<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 1, 1998
REGISTRATION NO. 333-64671
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
DAIMLER-BENZ VEHICLE OWNER TRUST 1998-A
(ISSUER WITH RESPECT TO THE NOTES)
DAIMLER-BENZ VEHICLE RECEIVABLES CORPORATION
(ORIGINATOR OF THE TRUST DESCRIBED HEREIN)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 9999 13-3770955
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
</TABLE>
1201 NORTH MARKET STREET
SUITE 1406
WILMINGTON, DE 19801
(302) 426-1900
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
HARVEY S. TRAISON
DAIMLER-BENZ NORTH AMERICA CORPORATION
375 PARK AVENUE
SUITE 3001
NEW YORK, NEW YORK 10152
(212) 909-9700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
STEVEN J. MOLITOR, ESQ. ANDREW M. FAULKNER, ESQ.
MORGAN, LEWIS & BOCKIUS LLP SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
101 PARK AVENUE 919 THIRD AVENUE
NEW YORK, NY 10178-0060 NEW YORK, NY 10022-3897
(212) 309-6183 (212) 735-2853
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable on or after the effective date of the Registration Statement.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
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, other than securities offered only in connection with dividend or interest
reinvestment plans, 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 statement 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,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SECURITY(1) PRICE(1) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
% Class A-1 Asset Backed Notes.... $ 360,000,000 100% $ 360,000,000 $100,085.68(2)
- ---------------------------------------------------------------------------------------------------------------------------------
% Class A-2 Asset Backed Notes.... $ 508,000,000 100% $ 508,000,000 $141,229.66(3)
- ---------------------------------------------------------------------------------------------------------------------------------
% Class A-3 Asset Backed Notes.... $ 440,000,000 100% $ 440,000,000 $122,325.66(4)
- ---------------------------------------------------------------------------------------------------------------------------------
% Class A-4 Asset Backed Notes.... $ 241,800,000 100% $ 241,800,000 $ 67,220.40
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Total................................ $1,549,800,000 100% $1,549,800,000 $430,861.40(5)
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</TABLE>
(1) Estimated solely for purpose of calculating the registration fee.
(2) $98.34 of which has previously been paid.
(3) $98.33 of which has previously been paid.
(4) $98.33 of which has previously been paid.
(5) $295 of which has previously been paid.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL 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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED DECEMBER 1, 1998
PROSPECTUS
$1,549,800,000
DIAMLER BENZ LOGO
DAIMLER-BENZ VEHICLE OWNER TRUST 1998-A
$360,000,000 % ASSET BACKED NOTES, CLASS A-1
$508,000,000 % ASSET BACKED NOTES, CLASS A-2
$440,000,000 % ASSET BACKED NOTES, CLASS A-3
$241,800,000 % ASSET BACKED NOTES, CLASS A-4
DAIMLER-BENZ VEHICLE RECEIVABLES CORPORATION
Seller
MERCEDES-BENZ CREDIT CORPORATION
Servicer
Daimler-Benz Vehicle Owner Trust 1998-A (the "Trust") was formed pursuant to a
Trust Agreement dated as of November 1, 1998, between Daimler-Benz Vehicle
Receivables Corporation (the "Seller") and Chase Manhattan Bank Delaware, as
Owner Trustee. The Trust will issue $1,549,800,000 aggregate principal amount of
Asset Backed Notes consisting of $360,000,000 aggregate principal amount of
% Class A-1 Asset Backed Notes (the "Class A-1 Notes"), $508,000,000
aggregate principal amount of % Class A-2 Asset Backed Notes (the "Class A-2
Notes"), $440,000,000 aggregate principal amount of % Class A-3 Asset Backed
Notes (the "Class A-3 Notes") and $241,800,000 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" or the
"Class A Notes"), pursuant to an Indenture to be dated as of November 1, 1998,
between the Trust and Citibank, N.A., as Indenture Trustee. The Trust will also
issue $81,654,551.40 aggregate principal amount of Class B Asset Backed
Certificates (the "Certificates" or the "Class B Certificates"). The
Certificates are not being offered hereby.
(continued on next page)
----------------------------------------------------------------------------
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK FACTORS"
BEGINNING ON PAGE 13 HEREIN.
----------------------------------------------------------------------------
THE NOTES REPRESENT OBLIGATIONS OF THE TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN THE SELLER, THE SERVICER OR ANY OF THEIR
RESPECTIVE AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
AGGREGATE INITIAL UNDERWRITING
PRINCIPAL INTEREST FINAL PRICE TO DISCOUNT AND
AMOUNT RATE PAYMENT DATE PUBLIC(1) COMMISSION
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A-1 Notes........... $ 360,000,000 % January 3, 2000
- --------------------------------------------------------------------------------------------------------------------
Class A-2 Notes........... $ 508,000,000 % December 20, 2001
- --------------------------------------------------------------------------------------------------------------------
Class A-3 Notes........... $ 440,000,000 % January 20, 2003
- --------------------------------------------------------------------------------------------------------------------
Class A-4 Notes........... $ 241,800,000 % December 22, 2003
- --------------------------------------------------------------------------------------------------------------------
Total..................... $ 1,549,800,000 %
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------- ----------------
PROCEEDS TO
SELLERS(2)
- ---------------------------- ----------------
<S> <C>
Class A-1 Notes...........
- ---------------------------------------------------------------
Class A-2 Notes...........
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Class A-3 Notes...........
- -------------------------------------------------------------------------------------------------
Class A-4 Notes...........
- ------------------------------------------------------------------------------------------------------------------
Total.....................
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from , 1998.
(2) Before deduction of expenses estimated to be $1,196,000.00.
----------------------------------------------------------------------------
The Notes are offered subject to prior sale when, as and if issued by the Trust
and accepted by the Underwriters and subject to their right to reject orders in
whole or in part. It is expected that delivery of the Notes in book-entry form
will be made through the facilities of The Depository Trust Company, Cedel Bank,
societe anonyme, and the Euroclear System on or about .
CHASE SECURITIES INC. SALOMON SMITH BARNEY
DEUTSCHE BANK SECURITIES
J.P. MORGAN & CO.
MERRILL LYNCH &
CO.
The date of this Prospectus is , 1998.
<PAGE> 3
(continued from previous page)
The assets of the Trust will include a pool of vehicle retail installment sale
contracts and certain rights and obligations thereunder (collectively, the
"Receivables"), all monies due or received thereunder on or after November 1,
1998 (the "Cutoff Date"), the Seller's security interests in new and used
Mercedes-Benz automobiles and new and used medium- and heavy-duty trucks and
tractors manufactured by Freightliner Corporation and its subsidiaries
(collectively, "Freightliner") and used trucks and tractors and new and used
trailers manufactured by companies other than Freightliner securing the
Receivables and certain other property, as more fully described herein. The
Notes will be secured by the Collateral pursuant to the Indenture. Interest on
the Notes will accrue at the rates per annum set forth herein. Interest accrued
on the Notes for each Interest Period will be payable on the 20th day of each
month (or, if the 20th day of the month is not a Business Day, the next
following Business Day) beginning December 21, 1998 (each, a "Payment Date").
Principal of the Notes will be payable on each Payment Date and, with respect to
the Class A-1 Notes if they are still outstanding after the December 1999
Payment Date, on January 3, 2000, to the extent described herein. The rights of
Certificateholders will be subordinated to the rights of the Noteholders to the
extent described herein.
The Final Payment Date for the Class A-1 Notes will be January 3, 2000, the
Final Payment Date for the Class A-2 Notes will be the December 2001 Payment
Date, the Final Payment Date for the Class A-3 Notes will be the January 2003
Payment Date and the Final Payment Date for the Class A-4 Notes will be the
December 2003 Payment Date.
The Notes will be subject to redemption in whole, but not in part, on any
Payment Date on which the Servicer exercises its option to purchase the
Receivables, which can occur on any Payment Date with respect to which the Pool
Balance as of the end of the related Collection Period is 10% or less of the
Initial Pool Balance, at a purchase price equal to the outstanding principal
amount of the Notes and of the Certificates, in each case plus accrued and
unpaid interest thereon.
Certain persons participating in this offering may engage in transactions that
stabilize, maintain or otherwise affect the price of the Notes offered hereby,
including over-allotment transactions, stabilizing transactions, syndicate
covering transactions and penalty bids. For a description of these activities,
see "Underwriting."
AVAILABLE INFORMATION
The Seller has filed with the Securities and Exchange Commission (the
"Commission"), on behalf of the Trust, a Registration Statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Notes offered pursuant to this Prospectus. For further information, reference is
made to such Registration Statement, and the exhibits thereto, which are
available for inspection without charge at the public reference facilities of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, as well as the
Regional Offices of the Commission at 500 West Madison, Chicago, Illinois 60661,
and 7 World Trade Center, New York, New York 10048. Copies of such information
can be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Such material may
also be obtained from the World Wide Web site maintained by the Commission
(http://www.sec.gov). The Servicer, on behalf of the Trust, will also file or
cause to be filed with the Commission such periodic reports as may be required
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations of the Commission thereunder.
REPORTS TO NOTEHOLDERS
Unless and until Definitive Notes are issued under the limited
circumstances described herein, monthly and annual reports concerning the
Receivables and the Trust will be prepared by the Servicer and sent on behalf of
the Trust only to Cede & Co., as nominee of The Depository Trust Company ("DTC")
and registered holder of the Notes. Such reports will not contain audited
financial statements with respect to the Trust. The Seller does not intend to
send any of its financial reports to Noteholders. See "Description of the
Notes -- Book Entry Registration" and "-- Statements to Noteholders."
Certain of the matters discussed under the caption "The
Receivables -- Maturity and Prepayment Considerations" in this Prospectus may
constitute forward-looking statements within the meaning of Section 27A of the
Securities Act, and as such may involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Receivables to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.
<PAGE> 4
PROSPECTUS SUMMARY
This summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus. Certain capitalized terms
used in this summary are defined elsewhere in this Prospectus. See the Index of
Principal Terms for the location herein of the definitions of capitalized terms.
Issuer........................ Daimler-Benz Vehicle Owner Trust 1998-A (the
"Trust" or the "Issuer"), a Delaware business
trust established pursuant to a Trust Agreement
dated as of November 1, 1998 (as amended and
supplemented from time to time, the "Trust
Agreement") between the Seller and the Owner
Trustee.
Seller........................ Daimler-Benz Vehicle Receivables Corporation, a
wholly-owned subsidiary of Mercedes-Benz Credit
Corporation ("MBCC").
Servicer...................... MBCC (in its capacity as servicer under the
Sale and Servicing Agreement, the "Servicer"),
a wholly-owned subsidiary of Daimler-Benz North
America Corporation ("DBNA").
Indenture Trustee............. Citibank, N.A., as trustee under the Indenture
(the "Indenture Trustee").
Owner Trustee................. Chase Manhattan Bank Delaware, as trustee under
the Trust Agreement (the "Owner Trustee").
The Notes..................... The Trust will issue the Notes in an aggregate
initial principal amount of $1,549,800,000
pursuant to an Indenture to be dated as of
November 1, 1998 (as amended and supplemented
from time to time, the "Indenture"), between
the Trust and the Indenture Trustee. The Notes
will be issued in four classes consisting of:
(1) % Class A-1 Asset Backed Notes in the
aggregate initial principal amount of
$360,000,000 (the "Class A-1 Notes"), (2)
% Class A-2 Asset Backed Notes in the
aggregate initial principal amount of
$508,000,000 (the "Class A-2 Notes"), (3) %
Class A-3 Asset Backed Notes in the aggregate
initial principal amount of $440,000,000 (the
"Class A-3 Notes") and (4) % Class A-4
Asset Backed Notes in the aggregate initial
principal amount of $241,800,000 (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" or the "Class A Notes"; and
each 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, a "Class"). The Notes
will be secured by certain assets of the Trust
pursuant to the Indenture. The Notes will be
offered for purchase in minimum denominations
of $1,000 and integral multiples thereof. See
"Description of the Notes -- General."
The Certificates.............. Concurrently with the issuance of the Notes,
pursuant to the Trust Agreement, the Trust will
issue the % Class B Asset Backed
Certificates (the "Certificates" or the "Class
B Certificates"). The Certificates will be
certificates of beneficial interest evidencing
an undivided ownership interest in the Trust
Property. The Certificates will be subor-
3
<PAGE> 5
dinated to the Notes to the extent described
herein. The Certificates are not being offered
hereby and initially will be retained by the
Seller or an affiliate. Any information
contained herein relating to the Certificates
is presented solely to provide a better
understanding of the Notes.
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 initial aggregate principal amount
of the Certificates will equal $81,654,551.40.
Thereafter, the principal amount of the
Certificates will be reduced by principal
payments made on the Certificates.
Trust Assets and Collateral... The property of the Trust (the "Trust
Property") will include (i) the Receivables,
(ii) all monies due or received thereunder on
or after November 1, 1998 (the "Cutoff Date"),
(iii) the Seller's security interests in the
Financed Vehicles, (iv) the Collection Account,
the Note Distribution Account, the Certificate
Distribution Account, the Payahead Account and
the Reserve Accounts, and all money, financial
assets or other property from time to time held
in or credited to, or purchased with funds
from, any of the foregoing accounts, (v) all of
the Seller's rights to receive proceeds from
claims on physical damage, credit life and
disability insurance policies covering the
Financed Vehicles or the Obligors under the
Receivables (the "Obligors"), (vi) all of the
Seller's rights to all documents contained in
the Receivables Files, (vii) all of the
Seller's rights under the Purchase Agreement
and the Sale and Servicing Agreement, (viii)
all of the Seller's rights, if any, of recourse
against Dealers arising out of breaches by
Dealers in connection with the Receivables,
(ix) all property (including the right to
receive future Liquidation Proceeds and
Recoveries) that secures a Receivable and that
will have been acquired by or on behalf of the
Indenture Trustee, (x) the Servicing Guaranty
Agreement, and (xi) all proceeds (within the
meaning of Section 9-306 of the Uniform
Commercial Code (the "UCC")) of the foregoing.
Pursuant to the Indenture, the Trust will grant
to the Indenture Trustee for the benefit of the
Noteholders a security interest in and lien on
all of the Trust's right, title and interest
in, to and under all of the Trust Property
other than the Certificate Distribution Account
and the Class B Reserve Account and all money,
financial assets or other property from time to
time held in or credited to, or purchased with
funds from, such accounts (such Trust Property
subject to the security interest and lien under
the Indenture, collectively, the "Collateral").
See "The Trust Property."
The Receivables............... The Receivables will consist of a pool of
retail installment sale contracts secured by
new and used Mercedes-Benz automobiles and new
and used medium- and heavy-duty
4
<PAGE> 6
trucks and tractors manufactured by
Freightliner and used trucks and tractors and
new and used trailers manufactured by companies
other than Freightliner, together with all
accessions thereto (the "Financed Vehicles"),
including rights to receive all payments made
with respect to such Receivables, security
interests in the Financed Vehicles, and the
proceeds thereof. As of the Cutoff Date, the
Receivables had an aggregate outstanding
principal balance of $1,631,454,551.40 (the
"Initial Pool Balance").
The Receivables will be purchased by the Trust
from the Seller pursuant to a Sale and
Servicing Agreement, to be dated as of November
1, 1998 (as amended or supplemented from time
to time, the "Sale and Servicing Agreement"),
among the Trust, the Seller and the Servicer
providing for such purchase on or before the
date of issuance of the Notes (the "Closing
Date"). The Receivables will be purchased by
the Seller from MBCC pursuant to a Purchase
Agreement, to be dated as of November 1, 1998
(as amended or supplemented from time to time,
the "Purchase Agreement"), between the Seller
and MBCC providing for such purchase on or
before the Closing Date. The Receivables will
be selected from the Contracts owned by MBCC
based on the criteria specified in the Sale and
Servicing Agreement and described herein. No
Receivable will have a scheduled maturity later
than November 21, 2005 (the "Final Scheduled
Maturity Date"). See "The Receivables."
The "Pool Balance" means, as of any date, the
aggregate outstanding Principal Balance of the
Receivables (excluding Defaulted Receivables)
as of the close of business on such date. A
"Collection Period" with respect to a Payment
Date will be the calendar month preceding the
month in which such Payment Date occurs (or, in
the case of the initial Collection Period, the
period from the Cutoff Date to and including
the last day of the month in which the Cutoff
Date occurred).
Registration of Notes......... The Notes will be represented initially by one
or more physical notes registered in the name
of Cede & Co. ("Cede"), as nominee of DTC.
Beneficial owners of Notes may elect to hold
their Notes through DTC (in the United States)
or Cedel or Euroclear (in Europe). Transfers
within DTC, Cedel or Euroclear, as the case may
be, will be made in accordance with the usual
rules and operating procedures of the relevant
system. Cross-market transfers between persons
holding directly or indirectly through DTC in
the United States, on the one hand, and
counterparties holding directly or indirectly
through Cedel or Euroclear, on the other, will
be effected in DTC through the relevant
Depositaries of Cedel or Euroclear.
No person acquiring a beneficial ownership
interest in the Notes (a "Note Owner") will be
entitled to receive a Definitive Note, except
in certain limited circumstances. Under the
5
<PAGE> 7
terms of the Indenture, Note Owners will not be
recognized as Noteholders and will be permitted
to exercise the rights of the Noteholders only
indirectly through DTC and its participants.
See "Description of the Notes -- Definitive
Notes."
Payment Dates................. Payments of interest on and principal of the
Notes and the Certificates will be made on the
20th day of each month or, if the 20th day of
such month is not a Business Day, the next
following Business Day (each, a "Payment
Date"), commencing December 21, 1998.
Additionally, if the Class A-1 Notes are still
outstanding after the December 1999 Payment
Date, the Class A-1 Notes will be payable in
full on January 3, 2000. Payments will be made
to (a) holders of record of the Class A Notes
(the "Class A Noteholders", "Noteholders" or
"Holders") as of the Record Date for
Noteholders and (b) holders of record of the
Certificates (the "Class B Certificateholders"
or the "Certificateholders") as of the Record
Date for Certificateholders. 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 or Wilmington,
Delaware are authorized or obligated by law,
regulation or executive order to be closed. A
"Record Date" is, in the case of the Notes, the
day immediately preceding each Payment Date,
or, in the case of the Certificates or if
Definitive Notes are issued, the last Business
Day of the calendar month preceding a Payment
Date.
Interest Rates................ The Class A-1 Notes will bear interest at the
rate of % per annum (the "Class A-1
Rate"), the Class A-2 Notes will bear interest
at the rate of % per annum (the "Class A-2
Rate"), the Class A-3 Notes will bear interest
at the rate of % per annum (the "Class A-3
Rate") and the Class A-4 Notes will bear
interest at the rate of % per annum (the
"Class A-4 Rate"). The Class B Certificates
will bear interest at the rate of % per
annum (the "Class B Rate"). The interest rates
on the various classes of Notes and on the
Certificates are referred to herein
collectively as the "Interest Rates."
Interest...................... Interest on the outstanding principal amount of
each Class of the Notes and on the Certificates
will accrue at the applicable Interest Rate (a)
with respect to the Class A-1 Notes, from and
including the Closing Date (in the case of the
first Payment Date) or from and including the
most recent Payment Date on which interest has
been paid, to but excluding the following
Payment Date and (b) with respect to the Class
A-2 Notes, the Class A-3 Notes, the Class A-4
Notes and the Class B Certificates, from and
including the Closing Date (in the case of the
first Payment Date) or from and including the
20th day of the calendar month preceding each
Payment Date to but excluding the 20th day of
the following calendar month. Interest on the
Class A-1 Notes will be calculated on the basis
of the actual number of days elapsed and a
360-day year. Interest on the Class A-2 Notes,
the
6
<PAGE> 8
Class A-3 Notes, the Class A-4 Notes and the
Class B Certificates will be calculated on the
basis of a 360-day year consisting of twelve
30-day months. No payments of interest will be
made on the Class B Certificates on any Payment
Date until all interest then due on the Class A
Notes has been paid. See "Description of the
Notes -- Interest."
Principal..................... Principal of the Notes will be payable on each
Payment Date in an amount equal to the
Principal Distribution Amount (as defined
below) for such Payment Date (to the extent
that funds are available therefor, as described
herein) and will be paid to the Holders of the
various Classes of Notes sequentially to the
earliest maturing Class then outstanding until
the principal amount of each successive Class
of Notes is paid in full. Accordingly, on each
Payment Date, an amount equal to the Principal
Distribution Amount will be paid to the Holders
of the Class A-1 Notes (the "Class A-1
Noteholders") until the Class A-1 Notes are
paid in full; then, to the Holders of the Class
A-2 Notes (the "Class A-2 Noteholders") until
the Class A-2 Notes are paid in full; then, to
the Holders of the Class A-3 Notes (the "Class
A-3 Noteholders") until the Class A-3 Notes are
paid in full; then, to the Holders of the Class
A-4 Notes (the "Class A-4 Noteholders") until
the Class A-4 Notes are paid in full; and
finally, to the Class B Certificateholders
until the Class B Certificates are paid in
full.
Principal of the Notes and of the Certificates
will be payable on each Payment Date in an
aggregate amount equal to the Principal
Distribution Amount for such Payment Date to
the extent described in "Description of the
Notes -- The Indenture Cash Flows." The
"Principal Distribution Amount" for a Payment
Date will be the sum of (i) the Scheduled
Principal for such Payment Date plus (ii) any
outstanding Principal Carryover Shortfall as of
the close of business on the preceding Payment
Date; provided, however, that the Principal
Distribution Amount for a Payment Date shall
not exceed the outstanding aggregate principal
balance of the Notes and the Certificate
Balance on such Payment Date; and provided,
further, that, on the Final Payment Date for
each Class of Notes or for the Certificates,
the amount required to be deposited in the Note
Distribution Account to pay principal of the
Notes and the amount required to be deposited
in the Certificate Distribution Account to pay
the Certificate Balance, as applicable, will
include the amount necessary (after giving
effect to the other amounts to be deposited in
the Note Distribution Account and the
Certificate Distribution Account, as
applicable, on such Payment Date and allocable
to principal) to reduce the outstanding
principal amount of such Class of Notes or the
Certificate Balance, as applicable, to zero.
Notwithstanding the foregoing, on each Payment
Date occurring on or after the date on which
the maturity dates of the
7
<PAGE> 9
Notes have been accelerated following the
occurrence of an Event of Default, any payments
of principal of the Notes will be paid (A) to
the Class A-1 Noteholders, the Class A-2
Noteholders, the Class A-3 Noteholders and the
Class A-4 Noteholders pro rata in proportion to
the respective outstanding principal balances
of the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes and the Class A-4 Notes
until all of such Classes have been paid in
full and (B) following payment in full of the
Class A Notes, to the Class B
Certificateholders until the Class B
Certificates have been paid in full. See
"Description of the Notes -- The Indenture Cash
Flows -- Monthly Withdrawals from the
Collection Account."
To the extent not previously paid or
accelerated, the outstanding principal amount
of (i) the Class A-1 Notes will be payable on
January 3, 2000 (the "Class A-1 Final Payment
Date"), (ii) the Class A-2 Notes will be
payable on the December 2001 Payment Date (the
"Class A-2 Final Payment Date"), (iii) the
Class A-3 Notes will be payable on the January
2003 Payment Date (the "Class A-3 Final Payment
Date"), (iv) the Class A-4 Notes will be
payable on the December 2003 Payment Date (the
"Class A-4 Final Payment Date") and (v) the
Class B Certificates will be payable on the May
2006 Payment Date (the "Class B Final Payment
Date" and, collectively with the foregoing, the
"Final Payment Dates").
A "Prepaid Receivable" is a Receivable which is
prepaid in full or accelerated under certain
circumstances or with respect to which the
related Financed Vehicle is repossessed and
sold or becomes a total loss.
Optional Redemption........... The Notes and the Certificates will be redeemed
in whole, but not in part, on any Payment Date
on which the Servicer exercises its option to
purchase the Receivables, which can occur on
any Payment Date with respect to which the Pool
Balance as of the end of the related Collection
Period is 10% or less of the Initial Pool
Balance, at a purchase price equal to the
unpaid outstanding principal amount of the
Notes and the Certificates, in each case plus
accrued and unpaid interest thereon. See
"Description of the Notes -- Optional
Redemption."
Reserve Accounts.............. Separate reserve accounts will be established
for the Class A Notes and for the Class B
Certificates (the "Class A Reserve Account" and
the "Class B Reserve Account," respectively,
and collectively, the "Reserve Accounts").
Amounts on deposit in the Class A Reserve
Account will be available on any Payment Date
to cover (i) the Total Servicing Fee and (ii)
shortfalls in distributions of interest on and
principal of the Class A Notes. Amounts on
deposit in the Class B Reserve Account will be
available on any Payment Date to cover (i) the
Total Servicing Fee and (ii) shortfalls in
distributions of interest on and principal of
the Class B Certificates. Amounts on deposit
from time to time in the
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Reserve Accounts will be invested in Permitted
Investments maturing on or prior to the next
succeeding Payment Date; provided, however,
that to the extent permitted by the Rating
Agencies, amounts on deposit in the Reserve
Accounts may be invested in Permitted
Investments that mature later than the next
succeeding Payment Date.
Class A Reserve Initial Deposit. The Class A
Reserve Account will be funded by the Seller
with cash or Permitted Investments maturing on
or prior to the initial Payment Date and
having, on the Closing Date, a value of
$40,786,363.79 (the "Class A Reserve Initial
Deposit"). The Class A Reserve Initial Deposit
will be augmented on each Payment Date by the
deposit in the Class A Reserve Account of
Available Funds to the extent necessary to
maintain the amount in the Class A Reserve
Account at an amount equal to the Specified
Class A Reserve Balance (as defined below).
Amounts in the Class A Reserve Account on any
Payment Date (reduced by the amount of all
distributions made on such Payment Date) in
excess of the Specified Class A Reserve Balance
for such Payment Date will be released for
deposit into the Class B Reserve Account or, to
the extent the amount on deposit therein is
equal to the Specified Class B Reserve Balance
(as defined below), payment to the Seller.
Specified Class A Reserve Balance. The
"Specified Class A Reserve Balance", with
respect to the Closing Date, will equal
$40,786,363.79, and with respect to any Payment
Date, will equal $57,100,909.30, except where
on any Payment Date (i) the annualized average
for the preceding three Collection Periods of
the ratios of net losses (that is, the net
balances of all Receivables which are
charged-off in the applicable Collection
Period, less any Liquidation Proceeds or
Recoveries received in such Collection Period)
to the Pool Balance as of the first day of each
such Collection Period exceeds 2.25% or (ii)
the average for the preceding three Collection
Periods of the ratios of (a) the sum of (1) the
balance of Receivables that are delinquent 61
days or more plus (2) the balance of
Receivables for any Contracts relating to
repossessed Vehicles which, in both cases, have
not been charged-off to (b) such outstanding
Pool Balance exceeds 4.25%, then the Specified
Class A Reserve Balance for such Payment Date
will equal $65,258,182.06. See "Description of
the Notes -- Subordination of the Class B
Certificates; Reserve Accounts."
The Seller may reduce the Specified Class A
Reserve Balance provided that (a) both Rating
Agencies confirm in writing to the Indenture
Trustee and to the Seller prior to such
reduction that such reduction will not result
in a lowering of or a withdrawal of the
then-current ratings of any Class of the Notes
and (b) an Opinion of Counsel is delivered to
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the Indenture Trustee to the effect that the
proposed change will not adversely affect the
status of the Notes as debt.
Specified Class B Reserve Balance. The
"Specified Class B Reserve Balance" will
initially be zero and remain zero for so long
as the Seller retains the Class B Certificates.
At such time, if any, as the Seller determines
to sell the Class B Certificates, the Specified
Class B Reserve Balance will be an amount
determined by the Seller in consultation with
the Rating Agencies in order to achieve the
desired rating for the Class B Certificates.
Collection Account;
Priority of Payments........ If MBCC is the Servicer, collections received
may be paid into an account in the name of the
Indenture Trustee (the "Collection Account") on
the Payment Date so long as (i) the obligation
of the Servicer to make required remittances
under the Sale and Servicing Agreement on each
Payment Date is unconditionally guaranteed by
DBNA pursuant to the Servicing Guaranty
Agreement (as defined herein) and DBNA will
have a rating of at least P-1 from Moody's and
at least A-1 from S&P with respect to its
short-term obligations and (ii) no Event of
Servicing Termination (as defined herein) shall
have occurred. Alternatively, even if all of
the foregoing conditions are not satisfied,
such collections may be paid into the
Collection Account on the Payment Date if the
Rating Agencies confirm in writing that such
failure to satisfy the foregoing conditions
will not affect the rating of any Class of
Notes. If neither of the above occurs, the
Servicer will be required to remit collections
received with respect to the Receivables within
two Business Days of receipt thereof to the
Collection Account.
On each Payment Date, upon receipt of
instructions from the Servicer, the Indenture
Trustee will withdraw funds on deposit in the
Collection Account for the related Collection
Period (including funds, if any, deposited
therein from the Reserve Accounts and the
Payahead Account) following the withdrawal
therefrom of the amount necessary to reimburse
the Servicer for Advances previously made by
the Servicer to the extent due and payable to
the Servicer on such Payment Date and will
apply such funds on each Payment Date as
follows (in the priority indicated): (i) the
Total Servicing Fee to the Servicer, (ii) the
Accrued Interest on each Class of Notes into
the Note Distribution Account, (iii) the
Accrued Interest on the Certificates into the
Certificate Distribution Account, (iv) the
Principal Distribution Amount with respect to
the Notes into the Note Distribution Account,
(v) the Principal Distribution Amount with
respect to the Certificates into the
Certificate Distribution Account, (vi) the
amount necessary to bring the amounts on
deposit in the Class A Reserve Account up to
the Specified Class A Reserve Balance, (vii)
the amount necessary to bring the amounts on
deposit in the Class B Reserve Account up to
the Specified
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Class B Reserve Balance and (viii) any
remaining funds to the Seller.
Servicing Fee................. A monthly fee for servicing the Receivables
(the "Servicing Fee") will be payable to the
Servicer on each Payment Date in an amount
equal to the product of one-twelfth of the
Servicing Rate and the Pool Balance as of the
first day of the related Collection Period and
will be payable generally out of collections on
the Receivables prior to distributions to
Noteholders and the Certificateholders. The
"Servicing Rate" will equal 1.0% per annum. As
additional servicing compensation, the Servicer
will also be entitled to any administrative
fees and charges and all late payment fees and
charges paid with respect to the Receivables
other than fees paid in connection with the
extension or deferral of payments on a
Receivable (the "Supplemental Servicing Fee,"
and together with the Servicing Fee payable on
any particular Payment Date, the "Total
Servicing Fee"). So long as it does not cause
to occur a reduction in the rating of any Class
of the Class A Notes, the Servicing Fee for a
Collection Period (together with any portion of
any Servicing Fee or any Supplemental Servicing
Fee that remains unpaid from prior Collection
Periods) will be paid at the beginning of such
Collection Period out of collections for such
Collection Period. See "Description of the
Transfer and Servicing Agreements -- Servicing
Compensation."
Advances...................... 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 a Receivable (other
than a Purchased Receivable) are less than the
Scheduled Payment in respect of such
Receivable, the Payahead Balance for such
Receivable will be applied by the Indenture
Trustee to the extent of the shortfall, and
such Payahead Balance will be reduced
accordingly. On the related Payment Date, the
Servicer will make an advance to the extent of
any remaining shortfall in respect of such
Receivable (such advance, an "Advance");
provided that no successor Servicer shall be
required to make Advances. Subsequent
collections on Receivables will be used to
reimburse the Servicer for Advances to the
extent described herein. The Servicer will not
be required to make any Advance to the extent
that it does not expect to recoup the Advances
from subsequent collections or recoveries. See
"Description of the Notes -- The Indenture Cash
Flows" and "-- Advances."
Repurchases and Purchases
of Certain Receivables...... The Seller will be obligated to repurchase any
Receivable if the interest of the Trust therein
is materially and adversely affected by a
breach of any representation or warranty made
by the Seller with respect to the Receivable
and if the breach has not been cured by the
last day of the Collection Period which
includes the 60th day after the date of
discovery by or
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<PAGE> 13
notice to the Seller of the breach.
Simultaneously with the Seller's repurchase
from the Trust, MBCC will be obligated to
repurchase the Receivable from the Seller
pursuant to the Purchase Agreement. See
"Description of the Transfer and Servicing
Agreements -- Mandatory Repurchase of
Receivables."
The Servicer will be obligated to purchase any
Receivable if, among other things, the Servicer
(i) extends the date for final payment by the
Obligor of such Receivable beyond the last day
of the Collection Period immediately preceding
the Final Scheduled Maturity Date, (ii) changes
the amount or the number of the scheduled
payments of such Receivable (except for certain
credit-related reasons) or (iii) fails to
maintain a perfected security interest in the
related Financed Vehicle in accordance with the
Servicer's customary servicing procedures. See
"Description of the Transfer and Servicing
Agreements -- Servicing Procedures."
Tax Status.................... In the opinion of Morgan, Lewis & Bockius LLP,
for U.S. Federal income tax purposes, the Notes
will be characterized as debt, and the Trust
will not be characterized as an association (or
a publicly traded partnership) taxable as a
corporation. Each Noteholder, by the acceptance
of a Note, will agree to treat the Notes as
indebtedness. See "Certain Federal Income Tax
Consequences."
Legal Investment.............. The Class A-1 Notes are structured to be
eligible for purchase by money market funds
under Rule 2a-7 under the Investment Company
Act of 1940, as amended. A money market fund
should consult its legal advisors regarding the
eligibility of the Class A-1 Notes under Rule
2a-7 and whether an investment by the money
market fund in the Class A-1 Notes satisfies
the money market fund's investment policies and
objectives.
Rating of the Notes........... It is a condition to the issuance of the Notes
that the Class A-1 Notes be rated in the
highest short-term rating category, and that
the Class A-2 Notes, the Class A-3 Notes and
the Class A-4 Notes each be rated in the
highest long-term rating category, in each case
by each of Moody's Investors Service, Inc.
("Moody's") and Standard & Poor's, a division
of The McGraw-Hill Companies ("S&P," and
together with Moody's, each, a "Rating
Agency"). There can be no assurance that a
rating will not be lowered or withdrawn by a
Rating Agency if circumstances so warrant.
ERISA Considerations.......... Subject to the considerations discussed under
"ERISA Considerations," the Notes may, in
general, be purchased by or on behalf of
employee benefit plans subject to ERISA. Any
employee benefit plan fiduciary considering a
purchase of Notes should, among other things,
consult with legal counsel regarding the
availability of a statutory or administrative
exemption from the prohibited transaction rules
of ERISA and the Code.
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RECENT DEVELOPMENTS
On May 7, 1998, Daimler-Benz, DaimlerChrysler AG, Chrysler Corporation, a
Delaware corporation ("Chrysler"), and Chrysler Merger Corporation, a newly
formed Delaware corporation ("Chrysler Merger Sub"), entered into a business
combination agreement (as amended and restated, the "Combination Agreement").
Pursuant to the Combination Agreement: (i) on November 6, 1998, the offer (the
"Daimler-Benz Exchange Offer") to holders of no par value Ordinary Shares of
Daimler-Benz (the "Daimler-Benz Ordinary Shares") and the holders of American
Depositary Shares of Daimler-Benz, each representing one Daimler-Benz Ordinary
Share (the "Daimler-Benz ADSs"), to exchange such shares for Ordinary Shares, no
par value, of DaimlerChrysler AG (the "DaimlerChrysler Ordinary Shares") was
completed, and DaimlerChrysler AG accepted for exchange approximately 98.2% of
the Daimler-Benz Ordinary Shares (including Daimler-Benz Ordinary Shares
represented by Daimler-Benz ADSs); and (ii) on November 12, 1998, Chrysler
Merger Sub was merged with and into Chrysler (the "Chrysler Merger"). As a
result of the Chrysler Merger, Chrysler became a wholly owned subsidiary of
DaimlerChrysler AG. The final step in the "merger-of-equals" transaction between
Daimler-Benz and Chrysler will be the merger of Daimler-Benz with and into
DaimlerChrysler AG (the "Daimler-Benz Merger"). As a result of the Daimler-Benz
Merger, the stockholders of Daimler-Benz (other than DaimlerChrysler AG) will
automatically become stockholders of DaimlerChrysler AG. Consummation of the
Daimler-Benz Merger is pending the resolution of three actions by purported
stockholders of Daimler-Benz filed with the regional court in Stuttgart,
Germany. The Daimler-Benz Exchange Offer, the Chrysler Merger and the
Daimler-Benz Merger, collectively the "Transactions," will have the effect of
combining the respective businesses, stockholder groups, managements and other
constituencies of Chrysler and Daimler-Benz. As a result of the Transactions,
the former stockholders of Chrysler and Daimler-Benz AG will own all the issued
and outstanding DaimlerChrysler Ordinary Shares.
RISK FACTORS
LIMITED LIQUIDITY
There currently is no secondary market for the Notes, and there is no
assurance that one will develop. The Underwriters expect, but will not be
obligated, to make a market in each Class of Notes. There is no assurance that
any such market will develop or, if one does develop, that it will provide
liquidity of investment or will continue for the life of the related Notes.
CERTAIN LEGAL ASPECTS -- THE RECEIVABLES
The Seller will cause financing statements to be filed with the appropriate
governmental authorities to perfect the interest of the Trust in the
Receivables, and the Servicer will hold the Receivables, either directly or
through subservicers, as custodian for the Indenture Trustee and the Trust
following the sale and assignment of the Receivables to the Trust. The
Receivables will not be segregated, stamped or otherwise marked to indicate that
they have been sold to the Trust. If, through inadvertence or otherwise, another
party purchases (or takes a security interest in) one or more Receivables for
new value in the ordinary course of business and takes possession of the
Receivables without actual knowledge of the Trust's interest, the purchaser (or
secured party) will acquire an interest in such Receivables superior to the
interest of the Trust and as a result reductions in the amounts of distributions
to Noteholders could result. See "Certain Legal Aspects of the
Receivables -- Rights in the Receivables."
The Seller will assign its security interests in the Financed Vehicles to
the Trust in connection with the sale and assignment of the Receivables to the
Trust. Following the sale and assignment of the Receivables to the Trust, the
Servicer will hold the certificates of title or ownership relating to the
Financed Vehicles, either directly or through subservicers, as custodian for the
Indenture Trustee
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and the Trust. The certificates of title or ownership will not be endorsed or
otherwise amended to identify the Trust as the new secured party. Because the
Trust will not be identified as the secured party on any certificates of title
or ownership, the security interest of the Trust in a Financed Vehicle (i) might
be defeated through fraud, forgery, negligence or error and (ii) may not be
perfected in every state. See "Certain Legal Aspects of the
Receivables -- Security Interests in the Financed Vehicles."
CERTAIN LEGAL ASPECTS -- BANKRUPTCY CONSIDERATIONS
The Seller has taken steps in structuring the transactions contemplated
hereby that are intended to ensure that the voluntary or involuntary application
for relief by MBCC under title 11 of the United States Code (the "Bankruptcy
Code") or similar state laws ("Insolvency Laws") will not result in
consolidation of the assets and liabilities of the Seller with those of MBCC.
These steps include the creation and maintenance of the Seller as a separate,
limited-purpose subsidiary pursuant to a certificate of incorporation containing
certain limitations (including restrictions on the nature of the Seller's
business and a restriction on the Seller's ability to commence a voluntary case
or proceeding under any Insolvency Law without the prior unanimous affirmative
vote of all of its directors). However, there can be no assurance that the
activities of the Seller would not result in a court concluding that the assets
and liabilities of the Seller should be consolidated with those of MBCC in a
proceeding under any Insolvency Law. 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, then delays in
distributions on the Notes could occur or reductions in the amounts of such
distributions could result. See "The Seller."
MBCC and the Seller intend that the transfer of the Receivables by MBCC to
the Seller constitute a "true sale" of the Receivables to the Seller. If the
transfer constitutes such a "true sale," the Receivables and the proceeds
thereof would not be part of MBCC's bankruptcy estate under Section 541 of the
Bankruptcy Code should it become the subject of a bankruptcy case subsequent to
the transfer of the Receivables to the Seller.
In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir. 1993),
cert. denied, 114 S. Ct. 554 (1993), the United States Court of Appeals for the
Tenth 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 bankruptcy estate in a bankruptcy of the seller. If
MBCC or the Seller were to become subject to a bankruptcy proceeding and a court
were to follow the Octagon court's reasoning, Noteholders might experience
delays in payment or possibly losses on their investment in the Notes. Counsel
to the Seller has advised the Seller that the reasoning of the Octagon case
appears to be inconsistent with other precedent. In addition, the Permanent
Editorial Board of the UCC has issued an official commentary (PEB Commentary No.
14) which characterizes the Octagon court's interpretation of Article 9 of the
UCC as erroneous. Such commentary states that nothing in Article 9 is intended
to prevent the transfer of ownership of accounts or chattel paper. See "The
Seller."
MATURITY AND PREPAYMENT CONSIDERATIONS
The weighted average life of each Class of Notes may be reduced by
prepayments on Receivables because the rate of payment of principal of each
Class of Notes depends on the rate of payment (including prepayments) of the
principal balance of the Receivables. The Receivables are prepayable by the
Obligors at any time without penalty. 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 optional purchase right. See "The Receivables -- Maturity and
Prepayment Considerations."
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The rate of prepayments on the Receivables may be influenced by a variety
of economic, social and other factors in addition to those described in the
preceding paragraph.
MBCC does not generally maintain records of the historical prepayment
experience of its portfolio of Contracts (as defined herein). No assurance can
be given that prepayments on the Receivables will conform to any historical
experience, and no prediction can be made as to the actual prepayment rates
which will be experienced on the Receivables. Noteholders will bear all
reinvestment risk resulting from the rate of prepayment of the Receivables and
corresponding payments on the Notes. There can be no assurance that the
Noteholders will be able to reinvest funds in an instrument with a comparable
rating and interest rate in the event the Notes are prepaid.
It is expected that the final payment of each Class of Notes will occur on
or prior to its respective Final Payment Date because of the considerations set
forth above. However, if sufficient funds are not available to pay any Class of
Notes in full on or prior to its respective Final Payment Date, an Event of
Default will occur and final payment of such Class of Notes could occur later
than such date.
LIMITED ASSETS; DEFICIENCIES FROM SALE UPON INSOLVENCY OF SELLER
Limited Assets. The Trust does not have, nor is it permitted or expected
to have, any significant assets or sources of funds other than the Receivables
and other Trust Property, including the right to receive payments under certain
circumstances from the Reserve Accounts. The Notes represent obligations solely
of the Trust. The Notes will not be insured or guaranteed by the Seller, the
Servicer, the Indenture Trustee, the Owner Trustee or any other person or
entity. Consequently, Noteholders must rely for payment of the Notes upon
payments on the Receivables (to the extent described herein) and, if and to the
extent available, amounts on deposit in the Class A Reserve Account.
To the extent of any shortfalls in the Trust's receipt of payments on the
Receivables, amounts on deposit in the Class A Reserve Account will be available
on any Payment Date to cover the payment of the Total Servicing Fee, the Accrued
Interest on the Notes and the Principal Distribution Amount with respect to the
Notes. See "Description of the Notes -- The Indenture Cash Flows" and
"-- Subordination of the Class B Certificates; Reserve Accounts." If the amounts
on deposit in the Class A Reserve Account were exhausted, the Trust would depend
solely on current payments on the Receivables (to the extent available to make
payments to the Noteholders), Advances by the Servicer, Liquidation Proceeds of
Defaulted Receivables and Recoveries to make the Total Required Payment. See
"Description of the Notes -- The Indenture Cash Flows." Although the Class B
Certificates will be subordinate to the Class A Notes to the extent described
herein, distributions of interest due to the Class B Certificateholders will not
be subordinate to distributions of principal due to the Class A Noteholders.
Moreover, the Class A Noteholders will not be entitled pursuant to the Indenture
to distributions from amounts on deposit in the Class B Reserve Account.
Although the Indenture authorizes the Indenture Trustee to sell the
Receivables in accordance with the Indenture following an acceleration of the
Notes upon an Event of Default, there is no assurance that the market value of
the Receivables will at any time be equal to or greater than the aggregate
outstanding principal amount of the Notes. Therefore, upon an Event of Default,
there can be no assurance that sufficient funds will be available to repay
Noteholders in full. In addition, the amount of principal required to be
distributed to Noteholders, in the aggregate under the Indenture on any Payment
Date, other than a Final Payment Date with respect to any Class of Notes, will
generally be limited to amounts available to be deposited in the Note
Distribution Account. Therefore, the failure to pay principal of a Class of
Notes may not result in the occurrence of an Event of Default until the Final
Payment Date for that Class of Notes.
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GEOGRAPHIC CONCENTRATION
Economic conditions in the states where the Obligors under the Contracts
reside may affect the delinquency, credit loss and repossession experience of
the Trust with respect to the Contracts. Based on the Pool Balance as of the
Cutoff Date, 15.88% of the Receivables will have been originated in Texas,
10.04% in California and 8.63% in Florida. Accordingly, adverse economic
conditions or other factors affecting Texas, California or Florida in particular
could adversely affect the delinquency, credit loss or repossession experience
of the Trust. No other state, by billing addresses of Obligors, constituted more
than 6% of the aggregate principal balance of the Receivables as of the Cutoff
Date.
EVENT OF DEFAULT CONSIDERATIONS
If the maturity dates of the Notes have been accelerated following the
occurrence of an Event of Default, the Notes may be prepaid in advance of their
respective maturity dates. The acceleration of the maturity dates following the
occurrence of an Event of Default will also change the order of priority for the
payment of principal on the different Classes of Notes. If the maturity dates of
the Notes have been accelerated following the occurrence of an Event of Default,
any payments of principal will be paid (i) to the Class A-1 Noteholders, the
Class A-2 Noteholders, the Class A-3 Noteholders and the Class A-4 Noteholders
pro rata in proportion to the respective principal balances of the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes until
all of such Classes have been paid in full and (ii) then to the Class B
Certificateholders until the Class B Certificates are paid in full.
BOOK ENTRY REGISTRATION
The Notes of each Class will be represented initially by one or more
physical notes registered in the name of Cede as nominee of DTC. No Note Owner
will be entitled to receive a Definitive Note except in certain limited
circumstances. Under the terms of the Indenture, Note Owners will not be
recognized as Noteholders, and will be permitted to exercise the rights of the
Noteholders only indirectly through DTC and its participants. See "Description
of the Notes -- Book Entry Registration" and "-- Definitive Notes."
RISK OF YEAR 2000
MBCC has conducted an evaluation of the actions necessary in order to
ensure that its computer systems will be able to function without disruption
with respect to the application of dating systems in the year 2000. As a result
of these evaluations, MBCC is engaged in the process of upgrading and replacing
certain of its information and other computer systems so as to be able to
operate without disruption due to year 2000 issues. MBCC's remedial actions are
scheduled to be completed during the second quarter of 1999. However, there can
be no assurance that the remedial actions being implemented by MBCC will be able
to be completed by the time necessary to avoid dating systems problems. In
addition, disruptions with respect to the computer systems of vendors or
customers, which systems are outside the control of MBCC, could impair the
ability of MBCC to obtain necessary materials or products or to sell to or
service their customers. Disruptions of MBCC's computer systems, or the computer
systems of MBCC's vendors or customers, could have a material adverse effect
upon MBCC's ability to service the Receivables.
THE TRUST
GENERAL
The Issuer, Daimler-Benz Vehicle Owner Trust 1998-A, is a business trust
formed under the laws of the State of Delaware pursuant to the Trust Agreement
for the transactions described in this Prospectus. The Trust will hold title to
the Receivables, issue the Notes and the Certificates and
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<PAGE> 18
distribute payments on the Notes and the Certificates. The Trust's principal
offices are in the State of Delaware in care of Chase Manhattan Bank Delaware,
as Owner Trustee, at the address listed below. See "-- The Owner Trustee."
The Trust will initially be capitalized through the issuance of the Notes
and the Certificates. The Trust will purchase the Receivables from the Seller
pursuant to the Sale and Servicing Agreement in exchange for the proceeds of the
Notes and the issuance to the Seller or an affiliate thereof of the
Certificates. The Seller or an affiliate initially will retain the Certificates.
The Seller may not transfer or assign the Certificates unless it receives an
Opinion of Counsel as to certain tax matters.
The Servicer will service the Receivables, either directly or through
subservicers, and will be paid the Total Servicing Fee out of collections on the
Receivables, prior to distributions to Noteholders and Certificateholders.
Certain other expenses of the Trust will be paid by the Servicer or by the
Seller as provided in the Sale and Servicing Agreement. See "Description of the
Transfer and Servicing Agreements -- Servicing Procedures," "-- Servicing
Compensation" and "Description of the Notes -- The Indenture Cash Flows."
The Servicer will hold the Receivables and the certificates of title or
ownership relating to the Financed Vehicles as custodian for the Indenture
Trustee and the Trust. However, the Receivables will not be marked or stamped to
indicate that they have been sold to the Trust, and the certificates of title or
ownership for the Financed Vehicles will not be endorsed or otherwise amended to
identify the Trust as the new secured party. Under such circumstances and in
certain jurisdictions, the Trust's security interest in the Receivables and the
Financed Vehicles may be defeated or may not be perfected. See "Certain Legal
Aspects of the Receivables."
The Trust will not acquire any assets other than the Trust Property and it
is not anticipated that the Trust will have any need for additional capital
resources. Because the Trust will have no operating history upon its
establishment and will not engage in any business other than acquiring and
holding the Trust Property and issuing and distributing payments on the Notes
and on 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 Class A Reserve Account from time
to time is insufficient, the Noteholders would have to look principally to the
Receivables that are not Defaulted Receivables, the proceeds from the
repossession and sale of Financed Vehicles which secure Defaulted Receivables
and the proceeds from recourse, if any, against Dealers with respect to the
Receivables for payment of the Notes. In such event, certain factors, such as
the Trust's not having perfected security interests in the Financed Vehicles in
all states, may affect the Trust's ability to repossess and sell the collateral
securing the Receivables, and thus may reduce the proceeds to be distributed to
Noteholders. See "Description of the Notes -- The Indenture Cash Flows" and
"Certain Legal Aspects of the Receivables."
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of the
Closing Date:
<TABLE>
<S> <C>
Class A-1 Notes............................................. $ 360,000,000.00
Class A-2 Notes............................................. 508,000,000.00
Class A-3 Notes............................................. 440,000,000.00
Class A-4 Notes............................................. 241,800,000.00
Class B Certificates........................................ 81,654,551.40
-----------------
Total............................................. $1,631,454,551.40
=================
</TABLE>
17
<PAGE> 19
THE OWNER TRUSTEE
Chase Manhattan Bank Delaware is the Owner Trustee under the Trust
Agreement. The Owner Trustee's Corporate Trust Office is located at 1201 North
Market Street, Wilmington, Delaware 19801. The Seller, the Servicer and their
respective affiliates may have other banking relationships with the Owner
Trustee and its affiliates in the ordinary course of their businesses.
THE TRUST PROPERTY
The Notes will be secured by certain of the Trust Property. The Trust
Property will include (i) the Receivables, (ii) all monies due or received
thereunder on or after the Cutoff Date, (iii) all of the Seller's security
interests in the Financed Vehicles, (iv) the Collection Account, the Note
Distribution Account, the Certificate Distribution Account, the Reserve Accounts
and the Payahead Account, and all money, financial assets or other property from
time to time held in or credited to, or purchased with funds from, any of the
foregoing accounts, (v) all of the Seller's rights to receive proceeds from
claims on physical damage, credit life and disability insurance policies
covering the Financed Vehicles or from the Obligors, (vi) all of the Seller's
right to all documents contained in the Receivable Files, (vii) all of the
Seller's rights under the Purchase Agreement, including the right of the Seller
to cause MBCC to repurchase Receivables from time to time from the Seller under
certain circumstances specified therein, and under the Sale and Servicing
Agreement, (viii) all of the Seller's rights, if any, of recourse against
Dealers arising out of breaches by Dealers in connection with the Receivables,
(ix) all property (including the right to receive future Liquidation Proceeds
and Recoveries) that secures a Receivable and that will have been acquired by or
on behalf of the Indenture Trustee, (x) the Servicing Guaranty Agreement, and
(xi) all proceeds (within the meaning of Section 9-306 of the UCC) of the
foregoing. Pursuant to the Indenture, the Trust will grant to the Indenture
Trustee for the benefit of the Noteholders a security interest in and lien on
all of the Trust's right, title and interest in, to and under all of the Trust
Property other than the Certificate Distribution Account and the Class B Reserve
Account and all money, financial assets or other property from time to time held
in or credited to, or purchased with funds from, such accounts (such Trust
Property subject to the security interest and lien under the Indenture,
collectively, the "Collateral").
MBCC'S VEHICLE CONTRACT PORTFOLIO
GENERAL
MBCC currently purchases motor vehicle retail installment contracts (the
"Motor Vehicle Contracts") directly from authorized Mercedes-Benz motor vehicle
dealers ("Mercedes-Benz Dealers") throughout the United States. MBCC currently
purchases commercial vehicle retail installment contracts for, and retail loans
evidenced by notes secured by, medium- and heavy-duty trucks, tractors and
trailers (the "Commercial Vehicle Contracts," and together with the Motor
Vehicle Contracts, the "Contracts") directly from authorized Freightliner
commercial vehicle dealers ("Commercial Vehicle Dealers" and, together with
Mercedes-Benz Dealers, "Dealers") throughout the United States. The Contracts
are originated by the Dealers who regularly sell such contracts to MBCC as well
as to other finance sources. MBCC purchases Contracts in accordance with its
established underwriting procedures, subject to the terms of an agreement with
each Dealer (each, a "Dealer Agreement").
Motor Vehicle Contracts. Each Dealer Agreement with respect to Motor
Vehicle Contracts, among other things, obligates the Dealer to repurchase any
Motor Vehicle Contract for the outstanding principal balance if the Dealer
breaches certain representations and warranties. Each Dealer warrants with
respect to Motor Vehicle Contracts that (i) all Motor Vehicle Contracts are
genuine and the only instruments executed for the related motor vehicles (each,
a "Motor Vehicle") described therein, and are and will continue free from
defenses and off-sets; (ii) all statements
18
<PAGE> 20
contained therein will be true, and unpaid balances shown therein are correct;
(iii) all amounts and numbers submitted to MBCC will be correct and accurately
reflect the true nature of the agreement between the Obligor and the Dealer;
(iv) the transactions conform to all applicable laws and regulations; (v) the
contents of any form used other than MBCC's will be legally sufficient and
enforceable; (vi) the Motor Vehicles shall have been delivered and accepted and
the Dealer will comply with all of its obligations with respect thereto; (vii)
each instrument will evidence a valid reservation of title to, or first lien
upon, the Motor Vehicle and will have been so filed and recorded, if permitted
or required by law, as to be effective against all persons and to preserve the
priority of such lien; and (viii) such Motor Vehicle shall be insured for fire,
theft, combined additional coverage, and collision in a manner and with
insurance carriers satisfactory to MBCC. Upon breach of any representation or
warranty made by a Dealer with respect to a Motor Vehicle Contract, pursuant to
the Dealer Agreements, MBCC has a right of recourse against such Dealer to
require it to repurchase such Contract. Generally, in determining whether to
exercise such right, MBCC considers the prior performance of the Dealer and
other business and commercial considerations. MBCC, as Servicer, is obligated to
enforce such rights with respect to Dealer Agreements relating to the
Receivables in accordance with such customary practices, and the right to any
proceeds received upon such enforcement will be conveyed to the Trust under the
Sale and Servicing Agreement. All terms of the Dealer Agreements which are
material to the Certificateholders are described in this Prospectus.
MBCC purchases Motor Vehicle Contracts relating to new Motor Vehicles
manufactured by Daimler-Benz and Motor Vehicle Contracts relating to used Motor
Vehicles manufactured by Daimler-Benz and other automobile manufacturers. MBCC
applies the same underwriting standards to its purchase of Motor Vehicle
Contracts whether or not the Motor Vehicle Contract relates to a Motor Vehicle
manufactured by Daimler-Benz. See "-- Underwriting" below.
Mercedes-Benz of North America, Inc. ("MBNA") imports, distributes, markets
and supports a select line of Mercedes-Benz Motor Vehicles to all 50 states in
the United States. In 1997, MBNA sold 122,265 vehicles. MBNA currently has 320
Mercedes-Benz Dealers in the United States, 10 authorized service-only dealers
and one company-owned dealership, Mercedes-Benz of Manhattan.
Commercial Vehicle Contracts. Each Dealer Agreement with respect to
Commercial Vehicle Contracts, among other things, obligates the Dealer to
repurchase any Commercial Vehicle Contract for the outstanding principal balance
if the Dealer breaches certain representations and warranties. The
representations and warranties typically relate to the origination of the
Commercial Vehicle Contract and the security interest in the related medium- or
heavy-duty truck, tractor or trailer (each, a "Commercial Vehicle," and the
Commercial Vehicles, together with Motor Vehicles, the "Vehicles") and not to
the creditworthiness of the Obligors under the Commercial Vehicle Contract or
the collectability of the Contract.
MBCC purchases Commercial Vehicle Contracts relating to new and used
medium- and heavy-duty trucks and tractors manufactured by Freightliner and
Commercial Vehicle Contracts relating to used trucks and tractors and new and
used trailers manufactured by companies other than Freightliner. See
"-- Underwriting" below.
Freightliner Corporation (together with its subsidiaries, "Freightliner"),
headquartered in Portland, Oregon, is a subsidiary of DBNA and the leading
manufacturer of Class 8 trucks (33,000 pounds gross vehicle weight and above) in
North America. Freightliner entered the Business Class 6/7 (26,000 to 33,000
pounds gross vehicle weight) market in 1991 and has experienced growing success
in this market. Freightliner trucks are distributed in North America through a
network of 250 independent dealers. Freightliner acquired the heavy-truck
business of Ford Motor Company in 1997, renamed Sterling Truck Corporation
("Sterling"), and the first Sterling trucks began to be produced in April 1998.
Sterling produces a range of trucks in Classes 6 to 8. There are
19
<PAGE> 21
219 Sterling dealers in North America, and they all provide parts, service and a
customer support network for Sterling and Freightliner.
UNDERWRITING
Motor Vehicle Contracts. MBCC's National Car Office ("NCO"), which is
located in Atlanta, Georgia, oversees and coordinates the activities of the car
financing operations throughout the United States. The NCO maintains three
regional offices that are dedicated to supporting and servicing Dealers and
customers throughout the United States. Through these regional offices, which
are located in Atlanta, Georgia, Wilmington, Delaware and Portland, Oregon, MBCC
purchases Motor Vehicle Contracts from Dealers using consistent underwriting
policies and procedures. Certain Receivables were originated by Dealers in
accordance with MBCC's requirements under existing agreements with such Dealers
and were purchased in accordance with MBCC's underwriting standards which
emphasize, among other factors, the applicant's willingness and ability to repay
according to the terms of the Receivable.
Applications received from Dealers must be signed by the applicant and must
contain, among other information, the applicant's name, address, residential
status, source and amount of monthly income and the amount of monthly rent or
mortgage payment. All applications are checked for completeness and entered into
MBCC's on-line credit applications system. In conjunction with the entering of
the application information, credit bureau reports on the customer are collected
and attached electronically to the application form.
A preliminary review of the application is then performed and, if deemed
necessary, additional information is requested from the Dealer. When all
relevant information is obtained, the credit analysis commences. At a minimum,
this analysis includes: (i) a review of credit bureau reports, including the
timeliness of payment history and the amount of payments; (ii) budget analysis,
including such ratios as Motor Vehicle Contract payment to income and total debt
payment to total income; (iii) verification of the value of the Motor Vehicle if
the credit request is for a used Motor Vehicle; and (iv) analysis of employment
history, with particular attention to time spent with current employer. The
credit decision is based upon the information described above as well as the
applicant's credit score as obtained from a statistically derived credit scoring
process and other qualitative considerations. The final credit decision is made
based upon the degree of credit risk perceived and the amount of credit
requested.
After analysis, the credit decision is communicated to the Dealer. If the
credit is accepted, and the applicant agrees to the terms of the Contract, the
Contract is funded.
Commercial Vehicle Contracts. MBCC's National Truck Office ("NTO") is
headquartered in Lisle, Illinois, near Chicago. This operation provides staff
and resources dedicated exclusively to support Freightliner and, beginning in
May 1998, Sterling customers and dealers throughout the United States.
NTO provides a wide range of financial services to Freightliner and
Sterling dealers in the United States. New business consists primarily of the
purchase of retail installment and lease contracts resulting from the sale of
new and used Freightliner and Sterling medium- and heavy-duty trucks and to a
lesser extent, used truck equipment of other manufacturers sold through
Freightliner and Sterling and working capital loans to authorized Freightliner
and Sterling dealerships. All the underwriting, collections, remarketing and
customer service functions are performed centrally at NTO.
Beginning in May 1998, NTO began providing financial services for Sterling
trucks, a new line of medium- and heavy-duty trucks, resulting from the recent
purchase by Freightliner of the Ford Motor Company's heavy-duty truck division,
which is now named Sterling Truck Corporation. The Sterling line offers a wide
variety of models for both vocational and on-highway use. The operations for
NTO's Sterling segment are structured similarly to the operations for the
Freightliner segment.
20
<PAGE> 22
MBCC's underwriting standards emphasize each prospective Obligor's ability
to pay and creditworthiness as well as the asset value of each Commercial
Vehicle that secures the Commercial Vehicle Contract. Prior to its purchase of
Commercial Vehicle Contracts, MBCC reviews credit applications from the
Obligors. All loan applications are forwarded by the Dealers to NTO. Once the
application is received, credit bureau reports are obtained. Dun and Bradstreet
reports are obtained for applicants that are corporations. Employment
verifications are completed according to specified procedures. Direct credit
verification is made for references not included in the credit bureau or Dun and
Bradstreet reports. Applicant information, including financial statements and
any direct credit references, are distributed to a credit analyst for review and
analysis. After reviewing the information along with other information such as
advances and credit history, the analyst will reach a credit decision. For
certain large fleet transactions, a more comprehensive review of the transaction
is performed. This review includes, but is not limited to, a review of: the
customer and Dealer; traffic lanes and products hauled; market segment data;
guarantor information; and existing fleet characteristics. The NTO has
established a number of credit authority levels within the organization.
SERVICING AND COLLECTION
MBCC measures delinquency by the number of days elapsed from the date a
payment is due under the Contracts (the "Due Date"). MBCC considers an account
to be past due or delinquent when the Obligor has an overdue balance in excess
of a predetermined minimum amount. MBCC generally begins collection activities
with respect to delinquent Contracts on the 11th day after the Due Date of the
scheduled payment. MBCC 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.
MBCC's collectors are assigned to specific Obligors 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 Contract becomes between 60 to 90 days delinquent. Repossession is
carried out pursuant to specific procedures adopted by MBCC.
Any deficiencies remaining after repossession and sale of the related
Vehicle after the full charge-off of the related Contract are pursued by MBCC 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
Motor Vehicle Contracts. Each Motor Vehicle Contract requires the Obligor
to maintain specific levels of physical damage insurance during the term of the
Contract. At the time of purchase, the Dealer and the Obligor sign a statement
indicating that the level of insurance required by MBCC is in place as well as
providing the name and address of the insurance company. However, on an ongoing
basis, MBCC does not monitor the insurance coverage on the Motor Vehicles to
ensure that such coverage is maintained. In the event that the Servicer is
notified that such insurance coverage is not maintained, the Servicer has the
right, but is not obligated, to declare the Contract to be in default. The
Servicer is not obligated, and does not intend, to purchase required insurance
on any Financed Vehicle and charge the Obligor for the cost of such insurance if
the Obligor fails to do so.
Commercial Vehicle Contracts. Each Commercial Vehicle Contract requires
the Obligor to obtain physical damage insurance covering loss or damage to the
Commercial Vehicle, except in the case of certain fleet customers which are
permitted to be self-insured in accordance with MBCC's customary standards.
Except for Contracts for such fleet customers, the Dealer Agreements include a
requirement that the Dealers provide MBCC with written confirmation that there
is physical damage insurance acceptable to MBCC covering each Commercial Vehicle
at the time that MBCC
21
<PAGE> 23
purchases the Commercial Vehicle Contracts from the Dealers. If an Obligor
required to maintain physical damage insurance fails to maintain the required
insurance, MBCC will, upon receipt of notice of the Obligor's failure, contact
the Obligor in an attempt to correct the Obligor's failure.
DELINQUENCY AND LOSS EXPERIENCE
Set forth below is certain information concerning MBCC's portfolio of
Contracts, including Contracts previously sold which MBCC continues to service.
The information shown below for 1998 and 1997 does not include receivables
generated under a program directed at first time buyers of used Commercial
Vehicles. This program was initiated by MBCC in 1996 and the receivables
generated thereunder are reflected in the information shown for 1996, but are
not material in amount for such year. There will be no receivables in the Trust
generated under this program. There is no assurance that the delinquency,
repossession or loss experience of the Receivables will be comparable to MBCC's
experience shown in the following tables.
DELINQUENCY EXPERIENCE OF THE MOTOR VEHICLE PORTFOLIO(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT DECEMBER 31,
----------------------- -----------------------------------------------
MOTOR VEHICLES 1998 1997 1997 1996 1995 1994
- -------------- ---------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Gross Balance Outstanding
at End of Period........ $2,243,847 $1,703,597 $1,792,325 $1,402,642 $1,086,082 $961,463
Gross Balance Past Due as
a Percentage of Gross
Balance
31-60 Days.............. 1.82% 2.22% 2.28% 2.20% 2.05% 1.62%
61-90 Days.............. 0.29 0.64 0.75 0.27 0.22 0.34
91 Days or More......... 0.56 0.57 0.77 0.28 0.25 0.23
---------- ---------- ---------- ---------- ---------- --------
Total............ 2.67% 3.43% 3.80% 2.75% 2.52% 2.19%
========== ========== ========== ========== ========== ========
</TABLE>
- ---------------
(1) The period of delinquency is based on the number of days payments are
contractually past due. Percentages are calculated by dividing the gross
remaining balance past due by the gross balances of the portfolio at the end
of the period.
