in the Financed Vehicles.........................67
Repossession of Financed Vehicles by Servicer on Behalf of the
Trust.....................................................................69
Servicer's Obligation to Provide Notice of Sale of a Financed
Vehicle; Obligor's Redemption Rights in a Financed Vehicle................69
Trust's Right to Deficiency Judgments Against Obligors......................69
Obligor's Right to Excess Proceeds Upon Sale of a
Financed Vehicle..........................................................70
Consumer Protection Laws Affecting the Trust's Rights under the
Receivables...............................................................70
Other Laws that Impose Limits on Enforcing the Receivables..................71
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.....................................71
Tax Treatment of the Notes and the Trust under Federal Income
Tax Law...................................................................71
Federal Tax Consequences of Waivers of Events of Default and
Amendments of Notes by Noteholders........................................73
Information Reporting and Backup Withholding of Taxes by
Indenture Trustee.........................................................74
Tax Consequences to Foreign Investors.......................................74
CERTAIN STATE TAX CONSEQUENCES..............................................75
ELIGIBILITY OF NOTES FOR PURCHASE BY MONEY
MARKET FUNDS..............................................................75
ERISA CONSIDERATIONS........................................................75
Special ERISA Considerations for Employee Benefit Plans.....................75
Special ERISA Considerations Applicable to Insurance
Company General Accounts..................................................76
General Investment Considerations for Employee
Benefit Plans.............................................................76
UNDERWRITING................................................................77
LEGAL OPINIONS..............................................................78
REPORTS TO NOTEHOLDERS......................................................78
WHERE YOU CAN FIND MORE INFORMATION.........................................78
INDEX OF PRINCIPAL TERMS....................................................80
ANNEX A.....................................................................84
IMPORTANT NOTICE
ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
You should rely only on information on the notes provided in this
prospectus. We have not authorized anyone to provide you with different
information.
We include cross-references to sections where you can find additional
information. Check the table of contents to locate these sections.
You can find a listing of the pages where capitalized terms used in this
prospectus are defined beginning on page 83 in this prospectus.
SUMMARY OF TERMS
THIS SUMMARY CONTAINS A BRIEF DESCRIPTION OF THE NOTES. YOU WILL FIND A
DETAILED DESCRIPTION OF THE TERMS OF THE OFFERING OF THE NOTES FOLLOWING
THIS SUMMARY.
The Trust: MMCA Auto Owner Trust 1999-1
Seller of the Receivables to MMCA Auto Receivables, Inc.
the Trust:
Seller's Address: 6363 Katella Avenue, Cypress, CA 90630
Seller's Telephone Number: (714) 236-1592
Servicer of the Receivables: Mitsubishi Motors Credit of America, Inc.
Indenture Trustee: Bank of Tokyo - Mitsubishi Trust Company
Owner Trustee: Wilmington Trust Company
The Trust Property: The trust property will include:
o the receivables, which are motor vehicle
retail installment sale
contracts originated by Mitsubishi Motors
Credit of America, Inc.;
o the security interests in the motor
vehicles financed by the receivables;
o the reserve account; o the supplemental
reserve account; o the yield supplemental
account; and o the negative carry account
THE TERMS OF THE NOTES
<TABLE>
<CAPTION>
Class A-1 Class A-2 Class A-3 Class A-4
Notes Notes Notes Notes
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Principal Amount: $__________ $__________ $__________ $__________
Interest Rate Per Annum: _____% _____% _____% _____%
Interest Accrual Method: actual/360 30/360 30/360 30/360
Payment Dates: monthly (15th) monthly(15th) monthly(15th) monthly(15th)
First Payment Date: February 15, 1999 February 15, 1999 February 15, 1999 February 15, 1999
Scheduled Final Payment
Date: _________________ _________________ _________________ _________________
Anticipated Ratings
(Moody's/Standard
& Poor's):* P-1/A-1 Aaa/AAA Aaa/AAA Aaa/AAA
</TABLE>
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* It is a condition to the offering of the notes that these ratings be
obtained. However, a rating agency in its discretion may lower or
withdraw its rating in the future.
THE RECEIVABLES
The trust will own two types of receivables:
o receivables that provide for equal monthly payments over the term of
the receivable; and
o receivables that provide for equal monthly payments plus a
substantially larger final balloon payment.
The principal balance of the receivables on [ ], 1999 was $[ ].
The principal balance of the balloon payments on [ ], 1999 was $[ ].
The seller expects to sell additional receivables to the trust during a
pre-funding period that begins on the closing date and ends no later than
[ ].
On each date on which additional receivables are sold to the trust, the
total balloon payments payable to the trust as a percentage of the total
principal balance of receivables will not exceed [ ]%
PAYMENT SOURCES
On each payment date, the trust will pay the amounts owed by the trust from
the following sources:
o collections on the receivables during the prior month;
o amounts withdrawn from the reserve account and the supplemental reserve
account;
o amounts withdrawn from the yield supplement account and the negative
carry account; and
o advances by the servicer of amounts due on the receivables but not paid
during the prior month.
PRIORITY OF DISTRIBUTIONS
On each payment date, the trust will pay the amounts owed by the trust in
the following order:
(1) payment to the servicer of amounts advanced by the servicer on
previous payment dates;
(2) payment of the servicing fee equal to 1/12th of 1.0% of the total
principal balance of the receivables on the first day of the prior
month;
(3) payment of the interest and principal payable on the notes; and
(4) any required deposits to the reserve account and the supplemental
reserve account.
For further information on the priority of distributions, see "Description
of the Terms of the Notes-Description of the Indenture Cash Flows" in this
prospectus.
PRIORITY OF INTEREST PAYMENTS
On each payment date, the trust will pay interest on the notes, in
proportion to the principal balance of each class.
PRIORITY OF PRINCIPAL PAYMENTS
On each payment date, the amount required to be paid as principal on the
notes will equal:
o the principal scheduled to be paid on the receivables during the
prior month; plus
o the full prepayments on the receivables received during the prior
month; plus
o the principal balance of receivables that became defaulted
receivables during the prior month.
On each payment date, the trust will distribute principal on the notes in
the following order:
(1) to the Class A-1 Notes until the Class A-1 Notes are paid in full;
(2) to the Class A-2 Notes until the Class A-2 Notes are paid in full;
(3) to the Class A-3 Notes until the Class A-3 Notes are paid in full;
(4) to the Class A-4 Notes until the Class A-4 Notes are paid in full.
If a default under the indenture occurs, the order of priority for
principal payments will change, and the trust will pay principal on all
classes of the notes, in proportion to the principal balance of each class,
until the notes are paid in full.
CERTIFICATES
In addition to the notes, on the closing date the trust will issue $[ ]
total principal amount of certificates. The trust will not make any
distributions on the certificates on any payment date until the interest
and principal payable on the notes on that payment date have been paid. The
certificates are not being offered by this prospectus.
CREDIT ENHANCEMENT
The credit enhancement for the notes will be as follows:
o the subordination of the certificates; and
o the reserve account, the supplemental reserve account and the yield
supplement account.
The credit enhancement for the notes will protect you against losses or
delays in payments on your notes by absorbing losses on the receivables and
other shortfalls in cash flows.
RESERVE ACCOUNT AND SUPPLEMENTAL RESERVE ACCOUNT
On each payment date, the trust will use funds in the supplemental reserve
account and the reserve account to pay the following amounts if collections
on the receivables are insufficient to pay such amounts:
(1) first, the amounts due to the servicer; and
(2) then, the interest and principal due on the notes.
On each payment date, the combined amount required to be on deposit in the
reserve account and the supplemental reserve account will equal the lesser
of (1) [ ]% of the principal balances of the receivables as of the dates on
which the trust acquired them and (2) the principal balance of the notes.
YIELD SUPPLEMENT ACCOUNT
On each payment date, the trust will use funds in the yield supplement
account to cover any shortfall between:
o the sum of (1) the weighted average interest rate on the notes and
(2) [ ]%; and
o the interest rate on each receivable.
OPTIONAL REDEMPTION
The servicer can purchase the receivables once their total principal
balance is 10% or less of their principal balances on the dates they were
sold to the trust. If the servicer purchases the receivables, the indenture
trustee will redeem the notes for the unpaid principal amount plus the
accrued and unpaid interest on the notes.
TAX STATUS
In the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, for federal
income and Delaware and California income and franchise tax purposes:
o the notes will be characterized as debt; and
o the trust will not be characterized as an association or a publicly
traded partnership taxable as a corporation.
If you purchase a note, you agree to treat it as debt for tax purposes.
ERISA CONSIDERATIONS
The notes are generally eligible for purchase by employee benefit plans
that are subject to the Employee Retirement Income Security Act of 1974.
However, administrators of employee benefit plans should review the matters
discussed under "ERISA Considerations" in this prospectus and also should
consult with their legal advisors before purchasing notes.
ELIGIBILITY OF NOTES FOR PURCHASE BY MONEY MARKET FUNDS
The Class A-1 Notes are structured to be eligible for purchase by money
market funds under Rule 2a-7 under the Investment Company Act of 1940, as
amended.
RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase notes.
ABSENCE OF SECONDARY The underwriters for the notes may assist in
MARKET FOR NOTES resales of the notes but they are not required to
COULD LIMIT YOUR do so. A secondary market for the notes may not
ABILITY TO RESELL develop. If a secondary market for the notes does
NOTES develop, it may not continue or it may not be
sufficiently liquid to allow you to resell any of
your notes.
INTERESTS OF OTHER Another person could acquire an interest in a
PERSONS IN receivable that is superior to the trust's
RECEIVABLES AND interest in the receivable because the servicer
VEHICLES COULD will not segregate or mark the receivables as
REDUCE THE FUNDS belonging to the trust. See "Certain Legal Aspects
AVAILABLE TO MAKE of the Receivables-Trust's Rights in the
PAYMENTS ON THE Receivables." If another person acquires an
NOTES interest in a receivable that is superior to the
trust's interest in the receivable, the
collections on that receivable will not be
available to make payments on the notes.
Another person could acquire an interest in a
vehicle financed by a receivable that is superior
to the trust's interest in the vehicle because the
servicer will not amend the certificate of title
or ownership to identify the trust as the new
secured party. See "Certain Legal Aspects of the
Receivables-Trust's Security Interests in the
Financed Vehicles." If another person acquires an
interest in a vehicle that is superior to the
trust's interest in the vehicle, the proceeds from
the sale of the vehicle will not be available to
make payments on the notes.
BANKRUPTCY OF If Mitsubishi Motors Credit of America, Inc.
MITSUBISHI MOTORS ("MMCA") enters a bankruptcy proceeding, you could
CREDIT OF AMERICA, experience losses or delays in the payments on
INC. COULD RESULT your notes. MMCA will sell the receivables to the
IN LOSSES OR DELAYS seller, and the seller will transfer the
IN PAYMENTS ON THE receivables to the trust. However, if MMCA enters
NOTES a bankruptcy proceeding, the court in the
bankruptcy proceeding could conclude that the sale
of the receivables by MMCA to the seller was not a
"true sale" and that MMCA still owns the
receivables. The court could also conclude that
MMCA and the seller should be consolidated for
bankruptcy purposes. If the court were to reach
either of these conclusions, you could experience
losses or delays in payments on your notes
because:
o the indenture trustee will not be able to
exercise remedies against MMCA on your behalf
without permission from the court;
o the court may require the indenture trustee to
accept property in exchange for the receivables
that is of less value than the receivables;
o tax or government liens on MMCA's property
that arose before the transfer of the
receivables to the trust will be paid from the
collections on the receivables before the
collections are used to make payments on your
notes; and
o the indenture trustee may not have a perfected
security interest in (a) one or more of the
vehicles securing the receivables or (b) cash
collections held by MMCA at the time that a
bankruptcy proceeding begins.
The seller has taken steps in structuring the
transactions described in this prospectus to
minimize the risk that a court would conclude that
the sale of the receivables to the seller was not
a "true sale" or that MMCA and the seller should
be consolidated for bankruptcy purposes. See
"Certain Legal Aspects of the
Receivables-Bankruptcy Considerations Relating to
the Transfer of the Receivables by MMCA to the
Seller" and "Description of the Seller."
In a case decided by the U.S. Court of Appeals for
the 10th Circuit in 1993, the court concluded that
accounts transferred by a seller to a buyer should
be included in the bankruptcy estate of the seller
even if the transfer was a "true sale". If MMCA
enters a bankruptcy proceeding and the court in
the bankruptcy proceeding applies the reasoning of
the court in that case, you could experience
losses or delays in the payments on your notes.
See "Certain Legal Aspects of the
Receivables-Bankruptcy Considerations Relating to
the Transfer of the Receivables by MMCA to the
Seller."
RISK THAT YOU MAY POTENTIAL PREPAYMENT OF NOTES DUE TO PREPAYMENT OF
BE REQUIRED TO RECEIVABLES. The payment of principal on your
REINVEST YOUR notes will be accelerated to an extent that cannot
PRINCIPAL IN THE be fully predicted by prepayments on the
NOTES AT A LOWER receivables by the related obligors and purchases
RATE OF RETURN of the receivables by the seller and the servicer
BECAUSE OF due to breaches of representations, warranties and
PREPAYMENTS ON covenants by the seller and servicer. You will
THE NOTES bear the risk that you will have to reinvest the
principal on your notes earlier than you expected
at a rate of interest that is less than the rate
of interest on your notes.
MMCA does not generally maintain historical
records on the rate of prepayment on its
receivables. The obligors on the receivables may
prepay the receivables voluntarily at any time.
The receivables are required to be prepaid upon
the sale, insured loss or other disposition of the
related vehicle. In addition, if MMCA breaches any
of its representations and warranties with respect
to any receivables, MMCA will be required to
repurchase those receivables from the seller, and
the seller will be required to repurchase those
receivables from the trust. MMCA will also be
required to purchase receivables from the trust if
it breaches its servicing obligations with respect
to those receivables. MMCA will also be entitled
to purchase all of the remaining receivables from
the trust once the aggregate principal balance of
the receivables is 10% or less of the principal
balances of the receivables on the dates on which
they were sold to the trust.
POTENTIAL PREPAYMENT OF NOTES DUE TO AN INCENTIVE
PROGRAM OFFERED BY MMCA. Obligors on receivables
that provide for a balloon payment can return the
related vehicle at the end of the term of the
receivable instead of paying the balloon payment.
MMCA will sell the returned vehicles on behalf of
the trust. MMCA expects the amount realized from
the sale of the returned vehicles to be less than
the balloon payments. To reduce losses from
obligors returning their vehicles at the end of
the term of their receivables instead of paying
the balloon payments, MMCA and its affiliates
offer incentives for the obligors to prepay their
receivables and return the related vehicles early
if they purchase another vehicle manufactured by
Mitsubishi Motors Corporation or one of its
affiliates. The incentives encourage a higher
level of prepayments on receivables than would
otherwise be the case. The higher level of
prepayments on receivables will be reflected in a
higher level of prepayments on the notes than
would otherwise be the case. See "Description of
the Receivables-Maturity and Prepayment
Considerations for the Receivables."
POTENTIAL PREPAYMENTS If the aggregate principal balance of the
ON NOTES DUE TO receivables transferred to the trust during the
FAILURE TO TRANSFER pre-funding period is less than the amount
A SUFFICIENT NUMBER deposited to the pre- funding account on the
OF ADDITIONAL closing date, the notes will be prepaid in the
RECEIVABLES TO amount of the shortfall. See "Description of the
THE TRUST Terms of the Notes-Mandatory Redemption of the
Notes."
The ability of the seller to apply the entire
balance of the pre-funding account to the transfer
of receivables to the trust during the pre-funding
period depends on the manufacture, distribution,
sale and financing of motor vehicles by Mitsubishi
Motors Corporation and its affiliates. The seller
will not be able to transfer receivables to the
trust during the pre-funding period unless MMCA
originates those receivables. MMCA mostly finances
vehicles manufactured by Mitsubishi Motors
Corporation and its affiliates. If Mitsubishi
Motors Corporation and its affiliates temporarily
or permanently stop manufacturing, distributing,
selling or financing motor vehicles, then MMCA's
ability to originate receivables for sale to the
seller will be adversely affected.
POTENTIAL LOSS OR Changes in the overall characteristics of the
PREPAYMENTS ON trust's pool of receivables resulting from the
NOTES DUE TO addition of receivables during the pre-funding
CHANGES IN period may POOL increase the risk that you will
CHARACTERISTICS experience losses or delays in payments on your
notes or prepayments on your notes. The
receivables to be transferred by the seller to the
trust during the pre-funding period may be
originated by MMCA using credit criteria that are
different from the credit criteria used by MMCA in
originating the receivables transferred to the
trust on the closing date. Any changes in such
credit criteria may result in a higher rate of
delinquencies and losses on the receivables or a
higher rate of prepayment than would otherwise be
the case, which will be reflected in the timing
and amount of payment of principal and interest on
the notes.
POTENTIAL LOSS ON You may suffer a loss on your notes if the assets
NOTES DUE TO of the trust are insufficient to pay the principal
LIMITED ASSETS OF amount of the notes in full. The only source of
THE TRUST funds for payments on the notes will be the assets
of the trust. The assets of the trust are limited
to the receivables and the funds on deposit in the
trust's bank accounts. The notes will not be
insured or guaranteed by MMCA, including in its
capacity as servicer, or by the seller, the
indenture trustee, the owner trustee or any other
person or entity. Consequently, you must rely for
payment of the notes solely upon collections on
the receivables and funds on deposit in the
trust's bank accounts. See "Description of the
Terms of the Notes-Description of the Reserve
Account and Supplemental Reserve Account."
POTENTIAL LOSS ON The obligors on receivables that provide for a
NOTES IN CONNECTION balloon payment will not have to pay the balloon
WITH SALES OF payment if they return the related vehicle to MMCA
VEHICLES at the end of the term of the receivable. MMCA
will sell the returned vehicle on behalf of the
trust. The trust will use the proceeds from the
sale of the returned vehicle to make payments on
the notes. You may experience delays or losses in
the payments on your notes if the proceeds from
the sale of the returned vehicles are less than
the amount of the balloon payment.
MMCA expects the proceeds from the sale of a
returned vehicle to be less than the balloon
payment because MMCA sets the balloon payments
higher than its estimate of the wholesale value of
the vehicle. See "Description of the Terms of the
Notes-Description of the Balloon Payment
Receivables."
POTENTIAL LOSS ON The obligor under a receivable that provides for a
NOTES IF MMCA DOES balloon payment also has the option to refinance
NOT REFINANCE with MMCA the total amount due at the end of the
BALLOON RECEIVABLES term of the receivable, subject to the
satisfaction of certain conditions. MMCA will be
obligated to provide such financing to the extent
it offers vehicle financing. No successor to MMCA
as servicer will be obligated to provide such
refinancing. If at any time MMCA no longer makes
refinancing available, the seller may contract
with third parties to do so. If a refinancing
option is not available, more obligors may return
their vehicles on the due date of the balloon
payment instead of paying the balloon payment
through refinancing of the motor vehicle, and
consequently more motor vehicles may be sold by
MMCA on behalf of the trust for prices less than
the balloon payment.
POTENTIAL LOSS ON MMCA does not require the obligor under a
NOTES IF VEHICLES receivable that provides for a balloon payment to
FINANCED BY pay the "gap amount" if theft or physical damage
RECEIVABLES ARE to the vehicle results in a total loss of the
ARE STOLEN OR motor vehicle. The "gap amount" is the difference
DESTROYED between the amount owed in respect of the
receivable as of the date of the total loss and
insurance proceeds received with respect to the
motor vehicle. In accordance with its customary
servicing practices and procedures, MMCA treats
any gap amount as a non-cash reduction of the
principal amount of the balloon payment. Any such
reduction will decrease the amount of collections
available to the trust. See "Description of the
Terms of the Notes-Description of the Balloon
Payment Receivables."
LACK OF HISTORICAL Receivables that provide for a balloon payment
DATA REGARDING THE have matured in large volumes only in recent
RETURN RATES OF years. MMCA therefore does not have extensive
VEHICLES FINANCED historical information regarding (a) the
BY BALLOON percentage of motor vehicles that will be returned
RECEIVABLES to MMCA upon the maturity of receivables that
provide for a balloon payment or (b) MMCA's loss
experience upon resale of such returned motor
vehicles. MMCA expects that, in the aggregate, the
amounts received by MMCA from the sale of such
vehicles will be less than the principal amounts
of the balloon payment because, as discussed
above, MMCA sets balloon payments higher than its
estimate of the wholesale value of the vehicle.
POTENTIAL LOSS ON Economic conditions in the states where the
NOTES DUE TO obligors under the receivables reside may affect
GEOGRAPHIC the delinquency, loan loss and repossession
CONCENTRATION OF experience of the trust with respect to the
RECEIVABLES receivables. Based on the principal balance of the
original pool of receivables as of the date as of
which the receivables were acquired by the trust,
% of the receivables were originated in
California, % in Texas, % in Florida and % in
Alabama. Accordingly, adverse economic conditions
or other factors affecting California, Texas,
Florida or Alabama could have an especially
significant effect on the delinquency, loan loss
or repossession experience of the trust and may
adversely affect the timing and amount of payment
of principal and interest on the notes.
RISKS IN CONNECTION If a default occurs under the indenture and the
WITH AN EVENT OF maturity dates of the notes are accelerated, the
DEFAULT UNDER indenture trustee may sell the receivables and
INDENTURE prepay the notes in advance of their respective
maturity dates. You may not be able to reinvest
the principal repaid to you earlier than expected
at a rate of return that is equal to or greater
than the rate of return on your notes. You also
may not be paid the principal amount of your notes
in full if the assets of the trust are
insufficient to pay the aggregate principal amount
of the notes in full. In addition, the
acceleration of the maturity dates will change the
order of priority for the payment of principal on
the different classes of notes. See "Description
of the Terms of the Notes - Principal Payable on
the Notes."
POTENTIAL DELAYS IN The payment of principal and interest on the notes
PAYMENTS ON NOTES could be delayed if MMCA, in its capacity as
DUE TO POTENTIAL servicer, or the indenture trustee experience
COMPUTER PROGRAM problems in their computer programs relating to
PROBLEMS BEGINNING the year 2000. Many existing computer programs use
IN THE YEAR 2000 only two digits to identify a year. These programs
could fail or produce erroneous results during the
transition from the year 1999 to the year 2000 and
afterwards. MMCA has evaluated the impact of
preparing its systems for the year 2000. It has
identified areas of potential impact and is
implementing conversion efforts. It believes its
mission-critical applications, including its
systems for operations, collections on the
receivables and servicing the receivables, are
already year 2000 compliant, subject to further
testing. MMCA's target is to have all systems
ready for the year 2000 in advance of December 31,
1999.
If MMCA, in its capacity as the servicer, does not
have a computer system that is year 2000 compliant
by the year 2000, MMCA's ability to service the
receivables may be materially and adversely
affected. If the indenture trustee does not have a
computer system that is year 2000 compliant by the
year 2000, the indenture trustee's ability to make
distributions on the notes may be materially and
adversely affected.
DESCRIPTION OF MMCA AUTO OWNER TRUST 1999-1
DESCRIPTION OF THE LIMITED PURPOSES AND ASSETS OF THE TRUST
MMCA Auto Owner Trust 1999-1 (the "Trust") is a business trust formed
under the laws of the State of Delaware pursuant to a Trust Agreement,
dated as of December 9, 1998 (as amended and supplemented from time to
time, the "Trust Agreement"), between the Seller and Wilmington Trust
Company in its capacity as the owner trustee (the "Owner Trustee") of the
Trust. The Trust was formed for purposes of the transactions described in
this Prospectus. The Trust will hold title to the Receivables, the
Pre-Funding Account and the other assets of the Trust and the proceeds
therefrom, 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 "--Description of the Owner Trustee."
The Trust will initially be capitalized through the issuance of the
Notes and $[ ] aggregate principal amount of Asset Backed Certificates
(the "Certificates"). 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 principal amount of the Certificates
will be reduced on each Payment Date by principal payments made on the
Certificates. The Certificates are not being offered hereby and will be
retained by the Seller or an affiliate.
The Trust will purchase the Initial 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 and reimbursed for
any Advances that are due and payable to it 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- Description of Servicing Procedures," "--Servicing
Compensation" and "Description of the Terms of the Notes- Description of
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 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, the Negative Carry 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 Terms of the Notes-Description of 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:
Class A-1 Notes.................................... $
Class A-2 Notes....................................
Class A-3 Notes....................................
Class A-4 Notes....................................
Certificates....................................... __________
Total........................................ $
==========
DESCRIPTION OF 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.
DESCRIPTION OF THE PROPERTY OF THE TRUST
The Notes will be secured by the property of the Trust (the "Trust
Property") pursuant to the Indenture. The Trust Property will include:
(1) a pool of motor vehicle retail installment sale contracts
originated on and after and certain rights and
obligations thereunder (collectively, the "Receivables");
(2) with respect to Actuarial Receivables, monies due thereunder on
or after the related Cutoff Date (including Payaheads) and,
with respect to Simple Interest Receivables, monies received
thereunder on or after the related Cutoff Date;
(3) 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 Pre-Funding Account, the Reserve Account,
the Supplemental Reserve Account, the Negative Carry Account
and the Yield Supplement Account;
(4) the Seller's security interests in the Financed Vehicles;
(5) 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;
(6) the Seller's rights of recourse against the Dealers under the
Dealer Agreements relating to the
Receivables;
(7) all of the Seller's rights to certain documents contained in
the Receivable Files;
(8) all of the Trust's rights under the Sale and Servicing Agreement
and the Yield Supplement Agreement;
(9) all of the Seller's rights under the Purchase Agreement,
including the Seller's right to cause MMCA to repurchase
certain Receivables from the Seller;
(10) payments and proceeds with respect to the Receivables held by
the Servicer;
(11) 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
Balloon 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;
(12) rebates of premiums and other amounts relating to insurance
policies and other items financed under the Receivables in
effect as of the related Cutoff Date; and
(13) all proceeds of the foregoing.
MMCA'S VEHICLE CONTRACT PORTFOLIO
TYPES OF CONTRACTS INCLUDED IN MMCA'S MOTOR VEHICLE CONTRACT PORTFOLIO
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 "--MMCA's
Underwriting Standards."
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 "--MMCA's
Underwriting Standards."
MMCA'S UNDERWRITING STANDARDS
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 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 Balloon 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.
MMCA'S SERVICING AND COLLECTION PROCEDURES
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 Contract becomes seven days
delinquent, while obligors considered strong credits with lesser risk are
generally contacted when the Contract 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 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 ON MMCA'S CONTRACTS
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 OF MMCA'S
CONTRACTS
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 Balloon Payment Receivables) in June 1994. MMCA changed its
credit scoring system again in November 1996 and made the changes
applicable to all types of Motor Vehicle Contracts. See "--MMCA's
Underwriting Standards" above. The Initial Receivables were originated more
recently than, on average, the receivables related to Motor Vehicles and
Trucks in the tables in the following pages.
Because (1) the composition of Initial Receivables included in the
Trust differs from, and the Subsequent Receivables to be included in the
Trust are anticipated to differ from, MMCA's combined portfolio, (2) MMCA
changed its underwriting criteria with respect to non-Balloon Payment
Receivables in June 1994 and (3) 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.
DELINQUENCY EXPERIENCE (1)
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, AS OF DECEMBER 31,
------------------- ------------------------------
1998 1997 1997 1996 1995
-------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Number of Contracts Outstanding
at End of Period.................... 129,738 126,493 123,274 122,224 107,507
Delinquencies as a Percent of
Contracts Outstanding (2)
30-59 Days.......................... 3.42% 4.14% 4.42% 5.13% 4.00%
60-89 Days.......................... 0.94% 1.20% 1.56% 1.69% 0.92%
90 Days or More..................... 0.33% 0.28% 0.51% 0.54% 0.30%
Repossessions as a Percent of 0.76% 1.26% 0.96% 1.41% 1.70%
Contracts Outstanding (2)(3)...........
</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>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------ --------------------------------
1998 1997 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Amount Outstanding (2)....... $1,934,366 $1,823,622 $1,769,219 $1,687,592 $1,436,009
Average Amount
Outstanding (3)............ $1,820,045 $1,768,391 $1,776,481 $1,590,046 $1,221,467
Number of Contracts
Outstanding.................. 129,738 126,493 123,274 122,224 107,507
Average Number of Contracts
Outstanding (3)............ 124,704 124,952 124,945 117,048 93,879
Charge-offs (4).............. $ 39,700 $ 55,632 $ 73,242 $ 84,872 $ 20,171
Recoveries (5)............... $ 7,515 $ 10,404 $ 13,126 $ 7,372 $ 1,058
Net Losses................... $ 32,185 $ 45,228 $ 60,116 $ 77,500 $ 19,113
Number of Repossessions (6).. 3,673 5,976 7,382 6,712 4,260
Number of Repossessions
as a Percent of the
Average Number of
Contracts Outstanding (7).. 3.93% 6.38% 5.91% 5.73% 4.54%
Net Losses as a Percent of
Average Amount
Outstanding (7)............ 2.36% 3.41% 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 Balloon Payments to the extent attributable to principal on
Balloon 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 Balloon Payments. Charge-offs do not
include any losses on sales of Motor Vehicles that were purchased by
MMCA pursuant to the terms of a Balloon 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 Balloon Payments for Balloon Payment Receivables
which 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 (a) the date upon which the related Financed
Vehicle is sold following repossession or (b) 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 nine-month period ending September 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.
MMCA began originating Balloon Payment Receivables in October 1993.
Because Balloon Payment Receivables have matured in large volumes only more
recently, the experience shown in the tables below may not be comparable to
the actual performance of the Balloon Payment Receivables included in the
Trust Property.
BALLOON PAYMENT RECEIVABLES: LOSS EXPERIENCE ON RETURNED VEHICLES (1)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------- -------------------------------
1998 1997 1997 1996 1995
----- ---- ---- ----- ----
Total Number of Final Payment
Receivables Scheduled to
<S> <C> <C> <C> <C> <C>
Terminate....................... 13,958 5,462 10,716 1,022 34
Total Number of Vehicles
Returned to MMCA.............. 3,466 1,365 2,926 435 7
Return Ratio (2)................ 24.83% 24.99% 27.31 % 42.56 % 20.59%
Total Losses on Returned
Vehicles Sold (3).............$4,911,496 $2,699,576 $5,371,694 $726,208 $12,464
Total Number of Returned
Vehicles Sold................. 2,884 1,322 2,578 432 7
Average Loss per Returned
Vehicle Sold (3)..............$ 1,703 $ 2,027 $ 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 Balloon 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.
DESCRIPTION OF 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. The Receivables will include
the Initial Receivables purchased as of the Initial Cutoff Date and any
Subsequent Receivables purchased as of the related Subsequent Cutoff Date.
As of the Initial Cutoff Date, the Initial Receivables had an aggregate
principal balance of $ , which consisted of a Level Pay Pool Balance
of $ and a Balloon Payment Pool Balance of $ .
The Receivables will be purchased by the Trust from the Seller
pursuant to a Sale and Servicing Agreement, to be dated as of , 1999
(as amended or supplemented from time to time, the "Sale and Servicing
Agreement"), among the Trust, the Seller and MMCA providing for the
purchase of the Initial Receivables on or before the date of issuance of
the Notes (the "Closing Date") and any Subsequent Receivables on the
related Subsequent Transfer Date. The Receivables will be purchased by the
Seller from MMCA pursuant to a Purchase Agreement, to be dated as of ,
1999 (as amended or supplemented from time to time, the "Purchase
Agreement"), between the Seller and MMCA, providing for the purchase of the
Initial Receivables on or before the Closing Date and any Subsequent
Receivables on the related Subsequent Transfer 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 (the "Final
Scheduled Maturity Date").