22
<PAGE> 24
NET CREDIT LOSS AND REPOSSESSION EXPERIENCE OF MOTOR VEHICLE PORTFOLIO(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------------- ------------------------------------------------------
MOTOR VEHICLES 1998 1997 1997 1996 1995 1994
- -------------- ---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Principal Amount
Outstanding............ $1,814,124 $1,367,213 $1,458,556 $1,148,024 $906,045 $820,045
Average Principal Amount
Outstanding............ $1,622,533 $1,249,185 $1,291,186 $1,004,975 $849,791 $794,985
Number of Contracts
Outstanding............ 78,275 62,385 65,548 53,714 44,867 40,962
Average Number of
Contracts
Outstanding............ 71,545 57,602 59,215 48,275 43,092 38,618
Net Losses(2)............ $ 10,449 $ 6,593 $ 9,117 $ 6,815 $ 5,920 $ 4,599
Number of Repossessions
as a Percentage of the
Average Number of
Contracts
Outstanding(3)......... 1.96%(4) 1.91%(4) 2.01% 1.43% 1.17% 1.15%
Net Losses as a
Percentage of Principal
Amount Outstanding..... 0.77%(4) 0.64%(4) 0.63% 0.59% 0.65% 0.56%
Net Losses as a
Percentage of Average
Principal Amount
Outstanding............ 0.86%(4) 0.70%(4) 0.71% 0.68% 0.70% 0.58%
</TABLE>
- ---------------
(1) All amounts and percentages except as indicated are based on the principal
balances of the Motor Vehicle contracts net of unearned finance and other
charges. Averages are computed by taking a simple average of month-end
outstandings for each period presented.
(2) Net Losses are equal to the total aggregate principal balance (including
accrued interest up to the time of repossession) determined to be
uncollectible in the period plus all costs of repossession and disposal less
recoveries received.
(3) Number of Repossessions means the number of repossessed Motor Vehicles in a
given period.
(4) Annualized rate. The nine months ended September 30, 1998 are not
necessarily indicative of a full year's actual results.
MBCC's loss experience for its Motor Vehicle contract portfolio is
dependent upon general economic conditions, receivables levels, the number of
repossessions, the amount outstanding at the time of repossession and the resale
value of the repossessed vehicles.
Higher losses in the Motor Vehicle contract portfolio in 1998 are due in
part to an increase in the frequency of defaults due to general economic
conditions affecting consumer debt.
23
<PAGE> 25
DELINQUENCY EXPERIENCE OF THE COMMERCIAL VEHICLE PORTFOLIO(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT DECEMBER 31,
----------------------- -------------------------------------------------
COMMERCIAL VEHICLES 1998 1997 1997 1996 1995 1994
- ------------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gross Balance
Outstanding at End of
Period................ $2,361,322 $1,816,829 $1,922,437 $1,968,912 $1,528,290 $1,232,260
Gross Balance Past Due
as a Percentage of
Gross Balance
31-60 Days............ 4.59% 3.92% 4.28% 4.86% 3.36% 1.49%
61-90 Days............ 1.47 1.15 1.59 1.55 0.89 0.19
91 Days or More....... 2.15 2.03 1.85 2.17 2.62 1.61
---------- ---------- ---------- ---------- ---------- ----------
Total.......... 8.21% 7.10% 7.72% 8.58% 6.87% 3.29%
========== ========== ========== ========== ========== ==========
</TABLE>
- ---------------
(1) The period of delinquency is based on the number of days payments are
contractually past due. Percentages are calculated by dividing the gross
remaining balance past due by the gross balances of the portfolio at the end
of the period.
NET CREDIT LOSS AND REPOSSESSION EXPERIENCE OF COMMERCIAL VEHICLE PORTFOLIO(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------------- -----------------------------------------------
COMMERCIAL VEHICLES 1998 1997 1997 1996 1995 1994
- ------------------- ---------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Principal Amount Outstanding......... $1,718,659 $1,376,114 $1,429,856 $1,520,517 $1,198,800 $976,000
Average Principal Amount
Outstanding........................ $1,562,811 $1,321,908 $1,343,896 $1,348,810 $1,072,077 $850,808
Number of Contracts
Outstanding........................ 41,864 33,200 34,463 39,271 31,231 24,429
Average Number of Contracts
Outstanding........................ 37,122 33,589 33,720 35,196 27,271 21,202
Net Losses(2)........................ $ 38,984 $ 25,693 $ 38,038 $ 15,204 $ 5,297 $ 6,340
Number of Repossessions as a
Percentage of the Average Number of
Contracts Outstanding(3)........... 5.41%(4) 5.52%(4) 5.69% 4.46% 2.91% 1.82%
Net Losses as a Percentage of
Principal Amount Outstanding....... 3.02%(4) 2.49%(4) 2.66% 1.00% 0.44% 0.65%
Net Losses as a Percentage of Average
Principal Amount Outstanding....... 3.33%(4) 2.59%(4) 2.83% 1.13% 0.49% 0.75%
</TABLE>
- ---------------
(1) All amounts and percentages except as indicated are based on the principal
balances of the Commercial Vehicle contracts net of unearned finance and
other charges. Averages are computed by taking a simple average of month-end
outstandings for each period presented.
(2) Net Losses are equal to the total aggregate principal balance (including
accrued interest up to the time of repossession) determined to be
uncollectible in the period plus all costs of repossession and disposal less
recoveries received.
(3) Number of Repossessions means the number of repossessed Commercial Vehicles
in a given period.
(4) Annualized rate. The nine months ended September 30, 1998 are not
necessarily indicative of a full year's actual results.
MBCC's loss experience for its Commercial Vehicle contract portfolio is
dependent upon general economic conditions, receivables levels, the number of
repossessions, the amount outstanding at the time of repossession, and the
resale value of repossessed vehicles. MBCC believes that fluctuations in
delinquencies, repossessions and losses on its Commercial Vehicle contract
portfolio generally follow cycles in the overall business environment.
Delinquencies, repossessions and losses are particularly sensitive to adverse
factors affecting the U.S. industrial sector, because that sector generates a
significant portion of the freight tonnage hauls.
24
<PAGE> 26
Higher losses in the Commercial Vehicle contract portfolio in 1997 and 1998
are due in part to adverse conditions affecting the U.S. heavy-duty truck
industry, including increased freight rate competition and a relative
overcapacity in the number of freight carriers versus the tonnage hauled,
combined with a decline in MBCC's Commercial Vehicle resale values. The
performance of the Commercial Vehicle contract portfolio for 1997 and 1998 was
also negatively impacted by the burden put on MBCC's Commercial Vehicle
collection and remarketing functions resulting from the significant growth and
diversification achieved in the Commercial Vehicle contract portfolio over the
periods presented. In 1998, MBCC has enhanced the collection and remarketing
functions to better service the existing portfolio. MBCC's underwriting
standards have remained constant over all years presented.
THE RECEIVABLES
SELECTION CRITERIA
The Receivables were purchased by MBCC from Dealers in the ordinary course
of business in accordance with MBCC's underwriting standards. The Receivables
were selected from the MBCC portfolio by several criteria, including the
following: (i) each Receivable was secured by a new or used Mercedes-Benz Motor
Vehicle or one or more new or used Commercial Vehicles; (ii) each Receivable had
an annual percentage rate ("APR") of at least 8.25% and not more than 13.00%;
(iii) each Receivable had a remaining maturity as of the Cutoff Date of not more
than 84 months, and an original maturity of not more than 85 months; (iv) each
Receivable had a remaining balance (net of unearned precomputed finance charges,
as of the Cutoff Date) of not more than $5,617,494.16 and not less than $217.25
as of the Cutoff Date; (v) as of the Cutoff Date, no Motor Vehicle Receivable
was more than 30 days delinquent and no Commercial Vehicle Receivable was more
than 60 days delinquent; (vi) no Financed Vehicle had been repossessed as of the
Cutoff Date; (vii) each Receivable is a Fully Amortizing Receivable or a Balloon
Receivable; (viii) each Receivable was originated prior to November 1, 1998;
(ix) no Obligor was, as of the Cutoff Date, to the knowledge of MBCC, the
subject of a proceeding under the Bankruptcy Code; (x) each Receivable was
originated in the United States by a Dealer in connection with the retail sale
of one or more Financed Vehicles in the ordinary course of such Dealer's
business; and (xi) the Obligor under each Receivable had a current billing
address in the United States as of the Cutoff Date. "Fully Amortizing
Receivables" are Receivables that provide for monthly payments that fully
amortize the amount financed over its original term to maturity. "Balloon
Receivables" are Receivables that provide for monthly payments except that a
larger payment becomes due on the final maturity date for such Receivables.
CERTAIN CHARACTERISTICS
The composition of the Receivables, geographical distribution, distribution
by APR, distribution by outstanding balance and distribution by remaining
maturity of the Receivables, as of Cutoff Date, are set forth in the following
tables.
COMPOSITION OF THE RECEIVABLES
<TABLE>
<CAPTION>
MOTOR COMMERCIAL
VEHICLES VEHICLES TOTAL
------------------------ -------------------------- --------------------------
<S> <C> <C> <C>
Aggregate Principal Balance........ $911,330,437.70 $720,124,113.70 $1,631,454,551.40
Percentage of Total Aggregate
Principal Balance.............. 55.86% 44.14% 100.00%
Number of Receivables.............. 29,670 9,479 39,149
Percentage of Total Number of
Receivables.................... 75.79% 24.21% 100.00%
Average Remaining Principal
Balance.......................... $30,715.55 $75,970.47 $41,672.96
</TABLE>
25
<PAGE> 27
<TABLE>
<CAPTION>
MOTOR COMMERCIAL
VEHICLES VEHICLES TOTAL
------------------------ -------------------------- --------------------------
<S> <C> <C> <C>
Average Original Amount Financed... $34,403.39 $87,096.57 $47,161.79
(Range).......................... $2,500.00 to $185,000.02 $6,600.00 to $6,476,493.00 $2,500.00 to $6,476,493.00
Weighted Average APR............... 9.76% 10.92% 10.27%
(Range).......................... 8.25% to 13.00% 8.25% to 13.00% 8.25% to 13.00%
Weighted Average Original Term to
Maturity......................... 56.43 months 56.44 months 56.43 months
(Range).......................... 8 months to 85 months 3 months to 84 months 3 months to 85 months
Weighted Average Remaining Term to
Maturity......................... 46.74 months 47.32 months 47.00 months
(Range).......................... 1 month to 84 months 1 month to 84 months 1 month to 84 months
</TABLE>
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES(1)
<TABLE>
<CAPTION>
PERCENTAGE
OF AGGREGATE
PRINCIPAL BALANCE
-----------------
<S> <C>
Alabama..................................................... 1.59%
Arkansas.................................................... 1.40
California.................................................. 10.04
Connecticut................................................. 1.26
Florida..................................................... 8.63
Georgia..................................................... 5.04
Illinois.................................................... 5.17
Indiana..................................................... 1.31
Kentucky.................................................... 1.04
Louisiana................................................... 3.13
Maryland.................................................... 5.02
Massachusetts............................................... 1.40
Michigan.................................................... 1.40
Mississippi................................................. 1.35
Missouri.................................................... 2.15
New Jersey.................................................. 2.14
New York.................................................... 3.41
North Carolina.............................................. 3.55
Ohio........................................................ 2.01
Oklahoma.................................................... 2.12
Pennsylvania................................................ 2.66
Tennessee................................................... 3.75
Texas....................................................... 15.88
Virginia.................................................... 2.99
Other(2).................................................... 11.56
------
Total....................................................... 100.00%
======
</TABLE>
- ---------------
(1) Based on the addresses of the Obligors as reflected on the records of MBCC.
(2) No other state accounts for more than 1% of the initial outstanding Pool
Balance.
26
<PAGE> 28
DISTRIBUTION BY APR OF THE RECEIVABLES
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF AGGREGATE OF AGGREGATE
APR RANGE (%) RECEIVABLES PRINCIPAL BALANCE PRINCIPAL BALANCE
- ------------- ----------- ----------------- -----------------
<S> <C> <C> <C>
8.250% to 8.999%.......................... 9,094 $ 341,213,481.59 20.91%
9.000% to 9.999%.......................... 13,044 460,698,447.96 28.24
10.000 to 10.999%......................... 7,246 351,642,307.25 21.55
11.000% to 11.999%........................ 5,225 274,458,054.44 16.82
12.000% to 12.999%........................ 4,106 184,293,408.73 11.30
13.00%.................................... 434 19,148,851.43 1.17
------ ----------------- ------
Total(1)........................ 39,149 $1,631,454,551.40 100.00%
====== ================= ======
</TABLE>
- ---------------
(1) Percentages may not add to 100.00% due to rounding.
DISTRIBUTION BY OUTSTANDING
BALANCE OF THE RECEIVABLES
<TABLE>
<CAPTION>
PERCENTAGE
OUTSTANDING NUMBER OF AGGREGATE OF AGGREGATE
BALANCES RECEIVABLES PRINCIPAL BALANCE PRINCIPAL BALANCE
- ----------- ----------- ----------------- -----------------
<S> <C> <C> <C>
$19,999.99 and Less....................... 7,962 $ 110,584,156.67 6.78%
$20,000.00 to $39,999.99.................. 16,722 495,750,385.15 30.39
$40,000.00 to $59,999.99.................. 7,076 337,720,046.01 20.70
$60,000.00 to $79,999.99.................. 3,346 234,613,098.84 14.38
$80,000.00 to $99,999.99.................. 2,919 260,461,666.06 15.96
$100,000.00 to $149,999.99................ 867 95,074,426.79 5.83
$150,000.00 to $249,999.99................ 126 23,241,167.41 1.42
$250,000.00 to $499,999.99................ 82 29,022,087.33 1.78
$500,000.00 to $999,999.99................ 38 25,789,481.05 1.58
$1,000,000.00 and Greater................. 11 19,198,036.09 1.18
------ ----------------- ------
Total........................... 39,149 $1,631,454,551.40 100.00%
====== ================= ======
</TABLE>
27
<PAGE> 29
DISTRIBUTION BY REMAINING MATURITY
OF THE RECEIVABLES
<TABLE>
<CAPTION>
RANGE OF
REMAINING TERM PERCENTAGE OF
TO MATURITY NUMBER OF AGGREGATE AGGREGATE
(IN MONTHS) RECEIVABLES PRINCIPAL BALANCE PRINCIPAL BALANCE
- -------------- ----------- ----------------- -----------------
<S> <C> <C> <C>
1 to 12 718 $ 22,483,607.77 1.38%
13 to 24 2,131 63,079,591.89 3.87
25 to 36 6,064 195,500,431.66 11.98
37 to 48 10,810 475,261,516.45 29.13
49 to 60 18,971 843,326,239.21 51.69
61 to 72 354 27,539,701.72 1.69
73 to 84 101 4,263,462.70 0.26
------ ----------------- ------
Total 39,149 $1,631,454,551.40 100.00%
====== ================= ======
</TABLE>
Based on the Initial Pool Balance, approximately 57.53% of the total number
of Receivables, and approximately 70.13% of the Pool Balance, relate to new
Vehicles. Approximately 42.47% of the total number of Receivables, and
approximately 29.87% of the Pool Balance as of the Cutoff Date, relate to used
Vehicles. Additionally, approximately 39.76% of the total number of Receivables
included in the Trust, and approximately 48.54% by principal balance of the
Receivables included in the Trust, relate to Balloon Receivables.
PAYMENTS ON THE RECEIVABLES
MBCC generally allocates payments received on all of the Receivables
according to the "actuarial" method. The actuarial method provides for
amortization of the loan over a series of fixed level monthly installments.
However, Balloon Receivables provide for monthly payments consisting of monthly
installments except that a larger payment becomes due on the final maturity date
for such Receivables. Each monthly installment is deemed to consist of an amount
of interest equal to a percentage 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 is subject to a late
payment penalty.
Notwithstanding that scheduled payments are allocated by MBCC in accordance
with the actuarial method, in the event of a Prepaid Receivable, the amount
owing by the Obligor will be determined by considering that previous payments on
the Receivable were allocated according to the "simple interest" or "Rule of
78's" method. Unlike the actuarial method, the simple interest method treats
each monthly payment as including 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, the simple interest method provides that 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, under the simple
interest method, if an obligor pays a fixed monthly installment before its
scheduled 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, under the simple interest method, if an obligor pays a fixed monthly
installment after its scheduled 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.
28
<PAGE> 30
Many of the Receivables generally also provide that, in the event of a
Prepaid Receivable, if the amount owing by the Obligor determined by the "Rule
of 78's" would be more favorable to the Obligor, the amount owing may be
determined in accordance with such Rule.
Because of the method of determining the amount owing by the Obligor in the
event of a Prepaid Receivable, the amount received or receivable from the
Obligor upon such Receivable might not in certain cases be equal to the full
Principal Balance of the Receivable as reflected on the books of the Trust
together with a full month's interest on such Principal Balance at the APR of
the Receivable. Such cases generally would be limited to circumstances in which
the Obligor generally had been making payments of the monthly amount owed on the
Receivable earlier than the date scheduled for such monthly payment.
"Principal Balance" means, with respect to any Receivable as of any date,
the Amount Financed minus the sum of: (i) that portion of all Scheduled Payments
due on or prior to such date and, with respect to periods prior to the initial
Collection Period, the amount indicated in such Receivable as required to be
paid by the Obligor in each such period, whether or not paid, allocable to
principal in accordance with the actuarial method, and (ii) any prepayment in
full applied by the Servicer to reduce the unpaid principal balance of such
Receivable; provided, however, that 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 becomes a Defaulted Receivable.
"Pool Balance" means, as of any date, the aggregate outstanding Principal
Balance of the Receivables (excluding Defaulted Receivables) as of the close of
business on such date. The "Amount Financed" in respect of a Receivable means
the amount originally advanced under such Receivable toward the purchase price
of the related Financed Vehicle and related costs. "Scheduled Payment" means,
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 by the Servicer in accordance
with the Sale and Servicing Agreement or any rescheduling in any insolvency or
similar proceeding).
The Receivables are prepayable by the Obligors at any time without penalty.
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 or 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, including the
fact that if an Obligor sells or otherwise transfers a Financed Vehicle, the
related Receivable must be repaid in full.
MATURITY AND PREPAYMENT CONSIDERATIONS
Prepayments in full on Receivables will have the effect of reducing the
weighted average life of the Notes, while delinquencies by Obligors under the
Receivables, as well as extensions on the Receivables, will have the effect of
increasing the weighted average life of the Notes except to the extent that the
Servicer has made Advances with respect to such delinquent Receivables. The
Receivables may be prepaid 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. MBCC
does not generally maintain records of the historical prepayment experience of
its Contract portfolio. 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, because 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.
29
<PAGE> 31
It is generally recognized by the consumer automobile and commercial
vehicle finance industry that the average actual maturity of a vehicle loan
portfolio tends to be less than the average stated contractual maturity. The
rate of prepayments on the Receivables may be influenced by a variety of
economic, social and other factors. Any reinvestment risk resulting from the
rate of prepayments of the Receivables and the distribution of such prepayments
to Noteholders will be borne entirely by the Noteholders. In addition, early
retirement of the Notes may be effected by the exercise of the option of the
Servicer, or any successor to the Servicer, to purchase all of the Receivables
remaining in the Trust when the Pool Balance as of the end of the related
Collection Period is 10% or less of the Initial Pool Balance. See "Description
of the Notes -- Optional Redemption."
Prepayments on motor vehicle receivables 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.
The tables captioned "Percent of Initial Note Principal Balance at Various
ABS Percentages" (each, an "ABS Table") have been prepared based on the
following assumptions: (a) the Receivables prepay in full at the specified
constant percentage of ABS monthly, with no defaults, losses or repurchases, (b)
each scheduled monthly payment on the Receivables is made on the last day of
each month and each month has 30 days, (c) payments on the Notes are made on
each Payment Date (and each such date is assumed to be the 20th day of each
applicable month), (d) the balance in the Class A Reserve Account on each
Payment Date is equal to the Specified Class A Reserve Balance, and (e) the
Servicer does not exercise its option to purchase the Receivables. The pool of
Receivables has an assumed cutoff date of the Cutoff Date. The ABS Tables
indicate the projected weighted average life of each Class of Notes and set
forth the percent of the initial principal amount of each Class of 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 (i) the Fully Amortizing Receivables have
been aggregated into hypothetical pools with all of the Fully Amortizing
Receivables within each such pool having the following characteristics and (ii)
the level scheduled monthly payment for each such pool (which is based on its
principal balance, weighted average Interest Rate, weighted average original
term to maturity and weighted average remaining term to maturity as of the
Cutoff Date) will be such that each pool will be fully amortized by the end of
its remaining term to maturity.
<TABLE>
<CAPTION>
RANGE OF WEIGHTED WEIGHTED
REMAINING WEIGHTED AVERAGE AVERAGE
LEVEL TERM TO AGGREGATE AVERAGE ORIGINAL TERM REMAINING TERM
PAYMENT MATURITY PRINCIPAL INTEREST TO MATURITY TO MATURITY
POOL (IN MONTHS) BALANCE RATE (IN MONTHS) (IN MONTHS)
- ------- --------------- --------------- -------- ------------- --------------
<S> <C> <C> <C> <C> <C>
1 0 to 12 $ 3,522,539.71 9.72% 19 9
2 13 to 24 28,118,210.77 9.65% 31 20
3 25 to 36 90,890,894.15 9.94% 40 31
4 37 to 48 230,942,747.50 10.41% 53 44
5 49 to 60 470,006,409.48 10.13% 60 55
6 Greater than 60 16,085,153.39 10.77% 75 71
---------------
$839,565,955.00
===============
</TABLE>
30
<PAGE> 32
The ABS Tables also assume that the principal amounts of the Balloon
Receivables have been aggregated into hypothetical balloon pools with all of the
Balloon Receivables within each pool having the following characteristics and
that the principal amount is due at the maturity of the pool.
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED WEIGHTED
RANGE OF AVERAGE AVERAGE AVERAGE
REMAINING ORIGINAL REMAINING ORIGINAL
TERM TO AGGREGATE WEIGHTED TERM TERM TO AMORTIZATION
BALLOON MATURITY PRINCIPAL AVERAGE TO MATURITY MATURITY TERM
POOL (IN MONTHS) BALANCE APR (IN MONTHS) (IN MONTHS) (IN MONTHS)(1)
- ------- --------------- --------------- -------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
1 0 to 12 $ 18,961,068.06 9.22% 33 7 80
2 13 to 24 34,961,381.12 9.72% 46 19 86
3 25 to 36 104,609,537.51 9.72% 51 31 87
4 37 to 48 244,318,768.95 10.41% 58 43 84
5 49 to 60 373,319,829.73 10.62% 61 55 84
6 Greater than 60 15,718,011.03 10.83% 75 65 92
---------------
$791,888,596.40
===============
</TABLE>
- ---------------
(1) Weighted average original amortization term is the amortization term of the
receivable used to determine monthly payment amount (excluding balloon
payment).
The information included in the following tables represents forward-looking
statements and involves risks and uncertainties that could cause actual results
to differ materially from those in the forward-looking statements. The actual
characteristics and performance of the Receivables will differ from the
assumptions used in constructing each ABS Table. The assumptions used are
hypothetical and have been provided only to give a general sense of how the
principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the Receivables will prepay at a constant
level of ABS until maturity or that all of the Receivables will prepay at the
same level of ABS. Moreover, the diverse terms of Receivables within each of the
hypothetical pools could produce slower or faster principal distributions than
indicated in each ABS Table at the various constant percentages of ABS
specified, even if the original and remaining terms to maturity of the
Receivables are as assumed. Any difference between such assumptions and the
actual characteristics and performance of the Receivables, or actual prepayment
experience, will affect the percentages of initial balances outstanding over
time and the weighted average lives of each Class of the Notes.
31
<PAGE> 33
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-1 NOTES CLASS A-2 NOTES
------------------------------------ ------------------------------------
ASSUMED ABS PERCENTAGE ASSUMED ABS PERCENTAGE
------------------------------------ ------------------------------------
PAYMENT DATES 0.50% 1.00% 1.60% 2.00% 0.50% 1.00% 1.60% 2.00%
- ------------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date....................... 100 100 100 100 100 100 100 100
December 20, 1998.................. 91 89 85 82 100 100 100 100
January 20, 1999................... 82 77 70 65 100 100 100 100
February 20, 1999.................. 73 66 55 47 100 100 100 100
March 20, 1999..................... 65 55 41 31 100 100 100 100
April 20, 1999..................... 56 44 27 14 100 100 100 100
May 20, 1999....................... 47 33 13 0 100 100 100 98
June 20, 1999...................... 34 17 0 0 100 100 97 84
July 20, 1999...................... 25 7 0 0 100 100 87 73
August 20, 1999.................... 16 0 0 0 100 97 78 63
September 20, 1999................. 8 0 0 0 100 90 68 52
October 20, 1999................... 0 0 0 0 100 83 59 42
November 20, 1999.................. 0 0 0 0 93 75 51 32
December 20, 1999.................. 0 0 0 0 87 68 42 22
January 20, 2000................... 0 0 0 0 81 61 33 12
February 20, 2000.................. 0 0 0 0 76 54 25 3
March 20, 2000..................... 0 0 0 0 70 47 17 0
April 20, 2000..................... 0 0 0 0 64 40 9 0
May 20, 2000....................... 0 0 0 0 58 34 1 0
June 20, 2000...................... 0 0 0 0 47 23 0 0
July 20, 2000...................... 0 0 0 0 41 17 0 0
August 20, 2000.................... 0 0 0 0 36 11 0 0
September 20, 2000................. 0 0 0 0 30 5 0 0
October 20, 2000................... 0 0 0 0 25 0 0 0
November 20, 2000.................. 0 0 0 0 20 0 0 0
December 20, 2000.................. 0 0 0 0 14 0 0 0
January 20, 2001................... 0 0 0 0 9 0 0 0
February 20, 2001.................. 0 0 0 0 3 0 0 0
March 20, 2001..................... 0 0 0 0 0 0 0 0
April 20, 2001..................... 0 0 0 0 0 0 0 0
May 20, 2001....................... 0 0 0 0 0 0 0 0
June 20, 2001...................... 0 0 0 0 0 0 0 0
July 20, 2001...................... 0 0 0 0 0 0 0 0
August 20, 2001.................... 0 0 0 0 0 0 0 0
September 20, 2001................. 0 0 0 0 0 0 0 0
October 20, 2001................... 0 0 0 0 0 0 0 0
November 20, 2001.................. 0 0 0 0 0 0 0 0
December 20, 2001.................. 0 0 0 0 0 0 0 0
January 20, 2002................... 0 0 0 0 0 0 0 0
February 20, 2002.................. 0 0 0 0 0 0 0 0
March 20, 2002..................... 0 0 0 0 0 0 0 0
April 20, 2002..................... 0 0 0 0 0 0 0 0
May 20, 2002....................... 0 0 0 0 0 0 0 0
June 20, 2002...................... 0 0 0 0 0 0 0 0
July 20, 2002...................... 0 0 0 0 0 0 0 0
August 20, 2002.................... 0 0 0 0 0 0 0 0
September 20, 2002................. 0 0 0 0 0 0 0 0
October 20, 2002................... 0 0 0 0 0 0 0 0
November 20, 2002.................. 0 0 0 0 0 0 0 0
December 20, 2002.................. 0 0 0 0 0 0 0 0
January 20, 2003................... 0 0 0 0 0 0 0 0
February 20, 2003.................. 0 0 0 0 0 0 0 0
March 20, 2003..................... 0 0 0 0 0 0 0 0
April 20, 2003..................... 0 0 0 0 0 0 0 0
May 20, 2003....................... 0 0 0 0 0 0 0 0
June 20, 2003...................... 0 0 0 0 0 0 0 0
July 20, 2003...................... 0 0 0 0 0 0 0 0
Weighted Average Life (years)(1)... 0.44 0.35 0.27 0.23 1.57 1.28 1.00 0.85
</TABLE>
- ---------------
(1) The weighted average life of a Note is determined by (i) multiplying the
amount of each principal payment of such Note by the number of years from
the date of the issuance of such Note to the Payment Date on which such
principal payment is made, (ii) adding the results and (iii) dividing the
sum by the initial principal balance of such Note.
THE ABS TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
32
<PAGE> 34
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-3 NOTES CLASS A-4 NOTES
------------------------------------ ------------------------------------
ASSUMED ABS PERCENTAGE ASSUMED ABS PERCENTAGE
------------------------------------ ------------------------------------
PAYMENT DATES 0.50% 1.00% 1.60% 2.00% 0.50% 1.00% 1.60% 2.00%
- ------------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date....................... 100 100 100 100 100 100 100 100
December 20, 1998.................. 100 100 100 100 100 100 100 100
January 20, 1999................... 100 100 100 100 100 100 100 100
February 20, 1999.................. 100 100 100 100 100 100 100 100
March 20, 1999..................... 100 100 100 100 100 100 100 100
April 20, 1999..................... 100 100 100 100 100 100 100 100
May 20, 1999....................... 100 100 100 100 100 100 100 100
June 20, 1999...................... 100 100 100 100 100 100 100 100
July 20, 1999...................... 100 100 100 100 100 100 100 100
August 20, 1999.................... 100 100 100 100 100 100 100 100
September 20, 1999................. 100 100 100 100 100 100 100 100
October 20, 1999................... 100 100 100 100 100 100 100 100
November 20, 1999.................. 100 100 100 100 100 100 100 100
December 20, 1999.................. 100 100 100 100 100 100 100 100
January 20, 2000................... 100 100 100 100 100 100 100 100
February 20, 2000.................. 100 100 100 100 100 100 100 100
March 20, 2000..................... 100 100 100 93 100 100 100 100
April 20, 2000..................... 100 100 100 82 100 100 100 100
May 20, 2000....................... 100 100 100 72 100 100 100 100
June 20, 2000...................... 100 100 89 61 100 100 100 100
July 20, 2000...................... 100 100 81 52 100 100 100 100
August 20, 2000.................... 100 100 73 43 100 100 100 100
September 20, 2000................. 100 100 65 34 100 100 100 100
October 20, 2000................... 100 98 57 26 100 100 100 100
November 20, 2000.................. 100 92 50 18 100 100 100 100
December 20, 2000.................. 100 85 42 10 100 100 100 100
January 20, 2001................... 100 78 35 3 100 100 100 100
February 20, 2001.................. 100 72 28 0 100 100 100 92
March 20, 2001..................... 98 65 21 0 100 100 100 79
April 20, 2001..................... 91 59 15 0 100 100 100 67
May 20, 2001....................... 85 53 9 0 100 100 100 55
June 20, 2001...................... 67 38 0 0 100 100 97 45
July 20, 2001...................... 62 32 0 0 100 100 88 35
August 20, 2001.................... 57 27 0 0 100 100 79 26
September 20, 2001................. 52 22 0 0 100 100 70 17
October 20, 2001................... 47 17 0 0 100 100 61 9
November 20, 2001.................. 42 13 0 0 100 100 53 3
December 20, 2001.................. 36 8 0 0 100 100 45 0
January 20, 2002................... 31 3 0 0 100 100 38 0
February 20, 2002.................. 26 0 0 0 100 97 30 0
March 20, 2002..................... 21 0 0 0 100 89 23 0
April 20, 2002..................... 16 0 0 0 100 81 17 0
May 20, 2002....................... 11 0 0 0 100 74 11 0
June 20, 2002...................... 0 0 0 0 77 44 1 0
July 20, 2002...................... 0 0 0 0 69 37 0 0
August 20, 2002.................... 0 0 0 0 64 33 0 0
September 20, 2002................. 0 0 0 0 58 28 0 0
October 20, 2002................... 0 0 0 0 53 24 0 0
November 20, 2002.................. 0 0 0 0 48 19 0 0
December 20, 2002.................. 0 0 0 0 42 15 0 0
January 20, 2003................... 0 0 0 0 37 11 0 0
February 20, 2003.................. 0 0 0 0 31 7 0 0
March 20, 2003..................... 0 0 0 0 26 3 0 0
April 20, 2003..................... 0 0 0 0 21 0 0 0
May 20, 2003....................... 0 0 0 0 16 0 0 0
June 20, 2003...................... 0 0 0 0 0 0 0 0
July 20, 2003...................... 0 0 0 0 0 0 0 0
Weighted Average
Life (years)(1).................... 2.90 2.50 2.00 1.69 3.98 3.66 3.04 2.55
</TABLE>
- ---------------
(1) The weighted average life of a Note is determined by (i) multiplying the
amount of each principal payment of such Note by the number of years from
the date of the issuance of such Note to the Payment Date on which such
principal payment is made, (ii) adding the results and (iii) dividing the
sum by the initial principal balance of such Note.
THE ABS TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
33
<PAGE> 35
POOL FACTORS AND OTHER INFORMATION
The "Note Pool Factor" for each Class of Notes will be a seven-digit
decimal which the Servicer will compute each month indicating the remaining
outstanding principal amount of the Notes of each Class as of the close of
business on the Payment Date in that month, as a fraction of the initial
outstanding principal amount of the Notes of such Class. The Note Pool Factor
for each Class of Notes will be 1.0000000 as of the Closing Date, and thereafter
will decline to reflect reductions in the outstanding principal amount of the
Notes. A Noteholder's portion of the aggregate outstanding principal amount of
the Notes of a Class will be the product of (i) the original denomination of the
Noteholder's Note and (ii) the Note Pool Factor for such Class.
Pursuant to the Sale and Servicing Agreement, the Noteholders will receive
monthly reports concerning the payments received on the Receivables, the Pool
Balance, the Note Pool Factor and various other items of information.
Noteholders of record during any calendar year will be furnished information for
tax reporting purposes not later than the latest date permitted by law. See
"Description of the Notes -- Statements to Noteholders."
USE OF PROCEEDS
The net proceeds to be received by the Seller from the sale of the Notes
will be applied to the purchase of the Receivables from MBCC.
THE SELLER
Corporate Formation and Existence. The Seller, a wholly-owned subsidiary
of MBCC, was incorporated in the State of Delaware on May 24, 1994. The Seller
was organized for limited purposes, which include purchasing receivables from
MBCC 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 1201
North Market Street, Suite 1406, Wilmington, Delaware 19801. The telephone
number of such offices is (302) 426-1900.
Bankruptcy Considerations. The Seller has taken steps in structuring the
transactions contemplated hereby that are intended to prevent any voluntary or
involuntary application for relief by MBCC under any Insolvency Law from
resulting in consolidation of the assets and liabilities of the Seller with
those of MBCC. These steps include the creation and maintenance of the Seller as
a separate, limited-purpose subsidiary pursuant to a certificate of
incorporation containing certain limitations (including restrictions on the
nature of the Seller's business and a restriction on the Seller's ability to
commence a voluntary case or proceeding under any Insolvency Law without the
prior unanimous affirmative vote of all of its directors). However, there can be
no assurance that the activities of the Seller would not result in a court
concluding that the assets and liabilities of the Seller should be consolidated
with those of MBCC in a proceeding under any Insolvency Law.
The Seller will receive the opinion of its special counsel, Morgan, Lewis &
Bockius LLP ("Special 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 MBCC in the event of the application
of the Federal bankruptcy laws to MBCC. Among other things, it will be assumed
by Special 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 MBCC, refraining from commingling its assets with those of MBCC and
refraining from holding itself out as having agreed to pay, or being liable for,
the debts of MBCC. 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 MBCC. If a
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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, then delays in distributions on the Notes could
occur or reductions in the amounts of such distributions could result.
"True Sale" Considerations. It is intended by MBCC and the Seller that the
transfer of the Receivables by MBCC to the Seller under the Purchase Agreement
constitute a "true sale" of the Receivables to the Seller. If the transfer
constitutes such a "true sale," the Receivables and the proceeds thereof would
not be part of MBCC's bankruptcy estate under Section 541 of the Bankruptcy Code
should MBCC become the subject of a bankruptcy case subsequent to the transfer
of the Receivables to the Seller.
The Seller will receive the opinion of Special Counsel to the effect that,
subject to certain facts, assumptions and qualifications, in the event MBCC were
to become the subject of a voluntary or involuntary case under the Bankruptcy
Code subsequent to the transfer of the Receivables to the Seller, the transfer
of the Receivables by MBCC to the Seller pursuant to the Purchase Agreement
would be characterized as a "true sale" of the Receivables from MBCC to the
Seller and the Receivables and the proceeds thereof would not form part of
MBCC's bankruptcy estate pursuant to Section 541 of the 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
Tenth 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 bankruptcy estate in a bankruptcy of the seller. If
MBCC or the Seller were to become subject to a bankruptcy proceeding and a court
were to follow the Octagon court's reasoning, Noteholders might experience
delays in payment or possibly losses on their investment in the Notes. As part
of the opinion of Special Counsel described above, such counsel will advise the
Seller that the reasoning of the Octagon case appears to be inconsistent with
other precedent and the UCC.
THE SERVICER
MBCC was incorporated in the State of Delaware on April 14, 1981 and is a
wholly-owned subsidiary of Daimler-Benz North America Corporation ("DBNA").
DBNA, based in New York City, was established as a holding company in 1982 to
achieve synergies and financial benefits through the consolidation of certain
Daimler-Benz activities in North America.
MBCC and its subsidiaries comprise the captive finance company for the
Daimler-Benz group in North America. MBCC provides a variety of comprehensive
financial services to dealers and customers of products manufactured or
distributed by Daimler-Benz companies in North America. MBCC and certain of its
subsidiaries primarily provide retail and wholesale financing, leasing, and
other financial services to authorized Mercedes-Benz automobile and Freightliner
commercial vehicle dealers and their customers. Additionally, a wholly-owned
subsidiary of MBCC provides financing for both Daimler-Benz and other
manufacturers' products. The headquarters of MBCC are located at 201 Merritt 7,
Suite 700, Norwalk, Connecticut, 06856-5425. Its telephone number is (203)
847-4500.
DBNA is the financial clearing entity for its subsidiaries and provides
capital funding through outside finance sources and resources generated within
the group of companies. DBNA has more than 30 subsidiaries, including
Mercedes-Benz U.S. International, Freightliner, and MBCC. DBNA's key goals are
to provide secure long-term liquidity, which serves as a basis for the expansion
of the Daimler-Benz group's North American activities, and to increase the
efficiency of the financial operations of the DBNA group.
Daimler-Benz AG, headquartered in Stuttgart, Germany, and its consolidated
subsidiaries (collectively, "Daimler-Benz") is the largest industrial group in
Germany and a leading provider of
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technologically advanced transportation products, systems and services
worldwide. Daimler-Benz focuses on the development and manufacture of
Mercedes-Benz passenger cars and commercial vehicles, Freightliner and Sterling
trucks, rail systems (Adtranz), diesel engines (MTU), and automotive electronics
(TEMIC). Daimler-Benz Aerospace builds aircraft and space systems and
Daimler-Benz InterServices (debis) provides services in areas such as leasing
and sales financing, mobile communications and information technology. For the
nine months ended September 30, 1998, Daimler-Benz reported consolidated
revenues of DM 102,897 million, net income of DM 3,282 million and stockholders'
equity of DM 34,064 million. In U.S. dollars, Daimler-Benz would have reported
consolidated revenues of $61,608 million, net income of $1,965 million and
stockholders' equity of $20,395 million.
On May 7, 1998, Daimler-Benz, DaimlerChrysler AG, a stock corporation
(Aktiengesellschaft) organized and existing under the laws of the Federal
Republic of Germany ("DaimlerChrysler AG") Chrysler Corporation, a Delaware
corporation ("Chrysler"), and Chrysler Merger Corporation, a newly formed
Delaware corporation ("Chrysler Merger Sub"), entered into a business
combination agreement (as amended and restated, the "Combination Agreement").
Pursuant to the Combination Agreement: (i) on November 6, 1998, the offer (the
"Daimler-Benz Exchange Offer") to holders of no par value Ordinary Shares of
Daimler-Benz (the "Daimler-Benz Ordinary Shares") and the holders of American
Depositary Shares of Daimler-Benz, each representing one Daimler-Benz Ordinary
Share (the "Daimler-Benz ADSs"), to exchange such shares for Ordinary Shares, no
par value, of DaimlerChrysler AG (the "DaimlerChrysler Ordinary Shares") was
completed, and DaimlerChrysler AG accepted for exchange approximately 98.2% of
the Daimler-Benz Ordinary Shares (including Daimler-Benz Ordinary Shares
represented by Daimler-Benz ADSs); and (ii) on November 12, 1998, Chrysler
Merger Sub was merged with and into Chrysler (the "Chrysler Merger"). As a
result of the Chrysler Merger, Chrysler became a wholly owned subsidiary of
DaimlerChrysler AG. The final step in the "merger-of-equals" transaction between
Daimler-Benz and Chrysler will be the merger of Daimler-Benz with and into
DaimlerChrysler AG (the "Daimler-Benz Merger"). As a result of the Daimler-Benz
Merger, the stockholders of Daimler-Benz (other than DaimlerChrysler AG) will
automatically become stockholders of DaimlerChrysler AG. Consummation of the
Daimler-Benz Merger is pending the resolution of three actions by purported
stockholders of Daimler-Benz filed with the regional court in Stuttgart,
Germany. The Daimler-Benz Exchange Offer, the Chrysler Merger and the
Daimler-Benz Merger, collectively the "Transactions," will have the effect of
combining the respective businesses, stockholder groups, managements and other
constituencies of Chrysler and Daimler-Benz. As a result of the Transactions,
the former stockholders of Chrysler and Daimler-Benz AG will own all the issued
and outstanding DaimlerChrysler Ordinary Shares.
DESCRIPTION OF THE NOTES
The Notes will be issued pursuant to the Indenture. The Certificates will
be issued pursuant to the Trust Agreement. Forms of each of the Indenture and
the Trust Agreement 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
Notes, the Indenture, the Trust Agreement and the Sale and Servicing Agreement.
GENERAL
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 physical notes registered in the name of Cede as nominee of DTC. No
Note Owner will be entitled to receive a Definitive Note representing such
person's beneficial ownership interest in the applicable Class of Notes except
in the event that Definitive Notes are issued under the limited circumstances
described herein. Unless and until Definitive Notes are issued, all references
to actions by Noteholders shall refer to actions taken by DTC upon instructions
from its Direct Participants (as defined below) and all references to
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distributions, notices, reports and statements to Noteholders shall refer to
distributions, 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 procedures with respect thereto. See "-- Book Entry Registration" and
"-- Definitive Notes."
BOOK ENTRY REGISTRATION
Beneficial owners of Notes may hold their Notes through DTC (in the United
States) or Cedel or Euroclear (in Europe) if they are participants of such
systems, or indirectly through organizations that are participants in such
systems.
DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to Section 17A of the Exchange Act. DTC
was created to hold securities for its participating organizations ("Direct
Participants") and to facilitate the clearance and settlement of securities
transactions between Direct Participants through electronic book-entries,
thereby eliminating the need for physical movement of certificates. Direct
Participants include securities brokers and dealers, banks, trust companies and
clearing corporations, and may include certain other organizations. Indirect
access to the DTC system is also available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants" and, together with Direct Participants, "DTC Participants").
To facilitate subsequent transfers, all Notes deposited with DTC will be
registered in the name of DTC's nominee, Cede. The deposit of Notes with DTC and
their registration in the name of Cede will effect no change in beneficial
ownership. DTC has no knowledge of the actual Note Owners of the Notes; DTC's
records reflect only the identity of the Direct Participants to whose accounts
such Notes are credited, which may or may not be the Note Owners. The DTC
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
No Noteholder will be entitled to receive a certificate representing such
person's interest in a Class of Notes. Unless and until Definitive Notes are
issued under the limited circumstances described below, all references herein to
actions by Noteholders shall refer to actions taken by DTC upon instructions
from DTC Participants, and all references herein to distributions, notices,
reports and statements to Noteholders shall refer to distributions, notices,
reports and statements to Cede, as the registered holder of the Notes, for
distribution to Noteholders in accordance with DTC procedures.
Note Owners will receive all payments of principal of 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
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held for the accounts of customers in bearer form or registered in "street name"
and will be the responsibility of such DTC Participant and not of DTC, the
Indenture Trustee, the Owner Trustee, the Seller or the Servicer, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal and interest to DTC is the responsibility of the Indenture
Trustee, disbursement of such payments to Direct Participants shall be the
responsibility of DTC and disbursement of such payments to Note Owners shall be
the responsibility of Direct Participants and Indirect Participants.
Purchases of Notes under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Notes on DTC's records. The
ownership interest of each actual Note Owner is in turn to be recorded on the
Direct Participants' and Indirect Participants' records. Note Owners will not
receive written confirmation from DTC of their purchase, but Note Owners are
expected to receive written confirmations providing details of the transaction,
as well as periodic statements of their holdings, from the Direct Participant or
Indirect Participant through which the Note Owner entered into the transaction.
Transfers of ownership interests in the Notes are to be accomplished by entries
made on the books of DTC Participants acting on behalf of Note Owners. Note
Owners will not receive physical notes representing their ownership interest in
Notes, except in the event that use of the book-entry system for the Notes is
discontinued.
Neither DTC nor Cede will comment or vote with respect to the Notes. DTC
has advised the Seller that it will take any action permitted to be taken by a
Noteholder under the Indenture only at the direction of one or more Direct
Participants to whose accounts with DTC the Notes are credited. Additionally,
DTC has advised the Seller that to the extent that the Indenture requires that
any action may be taken only by Holders of Notes representing a specified
percentage of the aggregate outstanding principal amount thereof, DTC will take
such action only at the direction of and on behalf of Direct Participants whose
holdings include undivided interests that satisfy such specified percentage.
Under its usual procedures, DTC will mail a written proxy (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 Administrator may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor securities depository). In that
event, Definitive Notes will be delivered to Noteholders. See "-- Definitive
Notes."
Cedel and Euroclear will hold omnibus positions on behalf of the Cedel
Participants and the Euroclear Participants, respectively, through customers'
securities accounts in Cedel's and Euroclear's names on the books of their
respective depositaries (each, a "Depositary" and collectively, the
"Depositaries") which in turn will hold such positions in customers' securities
accounts in the Depositaries' names on the books of DTC.
Transfers between Direct Participants will occur in accordance with DTC
rules. Transfers between Cedel Participants and Euroclear Participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transac-
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tion meets its settlement requirements, deliver instructions to its Depositary
to take action to effect final settlement on its behalf by delivering or
receiving securities in DTC, and making or receiving payment in accordance with
normal procedures for same-day funds settlement applicable to DTC. Cedel
Participants and Euroclear Participants may not deliver instructions directly to
the Depositaries.
Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing day, dated the Business
Day following the DTC settlement date, and such credits or any transactions in
such securities settled during such processing day will be reported to the
relevant Cedel Participant or Euroclear Participant on such Business Day. Cash
received in Cedel or Euroclear as a result of sales of securities by or through
a Cedel Participant or a Euroclear Participant to a DTC Participant will be
received with value on the DTC settlement date but will be available in the
relevant Cedel or Euroclear cash account only as of the Business Day following
settlement in DTC.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Seller believes to be reliable, but the
Seller takes no responsibility for the accuracy thereof.
Cedel Bank, societe anonyme ("Cedel") is incorporated under the laws of
Luxembourg as a professional depository. Cedel holds securities for its
participating organizations ("Cedel Participants") and facilitates the clearance
and settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled in Cedel in any of 36 currencies, including United States dollars. Cedel
provides to its Cedel Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedel interfaces with domestic
markets in several countries. As a professional depository, Cedel is subject to
regulation by the Luxembourg Monetary Institute. Cedel Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the Underwriters of the Notes.
Indirect access to Cedel is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Cedel Participant, either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System ("Euroclear Participants") and to clear and
settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need for
physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Transactions may now be settled in any of 34
currencies, including United States dollars. The Euroclear System includes
various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described above. The Euroclear
System is operated by Morgan Guaranty Trust Company of New York, Brussels,
Belgium office (the "Euroclear Operator" or "Euroclear"), under contract with
Euroclear Clearance System, S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for the Euroclear System on behalf of Euroclear Participants. Euroclear
Participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the
Underwriters of the Notes. Indirect access to the Euroclear System is also
available to other firms that clear through or maintain a custodial relationship
with a Euroclear Participant, either directly or indirectly.
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<PAGE> 41
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific securities
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of or relationship with persons holding through Euroclear Participants.
Payments on Notes held through Cedel or Euroclear will be credited to the
cash accounts of Cedel Participants or Euroclear Participants in accordance with
the relevant system's rules and procedures, to the extent received by its
Depositary. Such payments will be subject to tax reporting in accordance with
relevant United States tax laws and regulations. See "Certain Federal Income Tax
Consequences" and Annex A. Cedel or the Euroclear Operator, as the case may be,
will take any other action permitted to be taken by a Noteholder under the
related agreement on behalf of a Cedel Participant or Euroclear Participant only
in accordance with its relevant rules and procedures and subject to its
Depositary's ability to effect such actions on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of Notes among participants of DTC, Cedel and
Euroclear, they are under no obligation to perform or continue to perform such
procedures and such procedures may be discontinued at any time.
DEFINITIVE NOTES
The Notes of each Class will be issued in fully registered, certificated
form ("Definitive Notes") to Noteholders or their nominees, rather than to DTC
or its nominee, only if (i) the Trust, the Administrator or the Servicer advises
the Indenture Trustee in writing that DTC or a successor clearing agency is no
longer willing or able to discharge properly its responsibilities as depository
with respect to the Notes and the Indenture Trustee or the Administrator is
unable to locate a qualified successor, (ii) the Administrator, at its option,
elects to terminate the book-entry system through DTC, or (iii) after the
occurrence of an Event of Default or an Event of Servicing Termination, Note
Owners representing in the aggregate not less than a majority of the aggregate
outstanding principal amount of the Notes advise the Indenture Trustee and DTC
in writing that the continuation of a book-entry system through DTC (or a
successor thereto) is no longer in the best interest of Note Owners.
Upon the occurrence of any event described in the immediately preceding
paragraph, DTC is required to notify all Direct Participants and the Indenture
Trustee of the availability through DTC of Definitive Notes. Upon surrender by
DTC of the definitive notes representing the Notes and receipt by the Indenture
Trustee of instructions for re-registration, the Issuer will execute and the
Indenture Trustee will authorize 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 of 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
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Note, however, will be made only upon presentation and surrender of such
Definitive Note at the office or agency specified in the notice of final payment
mailed to Noteholders.
Definitive Notes will be transferable and exchangeable at the offices of
the Indenture Trustee. No service charge will be imposed for any registration of
transfer or exchange, but the Indenture Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith.
INTEREST
Interest on the outstanding principal amount of each Class of the Notes and
on the Certificates will accrue at the applicable Interest Rate and will be
payable to the applicable Noteholders and Certificateholders monthly on each
Payment Date, commencing December 21, 1998. Interest will accrue (i) with
respect to the Class A-1 Notes, from and including the Closing Date (in the case
of the first Payment Date) or from and including the most recent Payment Date on
which interest has been paid, to but excluding the following Payment Date and
(ii) with respect to the Class A-2 Notes, the Class A-3 Notes, the Class A-4
Notes and the Class B Certificates, from and including the Closing Date (in the
case of the first Payment Date) or from and including the 20th day of the
calendar month preceding each Payment Date to but excluding the 20th 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, the Class A-4 Notes and the Class B Certificates on
the basis of a 360-day year consisting 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 and of the Certificates as of the preceding
Payment Date, after giving effect to any payments of principal of the Notes and
of the Certificates 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 and of the Certificates). 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 Interest Rate (to the
extent permitted by law). Interest payments on the Notes and on the Certificates
will generally be derived from the Available Funds (as defined herein) remaining
after the reimbursement of Advances and 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 Reserve Accounts. See
"-- The Indenture Cash Flows" and "-- Subordination of the Class B Certificates;
Reserve Accounts."
Interest payments on all Classes of the Notes will have the same priority
of payment, and interest payments to the Class B Certificates will be
subordinated to interest payments on the Class A Notes. 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 Class
A Noteholders will be paid interest in full prior to payments of interest on the
Class B Certificates and, if the amount available for interest payments is less
than the amount of interest payable on the Class A Notes, each Class of Class A
Noteholders will receive their ratable share (based upon the aggregate amount of
interest due to such Class of Noteholders on such Payment Date) of the aggregate
amount available to be distributed in respect of interest on the Notes. An Event
of Default will occur if the full amount of interest due to all Classes of
Noteholders is not paid within five days.
PRINCIPAL
Principal payments will be made to the Noteholders on each Payment Date in
an aggregate amount equal to the Principal Distribution Amount in respect of
such Payment Date, subject to certain limitations. Principal of the Class A-1
Notes is also payable, to the extent not previously paid, on January 3, 2000.
Certificateholders will not be entitled to receive payments of principal until
the principal of all Classes of Notes have been paid in full. Principal of the
Notes will be payable on each Payment Date in an amount equal to the Principal
Distribution Amount for such Payment Date (to
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the extent of funds available therefor, as described herein) and will be paid to
the Holders of the various Classes of Notes sequentially to the earliest
maturing Class of Notes then outstanding until the principal amount of each
successive Class of Notes is paid in full.
Accordingly, on each Payment Date, an amount equal to the Principal
Distribution Amount will be paid to the Class A-1 Noteholders until the Class
A-1 Notes are paid in full; then, to the Class A-2 Noteholders until the Class
A-2 Notes are paid in full; then, to the Class A-3 Noteholders until the Class
A-3 Notes are paid in full; then, to the Class A-4 Noteholders until the Class
A-4 Notes are paid in full; and finally, to the Class B Certificateholders until
the Class B Certificates are paid in full; provided, however, that following the
occurrence and during the continuation of an Event of Default resulting in an
acceleration of the Notes, payments of principal of the Notes will be paid to
the Holders of all Classes of the Notes on a pro rata basis, until the principal
of all of the Notes is paid in full, before any distributions of principal may
be made on the Certificates. If the Class A-1 Notes are still outstanding after
the December 1999 Payment Date, the Class A-1 Noteholders will be entitled to be
paid in full on January 3, 2000. See "-- The Indenture Cash Flows" and
"-- Subordination of the Class B Certificates; Reserve Accounts."
The actual date on which the aggregate outstanding principal amount of any
Class of Notes is paid may be earlier or later than the respective Final Payment
Dates based on a variety of factors, including those described under "Risk
Factors -- Maturity and Prepayment Considerations" and "The
Receivables -- Maturity and Prepayment Considerations."
OPTIONAL REDEMPTION
The Notes and the Certificates will be redeemed in whole, but not in part,
on any Payment Date on which the Servicer exercises its option to purchase the
Receivables. The Servicer may purchase the Receivables on any Payment Date with
respect to which the Pool Balance as of the end of the related Collection Period
is 10% or less of the Initial Pool Balance. The redemption price will be equal
to the outstanding principal amount of the Notes and of the Certificates, in
each case plus accrued and unpaid interest thereon.
THE INDENTURE TRUSTEE
Citibank, N.A., a national banking association, will be the Indenture
Trustee. The Indenture Trustee's Corporate Trust Office is located at 111 Wall
Street, 5th Floor, Zone 2, New York, NY 10005. 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.
THE ACCOUNTS
The Servicer will establish and maintain a Collection Account, in the name
of the Indenture Trustee on behalf of the Noteholders and the
Certificateholders, into which payments made on or with respect to the
Receivables and Advances made by the Servicer will be deposited and into which
amounts on deposit in the Reserve Accounts may be transferred from time to time,
other than certain amounts payable to the Servicer under the Sale and Servicing
Agreement that are not required to be so deposited or transferred. The Servicer
will also establish and maintain (i) an account, in the name of the Indenture
Trustee on behalf of the Noteholders, in which amounts released from the
Collection Account for distribution to Noteholders will be deposited and from
which all payments to Noteholders will be made (the "Note Distribution
Account"), and (ii) an account, which will be held in trust in the name of the
Owner Trustee for the benefit of the Certificateholders, in which amounts
released from the Collection Account for distribution to Certificateholders will
be deposited and from which all payments to Certificateholders will be made (the
"Certificate Distribution Account").
The Servicer will also establish and maintain an account (the "Payahead
Account"), in the name of the Indenture Trustee on behalf of the Noteholders and
the Certificateholders, in which
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early payments with respect to 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 Receivables.
Amounts in the Payahead Account will be permitted to be held by the Servicer if
either (a) each Monthly Remittance Condition is satisfied or (b) a Monthly
Remittance Condition is not satisfied but such failure will not affect the
rating of any Class of the Notes by the Rating Agencies. Until such time as
payments are transferred from the Payahead Account to the Collection Account,
they will not constitute collected interest or collected principal, and will not
be available for distribution to the Noteholders or the Certificateholders.
Investment earnings (net of losses and investment expenses) on amounts on
deposit in the Payahead Account will be payable to the Collection Account.
The Servicer will also establish the Class A Reserve Account, in the name
of the Indenture Trustee on behalf of the Class A Noteholders, and the Class B
Reserve Account, which will be held in trust in the name of the Owner Trustee
for the benefit of the Class B Certificateholders. The Collection Account, the
Note Distribution Account, the Certificate Distribution Account, the Reserve
Accounts and the Payahead Account are collectively referred to as the
"Accounts."
Each Account will be maintained at all times in an Eligible Deposit
Account. "Eligible Deposit Account" means either (a) a segregated account with
an Eligible Bank or (b) a segregated trust account with the trust department of
a depository institution organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia (or any
domestic branch of a foreign bank), having trust powers and acting as trustee
for funds deposited in such account, so long as the long-term unsecured debt of
such depository institution will have a credit rating from each Rating Agency in
one of its generic rating categories which signifies investment grade (which,
for Moody's, is Baa3 or higher, and for S&P, is BBB- or higher).
"Eligible Bank" means (a) the corporate trust department of the Owner
Trustee, the Indenture Trustee or The Chase Manhattan Bank so long as it may be
the Paying Agent under the Trust Agreement or (b) any depository institution
with trust powers, organized under the laws of the United States of America or
any one of the states thereof or the District of Columbia (or any domestic
branch of a foreign bank), which has a net worth in excess of $50,000,000, the
deposits of which are insured to the full extent permitted by law by the Federal
Deposit Insurance Corporation (except with respect to any domestic branch of a
foreign bank), which is subject to supervision and examination by Federal or
state banking authorities and which has (i) a rating of P-1 from Moody's and
A-1+ from S&P with respect to short-term deposit obligations, or (ii) if such
institution has issued long-term unsecured debt obligations, a rating of A2 or
higher from Moody's and A from S&P with respect to long-term unsecured debt
obligations.
Funds in the Accounts 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 generally 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 remain on deposit therein
pending distribution of all funds on deposit therein in accordance with the
Indenture and the Sale and Servicing Agreement; any earnings (net of losses and
investment expenses) on amounts on deposit in the Payahead Account will be paid
to the Collection Account for distribution with all funds on deposit in the
Collection Account in accordance with the Indenture and the Sale and Servicing
Agreement; and any earnings (net of losses and investment expenses) on, and any
amounts released from, the Class A Reserve Account and the Class B Reserve
Account will be distributed to the Seller; provided that earnings on amounts on
deposit in the Class A Reserve Account and in the Class B Reserve Account will
be distributed to the Seller only to the extent that (i) the amounts on deposit
in the Class A Reserve Account exceed the
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Specified Class A Reserve Balance and (ii) the amounts on deposit in the Class B
Reserve Account exceed the Specified Class B Reserve Balance.
THE INDENTURE CASH FLOWS
Deposits to the Collection Account. On or before the earlier of (a) the
16th calendar day of each month and (b) the third Business Day preceding the
Payment Date in each month (the "Determination Date"), of the month in which a
Payment Date occurs, the Servicer will calculate the Available Funds, the Total
Servicing Fee, the Accrued Interest on each Class of Notes and on the
Certificates and the Principal Distribution Amount with respect to each Class of
Notes and the Certificates, if any, in each case with respect to such Payment
Date.
On or before each Payment Date, the Servicer will cause the Available Funds
for such Payment Date to be deposited into the Collection Account. Additionally,
if the Class A-1 Notes are still outstanding after the December 1999 Payment
Date, an additional Determination Date will be established on January 2, 2000
with respect to the Class A-1 Final Payment Date and the foregoing calculations
and deposits will be made for the Class A-1 Final Payment Date, and the deposits
and payments to be made on each Payment Date as described below will occur with
respect to the Class A-1 Notes on January 3, 2000.
The "Available Funds" for a Payment Date to be deposited into the
Collection Account shall equal the sum of the following amounts with respect to
the immediately preceding Collection Period: (i) all collections on the
Receivables including Payaheads withdrawn from the Payahead Account but
excluding Payaheads deposited into the Payahead Account; (ii) all proceeds of
the liquidation of Receivables which became Defaulted Receivables during the
related Collection Period, net of expenses incurred by the Servicer in
connection with such liquidation and any amounts required by law to be remitted
to the Obligor on such Defaulted Receivable ("Liquidation Proceeds"); (iii) all
proceeds of Defaulted Receivables which became Defaulted Receivables during
prior Collection Periods, 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 ("Recoveries"); (iv) all Advances made by
the Servicer of principal or interest due on the Receivables; (v) all proceeds
from claims on physical damage, credit life and disability insurance policies
covering the Financed Vehicles or the Obligors and (vi) 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) (each such Receivable, a "Purchased Receivable").
The Available Funds on any Payment Date will exclude the following:
(i) amounts received on Receivables (including Purchase Amounts) to
the extent that unreimbursed Advances have previously been made by the
Servicer on prior Payment Dates;
(ii) Liquidation Proceeds and Recoveries with respect to a particular
Receivable to the extent of any unreimbursed Advances for prior Collection
Periods;
(iii) administrative fees and charges and late payment fees and
charges collected on the Receivables (other than fees paid in connection
with the extension or deferral of payments on a Receivable); and
(iv) investment earnings and interest earned on the Reserve Accounts.
A "Defaulted Receivable" is a Receivable which by its terms is in default
and as to which (a) a Scheduled Payment is 240 or more days past due, (b) the
Servicer has determined, in accordance with its customary servicing procedures,
that eventual payment in full is unlikely and the outstanding balance of the
Receivable has been charged-off or (c) the Servicer has repossessed and disposed
of the related Financed Vehicle.
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Monthly Withdrawals from Collection Account. On each Payment Date, upon
receipt of instructions from the Servicer, the Indenture Trustee will (i)
withdraw from the Collection Account and pay to the Servicer any amounts
required to reimburse the Servicer for any outstanding Advances for any prior
Collection Periods, and thereafter, (ii) withdraw (A) all Available Funds on
deposit in the Collection Account for the related Collection Period and (B) the
additional amounts from the sources specified below and make the following
payments and deposits from the sources specified below for such Payment Date in
the following order of priority:
(i) to the Servicer, the Total Servicing Fee, such amount to be paid,
first, from Available Funds in the Collection Account, second, from the
Class B Reserve Account, and third, from the Class A Reserve Account;
(ii) to the Note Distribution Account, the Accrued Interest on each
Class of Notes, such amount to be paid, first, from Available Funds in the
Collection Account, and second, from the Class A Reserve Account;
(iii) to the Certificate Distribution Account, the Accrued Interest on
the Certificates, such amount to be paid first, from Available Funds in the
Collection Account, and second, from the Class B Reserve Account;
(iv) to the Note Distribution Account, the Principal Distribution
Amount with respect to each Class of Notes, such amount to be paid, first,
from Available Funds in the Collection Account, and second, from the Class
A Reserve Account;
(v) to the Certificate Distribution Account, the Principal
Distribution Amount with respect to the Certificates, such amount to be
paid first, from Available Funds in the Collection Account, and second,
from the Class B Reserve Account;
(vi) to the Class A Reserve Account, from Available Funds in the
Collection Account, the amount required to bring the amount in the Class A
Reserve Account up to the Specified Class A Reserve Balance;
(vii) to the Class B Reserve Account, from Available Funds in the
Collection Account, the amount required to bring the amount in the Class B
Reserve Account up to the Specified Class B Reserve Balance; and
(viii) to the Seller, any remaining Available Funds in the Collection
Account.
Notwithstanding the foregoing, following the occurrence and during the
continuation of an Event of Default which has resulted in an acceleration of the
Notes, the Available Funds remaining after the application of clauses (i) and
(ii) above and the payment of certain amounts to the Indenture Trustee will be
deposited in the Note Distribution Account to the extent necessary to reduce the
principal amount of the Notes to zero.
For purposes hereof, the following terms have the following meanings:
"Accrued Interest" means, with respect to any Payment Date and each Class
of Notes and the Class B Certificates, as applicable, the sum of the Monthly
Accrued Interest and the Interest Carryover Shortfall for such Class of Notes or
for the Certificates for such Payment Date.
"Certificate Balance" means, $81,654,551.40 and, thereafter, equals the
initial Certificate Balance minus all amounts paid as principal on the Class B
Certificates.
"Interest Carryover Shortfall" means, with respect to any Payment Date and
any Class of Notes or the Certificates, as applicable, the excess of (i) the sum
of the Monthly Accrued Interest for the preceding Payment Date and any
outstanding Interest Carryover Shortfall from the close of business on such
preceding Payment Date, over (ii) the amount in respect of interest that is
actually deposited in the Note Distribution Account and the Certificate
Distribution Account, as applicable, on such preceding Payment Date with respect
to such Class of Notes or the Certificates, as applicable,
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plus interest on such excess, to the extent permitted by law, at the applicable
Interest Rate for the related Interest Period.
"Interest Rates" means in the case of (i) the Class A-1 Notes, % per
annum, (ii) the Class A-2 Notes, % per annum, (iii) the Class A-3 Notes, %
per annum, (iv) the Class A-4 Notes, % per annum and (v) the Class B
Certificates, % 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, the Class A-4 Notes and
the Class B Certificates will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
"Monthly Accrued Interest" means, with respect to any Payment Date and (i)
any Class of Notes or the Certificates, as applicable, interest accrued for the
related Interest Period at the applicable Interest Rate on the aggregate
principal balance of the Notes of such Class or of the Certificate Balance, as
applicable, as of the immediately preceding Payment Date, after giving effect to
all payments of principal to Noteholders or to Certificateholders, as
applicable, 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 the initial
Certificate Balance of the Certificates); and (ii) with respect to the Notes
collectively, the sum of Monthly Accrued Interest for each Class.
"Principal Carryover Shortfall" means, as of the close of business on any
Payment Date, with respect to any Class of Notes or the Certificates, as
applicable, 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 Distribution Account
and the Certificate Distribution Account, as applicable, on such Payment Date.
"Principal Distribution Amount" means, with respect to any Payment Date,
and with respect to any Class of Notes or the Certificates, as applicable, the
sum of (i) the Scheduled Principal for such Payment Date plus (ii) any
outstanding Principal Carryover Shortfall as of the close of business on the
preceding Payment Date; provided, however, that the Principal Distribution
Amount shall not exceed the outstanding aggregate principal balance of the Notes
and the Certificate Balance, as applicable; and provided, further, that, on the
Final Payment Date for each Class of Notes or for the Certificates, as
applicable, the amount required to be deposited in the Note Distribution Account
to pay principal of the Notes and the amount required to be deposited in the
Certificate Distribution Account to pay the Certificate Balance, as applicable,
will include the amount necessary (after giving effect to the other amounts to
be deposited in the Note Distribution Account and the Certificate Distribution
Account, as applicable, on such Payment Date and allocable to principal or the
Certificate Balance) to reduce the outstanding principal amount of such Class of
Notes or of the Certificates to zero.
"Scheduled Principal" shall mean, with respect to any Payment Date, the sum
of (a) the principal portion of each Scheduled Payment due on any Receivable
during the related Collection Period, (b) (without duplication of amounts taken
into account under (a)) the outstanding principal balance of (i) Receivables
prepaid in full during the related Collection Period, and (ii) Receivables which
became Defaulted Receivables during the related Collection Period, (c) the
Purchase Amount of each Receivable that was purchased or repurchased by the
Seller or the Servicer during such Collection Period, to the extent attributable
to principal, and (d) (without duplication of amounts taken into account under
(b)) the proceeds of any other sale of a Receivable to the extent allocable to
principal; provided, however, that in calculating the Scheduled Principal, all
payments and proceeds (including Liquidation Proceeds) of any Purchased
Receivables the Purchase Amount of which has been included in Scheduled
Principal in a prior Collection Period (which shall be paid to the Seller or
Servicer, as applicable) will be excluded.
"Total Required Payment" means, on any Payment Date, the Total Servicing
Fee, the Accrued Interest with respect to the Notes and the Principal
Distribution Amount with respect to the Notes.
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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 Distribution Account will be paid in the following order of
priority:
(a) to the Class A Noteholders, Monthly Accrued Interest (and, if
amounts on deposit in the Note Distribution Account are insufficient for
such purpose, payments shall be made to the Class A Noteholders pro rata in
proportion to the Accrued Interest for each Class of Class A Notes);
(b) 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;
(c) following payment in full of the Class A-1 Notes, to the Class A-2
Noteholders, 100% of the remaining Principal Distribution Amount in
reduction of principal until the principal amount of the Class A-2 Notes
has been paid in full;
(d) following payment in full of the Class A-2 Notes, to the Class A-3
Noteholders, 100% of the remaining Principal Distribution Amount in
reduction of principal until the principal amount of the Class A-3 Notes
has been paid in full; and
(e) following payment in full of the Class A-3 Notes, to the Class A-4
Noteholders, 100% of the remaining Principal Distribution Amount in
reduction of principal until the principal amount of the Class A-4 Notes
has been paid in full.
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 Distribution Account will be paid: (a) to the Servicer
for any unreimbursed Advances for prior Collection Periods; (b) to the Indenture
Trustee, certain expenses and other amounts payable to the Indenture Trustee;
(c) to the Servicer, the amounts due and unpaid in respect of Total Servicing
Fees; (d) to the Class A Noteholders, Monthly Accrued Interest ratably in
proportion to Accrued 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; (e) to the Class A Noteholders, pro rata in proportion to the
respective principal balances of the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes and the Class A-4 Notes in reduction of principal until each
such Class has been paid in full; and (f) to the Certificate Distribution
Account for distribution to Certificateholders in reduction of the Certificate
Balance.
SUBORDINATION OF THE CLASS B CERTIFICATES; RESERVE ACCOUNTS
The rights of the Class B Certificateholders to receive distributions with
respect to the Receivables will be subordinated, to the extent described above
and in the Indenture, to the rights of the Class A Noteholders in the event of
defaults and delinquencies on the Receivables. Thus, the Class B
Certificateholders generally will not receive distributions of interest on a
Payment Date (other than from the Class B Reserve Account) unless the Class A
Noteholders receive the full amount of interest due to them on such Payment Date
(including from amounts on deposit in the Class A Reserve Account), and the
Class B Certificateholders will not receive distributions of principal on a
Payment Date (other than from the Class B Reserve Account) unless the Class A
Noteholders shall have received payment of the full amount of principal of the
Notes (including from amounts on deposit in the Class A Reserve Account).
In addition, the Seller will not receive distributions on any Payment Date
unless all interest and principal due to the Class A Noteholders and interest
and Certificate Balance due to the Class B Certificateholders have been paid and
amounts have been deposited in each Reserve Account at least equal the Specified
Class A Reserve Balance or the Specified Class B Reserve Balance, as the case
may be.
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In the event of losses and delinquencies on the Receivables, the protection
afforded to the Class A Noteholders will be effected by the application of
Available Funds for each Payment Date in the priority specified under "-- The
Indenture Cash Flows." In addition, the Class A Noteholders will have the
benefit of the Class A Reserve Account.
The Class A Reserve Account will be an Eligible Deposit Account initially
held by the Indenture Trustee. On each Payment Date, if the amounts on deposit
in the Class A Reserve Account are less than the Specified Class A Reserve
Balance, the Indenture Trustee will, after payment of amounts required to be
distributed to the Class A Noteholders and Class B Certificateholders, the
reimbursement of any unpaid Advances and the payment of the Total Servicing Fee
due with respect to the related Collection Period (including any unpaid Total
Servicing Fees with respect to prior Collection Periods) withdraw from the
Collection Account and deposit in the Class A Reserve Account the amount
remaining in the Collection Account that would otherwise be distributed to the
Seller, or such lesser portion thereof as is sufficient to restore the amount in
the Class A Reserve Account to such Specified Class A Reserve Balance. If the
amount on deposit in the Class A Reserve Account on such Payment Date (after
giving effect to all deposits or withdrawals therefrom on such Payment Date) is
greater than the Specified Class A Reserve Balance for such Payment Date, the
Indenture Trustee will release such excess amount from the Class A Reserve
Account and (i) deposit such excess amount in the Class B Reserve Account to the
extent that the amount on deposit therein is less than the Specified Class B
Reserve Balance, and (ii) distribute any remaining excess to the Seller. Upon
any deposit of such amounts in the Class B Reserve Account or distribution to
the Seller, the Class A Noteholders will not be entitled to any payment from
such amounts pursuant to the Indenture.
The Class A Reserve Account will be established for the benefit of the
Noteholders to cover shortfalls in amounts due to the Class A Noteholders and
the Class B Reserve Accounts will be established for the benefit of the
Certificateholders to cover shortfalls in amounts due to the Class A
Certificateholders. Amounts on deposit from time to time in the Class A Reserve
Account and Class B Reserve Account will be invested, as provided in the
Indenture, in Permitted Investments maturing on or prior to the next succeeding
Payment Date; provided, however, that to the extent permitted by the Rating
Agencies, amounts on deposit in the Class A Reserve Account and the Class B
Reserve Account may be invested in Permitted Investments that mature later than
the next succeeding Payment Date. To the extent the amounts on deposit in either
Reserve Account exceed the Specified Class A Reserve Balance or the Specified
Class B Reserve Balance, respectively, the Seller will be entitled to receive
all investment earnings on amounts in the Reserve Accounts, and investment
earnings on amounts in the Reserve Accounts will not be available for
distribution to the Noteholders or Certificateholders or otherwise subject to
any claims or rights of the Class A Noteholders or the Class B
Certificateholders.
The ability of the Class A Reserve Account to maintain the Specified Class
A Reserve Balance at any time after the Closing Date will be affected by the
delinquency, credit loss and repossession and prepayment experience of the
Receivables and, therefore, cannot be accurately predicted.
The subordination of the Class B Certificates and the creation of the Class
A Reserve Account are intended to enhance the likelihood of receipt by Class A
Noteholders of the full amount of principal of and interest on the Notes due to
them and to decrease the likelihood that the Class A Noteholders will experience
losses. However, in certain circumstances, the Class A Reserve Account could be
depleted and shortfalls could result.
The Class A Reserve Account will be funded by the Seller with cash or
Permitted Investments maturing on or prior to the initial Payment Date and
having, on the Closing Date, a value of approximately $40,786,363.79 (the "Class
A Reserve Initial Deposit"). The Class A Reserve Initial Deposit will be
augmented on each Payment Date by the deposit in the Class A Reserve Account of
Available Funds to the extent necessary to maintain the amount in the Class A
Reserve Account at an amount equal to the Specified Class A Reserve Balance.
Amounts in the Class A Reserve
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Account on any Payment Date (reduced by the amount of all distributions made on
such Payment Date) in excess of the Specified Class A Reserve Balance for such
Payment Date will be released for (i) deposit into the Class B Reserve Account
or (ii) to the extent the amount on deposit therein is equal to the Specified
Class B Reserve Balance, payment to the Seller.
The "Specified Class A Reserve Balance", with respect to the Closing Date,
will equal $40,786,363.79, and with respect to any Payment Date, will equal
$57,100,909.30, except where on any Payment Date (i) the annualized average for
the preceding three Collection Periods of the ratios of net losses (that is, the
net balances of all Receivables which are charged-off in the applicable
Collection Period, less any Liquidation Proceeds or Recoveries received in such
Collection Period) to the Pool Balance as of the first day of each such
Collection Period exceeds 2.25% or (ii) the average for the preceding three
Collection Periods of the ratios of (a) the sum of (1) the balance of
Receivables that are delinquent 61 days or more plus (2) the balance of
Receivables for any Contracts relating to repossessed Vehicles which, in both
cases, have not been charged-off to (b) such outstanding Pool Balance exceeds
4.25%, then the Specified Class A Reserve Balance for such Payment Date will
equal $65,258,182.06.
The Seller may reduce the Specified Class A Reserve Balance provided that
(a) both Rating Agencies confirm in writing to the Indenture Trustee and the
Seller prior to such reduction that such reduction will not result in a lowering
of or a withdrawal of the then-current rating of any Class of Notes and (b) an
Opinion of Counsel is delivered to the Indenture Trustee to the effect that the
proposed change will not adversely affect the status of the Notes as debt.
The "Specified Class B Reserve Balance" will initially be zero and remain
zero for so long as the Seller retains the Class B Certificates. At such time,
if any, as the Seller determines to sell the Class B Certificates, the Specified
Class B Reserve Balance will be an amount determined by the Seller in
consultation with the Rating Agencies in order to achieve the desired rating for
the Class B Certificates.
ADVANCES
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 a Receivable (other than a Purchased Receivable) are less than the
Scheduled Payment in respect of such Receivable, the Payahead Balance for such
Receivable will be applied by the Indenture Trustee to the extent of the
shortfall, and such Payahead Balance will be reduced accordingly. On the related
Payment Date, the Servicer will make an advance to the extent of any remaining
shortfall in respect of such Receivable (such advance, an "Advance"); provided
that no successor Servicer will be required to make Advances.
"Payahead Balance" means, with respect to a Receivable, 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 Receivable (including any
amount paid by or on behalf of the Obligor prior to the Cutoff Date that is due
on or after the Cutoff Date and was not used to reduce the Principal Balance of
such Receivable), as reduced by applications of previous Payaheads with respect
to such Receivable in accordance with the Sale and Servicing Agreement.
The Servicer will recoup Advances from subsequent payments by or on behalf
of the respective Obligor or from insurance, Liquidation Proceeds or Recoveries
with respect to such Receivable, or, upon the determination that reimbursement
from the preceding sources is unlikely, will recoup the Advance from any
collections made on other Receivables.
The Servicer will not be required to make any Advance with respect to a
Receivable to the extent that it does not expect to recoup the Advance from
subsequent payments on such Receivable. In determining whether to make an
Advance in connection with a delinquent Receivable, the Servicer will consider
certain factors with respect to the delinquent Receivable. Among such
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factors will be the payment history for such Receivable, the financial condition
of the Obligor, and the Obligor's reason for the delinquency. The Servicer's
decision not to make an Advance in connection with a delinquent Receivable would
generally coincide with the charge-off of such Receivable.
If MBCC 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) and, to the extent available, amounts on deposit in the Class
A Reserve Account. See "-- The Indenture Cash Flows" and "-- Subordination of
the Class B Certificates; Reserve Accounts."
COLLECTIONS ON THE RECEIVABLES
The Servicer will deposit all payments on Receivables, including
Liquidation Proceeds, but excluding certain amounts payable to the Servicer
under the Sale and Servicing Agreement, including late fees and charges on the
Receivables (which are not required to be deposited in the Collection Account),
into the Collection Account not later than two Business Days after receipt
thereof unless:
(x)(i) MBCC is the Servicer, (ii) the obligation of the Servicer to
make required remittances under the Sale and Servicing Agreement on each
Payment Date is unconditionally guaranteed by DBNA pursuant to a guaranty
agreement in favor of the Owner Trustee (the "Servicing Guaranty
Agreement") and DBNA will have a rating of at least P-1 from Moody's and at
least A-1 from S&P with respect to its short-term obligations and (iii) no
Event of Servicing Termination shall have occurred (each, a "Monthly
Remittance Condition"), or
(y) the failure to satisfy a Monthly Remittance Condition will not
affect the rating of any Class of Notes as confirmed in writing by the
Rating Agencies,
in which case such amounts will be paid into the Collection Account on the
Payment Date.
The Seller or the Servicer will also deposit into the Collection Account on
the Payment Date the Purchase Amount of each Receivable to be repurchased or
purchased by it pursuant to an obligation that arose during the preceding
Collection Period. The Servicer will be entitled to withhold, or to be
reimbursed from amounts otherwise payable into, or on deposit in, the Collection
Account with respect to a Collection Period, the amounts previously deposited in
the Collection Account but later determined to have resulted from mistaken
deposits or postings or checks returned unpaid for insufficient funds or other
reasons.
In those cases where a subservicer is servicing a Receivable pursuant to a
subservicing agreement, 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. See "Description of the Transfer
and Servicing Agreements -- Servicing Procedures."
As an administrative convenience, unless the Servicer is required to remit
collections within two Business Days of receipt thereof, the Servicer will be
permitted to make the deposit of collections and Purchase Amounts for or with
respect to the Collection Period net of distributions to be made to the Servicer
with respect to the Collection Period. The Servicer, however, will account to
the Indenture Trustee and the Noteholders as if all deposits, distributions and
transfers were made individually.
STATEMENTS TO NOTEHOLDERS
On or prior to each Payment Date, the Servicer will prepare and provide to
the Indenture Trustee a statement to be delivered to the Noteholders. Each such
statement to be delivered to
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Noteholders will include the following information as to the Notes with respect
to such Payment Date and the related Collection Period:
(i) the amount of the payment allocable to principal of each Class of
Notes;
(ii) the amount of the payment allocable to interest on or with
respect to each Class of Notes;
(iii) the amount of the Total Servicing Fee with respect to such
Collection Period;
(iv) the aggregate outstanding principal amount of each Class of the
Notes and the applicable Note Pool Factor (calculated 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;
(v) the Pool Balance (calculated as of the close of business on the
last day of the preceding Collection Period);
(vi) the amounts of the Interest Carryover Shortfall and the Principal
Carryover Shortfall, if any, for such Payment Date and the portion thereof
attributable to each Class of Notes;
(vii) the balance of Class A Reserve Account on such Payment Date,
after giving effect to changes therein on such Payment Date; and
(viii) the aggregate Purchase Amount of Receivables repurchased by the
Seller or purchased by the Servicer, if any, with respect to the related
Collection Period.
Each amount set forth pursuant to clauses (i), (ii), (iv) and (vi) 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
(i), (ii), (iii) and (vii) above for the purposes of such Noteholder's
preparation of Federal income tax returns. See "-- Book Entry Registration" and
"Certain Federal Income Tax Consequences."
INDENTURE
Events of Default. The "Events of Default" in the Indenture consist of (i)
a default for five days or more in the payment of interest on any Note when the
same becomes due and payable if such default continues for a period of five days
or more; (ii) a default in the payment of principal of, or any installment of
principal of, any Note when the same becomes due and payable; (iii) a default in
the observance or performance of any material covenant or agreement of the Trust
made in the Indenture, or any representation or warranty of the Trust made in
the Indenture or in any certificate or writing delivered pursuant thereto proves
to have been incorrect in any material respect as of the time when made, and the
continuation of such default for a period of 60 days or in the case of a
materially incorrect representation or warranty, 30 days, after notice thereof
is given to the Trust by the Indenture Trustee or the Trust and the Indenture
Trustee by the Holders of not less than 25% of the aggregate principal amount of
the outstanding Notes of all Classes; or (iv) certain events of bankruptcy,
insolvency, receivership or liquidation of the Trust. (Indenture, Section 5.1).
Noteholders holding not less than a majority of the aggregate principal
amount of the Notes outstanding, voting as a group, may waive any past default
or Event of Default prior to the declaration of the acceleration of the maturity
of the Notes, except a default (i) in payment of principal of or interest on any
of the Notes or (ii) in respect of any covenant or provision in the Indenture
which cannot be modified or amended without unanimous consent of the
Noteholders.
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(Indenture, Section 5.12). Any such waiver could be treated, for Federal income
tax purposes, as a constructive exchange of the Notes by the Noteholders for
deemed new Notes upon which gain or loss would be recognized.
Remedies. If an Event of Default should occur and be continuing, the
Indenture Trustee or the Holders of a majority of the aggregate outstanding
principal amount of the outstanding Notes of all Classes, voting as a group, may
declare the principal of the Notes of all Classes to be immediately due and
payable. Such declaration may be rescinded by the Holders of a majority of the
aggregate principal amount of the outstanding Notes before a judgment or decree
for payment of the amount due has been obtained by the Indenture Trustee if (i)
the Trust has deposited with the Indenture Trustee an amount sufficient to pay
(x) all amounts advanced by the Indenture Trustee and its costs and expenses and
(y) all interest on and principal of the Notes and all other amounts that would
be due under the Indenture if the Event of Default giving rise to such
declaration had not occurred and (ii) all Events of Default (other than the
nonpayment of principal of the Notes that has become due solely by such
acceleration) have been cured or waived. (Indenture, Section 5.2). Any such
rescission could be treated, for Federal income tax purposes, as a constructive
exchange of the Notes by the Noteholders for deemed new Notes upon which gain or
loss would be recognized.
If the Notes have been declared due and payable following an Event of
Default, the Indenture Trustee may institute proceedings to collect amounts due,
exercise remedies as a secured party, including foreclosure or sale of the
Collateral, or elect to maintain the Collateral and continue to apply proceeds
from the Collateral as if there had been no declaration of acceleration. The
Indenture Trustee may not, however, sell the Collateral following an Event of
Default, other than a default in the payment of any principal, or a default for
five days or more in the payment of any interest on the Notes, unless (i) 100%
of the Noteholders consent thereto, (ii) the proceeds of such sale are
sufficient to pay in full the principal of and the accrued interest on the then
outstanding Notes or (iii) the Indenture Trustee determines that the Collateral
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
conclusively rely upon an opinion of an independent accountant or investment
banking firm as to feasibility of such action and the sufficiency of the
Collateral 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 Collateral following the occurrence of an
Event of Default under the circumstances described in the preceding paragraph
pursuant to the direction of the Indenture Trustee or the Noteholders, the
proceeds of such sale will be distributed, first, to the Servicer for amounts
due in respect of any unreimbursed Advances; second, to the Indenture Trustee
for amounts due as compensation or indemnity payments pursuant to the terms of
the Indenture; third, to the Servicer for due and unpaid Total Servicing Fees;
fourth, to the Noteholders for interest which is due and unpaid; fifth, 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 Indenture, the Trust Agreement and the Sale and Servicing
Agreement. (Indenture, Section 5.4).
Subject to the provisions of the Indenture relating to the duties of the
Indenture Trustee, in case an Event of Default occurs and is continuing with
respect to the Notes, the Indenture Trustee will be under no obligation to
exercise any of the rights or powers under the Indenture at the request or
direction of any of the Noteholders, if the Indenture Trustee reasonably
believes it will not be adequately indemnified against the costs, expenses and
liabilities which might be incurred by it in complying with such request.
Subject to such provisions for indemnification and certain limitations contained
in the Indenture, the Holders of not less than a majority of the aggregate
principal amount of the outstanding Notes, voting as a group, will have the
right to direct the time, method and place of conducting any proceeding or any
remedy available to the Indenture Trustee with respect to the
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Notes or exercising any trust power conferred on the Indenture Trustee, subject
to certain limitations, and prior to the acceleration of the maturity of the
Notes, the Holders of not less than a majority of the aggregate principal amount
of the outstanding Notes, voting as a group, may, in certain cases, waive any
default with respect thereto, except a default in the payment of principal or
interest or a default in respect of a covenant or provision of the Indenture
that cannot be modified without the waiver or consent of all of the Holders of
the outstanding Notes. (Indenture, Sections 5.11 and 5.12). Until such time, if
any, as Definitive Notes have been issued, the Indenture Trustee will act only
in accordance with the instructions of Cede, as nominee for DTC. However, under
the rules, DTC will act only in accordance with the instructions of the DTC
Participants to whom Notes are credited, which will in turn act in accordance
with the instructions of persons holding beneficial interests in such Notes
through such DTC Participants. Accordingly, although only Cede will be entitled
to vote under the Indenture, Note Owners will be entitled to instruct DTC as to
the manner in which to vote.
No Noteholder will have the right to institute any proceeding with respect
to the Indenture, unless (i) such Noteholder previously has given to the
Indenture Trustee written notice of a continuing Event of Default, (ii) the
Holders of not less than 25% of the aggregate principal amount of the Notes
outstanding have made written request of the Indenture Trustee to institute such
proceeding in its own name as Indenture Trustee, (iii) such Noteholder or
Noteholders have offered the Indenture Trustee reasonable indemnity satisfactory
to the Indenture Trustee, (iv) the Indenture Trustee has for 60 days failed to
institute such proceeding after its receipt of written notice and its request
and the offer of the required indemnity and (v) no direction inconsistent with
such written request has been given to the Indenture Trustee during such 60-day
period by the holders of a majority of the aggregate principal amount of the
Notes outstanding. (Indenture, Section 5.6).
Neither the Indenture Trustee nor the Owner Trustee in their respective
individual capacities, nor any Holder of a Certificate, nor any of their
respective owners, beneficiaries, agents, officers, directors, employees,
successors or assigns will, in the absence of an express agreement to the
contrary, be personally liable for the payment of interest on or principal of
the Notes or for the agreements of the Trust and the Owner Trustee, in its
capacity as trustee, contained in the Indenture.
Certain Covenants. The Trust will not, among other things, (i) except as
expressly permitted by the Indenture, the Transfer and Servicing Agreements or
certain related documents (collectively, the "Basic Documents") sell, transfer,
exchange or otherwise dispose of any of the assets of the Trust, (ii) claim any
credit on or make any deduction from the principal or interest payable in
respect of the Notes (other than amounts withheld under the Code or applicable
state law) or assert any claim against any present or former Holder of Notes
because of the payment of taxes levied or assessed upon the Trust, (iii)
dissolve or liquidate in whole or in part or (iv) permit (w) the validity or
effectiveness of the Indenture to be impaired, (x) any person to be released
from any covenants or obligations with respect to the Notes under the Indenture
except as may be expressly permitted thereby, (y) any lien, charge, excise,
claim, security interest, mortgage or other encumbrance to be created on or
extend to or otherwise arise upon or burden the assets of the Trust or any part
thereof, or any interest therein or the proceeds therefrom or (z) 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 Collateral.
(Indenture, Section 3.8).
The Trust may not engage in any activities other than financing, acquiring,
owning, pledging and managing the Receivables 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).
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The Trust will not make any payments to Certificateholders in respect of
their Certificates for any Collection Period unless the Accrued Interest on the
Notes and the Total Servicing Fee have been provided for.
The Trust will or will cause the Servicer to deliver to the Indenture
Trustee on or prior to each Payment Date the disbursement and payment
instructions as required pursuant to the Indenture. (Sale and Servicing
Agreement, Section 4.9).
Replacement of Indenture Trustee. Noteholders holding not less than a
majority of the aggregate principal amount of the outstanding Notes, voting as a
group, may remove the Indenture Trustee without cause by so notifying the
Indenture Trustee and the Trust, and following such removal may appoint a
successor Indenture Trustee. Any successor Indenture Trustee must at all times
satisfy the requirements of Section 310(a) of the Trust Indenture Act of 1939,
as amended, and must have a combined capital and surplus of at least $50,000,000
and a long-term debt rating of investment grade by each Rating Agency or
otherwise acceptable to each Rating Agency. (Indenture, Sections 6.8 and 6.11).
The Indenture Trustee may resign at any time by so notifying the Trust and
the Noteholders. The Trust will be required to remove the Indenture Trustee if
the Indenture Trustee (i) ceases to be eligible to continue as the Indenture
Trustee, (ii) is adjudged a bankrupt or insolvent, (iii) comes under the charge
of a receiver or other public officer, or (iv) otherwise becomes incapable of
acting. Upon the resignation or required removal of the Indenture Trustee, or
the failure of the Noteholders to appoint a successor Indenture Trustee
following the removal without cause of the Indenture Trustee, the Trust will be
required promptly to appoint a successor Indenture Trustee. (Indenture, Section
6.8). No resignation or removal of the Indenture Trustee, or appointment of a
successor Indenture Trustee, will be effective until the acceptance of
appointment by the successor Indenture Trustee pursuant to the Indenture.
Duties of Indenture Trustee. Except during the continuance of an Event of
Default, the Indenture Trustee (i) will perform such duties and only such duties
as are specifically set forth in the Indenture, (ii) may in the absence of bad
faith, conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, on certificates or opinions furnished to the
Indenture Trustee which conform to the requirements of the Indenture, and (iii)
will examine any such certificates and opinions which are specifically required
to be furnished to the Indenture Trustee by the Indenture to determine whether
or not they conform to the requirements of the Indenture. Upon the continuance
of an Event of Default of which a responsible officer of the Indenture Trustee
has actual knowledge, the Indenture Trustee will be required to exercise the
rights and powers vested in it by the Indenture and use the same degree of care
and skill in the exercise thereof as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs. (Indenture,
Section 6.1).
Compensation and Indemnity. The Trust will, or will cause the
Administrator to, (i) pay to the Indenture Trustee from time to time reasonable
compensation for its services in accordance with the prevailing fee
arrangements, (ii) reimburse the Indenture Trustee for all reasonable expenses,
advances and disbursements reasonably incurred and (iii) indemnify the Indenture
Trustee for, and hold it harmless against, any and all losses, liability or
expense (including attorneys' fees) incurred by it in connection with the
performance of its duties under the Indenture and under the Basic Documents. 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 (a) 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, (b) 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 (c) 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
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Indenture Trustee has actual knowledge thereof or has received written notice
thereof in accordance with the provisions of the Indenture. (Indenture, Sections
6.1 and 6.7).
Access to Noteholder Lists. If Definitive Notes are issued in the limited
circumstances described herein and the Indenture Trustee is not the registrar
for the Notes, the Trust will furnish or cause to be furnished to the Indenture
Trustee a list of the names and addresses of the Noteholders (i) as of each
Record Date, within five days thereafter and (ii) as of not more than 10 days
prior to the time such list is furnished, within 30 days after receipt by the
Trust of a written request therefor. (Indenture, Section 7.1).
Annual Compliance Statement. The Trust will be required to file annually
with the Indenture Trustee a written statement as to the fulfillment of its
obligations under the Indenture. (Indenture, Section 3.9).
Satisfaction and Discharge of Indenture. The Indenture will be discharged
with respect to the Collateral securing the Notes upon the delivery to the
Indenture Trustee for cancellation of all the Notes or, with certain
limitations, including receipt of certain opinions with respect to tax matters,
upon deposit with the Indenture Trustee of funds sufficient for the payment in
full of all of the Notes (including interest and any fees due and payable to the
Owner Trustee or the Indenture Trustee). (Indenture, Section 4.1).
Modification of Indenture. Without the consent of any Noteholders but with
prior notice to the Rating Agencies, the Owner Trustee, on behalf of the Trust,
and the Indenture Trustee, upon request by the Trust, may execute a supplemental
indenture for the purpose of, among other things, adding to the covenants of the
Trust, curing any ambiguity, correcting or supplementing any provision which may
be inconsistent with any other provision or making any other provision with
respect to matters or questions arising under the Indenture which will not be
inconsistent with other provisions of the Indenture; provided that (x) such
action will not, (i) as evidenced by an opinion of counsel (which may be
internal counsel to the Seller or the Servicer (an "Opinion of Counsel")),
materially adversely affect the interests of any Noteholder and (ii) as
confirmed by each Rating Agency rating any Class of Notes, cause the
then-current rating assigned to any Class of Notes to be withdrawn, reduced or
qualified and (y) an Opinion of Counsel as to certain tax matters is delivered.
(Indenture, Section 9.1).
The Owner Trustee, on behalf of the Trust, and the Indenture Trustee, upon
request by the Trust, may also enter into supplemental indentures, with the
consent of not less than a majority of the Holders of the aggregate principal
amount of the outstanding Notes, voting as a group, and with prior written
notice to each Rating Agency, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Indenture or
of modifying in any manner the rights of Noteholders; provided, that (x) such
action will not, (i) as evidenced by an Opinion of Counsel, materially adversely
affect the interests of any Noteholder and (ii) as confirmed by each Rating
Agency rating any Class of Notes, cause the then-current rating assigned to any
such Class of Notes to be withdrawn, reduced or qualified and (y) an Opinion of
Counsel as to certain tax matters is delivered. (Indenture, Section 9.2).
Without the consent of the Holder of each outstanding Note affected
thereby, however, no supplemental indenture may (i) change the Final Payment
Date for any Class of Notes or the due date of any installment of principal of
or interest on any Note or reduce the principal amount thereof, the interest
rate specified thereon or the redemption price with respect thereto, change the
provisions of the Indenture relating to the application of collections on, or
the proceeds of the sale of, the Collateral to payment of principal of or
interest on the Notes, or change any place of payment where, or the coin or
currency in which, any Note or any interest thereon is payable, (ii) impair the
right to institute suit for the enforcement of certain provisions of the
Indenture regarding payment, (iii) reduce the percentage of the aggregate
outstanding principal amount of the Notes the consent of the Holders of which is
required for any such supplemental indenture or for any waiver of compliance
with certain provisions of the Indenture or of certain defaults thereunder and
their
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consequences as provided for in the Indenture, (iv) modify or alter the
provisions of the Indenture regarding the voting of Notes held by the Trust, the
Seller, the Servicer, an affiliate of any of them or any obligor on the Notes,
(v) reduce the percentage of the aggregate outstanding principal amount of the
Notes the consent of the Holders of which is required to direct the Indenture
Trustee to sell or liquidate the Collateral if the proceeds of such sale would
be insufficient to pay the principal amount of and accrued but unpaid interest
on the Notes, (vi) modify any provision of the Indenture specifying a percentage
of the aggregate principal amount of the Notes necessary to amend the Indenture
or the other Basic Documents except to increase any percentage specified in the
Indenture or to provide that certain additional provisions of the Indenture or
the Basic Documents cannot be modified or waived without the consent of the
Holder of each outstanding Note affected thereby, (vii) modify any provisions of
the Indenture in such manner as to affect the calculation of the amount of any
payment of interest or principal due on any Note on any Payment Date or to
affect the rights of the Holders of Notes to the benefit of any provisions for
the mandatory redemption of the Notes contained in the Indenture or (viii)
permit the creation of any lien ranking prior to or on a parity with the lien of
the Indenture with respect to any of the Collateral 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 9.1).
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The Trust will purchase the Receivables, and the Servicer will undertake to
service the Receivables pursuant to the Sale and Servicing Agreement. The Trust
will be created and the Certificates will be issued pursuant to the Trust
Agreement. MBCC will undertake certain administrative duties with respect to the
Trust pursuant to the Administration Agreement (together with the Sale and
Servicing Agreement and the Trust Agreement, the "Transfer and Servicing
Agreements"). Forms of the Transfer and Servicing Agreements have been filed as
exhibits to the Registration Statement of which this Prospectus forms a part.
The following summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the provisions of the Transfer and
Servicing Agreements.
SALE AND ASSIGNMENT OF THE RECEIVABLES
Prior to the time of issuance of the Notes, pursuant to the Purchase
Agreement, MBCC will sell and assign to the Seller, without recourse, its entire
right, title and interest in, to and under the Receivables, including its
security interests in the Financed Vehicles. At the time of issuance of the
Notes, the Seller will sell and assign to the Trustee, without recourse, the
Seller's entire interest in the Receivables, including its security interests in
the Financed Vehicles. Each Receivable conveyed by the Seller to the Trust will
be identified in a schedule attached to the Sale and Servicing Agreement. The
Owner Trustee will, concurrently with such sale and assignment, execute,
authenticate and deliver the Certificates. The net proceeds received from the
sale of the Notes will be applied to the purchase of the Receivables.
In the Purchase Agreement, MBCC will represent and warrant to the Seller,
and in the Sale and Servicing Agreement the Seller will represent and warrant to
the Owner Trustee, among other things, that (i) the information provided in the
schedule of Receivables is correct in all material respects; (ii) MBCC shall
have determined whether or not the Obligor on each Receivable has obtained
physical damage insurance (which shall not be force-placed insurance) covering
the Financed Vehicle in accordance with its normal requirements; (iii) at the
Closing Date, the Receivables are free and clear of all security interests,
liens, charges, and encumbrances and no setoffs, defenses, or counterclaims
against it have been asserted or threatened; (iv) at the Closing Date, each of
the Receivables is or will be secured by a perfected first priority security
interest in the Financed Vehicle in favor of MBCC; and (v) each Receivable, at
the time it was originated, complied, and at the date of issuance of the Notes,
complies in all material respects with applicable
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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 MBCC and the Seller
for breach of any of the foregoing representations and warranties with respect
to a Receivable will be to require MBCC 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 the payment in full of the principal of, and any accrued and unpaid
interest on, any securities 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 and the Indenture Trustee. 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, UCC financing statements reflecting the sale and
assignment of the Receivables by MBCC to the Seller and by the Seller to the
Trust will be filed, and the Servicer's accounting records and computer systems
will be marked to reflect such sale and assignment. See "The Trust" and "Certain
Legal Aspects of the Receivables."
MANDATORY REPURCHASE OF RECEIVABLES
In the event of a breach or failure to be true of any representation or
warranty with respect to the Receivables described in "-- Sale and Assignment of
the Receivables," which breach or failure materially and adversely affects the
interest of the Trust in a Receivable, the Seller, unless such breach or failure
has been cured by the last day of the Collection Period which includes the 60th
day after the date on which the Seller becomes aware of, or receives written
notice from the Owner Trustee or the Servicer of, such breach or failure, will
be required to repurchase the Receivable from the Trust, and MBCC 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 MBCC 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 MBCC 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 Collection Period
preceding the Collection Period in which such Payment Date occurred 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 Collection Period
preceding the Collection Period in which such Payment Date occurred 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.
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
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degree of skill and care that the Servicer exercises with respect to comparable
motor vehicle and commercial vehicle receivables owned and/or serviced by the
Servicer for itself or others.
Although it has no current plans to do so, the Servicer may enter into
subservicing agreements with Eligible Servicers for the subservicing of
Receivables. Any such subservicing agreements will contain provisions
substantially identical to those contained in the Sale and Servicing Agreement
and may contain such other provisions as are not inconsistent with the terms of
the Sale and Servicing Agreement. The Servicer may terminate a subservicing
agreement and either service the related Receivables directly or enter into a
new subservicing agreement for such Receivables with another subservicer,
provided, that any such subservicer is an Eligible Servicer. Notwithstanding any
subservicing agreement, the Servicer will remain obligated and liable to the
Trust and the Owner Trustee for servicing and administering the Receivables in
accordance with the Sale and Servicing Agreement as if the Servicer alone were
servicing the Receivables. References herein to actions required or permitted to
be taken, or restrictions on actions to be taken, by the Servicer include such
actions by a subservicer. References herein to amounts received by the Servicer
include amounts received by a subservicer.
"Eligible Servicer" means a person which, at the time of its appointment as
Servicer or as a subservicer, (i) has a net worth of not less than $50,000,000,
(ii) is servicing a portfolio of motor vehicle and commercial vehicle retail
installment sale contracts and/or motor vehicle and commercial 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 and
commercial vehicle retail installment sale contracts and/or motor vehicle and
commercial vehicle loans similar to the Receivables professionally and
competently in accordance with standards of skill and care that are consistent
with prudent industry standards, and (v) is qualified and entitled to use
pursuant to a license or other written agreement, and agrees to maintain the
confidentiality of, the software which the Servicer or any subservicer uses in
connection with performing its duties and responsibilities under the Sale and
Servicing Agreement or the related subservicing agreement or obtains rights to
use, or develops at its own expense, software which is adequate to perform its
duties and responsibilities under the Sale and Servicing Agreement or the
related subservicing agreement.
The Servicer will covenant in the Sale and Servicing Agreement that: (i)
the Financed Vehicle securing each Receivable will not be released from the
security interest granted by the Receivable in whole or in part, except as
contemplated by the Sale and Servicing Agreement; (ii) the Servicer will not
(nor will it permit any subservicer to) impair in any material respect the
rights of the Trust, the Indenture Trustee, the Noteholders, the Owner Trustee
or the Certificateholders in the Receivables, or, subject to clause (iii) below,
otherwise amend or alter the terms thereof if, as a result of such amendment or
alteration, the interests of the Trust, the Noteholders, the Indenture Trustee,
the Owner Trustee, or the Certificateholders under the Sale and Servicing
Agreement would be materially adversely affected; and (iii) the Servicer will
not increase or decrease the number or amount of Scheduled Payments or the
Amount Financed under, 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 on any Receivable for
credit-related reasons that would be acceptable to the Servicer with respect to
comparable motor vehicle or commercial vehicle receivables that it services for
itself or others in accordance with its customary standards if the cumulative
extensions with respect to any Receivable will not cause the term of any such
Receivable to extend beyond the Final Scheduled Maturity Date.
In the event of a breach by the Servicer of any covenant described above
that materially and adversely affects the interests of the Trust in a
Receivable, the Servicer, unless such breach has been cured by the last day of
the Collection Period which includes the 60th day after the date on which the
Servicer becomes aware of, or receives written notice of, such breach, will be
required to purchase the Receivable from the Trust for the Purchase Amount on
the Payment Date immediately following such Collection Period; provided,
however, that with respect to a breach of the covenant described in clause (iii)
of the preceding paragraph, the Servicer will be required to purchase the
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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, MBCC
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 MBCC
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
Advances for which the Servicer will be reimbursed in the manner described under
"Description of the Notes -- Advances."
The Sale and Servicing Agreement will provide that the Servicer will defend
and indemnify the Trust, the Indenture Trustee, the Owner Trustee, the
Noteholders, the Certificateholders and the Seller against any and all costs,
expenses, losses, damages, claims, and liabilities, including reasonable fees
and expenses of counsel and expenses of litigation, arising out of or resulting
from the use, ownership or operation by the Servicer or any affiliate thereof of
any Financed Vehicle, or in respect of any negligence, willful misfeasance or
bad faith of the Servicer in the performance of its duties (other than errors in
judgment) or by reason of reckless disregard of its obligations and duties,
under any Basic Document to which it is a party. The Servicer's obligations to
indemnify the Trust, the Indenture Trustee, the Owner Trustee, the Noteholders,
the Seller and the Certificateholders for the Servicer's actions or omissions
will survive the removal of the Servicer, but will not apply to any action or
omission of a successor Servicer.
SERVICING COMPENSATION
The Servicer will be entitled to receive the Servicing Fee for each
Collection Period, in an amount equal to the product of one-twelfth of the
Servicing Rate and the Pool Balance as of the first day of such Collection
Period. The "Servicing Rate" will equal 1.0% per annum. The Servicer will also
be entitled to receive, as additional servicing compensation, any administrative
fees and charges and all late payment fees and charges paid with respect to the
Receivables other than fees paid in connection with the extension or deferral of
payments on a Receivable (the "Supplemental Servicing Fee"), which will be
deposited in the Collection Account. The Servicing Fee and the Supplemental
Servicing Fee, together with any portion of the Servicing Fee or of the
Supplemental Servicing Fee that remains unpaid from prior Payment Dates (the
"Total Servicing Fee"), will be paid out of Available Funds prior to
distributions to Noteholders and Certificateholders.
The Servicing Fee and the Supplemental Servicing Fee will compensate the
Servicer for performing the functions of a third party servicer of Contracts and
for administering the Receivables on behalf of the Noteholders and the
Certificateholders, including collecting payments, accounting for collections,
furnishing monthly and annual statements to the Indenture Trustee and the Owner
Trustee with respect to distributions, responding to inquiries of Obligors,
investigating delinquencies, and providing collection and repossession services
in cases of Obligor default. In addition, the Servicing Fee and the Supplemental
Servicing Fee will further compensate the Servicer for certain taxes, accounting
fees, outside auditor fees, data processing costs, and other costs incurred by
the
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Servicer under the Sale and Servicing Agreement in connection with administering
and servicing the Receivables.
EVIDENCE AS TO COMPLIANCE
The Sale and Servicing Agreement will provide that a firm of independent
certified public accountants, who may provide audit and other services to the
Servicer, the Seller or MBCC, 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 shorter period in the case of the first such certificate) ended the
preceding December 31 or, if there has been a default in the fulfillment of any
such obligation, describing each such default.
Note Owners may obtain copies of such statements and certificates by
written request addressed to the Indenture Trustee.
CERTAIN MATTERS REGARDING THE SERVICER
The Sale and Servicing Agreement will provide that the Servicer may not
resign from its obligations and duties as Servicer thereunder, except upon a
determination that the Servicer's performance of such duties is no longer
permissible under applicable law. No such resignation will become effective
until the Indenture Trustee or a successor servicer has assumed the Servicer's
servicing obligations and duties under the Sale and Servicing Agreement and
becomes the Administrator under the Administration Agreement.
Any corporation or other entity into which the Servicer may be merged or
consolidated, or that may result from any merger, conversion or consolidation to
which the Servicer is a party, or any entity that may succeed by purchase and
assumption to all or substantially all of the business of the Servicer, where
the Servicer is not the surviving entity and where such corporation or other
entity is an Eligible Servicer and assumes the obligations of the Servicer under
the Sale and Servicing Agreement, will be the successor to the Servicer under
the Sale and Servicing Agreement.
INDEMNIFICATION AND LIMITS ON LIABILITY
The Sale and Servicing Agreement will provide that the Servicer will be
liable only to the extent of the obligations specifically undertaken by it under
the Sale and Servicing Agreement and will have no other obligations or
liabilities thereunder.
The Sale and Servicing Agreement will also provide that the Servicer will
be under no obligation to appear in, prosecute or defend any legal action that
is not incidental to the Servicer's servicing responsibilities under the Sale
and Servicing Agreement and that, in its opinion, may cause it to incur any
expense or liability. The Servicer may, however, at its expense undertake any
reasonable action that it may deem necessary or desirable in respect of the Sale
and Servicing Agreement and the rights and duties of the parties thereto and the
interests of the Noteholders and the Certificateholders thereunder.
EVENTS OF SERVICING TERMINATION
The following events will constitute "Events of Servicing Termination"
under the Sale and Servicing Agreement: (i) any failure by the Servicer to
deliver to the Owner Trustee or the Indenture Trustee the monthly certificate
pursuant to the Sale and Servicing Agreement detailing the collec-
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tions and distributions for any Collection Period (which failure continues
beyond the earlier of three business days from the date such Servicer's
certificate was due to be delivered and the related Payment Date), (ii) any
failure by the Servicer to deliver to the Collection Account or any other
account, any required payment or deposit under the Sale and Servicing Agreement,
which failure continues unremedied for five Business Days following the Due
Date, (iii) any failure by the Servicer duly to observe or perform in any
material respect any other covenant or agreement in the Notes, the Certificates
or the Sale and Servicing Agreement, which failure materially and adversely
affects the rights of Noteholders or Certificateholders and which continues
unremedied for 90 days after written notice of such failure is given to the
Servicer by the Indenture Trustee or the Owner Trustee, as applicable, or to the
Seller, the Servicer, the Owner Trustee and the Indenture Trustee by the Holders
of Notes evidencing not less than 25% in aggregate principal amount of the
outstanding Notes (voting as a group) or, if the Notes have been paid in full
and the Indenture has been discharged in accordance with its terms, by the
holders of Certificates evidencing not less than 25% of the Certificate Balance,
(iv) certain events of bankruptcy, receivership, insolvency, readjustment of
debt, marshalling of assets and liabilities, or similar proceedings with respect
to the Seller or the Servicer and certain actions by the Seller or the Servicer
indicating its insolvency or reorganization pursuant to bankruptcy,
receivership, conservatorship, insolvency, or similar proceedings, and (v)
failure of the Servicer to be an Eligible Servicer. The Holders of Notes
evidencing not less than a majority of the aggregate principal amount of the
outstanding Notes (voting as a group) (or, if all of the Notes have been paid in
full and the Indenture has been discharged in accordance with its terms, the
Owner Trustee or the holders of Certificates evidencing not less than a majority
of the Certificate Balance) 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. No such waiver will impair the rights of the Noteholders or the
Certificateholders with respect to subsequent defaults. For purposes of the
foregoing, Notes or Certificates owned by the Seller, the Servicer, or any
affiliate of either will not be considered to be "outstanding."
The Indenture Trustee will have no obligation to notify Noteholders of any
event which, with lapse of time to cure, would become an Event of Servicing
Termination, until after the expiration of any applicable cure period.
RIGHTS UPON AN EVENT OF SERVICING TERMINATION
As long as an Event of Servicing Termination remains unremedied, the
Indenture Trustee or the holders of Notes evidencing not less than a majority of
the aggregate principal amount of the outstanding Notes (or, if the Notes have
been paid in full and the Indenture has been discharged in accordance with its
terms, the Owner Trustee or the holders of Certificates evidencing not less than
a majority of the Certificate Balance) 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.
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AMENDMENT
The Transfer and Servicing Agreements may be amended by the parties thereto
without the consent of the Noteholders or the Certificateholders, to cure any
ambiguity, to correct or supplement any provision therein which may be
inconsistent with any other provision therein, and to add, change or eliminate
any other provision of the applicable Transfer and Servicing Agreement which is
not inconsistent with the provisions of such Transfer and Servicing Agreement;
provided, that such action will not, as evidenced by an Opinion of Counsel to
the Indenture Trustee and the Owner Trustee, materially and adversely affect the
interest of any Noteholder or Certificateholder or, with respect to the Trust
Agreement, have certain adverse tax consequences.
The Transfer and Servicing Agreements may also be amended by the parties
thereto (with, in the case of the Sale and Servicing Agreement, consent of the
Indenture Trustee and with, in the case of the Administration Agreement, consent
of the Seller) with the consent of the Holders of Notes evidencing not less than
a majority of the aggregate principal amount of the then outstanding Notes,
voting as a group, 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. However, no such amendment
may (i) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, or change the allocation or priority of, collections of payments
on Receivables or distributions that are required to be made on any Note or
Certificate, or change any Interest Rate or the Specified Class A Reserve
Balance or the Specified Class B Reserve Balance, without the consent of all
adversely affected Noteholders or Certificateholders, (ii) reduce the aforesaid
percentage of the Notes and the Certificates which is required to consent to any
such amendment, without the consent of all Noteholders or Certificateholders
affected thereby, or (iii) adversely affect the ratings of any Class of Notes by
the Rating Agencies without the consent, respectively, of holders of Notes
evidencing not less than 66 2/3% of the aggregate principal amount of the then
outstanding Notes of such Class. Additionally, with respect to an amendment of
the Trust Agreement, an Opinion of Counsel to the effect that such amendment
will not have certain adverse tax consequences shall be furnished to the
Indenture Trustee and the Owner Trustee. See "Description of the Notes -- Book
Entry Registration."
TERMINATION
The obligations of the Seller, the Servicer, the Owner Trustee and the
Indenture Trustee pursuant to the Indenture and the Transfer and Servicing
Agreements will, except with respect to certain reporting requirements,
terminate upon the earliest of (i) the Payment Date next succeeding the
Servicer's purchase of the Receivables, as described below, (ii) payment to
Noteholders and Certificateholders of all amounts required to be paid to them
pursuant to the Transfer and Servicing Agreements and (iii) the Payment Date
next succeeding the month which is one year after the maturity or other
liquidation of the last Receivable and the disposition of any amounts received
upon liquidation of any property remaining in the Trust in accordance with the
terms and priorities set forth in the Transfer and Servicing Agreements.
In order to avoid excessive administrative expense, the Servicer will be
permitted, at its option, in the event that the Pool Balance as of the close of
business on the last day of a Collection Period has declined to 10% or less of
the Initial Pool Balance, to purchase from the Trust, on any Payment Date
occurring in a subsequent Collection Period, all remaining Receivables in the
Trust at a purchase price equal to the outstanding principal amount of the Notes
and the Certificates, in each case plus accrued and unpaid interest thereon. The
exercise of this right will effect early retirement of the Notes and the
Certificates.
The Indenture Trustee will give written notice of termination of the Trust
to each Noteholder of record. The final distribution to any Noteholder will be
made only upon surrender and cancellation of such Holder's Note (whether a
Definitive Note or the one or more physical notes representing the Notes) at the
office or agency of the Indenture Trustee specified in the notice of
termination. Any
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funds remaining in the Trust, after the Indenture Trustee has taken certain
measures to locate a Noteholder and such measures have failed, will be
distributed to the Seller or as otherwise provided in the Transfer and Servicing
Agreements.
ADMINISTRATION AGREEMENT
MBCC, 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 and the Trust Agreement. As
compensation for the performance of the Administrator's obligations under the
Administration Agreement and as reimbursement for its expenses relating thereto,
the Administrator will be entitled to a monthly administration fee, which fee
will be paid by the Servicer.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
RIGHTS IN THE RECEIVABLES
The Receivables are "chattel paper" as defined in the 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. MBCC 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 the Receivables.
Pursuant to the Sale and Servicing Agreement, the Servicer will hold the
Receivables, either directly or through subservicers, as custodian for the
Indenture Trustee and the Trust following the sale and assignment of the
Receivables to the Trust. The Seller will take such action as is required to
perfect the rights of the Indenture Trustee and the Trust in the Receivables.
The Receivables will not be segregated, stamped, or otherwise marked, to
indicate that they have been sold to the Trust. If, through inadvertence or
otherwise, another party purchases (or takes a security interest in) the
Receivables for new value in the ordinary course of business and takes
possession of the Receivables without actual knowledge of the Trust's interest,
the purchaser (or secured party) will acquire an interest in the Receivables
superior to the interest of the Trust.
Under the Sale and Servicing Agreement, the Servicer will be obligated from
time to time to take such actions as are necessary to protect and perfect the
Trust's interest in the Receivables and their proceeds.
SECURITY INTERESTS IN THE FINANCED VEHICLES
Generally, retail installment sale contracts and retail loans such as the
Receivables evidence the credit sale of automobiles or financing of commercial
vehicles 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 Vehicles is generally
governed by the motor vehicle registration laws of the state in which the
vehicle is located. In most states in which the Receivables have been
originated, a security interest in the Vehicle is perfected by notation of the
secured party's lien on the Vehicle's certificate of ownership or title.
MBCC's practice is to take such action as is required in order to perfect
its security interest in a Vehicle under the laws of the jurisdiction in which
the Vehicle is registered. If MBCC, 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 MBCC's security interest
and to whom a certificate of ownership is
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issued in such purchaser's name, holders of perfected security interests in the
Financed Vehicle, and the trustee in bankruptcy of the obligor. MBCC'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, MBCC and the
Seller will warrant in the Purchase Agreement and the Sale and Servicing
Agreement, respectively, that, to the best of their knowledge, 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
or failure to be true of such representation or warranty if the interest of the
Seller and the Trust, respectively, therein are materially and adversely
affected by such breach or failure. This repurchase obligation will constitute
the sole remedy available to the Indenture Trustee and the Noteholders for such
breach or failure.
Pursuant to the Purchase Agreement, MBCC will assign its security interests
in the Financed Vehicles, along with the sale and assignment of the Receivables,
to the Seller, and pursuant to the Sale and Servicing Agreement, the Seller will
assign its security interests in the Financed Vehicles, along with the sale and
assignment of the Receivables, to the Trust. The Servicer will hold the
certificates of title or ownership 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 or ownership
will not be endorsed or otherwise amended to identify the Trust as the new
secured party, however, because of the administrative burden and expense
involved. The Seller will assign its rights under the Purchase Agreement to the
Trust. See "Risk Factors -- Certain Legal Aspects -- The Receivables."
In most states, an assignment of a security interest in a Financed Vehicle
along with the applicable Receivable is an effective conveyance of a security
interest without amendment of any lien noted on such 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 Financed Vehicle owner or of fraud, forgery, negligence or
error by MBCC or administrative error by state or local agencies, the notation
of MBCC'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.
MBCC and the Seller will represent and warrant in the Purchase Agreement
and the Sale and Servicing Agreement, respectively, as to each Receivable that,
to the best of their knowledge, immediately prior to the sale, assignment and
transfer of each Receivable by MBCC to the Seller on the Closing Date, such
Receivables were secured by a valid, subsisting, and enforceable first priority
perfected security interest in the related Financed Vehicle in favor of MBCC
(subject to any statutory or other lien arising by operation of law after the
Closing Date which is prior to such security interest) and, at such time as
enforcement of such security interest is sought, there shall exist a valid,
subsisting, and enforceable first priority perfected security interest in the
Financed Vehicle for the 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 any rights of third parties arising after the Closing Date as a
result of the fraud or forgery of the Vehicle owner or administrative error by
state recording officials which are prior to such security interest). In the
event of an uncured breach or failure to be true of such warranty, MBCC 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 if the interests of the Seller or the Trust,
respectively, therein
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are materially and adversely affected by such breach or failure. This repurchase
obligation will constitute the sole remedy available to the Trust, the
Noteholders and the Certificateholders for such breach or failure. MBCC's and
the Seller's representations and warranties with respect to perfection and
enforceability of a security interest in a Financed Vehicle will not cover
statutory or other liens arising after the Closing Date by operation of law or
any rights of third parties arising as a result of the fraud or forgery of the
Vehicle owner as described above or administrative error by state recording
officials as described above which are prior to such security interest.
Accordingly, any such lien or right would not by itself give rise to a
repurchase obligation on the part of MBCC and the Seller.
Under the laws of most states, a perfected security interest in a Vehicle
continues for four months after the Vehicle is moved to a new state from the one
in which it was initially registered and thereafter until the Vehicle owner
re-registers the 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 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 Vehicle. MBCC
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 Vehicle, re-registration could defeat
perfection. In the ordinary course of servicing retail installment sale
contracts and retail loans, MBCC 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, liens for repairs performed on a Vehicle and
liens for unpaid taxes take priority over a perfected security interest in the
Vehicle. The Code also grants priority to certain Federal tax liens over the
liens of a secured party. The laws of certain states and Federal law permit the
confiscation of Vehicles under certain circumstances if used in unlawful
activities, which may result in the loss of the secured party's perfected
security interest in the confiscated Vehicle. MBCC and the Seller will represent
and warrant in the Purchase Agreement and the Sale and Servicing Agreement,
respectively, that, as of the Closing Date, to the best of its knowledge, no
such liens or rights of confiscation are pending. In the event of a breach or
failure to be true of such representation or warranty which has a material and
adverse effect on the interest of the Trust in a Receivable, MBCC 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 or rights of
confiscation arising at any time after the Closing Date during the term of a
Receivable would not give rise to a repurchase obligation on the part of MBCC
and the Seller.
REPOSSESSION
In the event of a default by an Obligor under a retail installment sale
contract, the holder of a receivable such as 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 MBCC in most
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cases, and is accomplished simply by taking possession of the Financed 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 Financed
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.
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require the secured party to provide an
obligor with reasonable notice of the date, time, and place of any public sale
and/or the date after which any private sale of the collateral may be held. The
obligor generally has the right to redeem the collateral prior to actual sale by
paying the secured party the unpaid principal amount of the obligation, accrued
and unpaid interest, plus, in most cases, reasonable expenses for repossessing,
holding, and preparing the collateral for disposition and arranging for its sale
plus, in some jurisdictions, reasonable attorneys' fees. In some states, the
obligor has the right, prior to actual sale, to reinstatement of the original
loan terms and to return of the collateral by payment of delinquent installments
of the unpaid amount and cure any other defaults. Generally, this right of
reinstatement may be exercised on a limited number of occasions in any one-year
period.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of Financed Vehicles generally will be applied first
to the expenses of repossession and resale and then to the satisfaction of the
indebtedness on the related Receivable. While some states impose prohibitions or
limitations on deficiency judgments if the net proceeds from resale do not cover
the full amount of the indebtedness, a deficiency judgment can be sought in
those states that do not prohibit or limit such judgments. Any such deficiency
judgment would be a personal judgment against the obligor for the shortfall,
however, and a defaulting obligor may have very little capital or few sources of
income available following repossession. Therefore, in many cases, it may not be
useful to seek a deficiency judgment or, if one is obtained, it may be settled
at a significant discount or not paid at all. MBCC generally seeks to recover
any deficiency existing after repossession and sale of a Vehicle.
Occasionally, after resale of a repossessed 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 Vehicle or, if no such lienholder exists or funds remain
after paying such other lienholder, to the former owner of the Vehicle.
CONSUMER PROTECTION LAWS
Numerous Federal and state consumer protection laws and related regulations
impose substantial requirements upon lenders and servicers involved in consumer
finance. These laws include the Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Federal Trade Commission Act, the Fair Credit Billing Act,
the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations AA, B, M and
Z, and other similar acts, state adaptations of the National Consumer Act and of
the Uniform Consumer Credit Code and state motor vehicle retail installment sale
acts, retail installment sales acts and other similar laws. Also, state laws
impose finance charge ceilings and other restrictions on consumer transactions
and require contract disclosures in addition to those required under Federal
law. 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 to the extent they are
consumer finance contracts subject to such requirements. The "Credit Practices"
Rule of the Federal Trade Commission (the "FTC") imposes additional restrictions
on contract provisions and credit practices.
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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 vehicle dealer licensing laws of most states, sellers of vehicles
are required to be licensed to sell such vehicles at retail sale and to
originate certain installment sale contracts or loans in connection with such
sales. In addition, with respect to used vehicles, the FTC's Rule on Sale of
Used Vehicles requires that all sellers of used 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 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 or loan.
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.
MBCC and the Seller will warrant in the Purchase Agreement and the Sale and
Servicing Agreement, respectively, as to each Receivable that such Receivable
complied at the time it was originated and as of the Closing Date in all
material respects with all requirements of applicable law. If, as of the Cutoff
Date, an Obligor had a claim against the Trust for violation of any law, and
such claim materially and adversely affected the Trust's interest in a
Receivable, such violation would create an obligation of MBCC and the Seller
under the Purchase Agreement and the Sale and Servicing Agreement, respectively,
to repurchase the Receivable unless the breach were cured. This repurchase
obligation will constitute the sole remedy of the Trust, the Noteholders, and
the Certificateholders, against the Seller in respect of any such uncured
breach. See "Description of the Transfer and Servicing Agreements -- Sale and
Assignment of the Receivables."
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including Insolvency Laws, may interfere
with or affect the ability of a lender to realize upon collateral or enforce a
deficiency judgment. For example, in a proceeding under the Bankruptcy Code, a
court may prevent a lender from repossessing a 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
The following is a summary of certain United States Federal income tax
considerations that apply to the acquisition, ownership and disposition of Notes
by a Note Owner that is an individual citizen or resident of the United States,
a corporation created or organized in or under the laws of the United States or
any political subdivision thereof or an estate or trust the income of which is
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subject to United States Federal income taxation regardless of its source (a
"United States Holder") or by a Note Owner that is, for United States Federal
income tax purposes, a nonresident alien individual, a foreign corporation or a
nonresident alien fiduciary of a foreign estate or trust (a "United States Alien
Holder"). Although the following summary does not purport to describe all of the
tax considerations that may be relevant to a prospective purchaser of Notes, in
the opinion of Morgan, Lewis & Bockius LLP ("Special Tax Counsel"), such summary
describes the material United States Federal income tax consequences to a United
States Holder or, as the case may be, a United States Alien Holder. Opinions of
tax counsel have no binding effect or official status of any kind; no assurance
can be given that the conclusions set out below would be sustained by a court if
challenged by the Internal Revenue Service ("IRS"). This summary deals only with
Notes that are held as capital assets by United States Holders, or, as the case
may be, United States Alien Holders, and does not address tax considerations
applicable to (i) United States Holders that may be subject to special tax
rules, such as dealers or traders in securities or currencies, financial
institutions, life insurance companies, tax-exempt entities, United States
Holders that hold Notes as a hedge or that are hedged against currency risks or
that hold Notes as a part of a straddle, conversion transaction or other
arrangement involving more than one position or United States Holders whose
functional currency is not the United States dollar and (ii) United States Alien
Holders that may be subject to special tax rules, such as nonresident alien
individuals who have lost United States citizenship or who have ceased to be
treated as resident aliens, corporations that are treated as foreign or domestic
personal holding companies, controlled foreign corporations or passive foreign
investment companies or certain other United States Alien Holders that are owned
or controlled by persons subject to United States Federal income tax.
The discussion below is based upon the provisions of the United States
Internal Revenue Code of 1986, as amended (the "Code"), and regulations, rulings
and judicial decisions thereunder as of the date hereof; any such authority may
be repealed, revoked or modified, perhaps with retroactive effect, so as to
result in Federal income tax consequences different from those discussed below.
THE DISCUSSION SET OUT BELOW IS INTENDED ONLY AS A SUMMARY OF CERTAIN
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF AN INVESTMENT IN THE NOTES.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX
CONSEQUENCES OF AN INVESTMENT IN THE NOTES, INCLUDING THE APPLICATION TO THEIR
PARTICULAR SITUATION OF THE TAX CONSIDERATIONS DISCUSSED BELOW, AS WELL AS THE
APPLICATION OF STATE, LOCAL OR FOREIGN TAX LAWS. THE STATEMENTS OF UNITED STATES
TAX LAW SET OUT BELOW ARE BASED ON THE LAWS IN FORCE AND INTERPRETATIONS THEREOF
AS OF THE DATE OF THIS PROSPECTUS, AND ARE SUBJECT TO ANY CHANGES OCCURRING
AFTER THAT DATE.
GENERAL
Tax Status of the Notes and the Trust. No definitive judicial or
administrative authority relating to the characterization of an instrument as
debt addresses instruments such as the Notes, and courts at times have held that
obligations purporting to be debt constituted equity of the issuer for tax
purposes. However, on the Closing Date, Special Tax Counsel will deliver its
opinion that for Federal income tax purposes under existing law, and subject to
customary assumptions and qualifications set forth therein: (i) the Notes will
be treated as debt, and (ii) the Trust will not be classified as an association
(or publicly traded partnership) taxable as a corporation. The Seller, the Owner
Trustee and the Indenture Trustee have agreed, and the Note Owners 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. If, contrary to the
opinion of Special Tax Counsel, the Trust were treated as a partnership and the
Note Owners were treated as owning equity interests therein, Note Owners would
generally be taxed on their pro rata share of the Trust's income as partners in
a partnership. If the Trust were treated as an association taxable as a
corporation, (i) the Trust would be subject to tax on its income at corporate
tax rates and (ii) if the Note Owners were treated as owning equity interests,
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the Note Owners would be taxed on distributions from the trust as dividends to
the extent of their share of the Trust's earnings and profits and the Trust
would not be entitled to an interest deduction in determining its taxable
income. Any corporate income tax would reduce cash available to pay the Notes.
The balance of the discussion herein assumes that the Notes will properly be
treated as debt for U.S. Federal income tax purposes.
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 Note Owner 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 OID, premium and market discount, if
any, is 1.60% ABS. The amount of OID that will accrue during an accrual period
(generally the period between interest payments or compounding dates) is the
excess (if any) of the sum of (a) the present value of all payments remaining to
be made on the Note as of the close of the accrual period and (b) the payments
during the accrual period of amounts included in the stated redemption price of
the Note, over the "adjusted issue price" of the Note at the beginning of the
accrual period. An "accrual period" is the period over which OID accrues, and
may be of any length, provided, that each accrual period is no longer than one
year and each scheduled payment of interest or principal occurs on either the
last day or the first day of an accrual period. The Issuer intends to report OID
on the basis of an accrual period that corresponds to the interval between
payment dates. The adjusted issue price of a Note is the sum of its issue price
plus prior accruals of OID, reduced by the total payments made with respect to
such Note in all prior periods, other than qualified stated interest payments.
The present value of the remaining payments is determined on the basis of three
factors: (i) the original yield to maturity of the Note (determined on the basis
of compounding at the end of each accrual period and properly adjusted for the
length of the accrual period), (ii) events which have occurred before the end of
the accrual period and (iii) the
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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 Note Owner 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 Note Owner 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 Note Owners based on the Prepayment Assumption, no
representation is made to Note Owners 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 Note Owner makes this election, income on a Note will be calculated
as though (i) the issue price of the Note were equal to the Note Owner's
adjusted basis in the Note immediately after its acquisition by the Note Owner;
(ii) the Note were issued on the Note Owner's acquisition date; and (iii) none
of the interest payments on the Note were "qualified stated interest." A Note
Owner may make such an election for a Note that has premium or market discount,
respectively, only if the Note Owner makes, or has previously made, an election
to amortize bond premium or to include market discount in income currently. See
"-- Market Discount" and "-- Amortizable Bond Premium."
Market Discount. The Notes, whether or not issued with OID, will be
subject to the "market discount rules" of 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 OID that
exceeds a de minimis amount specified in the Code) and thereafter (a) recognizes
gain upon a disposition, or (b) receives payments of principal, the lesser of
(i) such gain or principal payment or (ii) the accrued market discount will be
taxed as ordinary interest income. Generally, the accrued market discount will
be the total market discount on the Note multiplied by a fraction, the numerator
of which is the number of days the Note Owner held the Note and the denominator
of which is the number of days from the date the Note Owner acquired the Note
until its maturity date. The Note Owner may elect, however, to determine accrued
market discount under the constant yield method.