The "Pool Balance" at any time will represent the aggregate principal
balance of the Receivables (including the aggregate principal balance of
Balloon Payments) at the end of the preceding Collection Period or, with
respect to any time during the first Collection Period, on the Initial
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, for such Collection Period, and reduced by the principal amount of
Receivables that became Defaulted Receivables during such Collection
Period. The "Initial Pool Balance" means the sum of (a) the Pool Balance as
of the Initial Cutoff Date plus (b) the aggregate principal balance of all
Subsequent Receivables sold to the Trust as of their respective Subsequent
Cutoff Dates.
SELECTION CRITERIA FOR THE RECEIVABLES
The Initial Receivables were purchased, and the Subsequent
Receivables have been or will be purchased, by MMCA from Dealers in the
ordinary course of business in accordance with MMCA's underwriting
standards. The Initial Receivables were selected, and the Subsequent
Receivables will be selected, from MMCA's portfolio by several criteria,
including the following:
(1) each Receivable is secured by a new or used automobile or a
light- or medium-duty truck;
(2) each Receivable has an annual percentage rate ("APR") of at
least 0% and not more than 30%;
(3) each Receivable had a remaining maturity as of the related
Cutoff Date of not more than 60 months, and an original
maturity of not more than 60 months;
(4) each Receivable had an original principal balance (net of
unearned precomputed finance charges) of not more than $60,000
and a remaining principal balance of not less than $100 as of
the related Cutoff Date;
(5) no Receivable was more than 30 days delinquent with respect to
more than 10% of a payment as of the related Cutoff Date;
(6) no Financed Vehicle had been repossessed as of the related
Cutoff Date;
(7) each Receivable is an installment sale contract;
(8) each Receivable is an Actuarial Receivable or a Simple Interest
Receivable (and may also be a Balloon Payment Receivable);
(9) each Receivable was originated during or after ;
(10) as of the related Cutoff Date, no obligor under a Receivable is
the subject of a proceeding under the United States Bankruptcy
Code; and
(11) 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.
In addition, the pool of Receivables will not deviate from the
following characteristics as of each Subsequent Transfer Date (after giving
effect to Subsequent Receivables sold to the Trust on such Subsequent
Transfer Date):
(1) the weighted average remaining maturity of the Receivables will
not be more than [ ] months; and
(2) the aggregate Balloon Payments as a percentage of the Pool
Balance will not be greater than [ ]%.
The Initial Receivables will represent approximately % of the sum
of the initial principal amount of the Notes and the initial principal
amount of the Certificates. Except for the criteria described in the
preceding paragraph, there will be no required characteristics of the
Subsequent Receivables. Therefore, following the transfer of Subsequent
Receivables to the Trust, the aggregate characteristics of the entire pool
of Receivables, including the composition of the Receivables, the
geographic distribution of the Receivables and the distribution by APR of
the Receivables described in the following tables may vary from those of
the Initial Receivables. Following the end of the Pre-Funding Period, the
Seller will file a report on Form 8-K containing information comparable to
that contained in the tables set forth below regarding the aggregate
characteristics of the entire pool of Receivables, after the addition of
the Subsequent Receivables.
CERTAIN CHARACTERISTICS OF THE INITIAL RECEIVABLES
The composition of the Initial Receivables as of , 1999 and the
geographical distribution and distribution by APR of the Pool Balance of
the Initial Receivables as of , 1999 are set forth in the following
tables. "Level Pay Pool Balance" means the Pool Balance exclusive of the
Balloon Payment Pool Balance. "Balloon Payment Pool Balance" means the
aggregate principal balance of Balloon Payments. See "Description of the
Terms of the Notes -- Description of the Balloon Payment Receivables."
COMPOSITION OF THE INITIAL RECEIVABLES AS OF THE INITIAL CUTOFF DATE
Pool Balance...................................... $
Level Pay Pool Balance............................ $
Balloon Payment Pool Balance...................... $
Number of Receivables
Average Principal Balance......................... $
(Range).....................................$ to $
Average Original Amount Financed.................. $
(Range).....................................$ to $
Average Level Pay Balance......................... $
(Range).....................................$ to $
Average Balloon Payment Balance (1)...............$
(Range).....................................$ to $
Weighted Average APR.............................. %
(Range)..................................... 0.00% to %
Weighted Average Original Term to Maturity........ months
(Range)..................................... 12 months to 60 months
Weighted Average Remaining Term to Maturity....... months
(Range)..................................... 3 months to 60 months
- -----------
(1) Based on Balloon Payment Receivable balances only.
GEOGRAPHIC DISTRIBUTION OF THE INITIAL RECEIVABLES
AS OF THE INITIAL CUTOFF DATE
PERCENTAGE OF PERCENTAGE OF
STATE (1) POOL BALANCE (2) STATE (1) POOL BALANCE (2)
- --------- ---------------- --------- ----------------
Alabama............. % Montana............... %
Alaska.............. Nebraska..............
Arizona............. Nevada................
Arkansas............ New Hampshire.........
California.......... New Jersey............
Colorado............ New Mexico............
Connecticut......... New York..............
Delaware............ North Carolina........
Florida............. North Dakota..........
Georgia............. Ohio..................
Idaho............... Oklahoma..............
Illinois............ Oregon................
Indiana............. Pennsylvania..........
Iowa................ Rhode Island..........
Kansas.............. South Carolina........
Kentucky............ South Dakota..........
Louisiana........... Tennessee.............
Maine............... Texas.................
Maryland............ Utah..................
Massachusetts....... Vermont...............
Michigan............ Virginia..............
Minnesota........... Washington............
Mississippi......... West Virginia.........
Missouri............ Wisconsin............. _____________
Montana............. Total 100.00%
- -----------
(1) State of origination is based on the addresses of the originating
Dealers.
(2) Percentages may not add to 100.00% due to rounding.
DISTRIBUTION BY APR OF THE INITIAL RECEIVABLES AS OF THE INITIAL CUTOFF DATE
PERCENTAGE
NUMBER OF POOL OF POOL
APR RANGE(%) RECEIVABLES BALANCE(1)(2) BALANCE(3)
- ------------ ----------- ------------- ----------
0.00 to 0.99.................. $ %
1.00 to 1.99..................
2.00 to 2.99..................
3.00 to 3.99..................
4.00 to 4.99..................
5.00 to 5.99..................
6.00 to 6.99..................
7.00 to 7.99..................
8.00 to 8.99..................
9.00 to 9.99..................
10.00 to 10.99................
11.00 to 11.99................
12.00 to 12.99................
13.00 to 13.99................
14.00 to 14.99................
15.00 to 15.99................
16.00 to 16.99................
17.00 to 17.99................
18.00 to 18.99................
19.00 to 19.99................
20.00 to 20.99................
21.00 to 21.99................
22.00 to 22.99................
23.00 to 23.99................
----------- ------------- ----------
Total......................... $ %
============= ==========
- -----------
(1) Remaining principal balance for Simple Interest Receivables, and
the present value of scheduled remaining payments for Actuarial
Receivables.
(2) Pool Balance does not add up to Initial Pool Balance because of
rounding.
(3) Percentages may not add to 100.00% due to rounding.
Approximately % of the total number of Receivables and
approximately % of the Pool Balance as of the Initial Cutoff Date
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 % of the total number of Receivables and
approximately % of the Pool Balance as of the Initial Cutoff Date
relate to used automobiles and light- or medium-duty trucks.
Approximately % of the total number of Receivables and
approximately % of the Pool Balance as of the Initial 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 % of the total number of Receivables and
approximately % of the Pool Balance as of the Initial Cutoff Date,
relate to medium-duty trucks, the primary purchasers of which are
businesses.
Approximately % of the total number of Receivables and
approximately % of the Pool Balance as of the Initial 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.
PAYMENT METHODS OF THE RECEIVABLES
Approximately % of the Pool Balance as of the Initial Cutoff Date
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 % of the Pool Balance as of the Initial Cutoff Date
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 % of the Pool Balance as of the Initial Cutoff Date
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 Balloon Payment Receivable that is a Simple
Interest Receivable, this allocation of payments may result in the
remaining principal balance of the Balloon Payment Receivable on the Due
Date for the Balloon Payment being greater or less than the Balloon
Payment.
Approximately % of the Pool Balance as of the Initial Cutoff Date
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 % of the Pool Balance as of the Initial Cutoff Date
was attributable to Balloon 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 Balloon 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 Balloon Payment; (2) refinancing the net
amount then due, which may be greater or less than the Balloon Payment,
subject to certain conditions; or (3) selling the related Motor Vehicle to
MMCA or its assignee for an amount equal to the Balloon Payment (reduced by
certain charges) and paying any excess of the total amount owed over the
Balloon Payment to MMCA. See "Description of the Terms of the Notes -
Description of the Balloon 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 representations and
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 for the
Receivables."
MATURITY AND PREPAYMENT CONSIDERATIONS FOR THE RECEIVABLES
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, which 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 available to the Reserve Account and the Supplemental
Reserve Account. See "Description of the Terms of the Notes -Description of
the Indenture Cash Flows" and " -Description of the 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.
% of the Pool Balance as of the Initial Cutoff Date
consists of the principal balance of the Balloon Payments on Initial
Receivables. Accordingly, a portion of the principal amount of the Notes is
expected to be paid from Balloon Payments. All of the Balloon Payments on
Initial Receivables that are Balloon Payment Receivables are due, as of the
Closing Date, between and . Accordingly, significant payments
of principal are likely to be made during such period. The average amount
of a Balloon Payment on an Initial Receivable that is a Balloon Payment
Receivable is approximately $ , which is approximately % of the
average principal balance of an Initial Receivable that is a Balloon
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 A-4 Note Amortization" (collectively,
the "ABS Tables") assume that:
(1) the Yield Supplement Amount is deposited into the Collection
Account each period;
(2) the Negative Carry Amount is deposited into the Collection
Account each period;
(3) the Initial Pre-Funded Amount is applied in its entirety to the
purchase of Subsequent Receivables and the related deposits to
the Reserve Account and the Yield
Supplement Account;
(4) the Receivables prepay in full at the specified constant
percentage of ABS monthly, with no defaults, losses or
repurchases;
(5) each scheduled monthly payment on the Receivables is made on
the last day of each month, and each month has 30 days;
(6) 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);
(7) the Closing Date is , 1999;
(8) the Servicer does exercise its option to purchase the
Receivables; and
(9) 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 manufactured by Mitsubishi Motors, 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 principal balance, APR, original term to maturity and
remaining term to maturity as of the Initial Cutoff Date) will be such that
each pool will be fully amortized by the end of its remaining term to
maturity.
WEIGHTED WEIGHTED
AVERAGE AVERAGE
LEVEL AGGREGATE WEIGHTED ORIGINAL TERM REMAINING TERM
PAYMENT PRINCIPAL AVERAGE TO MATURITY TO MATURITY
POOL BALANCE APR (IN MONTHS) (IN MONTHS)
- ------- --------- -------- ------------- --------------
1 .................. $ %
2 ..................
3 ..................
4 ..................
The ABS Tables also assume that the principal amounts of the Balloon
Payments on the Receivables have been aggregated into four hypothetical
last scheduled payment pools with all of the Balloon Payment Receivables
within each pool having the following characteristics and that the
principal amount is due at the maturity of the pool.
WEIGHTED WEIGHTED
AVERAGE AVERAGE
BALLOON AGGREGATE WEIGHTED ORIGINAL TERM REMAINING TERM
PAYMENT PRINCIPAL AVERAGE TO MATURITY TO MATURITY
POOL BALANCE APR (IN MONTHS) (IN MONTHS)
- ------- --------- -------- ------------- --------------
1 ................... $ %
2 ...................
3 ...................
4 ...................
The actual characteristics and performance of the Receivables in the
Trust will differ from the assumptions used in constructing the ABS Tables.
The assumptions used are hypothetical and have been provided only to give a
general sense of how the principal cash flow might behave under varying
prepayment scenarios. For example, it is very unlikely that the Receivables
will prepay at the same level of ABS. Moreover, the diverse terms of
Receivables within each of the 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. In addition,
the characteristics of the Subsequent Receivables are expected to be
different from the characteristics of the Initial Receivables. See
"Description of the Receivables-Selection Criteria for the Receivables."
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.
PROJECTED CLASS A-1 NOTE AMORTIZATION
PERCENT OF INITIAL NOTE PRINCIPAL AMOUNT
CLASS A-1 NOTE BALANCE (%)
--------------------------------------------
PAYMENT DATE 0.0% ABS 1.0% ABS 1.5% ABS 2.0% ABS
- ------------ -------- -------- -------- --------
February 15, 1999................
March 15, 1999...................
April 15, 1999...................
May 15, 1999.....................
June 15, 1999....................
July 15, 1999....................
August 15, 1999..................
September 15, 1999...............
October 15, 1999.................
November 15, 1999................
December 15, 1999................
January 15, 2000.................
-------- -------- -------- --------
Weighted Average Life (yrs)......
PROJECTED CLASS A-2 NOTE AMORTIZATION
PERCENT OF INITIAL NOTE PRINCIPAL AMOUNT
CLASS A-2 NOTE BALANCE (%)
-------------------------------------------
PAYMENT DATE 0.0% ABS 1.0% ABS 1.5% ABS 2.0% ABS
- ------------ -------- -------- -------- --------
February 15, 1999................
March 15, 1999...................
April 15, 1999...................
May 15, 1999.....................
June 15, 1999....................
July 15, 1999....................
August 15, 1999..................
September 15, 1999...............
October 15, 1999.................
November 15, 1999................
December 15, 1999................
January 15, 2000.................
February 15, 2000................
March 15, 2000...................
April 15, 2000...................
May 15, 2000.....................
June 15, 2000....................
July 15, 2000....................
August 15, 2000..................
September 15, 2000...............
-------- -------- -------- --------
Weighted Average Life (yrs)......
PROJECTED CLASS A-3 NOTE AMORTIZATION
PERCENT OF INITIAL NOTE PRINCIPAL AMOUNT
CLASS A-3 NOTE BALANCE (%)
--------------------------------------------
PAYMENT DATE 0.0% ABS 1.0% ABS 1.5% ABS 2.0% ABS
- ------------ -------- -------- -------- --------
February 15, 1999................
March 15, 1999...................
April 15, 1999...................
May 15, 1999.....................
June 15, 1999....................
July 15, 1999....................
August 15, 1999..................
September 15, 1999...............
October 15, 1999.................
November 15, 1999................
December 15, 1999................
January 15, 2000.................
February 15, 2000................
March 15, 2000...................
April 15, 2000...................
May 15, 2000.....................
June 15, 2000....................
July 15, 2000....................
August 15, 2000..................
September 15, 2000...............
October 15, 2000.................
November 15, 2000................
December 15, 2000................
January 15, 2001.................
February 15, 2001................
March 15, 2001...................
April 15, 2001...................
May 15, 2001.....................
June 15, 2001....................
July 15, 2001....................
August 15, 2001..................
September 15, 2001...............
October 15, 2001.................
November 15, 2001................
December 15, 2001................
January 15, 2002.................
February 15, 2002................
-------- -------- -------- --------
Weighted Average Life (yrs)......
PROJECTED CLASS A-4 NOTE AMORTIZATION
PERCENT OF INITIAL NOTE PRINCIPAL AMOUNT
CLASS A-4 NOTE BALANCE (%)
--------------------------------------------
PAYMENT DATE 0.0% ABS 1.0% ABS 1.5% ABS 2.0% ABS
- ------------ -------- -------- -------- --------
February 15, 1999................
March 15, 1999...................
April 15, 1999...................
May 15, 1999.....................
June 15, 1999....................
July 15, 1999....................
August 15, 1999..................
September 15, 1999...............
October 15, 1999.................
November 15, 1999................
December 15, 1999................
January 15, 2000.................
February 15, 2000................
March 15, 2000...................
April 15, 2000...................
May 15, 2000.....................
June 15, 2000....................
July 15, 2000....................
August 15, 2000..................
September 15, 2000...............
October 15, 2000.................
November 15, 2000................
December 15, 2000................
January 15, 2001.................
February 15, 2001................
March 15, 2001...................
April 15, 2001...................
May 15, 2001.....................
June 15, 2001....................
July 15, 2001....................
August 15, 2001..................
September 15, 2001...............
October 15, 2001.................
November 15, 2001................
December 15, 2001................
January 15, 2002.................
February 15, 2002................
-------- -------- -------- --------
Weighted Average Life (yrs)......
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
(a) the original denomination of the Noteholder's Note and (b) 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 Terms of the
Notes-Description of the 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 Initial Receivables from MMCA
and to make the deposits required to be made by the Seller on the Closing
Date to the Pre-Funding Account, the Negative Carry Account, the Yield
Supplement Account and the Reserve Account.
DESCRIPTION OF THE SELLER
MMCA Auto Receivables, Inc. (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 is
subject to the informational requirements of the Exchange Act and the
Commission's rules and regulations thereunder. For further information
regarding the periodic reports concerning the Trust and the Receivables
that will be filed with the Commission, reference is made to the
information that is available as described under "Where You Can Find More
Information."
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 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 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.
DESCRIPTION OF THE SERVICER
Mitsubishi Motors Credit of America, Inc. ("MMCA" or the "Servicer")
is a Delaware corporation which 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"), a California corporation which is engaged in the
wholesale distribution of automobiles and light-duty trucks throughout the
United States manufactured by Mitsubishi Motors Corporation and its
affiliates (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 TERMS OF THE NOTES
PRINCIPAL AMOUNT OF AND INTEREST RATES ON THE NOTES
The Trust will issue $[ ] aggregate principal amount of Asset
Backed Notes (collectively, the "Notes") pursuant to an indenture to be
dated as of , 1999 (as amended and supplemented from time to time, the
"Indenture"), between the Trust and Bank of Tokyo-Mitsubishi Trust Company
in its capacity as indenture trustee (the "Indenture Trustee").
The Notes will be issued in four classes consisting of:
o the % Class A-1 Notes in the aggregate principal amount
of $ (the "Class A-1 Notes");
o the % Class A-2 Notes in the aggregate principal amount
of $ (the "Class A-2 Notes");
o the % Class A-3 Notes in the aggregate principal amount
of $ (the "Class A-3 Notes"); and
o the % Class A-4 Notes in the aggregate principal amount
of $ (the "Class A-4 Notes").
A form of the Indenture has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. The following
summary does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the Notes, the Indenture, the Trust Agreement
and the Sale and Servicing Agreement.
REGISTRATION OF THE NOTES IN THE NAME OF CEDE AS NOMINEE OF DTC
The Notes of each class will be offered for purchase in minimum
denominations of $1,000 and integral multiples thereof and will be
represented initially by one or more physical notes registered in the name
of Cede & Co. ("Cede") as nominee of The Depository Trust Company ("DTC").
No person acquiring a beneficial ownership interest in the Notes (a "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 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 of the Notes" and "--Issuance of Definitive
Notes Upon the Occurrence of Certain Circumstances."
BOOK ENTRY REGISTRATION OF THE NOTES
Beneficial owners of Notes may hold their Notes through DTC (in the
United States) or Cedel Bank, societe anonyme ("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 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 Cedel 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 "--Issuance of Definitive Notes Upon the Occurrence of
Certain Circumstances."
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 in the United States, on the one hand, and directly or
indirectly through Cedel or Euroclear, on the other, will be effected in
DTC in accordance with DTC rules through the relevant European
international clearing system through 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 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 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.
ISSUANCE OF DEFINITIVE NOTES UPON OCCURRENCE OF CERTAIN CIRCUMSTANCES
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 or a successor clearing
agency, only if:
(1) the Trust, the Administrator or the Servicer advises the
Indenture Trustee in writing that DTC (or such
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;
(2) the Administrator, at its option, elects to terminate the
book-entry system through DTC (or such successor clearing
agency); or
(3) 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 (or such successor clearing agency) in writing that the
continuation of a book-entry system through DTC (or such
successor clearing agency) 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 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 PAYABLE ON THE NOTES
The Notes will bear interest at the following rates per annum:
o the Class A-1 Notes: % per annum (the "Class A-1 Rate");
o the Class A-2 Notes: % per annum (the "Class A-2 Rate");
o the Class A-3 Note : % per annum (the "Class A-3 Rate"); and
o the Class A-4 Notes: % per annum (the "Class A-4 Rate").
The interest rates for the various classes of Notes are referred to
herein collectively as the "Note Interest Rates."
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 the 15th of each month or, if the
15th day of the month is not a Business Day, the next following Business
Day (each, a "Payment Date"), commencing February 15, 1999. Payments will
be made to holders of record of the Notes (the "Noteholders") as of the
Business Day immediately preceding each Payment Date or, if Definitive
Notes are issued, as of the 15th day of the preceding month unless such day
is not a Business Day, in which case the immediately preceding Business Day
(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.
Interest will accrue: (1) 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 previous Payment Date, to but excluding the
following Payment Date and (2) with respect to the Class A-2 Notes, the
Class A-3 Notes and the Class A-4 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 A-4 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 "--Description of the
Indenture Cash Flows" and "--Description of the 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 Noteholders 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. No distributions will be made on the
Certificates on any Payment Date until the interest and principal payable
on the Notes on such Payment Date are paid in full.
PRINCIPAL PAYABLE ON THE NOTES
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 may be made on the Certificates. See "--Description of the
Indenture Cash Flows" and "--Description of the Reserve Account and
Supplemental Reserve Account."
On each Payment Date, an amount equal to the Principal Distribution
Amount will be paid:
(1) to the holders of the Class A-1 Notes until the Class A-1 Notes
have been paid in full;
(2) after the Class A-1 Notes are paid in full, to the holders of
the Class A-2 Notes until the Class A-2 Notes have been paid in
full;
(3) after the Class A-2 Notes are paid in full, to the holders of
the Class A-3 Notes until the Class A-3 Notes have been paid in
full; and
(4) after the Class A-3 Notes are paid in full, to the holders of
the Class A-4 Notes until the Class A-4 Notes have been paid in
full.
If the maturity dates of the Notes are accelerated following the
occurrence of an Event of Default under the Indenture, the order of
priority for principal payments on the Notes will change. 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, the Total Available Funds remaining after payment to the Servicer
of the Total Servicing Fee for such Payment Date will be deposited to the
Note Payment Account for distribution in the order of priority set forth
under "Description of the Indenture Cash Flows-Monthly Withdrawals from the
Note Payment Account On and After an Acceleration of the Maturity Dates of
the Notes."
The outstanding principal balance, if any, of each class of Notes
will be payable in full on the date specified below for such class of Notes
to the extent not previously paid:
o for the Class A-1 Notes, [ ] (the "Class A-1 Final
Payment Date");
o for the Class A-2 Notes, [ ] (the "Class A-2 Final
Payment Date");
o for the Class A-3 Notes, [ ] (the "Class A-3 Final
Payment Date"); and
o for the Class A-4 Notes, [ ] (the "Class A-4 Final
Payment Date" and, together with the foregoing, each a "Final
Payment Date").
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 -- Risk That You May Be Required to Reinvest
Your Principal in the Notes at a Lower Rate of Return Because of
Prepayments on the Notes" and "Description of the Receivables -- Maturity
and Prepayment Considerations."
MANDATORY REDEMPTION OF THE NOTES
On the Payment Date on or immediately following the last day of the
Pre-Funding Period, any funds remaining in the Pre-Funding Account (after
giving effect to the purchase of all Subsequent Receivables, including any
such purchase on such date) exclusive of any net earnings from the
investment of funds on deposit in the Pre-Funding Account will be applied
to redeem the Notes then outstanding in the same sequence and proportions
that would apply if such remaining funds were a part of the Principal
Distribution Amount.
OPTIONAL REDEMPTION OF THE NOTES
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.
DESCRIPTION OF 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 banking relationships with the Indenture Trustee
and its affiliates in the ordinary course of their businesses.
DESCRIPTION OF THE TRUST'S BANK ACCOUNTS
The Servicer will establish an account in the name of the Indenture
Trustee on behalf of the Noteholders and the Certificateholders (the
"Collection Account") 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, the Supplemental Reserve
Account, the Negative Carry Account and the Yield Supplement 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:
(1) an account in the name of the Indenture Trustee on behalf of
the Noteholders and the Certificateholders in which the Initial
Pre-Funded Amount will be deposited on the Closing Date (the
"Pre-Funding Account");
(2) 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");
(3) 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
(4) 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 Pre-Funding Account, the Collection Account
and the Note Payment Account, the "Trust Accounts").
The Payahead Account will be funded on the Closing Date with an
initial deposit by the Seller of an amount equal to the aggregate amount of
Payaheads as of the Initial Cutoff Date of the Initial Receivables. On each
Subsequent Transfer Date, the Indenture Trustee will make an additional
deposit to the Payahead Account of an amount equal to the aggregate amount
of the Payaheads as of the related Subsequent Cutoff Date of the Subsequent
Receivables sold to the Trust on such Subsequent Transfer Date. The
Indenture Trustee will make the additional deposit to the Payahead Account
on each Subsequent Transfer Date from funds on deposit in the Pre-Funding
Account that otherwise would be distributable to the Seller as payment for
the Subsequent Receivables.
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 and the Negative Carry Account in the name of the
Indenture Trustee for the exclusive benefit of the Noteholders. The Trust
Accounts, the Reserve Account, the Supplemental Reserve Account, the
Negative Carry 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 of
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, each a "Rating Agency"). In the event that a Rating
Agency no longer permits the Trust Accounts, the Reserve Account, the
Supplemental Reserve Account, the Negative Carry 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 qualified to take deposits and subject to supervision and
examination by Federal or state banking authorities, having a short-term
deposit rating acceptable to each 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 qualified to take deposits
and subject to supervision and examination by Federal or state banking
authorities, with authority to act under such laws as trustee or in any
other fiduciary capacity, having not less than $1 billion in assets under
fiduciary management and a long-term deposit rating acceptable to each
Rating Agency.
Funds in the Collection Account, the Pre-Funding Account, the
Payahead Account, the Reserve Account, the Supplemental Reserve Account,
the Negative Carry Account and the Yield Supplement Account will be
invested in 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 Payahead Account will be paid to the Servicer as
additional servicing compensation and will not be available to Noteholders,
and any earnings (net of losses and investment expenses) on, and any
amounts released from the Reserve Account, the Supplemental Reserve
Account, the Negative Carry Account and the Yield Supplement Account will
be distributed to the Seller. However, earnings on amounts on deposit in
the Reserve Account, the Supplemental Reserve Account and the Negative
Carry Account will be distributed to the Seller only to the extent that the
amounts on deposit in those accounts exceed the required balances of those
accounts.
DESCRIPTION OF THE YIELD SUPPLEMENT AGREEMENT
Simultaneously with the sale and assignment of the Initial
Receivables by MMCA to the Seller, MMCA and the Seller will enter into a
yield supplement agreement (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 "Yield Supplement Amount" with respect to any Payment Date will
be determined by aggregating with respect to all of the Receivables the
amount (if positive) calculated by the Servicer with respect to each
Receivable equal to the product of (x) one-twelfth times (y) an amount
equal to the difference (if positive) between (1) interest on such
Receivable's principal balance as of the first day of the related
Collection Period at a rate equal to the sum of (A) the Servicing Rate, (B)
the Weighted Average Rate as of the first day of the related Collection
Period and (C) % and (2) interest on such Receivable's principal balance as
of the first day of the related Collection Period at the APR on such
Receivable. 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.
The "Weighted Average Rate" means, with respect to any date of
determination, a per annum rate equal to (1) the sum of (a) the product of
(x) the outstanding principal amount of the Class A-1 Notes on such date,
(y) the Class A-1 Rate and (z) a fraction, the numerator of which is 365
and the denominator of which is 360, plus (b) the product of (x) the
outstanding principal amount of the Class A-2 Notes on such date and (y)
the Class A-2 Rate, plus (c) the product of (x) the outstanding principal
amount of the Class A-3 Notes on such date and (y) the Class A-3 Rate, plus
(d) the product of (x) the outstanding principal amount of the Class A-4
Notes on such date and (y) the Class A-4 Rate, divided by (2) the
outstanding principal amount of the Notes on such date.
DESCRIPTION OF THE YIELD SUPPLEMENT ACCOUNT
Payments of the Yield Supplement Amount due under the Yield
Supplement Agreement will be secured by funds on deposit in a segregated
trust deposit account initially to be established with the Indenture
Trustee for the benefit of the Noteholders and the Certificateholders (the
"Yield Supplement Account"). The Yield Supplement Account will 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. On the Closing Date, the Seller will make an initial deposit to
the Yield Supplement Account in the amount specified in the Sale and
Servicing Agreement. On each Subsequent Transfer Date, the Indenture
Trustee will make an additional deposit to the Yield Supplement Account
from funds on deposit in the Pre-Funding Account that otherwise would be
distributable to the Seller as payment for the Subsequent Receivables sold
to the Trust on such Subsequent Transfer Date unless the Yield Supplement
Account has been replaced by a Yield Supplement Letter of Credit on or
prior to such Subsequent Transfer Date.
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.
DESCRIPTION OF THE INDENTURE CASH FLOWS
Deposits to the Collection Account; Calculations Made by the
Servicer; Notice to the Indenture Trustee. On or before each Payment Date,
the Servicer will cause all payments on the Receivables (from whatever
source) and all proceeds of the Receivables (other than certain amounts
payable to the Servicer under the Sale and Servicing Agreement that are not
required to be deposited in the Collection Account) received by the
Servicer during the related Collection Period to be deposited into the
Collection Account. On or before the seventh Business Day, but no later
than the tenth calendar day (the "Determination Date"), of each month, the
Servicer will calculate the Available Funds, the Total Available Funds, the
Total Servicing Fee, the Accrued Note Interest, the Scheduled Principal,
the Principal Distribution Amount, the principal attributable to Balloon
Payments, the Negative Carry Amount, if any, and the Yield Supplement
Amount, if any, in each case with respect to such Payment Date. On or
before each Payment Date, the Servicer will deliver to the Indenture
Trustee a certificate setting forth the deposits to and withdrawals from,
the Collection Account, the Supplemental Reserve Account and the Reserve
Account to be made on such Payment Date.
Withdrawals from the Supplemental Reserve Account and the Reserve
Account to Reimburse Advances. On each Payment Date, the Indenture Trustee
will withdraw from the Supplemental Reserve Account and pay to the Servicer
an amount equal to the lesser of (x) the amount on deposit 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 (y) the amount, if any, of Advances due to be reimbursed on such
Payment Date but not reimbursed from funds on deposit in the Collection
Account.
In the event, that the amount on deposit in the Supplemental Reserve
Account is insufficient to fully reimburse the Servicer for Advances due to
be reimbursed on such Payment Date, the Indenture Trustee will withdraw
from the Reserve Account and pay to the Servicer an amount equal to the
lesser of (x) the amount on deposit 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 (y) the amount, if any, of
Advances due to be reimbursed on such Payment Date but not reimbursed from
funds on deposit in the Collection Account or the Supplemental Reserve
Account.