Limitations imposed by the Code which are intended to match deductions with
the taxation of income may defer deductions for interest on indebtedness
incurred or continued, or short-sale expenses incurred, to purchase or carry a
Note with accrued market discount. A Note Owner may elect to include market
discount in gross income as it accrues and, if the Note Owner makes such an
election, is exempt from this rule. Any such election will apply to all debt
instruments acquired by the taxpayer on or after the first day of the first
taxable year to which such election applies. The adjusted basis of a Note
subject to such election will be increased to reflect market discount included
in gross income, thereby reducing any gain or increasing any loss on a sale or
other taxable disposition.
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Amortizable Bond Premium. In general, if a Note Owner purchases a Note at
a premium (that is, an amount in excess of the amount payable upon the maturity
thereof), such Note Owner will be considered to have purchased such Note with
"amortizable bond premium" equal to the amount of such excess. Such Note Owner
may elect to amortize such bond premium as an offset to interest income and not
as a separate deduction item as it accrues under a constant yield method over
the remaining term of the Note. Such Note Owner's tax basis in the Note will be
reduced by the amount of the amortized bond premium. Any such election shall
apply to all debt instruments (other than instruments the interest on which is
excludible from gross income) held by the Note Owner at the beginning of the
first taxable year for which the election applies or thereafter acquired and is
irrevocable without the consent of the IRS. Bond premium on a Note held by a
Note Owner who does not elect to amortize the premium will decrease the gain or
increase the loss otherwise recognized on the disposition of the Note.
Disposition of Notes. A Note Owner's adjusted tax basis in a Note will be
its cost, increased by the amount of any OID, market discount and gain
previously included in income with respect to the Note, and reduced by the
amount of any payment on the Note that is not qualified stated interest and the
amount of bond premium previously amortized with respect to the Note. A Note
Owner will generally recognize gain or loss on the sale or retirement of a Note
equal to the difference between the amount realized on the sale or retirement
and the tax basis of the Note. Such gain or loss will be capital gain or loss
(except to the extent attributable to OID not previously accrued, accrued but
unpaid interest, or as described above under "-- Market Discount") and will be
long-term capital gain or loss if the Note was held for more than one year. In
addition, if the Prepayable Obligation rules apply, any OID that has not accrued
at the time of the payment in full of a Note will be treated as ordinary income.
WAIVERS AND AMENDMENTS
The Indenture permits the Note Owners to waive an Event of Default or
rescind an acceleration of the Notes in some circumstances upon a vote of the
requisite percentage of Note Owners. 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 Note Owner of the Notes for new Notes,
upon which gain or loss would be recognized.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Indenture Trustee will be required to report annually to the IRS, and
to each Note Owner, the amount of interest paid on the Notes (and the amount
withheld for Federal income taxes, if any) for each calendar year, except as to
exempt recipients (generally, corporations, tax-exempt organizations, qualified
pension and profit-sharing trusts, individual retirement accounts, or
nonresident aliens who provide certification as to their status). Each Note
Owner (other than Note Owners who are not subject to the reporting requirements)
will be required to provide, under penalties of perjury, a certificate
containing the Note Owner's name, address, correct Federal taxpayer
identification number (which includes a social security number) and a statement
that the Note Owner is not subject to backup withholding. Should a non-exempt
Note Owner fail to provide the required certification or should the IRS notify
the Indenture Trustee or the Issuer that the Note Owner has provided an
incorrect Federal taxpayer identification number or is otherwise subject to
backup withholding, the Indenture Trustee will be required to withhold (or cause
to be withheld) 31% of the interest otherwise payable to the Note Owner, and
remit the withheld amounts to the IRS as a credit against the Note Owner's
Federal income tax liability.
TAX CONSEQUENCES TO FOREIGN INVESTORS
The following discussion assumes that income or gain with respect to the
Notes is not effectively connected with the conduct by the United States Alien
Holder of a trade or business in the United States.
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WITHHOLDING TAX
Under present United States Federal income tax law and subject to the
discussion of backup withholding tax below:
(i) payments of principal, premium (if any) and interest (including
OID) by the Trust or any of its paying agents (in its capacity as such) to
a United States Alien Holder will be exempt from withholding of United
States Federal income tax (such exemption, the "Portfolio Interest
Exemption"), provided, that (i) such United States Alien Holder does not
own, actually or constructively, a "10 percent shareholder" of the Trust or
the Seller, is not a controlled foreign corporation related to the Trust or
the Seller through stock ownership and is not a bank receiving interest
described in Section 881(c)(3)(A) of the Code and (ii) the statement
described below has been provided by or with respect to the beneficial
owner; and
(ii) a United States Alien Holder of a Note will not be subject to
withholding of United States Federal income tax on any gain realized on the
sale or exchange of a Note.
Sections 871(h) and 881(c) of the Code require that, in order to obtain the
Portfolio Interest Exemption with respect to a Note, either the beneficial owner
of the Note, or a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business ( a "financial institution") and that holds the Note on behalf of
such beneficial owner, file a statement with the withholding agent to the effect
that the beneficial owner of the Note is not a United States person (within the
meaning of Section 7701(a)(30) of the Code). Under current United States
Treasury regulations, which generally apply to payments on a Note on or before
December 31, 1999, the statement requirement of Sections 871(h) and 881(c) will
be satisfied if (i) the beneficial owner of a Note certifies on IRS Form W-8,
under penalties of perjury, that it is not a United States person and provides
its name and address and (ii) any financial institution holding the Note on
behalf of the beneficial owner files a statement with the withholding agent to
the effect that it has received such a statement from the beneficial owner (and
furnishes the withholding agent with a copy thereof). The Final Regulations,
which generally apply to payments on a Note after December 31, 1998, provide
alternative methods for satisfying the certification requirement described
above.
ESTATE TAX
Under Section 2105(b) of the Code, a Note held by an individual who is not
a citizen or resident of the United States at the time of his death will not be
subject to United States Federal estate tax as a result of such individual's
death, provided, that (i) the individual is not a "10 percent shareholder" of
the Trust or the Seller and (ii) at the time of such individual's death, income
with respect to such Note would not have been effectively connected to the
conduct by such individual of a trade or business in the United States.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
Backup withholding tax will not apply to payments made by the Trust or a
paying agent (in its capacity as such) on a Note if the certifications required
by Sections 871(h) and 881(c) of the Code are received, provided in each case
that the Trust or such paying agent, as the case may be, does not have actual
knowledge (and, with respect to payments made after December 31, 1999, does not
have reason to know) that the payee is a United States person.
Payments of proceeds from the sale or exchange of a Note generally will not
be subject to information reporting or backup withholding tax if they are made
to or through a foreign office of a broker. However, if such broker is a United
States person, a controlled foreign corporation for United States tax purposes,
a foreign person 50 percent or more of whose gross income is effectively
connected with a United States trade or business for a specified three-year
period or, in the case of payments made after December 31, 1999, a foreign
partnership at least 50 percent of the
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capital or profits interests in which are owned by United States persons or that
is engaged in the conduct of a United States trade or business, information
reporting will be required unless the broker has in its records documentary
evidence that the beneficial owner is not a United States person and certain
other conditions are met or the beneficial owner otherwise establishes an
exemption. Payments to or through the United States office of a broker will be
subject to backup withholding tax and information reporting unless the holder
certifies, under penalties of perjury, that it is not a United States person or
otherwise establishes an exemption.
United States Alien Holders of Notes should consult their tax advisors
regarding the application of information reporting and backup withholding tax in
their particular situations, the availability of an exemption therefrom, and the
procedure for obtaining such an exemption, if available. Any amounts withheld
from a payment to a United States Alien Holder under the backup withholding tax
rules will be allowed as a credit against such United States Alien Holder's
United States Federal income tax liability and may entitle such United States
Alien Holder to a refund, provided, that the required information is furnished
to the IRS.
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 "Plan") and (d) persons
who have certain specified relationships to a Plan ("Parties-in-Interest" under
ERISA and "Disqualified Persons" under the Code). Moreover, based on the
reasoning of the United States Supreme Court in John Hancock Life Ins. Co. v.
Harris Trust and Sav. Bank, 114 S. Ct. 517 (1993), the general account of an
insurance company may be deemed to include assets of 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 Plan
by virtue of such an investment. ERISA also imposes certain duties on persons
who are fiduciaries of Plans subject to ERISA, and ERISA and Section 4975 of the
Code prohibit certain transactions between a Plan and Parties-in-Interest or
Disqualified Persons with respect to such Plans. 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.
Subject to the considerations discussed below, the Notes may, in general,
be purchased by or on behalf of a Plan.
PLAN ASSET CONSIDERATIONS
Under a regulation issued by the United States Department of Labor (the
"Plan Asset Regulation"), if a Plan makes an "equity" investment in a
corporation, partnership, trust or certain other entities, the underlying assets
and properties of such entity will be deemed for purposes of ERISA and Section
4975 of the Code to be assets of the investing Plan unless certain exceptions
set forth in the Plan Asset Regulation apply. The Plan Asset Regulation defines
an "equity interest" as any interest in an entity other than an instrument that
is treated as indebtedness under applicable local law and which has no
substantial equity features. Although there is little statutory or regulatory
guidance on this subject, and there can be no assurances in this regard, the
Seller believes that the Notes, which are denominated as debt, should be treated
as indebtedness without substantial equity features for purposes of the Plan
Asset Regulation.
POTENTIAL PROHIBITED TRANSACTIONS
However, without regard to whether the assets of the Trust were deemed to
be assets of any Plan, the acquisition or holding of Notes could be viewed as an
indirect extension of credit to holders
73
<PAGE> 75
of the Certificates, or their affiliates, possibly giving rise to a prohibited
transaction. In such case, certain exemptions from the prohibited transaction
rules could be applicable depending on the type and circumstances of the 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.
SPECIAL CONSIDERATIONS APPLICABLE TO INSURANCE COMPANY GENERAL ACCOUNTS
It should be noted that the Small Business Job Protection Act of 1996 added
new Section 401(c) of ERISA relating to the status of the assets of insurance
company general accounts under ERISA and Section 4975 of the Code. Pursuant to
Section 401(c), the Department of Labor is required to issue final regulations
(the "General Account Regulations") with respect to insurance policies issued on
or before December 31, 1998 that are supported by an insurer's general account.
The General Account Regulations are to provide guidance on which assets held by
the insurer constitute "plan assets" for purposes of the fiduciary
responsibility provisions of ERISA and Section 4975 of the Code. Section 401(c)
also provides that, except in the case of avoidance of the General Account
Regulations and actions brought by the Secretary of Labor relating to certain
breaches of fiduciary duties that also constitute breaches of state or Federal
criminal law, until the date that is 18 months after the General Account
Regulations become final, no person shall be subject to liability under the
fiduciary responsibility and prohibited transaction provisions of ERISA and
Section 4975 of the Code on the basis of a claim that the assets of the general
account of an insurance company constitute the assets of any plan. The plan
asset status of insurance company separate accounts is unaffected by new Section
401(c) of ERISA, and separate account assets continue to be treated as the
assets of any plan invested in the separate account. Insurance companies should
consult with their counsel regarding the potential impact of Section 401(c) on
their purchase of Notes.
As of the date hereof, the Department of Labor has issued proposed
regulations under Section 401(c). It should be noted that if the General Account
Regulations are adopted substantially in the form in which proposed, the General
Account Regulations may not exempt the assets of insurance company general
accounts from treatment as "plan assets" of plans holding policies issued after
December 31, 1998. The proposed regulations should not, however, adversely
affect the applicability of PTCE 95-60 to purchases of Notes.
GENERAL INVESTMENT CONSIDERATIONS
Prior to making an investment in the Notes, prospective 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 Plan fiduciary should take into account,
among other considerations, whether the fiduciary has the authority to make the
investment; the composition of the Plan's portfolio with respect to
diversification by type of asset; the 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 Plan, taking into account the overall investment policy of
the Plan and the composition of the Plan's investment portfolio.
Certain employee benefit plans, such as governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of
ERISA) are not subject to the provisions of Title I of ERISA and Section 4975 of
the Code. Accordingly, assets of such plans may, subject to the provisions of
any other applicable Federal and state law (including, without limitation,
Federal or state law which is, to a material extent, similar to the provisions
of Section 406 of ERISA or Section 4975 of the Code), be invested in any Class
of Notes without regard to the ERISA
74
<PAGE> 76
considerations described herein. It should be noted, however, that any such plan
that is qualified and exempt from taxation under Sections 401(a) and 501(a) of
the Code is subject to the prohibited transaction rules set forth in Section 503
of the Code.
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 has severally agreed to purchase from the Seller, the principal
amount of the Notes set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT PRINCIPAL AMOUNT PRINCIPAL AMOUNT
OF CLASS A-1 OF CLASS A-2 OF CLASS A-3 OF CLASS A-4
UNDERWRITERS NOTES NOTES NOTES NOTES
- ------------ ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Chase Securities Inc............... $ $ $ $
Salomon Smith Barney Inc. .........
Deutsche Bank Securities Inc. .....
J.P. Morgan Securities Inc. .......
Merrill Lync
h, Pierce, Fenner & Smith
Incorporated...........
------------ ------------ ------------ ------------
Total..................... $360,000,000 $508,000,000 $440,000,000 $241,800,000
============ ============ ============ ============
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all the Notes offered hereby
if any of the Notes are purchased. In the event of a default by any Underwriter,
the Underwriting Agreement provides that, in certain circumstances, purchase
commitments of the non-defaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.
The Seller has been advised that the Underwriters propose initially to
offer the Notes to the public at the public offering prices set forth on the
cover page hereof, and to certain dealers at such prices less a concession not
in excess of % of the principal amount of the Class A-1 Notes, % of the
principal amount of the Class A-2 Notes, % of the principal amount of the
Class A-3 Notes and % of the principal amount of the Class A-4 Notes. The
Underwriters may allow and such dealers may reallow a discount not in excess of
% of the principal amount of the Class A-1 Notes, % of the principal amount
of the Class A-2 Notes, % of the principal amount of the Class A-3 Notes and
% of the principal amount of the Class A-4 Notes on sales to certain other
dealers. After the initial public offering, the respective public offering
prices, concessions and discounts may be changed.
The Underwriters may engage in over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids with respect to
the Notes in accordance with Regulation M under the Exchange Act. Over-allotment
transactions involve syndicate sales in excess of the offering size creating a
syndicate short position. Stabilizing transactions permit bids to purchase the
Notes so long as the stabilizing bids do not exceed a specified maximum.
Syndicate covering transactions involve purchases of the Notes in the open
market after the distribution has been completed in order to cover syndicate
short positions. Penalty bids permit the Underwriters to reclaim a selling
concession from a syndicate member when the Notes originally sold by such
syndicate member are purchased in a syndicate covering transaction. Such
over-allotment transactions, stabilizing transactions, syndicate covering
transactions and penalty bids may cause prices of the Notes to be higher than
they would otherwise be in the absence of such transactions. Neither the Trust
nor any of the Underwriters represent that the Underwriters will engage in any
such transactions nor 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.
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<PAGE> 77
The Indenture Trustee may, from time to time, invest the funds in the
Collection Account, the Payahead Account, the Note Distribution Account and the
Reserve Accounts, and the Owner Trustee may, from time to time, invest the funds
in the Certificate Distribution 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.
MBCC and the Seller have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act or to
contribute to payments the Underwriters may be required to make in respect
thereof. The Underwriters have agreed to reimburse the Seller for certain
expenses incurred in connection with the issuance and distribution of the Notes.
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 Morgan, Lewis & Bockius LLP, New York, New York.
The validity of the Notes will be passed upon for the Underwriters by Skadden,
Arps, Slate, Meagher & Flom LLP, New York, New York. Skadden, Arps, Slate,
Meagher & Flom LLP has from time to time represented MBCC, DBNA and their
affiliates in connection with certain matters.
76
<PAGE> 78
INDEX OF PRINCIPAL TERMS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ABS......................................................... 30
ABS Table................................................... 30
Accounts.................................................... 43
Accrued Interest............................................ 45
Administration Agreement.................................... 63
Administrator............................................... 63
Advance..................................................... 11, 49
Amount Financed............................................. 29
APR......................................................... 25
Available Funds............................................. 44
Balloon Receivables......................................... 25
Bankruptcy Code............................................. 14
Basic Documents............................................. 53
Business Day................................................ 6
Cede........................................................ 5
Cedel....................................................... 39
Cedel Participants.......................................... 39
Certificate Balance......................................... 45
Certificate Distribution Account............................ 42
Certificateholders.......................................... 6
Certificates................................................ 1, 3
Chrysler.................................................... 13, 36
Chrysler Merger............................................. 13, 36
Chrysler Merger Sub......................................... 13, 36
Class....................................................... 3
Class A Noteholders......................................... 6
Class A Notes............................................... 1, 3
Class A Reserve Account..................................... 8
Class A Reserve Initial Deposit............................. 9, 48
Class A-1 Final Payment Date................................ 8
Class A-1 Noteholders....................................... 7
Class A-1 Notes............................................. 1, 3
Class A-1 Rate.............................................. 6
Class A-2 Final Payment Date................................ 8
Class A-2 Noteholders....................................... 7
Class A-2 Notes............................................. 1, 3
Class A-2 Rate.............................................. 6
Class A-3 Final Payment Date................................ 8
Class A-3 Noteholders....................................... 7
Class A-3 Notes............................................. 1, 3
Class A-3 Rate.............................................. 6
Class A-4 Final Payment Date................................ 8
Class A-4 Noteholders....................................... 7
Class A-4 Notes............................................. 1, 3
Class A-4 Rate.............................................. 6
Class B Certificateholders.................................. 6
Class B Certificates........................................ 1, 3
Class B Final Payment Date.................................. 8
Class B Rate................................................ 6
Class B Reserve Account..................................... 8
</TABLE>
77
<PAGE> 79
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Closing Date................................................ 5
Code........................................................ 68
Collateral.................................................. 4, 18
Collection Account.......................................... 10
Collection Period........................................... 5
Combination Agreement....................................... 13, 36
Commercial Vehicle Contracts................................ 18
Commercial Vehicle Dealers.................................. 18
Commercial Vehicle.......................................... 19
Commission.................................................. 2
Contracts................................................... 18
Cooperative................................................. 39
Cutoff Date................................................. 2
Daimler-Benz................................................ 35
Daimler-Benz ADSs........................................... 13, 36
Daimler-Benz Exchange Offer................................. 13, 36
Daimler-Benz Merger......................................... 13, 36
Daimler-Benz Ordinary Shares................................ 13, 36
DaimlerChrysler AG.......................................... 13, 36
DaimlerChrysler Ordinary Shares............................. 13, 36
DBNA........................................................ 3, 35
Dealer Agreement............................................ 18
Dealers..................................................... 18
Defaulted Receivable........................................ 44
Definitive Notes............................................ 40
Depositaries................................................ 38
Depositary.................................................. 38
Determination Date.......................................... 44
Direct Participants......................................... 37
Disqualified Persons........................................ 73
DTC......................................................... 2
DTC Participants............................................ 37
Due Date.................................................... 21
Eligible Bank............................................... 43
Eligible Deposit Account.................................... 43
Eligible Servicer........................................... 58
ERISA....................................................... 73
Euroclear................................................... 39
Euroclear Operator.......................................... 39
Euroclear Participants...................................... 39
Events of Default........................................... 51
Events of Servicing Termination............................. 60
Exchange Act................................................ 2
Final Payment Dates......................................... 8
Final Scheduled Maturity Date............................... 5
Financed Vehicles........................................... 5
financial institution....................................... 72
Freightliner................................................ 2, 19
FTC......................................................... 66
FTC Rule.................................................... 67
Fully Amortizing Receivables................................ 24
</TABLE>
78
<PAGE> 80
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Account Regulations................................. 74
Holders..................................................... 6
Indenture................................................... 3
Indenture Trustee........................................... 3
Indirect Participants....................................... 37
Initial Pool Balance........................................ 5
Insolvency Laws............................................. 14
Interest Carryover Shortfall................................ 45
Interest Period............................................. 41
Interest Rates.............................................. 6, 46
IRS......................................................... 68
Issuer...................................................... 3
Liquidation Proceeds........................................ 44
MBCC........................................................ 3
MBNA........................................................ 19
Mercedes-Benz Dealers....................................... 18
Monthly Accrued Interest.................................... 46
Monthly Remittance Condition................................ 50
Moody's..................................................... 12
Motor Vehicle Contracts..................................... 18
Motor Vehicle............................................... 18
NCO......................................................... 20
Note Distribution Account................................... 42
Note Owner.................................................. 5
Note Pool Factor............................................ 34
Noteholders................................................. 6
Notes....................................................... 1, 3
NTO......................................................... 20
Obligors.................................................... 4
OID......................................................... 69
OID Regulations............................................. 69
Omnibus Proxy............................................... 38
Opinion of Counsel.......................................... 55
Owner Trustee............................................... 3
Parties-in-Interest......................................... 73
Payahead Account............................................ 42
Payahead Balance............................................ 49
Payaheads................................................... 43
Payment Date................................................ 2, 6
Permitted Investments....................................... 43
Plan........................................................ 73
Plan Asset Regulation....................................... 73
Pool Balance................................................ 5, 29
Portfolio Interest Exemption................................ 72
Prepaid Receivable.......................................... 8
Prepayable Obligation....................................... 69
Prepayment Assumption....................................... 69
Principal Balance........................................... 29
Principal Carryover Shortfall............................... 46
Principal Distribution Amount............................... 7, 46
PTCE........................................................ 74
</TABLE>
79
<PAGE> 81
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Purchase Agreement.......................................... 5
Purchase Amount............................................. 57
Purchased Receivable........................................ 44
Rating Agency............................................... 12
Receivable File............................................. 57
Receivables................................................. 2
Record Date................................................. 6
Recoveries.................................................. 44
Reserve Accounts............................................ 8
S&P......................................................... 12
Sale and Servicing Agreement................................ 5
Scheduled Payment........................................... 29
Scheduled Principal......................................... 46
Securities Act.............................................. 2
Seller...................................................... 1
Servicer.................................................... 3
Servicing Fee............................................... 11
Servicing Guaranty Agreement................................ 50
Servicing Rate.............................................. 11, 60
Special Counsel............................................. 34
Special Tax Counsel......................................... 68
Specified Class A Reserve Balance........................... 9, 49
Specified Class B Reserve Balance........................... 10, 49
Sterling.................................................... 19
Supplemental Servicing Fee.................................. 11, 59
Terms and Conditions........................................ 40
Total Required Payment...................................... 46
Total Servicing Fee......................................... 11, 59
Transactions................................................ 13, 36
Transfer and Servicing Agreements........................... 56
Trust....................................................... 1, 3
Trust Agreement............................................. 3
Trust Property.............................................. 4
U.S. Person................................................. A-3
UCC......................................................... 4
Underwriters................................................ 75
Underwriting Agreement...................................... 75
United States Alien Holder.................................. 68
United States Holder........................................ 68
Vehicles.................................................... 19
</TABLE>
80
<PAGE> 82
ANNEX A
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Daimler-Benz
Vehicle Owner Trust 1998-A Asset Backed Notes will be available only in
book-entry form. Investors in the Notes may hold such Notes through any of DTC,
Cedel, or Euroclear. The Notes will be tradeable as home market instruments in
both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors holding Notes through Cedel and
Euroclear will be conducted in the ordinary way in accordance with their normal
rules and operating procedures and in accordance with conventional eurobond
practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Notes directly through
DTC will be conducted according to the rules and procedures applicable to U.S.
corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Notes will be effected on a delivery-against-payment basis
through the respective Depositaries of Cedel and Euroclear (in such capacity)
and as DTC Participants.
Non-U.S. holders (as described below) of Notes will be subject to U.S.
withholding taxes unless such holders meet certain requirements and deliver
appropriate U.S. tax documents to the securities clearing organizations or their
participants.
INITIAL SETTLEMENT
All Notes will be held in book-entry form by DTC in the name of Cede & Co.
as nominee of DTC. Investors' interests in the Notes will be represented through
financial institutions acting on their behalf as direct and indirect
participants in DTC. As a result, Cedel and Euroclear will hold positions on
behalf of their participants through their respective Depositaries, which in
turn will hold such positions in accounts as DTC Participants.
Investors electing to hold their Notes through DTC will follow the
settlement practices applicable to U.S. corporate debt obligations. Investor
securities custody accounts will be credited with their holdings against payment
in same-day funds on the settlement date.
Investors electing to hold their Notes through Cedel or Euroclear accounts
will follow the settlement procedures applicable to conventional eurobonds,
except that there will be no temporary global security and no "lock-up" or
restricted period. Notes will be credited to the securities custody accounts on
the settlement date against payment in the same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to U.S. corporate
debt obligations in same-day funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
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
A-1
<PAGE> 83
Participant, the purchaser will send instructions to Cedel or Euroclear through
a Cedel Participant or Euroclear Participant at least one business day prior to
settlement. Cedel or Euroclear, as the case may be, will instruct the respective
Depositary to receive the Notes against payment. Payment will include interest
accrued on the Notes from and including the last coupon payment date to and
excluding the settlement date, on the basis of a 360-day year consisting of
twelve 30-day months. Payment will then be made by the Depositary to the DTC
Participant's account against delivery of the Notes. After settlement has been
completed, the Notes will be credited to the respective clearing system and by
the clearing system, in accordance with its usual procedures, to the Cedel
Participant's or Euroclear Participant's account. The Notes credit will appear
the next day (European time) and the cash debit will be back-valued to, and the
interest on the Notes will accrue from, the value date (which would be the
preceding day when settlement occurred in New York). If settlement is not
completed on the intended value date (i.e., the trade fails), the Cedel or
Euroclear cash debit will be valued instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the Notes are
credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to pre-position
funds and allow that credit line to be drawn upon the finance settlement. Under
this procedure, Cedel Participants or Euroclear Participants purchasing Notes
would incur overdraft charges for one day, assuming they cleared the overdraft
when the Notes were credited to their accounts. However, interest on the Notes
would accrue from the value date. Therefore, in many cases the investment income
on the Notes earned during that one-day period may substantially reduce or
offset the amount of such overdraft charges, although this result will depend on
each Cedel Participant's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Notes to the
respective Depositary for the benefit of Cedel Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participants a cross-market transaction will
settle no differently than a trade between two DTC Participants.
Trading between Cedel or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Notes are to be
transferred by the respective clearing system, through the respective
Depositary, to a DTC Participant. The seller will send instructions to Cedel or
Euroclear through a Cedel Participant or Euroclear Participant at least one
business day prior to settlement. In these cases, Cedel or Euroclear will
instruct the respective Depositary, as appropriate, to deliver the bonds to the
DTC Participant's account against payment. Payment will include interest accrued
on the Notes from and including the last coupon payment date to and excluding
the settlement date on the basis of a 360-day year consisting of twelve 30-day
months. The payment will then be reflected in the account of the Cedel
Participant or Euroclear Participant the following day, and receipt of the cash
proceeds in the Cedel Participant's or Euroclear Participant's account would be
back-valued to the value date (which would be the preceding day, when settlement
occurred in New York). Should the Cedel Participant or Euroclear Participant
have a line of credit with its respective clearing system and elect to be in
debt in anticipation of receipt of the sale proceeds in its account, the back-
valuation will extinguish any overdraft charges incurred over that one-day
period. If settlement is not completed on the intended value date (i.e., the
trade fails), receipt of the cash proceeds in the Cedel Participant's or
Euroclear Participant's account would instead be valued as of the actual
settlement date.
A-2
<PAGE> 84
Finally, day traders that use Cedel or Euroclear and that purchase Notes
from DTC Participants for delivery to Cedel Participants or Euroclear
Participants should note that these trades would automatically fail on the sale
side unless affirmative action were taken. At least three techniques should be
readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or Euroclear
accounts) in accordance with the clearing system's customary procedures;
(b) borrowing the Notes in the U.S. from a DTC Participant no later
than one day prior to settlement, which would give the Notes sufficient
time to be reflected in their Cedel or Euroclear account in order to settle
the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at
least one day prior to the value date for the sale to the Cedel Participant
or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Notes holding securities through Cedel or Euroclear
(or through DTC if the holder has an address outside the U.S.) will be subject
to the 30% U.S. withholding tax that generally applies to payments of interest
(including original issue discount) on registered debt issued by U.S. Persons,
unless (i) each clearing system, bank, or other financial institution that holds
customers' securities in the ordinary course of its trade or business in the
chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Notes that
are non-U.S. Persons can obtain a complete exemption from the withholding tax by
filing a signed Form W-8 (Certificate of Foreign Status). If the information
shown on Form W-8 changes, a new Form W-8 must be filed within 30 days of such
change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. Persons resident in treaty countries
(Form 1001). Non-U.S. Persons that are Note Owners residing in a country that
has a tax treaty with the United States can obtain an exemption or reduced tax
rate (depending on the treaty terms) by filing Form 1001 (Ownership, Exemption
or Reduced Rate Certificate). If the treaty provides only for a reduced rate,
withholding tax will be imposed at that rate unless the filer alternatively
files Form W-8. Form 1001 may be filed by the Note Owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Note Owner or, in the
case of a Form 1001 or a Form 4224 filer, his agent, files by submitting the
appropriate form to the person through whom it holds (the clearing agency, in
the case of persons holding directly on the books of the clearing agency). Form
W-8 and Form 1001 are effective for three calendar years and Form 4224 is
effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership (including an entity treated as a
corporation or partnership) organized in or under the
A-3
<PAGE> 85
laws of the United States or any state thereof or the District of Columbia
(unless, in the case of a partnership, Treasury regulations provide otherwise),
(iii) an estate the income of which is includible in gross income for United
States tax purposes, regardless of its source, or (iv) a trust if a U.S. court
is able to exercise primary supervision over the administration of such trust
and one or more U.S. persons has the authority to control all substantial
decisions of the trust. This summary does not deal with all aspects of U.S.
Federal income tax withholding that may be relevant to foreign holders of the
Notes. Investors are advised to consult their own tax advisors for specific tax
advice concerning their holding and disposing of the Notes.
Recent Treasury regulations could affect the procedures to be followed by a
non-U.S. Person in complying with the United States Federal withholding, backup
withholding, and information reporting rules. The regulations are not currently
effective but, if finalized in their current form, would be effective for
payments made after December 31, 1998. Prospective investors are advised to
consult their own tax advisors regarding the effect, if any, of the regulations
on the purchase, ownership and disposition of the Notes.
A-4
<PAGE> 86
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE SELLER, THE SERVICER OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION BY ANYONE IN ANY STATE
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS, NOR ANY SALE MADE HEREUNDER, SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE SELLER OR
THE SERVICER SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................... 2
Reports to Noteholders.................... 2
Prospectus Summary........................ 3
Recent Developments....................... 13
Risk Factors.............................. 13
The Trust................................. 16
The Trust Property........................ 18
MBCC's Vehicle Contract Portfolio......... 18
The Receivables........................... 25
Pool Factors and Other Information........ 34
Use of Proceeds........................... 34
The Seller................................ 34
The Servicer.............................. 35
Description of the Notes.................. 36
Description of the Transfer and Servicing
Agreements.............................. 56
Certain Legal Aspects of the
Receivables............................. 63
Certain Federal Income Tax Consequences... 67
ERISA Considerations...................... 73
Underwriting.............................. 75
Legal Opinions............................ 76
Index of Principal Terms.................. 77
Annex A................................... A-1
</TABLE>
------------------------
UNTIL (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EFFECTING
TRANSACTIONS IN THE NOTES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION,
MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION
OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT
TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. UPON RECEIPT OF A REQUEST BY AN
INVESTOR, OR SUCH INVESTOR'S REPRESENTATIVE, WITHIN THE PERIOD DURING WHICH
THERE IS A PROSPECTUS DELIVERY OBLIGATION, THE SELLER OR THE UNDERWRITERS WILL
TRANSMIT OR CAUSE TO BE TRANSMITTED PROMPTLY, WITHOUT CHARGE AND IN ADDITION TO
ANY SUCH DELIVERY REQUIREMENTS, A PAPER COPY OF THE PROSPECTUS OR A PROSPECTUS
ENCODED IN AN ELECTRONIC FORMAT.
$1,549,800,000
DAIMLER-BENZ
VEHICLE OWNER TRUST
1998-A
$360,000,000
CLASS A-1
% ASSET BACKED NOTES
$508,000,000
CLASS A-2
% ASSET BACKED NOTES
$440,000,000
CLASS A-3
% ASSET BACKED NOTES
$241,800,000
CLASS A-4
% ASSET BACKED NOTES
DAIMLER-BENZ
VEHICLE RECEIVABLES
CORPORATION
SELLER
MERCEDES-BENZ
CREDIT CORPORATION
SERVICER
- ----------------------
PROSPECTUS
- ----------------------
CHASE SECURITIES INC.
SALOMON SMITH BARNEY
DEUTSCHE BANK SECURITIES
J.P. MORGAN & CO.
MERRILL LYNCH & CO.
DATED , 1998
<PAGE> 87
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Registration Fee............................................ $ 430,861.40
Printing and Engraving...................................... 70,000.00
Trustee's Fee............................................... 25,000.00
Legal Fees and Expenses..................................... 400,000.00
Blue Sky Fees and Expenses.................................. 10,000.00
Accountant's Fees and Expenses.............................. 50,000.00
Rating Agency Fees.......................................... 200,000.00
Miscellaneous Fees and Expenses............................. 10,138.60
-------------
Total Expenses.................................... $1,196,000.00
=============
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware provides as follows:
145 Indemnification of Officers, Directors, Employees and Agents; Insurance
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in
II-1
<PAGE> 88
subsections (a) and (b) of this section, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative or investigative action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys' fees) incurred
by other employees and agents may be so paid upon such terms and conditions, if
any, as the board deems appropriate.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(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
II-2
<PAGE> 89
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 VI of the By-Laws of Daimler-Benz Vehicle Receivables Corporation
provides as follows:
To the full extent permitted by law, the corporation may indemnify any
person, or his heirs, distributees, next of kin, successors, appointees,
executors, administrators, legal representatives and assigns, 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 by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, domestic or foreign,
against expenses, attorneys' fees, court costs, judgments, fines, amounts paid
in settlement and other losses actually and reasonably incurred by him in
connection with such action, suit or proceeding.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Not applicable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ -----------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement
3.1 -- Certificate of Incorporation of the Seller*
3.2 -- Bylaws of the Seller**
4.1 -- Form of Amended and Restated Trust Agreement of the Trust
between the Seller and the Owner Trustee
4.2 -- Form of Sale and Servicing Agreement among the Seller, the
Servicer and the Trust
4.3 -- Form of Indenture between the Trust and the Indenture
Trustee
4.4 -- Form of Administration Agreement among the Trust, the
Administrator and the Indenture Trustee
4.5 -- Form of Note (contained in Exhibit 4.3)
5.1 -- Opinion of Morgan, Lewis & Bockius LLP re Legality
8.1 -- Opinion of Morgan, Lewis & Bockius LLP re Tax Matters
10.1 -- Form of Purchase Agreement between MBCC and the Seller
23.1 -- Consent of Morgan, Lewis & Bockius LLP (contained in Exhibit
5.1)
23.2 -- Consent of Morgan, Lewis & Bockius LLP (contained in Exhibit
8.1)
24 -- Powers of Attorney***
25 -- Form T-1 of Indenture Trustee
</TABLE>
- ---------------
* Incorporated by reference to Exhibit 3.1 of Registration Statement No.
33-79574.
** Incorporated by reference to Exhibit 3.2 of Registration Statement No.
33-79574.
*** Previously filed.
(b) Financial Statement Schedules
Not applicable.
II-3
<PAGE> 90
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 shall be deemed to be part
of this Registration Statement as of the time it was declared effective.
(d) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 91
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on November 30, 1998.
DAIMLER-BENZ VEHICLE RECEIVABLES
CORPORATION
By: /s/ HARVEY S. TRAISON
------------------------------------
Harvey S. Traison
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ HARVEY S. TRAISON Director and President November 30, 1998
- ------------------------------------------ (principal executive officer)
Harvey S. Traison
* Director and Secretary and Treasurer November 30, 1998
- ------------------------------------------ (principal financial officer and
David A. Klanica principal accounting officer)
* Director November 30, 1998
- ------------------------------------------
Klaus Jacobs
* Director November 30, 1998
- ------------------------------------------
Charles B. McKenna
*By: /s/ HARVEY S. TRAISON
------------------------------------
Harvey S. Traison
Attorney-in-fact
</TABLE>
II-5
<PAGE> 92
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ -----------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement
3.1 -- Certificate of Incorporation of the Seller*
3.2 -- Bylaws of the Seller**
4.1 -- Form of Amended and Restated Trust Agreement of the Trust
between the Seller and the Owner Trustee
4.2 -- Form of Sale and Servicing Agreement among the Seller, the
Servicer and the Trust
4.3 -- Form of Indenture between the Trust and the Indenture
Trustee
4.4 -- Form of Administration Agreement among the Trust, the
Administrator and the Indenture Trustee
4.5 -- Form of Note (contained in Exhibit 4.3)
5.1 -- Opinion of Morgan, Lewis & Bockius LLP re Legality
8.1 -- Opinion of Morgan, Lewis & Bockius LLP re Tax Matters
10.1 -- Form of Purchase Agreement between MBCC and the Seller
23.1 -- Consent of Morgan, Lewis & Bockius LLP (contained in Exhibit
5.1)
23.2 -- Consent of Morgan, Lewis & Bockius LLP (contained in Exhibit
8.1)
24 -- Powers of Attorney***
25 -- Form T-1 of Indenture Trustee
</TABLE>
- ---------------
* Incorporated by reference to Exhibit 3.1 of Registration Statement No.
33-79574.
** Incorporated by reference to Exhibit 3.2 of Registration Statement No.
33-79574.
*** Previously filed.
<PAGE> 1
Exhibit 1.1
DAIMLER-BENZ VEHICLE OWNER TRUST 1998-A
CLASS A-1 [ ]% ASSET BACKED NOTES
CLASS A-2 [ ]% ASSET BACKED NOTES
CLASS A-3 [ ]% ASSET BACKED NOTES
CLASS A-4 [ ]% ASSET BACKED NOTES
DAIMLER-BENZ VEHICLE RECEIVABLES CORPORATION
(Company)
MERCEDES-BENZ CREDIT CORPORATION
(Servicer)
December [ ], 1998
NOTE UNDERWRITING AGREEMENT
Chase Securities Inc., and
Salomon Smith Barney Inc.
as Representatives of the
Several Underwriters named
in Schedule I hereto (the "Representatives")
c/o Chase Securities Inc.
270 Park Avenue, 7th Floor
New York, New York 10017-2070
Ladies and Gentlemen:
Daimler-Benz Vehicle Receivables Corporation, a Delaware corporation
(the "Company"), proposes to sell to the several Underwriters named in Schedule
I hereto (the "Underwriters") $360,000,000 principal amount of Class A-1 [ ]%
Asset Backed Notes (the "Class A-1 Notes"), $508,000,000 principal amount of
Class A-2 [ ]% Asset Backed Notes (the "Class A-2 Notes"), $440,000,000
principal amount of Class A-3 [ ]% Asset Backed Notes (the "Class A-3 Notes")
and $241,800,000 principal amount of Class A-4 [ ]% Asset Backed Notes (the
"Class A-4 Notes" and, together with the Class A-1 Notes, the Class-2 Notes and
the Class A-3 Notes, the "Notes") to be issued by Daimler-Benz Vehicle Owner
Trust 1998-A (the "Trust"). Each Note will be secured by the Receivables (as
hereinafter defined) and certain other property of the Trust. The Notes will be
issued in an aggregate principal amount
<PAGE> 2
of $1,549,800,000, which is equal to approximately 95% of the aggregate
principal balance of the Receivables as of the Cutoff Date.
The Notes will be issued pursuant to the Indenture to be dated as of
November 1, 1998 (the "Indenture") by and between the Trust and Citibank, N.A.
(the "Indenture Trustee"). Simultaneously with the issuance and sale of the
Notes, the Trust will issue $81,654,551.40 principal balance of Class B [ ]%
Asset Backed Certificates (the "Certificates"), payments in respect of which
are, to the extent specified in the Indenture, the Sale and Servicing Agreement
to be dated as of November 1, 1998 (the "Sale and Servicing Agreement") among
the Trust, the Seller and the Servicer, and the Trust Agreement (as hereinafter
defined), subordinated to the rights of the holders of the Notes. The
Certificates will be issued pursuant to the Amended and Restated Trust Agreement
(the "Trust Agreement") to be dated as of November 1, 1998, by and between the
Seller, as depositor, and Chase Manhattan Bank Delaware (the "Owner Trustee").
The Certificates will evidence an undivided ownership interest of approximately
5% in the Trust, payments in respect of which are, to the extent specified in
the Sale and Servicing Agreement, subordinated to the rights of the holders of
the Notes.
The assets of the Trust include, among other things, a pool of
retail installment contracts for and retail loans evidenced by notes secured by
new and used automobiles and new and used medium- and heavy-duty trucks and
tractors (the "Receivables") and certain monies due thereunder on or after
November 1, 1998 (the "Cutoff Date"), such Receivables to be sold to the Trust
by the Company and to be serviced for the Trust by the Servicer.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations of
the Commission thereunder (the "Rules and Regulations"), a registration
statement, including a prospectus, relating to the Notes. Any preliminary
prospectus included in such registration statement or filed with the Commission
pursuant to Rule 424(a) of the Rules and Regulations is referred to in this
Agreement as the
2
<PAGE> 3
"Preliminary Prospectus." The registration statement as amended at the time when
it shall become effective, or, if a post-effective amendment is filed with
respect thereto, as amended by such post-effective amendment at the time of its
effectiveness, including in each case information (if any) deemed to be part of
the registration statement at the time of effectiveness pursuant to Rule 430A
under the Act, is referred to in this Agreement as the "Registration Statement,"
and the prospectus in the form used to confirm sales of Notes is referred to in
this Agreement as the "Prospectus."
The terms which follow, when used in this Agreement, shall have the
meanings indicated. "Effective Date" shall mean each date that the Registration
Statement and any post-effective amendment or amendments thereto became or
become effective. "Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto. "Rule 424" and "Rule
430A" refer to such rules under the Act. To the extent not defined herein,
capitalized terms used herein have the meanings assigned to such terms in the
Sale and Servicing Agreement.
The Company agrees with the Underwriters as follows:
1. The Company agrees to sell and deliver the Notes to the several
Underwriters as hereinafter provided, and each Underwriter, upon the basis of
the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase, severally and not jointly,
from the Company the respective principal amount of Notes set forth opposite
such Underwriter's name in Schedule I hereto. The Class A-1 Notes are to be
purchased at the purchase price of [ ]% of the aggregate principal amount
thereof, the Class A-2 Notes are to be purchased at the purchase price of [ ]%
of the aggregate principal amount thereof, the Class A-3 Notes are to be
purchased at the purchase price of [ ]% of the aggregate principal amount
thereof and the Class A-4 Notes are to be purchased at the purchase price of [
]% of the aggregate principal amount thereof.
2. The Company understands that the Underwriters intend (i) to make
a public offering of their respective portions of the Notes as soon after the
Registration
3
<PAGE> 4
Statement and this Agreement have become effective as in the judgment of the
Representatives is advisable and (ii) initially to offer the Notes upon the
terms set forth in the Prospectus.
3. Payment for Notes shall be made to the Company or to its order by
wire transfer of same day funds at the office of Skadden, Arps, Slate, Meagher &
Flom LLP, 919 Third Avenue, New York, New York 10022 at 9:00 A.M., New York City
time, on [ ], 1998 (the "Closing Date"), or at such other time on the same or
such other date, not later than the fifth Business Day thereafter, as the
Representatives and the Company may agree upon in writing. As used herein, the
term "Business Day" means any day other than a day on which banks are permitted
or required to be closed in New York City.
Payment for the Notes shall be made against delivery to the
Representatives for the respective accounts of the several Underwriters of the
Notes registered in the name of Cede & Co. as nominee of The Depository Trust
Company and in such denominations, as permitted by the Sale and Servicing
Agreement, as the Representatives shall re quest in writing not later than two
full Business Days prior to the Closing Date, with any transfer taxes payable in
connection with the transfer to the Underwriters of the Notes duly paid by the
Company. The certificates for the Notes will be made available for inspection
and packaging by the Representatives at the office of Skadden, Arps, Slate,
Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022 not later than
1:00 P.M., New York City time, on the Business Day prior to the Closing Date.
4. The Company represents and warrants to and agrees with each
Underwriter that:
(a) The Registration Statement on Form S-1 (no. 333-64671),
including the Prospectus and such amendments thereto as may have been required
on or prior to the date hereof, relating to the Notes, has been filed with the
Commission and such Registration Statement as amended has become effective. With
respect to the Registration Statement, the conditions to the use of a
registration statement on Form S-1 under the Act, as set forth in the General
Instructions to Form S-1, have been satisfied by the Company;
4
<PAGE> 5
(b) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose has
been instituted or, to the knowledge of the Company, threatened by the
Commission, and on the Effective Date of the Registration Statement, the
Registration Statement and the Prospectus conformed in all respects to the
requirements of the Act and 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, on the Closing Date, the Registration Statement and the Prospectus will
conform in all respects to the requirements of the Act and the Rules and
Regulations, and neither of such documents will 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; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished to
the Company in writing by any Underwriter through the Representatives expressly
for use therein;
(c) The computer tape with respect to the Receivables to be
sold to the Trust created as of the Cutoff Date (the "Computer Tape"), and made
available to the Representatives by the Company, was complete and accurate in
all material respects as of the date thereof;
(d) The Company has been duly incorporated and is validly
existing as a 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 has been duly
qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified or in good
standing would not have a material adverse effect on the Company;
(e) The Notes have been duly authorized, and, when issued and
delivered pursuant to the Indenture, duly authenticated by the Indenture Trustee
and paid for by the Underwriters in accordance with the terms of this
5
<PAGE> 6
Agreement, will be duly and validly issued, authenticated and delivered and
entitled to the benefits provided by the Indenture; each of the Sale and
Servicing Agreement, the Trust Agreement, the Purchase Agreement and this
Agreement have been duly authorized by the Company and, when executed and
delivered by the Company and the other parties thereto (in the case of the Sale
and Servicing Agreement, the Trust Agreement and the Purchase Agreement), each
of the Sale and Servicing Agreement, the Trust Agreement, the Purchase Agreement
and this Agreement will constitute a valid and binding agreement of the Company;
the Notes, the Indenture, the Sale and Servicing Agreement, the Trust Agreement
and the Purchase Agreement will conform to the descriptions thereof in the
Prospectus in all material respects;
(f) No consent, approval, authorization or order of, or filing
with, any court or governmental agency or body is required to be obtained or
made by the Company for the consummation of the transactions contemplated by
this Agreement or the Sale and Servicing Agreement or the Trust Agreement or the
Purchase Agreement except such as have been obtained and made under the Act,
such as may be required under state securities laws and the filing of any
financing statements required to perfect the Trust's interest in the
Receivables;
(g) 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 proper ties is bound
which would have a material adverse effect on the transactions contemplated
herein or in the Sale and Servicing Agreement, the Trust Agreement and the
Purchase Agreement. The execution, delivery and performance of this Agreement,
the Sale and Servicing Agreement, the Trust Agreement and the Purchase Agreement
and the issuance and sale 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, rule,
regulation or order of any governmental agency or body or any court 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
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<PAGE> 7
is subject, or the Certificate of Incorporation or By-laws of the Company; and
the Company has full power and authority to authorize and sell, and establish,
the Trust that will issue the Notes as contemplated by this Agreement and to
enter into this Agreement, the Sale and Servicing Agreement, the Trust Agreement
and the Purchase Agreement and consummate the transactions contemplated hereby
and thereby;
(h) Other than as set forth or contemplated in the Prospectus,
there are no legal or governmental proceedings pending or, to the knowledge of
the Company, threatened to which the Company is or may be a party or to which
any property of the Company is or may be the subject that, if determined
adversely to the Company, could individually or in the aggregate reasonably be
expected to have a material adverse effect on the general affairs, business,
prospects, management, financial position, stockholders' equity or results of
operations of the Company or that would reasonably be expected to materially
adversely affect the interests of the holders of the Notes; and there are no
contracts or other documents of a character required to be filed as an exhibit
to the Registration Statement or required to be described in the Registration
Statement or the Prospectus which are not filed or described as required; and
(i) By assignment and delivery of each of the Receivables to
the Trust as of the Closing Date, the Company will transfer all of its right,
title and interest in, to and under the Receivables to the Trust, subject to no
prior lien, mortgage, security interest, pledge, adverse claim, charge or other
encumbrance.
5. The Company covenants and agrees with the several Underwriters
that:
(a) Prior to the termination of the offering of the Notes, the
Company will not file or cause to be filed any amendment of the Registration
Statement or supplement to the Prospectus which shall be reasonably disapproved
of promptly by the Representatives after reasonable notice thereof. Subject to
the foregoing sentence, if the Registration Statement has become or becomes
effective pursuant to Rule 430A, or filing of the Prospectus is otherwise
required under Rule 424(b), the Company will cause the Prospectus, properly
completed,
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<PAGE> 8
and any supplement thereto, to be filed with the Commission pursuant to the
applicable paragraph of Rule 424(b) within the time period prescribed and will
provide evidence satisfactory to the Underwriters of such timely filing. The
Company will promptly advise the Underwriters (i) when the Prospectus, and any
supplement thereto, shall have been filed (if required) with the Commission
pursuant to Rule 424(b), (ii) when, prior to termination of the offering of the
Notes, any amendment to the Registration Statement shall have become effective,
(iii) of any request by the Commission for any amendment of the Registration
Statement or supplement to the Prospectus or for any additional information,
(iv) of the receipt by the Company of notification with respect to the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding for
that purpose and (v) of the receipt by the Company of notification with respect
to the suspension of the qualification of the Notes for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose. The Company
will use its reasonable best efforts to prevent the issuance of any such stop
order and, if issued, to obtain as soon as possible the withdrawal thereof;
(b) The Company will deliver, at its expense, to the
Representatives, two signed copies of the Registration Statement (as originally
filed) and each amendment thereto, in each case including exhibits, and to each
other Underwriter a conformed copy of the Registration Statement and each
amendment thereto, in each case without exhibits, and, during the period
mentioned in paragraph (e) below, to each of the Underwriters as many copies of
the Prospectus (including all amendments and supplements there to) as the
Representatives may reasonably request. The Company will furnish or cause to be
furnished to the Representatives copies of all reports on Form SR required by
Rule 463 under the Act;
(c) If (i) during such period of time after the first date of
the public offering of the Notes as in the opinion of counsel for the
Underwriters a Prospectus relating to the Notes is required by law to be
delivered in connection with sales by an Underwriter or dealer, any event shall
occur as a result of which it is necessary to amend or supplement the Prospectus
in order to make the statements therein, in the light of the
8
<PAGE> 9
circumstances under which they were made, not misleading, or (ii) it is
necessary to amend or supplement the Prospectus to comply with the applicable
law, then the Company will forthwith prepare and furnish, at the expense of the
Company, to the Underwriters and to the dealers (whose names and addresses the
Representatives will furnish to the Company) to which Notes may have been sold
by the Representatives on behalf of the Underwriters and upon request by the
Representatives to any other dealers identified by the Representatives, such
amendments or supplements to the Prospectus as may be necessary so that the
statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances under which they were made, be misleading or so that
the Prospectus will comply with the law;
(d) The Company will endeavor to qualify the Notes for offer
and sale under the securities or "Blue Sky" laws of such jurisdictions as the
Representatives shall reasonably request and will continue such qualification
in effect so long as reasonably required for distribution of the Notes and will
pay all fees and expenses (including fees and disbursements of counsel to the
Underwriters) reasonably incurred in connection with such qualification and in
connection with the determination of the eligibility of the Notes for investment
under the laws of such jurisdictions as the Representatives may designate;
provided, however, that the Company shall not be obligated to qualify to do
business in any jurisdiction in which it is not currently so qualified; and
provided further that the Company shall not be required to file a general
consent to service of process in any jurisdiction;
(e) On or before March 31, 2000, the Company will cause the
Trust to make generally available to Noteholders and to the Representatives as
soon as practicable an earnings statement covering a period of at least twelve
months beginning with the first fiscal quarter of the Trust occurring after the
Effective Date of the Registration Statement, which shall satisfy the provisions
of Section 11(a) of the Act and Rule 158 of the Commission promulgated
thereunder;
(f) For the period from the date of this Agreement until the
retirement of the Notes the Servicer will furnish to the Representatives (x)
copies of each
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<PAGE> 10
certificate and the annual statements of compliance delivered to the Trustee
pursuant to Article III of the Sale and Servicing Agreement and the annual
independent certified public accountant's servicing reports furnished to the
Trustee pursuant to Article III of the Sale and Servicing Agreement, by
first-class mail as soon as practicable after such statements and reports are
furnished to the Trustee and (y) copies of each amendment to the Sale and
Servicing Agreement, and on each Determination Date or as soon thereafter as
practicable, the Servicer shall give notice substantially in the form of
Schedule II hereto by telex or telecopy to the Representatives of the Pool
Factor as of the related Record Date;
(g) During the period beginning on the date hereof and
continuing to and including the Business Day following the Closing Date, the
Company will not offer, sell, contract to sell or otherwise dispose of any
securities of or guaranteed by the Company which are substantially similar to
the Notes without the prior written consent of the Representatives;
(h) The Company will register the Notes pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act") prior to [ ],
199_;
(i) To the extent, if any, that the rating provided with
respect to the Notes by the rating agency or rating agencies rating the Notes
(the "Rating Agency") is conditional upon the furnishing of documents or the
taking of any other action by the Company agreed upon on or prior to the Closing
Date, the Company shall use its reasonable best efforts to furnish such
documents and take any such other action; and
(j) So long as any of the Notes are outstanding, the Company
will furnish to the Representatives by first class mail (i) as soon as practical
after the end of the Company's fiscal year, copies of all documents, records and
financial statements required to be distributed to Certificateholders (including
Certificate Owners) or filed with the Commission pursuant to the Exchange Act,
or any order of the Commission thereunder and (ii) from time to time, any other
information concerning the Company filed with any government or regulatory
authority or national securities exchange which is
10
<PAGE> 11
otherwise publicly available, as the Representatives may reason ably request.
6. The Company will pay all costs and expenses incident to the
performance of its obligations under this Agreement, including, without limiting
the generality of the foregoing, all costs and expenses (i) incident to the
preparation, issuance, execution, authentication and delivery of the Notes, (ii)
incident to the preparation, printing and filing under the Act of the
Registration Statement, the Prospectus and any preliminary prospectus (including
in each case all exhibits, amendments and supplements thereto), (iii) incurred
in connection with the registration or qualification and determination of
eligibility for investment of the Notes under the laws of such jurisdictions as
the Underwriters may designate (including fees and disbursements of counsel for
the Under writers with respect thereto), (iv) related to any filing with the
National Association of Securities Dealers, Inc., (v) in connection with the
printing (including word processing and duplication costs) and delivery of this
Agreement, the Indenture, the Sale and Servicing Agreement and any Blue Sky
Memorandum and the furnishing to Under writers and dealers of copies of the
Registration Statement and the Prospectus as herein provided, (vi) the fees and
disbursements of the Company's counsel and accountants and the Underwriters'
counsel fees and disbursements, and (vii) any fees and expenses payable to the
Rating Agencies in connection with the rating of the Notes. Notwithstanding the
foregoing, the Underwriters have agreed to reimburse the Company for expenses,
not to exceed $[ ], incurred by the Company in connection with the issuance and
distribution of the Notes.
7. The obligations of the several Underwriters to purchase and pay
for the Notes 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 officers of the Company made pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder and to the following
additional conditions precedent:
(a) At the time this Agreement is executed and delivered by
the Company and at the Closing Date, [KPMG Peat Marwick] shall have furnished to
the Representatives letters dated, respectively, as of the date of
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<PAGE> 12
this Agreement and as of the Closing Date substantially in the forms of the
drafts to which the Representatives previously agreed.
(b) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the Rules and Regulations and in accordance with Section 5(a) of this
Agreement; no stop order suspending the effectiveness of the Registration
Statement shall be in effect, and no proceedings for such purpose shall be
pending before or, to the knowledge of the Company, threatened by the
Commission; and all requests for additional information from the Commission with
respect to the Registration Statement shall have been complied with to the
satisfaction of the Representatives.
(c) The Representatives shall have received an officer's
certificate, dated the Closing Date, signed by the Chairman of the Board, the
President, or any Vice President and by a principal financial or accounting
officer of the Company representing and warranting that, as of the Closing Date,
except to the extent that they relate expressly to another date in which case
they will be true and correct as of such date on the Closing Date, the
representations and warranties of the Company in this Agreement are true and
correct, that the Company 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, that no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or, to the best of their knowledge, are contemplated by the
Commission.
(d) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any development
involving a prospective change, in or affecting particularly the business or
properties of the Trust, the Company, Daimler-Benz North America Corporation
("DBNA"), Freightliner Corporation and its subsidiaries ("Freightliner") or the
Servicer which, in the judgment of the Representatives, materially impairs the
investment quality of the Notes or makes it impractical or inadvisable to
proceed with completion of the sale of and payment for the Notes or (ii) any
downgrading in the rating of any debt securities of DBNA
12
<PAGE> 13
or any of its direct or indirect subsidiaries by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Act), or any public announcement that any such organization has under
surveillance or review its rating of any such debt securities (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating).
(e) Morgan, Lewis & Bockius LLP, special counsel to the
Company, MBCC, the Servicer and DBNA, shall have furnished to the
Representatives their written opinion, dated the Closing Date, in form and
substance satisfactory to the Representatives, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a 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.
(ii) MBCC has been duly incorporated and is validly existing
as a 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.
(iii) DBNA has been duly incorporated and is validly existing
as a 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, and is duly qualified to
transact business and is in good standing in the State of New York.
(iv) The Sale and Servicing Agreement, the Administration
Agreement and the Purchase Agreement have been duly authorized, executed
and delivered by, and each constitutes a valid and binding obligation of
each of the Company, MBCC and the Servicer, as applicable, enforceable
against each of the Company, MBCC and the Servicer, as applicable, in
accordance with its terms.
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<PAGE> 14
(v) The Servicing Guaranty Agreement has been duly authorized,
executed and delivered by, and constitutes a valid and binding obligation
of, DBNA, enforceable against DBNA in accordance with its terms.
(vi) This Agreement has been duly authorized, executed and
delivered by each of the Company and DBNA.
(vii) Neither the execution, delivery and performance of this
Agreement, the Sale and Servicing Agreement, the Trust Agreement, the
Administration Agreement and the Purchase Agreement by the Company, MBCC
or DBNA, as applicable, nor the execution, delivery and performance of the
Servicing Guaranty Agreement by DBNA, nor the execution and delivery of
the Indenture by the parties thereto will conflict with or result in a
breach of any of the terms or pro visions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the properties or assets of the Company, MBCC or
DBNA pursuant to the terms of the Certificate of Incorporation or the
By-Laws of the Company, MBCC or DBNA, any statute, rule or regulation or,
to the best of such counsel's knowledge, any order of any governmental
agency or body or any court having jurisdiction over the Company, MBCC or
DBNA, or any of their respective properties or any agreement or instrument
known to such counsel to which the Company, MBCC or DBNA, is a party or by
which any of them may be bound or to which any of their properties may be
subject.
(viii) To the best of such counsel's knowledge, no
authorization, approval or consent of any court or governmental agency or
authority is required by law in connection with the execution, delivery
and performance by the Company, MBCC, DBNA or the Servicer, as applicable,
of this Agreement, the Sale and Servicing Agreement, the Trust Agreement,
the Administration Agreement or the Purchase Agreement, or the execution,
delivery or performance by DBNA of the Servicing Guaranty Agreement, and
the execution and delivery by the parties thereto of the Indenture, except
such as may be required under the
14
<PAGE> 15
Act or the Rules and Regulations and state securities laws, and except for
such authorizations, approvals or consents (specified in such opinion) as
are in full force and effect as of the Closing Date.
(ix) The Notes have been duly authorized and, when executed
and authenticated by the Trustee in accordance with the Indenture and
delivered and paid for pursuant to this Agreement, will be validly issued
and outstanding and entitled to the benefits provided by the Indenture.
(x) Although they do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for those referred to in
the opinion in subsection (xviii) of this Section 7(e), they have no
reason to believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company prior to
the Closing Date (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or that, as of its date, the Prospectus
or any further amendment or supplement thereto made by the Company or DBNA
prior to the Closing Date (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading or that, as
of the Closing Date, either the Registration Statement or the Prospectus
or any further amendment or supplement thereto made by the Company or DBNA
prior to the Closing Date (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and they do
not know of any amendment to the Registration
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<PAGE> 16
Statement required to be filed or of any contracts or other documents of a
character required to be filed as an exhibit to the Registration Statement
or required to be described in the Registration Statement or the
Prospectus which are not filed or described as required.
(xi) Such counsel does not know of any contract or other
document of a character required to be filed as an exhibit to the
Registration Statement or required to be described in the Registration
Statement or the Prospectus which is not filed or described as required.
(xii) To the best of such counsel's knowledge, there are no
legal or governmental proceedings pending or threatened to which DBNA is a
party or of which any property of DBNA is subject, (A) that are required
to be disclosed in the Registration Statement or (B)(1) that assert the
invalidity of all or part of this Agreement, the Sale and Servicing
Agreement, the Servicing Guaranty Agreement or the Purchase Agreement,
(2) that seek to prevent the issuance of the Notes, (3) that could
materially and adversely affect DBNA's obligations under this Agreement or
the Servicing Guaranty Agreement or (4) that seek to affect adversely
the federal or state income tax attributes of the Notes.
(xiii) MBCC has full power and authority to sell and assign
the property to be sold and assigned to the Company pursuant to the
Purchase Agreement and has duly authorized such sale and assignment to the
Company by all necessary corporate action.
(xiv) The Company has full power and authority to sell and
assign the property to be sold and assigned to and deposited with the
Trustee as part of the Trust pursuant to the Sale and Servicing Agreement
and has duly authorized such sale and assignment to the Trustee by all
necessary corporate action.
(xv) Such counsel knows of no claim by or on behalf of any
third party to the effect that, immediately prior to the transfer of
Receivables by
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<PAGE> 17
MBCC pursuant to the Purchase Agreement, any person other than MBCC was
the sole owner of any right, title or interest in the Receivables and the
other property to be transferred by it to the Company.
(xvi) To the best of such counsel's knowledge, the
Receivables are "chattel paper" as defined in the UCC.
(xvii) All filings necessary under the Uniform Commercial Code
as in effect in the State of New York (the "UCC") or the State of Delaware
(the "DE-UCC") or the State of Connecticut (the "CT-UCC") to perfect both
the transfer of the Receivables and the proceeds thereof (within the
meaning of Section 9- 306 of the UCC or the DE-UCC or the CT-UCC,
whichever may be applicable (the "Applicable UCC")) by MBCC to the Company
pursuant to the Purchase Agreement and the transfer of the Receivables and
the proceeds thereof (within the meaning of Section 9-306 of the
Applicable UCC) by the Company to the Trustee pursuant to the Sale and
Servicing Agreement have been made and, provided that neither MBCC nor the
Company relocates its chief executive office in a state other than
Connecticut or Delaware, respectively, the Trustee maintains the list of
Receivables for inspection by interested parties, and no administrative
errors are made by state or local agencies affecting perfection, no other
filings (other than the filing of continuation statements) need be made
to maintain the perfection of the transfer of the Receivables and the
proceeds thereof (within the meaning of Section 9-306 of the Applicable
UCC) either to the Company pursuant to the Purchase Agreement or to the
Trustee pursuant to the Sale and Servicing Agreement.
(xviii) The statements in the Registration Statement and the
Prospectus under the headings "ERISA Considerations" and "Certain Legal
Aspects of the Receivables," to the extent they constitute descriptions
of matters of law or legal conclusions with respect thereto, have been
prepared or reviewed by such counsel and are correct in all material
respects.
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<PAGE> 18
(xix) The Trust Agreement is not required to be qualified
under the Trust Indenture Act, the Indenture has been duly qualified under
the Trust Indenture Act of 1939, and the Trust is not required to be
registered as an "investment company" under the Investment Company Act of
1940, as amended.
(xx) The Registration Statement has become effective under the
Act and no stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued and no proceeding for that
purpose has been instituted or, to the best of such counsel's knowledge,
threatened by the Commission; the Registration Statement and the
Prospectus and any further amendments and supplements thereto made by the
Company prior to the Closing Date (other than the financial statements and
related schedules therein or omitted therefrom, as to which such counsel
need express no opinion) comply as to form in all material respects with
the requirements of the Act and the Rules and Regulations.
(xxi) The Notes, this Agreement, the Indenture, the Sale and
Servicing Agreement, the Trust Agreement, the Servicing Guaranty
Agreement, the Administration Agreement and the Purchase Agreement each
conform in all material respects with the descriptions thereof contained
in the Registration Statement and the Prospectus.
Such opinion may be made subject to the qualifications that
the enforceability of the terms of the Indenture, the Sale and Servicing
Agreement, the Trust Agreement, the Purchase Agreement, the Administration
Agreement and the Servicing Guaranty Agreement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights, and the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(f) Morgan, Lewis & Bockius LLP shall have furnished their
written opinion, dated the Closing Date, with respect to the characterization of
the transfer of the Receivables by the Servicer to the Company and
18
<PAGE> 19
from the Company to the Trust and such opinion shall be in substantially the
form previously discussed with the Representatives and their counsel and in any
event satisfactory in form and in substance to the Representatives and their
counsel.
(g) Morgan, Lewis & Bockius LLP, special tax counsel to the
Company, shall have furnished to the Representatives their written opinion,
dated the Closing Date, in form and substance satisfactory to the
Representatives, to the effect that:
(i) The Trust will not be classified as an association or
publicly traded partnership taxable as a corporation for federal income
tax purposes and the Notes will be characterized as debt for federal
income tax purposes.
(ii) The Trust will not be subject to New York State income,
franchise or other taxes measured by income, profits, capital, or receipts
(other than sales, excise, or ad valorem taxes that might be imposed upon
the sale of a Financed Vehicle acquired upon default of a Receivable).