Withdrawals from the Supplemental Reserve Account and the Reserve
Account to pay the Total Required Payment. In the event that on any Payment
Date the Total Required Payment exceeds the Available Funds, the Indenture
Trustee will withdraw from the Supplemental Reserve Account and deposit in
the Collection Account an amount equal to the lesser of (x) the amount on
deposit in the Supplemental Reserve Account on such Payment Date (after any
reimbursement of Advances but prior to any deposits thereto or other
withdrawals therefrom relating to such Payment Date), and (y) the amount,
if any, by which the Total Required Payment for such Payment Date exceeds
the Available Funds for such Payment Date.
In the event that the amount on deposit in the Supplemental Reserve
Account is insufficient to make up a shortfall in the Available Funds to
pay the Total Required Payment, the Indenture Trustee will withdraw from
the Reserve Account and deposit in the Collection Account an amount equal
to the lesser of (x) the amount on deposit in the Reserve Account on such
Payment Date (after any reimbursement of Advances but prior to any deposits
thereto or other withdrawals therefrom relating to such Payment Date), and
(y) the amount, if any, by which the Total Required Payment for such
Payment Date exceeds the sum of the Available Funds and amounts withdrawn
from the Supplemental Reserve Account to pay the Total Required Payment.
The "Available Funds" for a Payment Date to be deposited into the
Collection Account on or prior to such Payment Date shall equal:
(1) the sum of the following amounts with respect to the preceding
calendar month, beginning , 1999 (the related "Collection
Period"):
(A) 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 Balloon Payment Receivable);
(B) 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");
(C) any recoveries in respect of Receivables that became
Defaulted Receivables in prior Collection Periods
("Recoveries");
(D) all extension and deferral fees paid with respect to the
Receivables;
(E) 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);
(F) all Actuarial Advances and Balloon Payment Advances
deposited to the Collection Account on such Payment Date
by the Servicer;
(G) the Yield Supplement Amount for such Payment Date;
(H) the Negative Carry Amount for such Payment Date;
(I) 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 related Cutoff Date;
(J) the net earnings on funds on deposit in the Pre-Funding
Account to the extent deposited to the Collection Account
on such Payment Date by the Indenture Trustee; and
(K) with respect to the Payment Date on or immediately
following the last day of the Pre- Funding Period, any
funds remaining in the Pre-Funding Account (after giving
effect to the purchase of all Subsequent Receivables,
including any purchase on the last day of the Pre-
Funding Period) exclusive of any net earnings on funds on
deposit in the Pre-Funding Account; minus
(2) the aggregate amount of the funds described in clause (1) above
that are used in the related Collection Period 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.
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:
(1) the related Financed Vehicle has been repossessed and liquidated;
(2) more than 10% of a scheduled payment (including, in the case of
a Balloon Payment Receivable, the amount owed by an obligor
with respect to a Balloon 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
(3) the Servicer has determined, in accordance with its customary
standards, policies and procedures, that eventual payment in
full (including, in the case of a Balloon Payment Receivable,
the amount owed by an obligor with respect to a Balloon 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).
The "Total Available Funds" for a Payment Date is an amount equal to
the Available Funds for such Payment Date plus the amounts, if any,
deposited by the Indenture Trustee to the Collection Account from the
Supplemental Reserve Account and the Reserve Account on such Payment Date.
Monthly Withdrawals from Collection Account. On each Payment Date,
the Indenture Trustee will make the following withdrawals of Total
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:
(1) to the Servicer, the Total Servicing Fee;
(2) to the Note Payment Account, the Accrued Note Interest for each
class of Notes;
(3) to the Note Payment Account, the Principal Distribution Amount;
(4) to the Reserve Account, the amount, if any, required to bring
the amount in the Reserve Account up to the Specified Reserve
Balance;
(5) to the Supplemental Reserve Account, the amount, if any,
required to bring the amount in the Supplemental Reserve
Account up to the Maximum Supplemental Reserve Amount; and
(6) to the Certificate Distribution Account, any remaining portion
of Total Available Funds.
On each Payment Date, the amount, if any, on deposit in the
Certificate Distribution Account will be distributed to the
Certificateholders.
Notwithstanding the foregoing, following the occurrence and during
the continuation of an Event of Default which has resulted in an
acceleration of the maturity dates of Notes, the Total Available Funds
remaining after the application of clause (1) above will be deposited in
the Note Payment Account for distribution in the order of priority set
forth under "-- Monthly Withdrawals from the Note Payment Account On and
After an Acceleration of the Maturity Dates of the Notes."
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, $ 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 (a) 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 (b)
with respect to the Notes collectively, the sum of Monthly Accrued Note
Interest for each class.
"Note Interest Rate" means in the case of (a) the Class A-1 Notes,
% per annum, (b) the Class A-2 Notes, % per annum, (c) the Class
A-3 Notes, % per annum and (d) the Class A-4 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 A-4 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.
"Principal Distribution Amount" means, with respect to any Payment
Date, the sum of (1) the Scheduled Principal for such Payment Date
(including, in the case of a Balloon Payment Receivable, the amount owed by
an obligor with respect to a Balloon Payment), (2) any outstanding
Principal Carryover Shortfall as of the close of business on the preceding
Payment Date and (3) with respect to the Payment Date on or immediately
following the end of the Pre-Funding Period, any funds remaining in the
Pre-Funding Account (after giving effect to the purchase of all Subsequent
Receivables, including any purchase on the last day of the Pre-Funding
Period) exclusive of any net earnings on funds on deposit in the
Pre-Funding Account; 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.
"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 Balloon Payment) over the Liquidation
Proceeds
attributable to such Defaulted Receivable.
"Scheduled Principal" shall mean, with respect to any Payment Date, the
sum of:
(1) the sum of (A) collections of principal on Simple Interest
Receivables received during the related Collection Period,
including collections of principal attributable to the Balloon
Payment of a Simple Interest Receivable that is a Balloon
Payment Receivable (unless a Balloon Payment Advance has
previously been made with respect to such Balloon Payment) and
charges for excess wear and tear and excess mileage and (B)
Balloon Payment Advances made on such Payment Date with respect
to Simple Interest Receivables that are Balloon Payment
Receivables;
(2) the principal portion of each scheduled payment, including a
Balloon Payment on a Balloon Payment Receivable, due on any
Actuarial Receivable during the related Collection Period;
(3) (without duplication of amounts taken into account under (1) or
(2)) the outstanding principal balance of (A) Receivables
prepaid in full during the related Collection Period, and (B)
Receivables which became Defaulted Receivables during the
related Collection Period;
(4) 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;
(5) the proceeds of any other sale of a Receivable to the extent
allocable to principal; and
(6) partial prepayments attributable to any refunded item included
in the amount financed, such as extended warranty protection
plan costs or physical damage, credit life, disability
insurance premiums, or any partial prepayment which causes a
reduction in the obligor's periodic payment to be below the
scheduled payment as of the related Cutoff Date; provided,
however, that in calculating the Scheduled Principal, (A) all
payments and proceeds (including Liquidation Proceeds) of any
purchased 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)
and (B) all amounts released from the Pre-Funding Account will
be excluded.
"Total Required Payment" means, on any Payment Date, the Total
Servicing Fee, the Accrued Note Interest and the Principal Distribution
Amount.
Monthly Withdrawals From the Note Payment Account. On each Payment
Date, unless the maturity dates of the Notes have been accelerated
following the occurrence of an Event of Default, all amounts on deposit in
the Note Payment Account will be paid in the following order of priority:
(1) to the Noteholders, the Accrued Note Interest on the applicable
class of Notes;
(2) to the Class A-1 Noteholders, the Principal Distribution Amount
until the Class A-1 Notes have been paid in full;
(3) following payment in full of the Class A-1 Notes, to the Class
A-2 Noteholders, the Principal Distribution Amount until the
Class A-2 Notes have been paid in full;
(4) following payment in full of the Class A-2 Notes, to the Class
A-3 Noteholders, the Principal Distribution Amount until the
Class A-3 Notes have been paid in full; and
(5) following payment in full of the Class A-3 Notes, to the Class
A-4 Noteholders, the Principal Distribution Amount until the
Class A-4 Notes have been paid in full.
Monthly Withdrawals From the Note Payment Account On and After an
Acceleration of the Maturity Dates of the Notes. On each Payment Date
occurring on or after the acceleration of the maturity dates of the Notes
following the occurrence of an Event of Default, all amounts on deposit in
the Note Payment Account will be paid:
(1) to the Indenture Trustee, amounts due as compensation or
indemnity payments pursuant to the terms of the Indenture;
(2) to the Servicer, the amounts due and unpaid in respect of the
Total Servicing Fee;
(3) to the Noteholders, the Accrued Note Interest on the applicable
class of Notes;
(4) to the Noteholders, all unpaid principal on the Notes pro rata
in proportion to the respective principal balances of each
class of Notes until each of such classes has been paid in
full; and
(5) to the Certificate Distribution Account, any amount remaining
in the Note Payment Account after each class of Notes has been
paid in full.
DESCRIPTION OF THE NEGATIVE CARRY ACCOUNT
An account to be known as the "Negative Carry Account" will be
established by the Seller and held in the name of the Indenture Trustee for
the exclusive benefit of the Noteholders. The Negative Carry Account will
be created with an initial deposit by the Seller of $ (the "Negative
Carry Account Initial Deposit"), which is equal to the Maximum Negative
Carry Amount as of the Closing Date.
The "Maximum Negative Carry Amount" means, as of any date of
determination, the product of (1) the Weighted Average Rate as of such date
minus %, multiplied by (2) the product of the Note Percentage as of such
date and the Pre-Funded Amount as of such date after giving effect to any
withdrawals from the Pre-Funding Account on such date, multiplied by (3)
the percentage equivalent of a fraction, the numerator of which is the
actual number of days until the expected end of the Pre-Funding Period and
the denominator of which is 360.
"Note Percentage" means, as of any date of determination, the
percentage equivalent of a fraction, the numerator of which is the
aggregate principal amount of the Notes as of such date, and the
denominator of which is an amount equal to the sum of the aggregate
principal amount of the Notes as of such date and aggregate principal
amount of the Certificates as of such date, in each case after giving
effect to any payment of principal on such date.
On each Payment Date, the Servicer will instruct the Indenture
Trustee to withdraw from the Negative Carry Account and deposit into the
Collection Account an amount equal to the Negative Carry Amount for the
related Collection Period. For each Collection Period, the "Negative Carry
Amount" will be calculated by the Servicer as the difference (if positive)
between (1) the product of (a) the Monthly Accrued Note Interest for such
Collection Period, multiplied by (b) the Pre-Funded Percentage as of the
Payment Date occurring in such Collection Period, or in the case of the
first Payment Date, the Closing Date, minus (2) the net investment earnings
on the Pre-Funded Amount for such Collection Period.
The "Pre-Funded Percentage" means, as of any date of determination,
the percentage equivalent of a fraction, the numerator of which is the
Pre-Funded Amount as of such date and the denominator of which is the sum
of the Pool Balance and the Pre-Funded Amount, in each case as of such
date, after taking into account all withdrawals from the Pre-Funding
Account and all transfers of Subsequent Receivables on or prior to such
date.
The amount required to be on deposit in the Negative Carry Account
(the "Required Negative Carry Account Balance") as of any Payment Date will
be equal to the lesser of (x) the Negative Carry Account Initial Deposit
minus all previous withdrawals of the Negative Carry Amount from the
Negative Carry Account, including any withdrawals of the Negative Carry
Amount therefrom on such Payment Date and (y) the Maximum Negative Carry
Amount as of such Payment Date. If the amount on deposit in the Negative
Carry Account on any Payment Date (after giving effect to the withdrawal of
the Negative Carry Amount, if any, for such Payment Date) is greater than
the Required Negative Carry Account Balance, the excess will be released to
the Seller. All amounts remaining on deposit in the Negative Carry Account
on the Payment Date on or immediately following the last day of the
Pre-Funding Period (after giving effect to all withdrawals therefrom on
such Payment Date for deposit to the Collection Account on such Payment
Date) will be released to the Seller.
DESCRIPTION OF THE RESERVE ACCOUNT AND SUPPLEMENTAL RESERVE ACCOUNT
Accounts to be known as the "Reserve Account" and the "Supplemental
Reserve Account" will be established by the Seller and held in the name of
the Indenture Trustee for the benefit of Noteholders and
Certificateholders.
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 $ , which is equal to the Pool Balance as of the Initial Cutoff Date
multiplied by %. On each Subsequent Transfer Date, cash or Permitted
Investments having a value approximately equal to % of the aggregate
principal balance as of the related Subsequent Cutoff Date of the
Subsequent Receivables conveyed to the Trust on such Subsequent Transfer
Date will be withdrawn from the Pre-Funding Account from amounts otherwise
distributable to the Seller in connection with the sale of Subsequent
Receivables and deposited in the Reserve Account. The Supplemental Reserve
Account will not be funded by an initial deposit by the Seller on the
Closing Date or an additional deposit by the Seller on any Subsequent
Transfer Date.
On or before each Payment Date, the Servicer will instruct the
Indenture Trustee to withdraw funds from the Supplemental Reserve Account
and apply such funds to make the following payment and deposit in the
following order of priority:
(1) to the Servicer, an amount equal to 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 that are paid to
the Servicer on such Payment Date as reimbursement for such
Advances; and
(2) to the Collection Account, an amount equal to the shortfall, if
any, between the Total Required Payment for such Payment Date
and the Available Funds allocable to the payment of the Total
Required Payment.
On each Payment Date, the Servicer will instruct the Indenture
Trustee to withdraw from the Reserve Account an amount equal to the
shortfall, if any, between the funds available in the Supplemental Reserve
Account on such Payment Date and the amounts described in clauses (1) and
(2) of the preceding paragraph, for application in the same order of
priority.
On each Payment Date, after payment of the amount owed to the
Servicer for Advances and the Total Servicing Fee for such Payment Date and
the deposit to the Note Payment Account of an amount equal to the Accrued
Note Interest for each class of Notes and the Principal Distribution Amount
for such Payment Date, the Indenture Trustee will apply the remaining Total
Available Funds to make the following deposits in the following order of
priority:
(1) to the Reserve Account, an amount, equal to the excess, if any,
of the Specified Reserve Balance for such Payment Date over the
amount on deposit in the Reserve Account after giving effect to
any withdrawals made from the Reserve Account on such Payment
Date; and
(2) to the Supplemental Reserve Account, an amount equal to the
excess, if any, of the Maximum Supplemental Reserve Amount for
such Payment Date over the amount on deposit in the
Supplemental Reserve Account after giving effect to any
withdrawals made from the Supplemental Reserve Account on such
Payment Date.
Amounts on deposit in the Reserve Account and the Supplemental
Reserve Account will be invested by the Seller in Permitted Investments. On
any Payment Date, to the extent that the amounts on deposit in the Reserve
Account and the Supplemental Reserve Account (including amounts
attributable to investment income, net of losses and investment expenses)
exceed the required balances in such accounts after giving effect to the
withdrawals to be made from such accounts on such Payment Date, such excess
will be withdrawn from the Reserve Account or the Supplemental Reserve
Account, as the case may be, and paid to the Seller. The Noteholders will
not have any rights in, or claims to, any such amounts paid to the Seller.
Amounts on deposit in the Reserve Account and 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 aggregate amount
required to be withdrawn from the Reserve Account and the Supplemental
Reserve Account on any Payment Date to reimburse the Servicer for Advances
and to cover shortfalls in Available Funds exceeds the aggregate amount on
deposit in the Reserve Account and the Supplemental Reserve Account, a
temporary shortfall in the amounts distributed to the Noteholders could
result. In addition, depletion of the Reserve Account and the Supplemental
Reserve Account ultimately could result in losses to Noteholders. To the
extent that amounts on deposit in the Reserve Account and the Supplemental
Reserve Account are exhausted, Noteholders will have no recourse to the
assets of the Seller as a source of payment.
The "Specified Reserve Balance" with respect to any Payment Date will
be an amount equal to the lesser of:
(1) (A) % of the sum of the aggregate principal balance of the
Initial Receivables as of the Initial Cutoff Date and the
principal balances of the Subsequent Receivables transferred to
the Trust on or prior to such Payment Date as of the related
Subsequent Cutoff Dates less (B) 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); and
(2) the outstanding principal amount of the Notes as of such
Payment Date (after giving effect to any principal payment made
on such Payment Date).
The "Maximum Supplemental Reserve Amount" with respect to any Payment
Date will be an amount equal to the lesser of:
(1) $ ; and
(2) 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
Specified Reserve Balance or the Maximum Supplemental Reserve Amount or a
change in the manner in by which the Reserve Account or 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 Specified Reserve
Balance or the Maximum Supplemental Reserve Amount, 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 the required balance of the
account will be reduced, provided that a reduction in the Specified Reserve
Balance will also require the delivery of certain tax opinions. The
Indenture will accordingly be amended to reflect the change in the required
balance of the account without the consent of any Noteholders.
DESCRIPTION OF THE BALLOON PAYMENT RECEIVABLES
Certain of the Motor Vehicle Contracts (the "Balloon Payment
Receivables") provide for level monthly payments that amortize the entire
amount financed under the Receivable to one substantially larger final
payment (the "Balloon Payment"), which is due at the end of the term of the
Receivable. MMCA sets the Balloon Payment for a particular model of Motor
Vehicle at the time the related Contract is entered into. The Balloon
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 Balloon 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 Balloon Payment Receivable upon maturity
may be greater or less than the Balloon Payment as a result of (a) 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 (b) 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 be an amount equal to the sum of the Pre-Funded Amount and the
aggregate principal amount of the Initial Receivables on the Initial Cutoff
Date, including the aggregate of the principal portions of the Balloon
Payments on the Balloon Payment Receivables. As of the Initial Cutoff Date,
the Balloon Payments of the Initial Receivables had an aggregate principal
balance of $ .
Collections attributable to Balloon 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 "--Description of the Indenture Cash Flows."
Upon maturity of a Balloon Payment Receivable, the related obligor
may satisfy the amount it owes 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 Balloon Payment), all accrued and unpaid
interest, plus any fees, charges, and other amounts then owing
on the Due Date of the Balloon Payment;
(2) refinancing the net amount then due, which may be greater or
less than the Balloon Payment, subject to certain conditions;
or
(3) selling the related Motor Vehicle to MMCA or its assignee for
an amount equal to the Balloon 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 Balloon
Payment to MMCA.
MMCA will sell its rights to the Balloon Payment Receivables,
including the Balloon 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 obligor sells the Motor Vehicle to MMCA (acting on behalf of
the Trust), it is anticipated that the full amount of the Balloon Payment
will not be realized upon the subsequent sale of the Motor Vehicle on
behalf of the Trust. MMCA sets the Balloon Payment for a particular model
of Motor Vehicle at the time of origination of the related retail
installment sale contract 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 Balloon 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 monthly installments which would be owed by obligors.
MMCA does not require the obligor under a Balloon 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. The "Gap Amount" is the
difference between the amount owed in respect of the Balloon 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 Balloon Payment.
In the event that the full amount owed by an obligor under a Balloon
Payment Receivable is not collected, the shortfall will reduce the
Available Funds available to pay the Total Required Payment and to make
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 CERTIFICATES TO THE NOTES
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
reimbursement of Advances made by the Servicer, the payment to the Servicer
of Rule of 78's Payments and the Total Servicing Fee, the Accrued Note
Interest on the Notes and principal payable on the Notes on such Payment
Date and to making the required deposits to the Reserve Account and the
Supplemental Reserve Account before distributions on the Certificates. In
addition, following the occurrence of an Event of Default that has resulted
in an acceleration of the Notes, the Noteholders will be entitled to be
paid in full before the Certificateholders are entitled to any
distributions. The foregoing subordination of the Certificates is intended
to enhance the likelihood of receipt by Noteholders of amounts due them and
to decrease the likelihood that the Noteholders will experience losses. See
"-- Description of the Indenture Cash Flows."
ADVANCES BY THE SERVICER OF AMOUNTS PAYABLE ON THE RECEIVABLES
If the collection of interest and principal on an Actuarial
Receivable (other than a Balloon 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:
(1) on each subsequent Payment Date out of any payments by or on
behalf of the related obligor to the extent such payments are
allocable to the reimbursement of the Actuarial Advance; and
(2) on the Payment Date following the Collection Period in which
the related Actuarial Receivable becomes a Defaulted Receivable
out of collections on other Receivables 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
Balloon 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 Balloon Payment (such advance, a "Balloon Payment Advance" and,
together with an Actuarial Advance, each an "Advance").
The Servicer will be reimbursed for any Balloon Payment Advance on
each Payment Date following the Payment Date on which the Balloon Payment
Advance was made:
(1) out of payments by or on behalf of the related obligor to the
extent such payments are allocable to the reimbursement of the
Balloon Payment Advance; and
(2) out of collections on other Receivables to the extent of any
losses allocable to the Balloon Payment that the Servicer has
recorded in its books and records during the preceding
Collection Period, but only to the extent the Balloon Payment
and the Balloon 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, withdrawals from the Negative
Carry Account and, to the extent available, amounts on deposit in the
Reserve Account and the Supplemental Reserve Account. See "--Description of
the Indenture Cash Flows" and "--Description of the Reserve Account and
Supplemental Reserve Account."
DEPOSIT OF COLLECTIONS ON THE RECEIVABLES TO COLLECTION ACCOUNT
The Servicer will deposit all payments on the Receivables (from
whatever source) and all proceeds of the Receivables (other than
disposition fees paid with respect to Balloon Payment Receivables, late
fees and certain other administrative fees and charges (other than
extension or deferral fees) collected on the Receivables that are payable
to the Servicer under the Sale and Servicing Agreement and therefore are
not required to be deposited in the Collection Account) into the Collection
Account not later than two Business Days after receipt thereof unless (a)
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 (b) 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 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 be reimbursed for the amounts previously
deposited in the Collection Account but later determined to have resulted
from mistaken deposits or posting or checks returned unpaid for
insufficient funds or other reasons from amounts otherwise payable into the
Collection Account or amounts on deposit in the Collection Account.
In those cases where a subservicer is servicing a Receivable pursuant
to a subservicing agreement, 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.
DESCRIPTION OF THE 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:
(1) the amount of the payment allocable to principal of each class
of Notes;
(2) the amount of the payment allocable to interest on or with
respect to each class of Notes;
(3) the Yield Supplement Amount;
(4) the amount of the Total Servicing Fee;
(5) 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 (1)
above;
(6) the Pool Balance, the Level Pay Pool Balance and the Balloon
Payment Pool Balance (calculated as of the close of business on
the last day of the related Collection Period);
(7) the amounts of the Interest Carryover Shortfall, if any, for
the next Payment Date, and the Principal Carryover Shortfall,
if any, for such Payment Date and the portion thereof
attributable to each class of Notes;
(8) the amount of the aggregate Realized Losses, if any;
(9) the balance of the Reserve Account on such Payment Date, after
giving effect to changes therein on such Payment Date;
(10) the balance of the Supplemental Reserve Account on such Payment
Date, after giving effect to changes therein on such Payment
Date;
(11) the amount of Actuarial Advances and Balloon Payment Advances,
if any;
(12) the aggregate Purchase Amount of Receivables repurchased by the
Seller or purchased by the Servicer during such Collection
Period;
(13) for each Payment Date during the Pre-Funding Period and the
Payment Date that is on or immediately following the end of the
Pre-Funding Period, (A) the amount, if any, withdrawn from the
Pre-Funding Account to purchase Subsequent Receivables during
such Collection Period, (B) the remaining Pre- Funded Amount,
if any, (C) the Negative Carry Amount, if any, for the related
Collection Period and (D) the amount remaining on deposit in
the Negative Carry Account, if any, after all withdrawals, made
on such Payment Date; and
(14) for the Payment Date on or immediately following the end of the
Pre-Funding Period, the remaining Pre-Funded Amount, if any,
that has not been used to fund the purchase of Subsequent
Receivables and is being passed through as payments of
principal on the Notes.
Each amount set forth pursuant to clauses (1), (2), (3), (4) and (7)
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.
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 (1), (2), (3), (4) and (7) above for the purposes of
such Noteholder's preparation of Federal income tax returns. See "Certain
Federal Income Tax Consequences" and "--Book Entry Registration of the
Notes."
DESCRIPTION OF THE TERMS OF THE INDENTURE
Events of Default Under the Indenture.
The "Events of Default" in the Indenture consist of:
(1) a default for five days or more in the payment of interest on any
Note when the same becomes due
and payable;
(2) a default in the payment of principal of, or any installment of
principal of, any Note when the same becomes due and payable;
(3) 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
(4) 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: (a) in payment
of principal of or interest on any of the Notes; or (b) 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 Following an Event of Default Under the Indenture. 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: (a) 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 (b) 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: (a) 100% of the Noteholders consent thereto;
(b) the proceeds of such sale are sufficient to pay in full the principal
of and the accrued interest on the then outstanding Notes; or (c) 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,
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:
(1) first, to the Indenture Trustee for amounts due as compensation
or indemnity payments pursuant to the terms of the Indenture;
(2) second, to the Servicer for amounts due in respect of unpaid
Total Servicing Fees;
(3) third, to the Noteholders for interest which is due and unpaid;
and
(4) 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. (Indenture, Sections 6.1 and 6.2). Subject to
such provisions for indemnification and certain other 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, 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 prior to the acceleration of the maturity of
Notes, 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 or Noteholders will have the right to institute any
proceeding with respect to the Indenture unless:
(1) such Noteholder or Noteholders previously has given to the
Indenture Trustee written notice of a continuing Event of
Default;
(2) 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;
(3) such Noteholder or Noteholders have offered the Indenture
Trustee reasonable indemnity;
(4) the Indenture Trustee has for 60 days failed to institute such
proceeding; and
(5) 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 by the Trust under the Indenture. The Trust will
not, among other things:
(1) 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;
(2) claim any credit on or make any deduction from the principal or
interest payable in respect of the Notes (other than amounts
withheld under the 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;
(3) dissolve or liquidate in whole or in part; or
(4) permit:
(A) the validity or effectiveness of the Indenture to be
impaired;
(B) 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;
(C) 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
(D) 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. (Indenture, Section
2.8).
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 4.11).
Replacement of Indenture Trustee. Noteholders holding not less than a
majority of the aggregate principal amount of the outstanding Notes, voting
as a group, may remove the Indenture Trustee without cause by so notifying
the Indenture Trustee and the Trust, and following 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:
(1) ceases to be eligible to continue as the Indenture Trustee;
(2) is adjudged to be bankrupt or insolvent;
(3) comes under the charge of a receiver or other public officer; or
(4) otherwise becomes incapable of acting.
Upon the resignation or required removal of the Indenture Trustee, or
the failure of the Noteholders to appoint a successor Indenture Trustee
following the removal without cause of the Indenture Trustee, the Trust
will be required promptly to appoint a successor Indenture Trustee.
(Indenture, Section 6.8).
Duties of Indenture Trustee under the Indenture. Except during the
continuance of an Event of Default, the Indenture Trustee:
(1) will perform such duties and only such duties as are
specifically set forth in the Indenture;
(2) 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
(3) 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 of the Indenture Trustee under the
Indenture. The Trust will:
(1) pay to the Indenture Trustee from time to time reasonable
compensation for its services;
(2) reimburse the Indenture Trustee for all expenses, advances and
disbursements reasonably incurred; and
(3) 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:
(1) 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;
(2) 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
(3) 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).
Indenture Trustee's 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: (a) as of each Record Date, within five days
thereafter; and (b) 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 to be Provided by Trust to Indenture
Trustee. The Trust will be required to file annually with the Indenture
Trustee a written statement as to the fulfillment of its obligations under
the Indenture. (Indenture, Section 3.9).
Requirements for Satisfaction and Discharge of Indenture. The
Indenture will be discharged with respect to the collateral securing the
Notes upon the delivery to the Indenture Trustee for cancellation of all
the Notes or, with 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).
Requirements for Modification of Indenture. Without the consent of
the Noteholders, the Owner Trustee, on behalf of the Trust, and the
Indenture Trustee, upon request by the Trust, may execute a supplemental
indenture for the purpose of, among other things, adding to the covenants
of the Trust, curing any ambiguity, correcting or supplementing any
provision which may be inconsistent with any other provision or making any
other provision with respect to matters or questions arising under the
Indenture which will not be inconsistent with other provisions of the
Indenture; provided that (a) such action will not, (1) 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 (2) 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 (b) 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 (a) such action will not, (1) as evidenced by an Opinion of
Counsel, materially adversely affect the interests of any Noteholder and
(2) as confirmed by each 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 (b) 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:
(1) 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 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;
(2) impair the right to institute suit for the enforcement of
certain provisions of the Indenture regarding payment;
(3) 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;
(4) 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;
(5) 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;
(6) 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;
(7) 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
(8) 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 a pool of motor vehicle retail installment
sale contracts (the "Initial Receivables") on the Closing Date. It is
anticipated that the Trust will purchase additional motor vehicle retail
installment sale contracts (the "Subsequent Receivables") on one or more
Subsequent Transfer Dates with an aggregate principal balance approximately
equal to the Initial Pre-Funded Amount. The Initial Receivables and the
Subsequent Receivables are referred to collectively in this Prospectus as
the "Receivables". 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 INITIAL RECEIVABLES AND THE SUBSEQUENT 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 Initial Receivables,
including its security interests in the related 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 Initial
Receivables, including its security interests in the related Financed
Vehicles. Each Initial Receivable conveyed by the Seller to the Trust will
be identified in a schedule attached to the Sale and Servicing Agreement.
The Initial Receivables will be sold and assigned by MMCA to the Seller and
sold and assigned by the Seller to the Trust as of [ ], 1999 (the
"Initial Cutoff Date"). The Owner Trustee will, concurrently with such sale
and assignment of the Initial Receivables, execute, authenticate and deliver
the Certificates. The net proceeds received from the sale of the Notes will
be applied to the purchase of the Initial Receivables on the Closing Date
and to the deposits required to be made to the Reserve Account, the
Pre-Funding Account, the Negative Carry Account, the Payahead Account and
the Yield Supplement Account on the Closing Date.
It is anticipated that Subsequent Receivables will be conveyed to the
Trust monthly on dates specified by the Seller (each, a "Subsequent
Transfer Date") occurring during a period beginning on the Closing Date and
ending not later than [ ] (the "Pre-Funding Period"). The Seller will
designate as a cutoff date (each, a "Subsequent Cutoff Date" and, together
with the Initial Cutoff Date, each a "Cutoff Date") the date as of which
particular Subsequent Receivables are conveyed to the Trust. On or prior to
each Subsequent Transfer Date, MMCA will sell and assign to the Seller,
without recourse, its entire right, title and interest in, to and under the
Subsequent Receivables to be transferred by the Seller to the Trust on such
date, including MMCA's security interests in the related Financed Vehicles.
On each Subsequent Transfer Date, subject to the conditions described
below, the Seller will sell and assign to the Trust, without recourse, the
Seller's entire interest in the Subsequent Receivables designated by the
Seller as of the related Subsequent Cutoff Date.