(iii) Note Owners who would not otherwise be subject to tax
imposed by the State of New York will not be subject to New York State
income or franchise taxes with respect to interest or other amounts which
are allocable to such Note Owners solely as a result of such Note Owners'
beneficial ownership of a Note (other than a Note Owner's allocable share
of any sales, excise, or ad valorem taxes that might be imposed upon the
sale of a Financed Vehicle acquired upon default of a Receivable).
(iv) The statements in the Registration Statement and
Prospectus under the headings "Certain Federal Income Tax Consequences,"
to the extent that they constitute descriptions of matters of law or legal
conclusions with respect thereto, have been prepared or reviewed by such
counsel and are correct in all material respects.
(h) [Mayer, Brown & Platt,] special Illinois tax counsel to
the Company shall have furnished to
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<PAGE> 20
the Representatives their written opinion, dated the Closing Date, in form and
substance satisfactory to the Representatives, to the effect that:
(i) The Trust will not be subject to tax under the Illinois
Income Tax Act (the "IITA"), the Illinois Franchise Tax or the personal
property replacement tax and the Trust will not be subject to other
Illinois taxes measured by income, capital, profits or receipts (other
than sales, excise, or ad valorem taxes that might be imposed upon the
sale of a vehicle acquired upon default of a Receivable) and the Notes
will be characterized as debt for Illinois income tax purposes.
(ii) Note Owners who would not otherwise be subject to tax
under the IITA or the Illinois Franchise Tax will not be subject to
Illinois income or franchise taxes with respect to interest or other
amounts attributable solely to the beneficial owner ship of a Notes (other
than such Note Owner's share of sales, excise, or ad valorem taxes that
might be imposed upon the sale of a vehicle acquired upon default of a
Receivable).
(i) [Fulbright & Jaworski, L.L.P.], special Texas tax counsel
to the Company shall have furnished to the Representatives their written
opinion, dated the Closing Date, in form and substance satisfactory to the
Representatives, to the effect that:
(i) The Trust will not be subject to Texas franchise tax or other
Texas taxes measured by income, capital, profits or receipts (other than sales,
excise, or ad valorem taxes that might be imposed upon the sale of a vehicle
acquired upon default of a Receivable) and the Notes will be characterized as
debt for Texas income tax purposes.
(ii) Note Owners who would not otherwise be subject to tax in
Texas will not be subject to Texas income or franchise taxes with respect
to interest or other amounts attributable solely to the beneficial
ownership of a Note (other than such Note Owner's share of sales, excise,
or ad valorem taxes that might be imposed upon the sale of a vehicle
acquired upon default of a Receivable).
20
<PAGE> 21
(i) [Day, Berry & Howard], special Connecticut tax counsel to
the Company, shall have furnished to the Representatives their written opinion,
dated the Closing Date, in form and substance satisfactory to the
Representatives, to the effect that:
(i) The Trust will not be subject to Connecticut income,
franchise or other taxes measured by income, profits, capital, or receipts
(other than sales, excise, or ad valorem taxes that might be imposed upon
the sale of a vehicle acquired upon default of a Receivable) and the Notes
will be characterized as debt for Connecticut income tax purposes.
(ii) Note Owners who would not otherwise be subject to tax in
Connecticut will not be subject to Connecticut income or franchise taxes
with respect to interest or other amounts (including payments under the
Shortfall Amount Agreement) attributable solely to the beneficial
ownership of a Note (other than such Note Owner's share of sales, excise,
or ad valorem taxes that might be imposed upon the sale of a vehicle
acquired upon default of a Receivable).
(j) [Troutman Sanders], special Georgia tax counsel to the
Company, shall have furnished to the Representatives their written opinion,
dated the Closing Date, in form and substance satisfactory to the
Representatives, to the effect that:
(i) The Trust will not be subject to Georgia income, franchise
or other taxes measured by income, profits, capital, or receipts (other
than sales, excise, or ad valorem taxes that might be imposed upon the
sale of a vehicle acquired upon default of a Receivable) and the Notes
will be characterized as debt for Georgia income tax purposes.
(ii) Note Owners who would not otherwise be subject to tax in
Georgia will not be subject to Georgia income or franchise taxes with
respect to interest or other amounts attributable solely to the
beneficial ownership of a Note (other than such Note
21
<PAGE> 22
Owner's share of sales, excise, or ad valorem taxes that might be imposed
upon the sale of a vehicle acquired upon default of a Receivable).
(k) [Robert Merck, Esq.], General Counsel of MBCC, shall have
furnished to the Representatives his written opinion, dated the Closing Date, in
form and substance satisfactory to the Representatives, to the effect that:
(i) MBCC has been duly incorporated and is validly existing as
a 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, and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or the ownership of its property requires such
qualification except where the failure to be so qualified or in good
standing would not have a material adverse effect on MBCC.
(ii) The Company has been duly incorporated and is validly
existing as a 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, and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or the ownership of its
property requires such qualification except where the failure to be so
qualified or in good standing would not have a material adverse effect on
the Company.
(iii) The execution, delivery and performance of the Sale and
Servicing Agreement, the Administration Agreement and the Purchase
Agreement by MBCC or the Trust Agreement and the Indenture by the parties
thereto 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
properties or assets of MBCC pursuant to the terms of the Certificate of
Incorporation or the By-Laws of MBCC, any statute, rule,
22
<PAGE> 23
regulation or order of any governmental agency or body or any court having
jurisdiction over MBCC or any of its properties or any agreement or
instrument to which MBCC is a party or by which MBCC or any of its
properties is bound.
(iv) No authorization, approval or consent of any court or
governmental agency or authority is necessary in connection with the
execution, delivery and performance by MBCC of the Sale and Servicing
Agreement, the Administration Agreement or the Purchase Agreement, or by
the parties thereto of the Trust Agreement and the Indenture, except such
as may be required under the Act or the Rules and Regulations and state
securities laws, and except for such authorizations, approvals or
consents (specified in such opinion) as are in full force and effect as of
the latest Effective Date and the Closing Date.
(v) There are no legal or governmental proceedings pending to
which MBCC is a party or of which any property of MBCC is the subject, and
no such proceedings are known by such counsel to be threatened or
contemplated by governmental authorities or threatened by others, (A) that
are required to be disclosed in the Registration Statement or (B)(1)
asserting the invalidity of all or part of the Sale and Servicing
Agreement, the Administration Agreement, the Trust Agreement, the
Indenture or the Purchase Agreement, (2) seeking to prevent the issuance
of the Notes, (3) that could materially and adversely affect MBCC's
obligations under the Purchase Agreement, the Administration Agreement or
the Sale and Servicing Agreement, or (4) seeking to affect adversely the
federal or state income tax attributes of the Notes.
(vi) There are no legal or governmental proceedings pending
to which the Company is a party or of which any property of the Company is
the subject, and no such proceedings are known by such counsel to be
threatened or contemplated by governmental authorities or threatened by
others, (A) that are required to be disclosed in the Registration
Statement or (B)(1) asserting the invalidity of all or part of the Sale
and Servicing Agreement, the
23
<PAGE> 24
Administration Agreement, the Trust Agreement, the Indenture or the
Purchase Agreement, (2) seeking to prevent the issuance of the Notes, (3)
that could materially and adversely affect the Company's obligations under
the Purchase Agreement, the Administration Agreement, the Trust Agreement,
the Indenture or the Sale and Servicing Agreement, or (4) seeking to
affect adversely the federal or state income tax attributes of the Notes.
(vii) Such counsel is familiar with MBCC's standard operating
procedures relating to MBCC's acquisition of a perfected first priority
security interest in the vehicles financed by MBCC pursuant to retail
installment sale contracts in the ordinary course of MBCC's business.
Assuming that MBCC's standard procedures have been followed with respect
to the perfection of security interests in the Financed Vehicles (and such
counsel has no reason to believe that MBCC has not followed its standard
procedures in connection with the perfection of security interest in the
Financed Vehicles), MBCC has acquired or will acquire a perfected first
priority security interest in each of the Financed Vehicles.
(viii) Immediately prior to the transfer of Receivables by
MBCC pursuant to the Purchase Agreement, MBCC was the sole owner of all
right, title and interest in the Receivables and the other property to be
transferred by it to the Company.
(ix) The Receivables are "chattel paper" as defined in the
UCC.
(l) The Representatives shall have received an opinion of
Skadden, Arps, Slate, Meagher & Flom LLP, dated the Closing Date, with respect
to the validity of the Notes and such other related matters as the
Representatives shall require and the Company shall have furnished or caused to
be furnished to such counsel such documents as they may reasonably request for
the purpose of enabling them to pass upon such matters.
(m) The Representatives shall have received an opinion
addressed to the Underwriters, the Company and the Servicer of Seward & Kissel,
counsel to
24
<PAGE> 25
the Indenture Trustee, dated the Closing Date and satisfactory in form and
substance to the Representatives and its counsel, to the effect that:
(i) The Indenture Trustee is a national banking association
duly organized and validly existing under the laws of the United States.
(ii) The Indenture Trustee has the power and authority to
enter into and perform the Indenture. The execution, delivery and
performance of the Indenture has been duly authorized by all requisite
action, and the Indenture has been duly executed and delivered by the
Indenture Trustee.
(iii) No consent, approval, authorization, order of or filing
with any court, governmental agency or body (including without limitation,
any banking regulatory agency or body or arbitrator having jurisdiction
over the Indenture Trustee) is required in connection with the execution
and delivery by the Indenture Trustee of the Indenture or the Sale and
Servicing Agreement and the performance by the Indenture Trustee of the
transactions thereunder.
(iv) The Indenture, assuming due authorization, execution and
delivery thereof by the Trust, constitutes a valid and legally binding
agreement of the Indenture Trustee and is enforceable against the
Indenture Trustee in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting the enforcement of creditors' rights generally
and the rights of creditors of banks in particular and by general
principles of equity.
(v) The Notes have been duly executed, authenticated and
delivered by the Indenture Trustee.
(vi) If the Indenture Trustee were acting as Servicer under
the Sale and Servicing Agreement as of the date of this Agreement, the
Indenture Trustee would have the corporate power and authority
25
<PAGE> 26
to perform the obligations of the Servicer as provided in the Sale and
Servicing Agreement.
(n) The Representatives shall have received an opinion
addressed to the Representatives, the Seller and MBCC of Pryor, Cashman, Sherman
& Flynn, counsel to the Owner Trustee, dated the Closing Date and satisfactory
in form and substance to the Representatives and counsel to the Representatives,
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 with 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 Indenture, the Sale and Servicing Agreement
and the Administration Agreement.
(ii) The Trust Agreement duly creates for the benefit of the
Seller and the Certificateholders the interests in the Owner Trust Estate
which the Trust Agreement purports to create, and the trust purported to
be created by the Trust Agreement is validly formed and is validly
existing as a business trust in good standing under the laws of the State
of Delaware.
(iii) The Trust Agreement authorizes the Trust to execute and
deliver the Indenture, the Sale and Servicing Agreement and the
Administration Agreement, to issue the Notes and to grant the Indenture
Trust Estate to the Indenture Trustee as security for the Notes.
(iv) The execution and delivery of the Trust Agreement and, on
behalf of the Trust, the Indenture, the Sale and Servicing Agreement and
the Administration Agreement and the performance by the Owner Trustee of
its obligations under the Trust Agreement, the Indenture, the Sale and
Servicing Agreement and the Administration Agreement have been duly
authorized by all necessary corporate action of
26
<PAGE> 27
the Owner Trustee and each has been duly executed and delivered by the
Owner Trustee.
(v) Assuming due authorization, execution and delivery thereof
by the parties thereto, the Trust Agreement, the Indenture, the Sale and
Servicing Agreement and the Administration Agreement each constitutes a
legal, valid and binding obligation of the Owner Trustee, enforceable
against the Owner Trustee in accordance with its terms, except (1) the
enforceability thereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights, and (2) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(vi) Neither the execution nor delivery by the Owner Trustee
of the Trust Agreement and, on behalf of the Trust, the Indenture, the
Sale and Servicing Agreement and the Administration Agreement, nor the
consummation of any of the transactions by the Owner Trustee contemplated
thereby required the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with respect to, any
governmental authority or agency under any existing federal or Delaware
State law governing the trust powers of the Owner Trustee, except such as
have been obtained, made or taken.
(vii) The Owner Trustee has duly authorized, issued, executed
and delivered each of the Notes pursuant to the terms and provisions of
the Indenture; each of such Notes is a legal, valid and binding obligation
of the Trust, enforceable against the Trust in accordance with its terms
and the terms of the Indenture; and each of such Notes is entitled to the
benefits and security afforded by the Indenture in accordance with the
terms of the Indenture.
27
<PAGE> 28
(viii) The execution and delivery by the Owner Trustee of the
Trust Agreement and, on behalf of the Trust, the Indenture, the Sale and
Servicing Agreement and the Administration Agreement, and the performance
by the Owner Trustee of its obligations thereunder do not conflict with or
result in a breach or violation of any of the terms, conditions or
provisions of any law, governmental rule or regulation of the United
States or the State of Delaware governing the banking or trust powers of
the Owner Trustee or the Certificate of Incorporation or By-Laws of the
Owner Trustee or, to such counsel's knowledge, any order writ, injunction
or decree of any court or governmental authority against the Owner Trustee
or by which it or any of its properties is bound or, to such counsel's
knowledge, any indenture, mortgage or contract or other agreement or
instrument to which the Owner Trustee is a party or by which it or any of
its properties is bound, or constitute a default thereunder.
(ix) The Owner Trustee has acquired such title to the
Receivables as has been conveyed to the Owner Trustee on the date hereof,
subject to the security interest created pursuant to the Indenture; and,
to such counsel's knowledge, there exist no liens, security interests or
charges affecting the title of the Owner Trustee to the Receivables
resulting from acts of or claims against the Owner Trustee except liens,
security interests or charges contemplated by the Basic Documents.
(o) The Representatives shall have received a letter or
letters from each counsel delivering any writ ten opinion to any Rating Agency
in connection with the transaction described herein which is not otherwise
described in this Agreement allowing the Underwriters to rely on such opinion as
if it were addressed to the Underwriters.
(p) The Representatives shall have received an officer's
certificate, dated the Closing Date, of the Chairman of the Board, the President
or any Vice President and by a principal financial or accounting
28
<PAGE> 29
officer of each of the Company and the Servicer in which each such officer shall
state that, the representations and warranties of the Company or the Servicer,
as applicable, contained in the Sale and Servicing Agreement and the
representations and warranties of MBCC or the Company, as applicable, contained
in the Purchase Agreement are true and correct in all material respects and that
the Company or the Servicer, 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 in all material respects.
(q) The Notes shall have been rated "Aaa" by Moody's Investors
Service, Inc. and "AAA" by Standard & Poor's Ratings Services, a Division of The
McGraw-Hill Companies, Inc.
(r) On the Closing Date, the representations and warranties
of the Company in the Sale and Servicing Agreement will be true and correct.
(s) Any taxes, fees and other governmental charges which are
due and payable in connection with the execution, delivery and performance of
this Agreement, the Indenture, the Sale and Servicing Agreement and the Notes
shall have been paid by the Company at or prior to the Closing Date.
8. The Company and DBNA agree to jointly and severally indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, the legal fees and other expenses
reasonably incurred in connection with investigating, preparing or defending any
suit, action or proceeding or any claim asserted, except as otherwise provided
below regarding the limitation on use of counsel) caused by any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus (as amended or supplemented if the Company shall
have fur nished such amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as
29
<PAGE> 30
such losses, claims, damages or liabilities are caused by any untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information furnished to the Company or DBNA in writing by any
Underwriter through the Representatives expressly for use therein; provided that
the foregoing indemnity with respect to any preliminary prospectus shall not
inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) from whom the person asserting any losses, claims
or damages purchased Notes if such untrue statement or omission or alleged
untrue statement or omission made in such preliminary prospectus is eliminated
or remedied in the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) and, if the furnishing of
a copy of the Prospectus (as so amended or supplemented) to such person was
required by law or was requested in writing by the Company, a copy of the
Prospectus (as so amended or supplemented) shall not have been furnished to such
person at or prior to the written confirmation of the sale of such Notes to such
person.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, each director and officer of the Company who signed
the Registration Statement, and DBNA and each person who controls the Company
or DBNA within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company and
DBNA to each Underwriter, but only with reference to information furnished to
the Company or DBNA in writing by such Underwriter through the Representatives
expressly for use in the Registration Statement, the Prospectus, any amendment
or supplement thereto, or any preliminary prospectus.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person
30
<PAGE> 31
to represent the Indemnified Person and any others the Indemnifying Person may
designate in such proceeding and shall pay the fees and expenses of such counsel
related to such proceeding. In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary, (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them, in which case such counsel for the
Indemnified Person shall be reasonably satisfactory to the Indemnifying Person.
It is understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to one local
counsel in each applicable jurisdiction) for all Indemnified Persons, and that
all such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for the Underwriters and such control persons of Underwriters
shall be designated in writing by the Representatives and any such separate firm
for the Company or DBNA or either of their directors, officers who sign the
Registration Statement or control persons shall be designated in writing by
DBNA. The Indemnifying Person shall not be liable for any settlement of any
claim or proceeding effected without its written consent. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have requested an
Indemnifying Person to reimburse the Indemnified Person for fees and expenses of
counsel as contemplated by the third sentence of this paragraph, the
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Person of the
aforesaid request and (ii) such Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of such
settlement. No Indemnifying Person shall, without the prior written consent of
the Indemnified Person,
31
<PAGE> 32
effect any settlement of any pending or threatened proceeding in respect of
which any Indemnified Person is or could have been a party and indemnity could
have been sought hereunder by such Indemnified Person, unless such settlement
includes an unconditional release of such Indemnified Person from all liability
on claims that are the subject matter of such proceeding.
If the indemnification provided for in the first and second
paragraphs of this Section 8 is unavailable other than in accordance with its
terms to an Indemnified Person in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such
paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and DBNA on
the one hand and the Underwriters on the other hand from the offering of the
Notes or (ii) if the allocation provided by clause (i) above 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 and DBNA on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and DBNA on the
one hand and the Underwriters on the other shall be deemed to be in the same
respective proportions as the net proceeds from the offering (before deducting
expenses) received by the Company and DBNA and the total underwriting discounts
and the commissions received by the Underwriters, in each case as set forth in
the table on the cover of the Prospectus, bear to the aggregate public offering
price of the Notes. The relative fault of the Company and DBNA on the one hand
and the Underwriters on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or DBNA or by any of the Underwriters and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
32
<PAGE> 33
The Company and DBNA and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 8 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 that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, in no event shall an Under
writer 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 that such
Underwriter has otherwise been required to pay by reason of 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 Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 8 are several in proportion to the respective principal
amount of Notes set forth opposite their names in Schedule I hereto, and not
joint.
The indemnity and contribution agreements contained in this Section
8 are in addition to any liability which the Indemnifying Persons may otherwise
have to the Indemnified Persons referred to above.
The indemnity and contribution agreements contained in this Section
8 and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter or by or on behalf
of the Company or DBNA, or any of their officers or directors or any other
person controlling the Company or DBNA and (iii) acceptance of and payment for
any of the Notes.
33
<PAGE> 34
9. Notwithstanding anything herein contained, this Agreement may be
terminated in the absolute discretion of the Representatives, by notice given to
the Company, if after the execution and delivery of this Agreement and prior to
the Closing Date (i) trading generally shall have been suspended or materially
limited on or by, as the case may be, the New York Stock Exchange or the
American Stock Exchange; (ii) trading of any securities of or guaranteed by DBNA
or DaimlerChrysler AG shall have been suspended on any exchange or in any
over-the-counter market; (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities; or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in the judgment of the Representatives is material and adverse and which,
in the judgment of the Representatives, makes it impracticable to market any
subclass of the Notes on the terms and in the manner contemplated in the
Prospectus.
10. This Agreement shall become effective upon the later of (x)
execution and delivery hereof by the parties hereto and (y) release of
notification of the effectiveness of the Registration Statement (or, if
applicable, any post-effective amendment) by the Commission.
If on the Closing Date any one or more of the Underwriters shall
fail or refuse to purchase Notes of any subclass which it or they have agreed to
purchase hereunder on such date, and the aggregate principal amount of Notes of
such subclass which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate
principal amount of the Notes of such subclass to be purchased on such date, the
other Underwriters shall be obligated severally in the proportions that the
principal amount of Notes of such subclass set forth opposite their respective
names in Schedule I bears to the aggregate principal amount of Notes of such
subclass set forth opposite the names of all such non-defaulting Underwriters,
or in such other proportions as the Representatives may specify, to purchase the
Notes of such subclass which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase on such date; provided that in no event shall
the principal amount of Notes of any
34
<PAGE> 35
subclass that any Underwriter has agreed to purchase pursuant to Section 1 be
increased pursuant to this Section 10 by an amount in excess of one-ninth of
such principal amount of Notes of such subclass without the written consent of
such Underwriter. If on the Closing Date any Underwriter or Underwriters shall
fail or refuse to purchase Notes of any subclass which it or they have agreed to
purchase hereunder on such date, and the aggregate principal amount of Notes of
such subclass with respect to which such default occurs is more than one-tenth
of the aggregate principal amount of the Notes of such subclass to be purchased
on such date, and arrangements satisfactory to the Representatives and the
Company for the purchase of such Notes are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case either the
Representatives or the Company shall have the right to postpone the Closing
Date, but in no event for longer than seven days, in order that the required
changes, if any, in the Registration Statement and in the Prospectus or in any
other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any default of such Under writer under this Agreement.
11. If this Agreement shall be terminated by the Underwriters, or
any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement or any condition of the Underwriters' obligations cannot be
fulfilled, the Company agrees to reimburse the Underwriters or such Underwriters
as have so terminated this Agreement with respect to themselves, severally, for
all out-of-pocket expenses (including the fees and expenses of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
12. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed, delivered by hand
or transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be given to the Representa-
35
<PAGE> 36
tives, c/o Chase Securities Inc., 270 Park Avenue, 7th Floor, New York, New York
10260 (Facsimile No.: 212-834-6562), Attention: Global Securitized Finance.
Notices to the Company shall be given to it at 1201 North Market Street, Suite
1406, Wilmington, Delaware 19801 (Facsimile No.: 302-426-6520), Attention:
President. Notices to DBNA shall be given to it at 375 Park Avenue, New York,
New York 10152 (Facsimile No.: 212-308-4252), Attention: Treasurer.
13. This Agreement shall inure to the benefit of and be binding upon
the Company, DBNA, the Underwriters, any controlling persons referred to herein
and their respective successors and assigns. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any other person, firm
or corporation any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision herein contained. No purchaser of Notes from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
14. This Agreement may be signed in counter parts, each of which
shall be an original and all of which together shall constitute one and the same
instrument. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS
OF LAWS PROVISIONS THEREOF.
36
<PAGE> 37
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof, whereupon
it will become a binding agreement among the Company, DBNA and the Under writers
in accordance with its terms.
Very truly yours,
DAIMLER-BENZ VEHICLE RECEIVABLES
CORPORATION
By:
-----------------------------------
Name:
Title:
DAIMLER-BENZ NORTH AMERICA
CORPORATION
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
<PAGE> 38
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
CHASE SECURITIES INC.
By:
------------------------------
Name:
Title:
SALOMON SMITH BARNEY INC.
By:
------------------------------
Name:
Title:
Acting on behalf of themselves and
as the Representatives of the
several Underwriters
<PAGE> 39
SCHEDULE I
UNDERWRITERS
<TABLE>
<CAPTION>
Initial Initial Initial Initial
Principal Principal Principal Principal
Amount of Amount of Amount of Amount of
Class A-1 Class A-2 Class A-3 Class A-4
Notes Notes Notes Notes
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Chase Securities Inc................... $ $ $ $
Salomon Smith Barney Inc...............
Deutsche Bank Securities Inc...........
J.P. Morgan Securities Inc.............
Merrill Lynch, Pierce, Fenner & Smith..
Incorporated...............
------------ ----------- ------------ ------------
Total $360,000,000 $508,000,000 $440,000,000 $241,800,000
============ ============ ============ ============
</TABLE>
<PAGE> 40
SCHEDULE II
FORM OF SERVICER'S CERTIFICATE
Chase Securities Inc.
270 Park Avenue, 7th Floor
New York, New York 10017
Attention:
Re: Sale and Servicing Agreement dated as of November 1, 1998 (the
"Sale and Servicing Agreement") between Daimler-Benz Vehicle
Receivables Corporation, as Seller, Mercedes-Benz Credit
Corporation, in its individual capacity and as Servicer,
Daimler-Benz Vehicle Owner Trust 1998-A, as Issuer and
Citibank, N.A., as Indenture Trustee
Determination Date to which this Certificate relates:
___________, 19__
For Monthly Period ending on _________, 19__
1. The undersigned Servicing Officer does hereby certify that the
Pool Factor is ___________.
2. Capitalized terms used in this Certificate shall have the same
meanings as in the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand as of the
above-referenced Determination Date.
MERCEDES-BENZ CREDIT
CORPORATION, as Servicer
By:____________________________
Servicing Officer
<PAGE> 1
Exhibit 4.1
================================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
between
DAIMLER-BENZ VEHICLE RECEIVABLES CORPORATION,
as Depositor,
and
CHASE MANHATTAN BANK DELAWARE,
as Owner Trustee
Dated as of November 1, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.1. Capitalized Terms...........................................1
SECTION 1.2. Other Definitional Provisions...............................4
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. Title to Trust Property.....................................8
SECTION 2.8. Situs of Trust..............................................8
SECTION 2.9. Representations and Warranties of the Depositor.............8
SECTION 2.10. 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.......................19
SECTION 3.7. Access to List of Certificateholders' Names
and Addresses.........................................19
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SECTION 3.8. Maintenance of Office or Agency............................20
SECTION 3.9. Appointment of Paying Agent................................20
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. Restrictions on Certificateholders' Power..................23
SECTION 4.4. Majority Control...........................................23
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
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
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
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ARTICLE VII
REGARDING THE OWNER TRUSTEE
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
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
SECTION 9.1. Termination of Trust Agreement.............................38
SECTION 9.2. Dissolution upon Bankruptcy of the Depositor...............39
SECTION 9.3. Prepayment of the Certificates.............................39
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
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
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ARTICLE XI
MISCELLANEOUS
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 Form of Certificate of Trust
EXHIBIT C Form of Rule 144A Transferor
Certificate
EXHIBIT D Form of Investment Letter --
Qualified Institutional Buyer
EXHIBIT E Form of Investment Letter --
Institutional Accredited Investor
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AMENDED AND RESTATED TRUST AGREEMENT, dated as of November 1, 1998
(as the same may be further amended, supplemented or otherwise modified and in
effect from time to time, this "Agreement"), between DAIMLER-BENZ VEHICLE
RECEIVABLES CORPORATION, a Delaware corporation, as depositor (the "Depositor"),
having its principal executive office at 1201 North Market Street, Suite 1406,
Wilmington, Delaware 19801; and CHASE MANHATTAN BANK DELAWARE, 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 1201 North Market Street, Wilmington,
Delaware 19801.
WHEREAS, the parties hereto are parties to the Trust Agreement,
dated as of November 1, 1998 (the "Trust Agreement"), and now wish to amend and
restate the Trust Agreement 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 that the Trust Agreement is hereby amended and
restated 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:
"Accrued Certificate Interest" shall mean, with respect to any
Payment Date, the sum of Monthly Accrued Certificate Interest and the
Certificate Interest Carryover Shortfall for such Payment Date.
"Administration Agreement" shall have the meaning assigned to such
term in the Indenture.
"Administrator" shall have the meaning assigned to such term in the
Indenture.
<PAGE> 7
"Agreement" shall have the meaning specified in the recitals hereto.
"Basic Documents" shall have the meaning assigned to such term in
the Indenture.
"Business Day" shall have the meaning assigned to such term in the
Sale and Servicing Agreement.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss. 3801 et seq., as the same may be amended,
supplemented or otherwise modified and in effect from time to time.
"Certificate" or "Class B 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 on the terms and subject to the conditions set forth herein; provided,
however, that certain of the Trust Property 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 Balance" shall mean, as the context requires, (a) with
respect to all of the Certificates, an amount equal to, initially, the Initial
Certificate Balance and, thereafter, the Initial Certificate Balance minus any
and all amounts allocable to principal previously distributed to
Certificateholders, and (b) 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 minus any and all amounts allocable to
principal previously distributed in respect of such Certificate.
"Certificate Distribution Account" shall have the meaning assigned
to such term in Section 5.1.
"Certificateholder" shall mean a Holder of a Certificate.
"Certificate Interest Carryover Shortfall" shall mean, with respect
to any Payment Date, the excess of the sum of (a) the Monthly Accrued
Certificate
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Interest for the preceding Payment Date and any outstanding Certificate Interest
Carryover Shortfall from the close of business on such preceding Payment Date,
over (b) the amount in respect of interest that is actually deposited into the
Certificate Distribution Account on such preceding Payment Date, plus interest
on such excess to the extent permitted by law, at the Class B Rate for the
related Certificate Interest Period.
"Certificate Interest Period" shall mean, with respect to any
Payment Date, the period from and including the Closing Date (in the case of the
first Payment Date) or from and including the twentieth (20th) day of the
calendar month preceding each Payment Date up to but excluding the twentieth
(20th) day of the following calendar month.
"Certificate of Trust" shall mean the Certificate of Trust in the
form of Exhibit B attached hereto 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.
"Class B Final Payment Date" shall mean the May 2006 Payment Date.
"Class B Rate" shall mean [___]% per annum.
"Class B Reserve Account" shall have the meaning assigned to such
term in Section 5.1.
"Closing Date" shall have the meaning assigned to such term in the
Indenture.
"Code" shall have the meaning assigned to such term in the
Indenture.
"Commission" shall have the meaning assigned to such term in the
Indenture.
"Corporate Trust Office" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
1201 North Market Street, Wilmington, Delaware 19801; or at such other address
as the
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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 Daimler-Benz Vehicle Receivables Corporation,
a Delaware corporation, and its successors and assigns.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" shall have the meaning assigned to such term in the
Indenture.
"Expenses" shall have the meaning assigned to such term in Section
8.2.
"Grant" shall have the meaning assigned to such term in the
Indenture.
"Holder" shall mean, with respect to any Certificate, 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 November 1, 1998,
by and between the Issuer and Citibank, N.A., a national banking association, as
the Indenture Trustee, as the same may be amended, supplemented or otherwise
modified and in effect from time to time.
"Indenture Trustee" shall have the meaning assigned to such term in
the Indenture.
"Initial Certificate Balance" shall mean, as the context requires,
(a) with respect to all of the Certificates, $81,654,551.40, or (b) with respect
to any Certificate, an amount equal to the initial denomination thereof.
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<PAGE> 10
"Insolvency Event" shall have the meaning assigned to such term in
Section 10.2.
"Issuer" shall have the meaning assigned to such term in the
Indenture.
"MBCC" shall mean Mercedes-Benz Credit Corporation, a Delaware
corporation, and its successors and assigns.
"Monthly Accrued Certificate Interest" shall mean, with respect to
any Payment Date, interest accrued for the related Certificate Interest Period
at the Class B Rate on the Certificate Balance as of the immediately preceding
Payment Date, after giving effect to all payments of principal to
Certificateholders on or prior to such preceding Payment Date (or, in the case
of the first Payment Date, the Initial Certificate Balance).
"Note" shall have the meaning assigned to such term in the
Indenture.
"Opinion of Counsel" shall have the meaning assigned to such term in
the Sale and Servicing Agreement.
"Owner Trust Estate" shall mean all right, title and interest of the
Trust in, to and under the Trust Property assigned to the Trust pursuant to
Article II of the Sale and Servicing Agreement.
"Owner Trustee" shall mean Chase Manhattan Bank Delaware, 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, with respect to any amounts held on
behalf of or paid to any Certificateholders, any paying agent or co-paying agent
appointed pursuant to Section 3.9 and shall initially be Citibank, N.A.
"Payment Date" shall have the meaning assigned to such term in the
Sale and Servicing Agreement.
"Prepayment Date" shall mean, as of any date of determination, the
Payment Date specified by the Servicer pursuant to Section 9.3(a).
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<PAGE> 11
"Prepayment Price" means an amount equal to the Certificate Balance,
plus any Accrued Certificate Interest.
"Qualified Institutional Buyer" has the meaning specified in Rule
144A.
"Record Date" shall mean, with respect to the Certificates and any
Payment Date, the close of business on the last Business Day of the calendar
month preceding such Payment Date.
"Rule 144A" shall have the meaning assigned to such term in Section
3.4(d).
"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 November 1, 1998, by and among the Issuer, the Seller and
MBCC, 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 have the meaning assigned to such term in the
Indenture.
"Seller" shall have the meaning assigned to such term in the Sale
and Servicing Agreement.
"Servicer" shall have the meaning assigned to such term in the Sale
and Servicing Agreement.
"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
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<PAGE> 12
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean the trust and Owner Trust Estate established by
this Agreement.
"Trust Property" shall have the meaning assigned to such term in the
Sale and Servicing 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".
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(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.
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<PAGE> 14
ARTICLE II
ORGANIZATION OF THE TRUST
SECTION 2.1. Name. The Trust created hereby shall be known as
"Daimler-Benz Vehicle Owner Trust 1998-A", 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 and the
Certificates upon the written order of the Depositor;
(ii) with the proceeds of the sale of the Notes, to fund the Class A
Reserve Account, to pay the organizational, start-up and transactional
expenses of the Trust, to pay the balance to the Depositor pursuant to the
Sale and Servicing Agreement, and to fund the Class B Reserve Account, if
any, with amounts contributed by the Depositor;
(iii) to pay interest on and principal of the Notes and the
Certificates and Available Funds to the Seller pursuant to the Sale and
Servicing Agreement and the Indenture;
(iv) to assign, grant, transfer, pledge, mortgage and convey the
Owner Trust Estate (other than the Certificate Distribution Account, the
Class B Reserve Account, and any money, financial assets or other property
from time to time held in or credited to, or purchased with funds from,
any of such accounts, which shall be part of the Owner Trust Estate but
not subject to the Grant under the Indenture) to the Indenture Trustee
pursuant to the Indenture;
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(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, the Certificateholders and the Seller.
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 [_______ __], 1998, the Depositor sold, assigned, transferred, conveyed and
set over to the Owner Trustee the sum of $1. The Owner Trustee hereby
acknowledges receipt in trust from the Depositor, as of such date, of the
foregoing contribution, which shall constitute the initial Owner Trust Estate
and shall be deposited in the Certificate Distribution Account. The Depositor
shall pay organizational expenses of the Trust as they may arise or shall, upon
the request of the Owner Trustee, promptly reimburse the Owner Trustee for any
such expenses paid by the Owner Trustee.
SECTION 2.6. Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Certificateholders,
subject to the obligations of the Trust under the Basic Documents. It is the
intention of the parties hereto that (i) the Trust constitute a business trust
under the Business Trust Statute and that this Agreement constitute the
governing instrument of such business trust and (ii) solely for income and
franchise tax purposes, the Trust shall be treated
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(a) if it has a single beneficial owner, as a non-entity and (b) if it has more
than one beneficial owner, as a partnership, with the assets of the partnership
being the Receivables and other Trust Property 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. 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 2.8. 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,
New York or Texas, and payments will be made by the Trust only from Delaware,
New York or Texas. The only office of the Trust will be at the Corporate Trust
Office in the State of Delaware.
SECTION 2.9. 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.
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<PAGE> 17
(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.
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(f) The representations and warranties of the Depositor in Section
3.1 of the Purchase Agreement are true and correct.
SECTION 2.10. 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. ss. 301.7701-3 or as a
partnership, and the Certificateholders (including the Depositor) will be
treated as partners in that partnership. The Depositor and the other
Certificateholders by acceptance of a Certificate agree to such treatment and
agree to take no action inconsistent with such treatment. For each taxable year
(or portion thereof), other than periods in which there is only one
Certificateholder and with respect to which the Depositor has received an
opinion of counsel that the Trust will be characterized as a "nonentity" under
Treas. Reg. ss.301.7701-3 for Federal, state and all other income tax purposes,
(a) amounts paid to the Depositor pursuant to Sections 4.7(a) and
(b) of the Sale and Servicing Agreement or clause (i) of the fourth
paragraph of Section 5.1(a) of the Sale and Servicing Agreement for such
year (or other period) shall be treated as a guaranteed payment within the
meaning of Section 707(c) of the Code;
(b) all remaining net income or net loss, as the case may be, of the
Trust for such year (or other period) as determined for Federal income tax
purposes (and each item of income, gain, credit, loss or deduction
entering into the computation thereof) shall be allocated to the
Certificateholders pro rata in accordance with the outstanding principal
balances of their respective Certificates.
The Depositor is authorized to modify the allocations in this paragraph if
necessary or appropriate, in its sole discretion, for the allocations to fairly
reflect the economic income, gain or loss to the Depositor or the
Certificateholders or as otherwise required by the Code.
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ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. Initial Ownership. Upon the formation of the Trust by
the contribution by the Depositor pursuant to Section 2.5 and until the issuance
of the Certificates, the Depositor shall be the sole beneficiary of the Trust.
SECTION 3.2. The Certificates. The Class B 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 a Transfer of the Certificates is permitted pursuant to this
Section 3.2 and Section 3.4, a transferee of a Certificate shall become a
Certificateholder, and shall be entitled to the rights and subject to the
obligations of a Certificateholder hereunder, upon such transferee's acceptance
of a Certificate duly registered in such transferee's name pursuant to Section
3.4.
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SECTION 3.3. Authentication of Certificates. Concurrently with the
initial sale of the Receivables to the Trust pursuant to the Sale and Servicing
Agreement, the Owner Trustee shall cause the Certificates, in an aggregate
principal amount equal to the Initial Certificate Balance, to be executed on
behalf of the Trust, authenticated and delivered to or upon the written order of
the Depositor, signed by its chairman of the board, its president, any executive
vice president, any vice president, its secretary or its treasurer, without
further corporate action by the Depositor, in authorized denominations. No
Certificate shall entitle its Holder to any benefit under this Agreement, or
shall be valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication substantially in the form set forth in Exhibit A
attached hereto executed by the Owner Trustee or The Chase Manhattan Bank, as
the Owner Trustee's authenticating agent, or any successor thereto hereunder, 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. The Chase Manhattan Bank 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 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 Securities 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 Securities 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
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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 CLASS B 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 CLASS B 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 C 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 D 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
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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 E 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 CERTIFICATE
HOLDERS, THIS CLASS B 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)."
THIS CLASS B CERTIFICATE MAY NOT BE ACQUIRED BY ANY (A) 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) PLAN, AS DEFINED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED (THE "CODE"), THAT IS SUBJECT TO SECTION 4975 OF THE CODE, (C)
GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, THAT IS SUBJECT TO ANY
STATE, LOCAL OR FEDERAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE
PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, (D) ENTITY WHOSE
UNDERLYING ASSETS INCLUDE "PLAN ASSETS" (WITHIN THE MEANING OF DEPARTMENT OF
LABOR REGULATION 29 C.F.R. ss. 2510.3-101 OR OTHERWISE UNDER ERISA) BY REASON
OF ANY SUCH PLAN'S INVESTMENT IN THE ENTITY OR (E) PERSON INVESTING "PLAN
ASSETS" OF ANY SUCH PLAN (INCLUDING, FOR PURPOSES OF CLAUSE (D) AND THIS CLAUSE
(E), AN INSURANCE COMPANY GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY REGISTERED
UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED).
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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, as defined
in Section 4975(e)(1) of the Code, that is subject to Section 4975 of the
Code,
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(C) a governmental plan, as defined in Section 3(32) of ERISA, that is
subject to any state, local or other Federal 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"
(within the meaning of Department of Labor Regulation 29 C.F.R. ss.
2510.3-101 or otherwise under ERISA) by reason of a plan's investment in
the entity or (E) a Person investing "plan assets" of any such plan
(including, for purposes of clause (D) and this clause (E), an insurance
company general account, but excluding 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 D or E 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
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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 C and (y) the
transferee executes and delivers to the Trust and the Certificate
Registrar an investment letter substantially in the form attached as
Exhibit D.
(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 E.
(e) The Trust, with the assistance of the Administrator as provided
in the Administration Agreement, shall make available to the prospective
transferor and transferee information requested to satisfy the requirements of
paragraph (d)(4) of Rule 144A (the "Rule 144A Information"). The Rule 144A
Information shall include any or all of the following items requested by the
prospective transferee:
(i) each statement delivered to Certificateholders pursuant to
Section 4.9 of the Sale and Servicing Agreement on each Payment Date
preceding such request; and
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(ii) such other information as is reasonably available to the
Administrator in order to comply with requests for information
pursuant to Rule 144A under the Securities Act.
None of the Depositor, the Certificate Registrar, the Owner Trustee
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 The Chase
Manhattan Bank, as its authenticating agent, or any successor thereto hereunder,
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
its 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. ss.ss. 1.7704-1(e) and (h), and the Depositor shall take
such intent into
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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, neither
the Owner Trustee nor the Certificate Registrar shall be responsible for
ascertaining whether any transfer complies with the registration provisions or
exemptions from the Securities Act, the Exchange Act, 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 or
the Certificate Registrar by a purchaser or transferee of a Certificate, the
Owner Trustee or the Certificate Registrar, as the case may be, 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 The Chase Manhattan Bank, as the Owner Trustee's authenticating
agent, or any successor thereto hereunder, 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.
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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 The Borough of Manhattan, The City of New York, 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 initially designates The Chase Manhattan Bank, 55
Water Street, New York, New York 10041 as its office for such purposes. 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 make distributions from the Class B
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Reserve Account pursuant to the Sale and Servicing Agreement, and shall report
the amounts of such distributions and deposits to the Owner Trustee. Any Paying
Agent shall have the revocable power to withdraw funds from the Certificate
Distribution Account and the Class B Reserve 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 Citibank,
N.A., and any co-paying agent chosen by the Owner Trustee. Citibank, N.A. shall
be permitted to resign as Paying Agent upon thirty (30) days' written notice to
the Owner Trustee. In the event that Citibank, N.A. shall no longer be the
Paying Agent, the Owner Trustee shall appoint a successor to act as Paying Agent
(which shall be a bank or trust company). The Owner Trustee shall cause such
successor Paying Agent or any additional Paying Agent appointed by the Owner
Trustee to execute and deliver to the Owner Trustee an instrument in which such
successor Paying Agent or additional Paying Agent shall agree with the Owner
Trustee that as Paying Agent, such successor Paying Agent or additional Paying
Agent will hold all sums, if any, held by it for payment to the
Certificateholders in trust for the benefit of the Certificateholders entitled
thereto until such sums shall be paid to such Certificateholders. The Paying
Agent shall return all unclaimed funds to the Owner Trustee and upon removal of
a Paying Agent such Paying Agent shall also return all funds in its possession
to the Owner Trustee. The provisions of Sections 7.1, 7.3, 7.4 and 8.1 shall
apply to the Owner Trustee also in its role as Paying Agent, for so long as the
Owner Trustee shall act as Paying Agent and, to the extent applicable, to any
other paying agent appointed hereunder. Any reference in this Agreement to the
Paying Agent shall include any co-paying agent unless the context requires
otherwise.
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ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1. Prior Notice to Certificateholders with Respect to
Certain Matters. With respect to the following matters, (i) at least thirty (30)
days before the taking of such action, the Owner Trustee shall notify the
Certificateholders and the Rating Agencies in writing of the proposed action and
(ii) in the case of items (e), (f) and (g) below, the Owner Trustee shall not
take such action unless Certificateholders holding not less than a majority of
the aggregate Certificate Balance shall not have notified the Owner Trustee in
writing prior to the thirtieth (30th) day after such notice is given that such
Certificateholders have consented to such action 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 in the ordinary course of business) 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, 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;
(e) the amendment of the Indenture by a supplemental indenture in
circumstances where (i) the consent of any Noteholder is not required or
(ii) the principal of the Notes, together with accrued and unpaid interest
thereon, shall have been paid in full, and such amendment materially
adversely affects the interests of the Certificateholders;
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(f) the amendment, change or modification of any of the Basic
Documents in circumstances where (i) the consent of any Noteholder is not
required or (ii) the principal of the Notes, together with accrued and
unpaid interest thereon, shall have been paid in full, and such amendment,
change or modification materially adversely affects the interests of the
Certificateholders; or
(g) the appointment pursuant to this Agreement of a successor Owner
Trustee or Certificate Registrar, or the consent to the assignment by the
Owner Trustee or Certificate Registrar of its respective obligations under
this Agreement.
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 principal of the
Notes and any accrued and unpaid interest thereon 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 VII thereof, (b) appoint a successor
Servicer pursuant to Article VII 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. 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 4.4. Majority Control. Except as expressly provided herein
or in any other Basic Document, any action that may be taken by the
Certificateholders under this Agreement may be taken by the Holders of
Certificates evidencing not less than a majority of the Certificate Balance.
Except as expressly provided herein, any written notice of the
Certificateholders delivered pursuant to this Agreement shall be effective if
signed by Holders of Certificates evidencing not less than a majority of the
Certificate Balance at the time of the delivery of such notice.
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ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1. Establishment of Certificate Distribution Account.
Pursuant to Section 4.1(c) and 4.7(a), respectively, of the Sale and Servicing
Agreement, there have been established and there shall be maintained (a) a
segregated trust account in the name of the Owner Trustee at Citibank, N.A.,
which shall be designated as the "Certificate Distribution Account", and (b) a
segregated trust account in the name of the Owner Trustee at Citibank, N.A.,
which shall be designated as the "Class B Reserve Account". The Certificate
Distribution Account and the Class B Reserve Account each 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 and the Class B Reserve Account each shall be under the sole dominion
and control of the Owner Trustee. All monies deposited from time to time in the
Certificate Distribution Account or the Class B Reserve Account pursuant to the
Sale and Servicing Agreement or the Indenture shall be applied as provided in
this Agreement, the Sale and Servicing Agreement and the Indenture.
SECTION 5.2. Application of Trust Funds.
(a) The principal of the Certificates shall be payable in
installments on each Payment Date in an aggregate amount determined in
accordance with the Sale and Servicing Agreement. The principal amount of the
Certificates, to the extent not previously paid, will be due on the Class B
Final Payment Date. The Certificates will bear interest at the Class B Rate.
Interest on the Certificates will be calculated on the basis of a 360 day year
of twelve 30-day months.
(b) On each Payment Date, the Owner Trustee (if other than the
Paying Agent and the Certificate Distribution Account is then held by 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 on account of principal of, or interest on, the
Certificates pursuant to Section 2.8(a) of the Indenture on such Payment Date to
the Paying Agent, or, if the Paying Agent is then holding the Certificate
Distribution Account, the Paying Agent, based upon such information, shall
withdraw such amount from the Certificate
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<PAGE> 33
Distribution Account, for distribution to the Certificateholders pro rata based
on the outstanding Certificate Balance of the Certificates.
(c) On each Payment Date, the Owner Trustee shall, or shall cause
the Paying Agent to, send to each Certificateholder the statement provided to
the Owner Trustee by the Servicer pursuant to Section 4.9 of the Sale and
Servicing Agreement with respect to such Payment Date.
(d) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Certificateholder, such tax shall reduce
the 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 (a)
such Certificateholder shall have provided to the Certificate Registrar
appropriate written instructions at least five (5) Business Days prior to such
Payment Date, or (b) 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 Class B Final Payment
Date or otherwise) will be payable only upon presentation and surrender of such
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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, 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 (or the Administrator on
its behalf), (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 (or the Administrator on its behalf) may satisfy
the obligations of the Owner Trustee under 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 [_________ __, ____], a letter in form and substance satisfactory to the
Owner Trustee and each Paying Agent 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 Code. The
Accountants shall be required to update the letter in each instance that any
additional tax withholding is subsequently
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required or any previously required tax withholding shall no longer be required.
The Owner Trustee (or the Administrator on its behalf) shall be deemed to have
discharged the obligations of the Owner Trustee 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.
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ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Trust is to be
a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is to be a party and any
amendment or other agreement, in each case, in such form as the Depositor shall
approve, as evidenced conclusively by the Owner Trustee's execution thereof and
the Depositor's execution of this Agreement, and to direct the Indenture Trustee
to authenticate and deliver Notes in the aggregate principal amount of
$1,549,800,000, comprised of $360,000,000 in aggregate principal amount of Class
A-1 Notes, $508,000,000 in aggregate principal amount of Class A-2 Notes,
$440,000,000 in aggregate principal amount of Class A-3 Notes and $241,800,000
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.
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(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) Subject to Section 4.1, 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.
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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 (a) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (b) in accordance with the other Basic
Documents to which the Trust or the Owner Trust is a party and (c) 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, New York or Connecticut income or franchise tax purposes, (ii) be
deemed to cause a taxable exchange of the Notes for Federal income or Delaware,
New York or Connecticut 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, New York or
Connecticut income or franchise tax purposes. The Certificateholders shall not
direct the Owner Trustee to take action that would violate the provisions of
this Section 6.6.
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ARTICLE VII
REGARDING THE OWNER TRUSTEE
SECTION 7.1. Acceptance of Trusts and Duties. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all monies actually received by it constituting
part of the Owner Trust Estate upon the terms of this Agreement to which the
Trust or Owner Trustee is a party and the other Basic Documents. The Owner
Trustee shall not be answerable or accountable hereunder or under any other
Basic Document under any circumstances, except (i) for its own willful
misconduct, bad faith or negligence or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.3 expressly made by the Owner
Trustee, in its individual capacity. In particular, but not by way of limitation
(and subject to the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment
made by a responsible officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the provisions of
this Agreement at the instructions of any Certificateholder, the Indenture
Trustee, the Depositor, the Administrator or the Servicer;
(c) no provision of this Agreement or any other Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers
hereunder or under any other Basic Document if the Owner Trustee shall
have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes or the Certificates.
(e) the Owner Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement or for the due execution
hereof
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by the Depositor or for the form, character, genuineness, sufficiency,
value or validity of any of the Owner Trust Estate or for or in respect of
the validity or sufficiency of the other Basic Documents, other than the
certificate of authentication on the Certificates, and the Owner Trustee
shall in no event assume or incur any liability, duty, or obligation to
any Noteholder or to any Certificateholder, other than as expressly
provided for herein and in the other Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Servicer, the Administrator, the Depositor or the
Indenture Trustee under any of the Basic Documents or otherwise and the
Owner Trustee shall have no obligation or liability to perform the
obligations of the Trust under this Agreement or the other Basic Documents
that are required to be performed by the Administrator under the
Administration Agreement, the Servicer under the Sale and Servicing
Agreement or the Indenture Trustee under the Indenture; and
(g) the Owner Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any other Basic Document, at the request,
order or direction of any of the Certificateholders, unless such
Certificateholders have offered to the Owner Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities that may be
incurred by the Owner Trustee therein or thereby. The right of the Owner
Trustee to perform any discretionary act enumerated in this Agreement or
in any other Basic Document shall not be construed as a duty, and the
Owner Trustee shall not be answerable for other than its willful
misconduct, bad faith or negligence in the performance of any such act.
SECTION 7.2. Furnishing of Documents. The Owner Trustee shall
furnish to the Certificateholders promptly upon receipt of a written request
therefor, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Owner Trustee under the Basic Documents.
SECTION 7.3. Representations and Warranties. The Owner Trustee, in
its individual capacity, hereby represents and warrants to the Depositor, for
the benefit of the Certificateholders, that:
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(a) It is a banking corporation duly organized and validly existing
in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to
execute and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement,
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will
contravene any Federal or Delaware law, governmental rule or regulation
governing the banking or trust powers of the Owner Trustee or any judgment
or order binding on it, or constitute any default under its charter
documents or by-laws or any indenture, mortgage, contract, agreement or
instrument to which it is a party or by which any of its properties may be
bound.
SECTION 7.4. Reliance; Advice of Counsel. (a) The Owner Trustee may
rely upon, shall be protected in relying upon, and shall incur no liability to
anyone in acting upon any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond, or other document or paper
believed by it to be genuine and believed by it to be signed by the proper party
or parties. The Owner Trustee may accept a certified copy of a resolution of the
board of directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect. As to any fact or matter the method of the
determination of which is not specifically prescribed herein, the Owner Trustee
may for all purposes hereof rely on a certificate, signed by the president or
any vice president or by the treasurer or other authorized officers of the
relevant party, as to such fact or matter and such certificate shall constitute
full protection to the Owner Trustee for any action taken or omitted to be taken
by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the other
Basic Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents
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or attorneys shall have been selected by the Owner Trustee with reasonable care,
and (ii) may consult with counsel, accountants and other skilled Persons to be
selected with reasonable care and employed by it. The Owner Trustee shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the written opinion or advice of any such counsel, accountants or other
such Persons and not contrary to this Agreement or any other Basic Document.
SECTION 7.5. Not Acting in Individual Capacity. Except as provided
in this Article VII, in accepting the trusts hereby created, Chase Manhattan
Bank Delaware acts solely as Owner Trustee hereunder and not in its individual
capacity, and all Persons having any claim against the Owner Trustee by reason
of the transactions contemplated by this Agreement or any other Basic Document
shall look only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.6. Owner Trustee Not Liable for Certificates or
Receivables. The recitals contained herein and in the Certificates (other than
the signature and countersignature of the Owner Trustee on the Certificates)
shall be taken as the statements of the Depositor, and the Owner Trustee assumes
no responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
other Basic Document or of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates) or the Notes, or of
any Receivable or related documents. The Owner Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Receivable, or the perfection and priority of any security
interest created by any Receivable in any Financed Vehicle or the maintenance of
any such perfection and priority, or for or with respect to the sufficiency of
the Owner Trust Estate or its ability to generate the payments to be distributed
to Certificateholders under this Agreement or the Noteholders under the
Indenture, including, without limitation: the existence, condition and ownership
of any Financed Vehicle; the existence and enforceability of any insurance
thereon; the existence and contents of any Receivable on any computer or other
record thereof; the validity of the assignment of any Receivable to the Trust or
any intervening assignment; the completeness of any Receivable; the performance
or enforcement of any Receivable; the compliance by the Depositor or the
Servicer with any warranty or representation made under any Basic Document or in
any related document, or the accuracy of any such warranty or representation or
any action of the Indenture Trustee, the Administrator or the Servicer or any
subservicer taken in the name of the Owner Trustee.
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SECTION 7.7. Owner Trustee May Own Certificates and Notes. The Owner
Trustee, in its individual or any other capacity, may become the owner or
pledgee of Certificates or Notes and may deal with the Depositor, the Servicer,
the Administrator and the Indenture Trustee in banking transactions with the
same rights as it would have if it were not Owner Trustee.
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ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1. Owner Trustee's Fees and Expenses. The Owner Trustee
shall receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Depositor and the
Owner Trustee, and the Owner Trustee shall be entitled to and reimbursed by the
Depositor for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder.
SECTION 8.2. Indemnification. The Depositor shall be liable as prime
obligor for, and shall indemnify Chase Manhattan Bank Delaware 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 Chase Manhattan Bank
Delaware 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 Owner Trust Estate for the payment or reimbursement of any Expenses. The
indemnities contained in this Section 8.2 shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement. In the
event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section 8.2, the Owner Trustee's choice of legal counsel shall
be subject to the approval of the Depositor, which approval shall not be
unreasonably withheld.
SECTION 8.3. Payments to the Owner Trustee. Any amounts paid to the
Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.
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ARTICLE IX
TERMINATION
SECTION 9.1. Termination of Trust Agreement. (a) This Agreement
(other than the provisions of Article VIII) and the Trust shall terminate and be
of no further force or effect (i) upon the payment to the Noteholders and the
Certificateholders of all amounts required to be paid to them pursuant to the
terms of the Indenture, the Sale and Servicing Agreement and Article V or (ii)
the Payment Date next succeeding the month which is one year after the maturity
or other liquidation of the last Receivable and the disposition of any amounts
received upon liquidation of any property remaining in the Trust. The
bankruptcy, liquidation, dissolution, death or incapacity of any
Certificateholder shall not (x) operate to terminate this Agreement or the
Trust, nor (y) entitle such Certificateholder's legal representatives or heirs
to claim an accounting or to take any action or proceeding in any court for a
partition or winding up of all or any part of the Trust or Owner Trust Estate
nor (z) otherwise affect the rights, obligations and liabilities of the parties
hereto.
(b) No Certificateholder shall be entitled to revoke or terminate
the Trust.
(c) Notice of any termination of the Trust, specifying the Payment
Date upon which the Certificateholders shall surrender their Certificates, to
the Paying Agent for payment of the final distribution and cancellation, shall
be given by the Owner Trustee by letter to Certificateholders mailed within five
(5) Business Days of receipt of notice of such termination from the Servicer,
stating (i) the Payment Date upon or with respect to which final payment of the
Certificates shall be made upon presentation and surrender of the Certificates,
at the office of the Paying Agent therein designated, (ii) the amount of any
such final payment and (iii) that the Record Date otherwise applicable to such
Payment Date is not applicable, payments being made only upon presentation and
surrender of the Certificates at the office of the Paying Agent therein
specified. The Owner Trustee shall give such notice to the Certificate Registrar
(if other than the Owner Trustee) and the Paying Agent at the time such notice
is given to Certificateholders. Upon presentation and surrender of the
Certificates, the Paying Agent shall cause to be distributed to
Certificateholders, amounts distributable on such Payment Date pursuant to
Section 5.2.
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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. 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 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 8.1(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 8.1(a), and the amount paid by the Servicer shall
be treated as collections of Receivables and applied to pay the in full the
Redemption Price of the Notes and the Prepayment Price 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
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Date and, upon the transfer of adequate funds therefor by the Servicer, 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 Certificates 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 one hundred percent (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 promptly following receipt of notice from the Trust or the 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 [Servicer]. 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(c), on the Prepayment Date be paid by the
Trust at the Prepayment Price and (unless the Trust shall default in the payment
of the
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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 (other than the provisions of Article VIII) and the Trust
shall terminate.
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ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times (i) be a corporation satisfying the provisions of
Section 3807(a) of the Business Trust Statute; (ii) be authorized to exercise
corporate trust powers; (iii) have a combined capital and surplus of at least
$50,000,000 and shall be subject to supervision or examination by Federal or
state authorities; and (iv) shall have (or shall have a parent that has) a
long-term debt rating of investment grade by each of the Rating Agencies or be
otherwise acceptable to the Rating Agencies. If such corporation shall publish
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purpose of
this Section 10.1, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Owner Trustee shall
cease to be eligible in accordance with the provisions of this Section 10.1, the
Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 10.2.
SECTION 10.2. Resignation or Removal of Owner Trustee. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Administrator. Upon receiving such
notice of resignation, the Administrator shall promptly appoint a successor
Owner Trustee by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Owner Trustee and one copy to the successor
Owner Trustee. If no successor Owner Trustee shall have been so appointed and
have accepted appointment within thirty (30) days after the giving of such
notice of resignation, the resigning Owner Trustee may petition any court of
competent jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Administrator, or if at any time the Owner
Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation (any of the foregoing events, an "Insolvency
Event"), then the Administrator may remove the Owner Trustee. If the
Administra-
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tor 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
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<PAGE> 51
such Owner Trustee to all Certificateholders, the Indenture Trustee, the
Noteholders and the Rating Agencies. If the Administrator shall fail to mail
such notice within ten (10) days after acceptance of appointment by the
successor Owner Trustee, the successor Owner Trustee shall cause such notice to
be mailed at the expense of the Administrator.
SECTION 10.4. Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder; provided that such corporation shall be eligible pursuant to Section
10.1, without the execution or filing of any instrument or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided further, however, that the Owner Trustee shall mail
notice of such merger or consolidation to the Rating Agencies.
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Owner Trust Estate or any Financed Vehicle may at the time be located, the
Administrator and the Owner Trustee acting jointly shall at any time have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Owner Trustee to act as co-trustee, jointly with the
Owner Trustee, or separate trustee or separate trustees, of all or any part of
the Owner Trust Estate, and to vest in such Person, in such capacity, such title
to the Trust, or any part thereof, and, subject to the other provisions of this
Section 10.5, such powers, duties, obligations, rights and trusts as the
Administrator and the Owner Trustee may consider necessary or desirable. If the
Administrator shall not have joined in such appointment within fifteen (15) days
after the receipt by it of a request so to do, the Owner Trustee alone shall
have the power to make such appointment. No co-trustee or separate trustee under
this Agreement shall be required to meet the terms of eligibility as a successor
trustee pursuant to Section 10.1 and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
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(i) all rights, powers, duties, and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed
by the Owner Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not
authorized to act separately without the Owner Trustee joining in such
act), except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed, the Owner Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties, and obligations (including the holding of
title to the Trust or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(iii) the Administrator and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article X. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Supplements and Amendments. (a) This Agreement may be
amended by the Depositor and the Owner Trustee, with prior written notice to the
Rating Agencies, without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement inconsistent with any other provision of this
Agreement or for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions in this Agreement; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel
satisfactory to the Owner Trustee and the Indenture Trustee adversely affect in
any material respect the interests of any Noteholder or Certificateholder and
provided further that an Opinion of Counsel shall be furnished to the Indenture
Trustee and the Owner Trustee to the effect that such amendment (A) will not
materially adversely affect the Federal or any Applicable Tax State income or
franchise taxation of any outstanding Note or Certificate, or any Holder thereof
and (B) will not cause the Trust to be taxable as a corporation for Federal or
any Applicable Tax State income or franchise tax purposes.
(b) This Agreement may also be amended from time to time by the
Depositor and the Owner Trustee, with prior written notice to the Rating
Agencies, with the consent of the Holders (as defined in the Indenture) of Notes
evidencing not less than a majority 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 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 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, the Class B
Rate, the Specified Class A Reserve Balance or the Specified Class B Reserve
Balance, without the consent of the holders of all the outstanding Notes and
Certificates affected thereby, 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
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of Notes evidencing not less than sixty-six and two thirds percent (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 Issuer is a party, the
Owner Trustee shall be entitled to receive and conclusively rely upon an Opinion
of Counsel to the effect that such amendment is authorized or permitted by the
Basic Documents and that all conditions precedent in the Basic Documents for the
execution and delivery thereof by the Issuer or the Owner Trustee, as the case
may be, have been satisfied.
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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 in
and to their beneficial interest in the Owner Trust Estate shall operate to
terminate this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Owner
Trust Estate.
SECTION 11.3. Limitation on Rights of Others. Except for Section
2.7, the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Depositor, the Administrator, the Certificateholders, the Servicer
and, to the extent expressly provided herein, the Indenture Trustee and the
Noteholders, and nothing in this Agreement (other than Section 2.3), 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 (3) 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 Daimler-Benz Vehicle Receivables Corporation 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
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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 each Certificateholder and their respective
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. Covenant of the Depositor. 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.
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SECTION 11.11. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.12. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
DAIMLER-BENZ VEHICLE
RECEIVABLES CORPORATION,
as Depositor
By:
-----------------------------------
Name:
Title:
CHASE MANHATTAN BANK
DELAWARE, not in its individual
capacity but solely as Owner Trustee
By:
-----------------------------------
Name:
Title:
Acknowledged and Agreed:
CITIBANK, N.A.,
as Paying Agent
By:
----------------------------
Name:
Title:
<PAGE> 59
EXHIBIT A
NUMBER $[____________]
R-[ ]
THIS CLASS B
CERTIFICATE MAY
NOT BE TRANSFERRED
BY A STOCK POWER BUT
ONLY AS SET FORTH
BELOW.
DAIMLER-BENZ VEHICLE OWNER TRUST 1998-A
[___]% CLASS B ASSET BACKED CERTIFICATE
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CLASS B 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 CLASS B 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 C TO
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<PAGE> 60
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
D 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 E 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 ANY STATE OF THE UNITED STATES. IN ADDITION,
EXCEPT IN THE CASE OF TRANSFERS TO EXISTING CERTIFICATEHOLDERS, THIS CLASS B
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).
THIS CLASS B CERTIFICATE MAY NOT BE ACQUIRED BY ANY (A) 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) PLAN, AS DEFINED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED (THE "CODE"), THAT IS SUBJECT TO SECTION 4975 OF THE CODE, (C)
GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, THAT IS SUBJECT TO ANY
STATE, LOCAL OR FEDERAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE
PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, (D) ENTITY WHOSE
UNDERLYING ASSETS INCLUDE "PLAN ASSETS" (WITHIN THE MEANING OF DEPARTMENT OF
A-2
<PAGE> 61
LABOR REGULATION 29 C.F.R. ss. 2510.3-101 OR OTHERWISE UNDER ERISA) BY REASON OF
ANY SUCH PLAN'S INVESTMENT IN THE ENTITY OR (E) PERSON INVESTING "PLAN ASSETS"
OF ANY SUCH PLAN (INCLUDING, FOR PURPOSES OF CLAUSE (D) AND THIS CLAUSE (E), AN
INSURANCE COMPANY GENERAL ACCOUNT, BUT EXCLUDING ANY ENTITY REGISTERED UNDER THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED).
THE PRINCIPAL OF THIS CLASS B CERTIFICATE IS DISTRIBUTABLE AS SET
FORTH IN THE TRUST AGREEMENT. ACCORDINGLY, THE OUTSTANDING PRINCIPAL OF THIS
CERTIFICATE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
A-3
<PAGE> 62
DAIMLER-BENZ VEHICLE OWNER TRUST 1998-A
CLASS B 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 Mercedes-Benz automobiles and new and used medium- and heavy-duty
trucks and tractors manufactured by Freightliner Corporation and its
subsidiaries (collectively, "Freightliner") and used trucks and tractors and new
and used trailers manufactured by companies other than Freightliner sold to
Daimler-Benz Vehicle Receivables Corporation by Mercedes-Benz Credit Corporation
and sold by Daimler-Benz Vehicle Receivables Corporation to the Trust. The
property of the Trust (other than the Certificate Distribution Account, the
Class B Reserve and any money, financial assets or other property from time to
time held in or credited to, or purchased with funds from, any of such accounts)
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
Mercedes-Benz Credit Corporation, Daimler-Benz North America Corporation,
Daimler-Benz Vehicle Receivables Corporation or any of their respective
affiliates, except to the extent described below.)
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<PAGE> 63
THIS CERTIFIES THAT [ ] is the registered owner of a [___________]
DOLLARS AND [______] CENTS nonassessable, fully-paid, beneficial interest in
Class B Certificates of Daimler-Benz Vehicle Owner Trust 1998-A (the "Trust")
formed by Daimler-Benz Vehicle Receivables Corporation, a Delaware corporation
(the "Depositor"). The Class B Certificates have an aggregate Initial
Certificate Balance of $81,654,551.40.
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the
within-mentioned Trust Agreement.
Dated: [ ], 1998
CHASE MANHATTAN CHASE MANHATTAN
BANK DELAWARE BANK DELAWARE
as Owner Trustee OR as Owner Trustee
By:________________________ By: THE CHASE MANHATTAN BANK
Authorized Officer as Authenticating Agent
By:___________________________
Authorized Officer
A-5
<PAGE> 64
The Trust was created pursuant to an Trust Agreement, dated as of
November 1, 1998 (as amended, supplemented or otherwise modified and in effect
from time to time, the "Trust Agreement"), by and between the Depositor and
Chase Manhattan Bank Delaware, 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 November 1, 1998 (as amended, supplemented or otherwise
modified and in effect from time to time, the "Sale and Servicing Agreement"),
by and among the Trust, the Depositor, as seller (in such capacity, the
"Seller"), and Mercedes-Benz Credit Corporation, as servicer (the "Servicer"),
as applicable.
This Certificate is one of the duly authorized Class B Certificates
designated as "Asset Backed Certificates" (herein called the "Certificates" or
the "Class B Certificates"). This Class B 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, tractors and trailers and certain
rights and obligations thereunder (the "Receivables"), (ii) all monies due or
received thereunder on or after the Cutoff Date; (iii) the Depositor's security
interests in the Financed Vehicles; (iv) all money, financial assets or other
property from time to time held in or credited to, or purchased with funds from,
the Collection Account, the Note Distribution Account, the Certificate
Distribution Account, the Payahead Account and the Reserve Accounts; (v) all of
the Depositor's rights to receive proceeds from claims on physical damage,
credit life and disability insurance policies covering the Financed Vehicles or
Obligors; (vi) all of Depositor's rights to all documents contained in the
Receivable Files; (vii) the rights of the Seller under the Purchase Agreement
and the Sale and Servicing Agreement; (viii) all of the Depositor's rights, if
any, of recourse against Dealers arising out of breaches by Dealers in
connection with the Receivables; (ix) all property (including the right to
receive future Liquidation Proceeds and Recoveries) that secures a Receivable
and that will have been acquired by or on behalf of the Indenture Trustee; (x)
the Servicing Guaranty Agreement and (xi) all proceeds (within the meaning of
Section 9-306 of the Uniform Commercial Code) of the foregoing. The rights of
the Trust in the foregoing property of the Trust (other than the Certificate
Distribution Account, the Class B Reserve Account and any money, financial
assets or other property from time to time held in or credited
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<PAGE> 65
to, or purchased with funds from, such accounts) have been pledged to the
Indenture Trustee to secure the payment of the Notes.
Under the Trust Agreement, the Sale and Servicing Agreement and the
Indenture, there will be distributed on the twentieth (20th) day of each month
or, if such twentieth (20th) day is not a Business Day, the next Business Day
(each, a "Payment Date"), commencing December 21, 1998, to the Person in whose
name this Certificate is registered at the close of business on the last
Business Day of the calendar month immediately preceding such Payment Date (the
"Record Date"), such Certificateholder's percentage interest in the amount on
deposit in the Certificate Distribution Account to be distributed to
Certificateholders on such Payment Date, including Accrued Certificate Interest
and the Principal Distribution Amount with respect to the Certificates;
provided, however, that (a) interest will be distributed to the
Certificateholders on each Payment Date to the extent of funds remaining after
the reimbursement of Advances by the Servicer, the payment of the Total
Servicing Fee and the payment of interest on the Notes on such Payment Date, and
(b) principal will be distributed to the Certificateholders on each Payment Date
to the extent of funds remaining after the reimbursement of Advances by the
Servicer, the payment of the Total Servicing Fee, the payment of interest on the
Certificates, and the payment of all principal and interest on the Notes on such
Payment Date; provided, further, however, that if not paid prior to such date,
the entire unpaid principal amount of this Certificate together with any accrued
and unpaid interest thereto shall be due and payable on the earlier of the Class
B Final Payment Date and the Prepayment Date, if any, pursuant to Sections 5.2
and 9.1 of the Trust Agreement.
This Certificate shall bear interest at the rate per annum shown
above on each Payment Date unless the principal of this Certificate is paid or
made available for payment, on the principal amount of this Certificate
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 Certificate will
accrue for each Payment Date from and including the Closing Date (in the case of
the first Payment Date) or from and including the twentieth (20th) date of the
calendar month preceding each Payment Date to but excluding the twentieth (20th)
day of the following calendar month. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
The Holder of this Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Certificate are subordinated
to
A-7
<PAGE> 66
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 The Borough of
Manhattan, The City of New York.
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.
A-8
<PAGE> 67
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.
DAIMLER-BENZ VEHICLE OWNER
TRUST 1998-A
By: CHASE MANHATTAN BANK
DELAWARE, not in its individual
capacity but solely as Owner Trustee
By: _____________________________________
Authorized Officer
A-9
<PAGE> 68
[REVERSE OF CLASS B CERTIFICATE]
The Class B 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 Class B
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 Class B 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, and 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.
Any attempted Transfer in contravention of the
A-10
<PAGE> 69
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 The Borough of Manhattan, City of
New York, 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 The Chase Manhattan Bank.
Except for Certificates issued to the Depositor, the Class B
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 ten
percent (10%) of the Initial Pool Balance.
A-11
<PAGE> 70
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.
A-12
<PAGE> 71
EXHIBIT B
[FORM OF CERTIFICATE OF TRUST]
CERTIFICATE OF TRUST OF
DAIMLER-BENZ VEHICLE OWNER TRUST 1998-A
This Certificate of Trust of DAIMLER-BENZ VEHICLE OWNER TRUST 1998-A
(the "Trust"), dated as of November 1, 1998, is being duly executed and filed by
Chase Manhattan Bank Delaware, a Delaware banking corporation, as trustee, to
form a business trust under the Delaware Business Trust Act (12 Delaware Code,
ss. 3801 et seq.).
1. Name. The name of the business trust formed hereby is
DAIMLER-BENZ VEHICLE OWNER TRUST 1998-A.
2. Delaware Trustee. The name and business address of the trustee of
the Trust in the State of Delaware is Chase Manhattan Bank Delaware, 1201 North
Market Street, Wilmington, DE 19801, Attention: Corporate Trust Administration.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
CHASE MANHATTAN BANK DELAWARE, not in its
individual capacity but solely as owner trustee
under a Trust Agreement dated as of
November 1, 1998
By:____________________________________________
Name:
Title:
B-1
<PAGE> 72
EXHIBIT C
[FORM OF RULE 144A TRANSFEROR CERTIFICATE]
[Date]
Chase Manhattan Bank Delaware,
as Owner Trustee
1201 North Market Street
Wilmington, Delaware 19801
Attention: Corporate Trust Administration
The Chase Manhattan Bank,
as Certificate Registrar
450 West 33rd Street
New York, New York 10001
Attention: Corporate Trust Administration
Ladies and Gentlemen:
This is to notify you as to the transfer of $ [*] in denomination of
Class B Asset Backed Certificates (the "Certificates") of Daimler-Benz Vehicle
Owner Trust 1998-A (the "Issuer").
The undersigned is the holder of the Certificates and with this
notice hereby deposits with the Owner Trustee $ [*] in denomination of
Certificates and requests that Certificates in the same aggregate denomination
be issued, executed and authenticated and registered to the purchaser on
[________ __, ____] as specified in the Trust Agreement dated as of November 1,
1998 relating to the Certificates, as follows:
Name: Denominations: [*]
Address:
Taxpayer I.D. No:
The undersigned represents and warrants that the undersigned (i)
reasonably believes the purchaser is a "qualified institutional buyer," as
defined in Rule 144A under the Securities Act 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
- --------
[* minimum of $[1,000,000]]
C-1
<PAGE> 73
is acquiring Certificates for its own account or for one or more institutional
accounts for which it is acting as fiduciary or agent in a minimum amount
equivalent to at least $1,000,000 for each such account.
Very truly yours,
[NAME OF HOLDER
OF CERTIFICATES]
By: _____________________________
Name:
Title:
C-2
<PAGE> 74
EXHIBIT D
[FORM OF INVESTMENT LETTER --
QUALIFIED INSTITUTIONAL BUYER]
[Date]
Daimler-Benz Vehicle Owner Trust 1998-A
as Issuer
Chase Manhattan Bank Delaware,
as Owner Trustee
1201 North Market Street
Wilmington, Delaware 19801
Attention: Corporate Trust Administration
The Chase Manhattan Bank,
as Certificate Registrar
450 West 33rd Street
New York, New York 10001
Attention: Corporate Trust Administration
Ladies and Gentlemen:
In connection with our proposed purchase of the Class B Asset Backed
Certificates (the "Certificates") of Daimler-Benz Vehicle Owner Trust 1998-A
(the "Issuer"), a trust formed by Daimler-Benz Vehicle Receivables Corporation
(the "Depositor" or "Seller"), we confirm that:
1. We agree to be bound by the restrictions and conditions set forth
in the Trust Agreement dated as of November 1, 1998 (the "Trust Agreement")
relating to the Certificates and we agree to be bound by, and not to resell,
transfer, assign, participate, pledge, or otherwise dispose of (any such act, a
"Transfer") the Certificates except in compliance with such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities Act").
2. We have neither acquired nor will we Transfer any Certificate we
purchase (or any interest therein) or cause any such Certificates (or any
interest therein) to be marketed on or through an "established securities
market" within the meaning of section 7704(b)(1) of the Internal Revenue Code of
1986, as amended (the "Code"), including, without limitation, an
over-the-counter-market or an interdealer quotation system that regularly
disseminates firm buy or sell quotations.
D-1
<PAGE> 75
3. We either (a) are not, and will not become, a partnership,
Subchapter S corporation, or grantor trust for U.S. Federal income tax purposes
or (b) are such an entity, but none of the direct or indirect beneficial owners
of any of the interests in us have allowed or caused, or will allow or cause,
80% or more (or such other percentage as the Seller may establish prior to the
time of such proposed Transfer) of the value of such interests to be
attributable to our ownership of Certificates.
4. We understand that no subsequent Transfer of the Certificates is
permitted unless (i) such Transfer is of a Certificate with a denomination of at
least $[1,000,000] and (ii) the Depositor consents in writing (which consent may
be withheld for any reason or for no reason) to the proposed Transfer; provided,
however, that no such consent shall be required where the proposed transferee
is, and at the time of the Transfer will be, a holder of a Certificate.
5. We understand that the opinion of tax counsel that the Issuer is
not a publicly traded partnership taxable as a corporation is dependent in part
on the accuracy of the representations in paragraphs 2, 3 and 4.
6. We are a "qualified institutional buyer" (within the meaning of
Rule 144A under the Securities Act) (a "QIB") and we are acquiring the
Certificates for our own account or for the account of a QIB for investment
purposes and not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act, and have such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of our investment in the Certificates, and we and any accounts
for which we are acting are each able to bear the economic risk of our or their
investment. We acknowledge that the sale of the Certificates to us is being made
in reliance on Rule 144A.
7. We are acquiring each of the Certificates purchased by us for our
own account or for a single account (which is a QIB and from which no resale,
pledge, or other transfer may be made) as to which we exercise sole investment
discretion.
8. We are not (A) an employee benefit plan, as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), that is subject to Title I of ERISA, (B) a plan, as defined in
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the
"Code"), that is subject to Section 4975 of the Code, (C) a governmental plan,
as defined in Section 3(32) of ERISA, that is subject to any state, local or
Federal 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" (within the meaning of Department of Labor Regulation 29
C.F.R. ss. 2510.3-101 or otherwise under ERISA) by reason of any such plan's
investment in the entity or (E) a person investing "plan assets" of any such
plan (including, for purposes of clause (D) and this clause (E), an insurance
company general account, but excluding any entity registered under the
Investment Company Act of 1940, as amended).
D-2
<PAGE> 76
9. We are a person who is either (A) (i) a citizen or resident of
the United States, (ii) a corporation, partnership or other entity organized in
or under the laws of the United States or any political subdivision thereof or
(iii) a person not described in (i) or (ii) whose ownership of the Certificates
is effectively connected with such person's conduct of a trade or business
within the United States (within the meaning of the Code) and who provides the
Depositor and the Issuer an IRS Form 4224 (and such other certifications,
representations or opinions of counsel as may be requested by the Depositor or
the Issuer) or (B) an estate or trust the income of which is includible in gross
income for United States Federal income tax purposes, regardless of source.
10. We understand that any purported Transfer of any Certificate (or
any interest therein) in contravention of the restrictions and conditions
(including any violation of the representation in paragraph 3 by an investor who
continues to hold such Certificates occurring any time after the Transfer in
which it acquired such Certificates) in paragraphs 1 through 9 above shall be
null and void (each, a "Void Transfer"), and the purported transferee in a Void
Transfer shall not be recognized by the Issuer or any other person as a
Certificateholder for any purpose.
11. We agree that if we determine to Transfer any of the
Certificates we will cause our proposed transferee to provide to the Issuer and
the Certificate Registrar a letter substantially in the form of this Exhibit D
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:
Securities To Be Purchased:
$ [principal balance of Certificates]
D-3
<PAGE> 77
EXHIBIT E
[FORM OF INVESTMENT LETTER --
INSTITUTIONAL ACCREDITED INVESTOR]
[Date]
Daimler-Benz Vehicle Owner Trust 1998-A
as Issuer
Chase Manhattan Bank Delaware,
as Owner Trustee
1201 North Market Street
Wilmington, Delaware 19801
Attention: Corporate Trust Administration
The Chase Manhattan Bank,
as Certificate Registrar
450 West 33rd Street
New York, New York10001
Attention: Corporate Trust Administration
Ladies and Gentlemen:
In connection with our proposed purchase of the Class B Asset Backed
Certificates (the "Certificates") of Daimler-Benz Vehicle Owner Trust 1998-A
(the "Issuer"), a trust formed by Daimler-Benz Receivables Corporation (the
"Depositor" or "Seller"), we confirm that:
1. We agree to be bound by the restrictions and conditions set forth
in the Trust Agreement dated as of November 1, 1998 (the "Trust Agreement")
relating to the Certificates and we agree to be bound by, and not to resell,
transfer, assign, participate, pledge, or otherwise dispose of (any such act, a
"Transfer") the Certificates except in compliance with such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities Act").
2. We have neither acquired nor will we Transfer any Certificate we
purchase (or any interest therein) or cause any such Certificates (or any
interest therein) to be marketed on or through an "established securities
market" within the meaning of section 7704(b)(1) of the Internal Revenue Code of
1986, as amended (the "Code"), including, without limitation, an
over-the-counter-market or an interdealer quotation system that regularly
disseminates firm buy or sell quotations.
E-1
<PAGE> 78
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 Issuer is
not a publicly traded partnership taxable as a corporation is dependent in part
on the accuracy of the representations in paragraphs 2, 3 and 4 and that in
addition to being subject to having its purchase rescinded, it will be liable
for damages.
6. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) and we are acquiring the
Certificates for investment purposes and not with a view to, or for offer or
sale in connection with, any distribution in violation of the Securities Act,
and have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Certificates, and we and any accounts for which we are acting are each able to
bear the economic risk of our or their investment.
7. We are acquiring each of the Certificates purchased by us for our
own account or for a single account (each of which is an institutional
"accredited investor" and from which no resale, pledge or other transfer may be
made) as to which we exercise sole investment discretion.
8. We are not (A) an employee benefit plan, as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), that is subject to Title I of ERISA, (B) a plan, as defined in
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the
"Code"), that is subject to Section 4975 of the Code, (C) a governmental plan,
as defined in Section 3(32) of ERISA, that is subject to any state, local or
Federal 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" (within the meaning of Department of Labor Regulation 29
C.F.R. ss. 2510.3-101 or otherwise under ERISA) by reason of any such plan's
investment in the entity or (E) a person investing "plan assets" of any such
plan (including, for purposes of clause (D) and this clause (E), an insurance
company general account, but excluding any entity registered under the
Investment Company Act of 1940, as amended).
E-2
<PAGE> 79
9. We are a person who is either (A) (i) a citizen or resident of
the United States, (ii) a corporation, partnership or other entity organized in
or under the laws of the United States or any political subdivision thereof or
(iii) a person not described in (i) or (ii) whose ownership of the Certificates
is effectively connected with such person's conduct of a trade or business
within the United States (within the meaning of the Code) and who provides the
Depositor and the Issuer an IRS Form 4224 (and such other certifications,
representations or opinions of counsel as may be requested by the Depositor or
the Issuer) or (B) an estate or trust the income of which is includible in gross
income for United States Federal income tax purposes, regardless of source.
10. We understand that any purported Transfer of any Certificate (or
any interest therein) in contravention of the restrictions and conditions
(including any violation of the representation in paragraph 3 by an investor who
continues to hold such Certificates occurring any time after the Transfer in
which it acquired such Certificates) in paragraphs 1 through 9 above shall be
null and void (each, a "Void Transfer"), and the purported transferee in a Void
Transfer shall not be recognized by the Issuer or any other person as a
Certificateholder for any purpose.
11. We agree that if we determine to Transfer any of the
Certificates, we will cause our proposed transferee to provide to the Issuer and
the Certificate Registrar a letter substantially in the form of this Exhibit E
or Exhibit D 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:
E-3
<PAGE> 1
Exhibit 4.2
================================================================================
SALE AND SERVICING AGREEMENT
by and among
DAIMLER-BENZ VEHICLE OWNER TRUST 1998-A,
as Issuer,
DAIMLER-BENZ VEHICLE RECEIVABLES CORPORATION,
as Seller
and
MERCEDES-BENZ CREDIT CORPORATION,
as Servicer
Dated as of November 1, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.................................................... 2
SECTION 1.2 Other Definitional Provisions.................................. 19
ARTICLE II
TRUST PROPERTY
SECTION 2.1 Conveyance of Trust Property................................... 20
SECTION 2.2 Representations and Warranties of the Seller as to the
Receivables ................................................... 20
SECTION 2.3 Repurchase upon Breach......................................... 25
SECTION 2.4 Custody of Receivable Files.................................... 26
SECTION 2.5 Duties of Servicer as Custodian................................ 26
SECTION 2.6 Instructions; Authority to Act................................. 28
SECTION 2.7 Indemnification of the Custodian............................... 28
SECTION 2.8 Effective Period and Termination............................... 29
ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND OTHER TRUST PROPERTY
SECTION 3.1 Duties of Servicer............................................. 29
SECTION 3.2 Collection and Allocation of Receivable Payments............... 33
SECTION 3.3 Realization upon Receivables................................... 34
SECTION 3.4 Physical Damage Insurance...................................... 35
SECTION 3.5 Maintenance of Security Interests in Financed Vehicles......... 35
SECTION 3.6 Covenants of Servicer.......................................... 35
SECTION 3.7 Purchase by Servicer upon Breach............................... 36
SECTION 3.8 Servicing Compensation......................................... 36
SECTION 3.9 Servicer's Certificate......................................... 37
SECTION 3.10 Annual Statement as to Compliance; Notice of Event
of Servicing Termination....................................... 37
SECTION 3.11 Annual Independent Certified Public Accountants' Reports....... 38
i
<PAGE> 3
Page
----
SECTION 3.12 Access to Certain Documentation and Information
Regarding Receivables.......................................... 39
SECTION 3.13 Reports to the Commission...................................... 39
SECTION 3.14 Reports to Rating Agencies..................................... 39
ARTICLE IV
ACCOUNTS; COLLECTIONS; ADVANCES; DISTRIBUTIONS;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 4.1 Accounts....................................................... 40
SECTION 4.2 Collections.................................................... 44
SECTION 4.3 Application of Collections..................................... 45
SECTION 4.4 Advances....................................................... 46
SECTION 4.5 Additional Deposits............................................ 47
SECTION 4.6 Distributions.................................................. 47
SECTION 4.7 Subordination; Reserve Accounts................................ 49
SECTION 4.8 Net Deposits................................................... 54
SECTION 4.9 Statements to Noteholders and Certificateholders............... 54
SECTION 4.10 Control of Securities Accounts................................. 55
ARTICLE V
THE SELLER
SECTION 5.1 Representations, Warranties and Covenants of Seller............ 56
SECTION 5.2 Liability of Seller; Indemnities............................... 58
SECTION 5.3 Merger or Consolidation of, or Assumption of the
Obligations of, Seller......................................... 59
SECTION 5.4 Limitation on Liability of Seller and Others................... 60
SECTION 5.5 Seller May Own Notes or Certificates .......................... 60
ARTICLE VI
THE SERVICER
SECTION 6.1 Representations and Warranties of Servicer..................... 60
SECTION 6.2 Liability of Servicer; Indemnities............................. 62
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Page
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SECTION 6.3 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer....................................... 64
SECTION 6.4 Limitation on Liability of Servicer and Others................. 65
SECTION 6.5 Servicer Not to Resign......................................... 65
SECTION 6.6 Servicer May Own Notes or Certificates......................... 66
ARTICLE VII
SERVICING TERMINATION
SECTION 7.1 Events of Servicing Termination................................ 66
SECTION 7.2 Indenture Trustee to Act; Appointment of Successor Servicer.... 68
SECTION 7.3 Effect of Servicing Transfer................................... 69
SECTION 7.4 Notification to Noteholders and Certificateholders............. 70
SECTION 7.5 Waiver of Past Events of Servicing Termination................. 70
ARTICLE VIII
TERMINATION
SECTION 8.1 Optional Purchase of All Receivables........................... 71
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1 Amendment...................................................... 72
SECTION 9.2 Protection of Title to Trust................................... 74
SECTION 9.3 Governing Law.................................................. 76
SECTION 9.4 Notices........................................................ 77
SECTION 9.5 Severability of Provisions..................................... 77
SECTION 9.6 Assignment..................................................... 77
SECTION 9.7 Further Assurances............................................. 78
SECTION 9.8 No Waiver; Cumulative Remedies................................. 78
SECTION 9.9 Third-Party Beneficiaries...................................... 78
SECTION 9.10 Actions by Noteholder or Certificateholders.................... 78
SECTION 9.11 Counterparts................................................... 79
SECTION 9.12 Agent for Service.............................................. 79
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Page
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SECTION 9.13 No Bankruptcy Petition......................................... 79
SECTION 9.14 Limitation of Liability of Owner Trustee and Indenture
Trustee ................................................... 79
SCHEDULES
SCHEDULE A Schedule of 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 Servicing Guaranty Agreement
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SALE AND SERVICING AGREEMENT, dated as of November 1, 1998 (as the
same may be amended, supplemented or otherwise modified and in effect from time
to time, this "Agreement"), by and among DAIMLER-BENZ VEHICLE OWNER TRUST
1998-A, a Delaware business trust (the "Issuer"), DAIMLER-BENZ VEHICLE
RECEIVABLES CORPORATION, a Delaware corporation (the "Seller"), and
MERCEDES-BENZ CREDIT CORPORATION, a Delaware corporation (the "Servicer").
WHEREAS, the Issuer desires to purchase a portfolio of accounts
receivable arising in connection with (i) motor vehicle retail installment
contracts generated by authorized Mercedes-Benz motor vehicle dealers throughout
the United States and (ii) commercial vehicle retail installment contracts for,
and retail loans evidenced by notes secured by, new and used medium- and
heavy-duty trucks, tractors and trailers generated by authorized Freightliner
(as defined herein) commercial vehicle dealers throughout the United States and
used trucks and tractors and new and used trailers manufactured by companies
other than Freightliner and certain other property, as more fully described
herein, in the ordinary course of business and sold to the Seller;
WHEREAS, the Seller is willing to sell such Receivables (as defined
herein) to the Issuer; and
WHEREAS, the Servicer is willing to service such Receivables on
behalf of the Issuer;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
<PAGE> 7
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 Certificate Interest" shall have the meaning assigned
thereto in the Trust Agreement.
"Accrued Note Interest" shall have the meaning assigned thereto in
the Indenture.
"Actuarial Method" shall mean the method of allocating a fixed level
payment between principal and interest, pursuant to which the portion of each
such payment that is allocated to interest is the product of one-twelfth of the
APR on the Receivable multiplied by the scheduled principal balance.
"Administration Agreement" shall have the meaning assigned thereto
in the Indenture.
"Administrator" shall have the meaning assigned thereto in the
Indenture.
"Advance" shall have the meaning assigned thereto in Section 4.4.
"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 assigned thereto in the recitals
hereto.
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"Amount Financed" shall mean, with respect to a Receivable, the
amount originally advanced under such Receivable toward the purchase price of
the related Financed Vehicles and any related costs.
"Applicable Tax State" shall mean, as of any date of determination,
each state in the United States 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.
"Assignment" shall mean the Assignment, dated as of November 1,
1998, by MBCC to the Seller.
"Authorized Officer" shall mean, in the case of the Indenture
Trustee, any duly authorized officer within the Corporate Trust Office of the
Indenture Trustee, including any vice president, assistant vice president,
senior trust officer, trust officer, secretary, assistant secretary, financial
services officer or any other officer of the Indenture Trustee 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, with respect to the Owner Trustee,
any duly authorized officer of the Owner Trustee with direct responsibility for
the administration of the Trust Agreement and the Basic Documents on behalf of
the Owner Trustee and shall also mean 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 immediately
preceding Collection Period: (i) all collections on the Receivables including
Payaheads withdrawn from the Payahead Account but excluding Payaheads deposited
into the Payahead Account; (ii) all Liquidation Proceeds; (iii) all Recoveries;
(iv) all Advances; (v) all proceeds from claims on physical damage, credit life
and disability insurance policies covering the Financed Vehicles or the Obligors
and (vi) the Purchase Amount of each Purchased Receivable, minus (b) the
sum of the following
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amounts with respect to the related Collection Period: (i) the aggregate amount
of funds described in clause (a) above that are used in the related Collection
Period or to be used on or before such Payment Date 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; (ii) the Supplemental
Servicing Fee, if any; and (iii) any investment earnings and interest earned on
the Reserve Accounts.
"Balloon Payment" shall mean a payment that becomes due on the
maturity date of a Balloon Receivable, which is sufficient to pay accrued
interest plus the remaining Amount Financed of such Receivable.
"Balloon Receivable" shall mean a Receivable that provides for (a)
fixed monthly payments prior to the maturity date for such Receivable that
amortize a portion of the Amount Financed of such Receivable, and (b) a Balloon
Payment on the maturity date of such Receivable.
"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
or Wilmington, Delaware shall be authorized or obligated by law, executive
order, or governmental decree to remain closed.
"Certificate" shall have the meaning assigned thereto in the Trust
Agreement.
"Certificate Balance" shall have the meaning assigned thereto in the
Trust Agreement.
"Certificate Distribution Account" shall have the meaning assigned
thereto in the Trust Agreement.
"Certificateholder" shall have the meaning assigned thereto in the
Trust Agreement.
"Certificate Interest Carryover Shortfall" shall have the meaning
assigned thereto in the Trust Agreement.
"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
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<PAGE> 10
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.
"Certificate Register" shall have the meaning assigned thereto in
the Trust Agreement.
"Certificate Registrar" shall have the meaning assigned thereto in
the Trust Agreement.
"Class" shall have the meaning assigned thereto in the Indenture.
"Class A Reserve Account" shall mean the account established and
maintained as such pursuant to Section 4.7.
"Class A Reserve Account Amount" shall mean, with respect to any
Payment Date, the amount on deposit in the Class A Reserve Account after giving
effect to all deposits and withdrawals therefrom on the prior Payment Date (or,
in the case of the first Payment Date, the Closing Date), as determined in
accordance with Section 4.7.
"Class A Reserve Initial Deposit" shall mean, with respect to the
Closing Date, $40,786,363.79.
"Class B Reserve Account" shall have the meaning assigned thereto in
the Trust Agreement, as determined in accordance with Section 4.7.
"Class B Reserve Account Amount" shall mean, with respect to any
Payment Date, the amount on deposit in the Class B Reserve Account after giving
effect to all deposits and withdrawals therefrom on the prior Payment Date (or,
in the case of the first Payment Date, the Closing Date), as determined in
accordance with Section 4.7.
"Class B Reserve Initial Deposit" shall mean, with respect to the
Closing Date, $0, which amount may be increased upon any sale by the Seller of
the Certificates and receipt of an Opinion of Counsel to the effect that such
increase would not adversely affect the status of the Trust for federal income
tax purposes.
"Closing Date" shall mean [_______ __], 1998.
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"Collection Account" shall mean the account established and
maintained as such pursuant to Section 4.1(a).
"Collection Period" shall mean (a) with respect to each Payment Date
during the term of this Agreement, the immediately preceding calendar month, or,
(b) in the case of the initial Collection Period, the period from the Cutoff
Date to and including the last day of the month in which the Cutoff Date
occurred.
"Commercial Vehicle" shall mean a medium- or heavy-duty truck,
tractor or trailer securing the indebtedness of the Obligor under the related
Receivable.
"Commercial Vehicle Dealers" shall mean authorized Freightliner
commercial vehicle dealers throughout the United States.
"Commission" shall have meaning assigned thereto in the Indenture.
"Contract" shall mean a retail installment sale contract, including
a retail installment contract or retail loan, relating to the sale of a Motor
Vehicle or Commercial Vehicle.
"Corporate Trust Office" with respect to (a) the Indenture Trustee,
shall have the meaning assigned thereto in the Indenture, and (b) the Owner
Trustee, shall have the meaning assigned thereto in the Trust Agreement.
"Cutoff Date" shall mean November 1, 1998.
"DBNA" shall mean Daimler-Benz North America Corporation, a Delaware
corporation, and its successors and assigns.
"Dealers" shall mean the Mercedes-Benz Dealers and the Commercial
Vehicle Dealers.
"Dealer Agreement" shall mean an agreement by and between MBCC and
any Dealer relating to the assignment of a Receivable to MBCC and all documents
and instruments relating thereto, as the same may be amended, supplemented or
otherwise modified and in effect from time to time.
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"Dealers" shall mean the Mercedes-Benz Dealers and the Commercial
Vehicle Dealers.
"Defaulted Receivable" shall mean a Receivable which, by its terms,
is in default and as to which (a) a Scheduled Payment is 240 or more days past
due, (b) the Servicer has determined, in accordance with its customary servicing
procedures, that eventual payment in full is unlikely and the outstanding
balance of the Receivable has been charged-off or (c) the Servicer has
repossessed and disposed of the related Financed Vehicle.
"Determination Date" shall mean, with respect to any Collection
Period, the earlier of (a) the sixteenth (16th) calendar day of the next
succeeding calendar month and (b) the third Business Day preceding the next
succeeding Payment Date.
"Due Date" shall mean the date a payment is due under a Contract.
"Eligible Bank" shall mean (a) the corporate trust department of the
Owner Trustee, the Indenture Trustee or The Chase Manhattan Bank so long as it
shall be Paying Agent under the Trust Agreement or (b) any depository
institution with trust powers organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia (or any
domestic branch of a foreign bank), (i) which has a net worth in excess of
$50,000,000, (ii) the deposits of which are insured to the full extent permitted
by law by the Federal Deposit Insurance Corporation (except with respect to any
domestic branch of a foreign bank), (iii) which is subject to supervision and
examination by Federal or state banking authorities and (iv) which has a rating
of P-1 from Moody's and A-1+ from S&P with respect to short-term deposit
obligations or if such institution has issued long-term unsecured debt
obligations, a rating of A2 or higher from Moody's and A from S&P with respect
to long-term unsecured debt obligations.
"Eligible Deposit Account" shall mean either (a) a segregated
account with an Eligible Bank or (b) a segregated trust account with the trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having trust powers and acting as
trustee for funds deposited in such account, so long as the long-term unsecured
debt of such depository institution will have a credit rating from each Rating
Agency in one of its generic rating categories
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<PAGE> 13
which signifies investment grade (which, for Moody's, is Baa3 or higher, and for
S&P, is BBB- or higher).
"Eligible Servicer" shall mean a Person which, at the time of its
appointment as Servicer or as a subservicer, (a) has a net worth of not less
than $50,000,000, (b) is servicing a portfolio of motor vehicle or commercial
vehicle retail installment sale contracts and/or loans, (c) is legally
qualified, and has the capacity, to service the Receivables, (d) has
demonstrated the ability to service a portfolio of motor vehicle or commercial
vehicle retail installment sale contracts and/or loans similar to the
Receivables professionally and competently in accordance with standards of skill
and care that are consistent with prudent industry standards, and (e) 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.
"Event of Servicing Termination" shall mean an event specified in
Section 7.1.
"Exchange Act" shall have the meaning assigned thereto in the
Indenture.
"Financed Vehicle" shall mean a new or used Motor Vehicle or
Commercial Vehicle, together with all accessions thereto, securing the
indebtedness of the Obligor under the related Receivable.
"Freightliner" shall mean Freightliner Corporation and its
subsidiaries.
"Holder" shall have the meaning assigned thereto in the Indenture.
"Indenture" shall mean the Indenture, dated as of November 1, 1998,
by and between the Issuer and Citibank, N.A., a national banking association, as
the Indenture Trustee, as the same may be amended, supplemented or otherwise
modified and in effect from time to time.
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"Indenture Trustee" shall have the meaning assigned thereto in the
Indenture.
"Initial Certificate Balance" shall have the meaning assigned
thereto in the Trust Agreement.
"Initial Pool Balance" shall mean $1,631,454,551.40.
"Issuer" shall have the meaning assigned thereto in the Indenture.
"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
(a) any expenses incurred by the Servicer in connection with collection of such
Receivable and the disposition of the Financed Vehicle and (b) any amounts
required by law to be remitted to the Obligor. Liquidation Proceeds shall be
allocated first to accrued and unpaid interest on the Receivables and then to
the unpaid principal balance thereof.
"MBCC" shall mean Mercedes-Benz Credit Corporation, a Delaware
corporation, and its successors and assigns.
"Mercedes-Benz Dealers" shall mean authorized Mercedes-Benz motor
vehicle dealers throughout the United States.
"Monthly Remittance Condition" shall have the meaning assigned
thereto in Section 4.1(e).
"Moody's" shall mean Moody's Investors Service, Inc., and its
successors and assigns.
"Motor Vehicle" shall mean a Mercedes-Benz motor vehicle securing
the indebtedness of the Obligor under the related Receivable.
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"Note Distribution Account" shall mean the account established and
maintained as such pursuant to Section 4.1(b).
"Note Interest Carryover Shortfall" shall have the meaning assigned
thereto in the Indenture.
"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 have the meaning assigned thereto in the
Indenture.
"Obligor" on a Receivable shall mean, with respect to any
Receivable, 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 (a) the
chairman, the president, any executive vice president, vice president or the
treasurer of the Seller or the Servicer, as the case may be or (b) an Authorized
Officer of the Owner Trustee on behalf of the Issuer, in each case delivered to
the Owner Trustee or the Indenture Trustee, as applicable.
"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 and opinion shall
be acceptable to the Indenture Trustee, the Owner Trustee or the Rating
Agencies, as applicable.
"Optional Purchase Percentage" shall mean ten percent (10%).
"Outstanding" shall have the meaning assigned thereto in the
Indenture.
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"Owner Trust Estate" shall have the meaning assigned thereto in the
Trust Agreement.
"Owner Trustee" shall have the meaning assigned thereto in the Trust
Agreement.
"Payahead" shall mean, with respect to a 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.
"Payahead Account" shall mean the account established and maintained
as such pursuant to Section 4.1(d).
"Payahead Balance" shall mean, with respect to a Receivable, 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 Receivable
(including any amount paid by or on behalf of the Obligor prior to the Cutoff
Date that is due on or after the Cutoff Date and was not used to reduce the
Principal Balance of such Receivable), as reduced by applications of previous
Payaheads with respect to such Receivable, pursuant to Sections 4.3 and 4.4.
"Paying Agent" shall mean a Paying Agent under the Indenture or a
Paying Agent under the Trust Agreement.
"Payment Date" shall mean the twentieth (20th) day of each month, or
if such day is not a Business Day, the immediately following Business Day,
commencing on December 21, 1998.
"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
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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 Issuer or
the Servicer has received written notification from the Rating Agencies
that the acquisition of such investment as a Permitted Investment will not
result in a withdrawal or downgrading of the ratings on any Class of
Notes.
"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.
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"Pool Balance" shall mean, as of any date, the aggregate outstanding
Principal Balance of the Receivables (excluding Defaulted Receivables) as of the
close of business on such date.
"Principal Balance" shall mean, with respect to any Receivable as of
any date, the Amount Financed minus the sum of: (a) that portion of all
Scheduled Payments due on or prior to such date and, with respect to periods
prior to the initial Collection Period, the amount indicated in such Receivable
as required to be paid by the Obligor in each such period, whether or not paid,
allocable to principal in accordance with the Actuarial Method, and (b) any
prepayment in full applied by the Servicer 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 into the
Note Distribution Account and the Certificate Distribution Account, as
applicable, on such Payment Date.
"Principal Distribution Amount" shall mean, with respect to any
Payment Date, the sum of (a) the Scheduled Principal for such Payment Date plus
(b) any outstanding Principal Carryover Shortfall as of the close of business on
the preceding Payment Date; provided, however, that the Principal Distribution
Amount shall not exceed the outstanding aggregate principal amount of the Notes
and the Certificate Balance, as applicable; and provided, further, that, on the
Final Payment Date for each Class of Notes or the Certificates, as applicable,
the amount required to be deposited in the Note Distribution Account to pay
principal of the Notes and the amount required to be deposited in the
Certificate Distribution Account to pay the Certificate Balance, as applicable,
shall include the amount necessary (after giving effect to the other amounts to
be deposited in the Note Distribution Account and the Certificate Distribution
Account, as applicable, on such Payment Date and allocable to principal or the
Certificate Balance) to reduce the outstanding principal amount of the Notes of
such Class or the Certificate Balance, as applicable, to zero.
"Proceedings" shall have the meaning assigned thereto in the
Indenture.
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"Program" shall have the meaning assigned thereto in Section 3.11.
"Purchase Agreement" shall mean the Purchase Agreement, dated as of
November 1, 1998, by and between the Seller and MBCC, as the same may be
amended, supplemented or otherwise modified and in effect from time to time,
relating to the purchase of the Receivables by the Seller from MBCC.
"Purchase Amount" shall mean, with respect to a Payment Date and a
Receivable to be purchased or repurchased by the Seller or the Servicer on such
Payment Date, an amount equal to the sum of (a) the outstanding Principal
Balance of such Receivable as of the first day of the Collection Period
preceding the Collection Period in which such Payment Date occurred 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
occurred 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
8.1 hereof.
"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 each of 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 each of 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 any Class of
the Notes.
"Receivable" shall mean each retail installment contract, retail
loan or Contract for a Financed Vehicle described in the Schedule of Receivables
and all rights and obligations thereunder, but excluding Purchased Receivables.
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"Receivable File" shall mean, with respect to a Receivable, the
electronic entries, documents, instruments and writings specified in Section
2.4.
"Record Date" (a) with respect to the Notes and any Payment Date,
shall mean the close of business on the day immediately preceding such Payment
Date or, if Definitive Notes have been issued, the last day of the calendar
month preceding such Payment Date and (b) with respect to the Certificates and
any Payment Date, shall have the meaning assigned thereto in the Trust
Agreement.
"Recoveries" shall mean, with respect to any Collection Period
following the Collection Period in which a 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 (a) 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 (b) any payments on such Receivable required by law to be
remitted to the Obligor.
"Required Rating" shall mean a rating on short-term unsecured debt
obligations of (a) P-1 by Moody's and (b) 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 Accounts" shall have the meaning assigned thereto in
Section 4.7(a).
"Reserve Account Property" shall have the meaning assigned thereto
in Section 4.7(a).
"S&P" shall mean Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., and its successors and assigns.
"Schedule of Receivables" shall mean the list identifying the
Receivables attached hereto as Schedule A (which list may be in the form of
microfiche, computer disk or tape or any other medium acceptable to the Issuer
and the Indenture Trustee), as supplemented or amended from time to time.
"Scheduled Payment" shall mean, for any Collection Period for any
Receivable, the amount indicated in such Receivable as required to be paid by
the
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Obligor in such Collection Period (without giving effect to deferrals of any Due
Date or payment 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 principal portion of each Scheduled Payment due on any
Receivable during the related Collection Period, (b) without duplication of
amounts taken into account under (a), the outstanding principal balance of (i)
Receivables prepaid in full during the related Collection Period and (ii)
Receivables which became Defaulted Receivables during the related Collection
Period, (c) the Purchase Amount of each Receivable that was purchased or
repurchased by the Seller or the Servicer during such Collection Period, to the
extent attributable to principal, and (d) without duplication of amounts taken
into account under (b), the proceeds of any other sale of a Receivable to the
extent allocable to principal; provided, however, that in calculating the
Scheduled Principal, all payments and proceeds (including Liquidation Proceeds)
of any Purchased Receivable, the Purchase Amount of which has been included in
Scheduled Principal in a prior Collection Period (which shall be paid to the
Seller or the Servicer, as applicable), will be excluded.
"Seller" shall mean Daimler-Benz Vehicle Receivables Corporation, 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 5.3.
"Servicer" shall mean MBCC, in its capacity as Servicer of the
Receivables under this Agreement, each successor thereto (in the same capacity)
pursuant to Section 6.3, and each Successor Servicer appointed and acting
pursuant to Section 7.2 and Section 3.7(e) of the Indenture.
"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 Guarantor" shall mean DBNA, as Servicing Guarantor under
the Servicing Guaranty Agreement, and any successor thereto thereunder.
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"Servicing Guaranty Agreement" shall mean an agreement,
substantially in the form of Exhibit D hereto, between DBNA, as Servicing
Guarantor, and the Issuer.
"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 one percent (1.0%) per annum.
"Shortfall" have the meaning assigned in Section 4.4(a).
"Specified Class A Reserve Balance" shall mean, with respect to the
Closing Date, $40,786,363.79, and with respect to any Payment Date,
$57,100,909.30, except where on any Payment Date (a) the annualized average for
the preceding three Collection Periods of the ratios of net losses (that is, the
net balances of all Receivables which are charged off in the applicable
Collection Period, less any Liquidation Proceeds or Recoveries received in such
Collection Period) to the Pool Balance as of the first day of each such
Collection Period exceeds two and one-quarter percent (2.25%) or (b) the average
for the preceding three Collection Periods of the ratios of (i) the sum of (A)
the balance of Receivables that are delinquent sixty-one (61) days or more plus
(B) the balance of Receivables for any Contracts relating to repossessed
Vehicles which in both cases have not been charged off to (ii) such outstanding
Pool Balance exceeds four and one-quarter percent (4.25%), then the Specified
Class A Reserve Balance for such Payment Date will equal $65,258,182.06.
Notwithstanding the foregoing, if (1) 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 (2) there is delivered to the
Indenture Trustee 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 Class A Reserve Balance may be reduced in
accordance with such letters without an amendment hereto.
"Specified Class B Reserve Balance" shall mean, initially zero and
remain zero for so long as the Seller retains the Class B Certificates; if the
Seller sells the Class B Certificates, the Specified Class B Reserve Balance
shall be set at
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an amount determined by the Seller, in consultation with the Rating Agencies, in
order to achieve the desired rating for the Class B Certificates, and provided
that the Rating Agency Condition will be satisfied with respect to each Class of
the Notes.
"Successor Servicer" shall have the meaning assigned thereto in the
Indenture.
"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 Servicing Fee" shall mean, with respect to any Payment Date,
the sum of (a) the Servicing Fee and the Supplemental Servicing Fee for the
related Collection Period plus (b) all accrued and unpaid Servicing Fees or
Supplemental Servicing Fees for prior Collection Periods.
"Trust" shall have the meaning assigned thereto in the Trust
Agreement.
"Trust Agreement" shall mean the Amended and Restated Trust
Agreement, dated as of November 1, 1998, by and between the Owner Trustee and
the Seller, as the same may be amended, supplemented or otherwise modified and
in effect from time to time.
"Trust Property" shall mean, collectively, (a) the Receivables, (b)
all monies due or received thereunder on or after the Cutoff Date, (c) all of
the Seller's security interests in the Financed Vehicles, (d) the Collection
Account, the Note Distribution Account, the Certificate Distribution Account,
the Payahead Account and the Reserve Accounts and all money, financial assets or
other property from time to time held in or credited to or purchased with funds
from, any of the foregoing accounts, (e) all of the Seller's rights to receive
proceeds from claims on physical damage, credit life and disability insurance
policies covering the Financed Vehicles or the Obligors, (f) all of the Seller's
rights to all documents contained in the Receivables Files, (g) all of the
Seller's rights under the Purchase Agreement and this Agreement, (h) all of the
Seller's rights, if any, of recourse against Dealers arising out of breaches by
Dealers in connection with the Receivables, (i) all property (including the
right to receive future Liquidation Proceeds and Recoveries) that secures a
Receivable and that will have been acquired by or on behalf of the Indenture
Trustee,
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(j) the Servicing Guaranty Agreement, and (k) all proceeds (within the meaning
of Section 9-306 of the UCC) of the foregoing.
"UCC" or "Relevant UCC" shall mean the Uniform Commercial Code as in
effect in the relevant jurisdiction.
"Vehicle" shall mean a Motor Vehicle or a Commercial Vehicle.
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, or if not defined therein, the meanings assigned to them in
the Trust Agreement.
(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.
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(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
TRUST PROPERTY
SECTION 2.1 Conveyance of Trust Property. In consideration of the
delivery by the Issuer to, or upon the written order of, the Seller of
authenticated Notes and Certificates, in authorized denominations in aggregate
principal amounts equal to the initial principal amount of the Notes and the
Initial Certificate Balance, respectively, the Seller hereby irrevocably sells,
transfers, assigns and conveys to the Issuer all right, title and interest of
the Seller, whether now owned or hereafter acquired, in, to and under the Trust
Property, without recourse (subject to the obligations herein). The sale,
transfer, assignment and conveyance made hereunder shall not constitute and is
not intended to result in an assumption by the Issuer of any obligation of the
Seller to the Obligors, the Dealers or any other Person in connection with the
Receivables and the other Trust Property or any agreement, document or
instrument related thereto.
It is the intention of the Seller and the Issuer that the transfer
of the Trust Property contemplated herein constitute a sale of the Trust
Property, conveying good title to the Trust Property from the Seller to the
Issuer. However, in the event that such transfer is deemed to be a pledge to
secure the payment of the Notes and the Certificates, the Seller hereby grants
to the Issuer a first priority security interest in and Lien on all of the
right, title and interest of the Seller 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.
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SECTION 2.2 Representations and Warranties of the Seller as to the
Receivables. The Seller makes the following representations and warranties as to
the Receivables on which the Issuer relies in accepting the Receivables. Such
representations and warranties speak as of the execution and delivery of this
Agreement, but shall survive the sale, transfer and assignment of the
Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(a) Characteristics of Receivables. Each Receivable (a) was
originated in the United States of America by a Dealer for the retail sale of
one or more Financed Vehicles in the ordinary course of such Dealer's business,
was fully and properly executed by the parties thereto, has been purchased by
the Seller from MBCC, which in turn purchased such Receivable from such Dealer
under an existing Dealer Agreement with MBCC, has been validly assigned by such
Dealer to MBCC, which in turn has validly assigned such Receivable to the
Seller, (b) contains 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, (c) except in the case of a Balloon
Receivable, provides for level monthly payments that fully amortize the Amount
Financed by maturity and yields interest at the APR of such Receivable, and in
the case of a Balloon Receivable, provides for fixed monthly payments that
amortize the Amount Financed to an amount equal to the Balloon Payment by
maturity, provides for a Balloon Payment at maturity that is sufficient to pay
the remaining Amount Financed of the Receivable, and yields interest at the APR
of such Receivable, (d) is a retail installment contract, and (e) is secured by
one or more Financed Vehicles.
(b) Schedule of Receivables. The information set forth in the
Schedule of Receivables was true and correct in all material respects as of the
opening of business on the Cutoff Date, and no selection procedures believed by
the Seller to be adverse to the Certificateholders were utilized in selecting
the Receivables.
(c) Compliance with Law. Each Receivable and the sale of the
related Financed Vehicle complied at the time it was originated or made, and
complies at the Closing Date, 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 Debt
Collection Practices Act, the Federal Trade Commission Act, the Magnuson Moss
Warranty Act, the Federal Reserve Board's Regulations B and Z, and state
adaptations of the National
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Consumer Act and of the Uniform Consumer Credit Code, and other consumer credit
laws and equal credit opportunity and disclosure laws.
(d) Binding Obligations. To the best of the Seller's
knowledge, each Receivable represents the legal, valid, and binding payment
obligation in writing of the related Obligor, enforceable by the holder thereof
in accordance with its terms except as enforceability may be limited by
bankruptcy, insolvency, reorganization, conservatorship, receivership,
liquidation or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles.
(e) No Government Obligor. Neither the United States of
America nor any state or any agency, department, or instrumentality of the
United States of America or any state is an Obligor.
(f) Security Interest in Financed Vehicles. To the best of the
Seller's knowledge, immediately prior to the sale, assignment, and transfer of
each Receivable by MBCC to the Seller, such Receivable was secured by a validly
perfected first priority security interest and Lien in the related Financed
Vehicle in favor of MBCC as secured party. Such security interest and Lien was
validly assigned by MBCC to the Seller pursuant to the Purchase Agreement and is
being assigned by the Seller to the Issuer pursuant to this Agreement, except
that no certificate of title or certificate of ownership with respect to such
Financed Vehicle has been or will be amended to identify the Seller or the
Issuer as a secured party. At such time as enforcement of such security interest
is sought, there shall exist a valid, subsisting and enforceable first priority
security interest in such Financed Vehicle for the benefit of the Issuer. The
foregoing representations and warranties with respect to perfection and
enforceability of a security interest in a Financed Vehicle do not cover
statutory or other liens arising after the Closing Date by operation of law or
any rights of third parties arising after the Closing Date as a result of the
fraud or forgery of the Vehicle owner or administrative error by state recording
officials which are prior to such security interest.
(g) 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 MBCC to the Seller and by the
Seller to the Issuer.
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(h) 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.
(i) No Defenses. No right of rescission, setoff, counterclaim,
or defense has been asserted or, to the best of the Seller's knowledge,
threatened with respect to any Receivable.
(j) No Liens. To the best of the Seller's knowledge, no liens
or claims have been filed for work, labor, or materials relating to a Financed
Vehicle that are liens prior to, or equal or on a parity with, the security
interest in the Financed Vehicle granted by the related Receivable.
(k) No Default; Repossession. Except for payment defaults
continuing for a period of not more than thirty (30) days in the case of Motor
Vehicles or sixty (60) days in the case of Commercial Vehicles as of the Cutoff
Date, to the best of the Seller's knowledge, no default, breach, violation, or
event permitting acceleration under the terms of any Receivable, and no event
that with notice or the lapse of time would constitute such a default, breach,
violation, or event permitting acceleration under the terms of any Receivable
has occurred; and no Financed Vehicle was repossessed on or prior to the Cutoff
Date.
(l) Insurance. Except in the case of certain fleet customers
which are permitted to be self-insured in accordance with MBCC's customary
standards, MBCC, in accordance with its customary procedures, has determined
that each Obligor has obtained or agreed to obtain physical damage insurance
covering the Financed Vehicle.
(m) Title. It is the intention of the Seller that the transfer
and assignment of the Receivables herein contemplated constitute a sale of the
Receivables from the Seller to the Issuer and that the beneficial interest in
and title to the Receivables not be part of the estate of the Seller in the
event of the filing of a bankruptcy petition or the commencement of any
Proceeding by or against the Seller under any bankruptcy or other insolvency
law. No Receivable has been sold, transferred, assigned, or pledged by the
Seller to any Person other than the Issuer. The Seller is transferring title to
each Receivable free and clear of all Liens and rights of others and has
perfected such transfer under the UCC.
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(n) Valid Assignment. No Receivable was originated in, or is
subject to the laws of, any jurisdiction under which the sale, transfer, and
assignment of such Receivable under this Agreement is unlawful, void, or
voidable. The Seller has not entered into any agreement with any Obligor that
prohibits, restricts or conditions the assignment of any portion of the
Receivables.
(o) All Filings Made. All filings (including, without
limitation, UCC filings) and agreements necessary in any jurisdiction to give
the Issuer a first priority perfected security interest in the Receivables have
been made.
(p) Chattel Paper. Each Receivable constitutes "chattel paper"
as defined in the Relevant UCC.
(q) One Original. There is only one original executed copy of
each Receivable.
(r) Principal Balances. Each Receivable had a remaining
Principal Balance as of the Cutoff Date of not more than $5,617,494.16 and not
less than $217.25.
(s) No Bankrupt Obligors. To the best of the Seller's
knowledge, no Obligor was, as of the Cutoff Date, the subject of a Proceeding
under title 11 of the United States Code or any other bankruptcy or insolvency
law.
(t) New and Used Vehicles. Approximately 70.13% of the
aggregate Principal Balance of the Receivables, constituting approximately
57.53% of the number of Receivables as of the Cutoff Date, relate to new
Financed Vehicles, and approximately 29.87% of the aggregate Principal Balance
of the Receivables, constituting 42.47% of the number of Receivables as of the
Cutoff Date, relate to used Financed Vehicles.
(u) Origination. Each Receivable shall have an origination
date on or after November 7, 1991.
(v) Maturity of Receivables. Each Receivable had a remaining
maturity, as of the Cutoff Date, of not more than 84 months, and an original
maturity of not more than 85 months.
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(w) Annual Percentage Rate. Each Receivable has an APR of at
least 8.25% and not more than 13.0%.
(x) Scheduled Payments. Each Receivable shall have a first
Scheduled Payment due on or prior to November 1, 1998, and no Receivable shall
have a payment that was more than thirty (30) days overdue in the case of Motor
Vehicles or sixty (60) days overdue in the case of Commercial Vehicles as of the
Cutoff Date.
(y) Location of Receivable Files. The Receivable Files shall
be kept at one or more of the locations listed in Schedule B hereto, as
supplemented from time to time.
(z) Billing Address. The Obligor under each Receivable had a
current billing address in the United States as of the Cutoff Date.
(aa) Representations and Warranties. The representations and
warranties of the Seller in Section 5.1 are true and correct.
(bb) Other Data. The tabular data and the numerical data
relating to the characteristics of the Receivables contained in the Prospectus
(as defined in the Purchase Agreement) is true and correct in all material
respects as of its 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 Owner Trustee, the Indenture Trustee and MBCC (if it is no longer
the Servicer) 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 (and, in the case of subsections 2.2(d), (f), (i), (j), (k) and
(s), any breach or failure which would have occurred if such warranty had not
been made to the best knowledge of the Seller). Unless any such breach or
failure shall have been cured by 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, the Indenture
Trustee or the Servicer of, such breach or failure, and such breach or failure
materially and adversely affects the interests of the Trust in
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any Receivable, the Seller shall repurchase from the Issuer any such Receivable
on the Payment Date immediately following such Collection Period, but with
effect from the first day of the Collection Period in which such Payment Date
occurs. In consideration of the repurchase of a Receivable hereunder, the Seller
shall remit the Purchase Amount of such Receivable in the manner specified in
Section 4.5. The sole remedy of the Issuer, the Owner Trustee, the
Certificateholders, the Indenture Trustee and the Noteholders 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 MBCC
to the Seller to repurchase such Receivable pursuant to the Purchase Agreement.
Neither the Owner Trustee nor the Indenture Trustee shall have any duty to
conduct an affirmative investigation as to the occurrence of any condition
requiring the repurchase of any Receivable pursuant to this Section 2.3 or the
eligibility of any Receivable for purposes of this Agreement.
SECTION 2.4 Custody of Receivable Files. To assure uniform quality
in servicing the Receivables and to reduce administrative costs, the Issuer,
upon the execution and delivery of this Agreement, revocably appoints the
Servicer, and the Servicer accepts such appointment, to act as custodian on
behalf of the Issuer and the Indenture Trustee of the following documents or
instruments, which are hereby constructively delivered to the Indenture Trustee,
as pledgee of the Issuer pursuant to the Indenture, with respect to each
Receivable (collectively, a "Receivable File"):
(a) the single original of the Receivable;
(b) the original credit application fully executed by the
Obligor or a photocopy or other imaged copy thereof;
(c) the original certificate of title or such other documents
that the Servicer or MBCC shall keep on file, in accordance with its customary
procedures, evidencing the security interest of MBCC in the Financed Vehicle;
(d) documents evidencing the existence of any insurance
covering the Financed Vehicle; and
(e) any and all other electronic entries, documents,
instruments and writings that the Servicer or the Seller shall keep on file, in
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accordance with its customary procedures, relating to a Receivable, an Obligor,
or a Financed Vehicle.
On the Closing Date, the Servicer shall provide an Officer's
Certificate to the Issuer and the Indenture Trustee confirming that the Servicer
has received, on behalf of the Issuer and the Indenture Trustee, all the
documents and instruments necessary for the Servicer to act as the agent of the
Issuer and the Indenture Trustee for the purposes set forth herein, including
the documents referred to herein, and the Issuer, the Owner Trustee and the
Indenture Trustee are hereby authorized to rely on such Officer's Certificate.
SECTION 2.5 Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity as custodian,
shall hold the Receivable Files for the benefit of the Issuer and the Indenture
Trustee and maintain such accurate and complete accounts, records, and computer
systems pertaining to each Receivable File as shall enable the Servicer and the
Issuer to comply with the terms and provisions of this Agreement, and the
Indenture Trustee to comply with the terms and conditions of the Indenture. In
performing its duties as custodian, the Servicer shall act with reasonable care,
using that degree of skill and attention that the Servicer exercises with
respect to the receivable files relating to all comparable Vehicle receivables
that the Servicer services for itself or others. In accordance with its
customary practices and procedures with respect to its retail installment sale
contracts, the Servicer shall conduct, or cause to be conducted, periodic audits
of the Receivable Files held by it under this Agreement, and of the related
accounts, records, and computer systems, in such a manner as shall enable the
Issuer or the Indenture Trustee to verify the accuracy of the recordkeeping of
the Servicer. 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
Issuer, the Owner Trustee or the Indenture Trustee of the Receivable Files and
none of the Issuer, the Owner Trustee and the Indenture Trustee shall be liable
or responsible for any action or failure to act by the Servicer in its capacity
as custodian hereunder.
(b) Maintenance of and Access to Records. The Servicer shall
maintain each Receivable File at one of its offices specified in Schedule B to
this Agreement, or at such other office as shall be specified to the Owner
Trustee and
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the Indenture Trustee by written notice not later than ninety (90) days after
any change in location. The Servicer shall make available to the Issuer, the
Owner Trustee and the Indenture Trustee or its duly authorized representatives,
attorneys, or auditors a list of locations of the Receivable Files, the
Receivable Files themselves, and the related accounts, records, and computer
systems maintained by the Servicer at such times as the Owner Trustee 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, or the agent or designee of the Indenture
Trustee, as the case may be, at such place or places as the Indenture Trustee
may designate, as soon thereafter as is practicable and prior to the occurrence
of an Event of Servicing Termination or an event which with the passage of time
and delivery of notice would constitute an Event of Servicing Termination, so
long as doing so will not adversely affect the ability of the Servicer to
perform its obligations under this Agreement. 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 and in any event at such time
as may be required by the Servicer to perform its obligations under this
Agreement.
(d) Title to Receivables. The Servicer agrees that, in respect
of any Receivable held by the Servicer as custodian hereunder, (i) 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 the purpose of
collecting or enforcing the Receivable for the benefit of the Issuer and (ii)
the entire equitable interest in such Receivable and the related Receivable File
shall at all times be vested in the Issuer.
SECTION 2.6 Instructions; Authority to Act. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by an Authorized Officer of the
Indenture Trustee. A certified copy of excerpts of authorizing resolutions of
the Board of Directors of the Indenture Trustee shall constitute conclusive
evidence of 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.
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SECTION 2.7 Indemnification of the Custodian. The Servicer, in its
capacity as custodian, shall indemnify and hold harmless the Issuer, the Owner
Trustee and the Indenture Trustee and each of their respective officers,
directors, employees and agents from and against any and all liabilities,
obligations, losses, compensatory damages, payments, costs or expenses
(including legal fees if any) of any kind whatsoever that may be imposed on,
incurred, or asserted against the Issuer, the Owner Trustee and the Indenture
Trustee or any of their respective officers, directors, employees and agents as
the result of any act or omission by the Servicer relating to the maintenance
and custody of the Receivable Files; provided, however, that the Servicer shall
not be liable hereunder to the Issuer or 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, errors in judgment 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, errors in
judgment or negligence of the Indenture Trustee or from the compliance by the
Servicer with instructions given by the Indenture Trustee or the Owner Trustee
to the Servicer pursuant hereto; and provided, further, that such
indemnification shall not extend to any credit losses on any Receivables.
SECTION 2.8 Effective Period and Termination. The appointment of the
Servicer as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section 2.8.
If the Servicer shall resign as Servicer under Section 6.5, or if all of the
rights and obligations of the Servicer shall have been terminated under Section
7.1, 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
twenty-five percent (25%) of the principal amount of the then Outstanding Notes
or, with the consent of Holders of Notes evidencing not less than twenty-five
percent (25%) of the principal amount of the then Outstanding Notes, by the
Owner Trustee or by Holders of Certificates evidencing not less than twenty-five
percent (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 7.1. As soon as practicable after any termination of such
appointment, the Servicer (at its own expense) shall deliver, or cause to be
delivered, the Receivable Files and the related accounts and records maintained
by the Servicer to the Indenture Trustee or an agent or designee of the
Indenture Trustee (including any Successor Servicer) at such place or places as
the Indenture Trustee may reasonably designate.
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ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND OTHER TRUST PROPERTY
SECTION 3.1 Duties of Servicer. (a) The Servicer, acting alone
and/or through subservicers as provided in this Section, shall administer the
Receivables with reasonable care. The duties of the Servicer 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 Indenture Trustee
and the Owner Trustee with respect to distributions and providing collection and
repossession services in the event of Obligor default and making Advances
pursuant to Section 4.4(a). 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 or commercial vehicle receivables that it services for itself or others.
Subject to Section 3.2, the Servicer shall follow its customary standards,
policies and procedures in performing its duties as Servicer. Without limiting
the generality of the foregoing, the Servicer is hereby authorized and empowered
to execute and deliver, on behalf of itself, the Issuer, the Owner Trustee,
Certificateholders, the Indenture Trustee, 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 which the Servicer would not attempt to collect in accordance with
its customary procedures, in which event the Servicer shall indemnify the Issuer
for such deficiency. 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 on behalf of the Trust to the Servicer,
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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
expense and direction of the Servicer, take steps to enforce the Receivable,
including bringing suit in its name or the names of the Trust, the
Certificateholders, the Indenture Trustee, the Noteholders or any of them. The
Owner Trustee shall execute and deliver to the Servicer any powers of attorney
and other documents as shall be prepared by the Servicer and reasonably
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder. The Servicer, at its expense, shall obtain on
behalf of the Issuer or the Owner Trustee, as applicable, all licenses, if any,
required by the laws of any jurisdiction to be held by the Issuer or the Owner
Trustee, as applicable, 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
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 Property, 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.
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(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 which had been serviced by the terminated subservicer or
enter into a subservicing agreement with a successor subservicer which will be
bound by the terms of the subservicing agreement with the terminated
subservicer.
(d) As conditions to the appointment of any subservicer, (i)
the Servicer shall notify each of the Owner Trustee, the Indenture Trustee and
the Rating Agencies in writing before such assignment becomes effective, and
(ii) 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 any other Trust Property being serviced by it, (A) 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, (B) it shall be required to perform its obligations as subservicer
for the benefit of the Issuer as if it were Servicer hereunder (subject,
however, to the right of the Servicer to direct the performance of such
obligations in accordance with this Agreement), (C) notwithstanding any
provision of a subservicing agreement to the contrary, such subservicer shall be
directly liable to the Owner Trustee and the Issuer (notwithstanding any failure
by the Servicer to perform its duties and obligations hereunder) for the failure
by such subservicer to perform its obligations hereunder or under any
subservicing agreement, and (D) the Owner Trustee may enforce the provisions of
this Agreement and any subservicing agreement against the subservicer for the
benefit of the Issuer (notwithstanding any failure by the Servicer to perform
its duties and obligations hereunder), without diminution of such obligations or
liabilities by virtue of (1) any subservicing agreement, (2) any indemnification
provided thereunder or (3) 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 any 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 Issuer and the
Owner Trustee for the servicing and administering of the Receivables and the
other Trust
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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 any such subservicing agreements or
arrangements or by virtue of any 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 any
subservicing agreement. In such event, the Successor Servicer shall be deemed to
have assumed all of the interest of the Servicer 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 the 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 any 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 any 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 any other Trust Property being serviced by such
subservicer to the Successor Servicer.
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SECTION 3.2 Collection and Allocation of Receivable Payments. 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 and commercial 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 or commercial 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 Due Date or other 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 or commercial 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. 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 first day of the Collection Period following 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.
SECTION 3.3 Realization upon Receivables. (a) On behalf of the
Issuer, the Servicer shall charge off a delinquent Receivable in accordance with
its customary standards and shall use its best efforts to repossess and
liquidate the Financed Vehicle securing any Defaulted Receivable as soon as
feasible after default, in accordance with the standard of care required by
Section 3.1. 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 motor vehicle and commercial vehicle 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 a Financed Vehicle and
liquidating a Financed Vehicle into cash proceeds, but only
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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 Issuer to the Servicer of the rights of recourse
under such Dealer Agreement. If, however, in any enforcement suit or legal
Proceeding, it is held that the Servicer may not enforce a Dealer Agreement on
the grounds that it is not a real party in interest or a Person entitled to
enforce the Dealer Agreement, the Owner Trustee, at the expense and direction of
the Servicer, 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
Trust, the Certificateholders, the Indenture Trustee, 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 obtained physical damage insurance covering the related Financed Vehicle.
SECTION 3.5 Maintenance of Security Interests in Financed Vehicles.
The Servicer, in accordance with the standard of care required under Section
3.1, shall take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle.
The Issuer hereby authorizes the Servicer, and the Servicer hereby agrees, to
take such steps as are necessary to re-perfect such security interest on behalf
of the Issuer and the Indenture Trustee for the benefit of the Noteholders in
the event the Servicer receives notice of, or otherwise has actual knowledge of,
the relocation of a Financed Vehicle to a location in the United States of
America or Canada 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 Servicer will
not (nor will it permit any subservicer to) release the Financed Vehicle
securing any
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Receivable from the security interest granted by the Receivable in whole or in
part, except as contemplated herein, or voluntarily allow an Obligor to relocate
outside the United States of America or Canada.