Upon the conveyance of Subsequent Receivables to the Trust on a
Subsequent Transfer Dates:
(1) the Pool Balance will increase in an amount equal to the
aggregate principal balance of the Subsequent Receivables;
(2) an amount equal to % of the aggregate principal balance of
the Subsequent Receivables will be withdrawn from the
Pre-Funding Account from funds otherwise distributable to the
Seller as payment for the Subsequent Receivables and deposited
in the Reserve Account;
(3) an amount equal to the Payaheads as of the related Subsequent
Cutoff Date of the Subsequent Receivables conveyed to the Trust
on such Subsequent Transfer Date will be withdrawn from the
Pre- Funding Account from funds otherwise distributable to the
Seller as payment for the Subsequent Receivables and deposited
in the Payahead Account;
(4) an amount equal to the projected Yield Supplement Amounts for
all future Payment Dates for the Subsequent Receivables
conveyed to the Trust on such Subsequent Transfer Date will be
withdrawn from the Pre-Funding Account from funds otherwise
distributable to the Seller as payment for the Subsequent
Receivables and deposited in the Yield Supplement Account
unless the Yield Supplement Account has been replaced by a
Yield Supplement Letter of Credit on or prior to such date; and
(5) an amount equal to the excess of the aggregate principal
balance of such Subsequent Receivables over the sum of the
amounts described in clauses (2), (3) and (4) will be withdrawn
from the Pre-Funding Account and paid to the Seller.
Any conveyance of Subsequent Receivables is subject to the
satisfaction, on or before the related Subsequent Transfer Date, of the
following conditions precedent, among others:
(1) each such Subsequent Receivable shall satisfy the eligibility
criteria specified in the Sale and Servicing Agreement (see
"Description of the Receivables--Selection Criteria for the
Receivables");
(2) the Seller shall not have selected such Subsequent Receivables
in a manner that it believes is adverse to the interests of the
Trust, the Noteholders or the Certificateholders;
(3) as of the related Subsequent Cutoff Date, the pool of
Receivables, after giving effect to the inclusion of the
Subsequent Receivables, shall satisfy the parameters specified
in the Sale and Servicing Agreement (see "Description of the
Receivables -- Selection Criteria for the Receivables");
(4) the applicable Reserve Account deposit for such Subsequent
Transfer Date shall have been made;
(5) the applicable Payahead Account deposit for such Subsequent
Transfer Date shall have been made;
(6) the applicable Yield Supplement Account deposit for such
Subsequent Transfer Date shall have been made;
(7) the Seller shall have executed and delivered to the Trust (with
a copy to the Indenture Trustee) a written assignment conveying
such Subsequent Receivables to the Trust (including a schedule
identifying such Subsequent Receivables);
(8) the Seller shall have delivered certain opinions of counsel to
the Owner Trustee, the Indenture Trustee and the Rating
Agencies with respect to the transfer of such Subsequent
Receivables; and
(9) the Owner Trustee, the Indenture Trustee and the Rating
Agencies shall have received written notification from the
Seller of the addition of all such Subsequent Receivables.
In addition, the pool of Receivables will not deviate from the
following characteristics as of each Subsequent Transfer Date (after giving
effect to Subsequent Receivables sold to the Trust on such Subsequent
Transfer Date):
(1) the weighted average remaining maturity of the Receivables will
not be more than [ ] months; and
(2) the aggregate Balloon Payments as a percentage of the Pool
Balance will not be greater than [ ]%.
Except for the criteria described in the two preceding paragraphs,
there will be no required characteristics of the Subsequent Receivables.
Therefore, following the transfer of Subsequent Receivables to the Trust,
the aggregate characteristics of the entire pool of Receivables may vary
from those of the Initial Receivables. See "Risk Factors" and "Description
of the Receivables."
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:
(1) the information provided in the schedule of Initial Receivables
attached to the Sale and Servicing Agreement and each schedule
of Subsequent Receivables attached to the related assignment is
correct in all material respects;
(2) 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;
(3) at the Closing Date or the related Subsequent Transfer Date, as
applicable, 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;
(4) at the Closing Date or the related Subsequent Transfer Date, as
applicable, 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
(5) each Receivable, at the time it was originated, complied, and
at the Closing Date or the related Subsequent Transfer Date, as
applicable, complies or will comply in all material respects
with applicable Federal and state laws, including consumer
credit, truth in lending, equal credit opportunity and
disclosure laws.
The 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 "Description of MMCA Auto Owner Trust 1999-1" and
"Certain Legal Aspects of the Receivables."
DESCRIPTION OF THE PRE-FUNDING PERIOD
The Trust will pay the purchase price for Subsequent Receivables with
funds on deposit in an account to be known as the "Pre-Funding Account".
The Seller will deposit an amount equal to $ (the "Initial Pre-Funded
Amount") in the Pre-Funding Account on the Closing Date. The Seller expects
to sell Subsequent Receivables to the Trust with an aggregate principal
balance approximately equal to the Initial Pre-Funded Amount. Prior to
being used to purchase Subsequent Receivables or paid to holders of the
Notes as described under "Description of the Notes-Mandatory Redemption,"
funds on deposit in the Pre-Funding Account will be invested from time to
time in Permitted Investments. The net earnings from the investment of
funds on deposit in the Pre-Funding Account will be transferred to the
Collection Account on a monthly basis on the Business Day preceding each
Payment Date.
The Pre-Funding Period will end earlier than the date specified above
if:
(1) the amount of funds on deposit in the Pre-Funding Account (the
"Pre-Funded Amount") is reduced to less than $100,000 because
of purchases of Subsequent Receivables;
(2) there is an Event of Default under the Indenture;
(3) there is no Event of Servicing Termination under the Sale and
Servicing Agreement; or
(4) the Seller or the Servicer becomes subject to certain
insolvency events.
Any funds remaining on deposit in the Pre-Funding Account at the end
of the Pre-Funding Period will be payable to the Noteholders as described
under "Description of the Notes-Mandatory Redemption."
MANDATORY REPURCHASE OF RECEIVABLES
In the event of a breach or failure to be true of any representation
or warranty with respect to the Receivables described in "--Sale and
Assignment of the Initial Receivables and the Subsequent 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 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.
DESCRIPTION OF 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:
(1) has a net worth of not less than $50,000,000;
(2) is servicing a portfolio of motor vehicle retail installment
sale contracts and/or motor vehicle loans;
(3) is legally qualified, and has the capacity, to service the
Receivables;
(4) 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
(5) 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:
(1) the Financed Vehicle securing each Receivable will not be
released from the security interest granted by the Receivable
in whole or in part, except as contemplated by the Sale and
Servicing Agreement;
(2) the Servicer will not (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
(3) 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
(3) 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 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 (3) 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 Balloon 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 a fee for servicing the
Receivables each Collection Period (the "Servicing Fee"), 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 Balloon 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 portion of the Servicing Fee that remains unpaid from prior
Payment Dates (the "Total Servicing Fee"), will be paid to the Servicer on
each Payment Date out of Total 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 TO BE PROVIDED AS TO SERVICER'S COMPLIANCE WITH ITS SERVICING
OBLIGATIONS
The Sale and Servicing Agreement will provide that a firm of
independent certified public accountants, who may provide audit and other
services to the Servicer, the Seller or MMCA, will furnish to the Indenture
Trustee and the Owner Trustee, on or before March 31 of each year,
beginning March 31, 2000, a report of examination as to compliance by the
Servicer during the 12 months (or longer 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 March 31 of each
year, beginning March 31, 2000, of a certificate signed by an officer of
the Servicer stating that to the best of such officer's knowledge the
Servicer has fulfilled its obligations under the Sale and Servicing
Agreement throughout the 12 months (or longer 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.
RESIGNATION BY THE SERVICER
The Sale and Servicing Agreement will provide that the Servicer may
not resign from its obligations and duties as Servicer thereunder, except
upon a determination that the Servicer's performance of 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.
CONSEQUENCES OF MERGER, CONVERSION, CONSOLIDATION OR SIMILAR ACTIONS BY
SERVICER
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.
LIMITS ON SERVICER'S LIABILITY
The Sale and Servicing Agreement will provide that the Servicer will
be liable only to the extent of the obligations specifically undertaken by
it under the Sale and Servicing Agreement and will have no other
obligations or liabilities thereunder.
LIMITS ON SERVICER'S OBLIGATIONS IN CONNECTION WITH LEGAL ACTIONS
The Sale and Servicing Agreement will also provide that the Servicer
will be under no obligation to appear in, prosecute or defend any legal
action that is not incidental to the Servicer's 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:
(1) 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);
(2) 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 (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);
(3) 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;
(4) 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
(5) 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 OF INDENTURE TRUSTEE AND NOTEHOLDERS 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, 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.
REQUIREMENTS FOR AMENDMENTS OF THE TRANSFER AND SERVICING AGREEMENTS
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, the
consent of the Indenture Trustee and with, in the case of the
Administration Agreement, the consent of 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 (except that
in the case of the Administration Agreement, the consent of holders of
Notes evidencing not less than a majority of the aggregate principal amount
of then outstanding Notes, voting as a group, will be required), and the
holders of Certificates evidencing not less than 51% of the Certificate
Balance (except that in the case of the Administration Agreement, the
consent of holders of Certificates evidencing not less than a majority of
the Certificate Balance will be required), 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:
(1) 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, the Specified Reserve Balance or
the Maximum Supplemental Reserve Amount, without the consent of
all adversely affected Noteholders or Certificateholders;
(2) 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
(3) with respect to any amendment to the Sale and Servicing
Agreement or the Trust Agreement, adversely affect the ratings
of any class of Notes by the Rating Agencies without the
consent of holders of Notes evidencing not less than 66 2/3% of
the aggregate principal amount of the then outstanding Notes of
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 Terms of the Notes-Book Entry
Registration of the Notes."
REQUIREMENTS FOR TERMINATION OF THE TRUST
The Trust shall terminate and be of no further force and effect upon
the earliest of (a) payment to Noteholders and Certificateholders of all
amounts required to be paid to them pursuant to the Indenture and the
Transfer and Servicing Agreements and (b) the Payment Date next succeeding
the month which is one year after the maturity or other liquidation of the
last Receivable and the disposition of any amounts received upon
liquidation of any property remaining in the Trust in accordance with the
terms and priorities set forth in the Indenture and the Transfer and
Servicing Agreements.
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.
ACTIONS TO BE TAKEN BY INDENTURE TRUSTEE UPON TERMINATION OF THE TRUST
The Indenture Trustee will give written notice of termination of the
Trust to each Noteholder of record. The final distribution to any
Noteholder will be made only upon surrender and cancellation of 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.
DESCRIPTION OF THE 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
BANKRUPTCY CONSIDERATIONS RELATING TO THE TRANSFER OF THE RECEIVABLES BY MMCA
TO THE SELLER
It is intended by MMCA and the Seller that the transfer of the
Receivables by MMCA to the Seller on the Closing Date and each Subsequent
Transfer Date under the Purchase Agreement constitute a "true sale" of the
Receivables to the Seller. If such transfers constitute 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
transfers 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 transfers of the
Receivables to the Seller on the Closing Date and each Subsequent Transfer
Date, the transfers 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.
In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir.
1993), cert. denied, 114 S. Ct. 554 (1993), the United States Court of
Appeals for the 10th Circuit suggested that even where a transfer of
accounts from a seller to a buyer constitutes a "true sale," the accounts
would nevertheless constitute property of the seller's estate in a
bankruptcy of the seller. If MMCA ever becomes subject to a bankruptcy
proceeding and the court follows the Octagon court's reasoning, you could
experience losses or delays in payments on your notes. Counsel to 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.
TRUST'S 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 on the Closing Date and each Subsequent
Transfer Date. 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.
TRUST'S 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 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 on the Closing Date and each Subsequent Transfer Date. 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-Interests of Other Persons in
Receivables and Vehicles Could Reduce the Funds Available to Make Payments
on the Notes."
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 or the related Subsequent Transfer 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
or the related Subsequent Transfer 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
benefit of the Seller and the Trust, respectively (subject to any statutory
or other lien arising by operation of law after the Closing Date or the
related Subsequent Transfer 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 or
the related Subsequent Transfer 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 or
the related Subsequent Transfer 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 or
the related Subsequent Transfer Date during the term of a Receivable would
not give rise to a repurchase obligation on the part of MMCA and the
Seller.
REPOSSESSION OF FINANCED VEHICLES BY SERVICER ON BEHALF OF THE TRUST
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 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.
SERVICER'S OBLIGATION TO PROVIDE NOTICE OF SALE OF A FINANCED VEHICLE;
OBLIGOR'S REDEMPTION RIGHTS IN A FINANCED VEHICLE
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.
TRUST'S RIGHT TO DEFICIENCY JUDGMENTS AGAINST OBLIGORS
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.
OBLIGOR'S RIGHT TO EXCESS PROCEEDS UPON SALE OF A FINANCED 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 AFFECTING THE TRUST'S RIGHTS UNDER THE RECEIVABLES
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 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 sale 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 sale 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 or the related Subsequent Transfer Date in all material respects with
all requirements of applicable law. If, as of the related 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 Initial Receivables and the
Subsequent Receivables."
OTHER LAWS THAT IMPOSE LIMITS ON ENFORCING THE RECEIVABLES
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.
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.
TAX TREATMENT OF THE NOTES AND THE TRUST UNDER FEDERAL INCOME TAX LAW
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: (a)
the Notes will be treated as debt, and (b) 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 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 Trust 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: (a) 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), (b) events which have occurred before the end of the accrual
period and (c) 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 (a) the issue price of the Note were
equal to the Noteholder's adjusted basis in the Note immediately after its
acquisition by the Noteholder; (b) the Note were issued on the Noteholder's
acquisition date; and (c) 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 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 (x) such
gain or principal payment or (y) 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.
FEDERAL TAX CONSEQUENCES OF WAIVERS OF EVENTS OF DEFAULT AND AMENDMENTS OF
NOTES BY NOTEHOLDERS
The Indenture permits the Noteholders to waive an Event of Default 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 OF TAXES BY INDENTURE TRUSTEE
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 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 Trust 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 (a) a
citizen or resident of the United States, (b) 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), (c) an estate the income of which is
includible in gross income for U.S. Federal income tax purposes, regardless
of its source or (d) 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 (1) 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 (2) 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 (1) the gain
is not effectively connected with the conduct of a trade or business
in the United States by the Foreign Person, and (2) 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.
Recent Treasury regulations could affect the procedures to be
followed by a non-U.S. Person in complying with the United States federal
withholding, backup withholding, and information reporting rules. The
regulations will generally be effective for payments made after December
31, 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, (a) the Notes will be treated as
debt for Delaware and California income and franchise tax purposes, (b) the
Trust will not be subject to Delaware or California income or franchise
taxes at the entity level, and (c) 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.
ELIGIBILITY OF NOTES FOR PURCHASE BY MONEY MARKET FUNDS
The Class A-1 Notes are structured to be eligible for purchase by
money market funds under Rule 2a-7 under the Investment Company Act of
1940, as amended. A money market fund should consult its legal advisors
regarding the eligibility of the Class A-1 Notes under Rule 2a-7 and
whether an investment by the money market fund in the Class A-1 Notes
satisfies the money market fund's investment policies and objectives.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended
("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 Mut. 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. In addition, ERISA and the Code prohibit certain transactions
between a Benefit Plan and Parties-in-Interest or Disqualified Persons with
respect to such Benefit Plan.
SPECIAL ERISA CONSIDERATIONS FOR EMPLOYEE BENEFIT PLANS
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 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 ERISA CONSIDERATIONS APPLICABLE TO INSURANCE COMPANY GENERAL ACCOUNTS
It should be noted that the Small Business Job Protection Act of 1996
added new Section 401(c) of ERISA relating to the status of the assets of
insurance company general accounts under ERISA and Section 4975 of the
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 FOR EMPLOYEE BENEFIT PLANS
Prior to making an investment in the Notes, prospective Benefit Plan
investors should consult with their legal advisors concerning the impact of
ERISA and the 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 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:
Principal Principal Principal Principal
Amount of Amount of Amount of Amount of
Class A-1 Class A-2 Class A-3 Class A-4
UNDERWRITERS Notes Notes Notes Notes
- ------------ --------- --------- --------- ---------
Merrill Lynch, Pierce,
Fenner & Smith
Incorporated........... $ $ $ $
--------- --------- --------- ---------
Total.................... $ $ $ $
========= ========= ========= =========
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 price to the public, the underwriting discounts and commissions
of the Underwriters, the selling concessions that the Underwriters may
allow to certain dealers, the discounts that certain dealers may reallow to
certain other dealers and the net proceeds to the Seller in the offering of
the Notes, each expressed as a percentage of the principal amount of the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4
Notes and as an aggregate dollar amount, will be as follows:
<TABLE>
<CAPTION>
UNDERWRITING SELLING NET PROCEEDS
PRICE TO DISCOUNTS AND CONCESSIONS, REALLOWANCE, TO THE
PUBLIC (1) COMMISSIONS NOT TO EXCEED NOT TO EXCEED SELLER(1)(2)
---------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Class A-1 Notes % % % % %
Class A-2 Notes % % % % %
Class A-3 Notes % % % % %
Class A-4 Notes % % % % %
Total $ $ $ $ $
</TABLE>
- --------------
(1) Plus accrued interest, if any, from , 1999.
(2) Before deducting expenses estimated at $ .
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.
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 Negative Carry Account, the Yield Supplement Account,
the Reserve Account and the Supplemental 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 of
1933, as amended (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.
REPORTS TO NOTEHOLDERS
Unless and until Definitive Notes are issued under the limited
circumstances described under "Description of the Notes-Definitive Notes,"
all notices, reports and statements to Noteholders, including any monthly
and annual reports concerning the Trust and the Receivables, will be
prepared by the Servicer and sent on behalf of the Trust only to DTC or
Cede as nominee of DTC and registered holder of the Notes. See "Description
of the Terms of the Notes-Principal Amount of and Interest Rates on the
Notes," "-Book Entry Registration of the Notes" and "-Issuance of
Definitive Notes Upon the Occurrence of Certain Circumstances." Such
notices, reports and statements will not contain audited financial
statements with respect to the Trust. The Servicer also does not intend to
send any financial reports of the Servicer or the Seller to Noteholders.
WHERE YOU CAN FIND MORE INFORMATION
The Seller, as originator of the Trust, filed with the Securities and
Exchange Commission (the "Commission") a registration statement under the
Securities Act relating to the Notes. This Prospectus is part of the
registration statement, but the registration statement includes additional
information.
The Servicer, on behalf of the Seller in its capacity as originator
of the Trust, will file or cause to be filed with the Commission such
periodic reports with respect to the Trust as may be required under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act") and
the rules and regulations of the Commission thereunder.
You may read and copy any notices, reports, statements or other
information the Servicer files or causes to be filed at the Commission's
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549.
You can request copies of these documents, upon payment of a duplicating
fee, by writing to the Commission. Please call the Commission at (800)
SEC-0330 for further information on the operation of the public reference
rooms. Our filings with the Commission are also available to the public on
the Commission's Internet site (http://www.sec.gov.), which contains
reports, proxy and information statements, and other information regarding
issuers that file publicly with the Commission.
INDEX OF PRINCIPAL TERMS
Page
ABS.....................................................................23
ABS Tables..............................................................23
accrual period..........................................................72
Accrued Note Interest...................................................42
Actuarial Advance.......................................................49
Actuarial Receivables...................................................21
Administration Agreement................................................66
Administrator...........................................................66
Advance.................................................................49
Applicable Trustee......................................................64
APR.....................................................................17
Available Funds.........................................................40
Balloon Payment.........................................................47
Balloon Payment Advance.................................................49
Balloon Payment Receivables.............................................47
Basic Documents.........................................................53
Benefit Plan............................................................75
Business Day............................................................35
Capped Receivables......................................................22
Cede....................................................................31
Cedel...................................................................31
Cedel Participants......................................................33
Certificate Balance.....................................................42
Certificate Distribution Account........................................37
Certificateholders......................................................37
Certificates.............................................................9
Class A-1 Final Payment Date............................................36
Class A-1 Notes.........................................................30
Class A-1 Rate..........................................................35
Class A-2 Final Payment Date............................................36
Class A-2 Notes.........................................................30
Class A-2 Rate..........................................................35
Class A-3 Final Payment Date............................................36
Class A-3 Notes.........................................................30
Class A-3 Rate..........................................................35
Class A-4 Final Payment Date............................................36
Class A-4 Notes.........................................................30
Class A-4 Rate..........................................................35
Closing Date............................................................16
Code....................................................................71
Collection Account......................................................37
Collection Period.......................................................40
Commission..............................................................78
Contracts...............................................................11
Cooperative.............................................................33
Cutoff Date.............................................................58
Dealer..................................................................11
Dealer Agreement........................................................11
Defaulted Receivable....................................................41
Definitive Notes........................................................34
Depositaries............................................................32
Depositary..............................................................32
Determination Date......................................................40
Direct Participants.....................................................31
Disqualified Persons....................................................75
DTC.....................................................................31
DTC Participants........................................................31
Due Date................................................................12
Eligible Servicer.......................................................61
Equity Interest.........................................................76
ERISA...................................................................75
Euroclear...............................................................33
Euroclear Operator......................................................33
Euroclear Participants..................................................33
Events of Default.......................................................51
Events of Servicing Termination.........................................64
Exchange Act............................................................79
Final Payment Date......................................................36
Final Scheduled Maturity Date...........................................17
Financed Vehicles.......................................................16
Foreign Person..........................................................74
FTC.....................................................................70
FTC Rule................................................................70
Gap Amount..............................................................48
General Account Regulations.............................................76
Indenture...............................................................30
Indenture Trustee.......................................................30
Indirect Participants...................................................31
Initial Cutoff Date.....................................................57
Initial Pool Balance....................................................17
Initial Pre-Funded Amount...............................................60
Initial Receivables.....................................................57
Insolvency Laws.........................................................29
Interest Carryover Shortfall............................................43
Interest Period.........................................................35
IRS.....................................................................71
Level Pay Balance.......................................................47
Level Pay Pool Balance..................................................18
Liquidation Proceeds....................................................41
Maximum Negative Carry Amount...........................................45
Maximum Supplemental Reserve Amount.....................................47
Mitsubishi Motors.......................................................30
MMCA.................................................................4, 30
MMSA....................................................................30
Monthly Accrued Note Interest...........................................43
Moody's.................................................................38
Motor Vehicle...........................................................11
Motor Vehicle Contracts.................................................11
Negative Carry Account..................................................45
Negative Carry Account Initial Deposit..................................45
Negative Carry Amount...................................................45
Note Interest Rate......................................................43
Note Interest Rates.....................................................35
Note Owner..............................................................31
Note Payment Account....................................................37
Note Percentage.........................................................45
Note Pool Factor........................................................29
Noteholders.............................................................35
Notes...................................................................30
OID.....................................................................71
OID Regulations.........................................................72
Opinion of Counsel......................................................56
Owner Trustee............................................................9
Parties-in-Interest.....................................................75
Payahead Account........................................................38
Payaheads...............................................................37
Payment Date............................................................35
Permitted Investments...................................................38
Plan Assets Regulation..................................................75
Pool Balance............................................................17
Pre-Funded Amount.......................................................60
Pre-Funded Percentage...................................................45
Pre-Funding Account.................................................37, 60
Pre-Funding Period......................................................58
Prepayable Obligation...................................................72
Prepayment Assumption...................................................72
Principal Carryover Shortfall...........................................43
Principal Distribution Amount...........................................43
PTCE....................................................................76
Purchase Agreement......................................................16
Purchase Amount.........................................................61
Qualified Institution...................................................38
Qualified Trust Institution.............................................38
Rating Agency...........................................................38
Realized Losses.........................................................43
Receivable File.........................................................60
Receivables.........................................................10, 57
Record Date.............................................................35
Recoveries..............................................................41
Representative..........................................................77
Reserve Account.........................................................45
Required Negative Carry Account Balance.................................45
Rule of 78's............................................................21
Rule of 78's Payment....................................................21
Sale and Servicing Agreement............................................16
Scheduled Principal.....................................................43
Securities Act..........................................................78
Seller..................................................................29
Servicer................................................................30
Servicing Fee...........................................................62
Servicing Rate..........................................................63
Simple Interest Receivables.............................................21
Special Tax Counsel.....................................................71
Specified Reserve Balance...............................................47
Standard & Poor's.......................................................38
Subsequent Cutoff Date..................................................58
Subsequent Receivables..................................................57
Subsequent Transfer Date................................................58
Supplemental Reserve Account............................................45
Terms and Conditions....................................................33
Total Available Funds...................................................42
Total Required Payment..................................................44
Total Servicing Fee.....................................................63
Transfer and Servicing Agreements.......................................57
Truck...................................................................11
Truck Contracts.........................................................11
Trust....................................................................9
Trust Accounts..........................................................38
Trust Agreement..........................................................9
Trust Property..........................................................10
U.S. Person.............................................................86
UCC.....................................................................67
Underwriters............................................................77
Underwriting Agreement..................................................77
Weighted Average Rate...................................................39
Yield Supplement Account................................................39
Yield Supplement Agreement..............................................39
Yield Supplement Amount.................................................39
Yield Supplement Letter of Credit.......................................39
ANNEX A
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered MMCA
Auto Owner Trust 1999-1 Asset Backed Notes will be available only in
book-entry form. Investors in the Notes may hold 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 DTC
Participants. 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.
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, which with respect to the Class A-1 Notes
will be on the basis of a 360-day year and the actual number of days
elapsed and with respect to the Class A-2 Notes, the Class A-3 Notes and
the Class A-4 Notes will be on the basis of a 360-day year consisting of
twelve 30-day months. Payment will then be made by the Depositary to the
DTC Participant's account against delivery of the Notes. After settlement
has been completed, the Notes will be credited to the respective clearing
system and by the clearing system, in accordance with its usual procedures,
to the 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, which with respect to the Class A-1 Notes will be on the basis of a
360-day year and the actual number of days elapsed and with respect to the
Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes will be on the
basis of a 360-day year consisting of twelve 30-day months. The payment
will then be reflected in the account of the 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.
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 (a) each clearing system, bank, or other
financial institution that holds customers' securities in the ordinary
course of its trade or business in the chain of intermediaries between such
beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (b) 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.
The term "U.S. Person" means (a) a citizen or resident of the United
States, (b) a corporation or partnership (including an entity treated as a
corporation or partnership) organized in or under the laws of the United
States or any state or the District of Columbia (unless, in the case of a
partnership, Treasury regulations provide otherwise), (c) an estate the
income of which is includible in gross income for United States tax
purposes, regardless of its source, or (iv) a trust if a U.S. court is able
to exercise primary supervision over the administration of 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 generally will 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.
MMCA AUTO OWNER TRUST 1999-1
$ % CLASS A-1 ASSET BACKED NOTES
$ % CLASS A-2 ASSET BACKED NOTES
$ % CLASS A-3 ASSET BACKED NOTES
$ % CLASS A-4 ASSET BACKED NOTES
MMCA AUTO RECEIVABLES, INC.
SELLER
[LOGO]
SERVICER
------------------------
PROSPECTUS
------------------------
UNDERWRITERS OF THE NOTES
MERRILL LYNCH & CO. [ ]
You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to
provide you with different information.
We are not offering the notes in any state where the offer of the notes
is not permitted.
We do not claim the accuracy of the information in this prospectus as
of any date other than the date stated on the cover of this
prospectus.
Dealers will deliver a prospectus when acting as underwriters of the
notes and with respect to their unsold allotments or subscriptions.
In addition, all dealers that effect transactions in the notes,
whether or not participating in the offering of the notes, will
be required to deliver a prospectus until , 1999.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Registration Fee.............................................. $ *
Printing and Engraving........................................ $ *
Trustee's Fee................................................. $ *
Legal Fees and Expenses....................................... $ *
Blue Sky Fees and Expenses.................................... $ *
Accountant's Fees and Expenses................................ $ *
Rating Agency Fees............................................ $ *
Miscellaneous Fees and Expenses............................... $ *
------------
Total Expenses ............................................... $ *
============
- ---------------------------
* To be supplied by amendment.
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 shall have power to 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 the person 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 the
person in connection with such action, suit or proceeding if the person
acted in good faith and in a manner the person 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
the person's 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
the person 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 the person's conduct was
unlawful.
(b) A corporation shall have power to 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 the person 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 the person in connection with the defense or
settlement of such action or suit if the person acted in good faith and in
a manner the person 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
this section, or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person 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 the person 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 such person 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 such person's 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 such person and incurred by such person in
any such capacity, or arising out of such person's status as such, whether
or not the corporation would have the power to indemnify such person
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 such
person 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 such person 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.
(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
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.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
NUMBER Description
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 - Form of Yield Supplement Agreement
23.1 - Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(contained in Exhibit 5.1)
23.2 - Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(contained in Exhibit 8.1)
24 - Powers of Attorney***
24.1 - Board Resolutions of the Seller****
25 - Form T-1 of Indenture Trustee
- -----------
* 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.
**** To be filed by amendment.
(b) Financial Statement Schedules
Not applicable.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes as follows:
(a) To provide to the Underwriters at the closing specified in the
Underwriting Agreement certificates in such denominations and registered in
such names as required by the Underwriters to permit prompt delivery to
each purchaser.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. 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, as amended
shall be deemed to be part of this Registration Statement as of the time it
was declared effective.
(d) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 3 to Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Cypress, State of California, on December 18, 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. 3 to 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 December 18, 1998
- -------------------------- (principal executive
Hiroshi Yajima officer)
/s/ Hideyuki Kitamura * Secretary and Treasurer December 18, 1998
- -------------------------- (principal financial
Hideyuki Kitamura officer and principal
accounting officer)
/s/ John Maynard * Director December 18, 1998
- --------------------------
John Maynard
/s/ Masaki Takahashi * Director December 18, 1998
- --------------------------
Masaki Takahashi
/s/ Charles A. Tredway * Director December 18, 1998
- --------------------------
Charles A. Tredway
/s/ Yasuhiro Hagihara * Director December 18, 1998
- --------------------------
Yasuhiro Hagihara
*By: /s/ J. Sean Plater
----------------------
J. Sean Plater
Attorney-in-fact
INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
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 Form of Yield Supplement Agreement
23.1 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(contained in Exhibit 5.1)
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(contained in Exhibit 8.1)
24 Powers of Attorney***
24.1 Board Resolutions of the Seller****
25 Form T-1 of Indenture Trustee
- -----------
* 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.
**** To be filed by amendment.
Exhibit 1.1
$___________
MMCA AUTO OWNER TRUST 1999-1
$___________ _____% CLASS A-1 ASSET BACKED NOTES
$___________ ____% CLASS A-2 ASSET BACKED NOTES
$___________ ____% CLASS A-3 ASSET BACKED NOTES
$__________ ____% CLASS A-4 ASSET BACKED NOTES
MMCA AUTO RECEIVABLES, INC.
UNDERWRITING AGREEMENT
January __, 1999
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 1999-1 (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 A-4 Asset Backed Notes (the "Class A-4 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
January 1, 1999 (the "Indenture"), between the Trust and Bank of Tokyo-
Mitsubishi Trust Company (the "Indenture Trustee").
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 ________, 1999 (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
________, 1999 (the "Initial Cutoff Date"),with respect to Receivables
("Initial Receivables") conveyed to the Trust on the Closing Date (as such
term is defined in Section 3), or on or after such subsequent cutoff dates
("Subsequent Cutoff Dates" and, together with the Cutoff Date, the "Cutoff
Dates") as are designated by the Company with respect to Receivables
("Subsequent Receivables") conveyed to the Trust subsequent to the Closing
Date, and, with respect to Simple Interest Receivables, certain monies due
or received thereunder on or after the related Cutoff Date. The
Receivables will be sold to the Trust by the Company and 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 January 1, 1999 (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. "Transfer Date" means, with respect to an
Initial Receivable, the Closing Date, and with respect to a Subsequent
Receivable, the date on which such Subsequent Receivable is purported to be
transferred to the Trust pursuant to the Sale Agreement. 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. 333-66063)
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 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 paragraph
(b) of Rule 430A 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 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.