(b) No Impairment. The Servicer will not (nor will it permit
any subservicer to) impair in any material respect the rights of the Issuer, the
Owner Trustee, the Indenture Trustee, the Certificateholders or the Noteholders
in the Receivables or, subject to clause (c) and (d) below, otherwise amend or
alter the terms thereof if, as a result of such amendment or alteration, the
interests of the Issuer, the Owner Trustee, the Indenture Trustee, the
Certificateholders or the Noteholders hereunder would be materially adversely
affected.
(c) Amendments. The Servicer will not (nor will it permit any
subservicer to) increase or decrease the number or amount of Scheduled Payments,
or the Amount Financed under or the APR of, a Receivable, or extend, rewrite or
otherwise modify the Due Pate or any other payment terms of a Receivable, except
pursuant to Section 3.2.
(d) Extensions. The Servicer will not (nor will it permit any
subservicer to) extend a Receivable except in accordance with Section 3.2.
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, the Owner Trustee, the Indenture Trustee and MBCC (if
it is no longer the Servicer) promptly, in writing, upon the discovery of any
breach of Sections 3.2, 3.5 or 3.6. Subject to Section 3.2, unless any such
breach shall 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 any Receivable, the Servicer
shall purchase from the Issuer any such Receivable on the immediately succeeding
Payment Date; provided, however, that with respect to a breach of Section 3.2,
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 6.2, the sole remedy of the Issuer, the Owner Trustee, the
Certificateholders, the Indenture Trustee and the Noteholders against the
Servicer with respect to a breach of Sections 3.2, 3.5 or 3.6 shall be to
require the Servicer to repurchase Receivables pursuant to this Section 3.7.
Neither
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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 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, as agreed upon
between the Seller, the Owner Trustee and the Indenture Trustee (and any
custodian or Paying Agent appointed by the Owner Trustee and the Indenture
Trustee), 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 each Rating Agency, a certificate of a Servicing Officer substantially
in the form of Exhibit A hereto (a "Servicer's Certificate") and attached to a
report of the Servicer containing all information necessary to make the
deposits, transfers and distributions pursuant to Sections 4.2, 4.3, 4.4, 4.5,
4.6 and 4.7, together with the written statements to be furnished by the Owner
Trustee to the Certificateholders pursuant to Section 4.9 hereof and by the
Indenture Trustee to the Noteholders pursuant to Section 4.9 hereof and Section
5.5 of the Trust Agreement and Section 6.6 of the Indenture. The Servicer also
shall identify separately (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 purchased or repurchased by the
Seller or the Servicer, as the case may be, on such Payment Date, and, upon
request of the Owner Trustee or the Indenture Trustee, each Receivable which
became a Defaulted Receivable during the Collection Period immediately preceding
such Payment Date. The Servicer shall deliver to each Rating
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Agency any information, to the extent it is available to the Servicer, that any
Rating Agency reasonably requests in order to monitor the Issuer.
SECTION 3.10 Annual Statement as to Compliance; Notice of Event of
Servicing Termination. (a) The Servicer shall deliver to the Owner Trustee and
the Indenture Trustee, on or before March 31 of each year, commencing March 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 the supervision of such
officer 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.
(b) The Servicer shall deliver to the Owner Trustee, the
Indenture Trustee, the Seller 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 7.1.
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
MBCC) to deliver to the Owner Trustee and the Indenture Trustee on or before
March 31 of each year, commencing March 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 (a) was made in accordance with generally accepted
auditing standards, (b) included tests relating to motor vehicle and commercial
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 (c) except as described in the
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report, disclosed no exceptions or errors in the records relating to Motor
Vehicle and Commercial Vehicle 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. In the event such firm of independent certified public accountants
requires the Indenture Trustee to agree or consent to the procedures performed
by such firm, the Issuer shall direct the Indenture Trustee in writing to so
agree, and the Indenture Trustee will not make any independent inquiry or
investigation as to, and shall have no obligation or liability in respect of the
sufficiency, validity or correctness of such procedures.
SECTION 3.12 Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide the Owner Trustee, the
Certificateholders, the Indenture Trustee and the Noteholders with access to the
Receivable Files in the cases where the Owner Trustee, 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, and, prior to the occurrence of
an Event of Servicing Termination or an event which with the passage of time and
delivery of notice would constitute an Event of Servicing Termination, only to
the extent that such access does not disrupt the normal business operations of
the Servicer and does not adversely affect the ability of the Servicer to
perform its obligations under this Agreement. 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, and
the Owner Trustee and the Indenture Trustee 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 and not to use any such information
except as permitted by, or to enforce, this Agreement, the Trust Agreement or
the Indenture.
SECTION 3.13 Reports to the Commission. The Servicer shall, on
behalf of the Issuer, cause to be filed with the Commission any periodic reports
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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
ACCOUNTS; COLLECTIONS; ADVANCES; DISTRIBUTIONS;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 4.1 Accounts. (a) (i) The Servicer shall, prior to the
Closing Date, establish and maintain a segregated trust account, in the name of
"Citibank, N.A. as Indenture Trustee, as secured party from Daimler-Benz Vehicle
Owner Trust 1998-A" at an Eligible Bank (which shall initially be the corporate
trust department of Citibank, N.A.), 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 and conditions of the Basic Documents. 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 thereto and withdrawals therefrom shall be
made only upon the terms and conditions of the Basic Documents.
(ii) 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
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interest and other income (net of losses and investment expenses) on funds on
deposit in the Collection Account shall remain on deposit therein pending
distribution of all funds therein in accordance with the Basic Documents. In the
event that the Collection Account is no longer to be maintained at the corporate
trust department of Citibank, N.A., the Servicer shall, with the assistance of
the Indenture Trustee or the Owner Trustee as necessary, cause the Collection
Account to be moved to an Eligible Bank within ten (10) Business Days of the
date of determination that the Collection Account shall no longer be maintained
at the corporate trust department of Citibank, N.A. (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 "Citibank, N.A. as
Indenture Trustee, as secured party from Daimler-Benz Vehicle Owner Trust
1998-A" at an Eligible Bank (which shall initially be the corporate trust
department of Citibank, N.A.), which shall be designated as the "Note
Distribution Account". The Note Distribution Account shall be held in trust for
the benefit of the Noteholders. The Note Distribution Account shall be under the
sole dominion and control of the Indenture Trustee; provided, that the Servicer
may direct the Indenture Trustee in writing to make withdrawals from the Note
Distribution Account in accordance with the terms and conditions of the Basic
Documents. All monies deposited from time to time in the Note Distribution
Account 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 Distribution Account is no longer to be maintained at the
corporate trust department of Citibank, N.A., the Servicer shall, with the
assistance of the Indenture Trustee as necessary, cause the Note Distribution
Account to be moved to an Eligible Bank within ten (10) Business Days of the
date of determination that the Note Distribution Account shall no longer be
maintained at the corporate trust department of Citibank, N.A. (or such longer
period not to exceed thirty (30) calendar days as to which each Rating Agency
may consent).
(c) The Servicer shall, prior to the Closing Date, establish
and maintain a segregated trust account, in the name of "Citibank, N.A. as
Paying Agent for Daimler-Benz Vehicle Owner Trust 1998-A" at an Eligible Bank
(which shall initially be the corporate trust department of Citibank, N.A.),
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 Servicer and the
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Indenture Trustee in accordance with the directions of the Servicer may make
deposits to such account pursuant to this Agreement and the Indenture, and that
the Servicer may direct Citibank, N.A., as Paying Agent under the Trust
Agreement, or any successor thereto as Paying Agent, in writing to make
withdrawals from the Certificate Distribution Account in accordance with the
terms and conditions of the Basic Documents. All monies deposited from time to
time in the Certificate Distribution Account shall be held by Citibank, N.A., as
Paying Agent under the Trust Agreement, or any successor Paying Agent, as part
of the Trust Property and shall be applied as provided in the Basic Documents.
In the event that the Certificate Distribution Account is no longer to be
maintained at Citibank, N.A., the Servicer shall, with the assistance of the
Owner Trustee as necessary, cause the Certificate Distribution Account to be
moved to an Eligible Bank within ten (10) Business Days of the determination
that the Certificate Distribution Account shall no longer be maintained at the
corporate trust department of Citibank, N.A. (or such longer period not to
exceed thirty (30) calendar days as to which each Rating Agency may consent) and
shall promptly notify the Owner Trustee in writing of the account number and
location of such account.
(d) (i) The Servicer shall, prior to the Closing Date,
establish and maintain a segregated trust account in the name of "Citibank, N.A.
as Indenture Trustee, as secured party from Daimler-Benz Vehicle Owner Trust
1998-A" at an Eligible Bank (which shall initially be the corporate trust
department of Citibank, N.A.), which shall be designated as the "Payahead
Account". 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 the terms and
conditions of 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 thereto and withdrawals therefrom shall
be made only upon the terms and conditions of the Basic Documents.
(ii) 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
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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 deposited into the Collection Account, for
distribution together with all other amounts on deposit therein in accordance
with the Basic Documents. In the event that the Payahead Account is no longer to
be maintained at the corporate trust department of Citibank, N.A., the Servicer
shall, with the assistance of the Indenture Trustee or the Owner Trustee as
necessary, cause the Payahead Account to be moved to an Eligible Bank within ten
(10) Business Days of the determination that the Payahead Account shall no
longer be maintained at the corporate trust department of Citibank, N.A. (or
such longer period not to exceed thirty (30) calendar days as to which each
Rating Agency may consent).
(e) Notwithstanding the provisions of clause (d) above and of
Sections 4.3 and 4.6(a)(ii), for so long as (i) MBCC is the Servicer, (ii) the
rating of the short-term unsecured debt of the Servicing Guarantor is at least
P-1 by Moody's and is at least A-1 by S&P and (iii) no Event of Servicing
Termination shall have occurred (each of the conditions in clauses (i), (ii) and
(iii) above, 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 each of the Monthly Remittance Conditions is 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 any
time that a Monthly Remittance Condition is not met, the Servicer shall deposit
in the Payahead Account, as soon as practicable but in no event after the close
of business on the second Business Day after receipt thereof, 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 such 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 each Class of the Notes.
The Owner Trustee and the Indenture Trustee shall not be deemed to have
knowledge of any event or circumstance under clauses (ii) or (iii) of the first
sentence of this Section 4.1(e) that would require remittance of the Payaheads
to the Payahead Account unless the Owner Trustee or the Indenture Trustee has
received written notice of such event or circumstance from the Seller or the
Servicer in an Officer's Certificate or from the Holders of Notes
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evidencing not less than twenty-five percent (25%) of the principal balance of
the then Outstanding Notes or from the Holders of Certificates evidencing not
less than twenty-five percent (25%) of the Certificate Balance or unless an
Authorized Officer in the Corporate Trust Office of the Owner Trustee or of the
Indenture Trustee with knowledge hereof and familiarity herewith has actual
knowledge of such event or circumstance.
(f) The Servicer shall be permitted to remit to any Obligor,
upon the request of such Obligor, the Payahead Balance with respect to any
Receivable of such Obligor or such lesser amount as is requested by such
Obligor, in accordance with the customary standards, policies, practices and
procedures of the Servicer, 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)(i) Subject to the provisions of
subsections 4.2(a)(ii) and (b) below, the Servicer shall remit to the Collection
Account (A) all payments by or on behalf of the Obligors (including, subject to
the next sentence, Payaheads on the Receivables, but excluding payments with
respect to amounts included in the Supplemental Servicing Fee and excluding
amounts received on a particular Receivable to the extent that unreimbursed
Advances with respect to such Receivable have previously been made by the
Servicer), including amounts treated as collections on Balloon Receivables, (B)
all Liquidation Proceeds (except Liquidation Proceeds with respect to a
particular Receivable to the extent of any unreimbursed Advances with respect to
such Receivable), (C) all Recoveries (except Recoveries with respect to a
particular Receivable to the extent of any unreimbursed Advances with respect to
such Receivable), (D) all Advances made by the Servicer of principal or interest
due on the Receivables and (E) all proceeds from claims on physical damage,
credit life and disability insurance policies covering the Financed Vehicles or
the Obligors and (F) all proceeds for Purchased Receivables, in each case
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 shall be deposited by the Servicer in
the Collection Account, pursuant to the preceding sentence for purposes of
administrative convenience only, pending determination of any amount to be
deposited in the Payahead Account (or in the event that each Monthly Remittance
Condition is satisfied, remitted to the Servicer pursuant to Section 4.1(e)),
which amount shall be deposited in the Payahead Account as soon as practicable
but in no event later than the Payment Date immediately following collection,
and such
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amounts shall not be transferred to the Collection Account until due, which
payments upon determination shall be made to the Servicer, and the Trust shall
not be entitled to such amounts.
(ii) MBCC, 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 paragraph. 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 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 such 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 any Class of the Notes. 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 written 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
twenty-five percent (25%) of the principal balance of the then Outstanding Notes
or from the Holders of Certificates evidencing not less than twenty-five percent
(25%) of the Certificate Balance or an Authorized Officer in the Corporate Trust
Office of the Owner Trustee or the Indenture Trustee with knowledge hereof or
familiarity herewith has actual knowledge of such event or circumstance.
(b) Notwithstanding the provisions of Section 4.2(a) hereof,
the Servicer may retain, or will be entitled to be reimbursed, from amounts
otherwise payable into, or on deposit in, the Collection Account with respect to
a Collection Period, any amounts previously deposited in the Collection Account
but later determined to have resulted from mistaken deposits or postings or
checks returned unpaid for insufficient funds or other reasons, in each case,
with respect to which the Servicer has not been previously reimbursed hereunder.
The amount to be retained
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or reimbursed hereunder shall not be included in collections with respect to the
related Payment Date.
SECTION 4.3 Application of Collections. (a) For the purposes of this
Agreement, all collections with respect to each Receivable (other than amounts
received by the Servicer with respect to the Supplemental Servicing Fee) in each
Collection Period shall be applied by the Servicer as follows:
Payments by or on behalf of the Obligor with respect to such
Receivable shall be applied first, to reduce outstanding Advances from
prior Collection Periods as described in Section 4.4(a) below. Next, any
excess shall be applied to the Scheduled Payment for such Collection
Period in respect of such Receivable. Any remaining excess shall be
applied to prepay the Receivable, but only if the sum of such excess and
the existing Payahead Balance in respect of such Receivable shall be
sufficient to prepay such Receivable in full. Otherwise, any such
remaining excess shall constitute a Payahead, shall increase the Payahead
Balance with respect to such Receivable, and shall be deposited into the
Payahead Account.
(b) Collections with respect to the Supplemental Servicing Fee
in each Collection Period shall be applied by the Servicer as additional
compensation to the Servicer.
SECTION 4.4 Advances. (a)(i) 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 a Receivable (other than a
Purchased Receivable) after application under Section 4.3 shall be less than the
Scheduled Payment in respect of such Receivable (a "Shortfall"), the Payahead
Balance with respect to such Receivable shall be applied by the Indenture
Trustee in accordance with the written direction of the Servicer to the extent
of such Shortfall, and such Payahead Balance shall be reduced accordingly. On
the Payment Date immediately following such Collection Period, subject to the
following sentence, an advance shall be made by the Servicer to the extent of
any remaining Shortfall in respect of such Receivable (such advance, an
"Advance"); provided that notwithstanding anything in this Agreement to the
contrary, no Successor Servicer shall be required to make Advances. Outstanding
Advances with respect to a Receivable shall be reduced by subsequent payments by
or on behalf of the related Obligor, collections of Liquidation Proceeds and
Recoveries in respect of the related Receivables, and payment of the Purchase
Amount.
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(ii) If the Servicer shall determine that an outstanding Advance
with respect to any Receivable shall not be recoverable as described in the
preceding paragraph, the Servicer shall be reimbursed from any collections
credited to payments made on other Receivables in the Trust (including
Liquidation Proceeds and Recoveries), and outstanding Advances with respect to
such Receivable shall be reduced accordingly.
(iii) The Servicer may elect not to make an Advance with respect to
a Receivable to the extent that the Servicer, in its sole discretion, does not
expect to recover such Advance from subsequent payments on such Receivable.
(b) 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)(i) 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.
(i) On each Payment Date, the Servicer shall deposit
into the Collection Account an amount equal to the aggregate amount of
Advances required to be made with respect to the related Collection
Period.
(c) On each Payment Date, the Servicer shall instruct the
Indenture Trustee in writing 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 Receivables with respect
to which the Servicer has made Advances in a prior Collection Period that are
allocable to the reimbursement of such Advances pursuant to Sections 4.3(a) and
4.4(a) and (ii) the aggregate amount of Advances that the Servicer has not been
reimbursed for pursuant to this Section 4.4(c) or Section 4.5 that are with
respect to Receivables that became Defaulted Receivables in the related
Collection Period.
SECTION 4.5 Additional Deposits. At the written direction of the
Servicer, the Indenture Trustee shall deposit in the Collection Account the
amounts required pursuant to Section 4.4(a)(i) and (b). The Servicer shall
deposit in the Collection Account amounts required to be paid by the Servicer
pursuant to Sections 4.4(a) and (b). The Seller and the Servicer shall deposit
or cause to be deposited in
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the Collection Account the aggregate Purchase Amount with respect to Purchased
Receivables pursuant to Section 2.3, 3.7 or 8.1. 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.
SECTION 4.6 Distributions. (a) On each Payment Date, after repayment
of Advances pursuant to Sections 4.3(a) and 4.4(c), the Indenture Trustee shall
cause to be made the following transfers and distributions in the amounts set
forth in the Servicer's Certificate for such Payment Date pursuant to Section
3.9:
(i) If the Monthly Remittance Conditions are not then
satisfied, from the Payahead Account, and otherwise from amounts paid by
the Servicer pursuant to Section 4.1(e), to the Collection Account in
immediately available funds, (x) the aggregate portion of Payaheads
constituting Scheduled Payments or prepayments in full, required by
Sections 4.2 and 4.3(a), and (y) the Payahead Balance, if any, relating to
any Purchased Receivable;
(ii) From the Collection Account to the Payahead
Account, or to the Servicer in each event that the Monthly Remittance
Condition is then satisfied, in immediately available funds, the aggregate
Payaheads required by Section 4.3 for the Collection Period related to
such Payment Date.
(b) On each Determination Date, the Servicer shall calculate
the Available Funds, the Total Servicing Fee, the Accrued Note Interest for each
Class of Notes, the Accrued Certificate Interest, the Scheduled Principal, the
Principal Distribution Amount, the Class A Reserve Account Amount, the Specified
Class A Reserve Balance, the Class B Reserve Account Amount and the Specified
Class B Reserve Balance, in each case with respect to the next succeeding
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 (i) all Available Funds on deposit in the Collection Account for the
related Collection Period and (ii) the additional amounts from the sources
specified below and make the following payments and deposits from the sources
specified below for such Payment Date in the following order of priority:
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(i) to the Servicer, the Total Servicing Fee, such amount to
be paid, first, from Available Funds in the Collection Account, second,
from the Class B Reserve Account, and third, from the Class A Reserve
Account;
(ii) to the Note Distribution Account, the Accrued Note
Interest on each Class of Notes, such amount to be paid, first, from
Available Funds in the Collection Account, and second, from the Class A
Reserve Account;
(iii) to the Certificate Distribution Account, the Accrued
Certificate Interest, such amount to be paid, first, from Available Funds
in the Collection Account, and second, from the Class B Reserve Account;
(iv) to the Note Distribution Account, the Principal
Distribution Amount with respect to each Class of Notes, such amount to be
paid, first, from Available Funds in the Collection Account, and second,
from the Class A Reserve Account;
(v) to the Certificate Distribution Account, the Principal
Distribution Amount with respect to the Certificates, such amount to be
paid first, from Available Funds in the Collection Account, and second,
from the Class B Reserve Account;
(vi) to the Class A Reserve Account, from Available Funds in
the Collection Account, the amount required to bring the amount in the
Class A Reserve Account up to the Class A Specified Reserve Balance;
(vii) to the Class B Reserve Account, from Available Funds in
the Collection Account, the amount required to bring the amount in the
Class B Reserve Account up to the Class B Specified Reserve Balance; and
(viii) to the Seller, any remaining Available Funds.
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(d) The rights of the Certificateholders to receive
distributions in respect of the Certificates shall be and hereby are
subordinated, to the extent set forth in Section 4.6(c), to the rights of the
Noteholders to receive distributions in respect of the Class A Notes and the
rights of the Servicer to receive reimbursements of Advances and payment of the
Total Servicing Fee (and any accrued and unpaid Servicing Fees or Supplemental
Servicing Fees from prior Collection Periods) in the event of delinquency or
defaults on the Receivables. Upon the written instructions of the Servicer
included in the Servicer's Certificate delivered on the related Determination
Date pursuant to Section 3.9, the Indenture Trustee shall release amounts
available in the Class A Reserve Account and the Class B Reserve Account,
respectively, as provided in Sections 4.4(a) and 4.6(c) and distribute such
amounts in accordance with Section 4.6(c).
SECTION 4.7 Subordination; Reserve Accounts. (a) The Seller shall,
prior to the Closing Date, establish and maintain a segregated trust account in
the name of "Citibank, N.A. as Indenture Trustee, as secured party from
Daimler-Benz Vehicle Owner Trust 1998-A" at an Eligible Bank (which shall
initially be the corporate trust department of Citibank, N.A.) which shall be
designated the "Class A Reserve Account" and shall, prior to the Closing Date,
establish and maintain a segregated trust account in the name of "Citibank,
N.A., as Paying Agent for Daimler-Benz Vehicle Owner Trust 1998-A" at an
Eligible Bank (which shall initially be the corporate trust department of
Citibank, N.A.) which shall be designated the "Class B Reserve Account"
(collectively, the "Reserve Accounts"). On the Closing Date, the Seller shall
deposit the Class A Reserve Initial Deposit into the Class A Reserve Account,
and the Class B Reserve Initial Deposit, if any, into the Class B Reserve
Account. The Class A Reserve Account shall be under the sole dominion and
control of the Indenture Trustee, and the Class B Reserve Account shall be under
the sole dominion and control of the Owner Trustee; provided, that the Servicer
may make deposits to the Reserve Accounts in accordance with this Agreement and
the Indenture. The Reserve Accounts and all amounts, securities, investments,
financial assets and other property deposited in or credited to the respective
Reserve Accounts (the "Reserve Account Property") has been conveyed by the
Seller to the Trust pursuant to Section 2.1. Pursuant to the Indenture, the
Trust will pledge all of its right, title and interest in, to and under the
Class A Reserve Account and the Reserve Account Property deposited therein or
credited thereto to the Indenture Trustee on behalf of the Noteholders to secure
its obligations under the Notes and the Indenture. The Class B Reserve Account
and the Reserve Account Property deposited therein or credited thereto will not
be pledged to the Indenture Trustee or the Noteholders.
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The Reserve Account Property shall, to the extent permitted by
applicable law, rules and regulations, be invested, as directed in writing by
the Seller, by the bank or trust company then maintaining the Reserve Accounts
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 Class A Reserve Account and the Class B 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 Class A Reserve Balance and the Specified
Class B Reserve Balance, respectively. In the event that either of the Class A
Reserve Account or the Class B Reserve Account is no longer to be maintained at
the corporate trust department of Citibank, N.A., the Servicer shall, with the
assistance of the Indenture Trustee or the Owner Trustee as necessary, cause
such Class A Reserve Account or Class B Reserve Account, as applicable, to be
moved to an Eligible Bank 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) With respect to any Reserve Account Property:
(i) any 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 Eligible Bank
maintaining the applicable Reserve Account, in accordance with customary
procedures of such institution such that such Institution establishes a
"securities entitlement" in favor of the Indenture Trustee or the Owner
Trustee, as applicable, with respect thereto;
(ii) any Reserve Account Property that is held in
deposit accounts shall be held solely in the name of the Indenture
Trustee, any appropriate Paying Agent or the Owner Trustee, as applicable,
at one or more depository institutions having the Required Rating and such
Indenture Trustee, appropriate Paying Agent or Owner Trustee, as
applicable, shall have sole signature authority with respect thereto; and
(iii) except for any deposit accounts specified in
clause (ii) above, the Reserve Accounts shall only be invested in
securities or in other assets which the Eligible Bank maintaining the
applicable Reserve
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Account agrees to treat as "financial assets" as defined in Section
8-102(a)(9) of the UCC.
(c) On any Distribution Date (i) if the principal amount of
the Reserve Account Property on deposit in the Class A Reserve Account (after
taking into account any withdrawals from and deposits into the Class A Reserve
Account pursuant to Section 4.6) is greater than the Specified Class A Reserve
Balance for such Distribution Date, the Indenture Trustee shall upon the written
instruction of the Servicer, release such excess from the Class A Reserve
Account and (ii) if the principal amount on deposit in the Class B Reserve
Account (after taking into account any withdrawals from and deposits in the
Class B Reserve Account pursuant to Section 4.6) is less than the Specified
Class B Reserve Balance for such Distribution Date, deposit such excess, as
directed by the Servicer, to the extent of such shortfall, in the Class B
Reserve Account and (iii) to the extent that the principal amount of the Reserve
Account Property (after taking into account any withdrawals from and deposits in
the Class B Reserve Account pursuant to Section 4.6) is equal to or greater than
the Specified Class B Reserve Balance for such Distribution Date, the Indenture
Trustee shall upon written instruction of the Servicer, release such excess from
the Class B Reserve Account to the Seller. Amounts properly released from the
Class A Reserve Account and deposited in the Class B Reserve Account or
distributed to the Seller pursuant to Section 4.6(c) or this Section 4.7(c),
either directly from the Collection Account without deposit in the Class A
Reserve Account and/or the Class B Reserve Account or from the Class A Reserve
Account and/or the Class B Reserve Account, shall be deemed released from the
trust established by this Section 4.7, and neither the Indenture Trustee, the
Noteholders, nor the Certificateholders shall have any further claim upon any
such distributed amounts. The delivery of the Servicer's Certificate pursuant to
Section 3.9 shall, unless otherwise specified by the Servicer, be deemed an
appropriate written instruction for purposes of this Section 4.7(c).
(d) (i) Amounts held in the Reserve Accounts shall be invested
in Permitted Investments in the manner specified in Section 4.1(a), in
accordance with written instructions from the Servicer, and such investments
shall not be sold or disposed of prior to their maturity; provided, however,
that to the extent permitted by the Rating Agencies, funds on deposit in the
Reserve Accounts may be invested in Permitted Investments that mature later than
the next succeeding Payment Date. All such investments shall be made in the name
of the Indenture Trustee or its nominee and all income and gain realized thereon
shall be solely for the benefit of the Seller and shall be payable to the Seller
on each Distribution Date.
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Additionally, it is understood and agreed that the Indenture Trustee shall not
be liable for any loss arising from investments in Permitted Investments or for
the selection of Permitted Investments and the Indenture Trustee shall have no
liability in respect of losses incurred as a result of the liquidation of any
Permitted Investments prior to its stated maturity or the failure of the
Servicer to provide timely written investment directions.
(ii) Each of the Seller and the Servicer agrees to take
or cause to be taken such further actions, to execute, deliver and file or
cause to be executed, delivered and filed such further documents and
instruments (including, without limitation, any UCC financing statements
or this Agreement) as may be determined to be necessary, in the Opinion of
Counsel of the Seller delivered to the Indenture Trustee, in order to
perfect the security interests in favor of the Indenture Trustee created
by this Section 4.7 and otherwise fully to effectuate the purposes, terms
and conditions of this Section 4.7. The Seller and the Servicer shall:
(A) promptly execute, deliver and file any financing
statements, amendments, continuation statements, assignments,
certificates and other documents with respect to such
interests and perform all such other acts as may be necessary
in order to perfect or to maintain the perfection of the
security interest of the Indenture Trustee for the benefit of
the Noteholders; and
(B) make the necessary filings of financing statements
or amendments thereto within five days after the occurrence of
any of the following: (1) any change in their respective
corporate names or any trade names, (2) any change in the
location of their respective chief executive offices or
principal places of business and (3) any merger or
consolidation or other change in their respective identities
or corporate structures; and shall promptly notify the
Indenture Trustee of any such filings.
(iii) Investment earnings attributable to the Class A
Reserve Account and the Class B Reserve Account and proceeds therefrom
shall be held by the Indenture Trustee for the benefit of the Seller.
Investment earnings attributable to the Class A Reserve Account and the
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Class B Reserve Account shall not be available to satisfy the
subordination provisions of this Agreement and shall not otherwise be
subject to any claims or rights of the Noteholders, the Certificateholders
or the Servicer. The Indenture Trustee shall cause all investment earnings
received on or prior to each Distribution Date and attributable to the
Class A Reserve Account and the Class B Reserve Account, respectively, to
be distributed on such Distribution Date to the Seller in accordance with
the written direction of the Servicer. Losses, if any, on investments in
the Class A Reserve Account or the Class B Reserve Account shall be
charged first against undistributed investment earnings attributable to
the Class A Reserve Account or Class B Reserve Account, respectively, and
then against the principal amount of the applicable Class A Reserve
Account or Class B Reserve Account, respectively.
(iv) The Indenture Trustee shall not enter into any
subordination or intercreditor agreement with respect to the Class A
Reserve Account or the Class B Reserve Account.
(e) Upon termination of this Agreement, all remaining Reserve
Account Property shall, upon written instruction of either the Servicer or the
Seller, be paid 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 shall be distributed to the Seller.
SECTION 4.8 Net Deposits. As an administrative convenience only,
unless the Servicer is required to remit collections pursuant to 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 4.9 Statements to Noteholders and Certificateholders. Three
Business Days prior to each Payment Date, the Servicer shall provide to the
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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 or the Paying Agent for the
Certificates 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 Certificate Balance;
(ii) the amount of such distribution allocable to
interest paid to each Class of Notes and to the Certificates;
(iii) the amount of the Total Servicing Fee and
Supplemental Servicing Fee with respect to the related Collection Period;
(iv) 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;
(v) the Pool Balance as of the close of business on the
last day of the related Collection Period;
(vi) the amounts of the Note Interest Carryover
Shortfall, the Certificate Interest Carryover Shortfall and the Principal
Carryover Shortfall, if any, for such Payment Date and the portion thereof
attributable to each Class of Notes and to the Certificates, as
applicable;
(vii) the balance of the Class A Reserve Account and the
Class B Reserve Account, if any, on such Payment Date, after giving effect
to changes therein on such Payment Date; and
(viii) the aggregate Purchase Amount of Receivables
repurchased by the Seller or purchased by the Servicer, if any, with
respect to the related Collection Period.
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Each amount set forth on the Payment Date statement pursuant to
clauses (i), (ii), (iv) and (vi) above shall be expressed as a dollar amount per
$1,000 of original principal balance of a Note or Certificate Balance, as
applicable.
SECTION 4.10 Control of Securities Accounts. Notwithstanding
anything else contained herein, the Issuer agrees that each of the Collection
Account, the Note Distribution Account, and the Class A Reserve Account will be
an Eligible Deposit Account established at an Eligible Bank which agrees
substantially as follows: (a) it will comply with "entitlement orders" (as
defined in Section 8-102(a)(8) of the UCC; i.e., orders directing the transfer
or redemption of any financial asset) relating to such accounts issued by the
Indenture Trustee without further consent by the Issuer; (b) 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 (c) 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
THE SELLER
SECTION 5.1 Representations, Warranties and Covenants of Seller. The
Seller makes the following representations, warranties and covenants on which
the Issuer is deemed to have relied in acquiring the Trust Property. The
representations, warranties and covenants speak as of the execution and delivery
of this Agreement and shall survive the sale of the Trust Property to the Issuer
and the pledge thereof by the Issuer to the Indenture Trustee pursuant to the
Indenture:
(a) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware, with power and authority to own its properties
and to conduct its business as such properties shall be currently owned and such
business is presently conducted, and had at all relevant times, and shall have,
power, authority, and legal right to acquire and own the Receivables.
(b) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary
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licenses and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such qualifications,
except where the failure of the Seller to so qualify or obtain such licenses or
approvals would not have a material adverse effect on the Seller, the Issuer or
any Receivable.
(c) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and the other Basic Documents to
which it is a party and to carry out their terms. The Seller has full power and
authority to sell and assign the property to be sold and assigned to and
deposited with the Issuer and has duly authorized such sale and assignment to
the Issuer by all necessary corporate action; and the execution, delivery, and
performance of this Agreement and the other Basic Documents to which it is a
party have been duly authorized by the Seller by all necessary corporate action.
(d) Valid Sale; Binding Obligation. This Agreement effects a
valid sale, transfer and assignment of the Receivables and the other Trust
Property conveyed by the Seller to the Issuer hereunder, enforceable against
creditors of and purchasers from the Seller; and this Agreement and the other
Basic Documents to which the Seller is a party constitute legal, valid, and
binding obligations of the Seller, enforceable against the Seller in accordance
with their terms, subject, as to enforceability, to applicable bankruptcy,
insolvency, reorganization, conservatorship, receivership, liquidation and other
similar laws affecting the enforcement of creditors' rights generally and by
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,
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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) Officer's Certificates. Each representation and warranty
made by the Seller in each of the Seller Officer's Certificates attached as
exhibits to the Purchase Agreement is true and correct as of the Closing Date,
and the Seller covenants to fulfill each covenant made by it in such Seller
Officer's Certificates.
SECTION 5.2 Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement, and hereby agrees to the
following:
(a) The Seller shall indemnify, defend, and hold harmless the
Issuer, the Owner Trustee and the Indenture Trustee from and against any taxes
that may at any time be asserted against any such Person with respect to, and as
of the date of, the sale of the Receivables to the Issuer or the issuance and
original sale of the Notes or the Certificates, including any sales, gross
receipts, general corporation, tangible personal property, privilege, or license
taxes (but, in the case of the Issuer, not including any taxes asserted with
respect to ownership of the Receivables or Federal or other Applicable Tax State
income taxes arising out of the transactions contemplated by this Agreement and
the other Basic Documents) and costs and expenses in defending against the same.
(b) The Seller shall indemnify, defend, and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Noteholders and the
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Certificateholders from and against any loss, liability or expense incurred by
reason of (i) the willful misfeasance, bad faith, or negligence of the Seller
(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 violation by the Seller 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.
Notwithstanding the foregoing, such indemnification shall not
extend to any credit losses on any Receivables. Indemnification under this
Section 5.2 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 5.2 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 5.3 Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person (a) into which the Seller may be merged or
consolidated, (b) resulting from any merger, conversion, or consolidation to
which the Seller shall be a party or (c) 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
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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 (i) 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 5.3, and (ii) the Seller shall have delivered to the Owner Trustee and
the Indenture Trustee an Opinion of Counsel either (A) stating that, in the
opinion of such counsel, all financing statements and continuation statements
and amendments thereto have been executed and filed that are necessary to fully
preserve and protect the interest of the Issuer and the Indenture Trustee,
respectively, in the Receivables and the other Trust Property, and reciting the
details of such filings, or (B) stating that, in the opinion of such counsel, no
such action shall be necessary to fully preserve and protect such interest. The
Seller shall provide notice of any merger, conversion, consolidation, or
succession pursuant to this Section 5.3, any amendment to the Articles of
Incorporation of the Seller or of the issuance of any other securities by the
Seller to the Rating Agencies. Notwithstanding anything herein to the contrary,
the execution of the foregoing agreement of assumption and compliance with
clauses (i) or (ii) above shall be conditions to the consummation of the
transactions referred to in clauses (a), (b) or (c) above.
SECTION 5.4 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 and shall be protected in acting or refraining from acting upon
the advice of counsel or on any resolution, certificate of auditors or
accountants or any other certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, appraisal, bond, note or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties. 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 5.5 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
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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 VI
THE SERVICER
SECTION 6.1 Representations and Warranties of Servicer. The Servicer
makes the following representations and warranties on which the Issuer is deemed
to have relied in acquiring the Trust Property, and such representations and
warranties speak as of the execution and delivery of this Agreement and shall
survive the sale of the Trust Property to the Issuer and the pledge thereof by
the Issuer pursuant to the Indenture:
(a) Organization and Good Standing. The Servicer has been duly
organized and is validly existing as a corporation in good standing under the
laws of the state of its incorporation, with power and authority to own its
properties and to conduct its business as such properties shall be currently
owned and such business is presently conducted, and had at all relevant times,
and shall have, power, authority, and legal right to acquire, own, sell, and
service the Receivables and to hold the Receivable Files as custodian on behalf
of the Indenture 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,
except where the failure of the Servicer so to qualify or obtain such licenses
or approvals would not have a material adverse effect on the Servicer, the
Issuer or any Receivable.
(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.
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(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 affecting the enforcement of creditors' rights generally and by
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: (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 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 (iv) that may adversely
affect the Federal or Applicable Tax State income, excise, franchise or similar
tax attributes of the Notes or the Certificates.
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SECTION 6.2 Liability of Servicer; Indemnities. The Servicer shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Servicer under this Agreement, and hereby agrees
to the following:
(a) The Servicer shall defend, indemnify and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders and the Seller from and against any and all costs, expenses,
losses, damages, claims and liabilities, arising out of or resulting from the
use, ownership or operation by the Servicer or any Affiliate thereof of a
Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee and the Indenture Trustee from and against any taxes
that may at any time be asserted against any such Person with respect to the
transactions contemplated herein or in the other Basic Documents, if any,
including, without limitation, any sales, gross receipts, general corporation,
tangible personal property, privilege or license taxes (but, in the case of the
Issuer, not including any taxes asserted with respect to, and as of the date of,
the sale of the Receivables to the Issuer or the issuance and original sale of
the Notes and the Certificates and the issuance of the Certificates, or asserted
with respect to ownership of the Receivables, or Federal or other Applicable Tax
State income taxes arising out of the transactions contemplated by this
Agreement and the other Basic Documents) and costs and expenses in defending
against the same.
(c) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders and the Seller from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent that such cost, expense,
loss, claim, damage or liability arose out of, or was imposed upon any such
Person through, the negligence, willful misfeasance or bad faith of the Servicer
in the performance of its duties under this Agreement or any other Basic
Document to which it is a party (except for errors in judgment), or by reason of
reckless disregard of its obligations and duties under this Agreement or any
other Basic Document to which it is a party.
(d) The Servicer shall indemnify, defend and hold harmless the
Owner Trustee and the Indenture Trustee, as applicable, from and against all
costs, expenses, losses, claims, damages and liabilities arising out of or
incurred in connection with the acceptance or performance of the trusts and
duties contained herein and in the other Basic Documents, if any, except to the
extent that such cost, expense, loss, claim, damage or liability: (a) shall be
due to the willful misfeasance,
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bad faith or negligence 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 breach by the Owner Trustee 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 breach by the Indenture
Trustee of any of its representations or warranties set forth in the Indenture;
or (d) shall be one as to which the Seller is required to indemnify the
Indenture Trustee or the Owner Trustee.
For purposes of this Section 6.2, in the event of the termination of
the rights and obligations of MBCC (or any successor thereto pursuant to Section
7.2) as Servicer pursuant to Section 7.1, 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 7.2.
Notwithstanding the foregoing, such indemnification shall not extend
to any credit losses on any Receivables. Indemnification under this Section 6.2
by MBCC (or any successor thereto pursuant to Section 7.2) 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 6.3 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
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merger, conversion, consolidation or succession and such agreement of assumption
comply with this Section 6.3, and (y) the Servicer shall have delivered to the
Owner Trustee and the Indenture Trustee an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary to fully preserve and protect the interest of the Issuer and the
Indenture Trustee, respectively, in the Receivables, and reciting the details of
such filings, or (B) stating that, in the opinion of such Counsel, no such
action shall be necessary to fully preserve and protect such interests. The
Servicer shall provide notice of any merger, conversion, consolidation or
succession pursuant to this Section 6.3 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 6.4 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 Issuer, the Noteholders or
the Certificateholders, except as provided under this Agreement, for any action
taken or for refraining from the taking of any action pursuant to this Agreement
or for errors in judgment; provided, however, that this provision shall not
protect the Servicer or any such Person against any liability that would
otherwise be imposed by reason of willful misfeasance or bad faith in the
performance of duties or by reason of reckless disregard of obligations and
duties under this Agreement, or by reason of negligence in the performance of
its duties under this Agreement (except for errors in judgment). The Servicer
and any director, officer or employee or agent of the Servicer may rely in good
faith and shall be protected in acting or refraining from acting upon any
resolution, certificate of auditors or accountants or any other certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, appraisal, bond, note or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties.
(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
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of such action and any liability resulting therefrom shall be expenses, costs
and liabilities of the Servicer.
SECTION 6.5 Servicer Not to Resign. Subject to the provisions of
Section 6.3, 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 (a) assumed the responsibilities and obligations of the
Servicer in accordance with Section 7.2 and (b) become the Administrator under
the Administration Agreement pursuant to Section 8 thereof.
SECTION 6.6 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 VII
SERVICING TERMINATION
SECTION 7.1 Events of Servicing Termination. (a) If any one of the
following events ("Events of Servicing Termination") shall occur and be
continuing:
(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
(or, for so long as the Servicer is an Affiliate of the Seller, the
Seller) to make any required payment or deposit under this Agreement,
which shall continue unremedied for a
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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 (or, for so
long as the Servicer is an Affiliate of the Seller, the Seller) 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
ninety (90) days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer
(or, for so long as the Servicer is an Affiliate of the Seller, the
Seller) 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
twenty-five percent (25%) of the principal balance of the then Outstanding
Notes, in the aggregate, or if the Notes have been paid in full and the
Indenture has been discharged in accordance with its terms, twenty-five
percent (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
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(v) The failure by the Servicer to be an Eligible
Servicer;
then, and in each and every case and for so long as such 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 the Notes have been paid in full and
discharged in accordance with its terms, the Owner Trustee pursuant to the Trust
Agreement, or the holders of Certificates evidencing not less than a majority of
the Certificate Balance, 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 7.2; 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 and shall cooperate with the successor servicer in the
enforcement of the Dealer Agreements. 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.
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(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 7.1(a).
SECTION 7.2 Indenture Trustee to Act; Appointment of Successor
Servicer. Upon the resignation by the Servicer pursuant to Section 6.5 or upon
the receipt by the Servicer of notice of termination as Servicer pursuant to
Section 7.1, the Indenture Trustee shall be the successor in all respects to the
Servicer in its capacity as Servicer under this Agreement, 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, whether or not the
Indenture has been terminated. In the ordinary course of business, the Indenture
Trustee and any other Person, in either case acting as Successor Servicer, may
at any time delegate any of its duties hereunder to any Person, including any of
its affiliates, who agrees to conduct such duties in accordance with standards
comparable to those that the Servicer executes pursuant to Section 3.1 hereof.
Such delegation shall not relieve the Indenture Trustee and any other Person, in
either case acting as Successor Servicer, of its liabilities and
responsibilities with respect to such duties and shall not constitute a
resignation within the meaning of Article VI of this Agreement. The Indenture
Trustee and any other Person, in either case acting as Successor Servicer, shall
provide each Rating Agency and the Indenture Trustee with written notice prior
to the delegation of any of its duties to any Person. 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 MBCC as Servicer hereunder. The Indenture Trustee and such Successor
Servicer shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. The Indenture Trustee shall not be
relieved of its duties as Successor Servicer under this Section 7.2 until a
newly
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appointed Servicer shall have assumed the responsibilities and obligations of
the terminated Servicer under this Agreement. Notwithstanding anything herein or
in the Indenture to the contrary, in no event shall the Indenture Trustee be
liable for any Servicing Fee, for any Advances or for any differential in the
amount of the Servicing Fee paid hereunder and the amount necessary to induce
any Successor Servicer to act as Successor Servicer under this Agreement and the
transactions set forth or provided for herein.
SECTION 7.3 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 7.2 after the transfer of
servicing hereunder, the outgoing Servicer shall have no further obligations
with respect to the management, 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 records the Successor Servicer
(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 7.3 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 7.3.
SECTION 7.4 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
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Owner Trustee shall give prompt written notice thereof to Certificateholders at
their respective addresses of record and to the Rating Agencies.
SECTION 7.5 Waiver of Past Events of Servicing Termination. The
Holders of Notes evidencing not less than a majority 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 Collection Account, the Note
Distribution Account, the Payahead Account, the Certificate Distribution Account
or the Reserve Accounts 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 VIII
TERMINATION
SECTION 8.1 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 Collection Account, the Note Distribution Account, the Payahead Account, the
Certificate Distribution Account and the Reserve Accounts. To exercise such
option, the Servicer shall notify the Owner Trustee and the Indenture Trustee in
writing no later than the twentieth (20th) 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
Collection Account, the Note Distribution Account, the Payahead Account, the
Certificate Distribution Account and the Reserve Accounts, 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
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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 Redemption Price of the Notes and the Prepayment
Price of the Certificates. The Purchase Amount for such Payment Date, plus to
the extent necessary all amounts in the Reserve Accounts, shall be used to make
payments in full to Noteholders and Certificateholders in the manner set forth
in Article IV. Following payment of all amounts payable to the Noteholders and
the Certificateholders, all remaining available funds (including the amounts
remaining in the Class A Reserve Account and the Class B Reserve Account) shall
be distributed to the Seller.
(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 long-term
unsecured debt of the Servicer 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, 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 Class A Reserve Account in
accordance with Sections 4.5 and 4.7.
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ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1 Amendment. (a) This Agreement may be amended by the
Seller, the Servicer and the Issuer, with the consent of the Indenture Trustee,
but without the consent of any of the Noteholders or the Certificateholders to
cure any ambiguity, to correct or supplement any provisions in this Agreement
which may be inconsistent with any other provisions in this Agreement, or to
add, change or eliminate any other provisions with respect to matters or
questions arising under this Agreement that shall not be inconsistent with the
provisions of this Agreement; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Owner Trustee and the
Indenture Trustee, materially and adversely affect the interests of any
Noteholder or Certificateholder.
(b) This Agreement may also be amended from time to time by
the Seller, the Servicer and the Issuer, with the consent of the Indenture
Trustee and the consent of the Holders of Notes evidencing not less than a
majority of Outstanding Amount of the Notes, voting as a group, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement, or of modifying in any manner the rights of the
Noteholders or the Certificateholders; provided, however, that no such amendment
shall (a) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, or change the allocation or priority of, collections of payments
on Receivables or distributions that shall be required to be made on any Note or
Certificate or change the Note Interest Rate or the Specified Class A Reserve
Balance without the consent of all adversely affected Noteholders or
Certificateholders, or change the Certificate Interest Rate or the Specified
Class B Reserve Balance without the consent of all of the Class B
Certificateholders then outstanding, (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 sixty-six and two-thirds (66-2/3%) of
the Notes of such Class Outstanding or adversely affect the rating, if any, of
the Certificates by the Rating Agencies without the consent of
Certificateholders evidencing not less than sixty-six and two thirds (66-2/3)%
of the Certificates then outstanding.
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(c) Prior to the execution of any amendment or consent
pursuant to Section 9.1(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 9.1, the Servicer shall furnish written notification of
the substance of such amendment or consent to each Noteholder and
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 9.1 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
conclusively rely upon (i) an Opinion of Counsel stating that the execution of
such amendment (A) is authorized or permitted by this Agreement, (B) will not
materially adversely affect the Federal or any Applicable Tax State income or
franchise taxation of any Outstanding Note or Certificate or any Holder thereof,
and (C) will not cause the Trust to be taxable as a corporation for Federal or
any Applicable Tax State income or franchise tax purposes and (ii) an Officer's
Certificate of the Servicer that all conditions precedent to the execution of
such amendment have been complied with. The Owner Trustee or the Indenture
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the respective rights, duties, indemnities or immunities of the Owner
Trustee or the Indenture Trustee under this Agreement or otherwise.
SECTION 9.2 Protection of Title to Trust. (a) The Seller or
Servicer, or both, shall execute and file such financing statements and cause to
be executed and filed such continuation statements, all in such manner and in
such places as may be required by law fully to preserve, maintain, and protect
the interest of the Issuer and the Indenture Trustee for the benefit of the
Noteholders in the Receivables and in the proceeds thereof. The Seller or
Servicer, or both, shall deliver (or cause to be delivered) to the Owner Trustee
and the Indenture Trustee file-stamped copies of, or
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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 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 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 and Reserve Accounts in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that,
from and after the time of sale under this Agreement of the Receivables to the
Issuer, the master computer records of the Servicer (including any back-up
archives) that refer to a Receivable shall indicate clearly the interest of the
Issuer and the Indenture Trustee in such Receivable and that such Receivable is
owned by the Issuer and has been pledged to the Indenture Trustee pursuant to
the Indenture. Indication of the respective interests of the Issuer or the
Indenture Trustee in a Receivable shall be deleted from or modified on the
computer systems of the Servicer when, and only
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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
Vehicle 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 Issuer and has been pledged to the Indenture
Trustee unless such Receivable has been paid in full or repurchased by the
Seller or purchased by the Servicer.
(g) The Servicer shall permit the Owner Trustee, the Indenture
Trustee and their respective agents at any time during normal business hours to
inspect, audit, and make copies of and abstracts from the records of the
Servicer regarding any Receivable, but, prior to the occurrence of an Event of
Servicing Termination or an event that with the passage of time and delivery of
notice would constitute an Event of Servicing Termination, only to the extent
that such activities do not disrupt the normal business operations of the
Servicer and do not adversely affect the ability of the Servicer to perform its
obligations under this Agreement.
(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, vehicle number, name and address of Obligor)
then held as part of the Trust, together with a reconciliation of such list to
the Schedule of Receivables and to each of the Servicer's Certificates furnished
before such request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the
Indenture Trustee:
(1) promptly after the execution and delivery of each
amendment to any financing statement, an Opinion of Counsel either
(A) stating that, in the opinion of such Counsel, all financing
statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the
Issuer and the Indenture Trustee in the Receivables, and reciting
the details of such filings or referring to prior Opinions of
Counsel in
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which such details are given, or (B) stating that, in the opinion of
such Counsel, no such action shall be necessary to preserve and
protect such interest; and
(2) within ninety (90) days after the beginning of each
calendar year beginning with the first calendar year beginning more
than three months after the Cutoff Date, an Opinion of Counsel,
dated as of a date during such 90-day period, either (A) stating
that, in the opinion of such Counsel, all financing statements and
continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Issuer
and the Indenture Trustee in the Receivables, and reciting the
details of such filings or referring to prior Opinions of Counsel in
which such details are given, or (B) stating that, in the opinion of
such Counsel, no such action shall be necessary to preserve and
protect such interest.
Each Opinion of Counsel referred to in clause (i)(1) or (i)(2) above
shall specify any action necessary (as of the date of such opinion) to be taken
in the following year to preserve and protect such interest.
(j) The Seller shall, to the extent required by applicable
law, cause the Notes to be registered with the Commission pursuant to Section
12(b) or Section 12(g) of the Exchange Act within the time periods specified in
such sections.
SECTION 9.3 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ITS
ENTIRETY 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 9.4 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 9.12
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 Issuer or 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
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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, a division of The
McGraw-Hill Companies, Inc., 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. Any notice to be delivered to the Rating Agencies hereunder
shall also be delivered to the Seller.
SECTION 9.5 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 9.6 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.3 and 7.2 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 9.7 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 9.8 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Owner Trustee, the Indenture
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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 9.9 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 IX, no other Person will have any
right or obligation hereunder. The parties hereto hereby acknowledge and consent
to the pledge of this Agreement by the Issuer to the Indenture Trustee for the
benefit of Noteholders pursuant to the Indenture.
SECTION 9.10 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 9.11 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 9.12 Agent for Service. The agent for service of the Seller
and the Servicer in respect of this Agreement shall be Harvey S. Traison,
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Daimler-Benz North America Corporation, 375 Park Avenue, Suite 3001, New York,
New York 10152.
SECTION 9.13 No Bankruptcy Petition. The Owner Trustee, the
Indenture Trustee, the Issuer and the Servicer each covenants and agrees that,
prior to the date which is one year and one day after the payment in full of all
securities issued by the Seller or by a trust for which the Seller was the
depositor which 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 9.13 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 either such Agreement.
SECTION 9.14 Limitation of Liability of Owner Trustee and Indenture
Trustee. (a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Chase Manhattan Bank Delaware, not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Chase Manhattan Bank Delaware, in its individual capacity
or, except as expressly provided in the Trust Agreement, as beneficial owner of
the Issuer, have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer. For all purposes
of this Agreement, in the performance of its duties or obligations hereunder or
in the performance of any duties or obligations of the Issuer hereunder, the
Owner Trustee shall be subject to, and entitled to the benefits of, the terms
and provisions of Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been accepted by Citibank, N.A., not in its individual
capacity but solely as Indenture Trustee, and in no event shall Citibank, N.A.
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 and under no circumstances shall
Citibank, N.A. be personally liable for the payment of any indebtedness or
expenses of the Trust.
80
<PAGE> 86
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.
DAIMLER-BENZ VEHICLE
RECEIVABLES CORPORATION,
as Seller
By:
--------------------------
Name: Harvey S. Traison
Title: President
MERCEDES-BENZ CREDIT
CORPORATION, as Servicer and
in its individual capacity
By:
--------------------------
Name: David A. Klanica
Title: Director,
Accounting Services
DAIMLER-BENZ VEHICLE
OWNER TRUST 1998-A,
as Issuer
By: CHASE MANHATTAN BANK
DELAWARE
not in its individual
capacity but solely as
Owner Trustee
By:
---------------------------------
Name:
Title:
<PAGE> 87
Accepted and agreed:
CITIBANK, N.A.
as Indenture Trustee
By:
-----------------------------
Name:
Title:
<PAGE> 88
SCHEDULE A
[SCHEDULE OF RECEIVABLES]
Delivered to Indenture Trustee at Closing
<PAGE> 89
SCHEDULE B
Locations of Receivables Files
Commercial Vehicles
Mercedes-Benz Credit Corporation
1011 Warrenville Road
Suite 500
Lisle, Illinois 60532
Motor Vehicles
Mercedes-Benz Credit Corporation
Seven Village Circle
Suite 300
Roanoke, Texas 76262
<PAGE> 90
EXHIBIT A
[FORM OF SERVICER'S CERTIFICATE]
The undersigned certifies that he is a [title] of Mercedes-Benz
Credit Corporation, 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 November 1, 1998,
by and among the Company, as Servicer, Daimler-Benz Vehicle Receivables
Corporation, as Seller, and Daimler-Benz Vehicle Owner Trust 1998-A, as Issuer
(the "Sale and Servicing Agreement") (all capitalized terms used herein without
definition have the respective meanings specified in the Sale and Servicing
Agreement), and further certifies that:
(a) The Servicer's report for the period from [_________] to
[____________] attached to this certificate is complete and accurate and
contains all information required by Section 3.9 of the Sale and Servicing
Agreement; and
(b) As of the date hereof, no Event of Servicing Termination or
event that with notice or lapse of time or both would become an Event of
Servicing Termination has occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature and the corporate
seal of the Company this [___] day of [____________], [____].
MERCEDES-BENZ CREDIT
CORPORATION, as Servicer
By: _____________________________
Name:
Title:
A-1
<PAGE> 91
EXHIBIT B
[FORM OF STATEMENT TO NOTEHOLDERS]
B-1
<PAGE> 92
EXHIBIT C
[FORM OF STATEMENT TO CERTIFICATEHOLDERS]
C-1
<PAGE> 1
EXHIBIT 4.3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INDENTURE
BETWEEN
DAIMLER-BENZ VEHICLE OWNER TRUST 1998-A,
AS ISSUER,
AND
CITIBANK, N.A.,
AS INDENTURE TRUSTEE
DATED AS OF NOVEMBER 1, 1998
$360,000,000 [ ] % CLASS A-1 ASSET BACKED NOTES
$508,000,000 [ ] % CLASS A-2 ASSET BACKED NOTES
$440,000,000 [ ] % CLASS A-3 ASSET BACKED NOTES
$241,800,000 [ ] % CLASS A-4 ASSET BACKED NOTES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
CROSS REFERENCE TABLE(1)
<TABLE>
<CAPTION>
TIA INDENTURE
SECTION SECTION
- ------- -------------
<S> <C> <C>
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
</TABLE>
- ---------------
(1) Note: This Cross Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
(2) N.A. means Not Applicable.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE................................. 2
SECTION 1.1 Definitions................................................. 2
SECTION 1.2 Incorporation by Reference of Trust Indenture Act........... 8
SECTION 1.3 Rules of Construction....................................... 8
ARTICLE II
THE NOTES.................................................................. 9
SECTION 2.1 Form........................................................ 9
SECTION 2.2 Execution, Authentication and Delivery...................... 9
SECTION 2.3 Temporary Notes............................................. 9
SECTION 2.4 Tax Treatment............................................... 10
SECTION 2.5 Registration; Registration of Transfer and Exchange......... 10
SECTION 2.6 Mutilated, Destroyed, Lost or Stolen Notes.................. 11
SECTION 2.7 Persons Deemed Owner........................................ 12
SECTION 2.8 Payments.................................................... 12
SECTION 2.9 Cancellation................................................ 14
SECTION 2.10 Release of Collateral....................................... 14
SECTION 2.11 Book-Entry Notes............................................ 14
SECTION 2.12 Notices to Clearing Agency.................................. 15
SECTION 2.13 Definitive Notes............................................ 15
SECTION 2.14 Authenticating Agents....................................... 16
ARTICLE III
COVENANTS.................................................................. 16
SECTION 3.1 Payment Covenant............................................ 16
SECTION 3.2 Maintenance of Office or Agency............................. 16
SECTION 3.3 Money for Payments To Be Held in Trust...................... 16
SECTION 3.4 Existence................................................... 18
SECTION 3.5 Protection of Trust Estate.................................. 18
SECTION 3.6 Opinions as to Trust Estate................................. 18
SECTION 3.7 Performance of Obligations; Servicing of Receivables........ 19
SECTION 3.8 Negative Covenants.......................................... 20
SECTION 3.9 Annual Statement as to Compliance........................... 21
SECTION 3.10 Issuer May Consolidate, etc., Only on Certain Terms......... 21
SECTION 3.11 Successor of Transferee..................................... 22
SECTION 3.12 No Other Business........................................... 22
SECTION 3.13 No Borrowing................................................ 22
SECTION 3.14 Servicer's Obligations...................................... 22
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities........... 22
SECTION 3.16 Capital Expenditures........................................ 22
SECTION 3.17 Further Instruments and Acts................................ 23
SECTION 3.18 Restricted Payments......................................... 23
SECTION 3.19 Notice of Events of Default................................. 23
SECTION 3.20 Removal of Administrator.................................... 23
ARTICLE IV
SATISFACTION AND DISCHARGE................................................. 23
SECTION 4.1 Satisfaction and Discharge of Indenture..................... 23
SECTION 4.2 Satisfaction, Discharge and Defeasance of the Notes......... 24
SECTION 4.3 Application of Trust Money.................................. 25
</TABLE>
i
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 4.4 Repayment of Monies Held by Paying Agent.................... 25
ARTICLE V
REMEDIES................................................................... 25
SECTION 5.1 Events of Default........................................... 25
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.......... 26
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by 26
Indenture Trustee...........................................
SECTION 5.4 Remedies; Priorities........................................ 28
SECTION 5.5 Optional Preservation of the Receivables.................... 29
SECTION 5.6 Limitation of Suits......................................... 29
SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal and 30
Interest....................................................
SECTION 5.8 Restoration of Rights and Remedies.......................... 30
SECTION 5.9 Rights and Remedies Cumulative.............................. 30
SECTION 5.10 Delay or Omission Not a Waiver.............................. 30
SECTION 5.11 Control by Noteholders...................................... 30
SECTION 5.12 Waiver of Past Defaults..................................... 31
SECTION 5.13 Undertaking for Costs....................................... 31
SECTION 5.14 Waiver of Stay or Extension Laws............................ 31
SECTION 5.15 Action on Notes............................................. 31
SECTION 5.16 Performance and Enforcement of Certain Obligations.......... 31
ARTICLE VI
THE INDENTURE TRUSTEE...................................................... 32
SECTION 6.1 Duties of Indenture Trustee................................. 32
SECTION 6.2 Rights of Indenture Trustee................................. 33
SECTION 6.3 Individual Rights of Indenture Trustee...................... 34
SECTION 6.4 Indenture Trustee's Disclaimer.............................. 34
SECTION 6.5 Notice of Defaults.......................................... 34
SECTION 6.6 Reports by Indenture Trustee to Holders..................... 35
SECTION 6.7 Compensation and Indemnity.................................. 35
SECTION 6.8 Replacement of Indenture Trustee............................ 35
SECTION 6.9 Successor Indenture Trustee by Merger....................... 36
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate Indenture 36
Trustee.....................................................
SECTION 6.11 Eligibility; Disqualification............................... 37
SECTION 6.12 Preferential Collection of Claims Against Issuer............ 37
SECTION 6.13 Pennsylvania Motor Vehicle Sales Finance Act Licenses....... 37
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS............................................. 38
SECTION 7.1 Issuer To Furnish Indenture Trustee Names and Addresses of 38
Noteholders.................................................
SECTION 7.2 Preservation of Information; Communications to 38
Noteholders.................................................
SECTION 7.3 Reports by Issuer........................................... 38
SECTION 7.4 Reports by Indenture Trustee................................ 38
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES....................................... 39
SECTION 8.1 Collection of Money......................................... 39
SECTION 8.2 Establishment of Accounts................................... 39
SECTION 8.3 General Provisions Regarding Accounts....................... 39
SECTION 8.4 Release of Collateral....................................... 40
SECTION 8.5 Opinion of Counsel.......................................... 40
</TABLE>
ii
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE IX
SUPPLEMENTAL INDENTURES.................................................... 40
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders...... 40
SECTION 9.2 Supplemental Indentures with Consent of Noteholders......... 42
SECTION 9.3 Execution of Supplemental Indentures........................ 43
SECTION 9.4 Effect of Supplemental Indenture............................ 43
SECTION 9.5 Conformity with Trust Indenture Act......................... 43
SECTION 9.6 Reference in Notes to Supplemental Indentures............... 43
ARTICLE X
REDEMPTION OF NOTES........................................................ 43
SECTION 10.1 Redemption.................................................. 43
SECTION 10.2 Form of Redemption Notice................................... 44
SECTION 10.3 Notes Payable on Redemption Date............................ 44
ARTICLE XI
MISCELLANEOUS.............................................................. 44
SECTION 11.1 Compliance Certificates and Opinions, etc................... 44
SECTION 11.2 Form of Documents Delivered to Indenture Trustee............ 46
SECTION 11.3 Acts of Noteholders......................................... 46
SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer and Rating 47
Agencies....................................................
SECTION 11.5 Notices to Noteholders; Waiver.............................. 47
SECTION 11.6 Alternate Payment and Notice Provisions..................... 48
SECTION 11.7 Conflict with Trust Indenture Act........................... 48
SECTION 11.8 Effect of Headings and Table of Contents.................... 48
SECTION 11.9 Successors and Assigns...................................... 48
SECTION 11.10 Separability................................................ 48
SECTION 11.11 Benefits of Indenture....................................... 48
SECTION 11.12 Legal Holiday............................................... 48
SECTION 11.13 Governing Law............................................... 48
SECTION 11.14 Counterparts................................................ 48
SECTION 11.15 Recording of Indenture...................................... 49
SECTION 11.16 Trust Obligation............................................ 49
SECTION 11.17 No Petition................................................. 49
SECTION 11.18 Inspection.................................................. 49
SCHEDULES
SCHEDULE A................................................................. SA-1
SCHEDULE I................................................................. SI-1
EXHIBITS
EXHIBIT A-1................................................................ A-1
EXHIBIT A-2................................................................ A-2
EXHIBIT A-3................................................................ A-3
EXHIBIT B.................................................................. B-1
</TABLE>
iii
<PAGE> 6
INDENTURE, dated as of November 1, 1998 (as the same may be further
amended, supplemented or otherwise modified and in effect from time to time,
this "Indenture"), between DAIMLER-BENZ VEHICLE OWNER TRUST 1998-A, a Delaware
business trust (the "Issuer"), and CITIBANK, N.A., a national banking
association, 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 "Class A Notes" or 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: (i) the Receivables, (ii) all monies
due or received thereunder on or after the Cutoff Date, (iii) the Seller's
security interests in the Financed Vehicles, (iv) the Collection Account, the
Note Distribution Account, the Class A Reserve Account and the Payahead Account
and all money, financial assets or other property from time to time held in or
credited to, or purchased with funds from, any of the foregoing accounts (but
excluding the Certificate Distribution Account and the Class B Reserve Account
and any amounts or property held in or credited to, or purchased with funds
from, such accounts), (v) all of the Seller's rights to receive proceeds from
claims on physical damage, credit life and disability insurance policies
covering the Financed Vehicles or the Obligors, (vi) all of the Seller's right
to all documents contained in the Receivable Files, (vii) the rights of the
Seller under the Purchase Agreement, including the right of the Seller to cause
MBCC to repurchase Receivables from time to time from the Seller under certain
circumstances specified therein, and under the Sale and Servicing Agreement,
(viii) all of the Seller's rights, if any, of recourse against Dealers arising
out of breaches by Dealers in connection with the Receivables, (ix) all property
(including the right to receive future Liquidation Proceeds and Recoveries) that
secures a Receivable and that will have been acquired by or on behalf of the
Indenture Trustee, (x) the Servicing Guaranty Agreement, and (xi) all proceeds
(within the meaning of Section 9-306 of the UCC) of the foregoing, including,
without limitation, 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 under 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 to the extent of the Collateral.
<PAGE> 7
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions. (a) 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 Note
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 November 1, 1998, by and among the Administrator, the Issuer and the
Indenture Trustee, as the same may from time to time be amended, supplemented or
otherwise modified and in effect.
"Administrator" shall mean MBCC, a Delaware corporation, or any successor
Administrator under the Administration Agreement.
"Assignment" shall have the meaning specified in the Sale and Servicing
Agreement.
"Authenticating Agent" shall have the meaning specified in Section 2.14.
"Authorized Officer" shall have the meaning specified in the Sale and
Servicing 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
Servicing Guaranty 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 have the meaning specified in the Sale and Servicing
Agreement.
"Certificate" shall have the meaning specified in the Trust Agreement.
"Certificate Distribution Account" shall have the meaning specified in the
Trust Agreement.