(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
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 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 on the related Transfer Dates 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 Tapes of the Receivables created as of the
related Cutoff Dates and made available to the Representative by the
Servicer are or will be, as applicable, complete and accurate as of
the dates thereof and include identifying descriptions of the
Receivables 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 A-4 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 at the offices of Skadden, Arps, Slate, Meagher
& Flom LLP, 919 Third Avenue, New York, New York 10022 or by wire transfer
to an account in New York previously designated to Merrill Lynch by the
Company at a bank acceptable to Merrill Lynch, at 10:00 a.m., New York
time, on January __, 1999, 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 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
Certificates to be so 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 January __, 1999, 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 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.
(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) 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 ("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 related Transfer 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 related Transfer 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 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 Rule 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 5:00 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 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 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;
(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 January __, 1999 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
(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 is 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;
(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,
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 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 OF TERMS ERISA Considerations", "ERISA CONSIDERATIONS",
"SUMMARY OF TERMS Tax Status", "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES" and "DESCRIPTION OF THE TERMS OF THE NOTES Description
of the Terms of the Indenture " (last sentence of second paragraph
under " Events of Default Under the Indenture" and last sentence of
first paragraph under " Remedies Following an Event of Default Under
the Indenture" 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 OF TERMS 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.
(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;
(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;
(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. section3801 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 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 section9-
312(4) of the Delaware UCC and temporarily perfected security
interests in proceeds under section9-306(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. section3805(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
Certificateholders 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.
(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.
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 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 any preliminary
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 (i) the untrue statement or omission contained in such
preliminary prospectus was corrected in the Prospectus; (ii) such person
was not sent or given a copy of the Prospectus 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 5(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
(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) 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 this Section 7 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 herein, 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 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 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 political, 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; (v) 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 (vi) 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 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, (iii), (v) or (vi) 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.
(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.
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:
For itself and as Representative of the
other Underwriters named in Schedule A
hereto.
<TABLE>
<CAPTION>
SCHEDULE A
Principal Principal Principal Principal
Amount of Amount of Amount of Amount of
Class A-1 Class A-2 Class A-3 Class A-4
Underwriter Notes Notes Notes Notes
- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Merrill Lynch, Pierce, Fenner
& Smith Incorporated $__________ $__________ $__________ $__________
__________ __________ __________ __________
__________ __________ __________ __________
__________ __________ __________ __________
Total $__________ $__________ $__________ $__________
</TABLE>
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 January __, 1999
===========================================================================
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Capitalized Terms . . . . . . . . . . 1
SECTION 1.2 Other Definitional Provisions . . . . 5
ARTICLE II ORGANIZATION OF THE TRUST . . . . . . . . . . . . . . . .
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 . . . . . 10
ARTICLE III TRUST CERTIFICATES AND TRANSFER OF INTERESTS . . . . . .
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. . . . . . . . . 19
SECTION 3.6 Persons Deemed Owners of
Certificate . . . . . . . . . . . . 20
SECTION 3.7 Access to List of
Certificateholders' Names
and Addresses . . . . . . . . . . . 20
SECTION 3.8 Maintenance of Office or Agency . . 20
SECTION 3.9 Appointment of Paying Agent . . . . 21
ARTICLE IV ACTIONS BY OWNER TRUSTEE . . . . . . . . . . . . . . . . .
SECTION 4.1 Prior Notice to Certificateholders
with Respect to Certain Matters . . . 22
SECTION 4.2 Action by Certificateholders with
Respect to Certain Matters . . . . . 23
SECTION 4.3 Action by Certificateholders with
Respect to Bankruptcy. . . . . . . . 23
SECTION 4.4 Restrictions on Certificateholders'
Power. . . . . . . . . . . . . . . . 23
SECTION 4.5 Majority Control . . . . . . . . . . 23
ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES . . . . . . . . 24
SECTION 5.1 Establishment of Certificate
Distribution Account . . . . . . . . 24
SECTION 5.2 Application of Trust Funds . . . . . 24
SECTION 5.3 Method of Payment . . . . . . . . . 25
SECTION 5.4 No Segregation of Monies; No
Interest . . . . . . . . . . . . . . 25
SECTION 5.5 Accounting and Reports to the
Noteholders, Certificateholders,
the Internal Revenue Service and
Others . . . . . . . . . . . . . . . 26
SECTION 5.6 Signature on Returns; Tax Matters
Partner . . . . . . . . . . . . . . 26
ARTICLE VI AUTHORITY AND DUTIES OF OWNER TRUSTEE . . . . . . . . . . 28
SECTION 6.1 General Authority . . . . . . . . . 28
SECTION 6.2 General Duties . . . . . . . . . . . 28
SECTION 6.3 Action upon Instruction . . . . . . 28
SECTION 6.4 No Duties Except as Specified in
this Agreement or in Instructions. . 30
SECTION 6.5 No Action Except Under Specified
Documents or Instructions. . . . . . 30
SECTION 6.6 Restrictions . . . . . . . . . . . . 30
ARTICLE VII REGARDING THE OWNER TRUSTEE . . . . . . . . . . . . . . . 32
SECTION 7.1 Acceptance of Trusts and Duties . . 32
SECTION 7.2 Furnishing of Documents . . . . . . 33
SECTION 7.3 Representations and Warranties . . . 33
SECTION 7.4 Reliance; Advice of Counsel . . . . 34
SECTION 7.5 Not Acting in Individual Capacity . 35
SECTION 7.6 Owner Trustee Not Liable for
Certificates or Receivables. . . . . 35
SECTION 7.7 Owner Trustee May Own Certificates
and Notes . . . . . . . . . . . . . 36
ARTICLE VIII COMPENSATION OF OWNER TRUSTEE . . . . . . . . . . . . . . 37
SECTION 8.1 Owner Trustee's Fees and Expenses . 37
SECTION 8.2 Indemnification . . . . . . . . . . 37
SECTION 8.3 Payments to the Owner Trustee . . . 37
ARTICLE IX TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.1 Termination of Trust Agreement . . . 38
SECTION 9.2 Notification Regarding Bankruptcy
of the Depositor . . . . . . . . . . 39
SECTION 9.3 Prepayment of the Certificates. . . 39
ARTICLE X SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES . . 42
SECTION 10.1 Eligibility Requirements for
Owner Trustee . . . . . . . . . . . 42
SECTION 10.2 Resignation or Removal of Owner
Trustee . . . . . . . . . . . . . . 42
SECTION 10.3 Successor Owner Trustee . . . . . . 43
SECTION 10.4 Merger or Consolidation of Owner
Trustee . . . . . . . . . . . . . . 44
SECTION 10.5 Appointment of Co-Trustee or
Separate Trustee . . . . . . . . . . 44
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 11.1 Supplements and Amendments . . . . . 47
SECTION 11.2 No Legal Title to Owner Trust
Estate in Certificateholders . . . . 49
SECTION 11.3 Limitation on Rights of Others . . . 49
SECTION 11.4 Notices . . . . . . . . . . . . . . 49
SECTION 11.5 Severability . . . . . . . . . . . . 49
SECTION 11.6 Separate Counterparts . . . . . . . 50
SECTION 11.7 Successors and Assigns . . . . . . . 50
SECTION 11.8 Covenants of the Depositor . . . . . 50
SECTION 11.9 No Petition . . . . . . . . . . . . 50
SECTION 11.10 No Recourse . . . . . . . . . . . . 51
SECTION 11.11 Headings . . . . . . . . . . . . . 51
SECTION 11.12 Governing Law . . . . . . . . . . . 51
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
AMENDED AND RESTATED TRUST AGREEMENT, dated as of January __,
1999 (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 [ ], 1999 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.
"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.
"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 January __,
1999, 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.
"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(d)(i).
"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 January __, 1999 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.
(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.
ARTICLE II
ORGANIZATION OF THE TRUST
SECTION 2.1 Name. The Trust created hereby shall be known as
"MMCA Auto Owner Trust 1999-1", 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, the Pre-Funding Account, the Negative
Carry 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;
(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 January __, 1999, 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. 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.
(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 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:
(a) amounts paid to the Depositor pursuant to Sections 4.1(b),
4.7(a), 4.7(b) and 4.9 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; and
(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.
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.
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 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 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) 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.
(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.
(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
(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 4.11 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.
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 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 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.
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 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.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1 Establishment of Certificate Distribution Account.
Pursuant to Section 4.1(e) 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) [Reserved]
(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 4.11 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 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.
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 [ ], 1999, 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.
(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.
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 and
$[ ] in aggregate principal amount of Class A-4 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 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
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 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.
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 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:
(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 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.
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.
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.
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 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 Notification Regarding 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
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.
(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.
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 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 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:
(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.
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 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 Trust 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 Trust 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 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. 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, 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.
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 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.
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,
not in its individual capacity but solely as
Owner Trustee
By:_______________________________
Name:
Title:
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 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.
MMCA AUTO OWNER TRUST 1999-1
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
from time to time to MMCA Auto Receivables, Inc. by Mitsubishi Motors
Credit of America, Inc. and sold by MMCA Auto Receivables, Inc. from time
to time 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 [ ] DOLLARS AND
[ ] CENTS nonassessable, fully-paid,
beneficial interest in Certificates of MMCA Auto Owner Trust 1999-1 (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: January __, 1999
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
The Trust was created pursuant to an Amended and Restated Trust
Agreement, dated as of January __, 1999 (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 January
__, 1999 (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 related Cutoff Date
(including Payaheads) and, with respect to Simple Interest Receivables,
monies due or received thereunder on or after the related 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) all 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) the Trust Accounts, the
Certificate Distribution Account, the Reserve Account, the Supplemental
Reserve Account, the Negative Carry 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) all rebates
of premiums and other amounts relating to insurance policies and other
items financed under the Receivables in effect as of the related Cutoff
Date; and (xii) all present and future claims, demands, causes of action
and chooses 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 February
15, 1999, 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 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.
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 1999-1
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee
By:____________________________________________
Authorized Officer
[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 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.
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, 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.
EXHIBIT B
[RESERVED]
EXHIBIT C
[FORM OF CERTIFICATE OF TRUST]
CERTIFICATE OF TRUST OF
MMCA AUTO OWNER TRUST 1999-1
This Certificate of Trust of MMCA AUTO OWNER TRUST 1999-1 (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 1999-1.
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:
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 1999-1 (the "Trust").
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, 1999 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 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.
-------------------
[* minimum of $1,000,000]
Very truly yours,
[NAME OF HOLDER
OF CERTIFICATES]
By:__________________________
Name:
Title:
EXHIBIT E
[FORM OF INVESTMENT LETTER
QUALIFIED INSTITUTIONAL BUYER]
[Date]
MMCA Auto Owner Trust 1999-1
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 1999-1 (the
"Trust"), 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 January __,
1999 (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 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 Trust
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).
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 Trust an IRS Form 4224
(and such other certifications, representations or opinions of counsel as
may be requested by the Depositor or the Trust) 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
Trust 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 Trust
and the Certificate Registrar a letter substantially in the form of this
Exhibit E or Exhibit F 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
EXHIBIT F
[FORM OF INVESTMENT LETTER
INSTITUTIONAL ACCREDITED INVESTOR]
[Date]
MMCA Auto Owner Trust 1999-1
c/o 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 1999-1 (the
"Trust"), 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 January __,
1999 (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.
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 Trust
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 Trust an IRS Form 4224
(and such other certifications, representations or opinions of counsel as
may be requested by the Depositor or the Trust) 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
Trust 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 Trust
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:
Exhibit 4.2
===========================================================================
SALE AND SERVICING AGREEMENT
by and among
MMCA AUTO OWNER TRUST 1999-1,
as the Trust
MMCA AUTO RECEIVABLES, INC.,
as Seller
and
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.,
as Servicer
Dated as of January [ ], 1999
===========================================================================
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Other Definitional Provisions . . . . . . . . . . . . 28
SECTION 1.3 Business Day Certificate . . . . . . . . . . . . . . 29
ARTICLE II
TRUST PROPERTY
SECTION 2.1 Conveyance of Trust Property . . . . . . . . . . . . 29
SECTION 2.2 Representations and Warranties of the Seller
as to the Receivables . . . . . . . . . . . . . . . 36
SECTION 2.3 Repurchase upon Breach . . . . . . . . . . . . . . . 42
SECTION 2.4 Custody of Receivable Files . . . . . . . . . . . . . 43
SECTION 2.5 Duties of Servicer as Custodian . . . . . . . . . . . 44
SECTION 2.6 Instructions; Authority to Act . . . . . . . . . . . 45
SECTION 2.7 Custodian's Indemnification . . . . . . . . . . . . . 45
SECTION 2.8 Effective Period and Termination . . . . . . . . . . 46
ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND TRUST PROPERTY
SECTION 3.1 Duties of Servicer . . . . . . . . . . . . . . . . . 46
SECTION 3.2 Collection and Allocation of Receivable Payments . . 50
SECTION 3.3 Realization upon Receivables . . . . . . . . . . . . 53
SECTION 3.4 Physical Damage Insurance . . . . . . . . . . . . . . 54
SECTION 3.5 Maintenance of Security Interests in Financed
Vehicles . . . . . . . . . . . . . . . . . . . . . 54
SECTION 3.6 Covenants of Servicer . . . . . . . . . . . . . . . . 54
SECTION 3.7 Purchase by Servicer upon Breach . . . . . . . . . . 54
SECTION 3.8 Servicing Compensation . . . . . . . . . . . . . . . 55
SECTION 3.9 Servicer's Certificate . . . . . . . . . . . . . . . 55
SECTION 3.10 Annual Statement as to Compliance; Notice of
Event of Servicing Termination . . . . . . . . . . 56
SECTION 3.11 Annual Independent Certified Public
Accountants' Reports . . . . . . . . . . . . . . . 57
SECTION 3.12 Access to Certain Documentation and Information
Regarding Receivables . . . . . . . . . . . . . . . 57
SECTION 3.13 Reports to the Commission . . . . . . . . . . . . . . 58
SECTION 3.14 Reports to Rating Agencies . . . . . . . . . . . . . 58
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS
TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 4.1 Accounts . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 4.2 Collections . . . . . . . . . . . . . . . . . . . . . 65
SECTION 4.3 Application of Collections . . . . . . . . . . . . . 66
SECTION 4.4 Advances . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 4.5 Additional Deposits . . . . . . . . . . . . . . . . . 69
SECTION 4.6 Allocation of Total Available Funds . . . . . . . . . 70
SECTION 4.7 Reserve Account; Supplemental Reserve Account . . . . 72
SECTION 4.8 Pre-Funding Account . . . . . . . . . . . . . . . . . 75
SECTION 4.9 Negative Carry Account . . . . . . . . . . . . . . . 76
SECTION 4.10 Net Deposits . . . . . . . . . . . . . . . . . . . . 76
SECTION 4.11 Statements to Noteholders and Certificateholders . . 76
SECTION 4.12 Control of Securities Accounts . . . . . . . . . . . 78
ARTICLE V
YIELD SUPPLEMENT LETTER OF CREDIT
SECTION 5.1 Yield Supplement Letter of Credit and the Yield
Supplement Account . . . . . . . . . . . . . . . . 79
ARTICLE VI
THE SELLER
SECTION 6.1 Representations, Warranties and Covenants of
Seller . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 6.2 Liability of Seller; Indemnities . . . . . . . . . . 84
SECTION 6.3 Merger or Consolidation of, or Assumption of the
Obligations of, Seller . . . . . . . . . . . . . . 85
SECTION 6.4 Limitation on Liability of Seller and Others . . . . 86
SECTION 6.5 Seller May Own Notes or Certificates . . . . . . . . 86
ARTICLE VII
THE SERVICER
SECTION 7.1 Representations and Warranties of Servicer . . . . . 87
SECTION 7.2 Liability of Servicer; Indemnities . . . . . . . . . 88
SECTION 7.3 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer . . . . . . . . . . . . . 90
SECTION 7.4 Limitation on Liability of Servicer and Others . . . 91
SECTION 7.5 Servicer Not to Resign . . . . . . . . . . . . . . . 92
SECTION 7.6 Servicer May Own Notes or Certificates . . . . . . . 92
ARTICLE VIII
SERVICING TERMINATION
SECTION 8.1 Events of Servicing Termination . . . . . . . . . . . 92
SECTION 8.2 Indenture Trustee to Act; Appointment of
Successor Servicer . . . . . . . . . . . . . . . . 94
SECTION 8.3 Effect of Servicing Transfer . . . . . . . . . . . . 95
SECTION 8.4 Notification to Noteholders and
Certificateholders . . . . . . . . . . . . . . . . 96
SECTION 8.5 Waiver of Past Events of Servicing Termination . . . 96
ARTICLE IX
TERMINATION
SECTION 9.1 Optional Purchase of All Receivables . . . . . . . . 97
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1 Amendment . . . . . . . . . . . . . . . . . . . . . . 98
SECTION 10.2 Protection of Title to Trust . . . . . . . . . . . . 99
SECTION 10.3 Governing Law . . . . . . . . . . . . . . . . . . . . 102
SECTION 10.4 Notices . . . . . . . . . . . . . . . . . . . . . . . 102
SECTION 10.5 Severability of Provisions . . . . . . . . . . . . . 103
SECTION 10.6 Assignment . . . . . . . . . . . . . . . . . . . . . 103
SECTION 10.7 Further Assurances . . . . . . . . . . . . . . . . . 103
SECTION 10.8 No Waiver; Cumulative Remedies . . . . . . . . . . . 103
SECTION 10.9 Third-Party Beneficiaries . . . . . . . . . . . . . . 104
SECTION 10.10 Actions by Noteholder or Certificateholders . . . . . 104
SECTION 10.11 Counterparts . . . . . . . . . . . . . . . . . . . . 104
SECTION 10.12 Agent for Service . . . . . . . . . . . . . . . . . . 104
SECTION 10.13 No Bankruptcy Petition . . . . . . . . . . . . . . . 105
SECTION 10.14 Limitation of Liability of Owner Trustee and
Indenture Trustee . . . . . . . . . . . . . . . . . 105
SCHEDULES
SCHEDULE A Schedule of Initial Receivables
SCHEDULE B Location of Receivable Files
EXHIBITS
EXHIBIT A Form of Servicer's Certificate
EXHIBIT B Form of Statement to Noteholders
EXHIBIT C Form of Statement to Certificateholders
EXHIBIT D Form of Yield Supplement Agreement
EXHIBIT E Form of Second-Tier Subsequent Assignment
SALE AND SERVICING AGREEMENT, dated as of January [ ], 1999 (as
amended, supplemented or otherwise modified and in effect from time to
time, this "Agreement"), by and among MMCA AUTO OWNER TRUST 1999-1, a
Delaware business trust (the "Trust"), MMCA AUTO RECEIVABLES, INC., a
Delaware corporation (the "Seller"), and MITSUBISHI MOTORS CREDIT OF
AMERICA, INC., a Delaware corporation (the "Servicer").
WHEREAS, the Trust desires to purchase portfolios 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 as of the date hereof and
from time to time hereafter;
WHEREAS, the Seller is willing to sell such receivables to the
Trust as of the date hereof and from time to time hereafter; and
WHEREAS, Mitsubishi Motors Credit of America, Inc. is willing to
service such receivables on behalf of the Trust;
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 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.
"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 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 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 deposited to the
Collection Account on such Payment Date by the Servicer; (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)) with respect
to the related Collection Period; (vii) the Negative Carry Amount for such
Payment Date; (viii) 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 related Cutoff Date;
(ix) the Pre-Funding Account Investment Earnings, if any, for the related
Collection Period; and (x) with respect to the Payment Date on or
immediately following the last day of the Pre-Funding Period, the Remaining
Pre-Funded Amount; 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 previously made by the Servicer that are due and payable
to the Servicer on such Payment Date.
"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 may require, (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 Trust, 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. 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 pledgee's right so to act with respect to such
Certificates and that the pledgee is not the Trust, 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(e).
"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 January [ ], 1999.
"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 Initial Cutoff Date to and including the [last day of
the month in which the Initial Cutoff Date occurred].
"Commission" shall mean the Securities and Exchange Commission.
"Computer Tape" shall mean any computer tape or compact disk
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 on the Closing Date or any Subsequent
Transfer Date.
"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.
"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, the Owner Trustee 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, the Owner Trustee 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, the Indenture
Trustee 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, the Indenture Trustee and the Seller).
"Cutoff Date" shall mean the Initial Cutoff Date or any
Subsequent Cutoff Date, as the context may require.
"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) more than 10% of 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 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 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 a 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.
"Holder" shall mean a Noteholder or a Certificateholder, as the
case may be.
"Indenture" shall mean the Indenture, dated as of January [ ],
1999, between the Trust 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 may
require, (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 Cutoff Date" shall mean January 1, 1999.
"Initial Payahead Account Deposit" shall mean $[ ].
"Initial Pool Balance" shall mean an amount equal to the sum of
(i) the Pool Balance as of the close of business on the Initial Cutoff
Date, which is $[ ], plus (ii) the aggregate Principal
Balance (including the aggregate principal balance of Last Scheduled
Payments) of all Subsequent Receivables as of the close of business on
their respective Subsequent Cutoff Dates.
"Initial Receivable" shall mean any Standard Receivable or Final
Payment Receivable described in the Schedule of Initial Receivables.
"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) to but excluding such Payment Date and (ii) with
respect to the Class A-2 Notes, the Class A-3 Notes and the Class A-4
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.
"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 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 Negative Carry Amount" shall mean, as of any Payment
Date, an amount equal to the product of (a) the Weighted Average Rate as of
the immediately following Payment Date minus [ ]%, multiplied by (b)
the product of the Note Percentage as of such Payment Date and the
Pre-Funded Amount as of such Payment Date after giving effect to any
withdrawals from the Pre-Funding Account on such Payment Date, multiplied
by (c) the percentage equivalent of a fraction, the numerator of which is
the actual number of days until the expected end of the Pre-Funding Period
and the denominator of which is 360. The Maximum Negative Carry Amount as
of any Payment Date shall be calculated in the manner described in the
preceding sentence as an approximation of the maximum aggregate amount of
the Negative Carry Amounts for all subsequent Payment Dates.
"Maximum Supplemental Reserve Amount" shall mean, with respect to
any Payment Date, an amount equal to the lesser of (i) $[ ]
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.
"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(g).
"Moody's" shall mean Moody's Investors Service, Inc., or its
successors and assigns.
"Negative Carry Account" shall mean the account established and
maintained as such pursuant to Section 4.1(c).
"Negative Carry Account Initial Deposit" shall mean $[ ].
"Negative Carry Amount" shall mean, with respect to any
Collection Period, the difference (if positive) between (1) the product of
(a) the Monthly Accrued Note Interest for such Collection Period,
multiplied by (b) the Pre-Funded Percentage as of the Payment Date
occurring in such Collection Period or, in the case of the first Collection
Period, the Closing Date, minus (2) the Pre-Funding Account Investment
Earnings for such Collection Period.
"Note Payment Account" shall mean the account established and
maintained as such pursuant to Section 4.1(d).
"Note Percentage" shall mean, as of any Payment Date, the
percentage equivalent of a fraction, the numerator of which is the
aggregate principal amount of the Notes as of such Payment Date (after
giving effect to any payments of principal on such Payment Date), and the
denominator of which is an amount equal to the sum of the aggregate
principal amount of the Notes and the aggregate principal amount of the
Certificates, in each case as of such Payment Date (after giving effect to
any payment of principal on such Payment Date).
"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.
"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(f).
"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 related Cutoff Date that is due on or
after the related 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 February 15, 1999.
"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
(g) any other investment with respect to which the Trust 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 or, with respect to any
date of determination during the first Collection Period, as of the Initial
Cutoff Date, 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.
"Pre-Funded Amount" shall mean, with respect to the Closing Date
or any Payment Date, the amount on deposit in the Pre-Funding Account on
such date exclusive of any interest and other income (net of losses and
expenses) on amounts on deposit in the Pre-Funding Account.
"Pre-Funded Percentage" shall mean, as of any date of
determination, the percentage equivalent of a fraction, the numerator of
which is the Pre-Funded Amount as of such date of determination (after
giving effect to any withdrawals from the Pre-Funding Account on or prior
to such date of determination), and the denominator of which is the sum of
the Pool Balance (after giving effect to all conveyances of Subsequent
Receivables to the Trust on or prior to such date of determination) and
the Pre-Funded Amount (after giving effect to any withdrawals from the
Pre-Funding Account on or prior to such date of determination).
"Pre-Funding Account" shall mean the account designated as such,
established and maintained pursuant to Section 4.1(b) of the Sale and
Servicing Agreement.
"Pre-Funding Account Investment Earnings" shall mean, with
respect to any Collection Period, the interest and other income (net of
losses and expenses) earned on amounts on deposit in the Pre-Funding
Account during such Collection Period and deposited to the Pre-Funding
Account on or prior to the related Payment Date.
"Pre-Funding Period" shall mean the period from and including the
Closing Date and ending on the earliest of: (a) the Determination Date on
which the Pre-Funded Amount (after giving effect to any transfers therefrom
in connection with the transfer of Subsequent Receivables to the Trust on
or before such Determination Date) is less than $100,000, (b) the date on
which an Event of Default or an Event of Servicing Termination occurs, (c)
the date on which an Insolvency Event occurs with respect to the Seller or
the Servicer and (d) the close of business on the [ ] Payment
Date.
"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 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), (ii) any outstanding
Principal Carryover Shortfall as of the close of business on the preceding
Payment Date and (iii) with respect to the Payment Date on or immediately
following the end of the Pre-Funding Period, the Remaining Pre-Funded
Amount; 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 shall
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 January [ ], 1999, 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.
"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 or any other
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 Trust,
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 such Defaulted Receivable.
"Receivable" shall mean, as of any date of determination, the
Initial Receivables together with any Subsequent Receivables conveyed to
the Trust as of such date of determination pursuant to Section 2.1(b)
hereof.
"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), the amount calculated by the Servicer equal to the
product of (a) one-twelfth (1/12) times (b) an amount equal to the
difference (if positive) between (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 Weighted Average Rate as of the first day
of the related Collection Period, (B) the Servicing Rate and (C) 2.00%, and
(ii) interest on such Receivable's Principal Balance as of the first day of
the related Collection Period at a rate equal to its APR.
"Record Date" shall mean, with respect to any Payment Date, the
close of business on the Business 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, unless such fifteenth
(15th) day is not a Business Day, in which case the immediately preceding
Business Day.
"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.
"Remaining Pre-Funded Amount" shall have the meaning assigned
thereto in Section 4.8(b).
"Required Negative Carry Account Balance" shall mean, as of any
Payment Date, the lesser of (x) the Negative Carry Account Initial Deposit
minus all previous withdrawals of the Negative Carry Amount from the
Negative Carry Account, including any withdrawals of the Negative Carry
Amount therefrom on such Payment Date, and (y) the Maximum Negative Carry
Amount as of such Payment Date.
"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.
"Reserve Account" shall mean the account established and
maintained as such pursuant to Section 4.7(a).
"Reserve Account Advance Draw Amount" shall have the meaning
assigned thereto in Section 4.6(b).
"Reserve Account Amount" shall mean, with respect to any Payment
Date, the amount on deposit in the Reserve Account. Unless specifically
stated to the contrary the Reserve Account Amount shall be calculated 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)
and all interest and other income (net of losses and investment expenses)
on such amounts during the related Collection Period.
"Reserve Account Property" shall have the meaning assigned
thereto in Section 4.7(a).
"Reserve Account TRP Draw Amount" shall have the meaning assigned
thereto in Section 4.6(b).
"Reserve Initial Deposit" shall mean $[ ].
"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 Initial Receivables" shall mean the list identifying
the Initial Receivables attached as Schedule A (which list may be in the
form of microfiche or compact disk).
"Schedule of Receivables" shall mean the Schedule of Initial
Receivables or any Schedule of Subsequent Receivables, as the context may
require.
"Schedule of Subsequent Receivables" shall mean any list
identifying Subsequent Receivables attached as Schedule A to the related
Second-Tier Subsequent Assignment (which list may be in the form of
microfiche or compact disk).
"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 of principal on Simple
Interest Receivables received during the related Collection Period,
including collections of principal attributable to the Last Scheduled
Payment of a Simple Interest Receivable that is a Final Payment Receivable
(unless a Last Scheduled Payment Advance has been made with respect to such
Last Scheduled Payment), and including any charges for Excess Wear and Tear
and Excess Mileage, 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 (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 related Cutoff Date; provided, however, that in
calculating the Scheduled Principal, (x) 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) and (y) all amounts released from the Pre-Funding Account will
be excluded.
"Second-Tier Subsequent Assignment" shall have the meaning
assigned thereto in Section 2.1(c)(ii).
"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.
"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, the lesser of (a) an amount equal to (x) [ ]% of the sum
of the aggregate Principal Balance of the Initial Receivables as of the
Initial Cutoff Date and the Principal Balances of any Subsequent
Receivables transferred to the Trust on or prior to such Payment Date as of
the related Subsequent Cutoff Dates 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) and (b) the outstanding principal amount of the Notes as
of such Payment Date (after giving effect to any principal payment made 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.
"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 a Schedule of
Receivables.
"Subsequent Cutoff Date", with respect to any Subsequent
Receivable, shall have the meaning specified in the related Second-Tier
Subsequent Assignment.
"Subsequent Payahead Account Deposit" shall mean, with respect to
any Subsequent Transfer Date, cash or Permitted Investments having a value
equal to the aggregate amount of the Payahead Balances as of the related
Subsequent Cutoff Date of the Subsequent Receivables conveyed to the Trust
on such Subsequent Transfer Date.
"Subsequent Receivable" shall mean any Standard Receivable or
Final Payment Receivable described in a Schedule of Subsequent Receivables.
"Subsequent Reserve Account Deposit" shall mean, with respect to
any Subsequent Transfer Date, cash or Permitted Investments having a value
approximately equal to [ ]% of the aggregate Principal Balances as of
the related Subsequent Cutoff Date of the Subsequent Receivables conveyed
to the Trust on such Subsequent Transfer Date.
"Subsequent Transfer Date" shall mean, with respect to any
Subsequent Receivable, the Business Day during the Pre-Funding Period on
which such Subsequent Receivables is to be conveyed by the Seller to the
Trust pursuant to Section 2.1(b) and the related Second-Tier Subsequent
Assignment is executed and delivered by the Seller to the Trust and the
Indenture Trustee pursuant to Section 2.1(c)(ii).
"Subsequent Yield Supplement Account Deposit" shall mean, with
respect to any Subsequent Transfer Date, cash or Permitted Investments
having a value approximately equal to the sum of the projected Yield
Supplement Amounts for the Subsequent Receivables conveyed to the Trust on
such Subsequent Transfer Date for all future Payment Dates, assuming the
future Scheduled Payments on such Subsequent Receivables are made on their
scheduled due dates.
"Supplemental Reserve Account" shall mean the account established
and maintained as such pursuant to Section 4.7(b).
"Supplemental Reserve Account Advance Draw Amount" shall have the
meaning assigned thereto in Section 4.6(b).
"Supplemental Reserve Account Amount" shall mean, with respect to
any Payment Date, the amount on deposit in the Supplemental Reserve
Account. Unless specifically stated to the contrary the Supplemental
Reserve Account Amount for any Payment Date shall be calculated 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)
and all interest and other income (net of losses and investment expenses)
on such amounts during the related Collection Period.
"Supplemental Reserve Account Property" shall have the meaning
assigned thereto in Section 4.7(b).
"Supplemental Reserve Account TRP Draw Amount" shall have the
meaning assigned thereto in Section 4.6(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 Available Funds" shall mean, for any Payment Date, an
amount equal to the sum of (i) the Available Funds for such Payment Date,
(ii) the Reserve Account TRP Draw Amount, if any, for such Payment Date and
(iii) the Supplemental Reserve Account TRP Draw Amount, if any, for such
Payment Date.
"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.
"Trust" shall mean the MMCA Auto Owner Trust 1999-1, a Delaware
business trust.
"Trust Accounts" shall have the meaning assigned thereto in
Section 4.1(f).
"Trust Agreement" shall mean the Amended and Restated Trust
Agreement, dated as of January [ ], 1999, 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, as of any date of determination, the
Initial Receivables and other property related thereto sold, transferred,
assigned and otherwise conveyed by the Seller to the Trust pursuant to
Section 2.1(a), together with the Subsequent Receivables and other property
related thereto sold, transferred, assigned and otherwise conveyed by the
Seller to the Trust as of such date of determination pursuant to Section
2.1(b).
"Weighted Average Rate" shall mean, with respect to any date of
determination, a per annum rate equal to (1) the sum of (a) the product of
(x) the outstanding principal amount of the Class A-1 Notes on such date,
(y) the Class A-1 Rate and (z) a fraction, the numerator of which is 360
and the denominator of which is 365, plus (b) the product of (x) the
outstanding principal amount of the Class A-2 Notes on such date and (y)
the Class A-2 Rate, plus (c) the product of (x) the outstanding principal
amount of the Class A-3 Notes on such date and (y) the Class A-3 Rate, plus
(d) the product of (x) the outstanding principal amount of the Class A-4
Notes on such date and (y) the Class A-4 Rate, divided by (2) the
outstanding principal amount of the Notes on such date; provided, that if
the date of determination is a Payment Date, then the outstanding principal
amount of any class of Notes shall be determined after giving effect to all
payments made on such 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 January [ ], 1999, 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.
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 December
17, 1999 (with respect to the remainder of calendar year 1999 and calendar
year 2000) 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.
ARTICLE II
TRUST PROPERTY
SECTION 2.1 Conveyance of Trust Property.
(a) In consideration of the Trust'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
otherwise conveys to the Trust, 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:
(i) the Initial Receivables;
(ii) with respect to Initial Receivables that are Actuarial
Receivables, monies due thereunder on or after the Initial Cutoff Date
(including Payaheads) and, with respect to Initial Receivables that
are Simple Interest Receivables, monies received thereunder on or
after the Initial Cutoff Date;
(iii) the security interests in Financed Vehicles granted
by Obligors pursuant to the Initial Receivables and any other interest
of the Trust in such Financed Vehicles;
(iv) rights to receive proceeds with respect to the Initial
Receivables from claims on any physical damage, theft, credit life or
disability insurance policies covering the related Financed Vehicles
or related Obligors;
(v) rights to receive proceeds with respect to the Initial
Receivables from recourse to Dealers thereon pursuant to Dealer
Agreements;
(vi) all of the Seller's rights to the Receivable Files
that relate to the Initial Receivables;
(vii) the Trust Accounts, the Certificate Distribution
Account, the Reserve Account, the Supplemental Reserve Account, the
Negative Carry 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 Initial
Receivables held by MMCA;
(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 terms of an
Initial Receivable that is a Final Payment Receivable), guarantees and
other collateral securing an Initial Receivable (other than an Initial
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 Initial
Receivables in effect as of the Initial 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.
(b) Subject to satisfaction of the conditions set forth in
Section 2.1(c), in consideration of the Indenture Trustee's delivery on or
prior to any Subsequent Transfer Date to the Seller of the amount described
in Section 4.8(a) to be delivered to the Seller, the Seller shall
irrevocably sell, transfer, assign and otherwise convey to the Trust,
without recourse (subject to the obligations herein), on the Subsequent
Transfer Date, all right, title and interest of the Seller, whether now
owned or hereafter acquired, in, to and under the following:
(i) the Subsequent Receivables listed on Schedule A to the
related Second-Tier Subsequent Assignment;
(ii) with respect to the Subsequent Receivables that are
Actuarial Receivables, monies due thereunder on or after the related
Subsequent Cutoff Date (including Payaheads) and, with respect to
Subsequent Receivables that are Simple Interest Receivables, monies
received thereunder on or after the related Subsequent Cutoff Date;
(iii) the security interests in Financed Vehicles granted
by Obligors pursuant to the Subsequent Receivables and any other
interest of the Trust in such Financed Vehicles;
(iv) rights to receive proceeds with respect to the
Subsequent Receivables from claims on any physical damage, theft,
credit life or disability insurance policies covering the related
Financed Vehicles or related Obligors;
(v) rights to receive proceeds with respect to the
Subsequent Receivables from recourse to Dealers thereon pursuant to
Dealer Agreements;
(vi) all of the Seller's rights to the Receivable Files
that relate to the Subsequent Receivables;
(vii) payments and proceeds with respect to the Subsequent
Receivables held by the Servicer;
(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
Subsequent Receivable that is a Final Payment Receivable), guarantees
and other collateral securing an Subsequent Receivable (other than an
Subsequent Receivable repurchased by the Servicer or purchased by the
Seller);
(ix) all of the Seller's rights under the related First
Tier Subsequent Assignment;
(x) rebates of premiums and other amounts relating to
insurance policies and other items financed under the Subsequent
Receivables in effect as of the related Subsequent Cutoff Date; and
(xi) 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.
(c) It is the intention of the Seller and the Trust that the
transfers of the Trust Property contemplated by Sections 2.1(a) and (b)
constitute sales of the Trust Property, conveying good title to the Trust
Property from the Seller to the Trust. However, in the event that such
transfers are deemed to be pledges to secure the payment of the Notes and
the Certificates, the Seller hereby grants to the Trust 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.
(d) The Seller shall sell, transfer, assign and otherwise convey
to the Trust on any Subsequent Transfer Date the Subsequent Receivables and
the other property and rights related thereto described in Section 2.1(b)
only upon the satisfaction of each of the following conditions on or prior
to such Subsequent Transfer Date:
(i) the Seller shall have provided the Indenture Trustee,
the Owner Trustee and the Rating Agencies (i) written notification of
the addition of such Subsequent Receivables at least five (5) Business
Days prior to the Subsequent Transfer Date and (ii) on or prior to the
Subsequent Transfer Date, a statement listing the approximate
aggregate Principal Balance of such Subsequent Receivables as of the
related Subsequent Cutoff Date and any other information reasonably
requested by any of the foregoing;
(ii) the Seller shall have delivered to each of the Owner
Trustee and the Indenture Trustee a duly executed written assignment
in substantially the form of Exhibit E hereto (the "Second-Tier
Subsequent Assignment"), which shall include a Schedule A attached
thereto listing the Subsequent Receivables;
(iii) the Seller shall, to the extent required by Section
4.2, have deposited in the Collection Account all collections in
respect of the Subsequent Receivables that are property of the Trust;
(iv) as of such Subsequent Transfer Date: (A) the Seller
shall not be insolvent and shall not become insolvent as a result of
the transfer of Subsequent Receivables on such Subsequent Transfer
Date, (B) the Seller shall not intend to incur or believe that it
would incur debts that would be beyond the Seller's ability to pay as
such debts matured, (C) such transfer shall not be made by the Seller
with actual intent to hinder, delay or defraud any Person and (D) the
assets of the Seller shall not constitute unreasonably small capital
to carry out its business as conducted;
(v) the applicable Subsequent Reserve Account Deposit for
such Subsequent Transfer Date shall have been made;
(vi) the applicable Subsequent Payahead Account Deposit for
such Subsequent Transfer Date shall have been made;
(vii) the applicable Subsequent Yield Supplement Account
Deposit for such Subsequent Transfer Date shall have been made;
(viii) the Receivables, including the Subsequent Receivables
to be conveyed to the Trust on the Subsequent Transfer Date, shall
meet the following criteria (based on the characteristics of each
Receivables as of the related Cutoff Date): (A) the weighted average
remaining maturity of the Receivables will not be more than [ ]
months; and (B) the aggregate Last Scheduled Payments as a percentage
of the Pool Balance will not be greater than [ ]% as of the related
Subsequent Cutoff Date;
(ix) the Pre-Funding Period shall not have terminated prior
to the Subsequent Transfer Date;
(x) each of the representations and warranties made by the
Seller pursuant to Section 2.2 of this Agreement and by MMCA pursuant
to Section 3.2(b) of the Purchase Agreement, in each case with respect
to the Subsequent Receivables, shall be true and correct as of the
date as of which such representations and warranties are made;
(xi) the Seller shall, at its own expense, on or prior to
the Subsequent Transfer Date, indicate in its computer files that the
Subsequent Receivables have been sold to the Trust pursuant to this
Agreement and the related Second-Tier Subsequent Assignment and
delivered to the Owner Trustee the related Schedule of Subsequent
Receivables certified by an officer of the Seller to be true, correct
and complete;
(xii) the Seller shall have taken any action required to
maintain the first perfected ownership interest of the Trust in the
Trust Property and the first perfected security interest of the
Indenture Trustee in the Collateral;
(xiii) no selection procedures believed by the Seller to be
adverse to the interests of the Trust, the Noteholders or the
Certificateholders shall have been utilized in selecting the
Subsequent Receivables;
(xiv) the addition of the Subsequent Receivables will not
result in a material adverse tax consequence to the Trust, the
Noteholders or the Certificateholders;
(xv) the Seller shall have delivered to the Owner Trustee,
the Indenture Trustee and the Rating Agencies an Opinion of Counsel
relating to the security interests of the Owner Trustee and the
Indenture Trustee in the Subsequent Receivables in substantially the
form of the Opinion of Counsel delivered the Owner Trustee, the
Indenture Trustee and the Rating Agencies regarding such matters on
the Closing Date;
(xvi) the Seller shall have delivered to the Owner Trustee
and the Indenture Trustee an Officer's Certificate confirming the
satisfaction of each condition specified in this Section 2.1(c)
(substantially in the form attached as Annex A to the form of Second-
Tier Subsequent Assignment attached hereto as Exhibit E); and
(xvii) all the conditions to the transfer of the Subsequent
Receivables by MMCA to the Seller specified in Section 4.1(b) of the
Purchase Agreement shall be satisfied.
(e) The Seller agrees to transfer to the Trust, pursuant to
Section 2.1(b), Subsequent Receivables with an aggregate Principal Balance
as of the related Subsequent Cutoff Dates of approximately $[
], subject only to availability thereof.
(f) The sales, transfers, assignments and conveyances of the
Trust Property made under Sections 2.1(a) and (b) shall not constitute and
are not intended to result in an assumption by the Trust 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.
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 Trust relies in accepting the
Receivables. Such representations and warranties speak as of the execution
and delivery of this Agreement in the case of the Initial Receivables and
as of the applicable Subsequent Transfer Date in the case of the Subsequent
Receivables, except in each case to the extent otherwise provided in the
following representations and warranties, but shall survive the sale,
transfer and assignment of the Receivables to the Trust and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.
(i) Characteristics of Receivables. Each Receivable (a)
shall have been originated (x) 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 or (y) by MMCA in
connection with the refinancing of a motor vehicle retail installment
sales contract of the type described in subclause (x) above, shall
have been fully and properly executed by the parties thereto, shall
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 (unless such Receivable was originated by MMCA in connection
with a refinancing), and shall have been validly assigned by such
Dealer to MMCA in accordance with its terms (unless such Receivable
was originated by MMCA in connection with a refinancing), 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 Trust and
by the Trust 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 related Schedule of Receivables shall be true and correct in all
material respects as of the opening of business on the related 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 compact
disk or other listing regarding the Receivables made available to the
Trust and its assigns (which compact disk 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, (with respect to each Initial Receivable) or the related
Subsequent Transfer Date (with respect to each Subsequent Receivable)
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 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 Trust, respectively
(subject to any statutory or other lien arising by operation of law
after the Closing Date (with respect to each Initial Receivable) or
the related Subsequent Transfer Date (with respect to each Subsequent
Receivable) 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 Trust.
(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.
(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 or payment
defaults of 10% or less of a payment, in each case as of the related
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 related 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 each
transfer and assignment of Receivables herein contemplated constitute
a sale of such Receivables from the Seller to the Trust and that the
beneficial interest in, and title to, such 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 Trust. Immediately prior to each
transfer and assignment herein contemplated, the Seller had good and
marketable title to such Receivables free and clear of all Liens,
encumbrances, security interests, and rights of others and,
immediately upon the transfer thereof, the Trust shall have good and
marketable title to such Receivables, 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 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 Trust 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 (with respect to the Initial
Receivables) or ten (10) days of the related Subsequent Transfer Date
(with respect to the Subsequent Receivables).
(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
related Cutoff Date of not less than $100.00.
(xix) No Bankrupt Obligors. As of the related 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 Initial Receivables, constituting
approximately [ ]% of the total number of the Initial
Receivables, as of the Initial Cutoff Date, relate to new automobiles
and light- or medium-duty trucks financed at new vehicle rates.
Approximately [ ]% of the Pool Balance of the Initial
Receivables, constituting approximately [ ]% of the total
number of Initial Receivables as of the Initial Cutoff Date, relate to
used automobiles and light- or medium-duty trucks. Approximately
[ ]% of the Pool Balance of the Initial Receivables, constituting
approximately [ ]% of the total number of Initial Receivables
as of the Initial 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.
Approximately [ ]% of the Pool Balance of the Initial
Receivables, constituting approximately [ ]% of the total
number of Initial Receivables as of the Initial 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 [ ].
(xxii) Maturity of Receivables. Each Receivable shall have
a remaining maturity, as of the related Cutoff Date, of not more than
sixty-one (61) months, and an original maturity of not more than
sixty-one (61) months.
(xxiii) Weighted Average Maturity of Receivables. The
weighted average remaining maturity of the Receivables as of the
Initial Cutoff Date and each Subsequent Cutoff Date shall not be more
than [ ] months.
(xxiv) Annual Percentage Rate. Each Receivable shall have
an APR of at least 0%. Each Receivable shall have an APR of not more
than 30%.
(xxv) Scheduled Payments. Each Receivable shall have a
first Scheduled Payment due on or prior to [ ], 1999,
and no Receivable shall have a payment of which more than 10% of such
payment is thirty (30) days overdue as of the related Cutoff Date.
(xxvi) Location of Receivable Files. The Receivable Files
shall be kept at one or more of the locations listed in Schedule B
hereto.
(xxvii) 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.
(xxviii) Agreement. The representations and warranties of
the Seller in Section 6.1 are true and correct.
(xxix) Other Data. The tabular data and the numerical data
relating to the characteristics of the Initial Receivables contained
in the Prospectus (as defined in the Purchase Agreement) is true and
correct in all material respects.
(xxx) Last Scheduled Payments. The average Last Scheduled
Payment of the Final Payment Receivables as a percentage of the
aggregate original Principal Balances of the Final Payment
Receivables, as of the Closing Date and each Subsequent Transfer Date
(after giving effect to the Final Payment Receivables sold to the
Purchaser on such Subsequent Transfer Date pursuant to Section
2.1(b)), in each case as of the related dates of origination, shall
not be greater than [ ]%.
(xxxi) Receivable Yield Supplement Amounts. An amount
equal to the sum of all projected Yield Supplement Amounts for all
future Payment Dates with respect to each Receivable, assuming that
future Scheduled Payments on such Receivable are made on their
scheduled due dates, has been deposited to the Yield Supplement
Account on or prior to the Closing Date or the related Subsequent
Transfer Date.
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
Trust in a Receivable, the Seller shall repurchase from the Trust 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 Trust, 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 Trust, 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 Trust and
the Indenture Trustee of the following documents or instruments, which are
hereby constructively delivered to the Indenture Trustee, as pledgee of the
Trust pursuant to the Indenture (or, in the case of the Subsequent
Receivables, will as of the applicable Subsequent Transfer Date be
constructively delivered to the Indenture Trustee, as pledgee of the Trust
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;
(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, at the time of
origination of the Receivable, 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 (with respect to the Initial Receivables) and
each Subsequent Transfer Date (with respect to the related Subsequent
Receivables), the Servicer shall provide an Officer's Certificate to the
Trust and the Indenture Trustee confirming that the Servicer has received,
on behalf of the Trust and the Indenture Trustee, all the documents and
instruments necessary for the Servicer to act as the agent of the Trust and
the Indenture Trustee for the purposes set forth in this Section 2.4,
including the documents referred to herein, and the Trust, 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 Trust 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 Trust 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 Trust 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 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 Trust, the Owner Trustee or the Indenture Trustee of the Receivable
Files and none of the Trust, 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
Trust 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 Trust 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 Trust
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 Trust and that the
entire equitable interest in such Receivable and the related Receivable
File shall at all times be vested in the Trust.
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 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 Trust, 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 Trust, 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 Initial 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 designee at such place or places
as the Indenture Trustee may reasonably designate.
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 Trust, 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 shall indemnify the Trust 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 Trust or the Owner Trustee all
licenses, if any, required by the laws of any jurisdiction to be held by
the Trust 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 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 Trust 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 Trust (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 Trust, 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 otherwise, the Servicer shall remain obligated and liable to the
Trust 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 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 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 (and shall
deliver copies thereof to the Indenture Trustee and the Owner Trustee upon
written request within ten days of receipt of such request).
(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
within ten days of receipt of such request). If MMCA is no longer the
Servicer, the Trust 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
Trust, 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 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 Trust 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 Trust 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 Trust 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.
(b) No Impairment. The Servicer will not (nor will it permit
any subservicer to) impair in any material respect the rights of the Trust,
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 Trust, 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
Trust, 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 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 4.11 and by the Indenture Trustee to the Noteholders
pursuant to Section 4.11 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 Trust.
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, 2000, an Officer's Certificate, stating that (i) a
review of the activities of the Servicer during the preceding calendar year
(or longer period, in the case of 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, 2000, a report addressed to
the Board of Directors of the Servicer with respect to the preceding
calendar year (or longer 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
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 Trust, 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.
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).
(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 "Pre-Funding Account".
The Pre-Funding Account shall be held in trust for the benefit of the
Noteholders and the Certificateholders. The Pre-Funding 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 Pre-Funding Account in accordance with
the terms of this Agreement and the other Basic Documents. All monies
deposited from time to time in the Pre-Funding 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.
All amounts held in the Pre-Funding 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 Pre-Funding Account in Permitted Investments that mature
not later than the Business Day immediately prior to each Payment Date and
such Permitted Investments shall be held until maturity. On the Business
Day preceding each Payment Date, the Servicer shall instruct the Indenture
Trustee to withdraw from the Pre-Funding Account for deposit to the
Collection Account on such date an amount equal to the Pre-Funding Account
Investment Earnings, if any, for the related Collection Period. In the
event that the Pre-Funding 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 Pre-Funding 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).
With respect to any amounts, securities, investments, financial
assets and other property deposited in or credited to the Pre-Funding
Account:
(i) any such 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 Pre-Funding 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 such 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 Pre-Funding Account shall only be invested in
securities or in other assets which the Qualified Institution or
Qualified Trust Institution maintaining the Pre-Funding Account,
as applicable, agrees to treat as "financial assets" as defined
in Section 8-102(a)(9) of the UCC.
(c) 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 "Negative Carry Account".
The Negative Carry Account shall be held in trust for the exclusive benefit
of the Noteholders. The Negative Carry 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 Negative Carry Account in accordance with the terms of
this Agreement and the other Basic Documents. All monies deposited from
time to time in the Negative Carry 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.
All amounts held in the Negative Carry 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 Negative Carry Account in Permitted Investments that mature
not later than the Business Day immediately prior to each Payment Date and
such Permitted Investments shall be held until maturity. All interest and
other income (net of losses and investment expenses) on funds on deposit in
the Negative Carry Account shall be withdrawn from the Negative Carry
Account for deposit to the Collection Account or release to the Seller at
the time and in the manner provided in Section 4.9. In the event that the
Negative Carry 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).
With respect to any amounts, securities, investments, financial
assets and other property deposited in or credited to the Negative Carry
Account:
(i) any such 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 Negative Carry 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 such 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 Negative Carry Account shall only be invested in
securities or in other assets which the Qualified Institution or
Qualified Trust Institution maintaining the Negative Carry
Account, as applicable, agrees to treat as "financial assets" as
defined in Section 8-102(a)(9) of the UCC.
(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 "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).
(e) 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.
(f) 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, the Pre-Funding
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.
On the Closing Date, the Seller shall deposit an amount equal to
the Initial Payahead Account Deposit into the Payahead Account from the net
proceeds of the sale of the Notes and the Certificates. On each Subsequent
Transfer Date, the Servicer shall instruct the Indenture Trustee to
withdraw from the Pre-Funding Account and deposit to the Payahead Account
an amount equal to the applicable Subsequent Payahead Account Deposit.
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).
(g) 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 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(g) 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.
(h) 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 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(g)), 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 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.
(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 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.
Subject to the last sentence of this Section 4.4(a), on each Payment Date
the Servicer shall advance an amount equal to the excess, if any, of the
Scheduled Payment with respect to an Actuarial Receivable over of the sum
of the (x) payments received on or in respect of such Actuarial Receivable
during the preceding Collection Period and (y) the Payahead Balance with
respect to such Actuarial Receivable (such advance, an "Actuarial
Advance"); provided that the Servicer shall make Actuarial Advances with
respect to the Last Scheduled Payment on Actuarial Receivables that are
Final Payment Receivables in accordance with Section 4.4(b). All
applications of the Payahead Balance of a Receivable by the Indenture
Trustee and all Actuarial Advances by the Servicer 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. Notwithstanding anything in this Agreement to the contrary, no
successor to Mitsubishi Motors Credit of America, Inc. as Servicer shall be
required to make Actuarial Advances.
(b) 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, in the case of an Actuarial
Receivable, 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 by depositing such amount into the Collection Account on the
related Payment Date (such advance, a "Last Scheduled Payment Advance") .
Notwithstanding anything in this Agreement to the contrary, no successor to
Mitsubishi Motors Credit of America, Inc. as Servicer shall be required to
make Last Scheduled Payment Advances.
(c) (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).
(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.
(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) 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 have not already
been reimbursed pursuant to this Section 4.4(e) or Section 4.5(b) or
Section 4.5(c).
SECTION 4.5 Additional Deposits. (a) The Indenture Trustee
shall deposit in the Collection Account amounts required pursuant to
Section 4.4(c). The Servicer shall deposit in the Collection Account
amounts required to be advanced by the Servicer pursuant to Sections 4.4(a)
and (b). 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 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 (in each case as set forth in the Servicer's
Certificate for such Payment Date): (i) an amount equal to the
Supplemental Reserve Account Advance Draw Amount, if any, calculated by the
Servicer pursuant to Section 4.6(b), and shall pay such amount to the
Servicer and (ii) an amount equal to the Supplemental Reserve Account TRP
Draw Amount, if any, calculated by the Servicer pursuant to Section 4.6(b),
and shall deposit such funds to the Collection Account.
(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 (in each case as set forth in the Servicer's Certificate for
such Payment Date): (i) an amount equal to the Reserve Account Advance
Draw Amount, if any, calculated by the Servicer pursuant to Section 4.6(b),
and shall pay such amount to the Servicer and (ii) an amount equal to the
Reserve Account TRP Draw Amount, if any, calculated by the Servicer
pursuant to Section 4.6(b), and shall deposit to the Collection Account.
SECTION 4.6 Allocation of Total Available Funds. (a) On each
Payment Date, the Indenture Trustee shall cause to be made the following
transfers and distributions in immediately available funds in the amounts
set forth in the Servicer's Certificate for such Payment Date:
(i) To the Collection Account from the Payahead Account (if
the Monthly Remittance Conditions are not then satisfied) or otherwise
from amounts remitted by the Servicer pursuant to Section 4.1(g) an
amount equal to the sum of:
(A) the aggregate portion of Payaheads constituting Scheduled
Payments with respect to the preceding Collection Period and
prepayments in full received during the preceding Collection
Period, as required by Sections 4.3 and 4.4(a); and
(B) the Payahead Balance, if any, relating to any Purchased
Receivable;
(ii) From the Collection Account to the Payahead Account
or, if the Monthly Remittance Conditions are then satisfied, to the
Servicer, the aggregate Payaheads received during the preceding
Collection Period, as required by Section 4.3.
(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 Last Scheduled Payment Principal Collections, the Negative
Carry Amount, if any, in each case with respect to the following Payment
Date. In addition, on each Determination Date the Servicer shall calculate
the following amounts with respect to the following Payment Date:
(i) an amount equal to the lesser of (x) the amount, if any,
by which the aggregate amount payable to the Servicer out of the
Collection Account on the related Payment Date as reimbursement for
Actuarial Advances pursuant to Section 4.4(d) and for Last Scheduled
Payment Advances pursuant to Section 4.4(e) exceeds the amount in the
Collection Account available for such purpose (without giving effect
to any deposits thereto from amounts in the Reserve Account or the
Supplemental Reserve Account but giving effect to all other deposits
to the Collection Account required to be made on such Payment Date)
and (y) the Supplemental Reserve Account Amount for such Payment Date
(without giving effect to any deposits of Total Available Funds but
giving effect to all other deposits to the Supplemental Reserve
Account on such Payment Date) (the "Supplemental Reserve Account
Advance Draw Amount");
(ii) an amount equal to the lesser of (x) the amount, if
any, by which the amount specified in clause (x) of paragraph (i)
above exceeds the Supplemental Reserve Account Advance Draw Amount
for such Payment Date and (y) the Reserve Account Amount for such
Payment Date (without giving effect to any deposits of Total Available
Funds on such Payment Date) (the "Reserve Account Advance Draw
Amount");
(iii) an amount equal to the lesser of (x) the amount, if any,
by which the Total Required Payment for such Payment Date exceeds
the Available Funds for such Payment Date and (y) an amount equal to
the Supplemental Reserve Account Amount (without giving effect to any
deposits of Total Available Funds on such Payment Date) for such
Payment Date, less the Supplemental Reserve Account Advance Draw
Amount for such Payment Date (the "Supplemental Reserve Account TRP
Draw Amount");
(iv) an amount equal to the lesser of (x) the amount, if
any, by which the specified in clause (x) of paragraph (iii) above
exceeds the Supplemental Reserve Account TRP Draw Amount for such
Payment Date and (y) the Reserve Account Amount (without giving effect
to any deposits of Total Available Funds on such Payment Date) for
such Payment Date less the Reserve Account Advance Draw Amount for
such Payment Date (the "Reserve Account TRP Draw Amount");
(v) the Total Available Funds for such Payment Date;
(vi) the Reserve Account Amount with respect to such Payment
Date after giving effect to the Reserve Account Advance Draw Amount
and the Reserve Account TRP Draw Amount for such Payment Date, and
the difference, if any, between the Reserve Account Amount and the
Specified Reserve Balance for such Payment Date; and
(vii) the Supplemental Reserve Account Amount with respect to
such Payment Date after giving effect to the Supplemental Reserve
Account Advance Draw Amount and the Supplemental Reserve Account TRP
Draw Amount for such Payment Date, and the difference, if any, between
the Supplemental Reserve Account Amount and the Maximum Supplemental
Reserve Amount for such Payment Date.
(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 the Total 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, the amount, if
any, necessary to reinstate the balance in the Supplemental Reserve
Account up to the Maximum Supplemental Reserve Amount; and
(vi) to the Certificate Distribution Account, any remaining
portion of the Total 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. On each
Subsequent Transfer Date, the Servicer shall instruct Indenture Trustee to
withdraw from the Pre-Funding Account and deposit to the Reserve Account on
such Subsequent Transfer Date an amount equal to the applicable Subsequent
Reserve Account Deposit as provided in Section 4.8(a). 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(a). Pursuant to the 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(a). 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.
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 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 distribute the amount of such excess to the Seller; provided
that the Indenture Trustee hereby releases, on each Payment Date, its
security interest, in, to and under the Supplemental Reserve Account
Property distributed to the Seller.
(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 Pre-Funding Account. (a) On the Closing Date, the
Indenture Trustee shall deposit, on behalf of the Seller, in the
Pre-Funding Account $[ ] from the net proceeds of the
sale of the Notes. On each Subsequent Transfer Date, the Servicer shall
instruct the Indenture Trustee to withdraw the following amounts from the
Pre-Funding Account: (i) an amount equal to the aggregate Principal
Balance of the Subsequent Receivables transferred to the Trust on such
Subsequent Transfer Date less an amount equal to the sum of the amounts
described in clauses (ii), (iii) and (iv) of this sentence, which amount
the Indenture shall distribute to the Seller, (ii) the Subsequent Reserve
Account Deposit for such Subsequent Transfer Date, which amount the
Indenture Trustee shall deposit to the Reserve Account on behalf of the
Seller, (iii) the Subsequent Yield Supplement Account Deposit, which amount
the Indenture Trustee shall deposit to the Yield Supplement Account on
behalf of the Seller and (iv) if the Yield Supplement Account has not been
replaced by a Yield Supplement Letter of Credit on or prior to such
Subsequent Transfer Date, the Subsequent Yield Supplement Account Deposit
for such Subsequent Transfer Date, which amount the Indenture Trustee shall
deposit to the Yield Supplement Account on behalf of the Seller.
(b) If the Pre-Funded Amount has not been reduced to zero on
the Payment Date on which the Pre-Funding Period ends (or, if the
Pre-Funding Period does not end on a Payment Date, on the first Payment
Date following the end of the Pre-Funding Period), after giving effect to
any reductions in the Pre-Funded Amount on such date pursuant to paragraph
(a), the Servicer shall instruct the Indenture Trustee to withdraw from the
Pre-Funding Account on such Payment Date (or, if the Pre-Funding Period
does not end on a Payment Date, on the first Payment Date following the end
of the Pre-Funding Period), the amount remaining in the Pre-Funding Account
at such time exclusive of the Pre-Funding Account Investment Earnings, if
any, for the related Collection Period (such remaining amount being the
"Remaining Pre-Funded Amount") and deposit such amount in the Collection
Account for inclusion in the Available Funds for such Payment Date. The
Pre-Funding Account Investment Earnings for the related Collection Period
(together with any other interest and other income (net of losses and
expenses) earned on amounts on deposit in the Pre-Funding Account that are
on deposit in the Pre-Funding Account) shall be deposited to the Collection
Account.
SECTION 4.9 Negative Carry Account. On the Closing Date, the
Seller shall deposit the Negative Carry Account Initial Deposit into the
Negative Carry Account. On each Payment Date, the Servicer shall instruct
the Indenture Trustee to withdraw from the Negative Carry Account and
deposit into the Collection Account an amount equal to the lesser of (x)
the amount, if any, on deposit in the Negative Carry Account on such
Payment Date and (y) the Negative Carry Amount, if any, for the related
Collection Period. If the amount on deposit in the Negative Carry Account
on any Payment Date (after giving effect to the withdrawal therefrom of the
Negative Carry Amount, if any, for such Payment Date) is greater than the
Required Negative Carry Account Balance for such Payment Date, the excess
shall be released to the Seller on such Payment Date. On the Payment Date
on which the Pre-Funding Period ends (or, if the Pre-Funding Period does
not end on a Payment Date, on the first Payment Date following the end of
the Pre-Funding Period), the Servicer shall instruct the Indenture Trustee
to release to the Seller on such Payment Date all amounts remaining on
deposit in the Negative Carry Account after giving effect to any
withdrawals of the Negative Carry Amount on such Payment Date.
SECTION 4.10 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.
SECTION 4.11 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, if
any, for the next Payment Date, 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;
(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;
(xiii) for each such Payment Date during the Pre-Funding
Period and the Payment Date that is on or immediately following the
end of the Pre-Funding Period, (A) the amount, if any, withdrawn from
the Pre-Funding Account to purchase Subsequent Receivables during the
related Collection Period, (B) the remaining Pre-Funded Amount, if
any, (C) the Negative Carry Amount, if any, for the related Collection
Period, and (D) the amount remaining on deposit in the Negative Carry
Account, if any, after all withdrawals, if any, made on such Payment
Date; and
(xiv) for the first Payment Date on or immediately
following the end of the Pre-Funding Period, the Remaining Pre-Funded
Amount, if any.
Each amount set forth on the Payment Date statement pursuant to
clauses (i), (ii), (iii), (iv) 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 4.12 Control of Securities Accounts. Notwithstanding
anything else contained herein, the Trust agrees that each of the
Collection Account, the Pre-Funding Account, the Note Payment Account, the
Reserve Account, the Supplemental Reserve Account, the Negative Carry
Account and the Yield Supplement Account will only be established at a
Qualified Institution or Qualified Trust Institution that 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 Trust; (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.
ARTICLE V
YIELD SUPPLEMENT LETTER OF CREDIT AND
THE YIELD SUPPLEMENT ACCOUNT
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 shall deposit an amount equal to the Initial Yield
Supplement Amount into the Yield Supplement Account from the net proceeds
of the sale of the Notes. On each Subsequent Transfer Date, the Servicer
shall instruct the Indenture Trustee to withdraw from the Pre-Funding
Account and deposit to the Yield Supplement Account an amount equal to the
applicable Subsequent Yield Supplement Account Deposit unless the Yield
Supplement Account has been replaced by a Yield Supplement Letter of Credit
on or prior to such Subsequent Transfer Date, in which case the Servicer
shall cause the amount available to be drawn under the Yield Supplement
Letter of Credit as of such Subsequent Transfer Date to be no less than the
Specified Yield Supplement Account Balance as of such Subsequent Transfer
Date after giving effect to the transfer to the Trust of the related
Subsequent Receivables. 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 for such Payment Date, 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 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 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 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 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.
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 Trust 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 in the case of the Initial Receivables and the
other Trust Property related thereto, and as of the related Subsequent
Transfer Date in the case of the Subsequent Receivables and the other Trust
Property related thereto, and shall survive the sale of the Trust Property
to the Trust and the pledge thereof by the Trust 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 Trust and has duly authorized such sale and
assignment to the Trust 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, and the execution, delivery and
performance of each Second-Tier Subsequent Assignment has been or will be
on or before the related Subsequent Transfer Date, 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 Initial Receivables and the
other Trust Property related thereto conveyed by the Seller to the Trust
hereunder and this Agreement together with each Second-Tier Subsequent
Assignment will effect a valid sale, transfer and assignment of the related
Subsequent Receivables and the other Trust Property related thereto, in
each case 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, and each Second-Tier Subsequent Assignment when executed
and delivered by the Seller will 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, 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.
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
Trust, 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 Trust or the
issuance and original sale of the Notes or the Certificates, including any
sales, gross receipts, general corporation, tangible personal property,
privilege, or license taxes (but, in the case of the Trust, 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
Trust, 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 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 Trust 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 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.
ARTICLE VII
THE SERVICER
SECTION 7.1 Representations and Warranties of Servicer. The
Servicer makes the following representations and warranties on which the
Trust 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, in the case of the Initial Receivables and the other Trust
Property related thereto, and as of the related Subsequent Transfer Date,
in the case of the Subsequent Receivables and the other Trust Property
related thereto, and shall survive the sale of the Trust Property to the
Trust and the pledge thereof by the Trust 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.
(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
Trust, the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders and the Seller 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 Servicer or any
Affiliate thereof of a Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the
Trust, 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 Trust, not including any taxes asserted with respect to,
and as of the date of, the sale of the Receivables to the Trust 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
Trust, 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 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 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 Trust 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. (a)
Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to the Trust, 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; 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.
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
(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 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 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.
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.
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, the
Negative Carry 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, the Negative Carry 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, any Negative Carry 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 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.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1 Amendment. (a) This Agreement may be amended by
the Seller, the Servicer and the Trust, 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 Trust, 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, 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.
(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 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 Trust 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 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 Trust, the Servicer's master computer records (including any back-up
archives) that refer to a Receivable shall indicate clearly the interest of
the Trust and the Indenture Trustee in such Receivable and that such
Receivable is owned by the Trust and has been pledged to the Indenture
Trustee pursuant to the Indenture. Indication of the Trust'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 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,
compact disks, 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 Trust 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 Schedules
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 Trust 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 Initial 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 continuation statements have been
executed and filed that are necessary fully to preserve and
protect the interest of the Trust 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 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.
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 Trust 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 and Treasurer, 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 Trust 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 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 Trust and in no event shall Wilmington Trust Company in its
individual capacity or, except as expressly provided in the Trust
Agreement, as Owner Trustee of the Trust, have any liability for the
representations, warranties, covenants, agreements or other obligations of
the Trust 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 Trust. 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 Trust 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 Trust 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 Trust.
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 1999-1
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:
Accepted and agreed:
BANK OF TOKYO - MITSUBISHI TRUST COMPANY,
as Indenture Trustee
By: _____________________________________
Name:
Title:
SCHEDULE A
[SCHEDULE OF INITIAL RECEIVABLES]
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
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 January [ ], 1999, by and among the Company, as Servicer, MMCA
Auto Receivables, Inc., as Seller, and MMCA Auto Owner Trust 1999-1 (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 ____________, ____.
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.
By: _____________________________________
Name:
Title:
EXHIBIT B
[FORM OF STATEMENT TO NOTEHOLDERS]
EXHIBIT C
[FORM OF STATEMENT TO CERTIFICATEHOLDERS]
EXHIBIT D
[FORM OF YIELD SUPPLEMENT AGREEMENT]
January [ ], 1999
MMCA Auto Receivables, Inc.
6363 Katella Avenue
Cypress, California 90630-5205
`
Re: MMCA Auto Owner Trust 1999-1
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 January [ ], 1999 (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 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 1999-1 (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.
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: Executive Vice President 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.
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:
EXHIBIT E
FORM OF SECOND-TIER SUBSEQUENT ASSIGNMENT
For value received, in accordance with and subject to the Sale
and Servicing Agreement, dated as of January [ ], 1999 (the "Sale and
Servicing Agreement"), among MMCA Auto Owner Trust 1999-1 (the "Trust"),
MMCA Auto Receivables, Inc., as the Seller (the "Seller"), and Mitsubishi
Motors Credit of America, Inc., as the Servicer (the "Servicer"), the
Seller hereby irrevocably sells, transfers, assigns and otherwise conveys
to the Trust, 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:
(i) the Subsequent Receivables, with an aggregate Principal
Balance as of ______________, ________________ (the "Subsequent Cutoff
Date") equal to $[ ], listed on Schedule A hereto;
(ii) with respect to the Subsequent Receivables that are
Actuarial Receivables, monies due thereunder on or after the
Subsequent Cutoff Date (including Payaheads), and, with respect to the
Subsequent Receivables that are Simple Interest Receivables, monies
received thereunder on or after the Subsequent Cutoff Date;
(iii) the security interests in Financed Vehicles granted
by Obligors pursuant to the Subsequent Receivables and any other
interest of the Trust in such Financed Vehicles;
(iv) rights to receive proceeds with respect to the
Subsequent Receivables from claims on any physical damage, theft,
credit life or disability insurance policies covering the related
Financed Vehicles or related Obligors;
(v) rights to receive proceeds with respect to the
Subsequent Receivables from recourse to Dealers thereon pursuant to
Dealer Agreements;
(vi) all of the Seller's rights to the Receivable Files
that relate to the Subsequent Receivables;
(vii) payments and proceeds with respect to the Subsequent
Receivables held by the Servicer;
(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
Subsequent Receivable that is a Final Payment Receivable), guarantees
and other collateral securing an Subsequent Receivable (other than an
Subsequent 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 Subsequent
Receivables in effect as of the Subsequent 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 included in the proceeds of any of the foregoing.
The foregoing sale, transfer, assignment and conveyance shall not
constitute and is not intended to result in an assumption by the Trust of
any obligation of the Seller to the Obligors, the Dealers or any other
Person with respect the Subsequent Receivables set forth in Schedule A
attached hereto and the other Trust Property related thereto or any
agreement, document or instrument related thereto.
This Second-Tier Subsequent Assignment is made pursuant to and
upon the representations, warranties and agreements on the part of the
Seller contained in the Sale and Servicing Agreement (including the
Officer's Certificate of the Seller accompanying this Second-Tier
Subsequent Assignment) and is to be governed in all respects by the Sale
and Servicing Agreement. Capitalized terms used but not otherwise defined
herein shall have the meanings assigned to them in the Sale and Servicing
Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Second-Tier
Subsequent Assignment to be duly executed as of _________________, _____.
MMCA AUTO RECEIVABLES, INC.
By: _________________________________
Name:
Title:
SCHEDULE A
[SCHEDULE OF SUBSEQUENT RECEIVABLES]
ANNEX A
OFFICER'S CERTIFICATE
The undersigned officer of MMCA Auto Receivables, Inc. (the
"Company"), does hereby certify, pursuant to Section 2.2(c)(xvi) of the
Sale and Servicing Agreement, dated as of January [ ], 1999, among MMCA
Auto Owners Trust 1999-1 ( the "Trust"), MMCA Auto Receivables, Inc., as
the Seller, and Mitsubishi Motors Credit of America, Inc., as the Servicer
(as amended, supplemented or otherwise modified as of the date hereof, the
"Agreement") that all of the conditions to the transfer to the Trust of the
Subsequent Receivables listed on Schedule A to the Second-Tier Subsequent
Assignment delivered herewith and the other property and rights related to
such Subsequent Receivable, as described in Section 2.2(c) of the
Agreement, have been satisfied on or prior to the related Subsequent
Transfer Date.
Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Agreement.
IN WITNESS WHEREOF, the undersigned have caused this certificate
to be duly executed this ____ day of __________, 19______.
By: ________________________________
Name:
Title:
Exhibit 4.3
===========================================================================
INDENTURE
between
MMCA AUTO OWNER TRUST 1999-1,
as Issuer,
and
BANK OF TOKYO - MITSUBISHI TRUST COMPANY,
as Indenture Trustee
Dated as of January [ ], 1999
___________________________
$[ ] [ ]% Class A-1 Asset Backed Notes
$[ ] [ ]% Class A-2 Asset Backed Notes
$[ ] [ ]% Class A-3 Asset Backed Notes
$[ ] [ ]% Class A-4 Asset Backed Notes
____________________________
===========================================================================
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
(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.
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Incorporation by Reference of Trust Indenture Act . .15
SECTION 1.3 Rules of Construction . . . . . . . . . . . . . . . . 15
ARTICLE II
THE NOTES
SECTION 2.1 Form . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.2 Execution, Authentication and Delivery . . . . . . . 17
SECTION 2.3 Temporary Notes . . . . . . . . . . . . . . . . . . . 17
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 . . . . . . . . . . . . . . . . . . . . . . 21
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
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
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 . . . . . . . . . . . . . . . . . 40
SECTION 3.13 No Borrowing . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.14 Servicer's Obligations . . . . . . . . . . . . . . . 40
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 . . . . . . . . . . . . 41
SECTION 3.20 Removal of Administrator . . . . . . . . . . . . . . 42
ARTICLE IV
SATISFACTION AND DISCHARGE
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
SECTION 5.1 Events of Default . . . . . . . . . . . . . . . . . . 47
SECTION 5.2 Acceleration of Maturity; Rescission and
Annulment . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 5.3 Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee . . . . . . . . . . 49
SECTION 5.4 Remedies; Priorities . . . . . . . . . . . . . . . . 52
SECTION 5.5 Optional Preservation of the Receivables . . . . . . 53
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 . . . . . . . . . 55
SECTION 5.9 Rights and Remedies Cumulative . . . . . . . . . . . 55
SECTION 5.10 Delay or Omission Not a Waiver . . . . . . . . . . . 55
SECTION 5.11 Control by Noteholders . . . . . . . . . . . . . . . 56
SECTION 5.12 Waiver of Past Defaults . . . . . . . . . . . . . . 56
SECTION 5.13 Undertaking for Costs . . . . . . . . . . . . . . . 57
SECTION 5.14 Waiver of Stay or Extension Laws . . . . . . . . . . 57
SECTION 5.15 Action on Notes . . . . . . . . . . . . . . . . . . 58
SECTION 5.16 Performance and Enforcement of Certain
Obligations . . . . . . . . . . . . . . . . . . . . 58
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1 Duties of Indenture Trustee . . . . . . . . . . . . . 60
SECTION 6.2 Rights of Indenture Trustee . . . . . . . . . . . . . 61
SECTION 6.3 Individual Rights of Indenture Trustee . . . . . . . 63
SECTION 6.4 Indenture Trustee's Disclaimer . . . . . . . . . . . 63
SECTION 6.5 Notice of Defaults . . . . . . . . . . . . . . . . . 63
SECTION 6.6 Reports by Indenture Trustee to Holders . . . . . . . 63
SECTION 6.7 Compensation and Indemnity . . . . . . . . . . . . . 64
SECTION 6.8 Replacement of Indenture Trustee . . . . . . . . . . 64
SECTION 6.9 Successor Indenture Trustee by Merger . . . . . . . . 66
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate
Indenture Trustee . . . . . . . . . . . . . . . . . 66
SECTION 6.11 Eligibility; Disqualification . . . . . . . . . . . 68
SECTION 6.12 Preferential Collection of Claims Against Issuer . . 68
SECTION 6.13 Pennsylvania Motor Vehicle Sales Finance Act
Licenses . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1 Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders . . . . . . . . . . . . . . 69
SECTION 7.2 Preservation of Information; Communications to
Noteholders . . . . . . . . . . . . . . . . . . . . 69
SECTION 7.3 Reports by Issuer . . . . . . . . . . . . . . . . . . 69
SECTION 7.4 Reports by Indenture Trustee . . . . . . . . . . . . 70
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1 Collection of Money . . . . . . . . . . . . . . . . . 71
SECTION 8.2 Trust Accounts, the Reserve Account, the
Supplemental Reserve Account, the Negative
Carry Account and the Yield Supplement Account . . . . 71
SECTION 8.3 General Provisions Regarding Accounts . . . . . . . . 72
SECTION 8.4 Release of Trust Estate . . . . . . . . . . . . . . . 73
SECTION 8.5 Opinion of Counsel . . . . . . . . . . . . . . . . . 73
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures Without Consent of
Noteholders . . . . . . . . . . . . . . . . . . . . 75
SECTION 9.2 Supplemental Indentures with Consent of
Noteholders . . . . . . . . . . . . . . . . . . . . . 77
SECTION 9.3 Execution of Supplemental Indentures . . . . . . . . 79
SECTION 9.4 Effect of Supplemental Indenture . . . . . . . . . . 79
SECTION 9.5 Conformity with Trust Indenture Act . . . . . . . . . 80
SECTION 9.6 Reference in Notes to Supplemental Indentures . . . . 80
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1 Redemption . . . . . . . . . . . . . . . . . . . . . 80
SECTION 10.2 Form of Redemption Notice . . . . . . . . . . . . . 82
SECTION 10.3 Notes Payable on Redemption Date . . . . . . . . . . 82
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Compliance Certificates and Opinions, etc. . . . . . 83
SECTION 11.2 Form of Documents Delivered to Indenture Trustee . . 85
SECTION 11.3 Acts of Noteholders . . . . . . . . . . . . . . . . 86
SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer
and Rating Agencies . . . . . . . . . . . . . . . . 87
SECTION 11.5 Notices to Noteholders; Waiver . . . . . . . . . . . 88
SECTION 11.6 Alternate Payment and Notice Provisions . . . . . . 88
SECTION 11.7 Conflict with Trust Indenture Act . . . . . . . . . 89
SECTION 11.8 Effect of Headings and Table of Contents . . . . . . 89
SECTION 11.9 Successors and Assigns . . . . . . . . . . . . . . . 89
SECTION 11.10 Separability . . . . . . . . . . . . . . . . . . . 89
SECTION 11.11 Benefits of Indenture . . . . . . . . . . . . . . . 89
SECTION 11.12 Legal Holiday . . . . . . . . . . . . . . . . . . . 89
SECTION 11.13 Governing Law . . . . . . . . . . . . . . . . . . . 90
SECTION 11.14 Counterparts . . . . . . . . . . . . . . . . . . . 90
SECTION 11.15 Recording of Indenture . . . . . . . . . . . . . . 90
SECTION 11.16 Trust Obligation . . . . . . . . . . . . . . . . . 90
SECTION 11.17 No Petition . . . . . . . . . . . . . . . . . . . . 91
SECTION 11.18 Inspection . . . . . . . . . . . . . . . . . . . . 91
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
INDENTURE, dated as of January [ ], 1999 (as amended,
supplemented or otherwise modified and in effect from time to time, this
"Indenture"), between MMCA AUTO OWNER TRUST 1999-1, 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 [ ]% Class A-4
Asset Backed Notes (the "Class A-4 Notes" and, together with the Class A-1
Notes, the Class A-2 Notes and the Class A-3 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 related Cutoff Date (including Payaheads) and, with respect to Simple
Interest Receivables, monies received thereunder on or after the related
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) all 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) all 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, the
Negative Carry 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) all of
the Trust's rights under 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) all 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 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 related
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.
"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 January [ ], 1999, 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.
"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 A-4 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 Issuer pursuant to this Indenture, substantially in the form of
Exhibit A-1 to this Indenture.
"Class A-1 Rate" shall mean [ ]% per annum.
"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 Issuer 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 Issuer pursuant to this Indenture, substantially in the form
of Exhibit A-3 to this Indenture.
"Class A-3 Rate" shall mean [ ]% per annum.
"Class A-4 Final Payment Date" shall mean the [ ]
Payment Date.
"Class A-4 Noteholder" shall mean the Person in whose name a
Class A-4 Note is registered on the Note Register.
"Class A-4 Notes" shall mean the $[ ] aggregate
initial principal amount of [ ]% Class A-4 Asset Backed Notes issued
by the Issuer pursuant to this Indenture, substantially in the form of
Exhibit A-4 to this Indenture.
"Class A-4 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 January [ ], 1999.
"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 January [ ], 1999, 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 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 A-4 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
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 A-4
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 1999-1, 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
January [ ], 1999, 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 A-4 Notes, the Class A-4 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 maintaining 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 A-4 Noteholders,
collectively.
"Notes" shall mean the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes and the Class A-4 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, 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.
"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 February 15, 1999.
"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 Business 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, unless such fifteenth (15th) day is not a Business Day, in
which case the immediately following Business Day.
"Redemption Date" shall mean (a) in the case of a redemption of
Notes pursuant to Section 10.1(a) or (b), 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 and
(b) in the case of a redemption of Notes pursuant to Section 10.1(c), the
Payment Date specified by the Servicer pursuant to Section 4.8(b) of the
Sale and Servicing Agreement.
"Redemption Price" shall mean (a) in the case of a redemption of
Notes pursuant to Section 10.1(a) or (b), an amount equal to the unpaid
principal amount of the Notes redeemed plus accrued and unpaid interest
thereon, and (b) in the case of a redemption of Notes pursuant to Section
10.1(c), an amount equal to the lesser of (x) the Remaining Pre-Funded
Amount withdrawn from the Pre-Funding Account and deposited to the
Collection Account on or prior to the Redemption Date pursuant to Section
4.8(b) of the Sale and Servicing Agreement and (y) the amount specified in
clause (a) above.
"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 January [ ], 1999, 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 of principal on Simple
Interest Receivables received during the related Collection Period,
including collections of principal attributable to the Last Scheduled
Payment of a Simple Interest Receivable that is a Final Payment Receivable
(unless a Last Scheduled Payment Advance has been made with respect to such
Last Scheduled Payment), and including any charges for Excess Wear and Tear
and Excess Mileage, 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 (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 related Cutoff Date; provided, however, that in
calculating the Scheduled Principal, (x) 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) and (y) all amounts released from the Pre-Funding Account will
be excluded.
"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).
"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.
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 A-4 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 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 Asset Backed Notes for
original issue in an aggregate principal amount of $[ ],
[ ]% Class A-2 Asset Backed Notes for original issue in an aggregate
principal amount of $[ ], [ ]% Class A-3 Asset Backed
Notes for original issue in an aggregate principal amount of
$[ ] and [ ]% Class A-4 Asset Backed Notes for
original issue in an aggregate principal amount of $[ ]. The
aggregate principal amounts of [ ]% Class A-1 Asset Backed Notes,
[ ]% Class A-2 Asset Backed Notes, [ ]% Class A-3 Asset
Backed Notes and [ ]% Class A-4 Asset Backed 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.
(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.
(b) 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
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, evidencing
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 in whole
pursuant to Section 10.1(a) or (b), 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 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 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 shall withdraw the Total 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 Total 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 Total 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 Total Available Funds remaining after the application of
clauses (i) and (ii) above shall 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 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, Accrued Note
Interest (and, if amounts on deposit in the Note Payment Account
are insufficient for such purpose, payments shall be made to the
Noteholders pro rata in proportion to the Accrued Note Interest
for each Class of Notes);
(ii) to the Class A-1 Noteholders, 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, 100% 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, 100% 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-3 Notes, to the Class A-4 Noteholders, 100% of the Principal
Distribution Amount in reduction of principal until the principal
amount of the Class A-4 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 A-4 Notes, to the extent not previously paid, will be due on the
Class A-4 Final Payment Date.
(d) The Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes and the Class A-4 Notes shall accrue interest at the Class A-1 Rate,
the Class A-2 Rate, the Class A-3 Rate and the Class A-4 Rate,
respectively, and such interest shall be due and payable on each Payment
Date. Interest on the Class A-1 Notes shall 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 A-4 Notes shall 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 in
whole pursuant to Section 10.1(a) or (b)), 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 a Class of 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.
(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 of
Notes, Accrued Note Interest ratably in proportion to Accrued
Note Interest for each Class of Notes, 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, the Class A-3 Noteholders and the
Class A-4 Noteholders, the outstanding principal amount of the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class A-4 Notes, respectively, pro rata in proportion to the
respective principal balances of each of such Classes as of such
Payment Date (prior to giving effect to any payment of principal
on such date) in reduction of principal until the principal
amount of each of such Classes has been paid in full; and
(v) fifth, to the Certificateholders.
SECTION 2.9 Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption in whole pursuant to
Section 10.1(a) or (b) 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:
(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.
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 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.
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 Pre-Funding Account, the Reserve Account, the
Supplemental Reserve Account, the Negative Carry 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 Pre-Funding Account,
the Reserve Account, the Supplemental Reserve Account, the Negative Carry
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 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.
(vi) 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.
(d) 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 in whole pursuant to Section 10.1(a) or
(b) 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 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 March 31, in each calendar year, beginning
in 2000, 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 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 March 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 Agreement,
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 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
payments under the Code or applicable state law) or assert any
claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon the Issuer;
(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 Issuer 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, on or before March 31 of each year
(commencing with the year 2000), 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 (or with respect to the Officer's Certificate to
be delivered in the year 2000, such longer period) 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, 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 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;
(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.
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.
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 4.11 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 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.
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 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;
(3) the Issuer has paid or caused to be paid all other sums
payable by the Issuer hereunder and under the other Basic
Documents;
(4) 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
(5) 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 principal 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 and 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;
(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.
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, 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 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 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.
(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 Indenture
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
(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 Indenture 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.
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 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(g).
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 Total
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;
(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 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
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 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.
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.
(a) 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.
(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.
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1 Duties of Indenture Trustee. (a) 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 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.
SECTION 6.2 Rights of Indenture Trustee. (a) 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, 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 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. (a) 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. (a) 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 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.
(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. (a) 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. (a) 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 Estate, 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 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 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.
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. (a) 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. (a) 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 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. (a) If required by
TIA Section 313(a), within sixty (60) days after each March 31, beginning
with March 31, 2000, 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.
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, the Negative Carry Account and the Yield
Supplement Account. (a) On or prior to the Closing Date, the Issuer shall
cause the Servicer to establish and maintain, in the name of the Indenture
Trustee, (i) 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, 4.12 and
5.1 of the Sale and Servicing Agreement and (ii) for the exclusive benefit
of the Noteholders, the Negative Carry Account as provided in Sections
4.1(c) and 4.12 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.
SECTION 8.3 General Provisions Regarding Accounts. (a) 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 Pre-Funding
Account, the Payahead Account, the Reserve Account, the Supplemental
Reserve Account, the Negative Carry 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 Pre-Funding Account, the Payahead Account, the
Reserve Account, the Supplemental Reserve Account, the Negative Carry
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 Pre-Funding Account, the Reserve Account, the Supplemental Reserve
Account, the Negative Carry Account and the Yield Supplement Account) as
provided in Sections 4.1, 4.7, 4.8, 4.9 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, the
Negative Carry 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, the
Negative Carry 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 Pre-Funding Account, the Payahead Account, the Reserve Account, the
Supplemental Reserve Account, the Negative Carry Account or the Yield
Supplement Account to the Indenture Trustee by 11:00 a.m., New York Time
(or 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, the Negative Carry Account or
the Yield Supplement Account, 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. (a) 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 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.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures Without Consent of
Noteholders. (a) 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 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 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 application 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 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 supplemental 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.
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1 Redemption. (a) 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 such 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.
(c) In the event that on or prior to the Payment Date on
which the Pre-Funding Period ends (or, if the Pre-Funding Period does not
end on a Payment Date, the immediately succeeding Payment Date) the
Remaining Pre-Funded Amount has been withdrawn from the Pre-Funding
Account and deposited to the Collection Account by the Indenture Trustee
at the direction of the Servicer pursuant to Section 4.8(b) of the Sale and
Servicing Agreement, the Remaining Pre-Funded Amount shall be treated as a
part of the Available Funds and the Principal Distribution Amount for such
Payment 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.
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.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Compliance Certificates and Opinions, etc. (a)
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 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 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.
(a) 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 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. (a) 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.
(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 1999-1, 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 and Treasurer, 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 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. (a) 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 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 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.
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.
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 1999-1
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:
STATE OF DELAWARE )
) ss.:
COUNTY OF NEW CASTLE )
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 1999-1, 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
_______________, 1999.
________________________
Notary Public in and for
the State of Delaware.
[Seal]
My commission expires:
______________________
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
_______________, 1999.
________________________
Notary Public in and for
the State of New York.
[Seal]
My commission expires:
_______________________
SCHEDULE A
[To be Provided to the Indenture Trustee at the Closing]
SCHEDULE I
List of Permitted Investments
Account(s) Permitted Investments
Collection Account [ ]
Negative Carry Account [ ]
Payahead Account [ ]
Pre-Funding Account [ ]
Reserve Account [ ]
Supplemental Reserve [ ]
Account
Yield Supplement Account [ ]
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-[ ] CUSIP NO. [ ]
MMCA AUTO OWNER TRUST 1999-1
[ ]% CLASS A-1 ASSET BACKED NOTES
MMCA Auto Owner Trust 1999-1, 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 Indenture dated as of January [ ], 1999 (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 [ ] Payment Date (the "Class A-
1 Final Payment Date") and the Redemption Date, if any, pursuant to Section
10.1(a) or (b) of the Indenture. In addition, the unpaid principal amount
of this Class A-1 Note may be redeemed in whole or in part on the
Redemption Date, if any, pursuant to Section 10.1(c) 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.
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.]
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: [ ], 1999
MMCA AUTO OWNER TRUST 1999-1,
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: [ ], 1999
BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
not in its individual capacity but solely as
Indenture Trustee
By: ___________________________
Authorized Officer
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 A-4
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 February 15, 1999.
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(a) or (b) of the Indenture. In addition, the unpaid principal amount
of this Class A-1 Note may be redeemed in whole or in part on the
Redemption Date, if any, pursuant to Section 10.1(c) 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 Class A-1 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 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 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.
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.
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.
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.
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- [ ] CUSIP NO. [ ]
MMCA AUTO OWNER TRUST 1999-1
[ ]% CLASS A-2 ASSET BACKED NOTES
MMCA Auto Owner Trust 1999-1, 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 of January [ ], 1999 (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 [ ]
Payment Date (the "Class A-2 Final Payment Date") and the Redemption Date,
if any, pursuant to Section 10.1(a) or (b) of the Indenture. In addition,
the unpaid principal amount of this Class A-2 Note may be redeemed in whole
or in part on the Redemption Date, if any, pursuant to Section 10.1(c) 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.
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.]
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: [ ], 1999
MMCA AUTO OWNER TRUST 1999-1,
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: [ ], 1999
BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
not in its individual capacity but solely as
Indenture Trustee
By: ___________________________
Authorized Officer
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 A-4
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 February 15, 1999.
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(a) or (b) of the Indenture. In addition, the unpaid principal amount
of this Class A-2 Note may be redeemed in whole or in part on the
Redemption Date, if any, pursuant to Section 10.1(c) 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 Class A-2 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 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 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.
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.
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.
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.
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- [ ] CUSIP NO. [ ]
MMCA AUTO OWNER TRUST 1999-1
[ ]% CLASS A-3 ASSET BACKED NOTES
MMCA Auto Owner Trust 1999-1, 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 of January [ ], 1999 (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 [ ]
Payment Date (the "Class A-3 Final Payment Date") and the Redemption Date,
if any, pursuant to Section 10.1(a) or (b) of the Indenture. In addition,
the unpaid principal amount of this Class A-3 Note may be redeemed in whole
or in part on the Redemption Date, if any, pursuant to Section 10.1(c) 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.
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.]
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: [ ], 1999
MMCA AUTO OWNER TRUST 1999-1,
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: [ ], 1999
BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
not in its individual capacity but solely as
Indenture Trustee
By: ___________________________
Authorized Officer
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-2 Asset-Backed Notes and the [ ]% Class A-4
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 February 15, 1999.
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(a) or (b) of the Indenture. In addition, the unpaid principal amount
of this Class A-3 Note may be redeemed in whole or in part on the
Redemption Date, if any, pursuant to Section 10.1(c) 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 Class A-3 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 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 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.
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.
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.
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.
EXHIBIT A-4
Form of Class A-4 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-[ ] CUSIP NO. [ ]
MMCA AUTO OWNER TRUST 1999-1
[ ]% CLASS A-4 ASSET BACKED NOTES
MMCA Auto Owner Trust 1999-1, 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-4 Notes pursuant to
Section 2.8 of the Indenture dated as of January [ ], 1999 (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-4 Note shall be
due and payable on the earlier of the [ ] Payment Date
(the "Class A-4 Final Payment Date") and the Redemption Date, if any,
pursuant to Section 10.1(a) or (b) of the Indenture. In addition, the
unpaid principal amount of this Class A-4 Note may be redeemed in whole
or in part on the Redemption Date, if any, pursuant to Section 10.1(c)
of the Indenture.
Capitalized terms
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-4 Note at the rate
per annum shown above on each Payment Date until the principal of this
Class A-4 Note is paid or made available for payment, on the principal
amount of this Class A-4 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-4 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-4 Note shall be paid in the manner specified on
the reverse hereof.
The principal of and interest on this Class A-4 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-4 Note shall be
applied first to interest due and payable on this Class A-4 Note as
provided above and then to the unpaid principal of this Class A-4 Note.
Reference is made to the further provisions of this Class A-4
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-4 Note.
Unless the certificate of authentication hereon has been executed
by the Indenture Trustee whose name appears below by manual signature, this
Class A-4 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.]
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: [ ], 1999
MMCA AUTO OWNER TRUST 1999-1,
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: [ ], 1999
BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
not in its individual capacity but solely as
Indenture Trustee
By: ___________________________
Authorized Officer
This Class A-4 Note is one of a duly authorized issue of Notes of
the Issuer, designated as its [ ]% Class A-4 Asset Backed Notes,
which, together with the [ ]% Class A-1 Asset-Backed Notes, the
[ ]% Class A-2 Asset-Backed Notes and the [ ]% Class A-3
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-4 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-4 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 February 15, 1999.
As described above, the entire unpaid principal amount of this
Class A-4 Note shall be due and payable on the earlier of the Class A-4
Final Payment Date and the Redemption Date, if any, pursuant to Section
10.1(a) or (b). In addition, the unpaid principal amount of this Class A-4
Note may be redeemed in whole or in part on the Redemption Date, if any,
pursuant to Section 10.1(c) 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.
Payments of interest on this Class A-4 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-4 Note, shall be made by
check mailed to the Person whose name appears as the Registered Holder of
this Class A-4 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-4 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-4 Note be submitted for notation of payment. Any reduction in the
principal amount of this Class A-4 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-4 Note and of any Class A-4 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-4 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-4
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-4 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-4 Note may be registered on
the Note Register upon surrender of this Class A-4 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-4 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-4 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 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-4 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-4 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-4 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-4 Note be overdue, and none of
the Issuer, the Indenture Trustee or any such agent shall be affected by
notice to the contrary.
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-4 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-4 Note and of any Class A-4 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-4 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-4 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 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-4 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-4 Note.
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.
EXHIBIT B
Form of Opinion of Counsel
Pursuant to Section 3.6(a)
[To be included]
Exhibit 4.4
This ADMINISTRATION AGREEMENT, dated as of January __, 1999 (as
the same may be amended, supplemented or otherwise modified from time to
time and in effect, this "Agreement"), is by and among MMCA AUTO OWNER
TRUST 1999-1, 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 and [ ]% Class A-4 Asset Backed Notes
(collectively, the "Notes") pursuant to the Indenture, dated as of January
__, 1999 (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 January __, 1999 (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 January __, 1999 (as amended, supplemented
or otherwise modified and in effect from time to time, the "Note Depository
Agreement"), among the Issuer, the Indenture Trustee 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");
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;
(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));
(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 3.7,
3.9, 3.10, 3.11, 3.12, 3.13, 3.14, and 4.11 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);
(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, the Negative Carry
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);
(A2) the duty to notify Noteholders of redemption of the Notes or
to cause the Indenture Trustee to provide such notification (Section
10.2);
(B2) 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));
(C2) 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));
(D2) 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);
(E2) the preparation and delivery to Noteholders and the
Indenture Trustee of any agreements with respect to alternate payment
and notice provisions (Section 11.6);
(F2) the recording of the Indenture, if applicable (Section
11.15); and
(G2) 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
(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 Issuer 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 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 Issuer'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 Issuer 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, 2000, 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.
(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.
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.
(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.
(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 as follows:
(a) if to the Issuer or the Owner Trustee, to:
MMCA Auto Owner Trust 1999-1
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:
Mitsubishi Motors Credit of America, Inc.
6363 Katella Avenue
Cypress, California 90630-5205
Attention: Executive Vice President and Treasurer
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; 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.
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 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.
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 1999-1
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:
EXHIBIT A
POWER OF ATTORNEY
STATE OF DELAWARE }
}
COUNTY OF NEW CASTLE }
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 1999-1 (the
"Issuer"), does hereby make, constitute and appoint Mitsubishi Motors
Credit of America, Inc., as administrator under the Administration
Agreement dated as of January __, 1999 (the "Administration Agreement"),
among the Issuer, 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 Issuer all such
documents, reports, filings, instruments, certificates and opinions as it
should be the duty of the Owner Trustee or the Issuer 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 Issuer in connection
with the preparation, filing and audit of federal, state and local tax
returns pertaining to the Issuer, 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 January __, 1999.
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
______________________________________
Name:
Title:
STATE OF DELAWARE }
}
COUNTY OF NEW CASTLE }
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 January __, 1999.
_________________________________
Notary Public - State of Delaware
Exhibit 10.1
PURCHASE AGREEMENT
This PURCHASE AGREEMENT, dated as of January __, 1999 (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 Initial Receivables (such capitalized term and the
other capitalized terms used herein have the meanings assigned thereto
pursuant to Article I hereof) and certain additional property related
thereto are to be sold by the Seller to the Purchaser on the Closing Date
and the Subsequent Receivables and certain additional property related
thereto are to be sold by the Seller to the Purchaser from time to time
during the Pre-Funding Period, which Receivables and other property related
thereto will be sold by the Purchaser, pursuant to the Sale and Servicing
Agreement, to the MMCA Auto Owner Trust 1999-1 to be created pursuant to
the Trust Agreement, which Trust will issue notes secured by such
Receivables and certain other property of the Trust, pursuant to the
Indenture, 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:
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, for purposes of this Agreement, the
First-Tier Initial Assignment or any First-Tier Subsequent Assignment, as
the context may require.
"Closing" shall have the meaning specified in Section 2.3.
"Closing Date" shall mean January __, 1999.
"Cutoff Date" shall mean the Initial Cutoff Date or any
Subsequent Cutoff Date, as the context may require.
"First-Tier Initial Assignment" shall mean the document of
assignment in substantially the form attached to this Agreement as Exhibit
A-1.
"First-Tier Subsequent Assignment" shall mean any document of
assignment in substantially the form attached to this Agreement as Exhibit
A-2.
"Indenture" shall mean the Indenture, dated as of January __,
1999, 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.
"Initial Cutoff Date" shall mean January 1, 1999.
"Initial Receivable" shall mean, for purposes of this Agreement,
each motor vehicle retail installment sale contract described in the
Schedule of Initial Receivables attached hereto as Exhibit B and all rights
and obligations thereunder and any amendments, modifications or supplements
to such motor vehicle retail installment sale contract.
"Initial Receivables Purchase Price" shall mean $[ ].
"Officer's Certificate" shall mean, for purposes of this
Agreement, a certificate signed by the chairman, the president, any
executive vice president, vice president or the treasurer of the Seller,
and delivered to the Purchaser.
"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 purposes of this Agreement, any
Initial Receivable or Subsequent Receivable, as the context may require.
"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 January __, 1999, 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 Initial Receivables" shall mean, for purposes of
this Agreement, the list of Initial Receivables (which list may be in the
form of microfiche or compact disk) annexed hereto as Exhibit B.
"Schedule of Receivables" shall mean, for purposes of this
Agreement, the Schedule of Initial Receivables or any Schedule of
Subsequent Receivables, as the context may require.
"Schedule of Subsequent Receivables" shall mean, for purposes of
this Agreement, any list of Subsequent Receivables (which list may be in
the form of microfiche or compact disk) attached as Schedule A to the
related First-Tier Subsequent Assignment.
"Seller" shall mean Mitsubishi Motors Credit of America, Inc., a
Delaware corporation, and its successors and assigns.
"Subsequent Cutoff Date", with respect to any Subsequent
Receivable, shall have the meaning specified in the related First-Tier
Subsequent Assignment.
"Subsequent Receivable" shall mean, for purposes of this
Agreement, each motor vehicle retail installment sale contract described in
a Schedule of Subsequent Receivables attached as Schedule A to a First-Tier
Subsequent Assignment and all rights and obligations thereunder and any
amendments, modifications or supplements to such motor vehicle retail
installment sale contract.
"Subsequent Receivables Purchase Price" shall have the meaning
specified in Section 2.2(a).
"Subsequent Transfer Date" shall mean, with respect to any
Subsequent Receivable, the Business Day during the Pre-Funding Period on
which such Subsequent Receivable is to be conveyed by the Seller to the
Purchaser pursuant to Section 2.1(b) and the related First-Tier Subsequent
Assignment is executed and delivered by the Seller to the Purchaser
pursuant to Section 4.1(b)(iii)(A).
"Trust" shall mean the MMCA Auto Owner Trust 1999-1 created by
the Trust Agreement.
"Trust Agreement" shall mean the Amended and Restated Trust
Agreement, dated as of January __, 1999, 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,
dated January __, 1999 by and between Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as representative of the several underwriters, and the
Purchaser, as the same may be from time to time amended, supplemented or
otherwise modified and in effect.
"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 be from time to time amended, supplemented or
otherwise modified and in effect.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
SECTION 2.1. Purchase and Sale of Receivables.
On the Closing Date and each Subsequent Transfer 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 set forth in the related Schedule of Receivables and the other
property relating thereto (as described below).
(a) Sale of Initial 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 Initial Receivables; (ii) with
respect to Initial Receivables that are Actuarial Receivables, monies due
thereunder on or after the Initial Cutoff Date (including Payaheads) and,
with respect to Initial Receivables that are Simple Interest Receivables,
monies received thereunder on or after the Initial Cutoff Date; (iii) the
security interests in Financed Vehicles granted by Obligors pursuant to the
Initial Receivables and any other interest of the Seller in such Financed
Vehicles; (iv) rights to receive proceeds with respect to the Initial
Receivables from claims on any physical damage, theft, credit life or
disability insurance policies covering the related Financed Vehicles or
related Obligors; (v) rights to receive proceeds with respect to the
Initial Receivables from recourse to Dealers thereon pursuant to the Dealer
Agreements; (vi) all of the Seller's rights to the Receivable Files that
relate to the Initial Receivables; (vii) payments and proceeds with respect
to the Initial 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 an Initial Receivable that is a Final Payment Receivable),
guarantees and other collateral securing an Initial Receivable (other than
an Initial 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 Initial Receivables in effect
as of the Initial 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 included in the
proceeds of any of the foregoing.
It is the intention of the Seller and the Purchaser that the transfer
and assignment of the Initial Receivables and the other property described
in clauses (i) through (x) of this Section 2.1(a) shall constitute a sale
of the Initial Receivables and such other property from the Seller to the
Purchaser, conveying good title thereto free and clear of any liens, and
the Initial Receivables and such other property shall 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 or similar law.
(b) Sale of Subsequent Receivables. Subject to
satisfaction of the conditions set forth in Section 4.1(b), 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 Subsequent Receivables listed on
Schedule A to the related First Tier Subsequent Assignment, (ii) with
respect to the Subsequent Receivables that are Actuarial Receivables,
monies due thereunder on or after the related Subsequent Cutoff Date
(including Payaheads) and, with respect to the Subsequent Receivables that
are Simple Interest Receivables, monies received thereunder on or after the
related Subsequent Cutoff Date; (iii) the security interests in Financed
Vehicles granted by Obligors pursuant to the Subsequent Receivables and any
other interest of the Seller in such Financed Vehicles; (iv) rights to
receive proceeds with respect to the Subsequent Receivables from claims on
any physical damage, theft, credit life or disability insurance policies
covering the related Financed Vehicles or related Obligors; (v) rights to
receive proceeds with respect to the Subsequent Receivables from recourse
to Dealers thereon pursuant to the related Dealer Agreements; (vi) all of
the Seller's rights to the Receivable Files that relate to the Subsequent
Receivables; (vii) payments and proceeds with respect to the Subsequent
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
Subsequent Receivable that is a Final Payment Receivable), guarantees and
other collateral securing a Subsequent Receivable (other than a Subsequent
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 Subsequent Receivables in effect as of the
related Subsequent 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 included in the
proceeds of any of the foregoing.
It is the intention of the Seller and the Purchaser that each transfer
and assignment of the Subsequent Receivables and the other property
described in clauses (i) through (x) of this Section 2.1(b) shall
constitute a sale of the Subsequent Receivables and such other property
from the Seller to the Purchaser, conveying good title thereto free and
clear of any liens, and the Subsequent Receivables and such other property
shall 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 or
similar law.
SECTION 2.2. Payment of the Purchase Price
(a) Initial Receivables Purchase Price. In consideration
for the Initial Receivables, the other property described in Section 2.1(a)
and delivery of the Yield Supplement Agreement, the Purchaser shall, on or
prior to the Closing Date, pay to or upon the order of the Seller the
Initial Receivables Purchase Price. An amount equal to $[ ]
of the Initial Receivables Purchase Price shall be paid to the Seller in
cash. The remainder of the Initial Receivables Purchase Price shall be
paid by crediting the Seller with a contribution to the capital of the
Purchaser. The portion of the Initial Receivables Purchase Price to be
paid in cash shall be by federal wire transfer (same day) funds.
(b) Subsequent Receivables Purchase Price. In
consideration for the Subsequent Receivables and the other property related
thereto described in Section 2.1(b) to be sold, transferred, assigned and
otherwise conveyed to the Purchaser on the related Subsequent Transfer
Date, the Purchaser shall, on or prior to the related Subsequent Transfer
Date, pay to or upon the order of the Seller an amount (the related
"Subsequent Receivables Purchase Price") equal to the aggregate Principal
Balance of the Subsequent Receivables as of the related Subsequent Cutoff
Date, plus any premium or minus any discount agreed upon by the Seller and
the Purchaser. Any Subsequent Receivables Purchase Price shall be payable
as follows: (i) cash in the amount released to the Purchaser from the
Pre-Funding Account pursuant to Section 4.8(a) of the Sale and Servicing
Agreement shall be paid to or upon the order of the Seller on the related
Subsequent Transfer Date by federal wire transfer (same day funds) and the
balance paid in cash as and when amounts are released to, or otherwise
realized by, the Purchaser from the Reserve Account and the Negative Carry
Account in accordance with the Sale and Servicing Agreement; or (ii) as
otherwise agreed by the Seller and the Purchaser.
SECTION 2.3. 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 Initial
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 Trust
Property 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.
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 and as of each Subsequent Transfer 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, 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 and each
Subsequent Transfer 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 on the Closing Date and the
property to be sold and assigned to the Purchaser hereunder on each
Subsequent Transfer Date and has duly authorized such sales and
assignments to the Purchaser by all necessary corporate action. This
Agreement and the First-Tier Initial Assignment has been, and each
First-Tier Subsequent Assignment has been or will be on or before the
related Subsequent Transfer Date, duly authorized, executed and
delivered by the Seller, and in each case 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.
(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.
(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 in the case of the Initial
Receivables and as of the applicable Subsequent Transfer Date in the case
of the Subsequent Receivables except to the extent otherwise provided in
the following representations and warranties, 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 (x) 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 or (y) originated by the
Seller in connection with the refinancing by the Seller of a motor
vehicle retail installment sales contract of the type described in
subclause (x) above, 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 (unless such
Receivable was originated by the Seller in connection with a
refinancing), and shall have been validly assigned by such Dealer to
the Seller in accordance with its terms (unless such Receivable was
originated by the Seller in connection with a refinancing), (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 related Schedule of Receivables shall be true and correct in all
material respects as of the opening of business on the related Cutoff
Date, and no selection 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 compact disk 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 (with respect to each Initial Receivable) or the related
Subsequent Transfer Date (with respect to each Subsequent Receivable),
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 operation of law
after the Closing Date (with respect to each Initial Receivable) or
the related Subsequent Transfer Date (with respect to each Subsequent
Receivable) 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 or payment
defaults of 10% or less of a payment, in each case as of the related
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 related 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.
(xiii) Title. It is the intention of the Seller that each
transfer and assignment of Receivables herein contemplated constitute
a sale of such Receivables from the Seller to the Purchaser and that
the beneficial interest in and title to such 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
each transfer and assignment of Receivables herein contemplated, the
Seller had good and marketable title to such Receivables 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 such Receivables, 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 (with respect to the Initial Receivables) or ten (10)
days of the related Subsequent Transfer Date (with respect to the
Subsequent Receivables).
(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 related
Cutoff Date of not less than $100.
(xix) No Bankrupt Obligors. None of the Receivables shall
be due from any Obligor who, as of the related 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 Initial Receivables, constituting approximately [
]% of the total number of the Initial Receivables, as of the
Initial Cutoff Date, relate to new automobiles and light- or medium-
duty trucks financed at new vehicle rates. Approximately [ ]% of
the Pool Balance of the Initial Receivables, constituting
approximately [ ]% of the total number of Initial Receivables, as
of the Initial Cutoff Date, relate to used automobiles and light- or
medium-duty trucks. Approximately [ ]% of the Pool Balance of
the Initial Receivables, constituting approximately [ ]% of the
total number of the Initial Receivables, as of the Initial 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. Approximately [ ]% of the Pool
Balance of the Initial Receivables, constituting approximately [
]% of the total number of Initial Receivables as of the Initial 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 [ ].
(xxii) Maturity of Receivables. Each Receivable shall have
a remaining maturity, as of the related Cutoff Date, of not more than
sixty-one (61) months, and an original maturity of not more than
sixty-one (61) months.
(xxiii) Weighted Average Remaining Maturity of
Receivables. The weighted average remaining maturity of the
Receivables as of the Closing Date and each Subsequent Transfer Date
(after giving effect to the Subsequent Receivables sold to the
Purchaser on such Subsequent Transfer Date pursuant to Section 2.1(b))
shall not be more than [ ] months.
(xxiv) Annual Percentage Rate. Each Receivable shall have
an APR of at least 0% and not more than 30%.
(xxv) Scheduled Payments. Each Receivable shall have a
first Scheduled Payment due on or prior to [ ], and no
Receivable shall have a payment of which more than 10% of such payment
is more than 30 days overdue as of the related Cutoff Date.
(xxvi) Location of Receivable Files. The Receivable Files
shall be kept at one or more of the locations listed in Schedule A
hereto.
(xxvii) 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.
(xxviii) Other Data. The tabular data and the numerical
data relating to the characteristics of the Initial Receivables
contained in the Prospectus and is true and correct in all material
respects.
(xxix) Last Scheduled Payments. The average Last Scheduled
Payment of the Final Payment Receivables as of the Closing Date and
each Subsequent Transfer Date as a percentage of the aggregate
original Principal Balances of the Final Payment Receivables (after
giving effect to the Final Payment Receivables sold to the Purchaser
on such Subsequent Transfer Date pursuant to Section 2.1(b)), in each
case as of the related dates of origination, shall not be greater than
[ ]%.
(xxx) Receivable Yield Supplement Amounts. An amount equal
to the sum of all projected Yield Supplement Amounts for all future
Payment Dates with respect to each Receivable, assuming that future
Scheduled Payments on such Receivable are made on their scheduled due
dates, has been deposited to the Yield Supplement Account on or prior
to the Closing Date or the related Subsequent Transfer Date.
ARTICLE IV
CONDITIONS
SECTION 4.1. Conditions to Obligations of the Purchaser.
(a) Initial Receivables. The obligation of the Purchaser
to purchase the Initial Receivables is subject to the satisfaction of the
following conditions:
(i) 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.
(ii) Computer Files Marked. The Seller shall, at its own
expense, on or prior to the Closing Date, indicate in its computer
files that the Initial Receivables have been sold to the Purchaser
pursuant to this Agreement and deliver to the Purchaser the Schedule
of Initial Receivables certified by an officer of the Seller to be
true, correct and complete.
(iii) Documents to be delivered by the Seller at the
Closing.
(A) The First-Tier Initial Assignment. At the
Closing, the Seller will execute and deliver the First-Tier
Initial Assignment in substantially the form of Exhibit A-1
hereto.
(B) 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.
(C) 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 Initial
Receivables and the other property conveyed under Section
2.1(a) 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
the Initial Receivables to the Purchaser. The Seller shall
deliver a file-stamped copy, or other evidence satisfactory
to the Purchaser of such filing, to the Purchaser within ten
(10) days of the Closing Date.
(D) Other Documents. Such other documents as
the Purchaser may reasonably request.
(iv) 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.
(b) Subsequent Receivables. The obligation of the
Purchaser to purchase any Subsequent Receivables is subject to the
satisfaction of the following conditions:
(i) Representations and Warranties True. The
representations and warranties of the Seller under Section 3.2(b) with
respect to such Subsequent Receivables shall be true and correct as of
the date as of which such representations and warranties are made, and
the Seller shall have performed all obligations to be performed by it
hereunder on or prior to the related Subsequent Transfer Date.
(ii) Computer Files Marked. The Seller shall, at its own
expense, on or prior to the related Subsequent Transfer Date, indicate
in its computer files that such Subsequent Receivables have been sold
to the Purchaser pursuant to this Agreement and the related First-Tier
Subsequent Assignment and deliver to the Purchaser the related
Schedule of Subsequent Receivables certified by an officer of the
Seller to be true, correct and complete.
(iii) Documents to be delivered by the Seller on the
related Subsequent Transfer Date.
(A) The First-Tier Subsequent Assignment. On
or prior to the related Subsequent Transfer Date, the Seller
will execute and deliver the related First-Tier Subsequent
Assignment in substantially the form of Exhibit A-2 hereto.
(B) Evidence of UCC Filing. Within ten (10)
days of the related Subsequent Transfer 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 such Subsequent Receivables and the other property
conveyed under Section 2.1(b) 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 Subsequent Receivables to
the Purchaser. The Seller shall deliver a file-stamped
copy, or other evidence satisfactory to the Purchaser of
such filing, to the Purchaser within ten (10) days of the
related Subsequent Transfer Date.
(C) Officer's Certificate. The Seller shall have
delivered to the Purchaser an Officer's Certificate
confirming the satisfaction of each condition precedent
specified in this Section 4.1(b) (substantially in the
form attached as Annex A to the form of First-Tier
Subsequent Assignment attached hereto as Exhibit A-2).
(D) Other Documents. Such other documents as
the Purchaser may reasonably request.
(iv) As of the related Subsequent Transfer Date: (A) the
Seller was not insolvent and will not become insolvent as a result of
the transfer of such Subsequent Receivables on the related Subsequent
Transfer Date, (B) the Seller did not intend to incur or believe that
it would incur debts that would be beyond the Seller's ability to pay
as such debts matured, (C) such transfer was not made by the Seller
with actual intent to hinder, delay or defraud any Person and (D) the
assets of the Seller did not constitute unreasonably small capital to
carry out its business as conducted.
(v) No selection procedures believed by the Seller to be
adverse to the interests of the Purchaser, the Trust, the Noteholders
or the Certificateholders shall have been utilized in selecting the
Subsequent Receivables.
(vi) The addition of the Subsequent Receivables will not
result in a material adverse tax consequence to the Purchaser, the
Trust, the Noteholders or the Certificateholders.
(vii) All the conditions to the transfer of the Subsequent
Receivables to the Purchaser specified in Section 2.1(c) of the Sale
and Servicing Agreement shall have been satisfied.
SECTION 4.2. Conditions to Obligation of the Seller. The
obligation of the Seller to sell the Initial Receivables to the Purchaser
on the Closing Date and any Subsequent Receivables to the Purchaser on the
related Subsequent Transfer Date 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 or the related Subsequent Transfer 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
or the related Subsequent Transfer Date.
(b) Receivables Purchase Prices. (i) On or prior to the
Closing Date, the Purchaser shall deliver to the Seller the Receivables
Purchase Price, as provided in Section 2.2(a); and (ii) on or prior to each
Subsequent Transfer Date, the Purchaser shall deliver to the Seller the
related Subsequent Receivables Purchase Price, as provided in Section
2.2(b).
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 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, compact disks, 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.
SECTION 5.3. [Reserved]
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.
(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.
SECTION 5.7. Transfer of Subsequent Receivables. The Seller
agrees to transfer to the Purchaser, pursuant to Section 2.1(b), Subsequent
Receivables with an aggregate Principal Balance as of the related Cutoff
Dates approximately equal to $[ ], subject only to
the availability of such Subsequent Receivables.
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 5.5(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 Initial Receivables to the Trust on the Closing Date
and the Subsequent Receivables to the Trust on the related Subsequent
Transfer Dates 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 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 Initial Receivables set forth as Exhibit B hereto and will compare those
characteristics to the information with respect to the Initial 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 Experience", "Net Credit Loss and Repossession Experience" and
"Final Payment Receivables: Loss Experience on Returned Vehicles" 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
any 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.
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 each 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.
(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.
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:
EXHIBIT A-1
FORM OF FIRST-TIER INITIAL ASSIGNMENT
For value received, in accordance with the Purchase Agreement
dated as of January __, 1999, 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 Initial Receivables; (ii) with respect to Initial Receivables that
are Actuarial Receivables, monies due thereunder on or after the Initial
Cutoff Date (including Payaheads) and, with respect to the Initial
Receivables that are Simple Interest Receivables, monies received
thereunder on or after the Initial Cutoff Date; (iii) the security
interests in Financed Vehicles granted by Obligors pursuant to the Initial
Receivables and any other interest of the Seller in such Financed Vehicles;
(iv) rights to receive proceeds with respect to the Initial Receivables
from claims on any physical damage, theft, credit life or disability
insurance policies covering the related Financed Vehicles or related
Obligors; (v) rights to receive proceeds with respect to the Initial
Receivables from recourse to Dealers thereon pursuant to the Dealer
Agreements; (vi) all of the Seller's rights to the Receivable Files that
relate to the Initial Receivables; (vii) payments and proceeds with respect
to the Initial 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 an Initial Receivable that is a Final Payment Receivable),
guarantees and other collateral securing an Initial Receivable (other than
an Initial 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 Initial Receivables in effect
as of the Initial 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 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 Initial Receivables, the related Receivable Files,
any insurance policies or any agreement or instrument relating to any of
them.
This First-Tier Initial 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.
IN WITNESS WHEREOF, the undersigned has caused this First-Tier
Initial Assignment to be duly executed as of January __, 1999.
MITSUBISHI MOTORS CREDIT
OF AMERICA, INC.
By: _______________________
Name:
Title:
EXHIBIT A-2
FORM OF FIRST-TIER SUBSEQUENT ASSIGNMENT
For value received, in accordance with the Purchase Agreement,
dated as of January __, 1999, 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 Subsequent Receivables, with an aggregate Principal Balance of
$_______________ as of _______________, ________ (the "Subsequent Cutoff
Date"), set forth in the Schedule of Subsequent Receivables attached hereto
as Schedule A; (ii) with respect to the Subsequent Receivables that are
Actuarial Receivables, monies due thereunder on or after the Subsequent
Cutoff Date (including Payaheads) and, with respect to the Subsequent
Receivables that are Simple Interest Receivables, monies received
thereunder on or after the Subsequent Cutoff Date; (iii) the security
interests in Financed Vehicles granted by Obligors pursuant to the
Subsequent Receivables and any other interest of the Seller in Financed
Vehicles; (iv) rights to receive proceeds with respect to the Subsequent
Receivables from claims on any physical damage, theft, credit life or
disability insurance policies covering the Subsequent Financed Vehicles or
the related Obligors; (v) rights to receive proceeds with respect to the
Subsequent Receivables from recourse to Dealers thereon pursuant to Dealer
Agreements; (vi) all of the Seller's rights to the Receivable Files that
relate to the Subsequent Receivables; (vii) payments and proceeds with
respect to the Subsequent 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 Subsequent Receivable that is a Final
Payment Receivable), guarantees and other collateral securing a Subsequent
Receivable (other than a Subsequent 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
Subsequent Receivables in effect as of the Subsequent 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 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 Subsequent Receivables, the related Receivable Files, any
insurance policies or any agreement or instrument relating to any of them.
This First-Tier Subsequent Assignment is made pursuant to and
upon the representations, warranties and agreements on the part of the
undersigned contained in the Purchase Agreement (including the Officer's
Certificate of the Seller accompanying this First-Tier Subsequent
Assignment) 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.
IN WITNESS WHEREOF, the undersigned has caused this First-Tier
Subsequent Assignment to be duly executed as of _______________, ______.
MITSUBISHI MOTORS CREDIT
OF AMERICA, INC.
By: _______________________
Name:
Title:
SCHEDULE A
[SCHEDULE OF SUBSEQUENT RECEIVABLES]
ANNEX A
OFFICERS' CERTIFICATE
The undersigned officer of Mitsubishi Motors Credit of America,
Inc., a Delaware corporation (the "Seller"), does hereby certify, pursuant
to Section 4.1(b)(iii)(C) of the Purchase Agreement, dated as of January
__, 1999 (as amended, supplemented or otherwise modified and in effect from
time to time, the "Purchase Agreement"), between the Seller and MMCA Auto
Receivables, Inc., a Delaware corporation (the "Purchaser"), that all of
the conditions precedent to the transfer to the Purchaser of the Subsequent
Receivables listed on Schedule A to the First-Tier Subsequent Assignment
delivered herewith, and the other property and rights related to such
Subsequent Receivables as described in Section 2.1(b) of the Purchase
Agreement, have been satisfied on or prior to the related Subsequent
Transfer Date.
Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Purchase Agreement.
IN WITNESS WHEREOF, the undersigned have caused this certificate
to be duly executed this ______ day of _______________, ________.
By:_________________________________
Name:
Title:
EXHIBIT B
[SCHEDULE OF INITIAL RECEIVABLES]
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
Exhibit No. 10.2
January __, 1999
MMCA Auto Receivables, Inc.
6363 Katella Avenue
Cypress, California 90630-5205
Re: MMCA Auto Owner Trust 1999-1
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 January __, 1999 (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 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 1999-1 (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.
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: Executive Vice President 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.
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:
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)
-----------------------
MMCA Auto Receivables, Inc.
(Exact name of obligor as specified in its charter)
Delaware 33-0570905
(State of other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
6363 Katella Avenue
Cypress, CA 90630-5205
(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, 10006,
the State of New York and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, NY, 10045
Federal Deposit Insurance Washington, D.C. 20429
Corporation
(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.*
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.
- -------------
* Exhibit previously filed with the Securities and Exchange
Commission with Registration No. 333-32937 and incorporated herein
by reference thereto.
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 26th day of October 1998.
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By: /s/ Tadahiro Yamada
___________________________________
Name: T. Yamada
Title: Vice President
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
- ---------------------------------------------------------------------------------------------
ASSETS:
<S> <C> <C>
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
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Loans, net 4,512,135 4,375,959
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Bank premises and equipment net of accumulated
depreciation of $6,627 and $6,168, respectively 9,305 8,729
Customers' liability on acceptances 541 3,836
Accrued interest receivable 64,818 78,125
Other assets 33,441 40,705
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Total assets $7,369,471 $7,159,036
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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
Interest-bearing deposits in overseas offices (note 6) 1,989,833 1,794,506
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Total deposits: 3,860,498 3,637,292
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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
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Liabilities other than capital notes 6,301,938 6,185,748
Capital notes and subordinated debt (note 7) 313,286 277,281
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Total liabilities 6,615,224 6,463,029
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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
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Total stockholders equity 754,247 696,007
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Total liabilities and stockholder's equity $7,369,471 $7,159,036
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</TABLE>