"Certificate of Trust" shall have the meaning specified in 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 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.
"Class A Reserve Account" shall have the meaning specified in the Sale and
Servicing Agreement.
"Class A-1 Final Payment Date" shall mean January 3, 2000.
"Class A-1 Noteholder" shall mean, subject to Section 2.11, the Person in
whose name a Class A-1 Note is registered on the Note Register.
"Class A-1 Notes" shall mean the $360,000,000 aggregate initial principal
amount of [ ]% Class A-1 Asset Backed Notes issued by the Trust pursuant to
this Indenture, substantially in the form of Exhibit A-1 to this Indenture.
"Class A-1 Rate" shall mean [ ]% per annum.
2
<PAGE> 8
"Class A-2 Final Payment Date" shall mean the December 2001 Payment Date.
"Class A-2 Noteholder" shall mean, subject to Section 2.11, the Person in
whose name a Class A-2 Note is registered on the Note Register.
"Class A-2 Notes" shall mean the $508,000,000 aggregate initial principal
amount of [ ]% Class A-2 Asset Backed Notes issued by the Trust pursuant to
this Indenture, substantially in the form of Exhibit A-2 to this Indenture.
"Class A-2 Rate" shall mean [ ]% per annum.
"Class A-3 Final Payment Date" shall mean the January 2003 Payment Date.
"Class A-3 Noteholder" shall mean, subject to Section 2.11, the Person in
whose name a Class A-3 Note is registered on the Note Register.
"Class A-3 Notes" shall mean the $440,000,000 aggregate initial principal
amount of [ ]% Class A-3 Asset Backed Notes issued by the Trust pursuant to
this Indenture, substantially in the form of Exhibit A-3 to this Indenture.
"Class A-3 Rate" shall mean [ ]% per annum.
"Class A-4 Final Payment Date" shall mean the December 2003 Payment Date.
"Class A-4 Noteholder" shall mean, subject to Section 2.11, the Person in
whose name a Class A-4 Note is registered on the Note Register.
"Class A-4 Notes" shall mean the $241,800,000 aggregate initial principal
amount of [ ]% Class A-4 Asset Backed Notes issued by the Trust pursuant to
this Indenture, substantially in the form of Exhibit A-4 to this Indenture.
"Class A-4 Rate" shall mean [ ]% per annum.
"Class B Final Payment Date" shall have the meaning specified in the Trust
Agreement.
"Class B Reserve Account" shall have the meaning specified in the Trust
Agreement.
"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 have the meaning specified in the Sale and Servicing
Agreement.
"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.
"Collection Account" shall have the meaning specified in the Sale and
Servicing Agreement.
"Commission" shall mean the Securities and Exchange Commission.
"Control Agreement" shall mean the Securities Account Control Agreement,
dated as of November 1, 1998, by and among the Seller, the Issuer, the Owner
Trustee, the Indenture Trustee and Citibank, N.A. in its capacity as a
securities intermediary, as the same may be amended, supplemented or otherwise
modified and in effect from time to time.
"Corporate Trust Office" shall mean, with respect to the Indenture Trustee,
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 111 Wall Street, 5th Floor, Zone 2,
New York, NY 10005, Attention: Global Agency and Trust Services, or at such
3
<PAGE> 9
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.
"Cutoff Date" shall have the meaning specified in the Sale and Servicing
Agreement.
"Dealers" shall have the meaning specified in the Sale and Servicing
Agreement.
"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, the Class A-4 Final
Payment Date, the Class B Final Payment Date, collectively, or any of them, as
the context requires.
"Final Scheduled Maturity Date" shall mean November 21, 2005.
"Financed Vehicle" shall have the meaning specified in the Sale and
Servicing Agreement.
"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" with respect to (a) any Note, subject to Section 2.11, shall mean
the Person in whose name the Note is registered on the Note Register, and (b)
any Certificate, shall have the meaning specified in the Trust Agreement.
"Indenture shall have the meaning specified in the recitals hereto.
"Indenture Trustee" shall mean Citibank, N.A., a national banking
association, 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
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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.
"Issuer" shall mean Daimler-Benz Vehicle Owner Trust 1998-A, 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 Authorized Officer of the Owner Trustee
and delivered to the Indenture Trustee.
"Liquidation Proceeds" shall have the meaning specified in the Sale and
Servicing Agreement.
"MBCC" shall mean Mercedes-Benz Credit Corporation, 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
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 November 1,
1998, by and among the Issuer, the Indenture Trustee and The Depository Trust
Company, as the initial Clearing Agency, relating to the Notes.
"Note Distribution Account" shall have the meaning specified in the Sale
and Servicing Agreement.
"Note Interest Carryover Shortfall" shall mean, with respect to any Payment
Date and any Class of Notes, the excess of (i) the sum of the Monthly Accrued
Note Interest for the preceding Payment Date and any outstanding Note Interest
Carryover Shortfall from the close of business on such preceding Payment Date,
over (ii) the amount in respect of interest that is actually deposited in the
Note Distribution 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 Note Interest Period.
"Note Interest Period" shall mean, with respect to any Payment Date, (i)
with respect to the Class A-1 Notes, the period from and including the Closing
Date (in the case of the first Payment Date) or from and including the most
recent Payment Date to but excluding the following Payment Date and (ii) with
respect to the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes, the
period from and including the Closing Date (in the case of the first Payment
Date) or from and including the twentieth (20th) day of the calendar month
preceding each Payment Date to but excluding the twentieth (20th) day of the
following calendar month.
"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.
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"Noteholder" shall mean the Holder of a Note.
"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.
"Obligor" shall have the meaning specified in the Sale and Servicing
Agreement.
"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, the Seller, MBCC 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 fully paid and cancelled by the Note Registrar
or delivered to the Note Registrar for re-registration and 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 the Notes that a
Responsible Officer of the Indenture Trustee actually 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 have the meaning specified in the Trust Agreement.
"Payahead Account" shall have the meaning specified in the Sale and
Servicing Agreement.
"Paying Agent" shall mean, with respect to any amounts held on behalf of or
paid to any Noteholders, 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 Distribution Account, including payment of
principal of or interest on the Notes on behalf of the Issuer.
"Payment Date" shall have the meaning specified in the Sale and Servicing
Agreement.
"Permitted Investments" shall have the meaning specified in the Sale and
Servicing Agreement.
"Person" shall have the meaning specified in the Sale and Servicing
Agreement.
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"Purchase Agreement" shall have the meaning specified in the Sale and
Servicing Agreement.
"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 have the meaning specified in the
Sale and Servicing Agreement.
"Principal Distribution Amount" shall have the meaning specified in the
Sale and Servicing Agreement.
"Proceeding" shall mean any suit in equity, action at law or other judicial
or administrative proceeding.
"Rating Agency Condition" shall have the meaning specified in the Sale and
Servicing Agreement.
"Receivable" shall have the meaning specified in the Sale and Servicing
Agreement.
"Receivable File" shall have the meaning specified in the Sale and
Servicing Agreement.
"Record Date" shall have the meaning specified in the Sale and Servicing
Agreement.
"Recoveries" shall have the meaning specified in the Sale and Servicing
Agreement.
"Redemption Date" shall mean the Payment Date specified by the Servicer
pursuant to Section 10.1, on which date the Indenture Trustee, among other
things, shall withdraw any amount remaining in the Class A Reserve Account and
deposit the applicable amount thereof payable to the Holders of the Notes in the
Note Distribution Account, and any amount remaining in the Class B Reserve
Account and deposit the applicable amount thereof payable to the Holders of the
Certificates in the Certificate Distribution Account.
"Redemption Price" shall mean an amount equal to the unpaid principal
amount of the Notes redeemed plus accrued and unpaid interest thereon.
"Registered Holder" shall mean the Person in whose name a Note is
registered on the Note Register on the applicable Record Date.
"Reserve Accounts" shall have the meaning specified in the Sale and
Servicing Agreement.
"Responsible Officer" shall mean, with respect to the Indenture Trustee,
any officer within the Corporate Trust Office of the Indenture Trustee including
any managing director, vice president, assistant vice president, assistant
treasurer, assistant secretary or any other officer of the Indenture Trustee
customarily performing functions similar to those performed by the above
designated officers and having 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 the Sale and Servicing Agreement,
dated as of November 1, 1998, by and among the Issuer, the Seller and MBCC, as
Servicer, as the same may be amended, supplemented or otherwise modified and in
effect from time to time.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" shall have the meaning specified in the Sale and Servicing
Agreement.
"Servicer" shall have the meaning specified in the Sale and Servicing
Agreement.
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"Servicing Guaranty Agreement" shall have the meaning specified in the Sale
and Servicing Agreement.
"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
with respect to the Notes.
"Trust" shall have the meaning specified in the Trust Agreement.
"Trust Agreement" shall mean the Amended and Restated Trust Agreement,
dated as of November 1, 1998, by and between the Owner Trustee and the Seller,
as depositor, as the same may be amended, supplemented or otherwise modified and
in effect from time to time.
"Trust Estate" shall mean the "Owner Trust Estate" as defined in the Trust
Agreement.
"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.
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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 thereon, 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 Owner Trustee on behalf 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 $360,000,000, [ ]% Class A-2 Asset Backed Notes for
original issue in an aggregate principal amount of $508,000,000, [ ]% Class
A-3 Asset Backed Notes for original issue in an aggregate principal amount of
$440,000,000 and [ ]% Class A-4 Asset Backed Notes for original issue in an
aggregate principal amount of $241,800,000. 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.
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(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 Collateral. 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
conclusively 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
conclusively 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 conclusively 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
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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.
(f) 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.
(g) 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 satisfactory
security or indemnity as may be required by it to hold the Issuer and the
Indenture Trustee harmless, then, in the absence of written 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
written request the Indenture Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a
replacement Note of the same Class; provided, however, that if any such
destroyed, lost or stolen Note, but not a mutilated Note, shall have become or
within seven (7) days of the Indenture Trustee's receipt of evidence to its
satisfaction of such destruction, loss or theft shall be due and payable, or
shall have been called for redemption, instead of issuing a replacement Note of
the same Class, the Issuer may pay such destroyed, lost or stolen Note when so
due or payable or upon the Redemption Date without surrender thereof. The
Indenture Trustee may conclusively 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 and the Trustee may require in addition to satisfactory security or
indemnity, 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 a
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.
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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 in the Note Register (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 written instructions from the
Servicer pursuant to Section 4.6(c) of the Sale and Servicing Agreement, the
Indenture Trustee will (i) withdraw from the Collection Account and pay to the
Servicer any amounts required to reimburse the Servicer for any outstanding
Advances for any prior Collection Periods in accordance with Section 4.4 of the
Sale and Servicing Agreement, and thereafter, (ii) withdraw (A) all Available
Funds on deposit in the Collection Account for the related Collection Period and
(B) the additional amounts from the sources specified below and make the
following payments and deposits from the sources specified below for such
Payment Date in the following order of priority:
(i) to the Servicer, the Total Servicing Fee, such amount to be paid,
first, from Available Funds in the Collection Account, second, from the
Class B Reserve Account, and third, from the Class A Reserve Account;
(ii) to the Note Distribution Account, the Accrued Note Interest on
each Class of Notes, such amount to be paid, first, from Available Funds in
the Collection Account, and second, from the Class A Reserve Account;
(iii) to the Certificate Distribution Account, the Accrued Certificate
Interest, such amount to be paid, first, from Available Funds in the
Collection Account, and second, from the Class B Reserve Account;
(iv) to the Note Distribution Account, the Principal Distribution
Amount with respect to each Class of Notes, such amount to be paid, first,
from Available Funds in the Collection Account, and second, from the Class
A Reserve Account;
(v) to the Certificate Distribution Account, the Principal
Distribution Amount with respect to the Certificates, such amount to be
paid, first, from Available Funds in the Collection Account, and second,
from the Class B Reserve Account;
(vi) to the Class A Reserve Account, from Available Funds in the
Collection Account, the amount required to bring the amount in the Class A
Reserve Account up to the Specified Class A Reserve Balance;
(vii) to the Class B Reserve Account, from Available Funds in the
Collection Account, the amount required to bring the amount in the Class B
Reserve Account up to the Specified Class B Reserve Balance; and
(viii) to the Seller, any remaining Available Funds in the Collection
Account.
Notwithstanding the foregoing, following the occurrence and during the
continuation of an Event of Default which has resulted in an acceleration of the
Notes, the Available Funds remaining after the application of clauses (i) and
(ii) above will be deposited in the Note Distribution Account and applied in
accordance with Section 2.8(f).
(b) The principal of each Note shall be payable in installments on each
Payment Date in an aggregate amount (unless the Notes have been accelerated in
accordance with Section 5.2 following the occurrence of an Event of Default) for
all Classes of Notes equal to the Principal Distribution Amount with respect to
such Payment Date. On each Payment Date, unless the Notes have been accelerated
in accordance with Section 5.2 following the occurrence of an Event of
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Default, the Issuer shall cause to be paid all amounts on deposit in the Note
Distribution Account with respect to the related Collection Period in the
following order of priority;
(i) to the Class A Noteholders, Accrued Note Interest (and, if amounts
on deposit in the Note Distribution Account are insufficient for such
purpose, payments shall be made to the Class A Noteholders pro rata in
proportion to the Accrued Note Interest for each Class of Class A 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 remaining 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 remaining 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 remaining 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 will be
calculated on the basis of actual days elapsed and a 360-day year. Interest on
the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes will be
calculated on the basis of a 360-day year of twelve 30-day months. Subject to
Section 3.1, any installment of principal of or interest, if any, payable on any
Note that is punctually paid or duly provided for by the Issuer on the
applicable Payment Date shall be paid to the Person in whose name such Note (or
one or more Predecessor Notes) is registered on the Record Date by check mailed
first-class postage prepaid to such Person's address as it appears on the Note
Register on such Record Date; provided that, unless Definitive Notes have been
issued pursuant to Section 2.13, with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payment shall be made by wire transfer in immediately
available funds to the account designated by such nominee, and except for the
final installment of principal payable with respect to such Note on a Payment
Date or on the related Final Payment Date (and except for the Redemption Price
for any Note called for redemption pursuant to Section 10.1), which shall be
payable as provided below. The funds represented by any such checks returned
undelivered shall be held in accordance with Section 3.3. The Issuer shall pay
all Accrued Note Interest, including Note Interest Carryover Shortfalls, to the
Persons who are Noteholders on the Record Date for a particular Payment Date
even if a portion of such Accrued Note Interest relates to a different Payment
Date.
(e) All principal payments on the Notes shall be made pro rata to the
Noteholders entitled thereto. The Indenture Trustee shall notify the Person in
whose name a Note is registered at the close of business on the Record Date
preceding the Payment Date on which the Issuer expects that the final
installment of principal of and interest on such Note shall be paid. Such notice
shall be mailed or transmitted by facsimile prior to such final Payment Date and
shall specify that such final
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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) 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 Distribution Account shall be paid in the following order of priority.
(i) first, to the Servicer for any unreimbursed Advances;
(ii) second, to the Indenture Trustee for amounts due under Section
6.7;
(iii) third, to the Servicer for amounts due and unpaid in respect of
Total Servicing Fees;
(iv) fourth, to Noteholders of each Class of Class A Notes, Accrued
Note Interest ratably in proportion to Accrued Note Interest for each Class
of Class A Notes, without preference or priority of any kind, according to
the amounts due and payable on the Notes for interest;
(v) fifth, 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 in reduction of
principal until the principal amount of each of such Classes has been paid
in full; and
(vi) sixth, to the Certificate Distribution Account, any remaining
balance in the Note Distribution Account.
SECTION 2.9 Cancellation. All Notes surrendered for payment, registration
of transfer, exchange or redemption shall, if surrendered to any Person other
than the Indenture Trustee, be delivered to the Indenture Trustee and shall be
promptly cancelled by the Indenture Trustee. The Issuer may at any time deliver
to the Indenture Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly cancelled by the Indenture Trustee.
No Notes shall be authenticated in lieu of or in exchange for any Notes
cancelled as provided in this Section 2.9, except as expressly permitted by this
Indenture. All cancelled Notes may be held or disposed of by the Indenture
Trustee in accordance with its standard retention or disposal policy as in
effect at the time unless the Issuer shall direct by an Issuer Order that they
be destroyed or returned to it, provided, that such Issuer Order is timely and
the Notes have not been previously disposed of by the Indenture Trustee.
SECTION 2.10 Release of Collateral. Subject to Section 11.1 and the terms
of the Basic Documents, the Indenture Trustee shall release property from the
lien of this Indenture only upon receipt of an Issuer Request accompanied by an
Officer's Certificate, an Opinion of Counsel and Independent Certificates in
accordance with TIA Sections 314(c) and 314(d)(1) or an Opinion of Counsel in
lieu of such Independent Certificates to the effect that the TIA does not
require any such Independent Certificates. If the Commission shall issue an
exemptive order under TIA Section 304(d) modifying the Indenture 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
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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;
(v) whenever this Indenture requires or permits actions to be taken
based upon written 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 written
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 written instructions to the Indenture Trustee; and
(vi) the Clearing Agency may be treated by the Indenture Trustee and
its agents, employees, officers and directors as the absolute owner of the
Notes for all purposes whatsoever.
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 (or a successor thereto) 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 in writing 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
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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 of the Indenture Trustee, 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
or Certificates that are to be made from amounts withdrawn from the Collection
Account, the Reserve Accounts, the Note Distribution Account or the Certificate
Distribution Account, as applicable, shall be made on behalf of the Issuer
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by the Indenture Trustee or by any other Paying Agent, and no amounts so
withdrawn from the Collection Account, the Reserve Accounts, the Note
Distribution Account or the Certificate Distribution Account, as applicable, for
payments of Notes or Certificates 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, to the extent funds
are available for such purpose, the Indenture Trustee or any other Paying Agent
shall deposit or cause to be deposited in each of the Note Distribution Account
and the Certificate Distribution Account an aggregate sum sufficient to pay the
amounts then becoming due under the Notes and the Certificates, as the case may
be, such sum to be held in trust for the benefit of the Persons entitled
thereto, and (unless the only Paying Agent is the Indenture Trustee) shall
promptly notify the Indenture Trustee in writing 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 or the Certificates, as applicable, 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 and the Owner 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 or the Certificates, as applicable;
(iii) at any time during the continuance of any such default, upon the
written request of (a) the Indenture Trustee, forthwith pay to the
Indenture Trustee, and (b) the Owner Trustee, forthwith pay to the Owner
Trustee, as appropriate, all sums so held in trust by such Paying Agent on
behalf of the Noteholders and the Certificateholders, respectively;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee and the Owner Trustee, respectively, all sums held by it
in trust for the payment of Notes or the Certificates, as applicable, if at
any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment;
(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 or Certificates, as applicable, of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements
in connection therewith; and
(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 and
the Owner Trustee, as appropriate, all sums held in trust by such Paying
Agent, such sums to be held, after receipt thereof by the Indenture
Trustee, by the Indenture Trustee and the Owner Trustee, as applicable,
upon the same trusts as those upon which the sums were held by such Paying
Agent; and upon such payment by any Paying Agent, 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, the Owner Trustee or any Paying Agent in trust
for the payment of any amount due with respect to any Note or any Certificate,
as applicable, 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 or Certificate, as
applicable, 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
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Trustee, the Owner 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 written 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 written
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 or Certificates, as applicable, have been called but have
not been surrendered for redemption or whose right to or interest in monies due
and payable but not claimed is determinable from the records of the Indenture
Trustee, the Owner 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 Certificates, 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 shall
file 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 rights hereunder with respect to the Collateral; or
(iv) preserve and defend title to the Trust Estate and the rights of
the Indenture Trustee, the Noteholders and the Certificateholders 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 at the expense of the Issuer any financing
statement, continuation statement or other instrument required to be executed
pursuant to this Section 3.5.
SECTION 3.6 Opinions as to Trust Estate. (a) On the Closing Date, the
Issuer shall furnish to the Indenture Trustee an Opinion of Counsel
substantially in the form attached hereto as Exhibit B.
(b) On or before May 31, in each calendar year, beginning in 1999, the
Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording, filing, re-recording and refiling of this Indenture,
any indentures supplemental hereto and any other requisite documents and with
respect to the execution and filing of any financing statements and continuation
statements as is necessary to maintain the lien and security interest 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
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shall, in the opinion of such counsel, be required to maintain the lien and
security interest of this Indenture until May 31 in the following calendar year.
SECTION 3.7 Performance of Obligations; Servicing of Receivables. (a) The
Issuer shall not take any action and shall use its best efforts not to permit
any action to be taken by others that would release any Person from any of such
Person's material covenants or obligations under any instrument or agreement
included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture and the other Basic Documents.
(b) The Issuer may contract with other Persons to assist it in performing
its duties under this Indenture, and any performance of such duties by a Person
identified to the Indenture Trustee in an Officer's Certificate of the Issuer
shall be deemed to be action taken by the Issuer. Initially, the Issuer has
contracted with the Servicer and the Administrator to assist the Issuer in
performing its duties under this Indenture.
(c) The Issuer shall punctually perform and observe all of its obligations
and agreements contained in this Indenture, the Basic Documents and in the
instruments and agreements included in the Trust Estate, including, but not
limited to, filing or causing to be filed all financing statements and
continuation statements required to be filed under the Relevant UCC by the terms
of this Indenture and the Sale and Servicing Agreement in accordance with and
within the time periods provided for herein and therein. Except as otherwise
expressly provided therein, the Issuer shall not waive, amend, modify,
supplement or terminate any Basic Document or any provision thereof without the
consent of the Indenture Trustee or the Holders of at least a majority of the
principal amount of the Notes Outstanding.
(d) If the Issuer shall have knowledge of the occurrence of an Event of
Servicing Termination under the Sale and Servicing Agreement, the Issuer shall
promptly notify the Indenture Trustee and the Rating Agencies in writing 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 7.1 of the
Sale and Servicing Agreement, the Issuer shall (subject to the rights of the
Indenture Trustee to direct such appointment pursuant to Section 7.2 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,
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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 7.2 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 in writing. As soon as a Successor Servicer is appointed by the Issuer,
the Issuer shall notify in writing 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 assert any claim against any
present or former Noteholder by reason of the payment of the taxes levied
or assessed upon the Trust;
(iii) dissolve or liquidate in whole or in part; or
(iv) (A) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released
from any covenants or obligations with respect to the Notes under this
Indenture except as may be expressly permitted hereby, (B) permit any lien,
charge, excise, claim, security interest, mortgage or other encumbrance
(other than the lien of this Indenture or as specifically contemplated by
the Basic Documents) to be created on or extend to or otherwise arise upon
or burden the assets of the Trust or any part thereof or any interest
therein or the proceeds thereof or (C) permit the lien of this Indenture
not to constitute a valid first priority (other than with respect to any
such tax, mechanics' or other lien) security interest in the Collateral.
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SECTION 3.9 Annual Statement as to Compliance. The Issuer shall deliver
to the Indenture Trustee, within 120 days after the end of each calendar year
(commencing with the year 1999), an Officer's Certificate stating, as to the
Authorized Officer signing such Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year and of
its performance under this Indenture has been made under such Authorized
Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on such
review, the Issuer has complied with all conditions and covenants under
this Indenture throughout such year, or, if there has been a default in its
compliance with any such condition or covenant, 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
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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 and the Certificates.
SECTION 3.14 Servicer's Obligations. The Issuer shall cause the Servicer
to comply with the Sale and Servicing Agreement, including Sections 3.7, 3.9,
3.10, 3.11, 3.12, 3.13, 3.14 and 4.9 and Article VI 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.
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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
Seller, the Owner Trustee and the Certificateholders and into the Certificate
Distribution Account and the Class B Reserve Account as contemplated by, and to
the extent funds are available for such purpose under, this Indenture, 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, indemnities 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:
(1) either
(A) 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
(B) 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
sufficient cash or direct obligations of or obligations guaranteed by the
United States of America (which will mature prior to the date such amounts
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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;
(2) the Issuer has paid or caused to be paid all other sums payable by the
Issuer hereunder and under the other Basic Documents;
(3) 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
(4) 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 or 3.3 hereof;
(iii) the obligations of the Issuer to the Indenture Trustee under
Section 6.7 hereof; and
(iv) the rights, powers, trusts, indemnities and immunities of the
Indenture Trustee hereunder and the duties of the Indenture Trustee
hereunder.
(b) The satisfaction, discharge and defeasance of the Notes pursuant to
subsection (a) of this Section 4.2 is subject to the satisfaction of all of the
following conditions:
(i) the Issuer has deposited or caused to be deposited irrevocably
(except as provided in Section 4.4 hereof) with the Indenture Trustee as
trust funds in trust, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the Notes, which, through the
payment of interest and principal in respect thereof in accordance with
their terms will provide, not later than one day prior to the due date of
any payment referred to below, money in an amount sufficient, in the
opinion of a nationally recognized firm of independent certified public
accountants expressed in a written certification thereof delivered to the
Indenture Trustee, to pay and discharge the entire indebtedness on the
Notes Outstanding, for principal thereof and interest thereon to the date
of such deposit (in the case of Notes that have become due and payable) or
to the maturity of such principal and interest, as the case may be;
(ii) such deposit will not result in a breach or violation of, or
constitute an event of default under, any other agreement or instrument to
which the Issuer is bound;
(iii) no Event of Default with respect to the Notes shall have
occurred and be continuing on the date of such deposit or on the
ninety-first (91st) day after such date;
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(iv) the Issuer has delivered to the Indenture Trustee an Opinion of
Counsel to the effect that the satisfaction, discharge and defeasance of
the Notes pursuant to this Section 4.2 will not cause any Noteholder to be
treated as having sold or exchanged any of its Notes for purposes of
Section 1001 of the Code; and
(v) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent relating to the defeasance contemplated by this Section 4.2 have
been complied with.
SECTION 4.3 Application of Trust Money. All monies deposited with the
Indenture Trustee pursuant to Section 4.1 shall be held in trust and applied by
it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Indenture Trustee
may determine, to the Holders of the particular Notes for the payment or
redemption of which such monies have been deposited with the Indenture Trustee,
of all sums due and to become due thereon for principal and interest, but such
monies need not be segregated from other funds except to the extent required
herein or in the Sale and Servicing Agreement or required by law.
SECTION 4.4 Repayment of Monies Held by Paying Agent. In connection with
the satisfaction and discharge of this Indenture with respect to the Notes, all
monies then held by any Paying Agent other than the Indenture Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.3 and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
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
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(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, voting as a group, 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 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
(B) 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
(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,
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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 and
all other amounts that would then be due hereunder or upon such Notes, 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, subject to the Basic Documents, 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, 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 in case
of any other comparable judicial Proceedings relative to the Issuer or other
obligor upon the Notes, or to the property of the Issuer or such other obligor,
the Indenture Trustee, irrespective of whether the principal of any Notes shall
then be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Indenture Trustee shall have made any demand
pursuant to the provisions of this Section 5.3, shall be entitled and empowered,
by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee and each predecessor
Indenture Trustee, and their respective agents, attorneys and counsel, and
all other amounts due and owing to the Trustee pursuant to Section 6.7) and
of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any monies or other property payable or
deliverable on any such claims and to pay all amounts received with respect
to the claims of the Noteholders and of the Indenture Trustee on their
behalf; and
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(iv) to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Indenture
Trustee or the Holders of Notes allowed in any judicial proceedings
relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other amounts due and
owing to the Trustee pursuant to Section 6.7.
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or Proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents, attorneys and counsel, 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 Collateral;
(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 Collateral 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 Collateral following an Event of Default, other than an Event of
Default described in Section 5.1(i) or (ii), unless (A) the Holders of one
hundred percent (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 Collateral 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 sixty-six
and two-thirds percent (66 2/3%) of the principal amount of the Notes
Outstanding. In determining such
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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
Collateral for such purpose.
(b) If the Indenture Trustee collects any money or property pursuant to
this Article V, it shall pay out the money or property in the order of priority
set forth in Section 2.8.
The Indenture Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section 5.4. At least fifteen (15) days before such
record date, the Issuer shall mail to each Noteholder and the Indenture Trustee
a notice that states the record date, the payment date and the amount to be
paid.
SECTION 5.5 Optional Preservation of the Receivables. If the Notes have
been declared to be due and payable under Section 5.2 following an Event of
Default, and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee may, but need not, elect to maintain possession
of the Collateral and apply proceeds as if there had been no declaration of
acceleration; provided, however, that Available Funds shall be applied in
accordance with such declaration of acceleration in the manner specified in
Section 4.6(c) of the Sale and Servicing Agreement. It is the desire of the
parties hereto and the Noteholders that there be at all times sufficient funds
for the payment of principal of and interest on the Notes, and the Indenture
Trustee shall take such desire into account when determining whether or not to
maintain possession of the Collateral. In determining whether to maintain
possession of the Collateral, the Indenture Trustee may, but need not, obtain
and conclusively 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 Collateral 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 twenty-five percent (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 indemnity
satisfactory to it 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
written notice, request and offer of the required 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 sixty (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
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determine what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture and the Indenture Trustee shall not be liable for
any action taken pursuant to this Section.
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 and any other amount due, 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 written direction coupled with such satisfactory indemnity of the
Indenture Trustee 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 written direction to
the Indenture Trustee to sell or liquidate the Collateral shall be by Holders of
Notes representing not less than one hundred percent (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 Collateral pursuant to such Section, then
any written direction to the Indenture Trustee by Holders of Notes representing
less than one hundred percent (100%) of the principal amount of the Notes
Outstanding to sell or liquidate the Collateral 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 written 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,
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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 and
expenses, 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 ten percent (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
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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 written direction (which direction coupled with the
satisfactory indemnity of the Indenture Trustee shall be in writing or by
telephone, confirmed in writing promptly thereafter) of the Holders of sixty-
six and two-thirds percent (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 MBCC 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 MBCC 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 written direction (which direction coupled with the
satisfactory indemnity of the Indenture Trustee shall be in writing or by
telephone (confirmed in writing promptly thereafter)) of the Holders of
sixty-six and two-thirds percent (66 2/3%) of the principal amount of the Notes
Outstanding, shall, exercise all rights, remedies, powers, privileges and claims
of the Seller against MBCC 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 MBCC 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 of which a Responsible Officer has actual knowledge,
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
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(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 reasonable 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 6.1(c) 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 by
a court of competent jurisdiction 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 indemnity satisfactory to it 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 and actually received by the Indenture Trustee in accordance
with the provisions of this Indenture.
SECTION 6.2 Rights of Indenture Trustee. (a) The Indenture Trustee may
conclusively rely and shall be fully protected in relying on any document
believed by it to be genuine and to have been signed or presented by the
purportedly 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 and shall be entitled to receive 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 such Officer's Certificate or Opinion
of Counsel unless it is proved by a court of competent jurisdiction 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
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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 of its choice, 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 written request or
direction of any of the Noteholders pursuant to this Indenture, unless such
Noteholders shall have offered to the Indenture Trustee security or indemnity
satisfactory to it 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
selected by it for such purpose.
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 or warranty, as to the
legality, validity, sufficiently, enforceablity or adequacy of this Indenture,
the Collateral or the Notes or the authenticity of 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. Except as expressly set forth
in the Basic Documents, the Indenture Trustee shall have no obligation to
administer, service or collect the Receivables or to maintain or otherwise
supervise the administration, servicing or collection of the Receivables. The
Indenture Trustee shall have no duty to monitor the performance of the Servicer
nor shall it have any liability in connection with the malfeasance or
nonfeasance by the Servicer. The Indenture Trustee shall have no liability in
connection with compliance by the Servicer with statutory or regulatory
requirements related to the Receivables or any provision of this Indenture, the
Sale and Servicing Agreement or any related instrument or agreement. The
Indenture Trustee shall not make or be deemed to have made any representations
or warranties with respect to the applicable Basic Documents or the validity or
sufficiency of any assignment of the Receivables to the Indenture Trustee.
SECTION 6.5 Notice of Defaults. If a Default occurs and is continuing and
if it is actually 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.
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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 in accordance with the prevailing fee
agreement. 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 and expenses)
incurred by it in connection with the administration of this trust and the
performance of its duties hereunder and under the Basic Documents. 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 arising prior to the resignation or removal of the Indenture
Trustee shall remain enforceable notwithstanding such resignation or removal and
the subsequent 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 in writing
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.
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(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; provided, however,
that all amounts due and owing the predecessor trustee have been paid. The
successor Indenture Trustee shall mail a notice of its succession to each
Noteholder and to the Rating Agencies. 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, 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 (other than the
Certificate Distribution Account and the Class B Reserve Account and any amounts
or property held therein or credited thereto), 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.
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(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 any of the Trust Estate 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 reasonable efforts to maintain the effectiveness
of all licenses required under the Pennsylvania Motor Vehicle Sales Finance Act
in connection with this Indenture and the transactions contemplated hereby until
the lien and security interest of this Indenture shall no longer be in effect in
accordance with the terms hereof.
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ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1 Issuer To Furnish Indenture Trustee Names and Addresses of
Noteholders. The Issuer shall furnish or cause to be furnished to the Indenture
Trustee (a) not more than five (5) days after each Record Date, a list, in such
form as the Indenture Trustee may reasonably require, of the names and addresses
of the Holders of Notes as of such Record Date and (b) at such other times as
the Indenture Trustee may request in writing, within thirty (30) days after
receipt by the Issuer of any such request, a list of similar form and content as
of a date not more than ten (10) days prior to the time such list is furnished;
provided, however, that so long as (i) the Indenture Trustee is the Note
Registrar or (ii) the Notes are issued as Book-Entry Notes, no such list shall
be required to be furnished.
SECTION 7.2 Preservation of Information; Communications to
Noteholders. (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).
(d) A copy of the Officer's Certificate required under Section 3.10(a) of
the Sale and Servicing Agreement 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.
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,
1999, the Indenture Trustee shall mail to each Noteholder as required by TIA
Section 313(c) a brief report dated as of such date that
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complies with TIA Section 313(a). The Indenture Trustee in writing 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 in writing 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 Collateral, 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 Establishment of Accounts. (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, the Collection Account and the Payahead Account for
the benefit of the Noteholders and the Certificateholders, and the Note
Distribution Account and the Class A Reserve Account for the benefit of the
Noteholders, as provided in Sections 4.1, 4.7 and 4.10 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 Distribution Account and the Certificate Distribution
Account, as applicable, 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 or any Paying Agent from the Collection Account and/or
the Reserve Accounts, as applicable, and deposited to the Note Distribution
Account, the Certificate Distribution Account and/or the Reserve Accounts, as
applicable, including for payment to Noteholders, Certificateholders and the
Seller, as applicable, in accordance with Section 4.6 of the Sale and Servicing
Agreement and 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 Payahead Account and the
Class A Reserve Account shall be invested by the Indenture Trustee at the
written direction of the Servicer in Permitted Investments as provided in
Sections 4.1 and 4.7 of the Sale and Servicing Agreement. All income or other
gain (net of losses and investment expenses) from investments of monies
deposited in the Collection Account, the Payahead Account and the Reserve
Accounts shall be withdrawn by the Indenture Trustee or any Paying Agent, as the
case may be, from such accounts and deposited or distributed (but only under the
circumstances set forth in the Sale and Servicing Agreement in the case of the
Reserve Accounts), as provided in Sections 4.1 and 4.7 of the Sale and Servicing
Agreement. The Servicer shall not direct the Indenture Trustee or any Paying
Agent to make any investment of any funds or to sell any investment held in any
of the Trust Accounts or the Reserve Accounts unless the security interests
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granted and perfected in such accounts 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), neither the Indenture Trustee, any Paying
Agent nor the Owner Trustee shall in any way be held liable by reason of any
insufficiency in any of the Trust Accounts or the Reserve Accounts, resulting
from any loss on any Permitted Investment included therein, except for losses
attributable to the failure by the Indenture Trustee, any Paying Agent or the
Owner Trustee, as the case may be, to make payments on such Permitted
Investments issued by the Indenture Trustee, any Paying Agent or the Owner
Trustee, as applicable, in their respective commercial capacities as principal
obligors and not as trustees, in accordance with their terms. The Indenture
Trustee shall have no obligation to invest or reinvest any amounts held
hereunder in the absence of written investment direction.
SECTION 8.4 Release of Collateral. (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 Collection
Account, the Payahead Account, the Note Distribution Account or the Class A
Reserve Account. 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) Business Days prior written 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
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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
(other than the Certificate Distribution Account and the Class B Reserve
Account or any amounts or property held therein or credited thereto) 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
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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
Collateral 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 provision 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;
(iv) modify or alter the provisions of the proviso to the definition
of the term "Outstanding";
(v) reduce the percentage of the principal amount of the Notes
Outstanding required to direct the Indenture Trustee to sell or liquidate
the Collateral pursuant to Section 5.4 if the proceeds of such sale would
be insufficient to pay the principal amount of and accrued but unpaid
interest on the Notes;
(vi) 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;
(vii) 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 calcula-
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tion) 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
(viii) 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 Collateral 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.
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, such notice to be prepared by the Issuer. 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 conclusively
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, indemnities 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 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. The Notes are subject to redemption in whole,
but not in part, at the direction of the Servicer pursuant to Section 8.1(a) of
the Sale and Servicing Agreement, on any
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Payment Date on which the Servicer exercises its option to purchase the assets
of the Issuer pursuant to said Section 8.1(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 and the Certificate Balance, in each case,
plus accrued and unpaid interest thereon. 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, the Servicer or the
Issuer shall furnish written notice of such election to the Indenture Trustee
not later than twenty (20) days prior to the Redemption Date and the Issuer,
upon the transfer of adequate funds therefor by the Servicer, shall deposit by
10:00 A.M. (New York City time) on the Business Day prior to the Redemption Date
with the Indenture Trustee in the Note Distribution Account the Redemption Price
of the Notes to be redeemed, whereupon all such Notes shall be due and payable
on the Redemption Date.
SECTION 10.2 Form of Redemption Notice. Notice of redemption under
Section 10.1 shall be given by the Indenture Trustee at the expense of the
Issuer 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, 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 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) (if required by the TIA) 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.
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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 another 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,
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<PAGE> 51
(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 Collection Account, the
Payahead Account, the Note Distribution Account, the Certificate
Distribution Account and the Reserve 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 conclusively 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 written 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 written 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 written
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.
46
<PAGE> 52
(d) Any written 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. (a) 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: Daimler-Benz
Vehicle Owner Trust 1998-A, in care of Chase Manhattan Bank Delaware, 1201
North Market Street, Wilmington, Delaware 19801, Attention: Corporate Trust
Administration, with a copy to the Administrator at 201 Merritt 7, Suite
700, Norwalk, Connecticut 06856-5425, 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.
(b) 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: 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.
47
<PAGE> 53
(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. Except insofar as the Indenture
Trustee and the Paying Agent are required to (i) make deposits to the Collection
Account, the Certificate Distribution Account and the Class B Reserve Account in
trust on behalf of the Certificateholders, (ii) make payments to the Seller, the
Owner Trustee or the Certificateholders as required herein and in the Sale and
Servicing Agreement, and (iii) give notices to the Seller, the Owner Trustee or
the Certificateholders as required herein and in the Sale and Servicing
Agreement, 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 ITS
ENTIRETY 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.
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<PAGE> 54
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 Certificate or any other 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 Certificate or any other 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 Articles 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.
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<PAGE> 55
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.
DAIMLER-BENZ VEHICLE
OWNER TRUST 1998-A
By: CHASE MANHATTAN BANK
DELAWARE, not in its individual
capacity, but solely as Owner
Trustee
By:
--------------------------------------
Name:
Title:
CITIBANK, N.A.,
not in its individual capacity,
but solely as Indenture Trustee
By:
--------------------------------------
Name:
Title:
<PAGE> 56
- ---------------------------------------------------
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 CHASE MANHATTAN BANK DELAWARE, as
Owner Trustee of DAIMLER-BENZ VEHICLE OWNER TRUST 1998-A, a Delaware business
trust, for the purpose and consideration therein expressed, and in the
capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this day of [ ],
1998.
--------------------------------------
Notary Public in and for
the State of Delaware.
[Seal]
My commission expires:
- ---------------------------
<PAGE> 57
- ---------------------------------------------------
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
[ ], a [ ] of CITIBANK, N.A., and that such
person executed the same as the act of said corporation for the purpose and
consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this day of [ ],
1998.
--------------------------------------
Notary Public in and for
the State of New York.
[Seal]
My commission expires:
- ---------------------------
<PAGE> 58
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. [ ]
DAIMLER-BENZ VEHICLE OWNER TRUST 1998-A
[ ]% CLASS A-1 ASSET BACKED NOTES
Daimler-Benz Vehicle Owner Trust 1998-A, 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 [ ] MILLION DOLLARS
payable on each Payment Date in the aggregate amount, if any, payable from the
Note Distribution Account in respect of principal on the Class A-1 Notes
pursuant to Section 2.8 of the Indenture dated as of November 1, 1998 (as
amended, supplemented or otherwise modified and in effect from time to time, the
"Indenture"), between the Issuer and Citibank, N.A., a national banking
association, 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 January 3, 2000 (the "Class A-1 Final Payment Date") and the Redemption Date,
if any, pursuant to Section 10.1 of the Indenture. Capitalized terms used but
not defined herein are defined in Article I of the Indenture, which also
contains rules as to construction that shall be applicable herein.
The Issuer shall pay interest on this Class A-1 Note at the rate per annum
shown above on each Payment Date until the principal of this Class A-1 Note is
paid or made available for payment, on the principal amount of this Class A-1
Note outstanding on the preceding Payment Date (after giving effect to all
payments of principal made on the preceding Payment Date), subject to certain
limitations contained in Section 3.1 of the Indenture. Interest on this Class
A-1 Note will accrue for each Payment Date from and including the previous
Payment Date (or, in the case of the initial Payment Date or if no interest has
been paid, from the Closing Date) to but excluding such Payment Date. Interest
will be computed on the basis of actual days elapsed and a 360-day year. Such
principal of and interest on this Class A-1 Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Class A-1 Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Class A-1 Note shall be applied first to
A-1-1
<PAGE> 59
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.]
A-1-2
<PAGE> 60
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: [ ], 1998
DAIMLER-BENZ VEHICLE
OWNER TRUST 1998-A,
By: CHASE MANHATTAN BANK
DELAWARE, 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: [ ], 1998
CITIBANK, N.A.,
not in its individual capacity,
but solely as Indenture Trustee
By:
------------------------------------
Authorized Officer
A-1-3
<PAGE> 61
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 twentieth (20th)
day of each month or, if any such day is not a Business Day, the next succeeding
Business Day, commencing December 21, 1998.
As described above, the entire unpaid principal amount of this Class A-1
Note shall be due and payable on the earlier of the Class A-1 Final Payment Date
and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which an Event of Default shall have
occurred and be continuing and the Indenture Trustee or the Holders of the Notes
representing not less than a majority of the outstanding principal amount of the
Notes of all classes have declared the Notes to be immediately due and payable
in the manner provided in Section 5.2 of the Indenture. All principal payments
on the 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. Any such payments in
the form of 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
A-1-4
<PAGE> 62
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 Certificate or any other 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 Certificate or any other 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, single business
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
A-1-5
<PAGE> 63
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 Citibank, N.A., in its individual
capacity, Chase Manhattan Bank Delaware, in its individual capacity, any owner
of a Certificate or any other beneficial interest in the Issuer, or any of their
respective partners, beneficiaries, agents, officers, directors, employees or
successors or assigns shall be personally liable for, nor shall recourse be had
to any of them for, the payment of principal or of interest on this Class A-1
Note or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in the Indenture. The Holder of this
Note, by his acceptance hereof, agrees that, except as expressly provided in the
Basic Documents, in the case of an Event of Default under the Indenture, the
Holder shall have no claim against any of the foregoing for any deficiency, loss
or claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the Issuer
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Class A-1 Note.
A-1-6
<PAGE> 64
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.
<TABLE>
<S> <C>
Dated: --------------------------------------------- -------------------------------------------------- */
SIGNATURE GUARANTEED
-------------------------------------------------- */
</TABLE>
- ---------------
*/ NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Note Registrar.
A-1-7
<PAGE> 65
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. [ ]
DAIMLER-BENZ VEHICLE OWNER TRUST 1998-A
[ ]% CLASS A-2 ASSET BACKED NOTES
Daimler-Benz Vehicle Owner Trust 1998-A, 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 [ ] MILLION DOLLARS payable on each
Payment Date in the aggregate amount, if any, payable from the Note Distribution
Account in respect of principal on the Class A-2 Notes pursuant to Section 2.8
of the Indenture dated as of November 1, 1998 (as amended, supplemented or
otherwise modified and in effect from time to time, the "Indenture"), between
the Issuer and Citibank, N.A., a national banking association, 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 December 2001 Payment
Date (the "Class A-2 Final Payment Date") and the Redemption Date, if any,
pursuant to Section 10.1 of the Indenture. Capitalized terms used but not
defined herein are defined in Article I of the Indenture, which also contains
rules as to construction that shall be applicable herein.
The Issuer shall pay interest on this Class A-2 Note at the rate per annum
shown above on each Payment Date until the principal of this Class A-2 Note is
paid or made available for payment, on the principal amount of this Class A-2
Note outstanding on the preceding Payment Date (after giving effect to all
payments of principal made on the preceding Payment Date), subject to certain
limitations contained in Section 3.1 of the Indenture. Interest on this Class
A-2 Note will accrue for each Payment Date from and including the twentieth
(20th) 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 twentieth (20th) 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
A-2-1
<PAGE> 66
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.]
A-2-2
<PAGE> 67
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:[ ], 1998
DAIMLER-BENZ VEHICLE
OWNER TRUST 1998-A,
By: CHASE MANHATTAN BANK
DELAWARE, 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: [ ], 1998
CITIBANK, N.A.,
not in its individual capacity,
but solely as Indenture Trustee
By:
--------------------------------------
Authorized Officer
A-2-3
<PAGE> 68
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 twentieth (20th)
day of each month or, if any such day is not a Business Day, the next succeeding
Business Day, commencing December 21, 1998.
As described above, the entire unpaid principal amount of this Class A-2
Note shall be due and payable on the earlier of the Class A-2 Final Payment Date
and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which an Event of Default shall have
occurred and be continuing and the Indenture Trustee or the Holders of the Notes
representing not less than a majority of the outstanding principal amount of the
Notes of all classes have declared the Notes to be immediately due and payable
in the manner provided in Section 5.2 of the Indenture. All principal payments
on the 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. Any such payments in
the form of 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,
A-2-4
<PAGE> 69
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 Certificate or any other 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 Certificate or any other 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, single business
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
A-2-5
<PAGE> 70
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 Citibank, N.A., in its individual
capacity, Chase Manhattan Bank Delaware, in its individual capacity, any owner
of a Certificate or any other beneficial interest in the Issuer, or any of their
respective partners, beneficiaries, agents, officers, directors, employees or
successors or assigns shall be personally liable for, nor shall recourse be had
to any of them for, the payment of principal or of interest on this Class A-2
Note or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in the Indenture. The Holder of this
Note, by his acceptance hereof, agrees that, except as expressly provided in the
Basic Documents, in the case of an Event of Default under the Indenture, the
Holder shall have no claim against any of the foregoing for any deficiency, loss
or claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the Issuer
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Class A-2 Note.
A-2-6
<PAGE> 71
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.
<TABLE>
<S> <C>
Dated: --------------------------------------------- -------------------------------------------------- */
SIGNATURE GUARANTEED
-------------------------------------------------- */
</TABLE>
- ---------------
*/ NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Note Registrar.
A-2-7
<PAGE> 72
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. [ ]
DAIMLER-BENZ VEHICLE OWNER TRUST 1998-A
[ ]% CLASS A-3 ASSET BACKED NOTES
Daimler-Benz Vehicle Owner Trust 1998-A, 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 [ ] MILLION DOLLARS payable on each
Payment Date in the aggregate amount, if any, payable from the Note Distribution
Account in respect of principal on the Class A-3 Notes pursuant to Section 2.8
of the Indenture dated as of November 1, 1998 (as amended, supplemented or
otherwise modified and in effect from time to time, the "Indenture"), between
the Issuer and Citibank, N.A., a national banking association, 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 January 2003 Payment
Date (the "Class A-3 Final Payment Date") and the Redemption Date, if any,
pursuant to Section 10.1 of the Indenture. Capitalized terms used but not
defined herein are defined in Article I of the Indenture, which also contains
rules as to construction that shall be applicable herein.
The Issuer shall pay interest on this Class A-3 Note at the rate per annum
shown above on each Payment Date until the principal of this Class A-3 Note is
paid or made available for payment, on the principal amount of this Class A-3
Note outstanding on the preceding Payment Date (after giving effect to all
payments of principal made on the preceding Payment Date), subject to certain
limitations contained in Section 3.1 of the Indenture. Interest on this Class
A-3 Note will accrue for each Payment Date from and including the twentieth
(20th) 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 twentieth (20th) 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
A-3-1
<PAGE> 73
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.]
A-3-2
<PAGE> 74
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: [ ], 1998
By: CHASE MANHATTAN BANK
DELAWARE, 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: [ ], 1998
CITIBANK, N.A.,
not in its individual capacity,
but solely as Indenture Trustee
By:
------------------------------------
Authorized Officer
A-3-3
<PAGE> 75
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 twentieth (20th)
day of each month or, if any such day is not a Business Day, the next succeeding
Business Day, commencing December 21, 1998.
As described above, the entire unpaid principal amount of this Class A-3
Note shall be due and payable on the earlier of the Class A-3 Final Payment Date
and the Redemption Date, if any, pursuant to Section 10.1 of the Indenture.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which an Event of Default shall have
occurred and be continuing and the Indenture Trustee or the Holders of the Notes
representing not less than a majority of the outstanding principal amount of the
Notes of all classes have declared the Notes to be immediately due and payable
in the manner provided in Section 5.2 of the Indenture. All principal payments
on the 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. Any such payments in
the form of 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,
A-3-4
<PAGE> 76
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 Certificate or any other 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 Certificate or any other 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, single business
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
A-3-5
<PAGE> 77
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 Citibank, N.A., in its individual
capacity, Chase Manhattan Bank Delaware, in its individual capacity, any owner
of a Certificate or any other beneficial interest in the Issuer, or any of their
respective partners, beneficiaries, agents, officers, directors, employees or
successors or assigns shall be personally liable for, nor shall recourse be had
to any of them for, the payment of principal or of interest on this Class A-3
Note or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in the Indenture. The Holder of this
Note, by his acceptance hereof, agrees that, except as expressly provided in the
Basic Documents, in the case of an Event of Default under the Indenture, the
Holder shall have no claim against any of the foregoing for any deficiency, loss
or claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the Issuer
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Class A-3 Note.
A-3-6
<PAGE> 78
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.
<TABLE>
<S> <C>
Dated: --------------------------------------------- -------------------------------------------------- */
SIGNATURE GUARANTEED
-------------------------------------------------- */
</TABLE>
- ---------------
*/ NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Note Registrar.
A-3-7
<PAGE> 79
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. [ ]
DAIMLER-BENZ VEHICLE OWNER TRUST 1998-A
[ ]% CLASS A-4 ASSET BACKED NOTES
Daimler-Benz Vehicle Owner Trust 1998-A, 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 [ ] MILLION DOLLARS
payable on each Payment Date in the aggregate amount, if any, payable from the
Note Distribution Account in respect of principal on the Class A-4 Notes
pursuant to Section 2.8 of the Indenture dated as of November 1, 1998 (as
amended, supplemented or otherwise modified and in effect from time to time, the
"Indenture"), between the Issuer and Citibank, N.A., a national banking
association, 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 December 2003 Payment Date (the "Class A-4 Final Payment Date") and the
Redemption Date, if any, pursuant to Section 10.1 of the Indenture. Capitalized
terms used but not defined herein are defined in Article I of the Indenture,
which also contains rules as to construction that shall be applicable herein.
The Issuer shall pay interest on this Class A-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 twentieth
(20th) 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 twentieth (20th) 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
A-4-1
<PAGE> 80
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.]
A-4-2
<PAGE> 81
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: [ ], 1998
DAIMLER-BENZ VEHICLE
OWNER TRUST 1998-A,
By: CHASE MANHATTAN BANK
DELAWARE, 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: [ ], 1998
CITIBANK, N.A.,
not in its individual capacity,
but solely as Indenture Trustee
By:
------------------------------------
Authorized Officer
A-4-3
<PAGE> 82
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 twentieth (20th)
day of each month or, if any such day is not a Business Day, the next succeeding
Business Day, commencing December 21, 1998.
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 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-4 Notes shall be made pro rata to the Holders entitled thereto.
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. Any such payments in
the form of 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,
A-4-4
<PAGE> 83
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 Certificate or any other 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 Certificate or any other 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, single business
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
A-4-5
<PAGE> 84
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 Citibank, N.A., in its individual
capacity, Chase Manhattan Bank Delaware, in its individual capacity, any owner
of a Certificate or any other 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.
A-4-6
<PAGE> 85
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.
<TABLE>
<S> <C>
Dated: --------------------------------------------- ---------------------------------------------------*/
SIGNATURE GUARANTEED
---------------------------------------------------*/
</TABLE>
- ---------------
*/ NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Note Registrar.
A-4-7
<PAGE> 86
EXHIBIT B
FORM OF OPINION OF COUNSEL
PURSUANT TO SECTION 3.6(A)
[ ], 1998
To the Addressees Indicated on
Schedule A hereto
Re: Daimler-Benz Vehicle Owner Trust 1998-A
Ladies and Gentlemen:
We have acted as special counsel to Mercedes-Benz Credit Corporation, a
Delaware corporation ("MBCC"), and Daimler-Benz Vehicle Receivables Corporation,
a Delaware corporation (the "Seller"), in connection with the transactions
contemplated by (i) the Purchase Agreement, dated as of November 1, 1998 (the
"Purchase Agreement"), between MBCC and the Seller, (ii) the Sale and Servicing
Agreement, dated as of November 1, 1998 (the "Sale and Servicing Agreement"), by
and among the Seller, as seller, MBCC, as servicer, and Daimler-Benz Vehicle
Owner Trust 1998-A, a Delaware business trust (the "Trust"), as issuer, (iii)
the Indenture, dated as of November 1, 1998 (the "Indenture"), between the Trust
and Citibank, N.A., as indenture trustee for the benefit of the Holders of the
Notes (the "Indenture Trustee"), and (iv) the Trust Agreement, dated as of
November 1, 1998 (the "Trust Agreement"), between the Seller and Chase Manhattan
Bank Delaware, as owner trustee on behalf of the Trust (the "Owner Trustee").
Capitalized terms not otherwise defined herein have the meanings assigned to
such terms in the Sale and Servicing Agreement.
Pursuant to the Purchase Agreement and the Assignment dated as of November
1, 1998 related thereto (the "Assignment"), MBCC proposes to sell to the Seller,
and the Seller proposes to purchase from MBCC, among other things, certain motor
vehicle retail installment sale contracts (collectively, the "Receivables")
secured by new and used automobiles and light- and medium-duty trucks
(collectively, the "Financed Vehicles"), certain monies due or received
thereunder on or after the Cutoff Date, MBCC's security interests in the
Financed Vehicles, MBCC's rights under certain insurance policies, certain
rights under dealer agreements relating to the Receivables and certain other
property related to the Receivables and all the proceeds thereof.
Pursuant to the Sale and Servicing Agreement, the Seller proposes to sell
to the Trust all right, title and interest of the Seller in, to and under the
Receivables, all monies due or received thereunder on and after the Cutoff Date,
certain other property related to the Receivables and all proceeds thereof. The
Trust will issue (i) $360,000,000 aggregate principal amount of [ ]% Class
A-1 Asset Backed Notes, $508,000,000 aggregate principal amount of [ ]%
Class A-2 Asset Backed Notes, $440,000,000 aggregate principal amount of
[ ]% Class A-3 Asset Backed Notes and $241,800,000 aggregate principal
amount of [ ]% Class A-4 Asset Backed Notes (collectively, the "Notes")
pursuant to the Indenture for sale to the several underwriters named in the
Underwriting Agreement, dated as of [ ], 1998, between the Seller
and Chase Securities Inc. and Salomon Smith Barney Inc., as representatives of
the several underwriters; and (ii) $81,654,551.40 aggregate principal amount of
[ ]% Class B Asset Backed Certificates (collectively, the "Certificates")
pursuant to the Trust Agreement for issuance to the Seller.
In our examination we have assumed the genuineness of all signatures
(including endorsements), the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies, and the authenticity of the originals of such copies. As to any facts
material to
B-1
<PAGE> 87
To the Addressees Indicated on
Schedule A hereto
[ ], 1998
Page 2
this opinion which we did not independently establish or verify, we have relied
upon statements and representations of MBCC and the Seller and their officers
and other representatives and of public officials.
In rendering the opinions set forth herein, we have examined and relied on
originals or copies, certified or otherwise identified to our satisfaction, of
the following:
(a) the Purchase Agreement, the Sale and Servicing Agreement, the
Indenture, the Trust Agreement and the Assignment;
(b) a Certificate of the Seller, dated the date hereof, a copy of
which is attached as Exhibit A hereto (the "Seller Certificate");
(c) an unfiled, but signed copy of a financing statement naming the
Seller as debtor and the Trust as secured party, which we understand will
be filed within ten (10) days of the transfer of the security interest in
the office of the Secretary of State of the State of [New York] (such
filing office, the "Filing Office" and such financing statement, the
"Financing Statement");
(d) the report of Lexis Document Services dated
[ ], 1998, as to financing statements naming the Seller
as debtor and on file in the office of the Secretary of State of the State
of [New York] as of an effective date of [ ], 1998 (the
"Search Report");
(e) forms of motor vehicle retail installment sale contracts (the
"Form Contracts") attached as Annex A to the Seller Certificate; and
(f) such other agreements, certificates or documents as we have deemed
necessary or appropriate as a basis for the opinion set forth below.
Unless otherwise indicated, references to the "UCC" shall mean: (i) with
respect to the validity of the security interests held by the Owner Trustee and
the Indenture Trustee, the Uniform Commercial Code as in effect on the date
hereof in the State of [New York], (ii) with respect to the perfection and the
effect of perfection or non-perfection of the security interest of the Owner
Trustee in the Receivables, the Uniform Commercial Code as in effect on the date
hereof in the State of [New York], and (iii) with respect to our opinion in
paragraph 1 below, the Uniform Commercial Code as in effect on the date hereof
in the States of New York and Delaware.
Members of this Firm are admitted to practice in the States of Delaware and
New York. We express no opinion as to the laws of any jurisdiction other than
(i) the laws of the State of New York and (ii) with respect to the security
interest opinions set forth in paragraphs 1, 2 and 3 herein, the UCC. References
to the "Applicable States" shall mean Delaware and/or New York, as applicable.
Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, we are of the opinion that:
(1) Each Receivable is a motor vehicle retail installment sale
contract that constitutes "chattel paper" as defined in Section 9-105 of
the UCC.
(2) 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 UCC) in the Seller's rights in
the Receivables and proceeds thereof, which security interest if
characterized as a transfer for security will secure payment of the Notes.
B-2
<PAGE> 88
To the Addressees Indicated on
Schedule A hereto
[ ], 1998
Page 3
(3) The Financing Statement is in appropriate form for filing in the
Filing Office under the UCC. Upon the filing of the Financing Statement in
the 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 Seller's will be equal or
prior to the security interest of the Owner Trustee in the Receivables and
proceeds thereof.
(4) The provisions of the Indenture are effective to create in favor
of the Indenture Trustee, a valid security interest in the Trust's rights
in the Receivables and proceeds thereof to secure payment of the Notes.
Our opinions in paragraphs 1-4 above are subject to the following
qualifications:
(a) we have assumed that the Receivables exist and that the Seller has
sufficient rights in the Receivables for the security interest of the Owner
Trustee to attach, and that the Owner Trustee has sufficient rights in the
Receivables for the security interest of the Indenture Trustee to attach,
and we express no opinion as to the nature or extent of the Seller's or the
Owner Trustee's rights in, or title to, any Receivables;
(b) our security interest opinions are limited to Article 9 of the
UCC, and therefore such opinions do not address (i) laws of jurisdictions
other than Applicable States, and of Applicable States except for Article 9
of the UCC, (ii) collateral of a type not subject to Article 9 of the UCC,
and (iii) under Section 9-103 of the UCC, what law governs perfection of
the security interests granted in the collateral covered by this opinion;
(c) we call to your attention that under the UCC, events occurring
subsequent to the date hereof may affect any security interest subject to
the UCC including, but not limited to, factors of the type identified in
Section 9-306 with respect to proceeds; Section 9-402 with respect to
changes in name, structure and corporate identity of the debtor; Section
9-103 with respect to changes in the location of the collateral and the
location of the debtor; Section 9-316 with respect to subordination
agreements; Section 9-403 with respect to continuation statements; and
Sections 9-307, 9-308 and 9-309 with respect to subsequent purchasers of
the collateral. In addition, actions taken by a secured party (e.g.,
releasing or assigning the security interest, delivering possession of the
collateral to the debtor or another person and voluntarily subordinating a
security interest) may affect the validity, perfection or priority of a
security interest;
(d) we have assumed that each Receivable is substantially in the form
of a Form Contract, and we have assumed that no Receivable is or will be
credited to a securities account;
(e) we have assumed that there are no agreements between the Seller or
the Owner Trustee and any account debtor prohibiting, restricting or
conditioning the assignment of any portion of the Receivables;
(f) we express no opinion with respect to the perfection or priority
of the security interest of the Indenture Trustee;
(g) we call to your attention that the security interest of the Owner
Trustee and the Indenture Trustee may be subject to the rights of account
debtors, claims and defenses of account debtors and the terms of agreements
with account debtors;
(h) we express no opinion regarding the security interest of the Owner
Trustee or the Indenture Trustee in any Receivables consisting of claims
against any government or governmental agency (including, without
limitation, the United States of America or any state thereof or any agency
or department of the United States of America or any state thereof);
B-3
<PAGE> 89
To the Addressees Indicated on
Schedule A hereto
[ ], 1998
Page 4
(i) we express no opinion with respect to the Owner Trustee's or
Indenture Trustee's rights in and to any property which secures any
Receivable;
(j) we have assumed that the Seller's chief executive office is and
will be located at the address set forth in the Seller Certificate;
(k) we express no opinion with respect to the priority of the interest
of the Owner Trustee in the Receivables against any of the following: (i)
pursuant to Section 9-301(1) of the UCC, a lien creditor or bulk purchaser
who attached or levied prior to the perfection of the security interest of
the Owner Trustee; (ii) pursuant to Section 9-301(4) of the UCC, a lien
creditor to the extent that provision limits the priority afforded future
advances; (iii) pursuant to Section 9-312(7) of the UCC, another secured
creditor to the extent that provision limits the priority afforded future
advances; (iv) pursuant to Sections 9-103(1)(d) or (3)(e) and Section
9-312(1) of the UCC, a security interest perfected under the laws of
another jurisdiction to the extent the Seller was located in such
jurisdiction within four months prior to the date of the perfection of the
security interest of the Owner Trustee; (v) pursuant to Section 9-312(3)
and (4) of the UCC, a "purchase money security interest" as such term is
defined in Section 9-107 of the UCC; (vi) pursuant to Section 9-312(6) of
the UCC, another secured party with a perfected security interest in other
property of the Seller to the extent the Receivables are proceeds of such
other creditor's property; (vii) pursuant to Sections 9-104, 9-113, 9-208
and 9-302(1) of the UCC, another creditor not required to file a financing
statement to perfect its interest; and (viii) pursuant to Section 9-401(2)
and (3) of the UCC, the security interest of a creditor who filed a
financing statement based on a prior or incorrect location of the Seller or
the Receivables or use of the Receivables to the extent such other
financing statement would be effective under Section 9-401(2) or (3) of the
UCC;
(l) we have assumed that no financing statement naming the Seller as
debtor was filed in the Filing Office between the effective date of the
Search Report and the date of the filing of the Financing Statement in such
Filing Office;
(m) as used in paragraph 2, the term "security interest" is used as
defined in Section 1-201 of the UCC, which definition includes both (i) an
interest in chattel paper to secure payment and (ii) a sale of chattel
paper. In addition, we express no opinion whether or to what extent the
transfer pursuant to the Sale and Servicing Agreement will be characterized
as a sale or a transfer for security;
(n) we have assumed that (i) the Sale and Servicing Agreement
constitutes the legal, valid and binding obligation of the Trust,
enforceable against the Trust in accordance with its terms and (ii) the
Indenture constitutes the legal, valid and binding obligation of the
Indenture Trustee and the Trust, enforceable against the Indenture Trustee
and the Trust, respectively, in accordance with its terms; and
(o) we call to your attention that in the case of the issuance of
distributions on, or proceeds of, the Receivables, the security interest of
the Owner Trustee therein will be perfected only if possession thereof is
obtained or other appropriate action is taken in accordance with the
provisions of the UCC or other applicable law and, in the case of certain
types of distributions or proceeds, other parties such as holders in due
course, protected purchasers and buyers in the ordinary course of business
may obtain superior priority.
B-4
<PAGE> 90
To the Addressees Indicated on
Schedule A hereto
[ ], 1998
Page 5
We call to your attention that, with respect to paragraphs (a), (e),
(k)(iv) and (l) of our qualifications set forth above, we have relied upon
representations and warranties of the Seller as to the assumptions therein.
This opinion is being furnished only to you and is solely for your benefit
and is not to be used, circulated, quoted, relied upon or otherwise referred to
for any purpose without prior written consent in each instance.
Very truly yours,
B-5
<PAGE> 91
SCHEDULE A
Mercedes-Benz Credit Corporation
201 Merritt 7, Suite 700
Norwalk, CT 06856-5425
Daimler-Benz Vehicle Receivables Corporation
1201 North Market Street
Suite 1406
Wilmington, DE 19801
Chase Manhattan Bank Delaware,
as Owner Trustee
1201 North Market Street
Wilmington, Delaware 19801
Citibank, N.A.,
as Indenture Trustee
111 Wall Street, 5th Floor
New York, NY 10005
Chase Securities Inc., as
Representative of the several
Underwriters
270 Park Avenue, 7th Floor
New York, NY 10017
Standard & Poor's,
a Division of The McGraw-Hill Companies
25 Broadway
New York, New York 10004
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
<PAGE> 92
EXHIBIT A
DAIMLER-BENZ VEHICLE RECEIVABLES CORPORATION
OFFICER'S CERTIFICATE
The undersigned, a duly authorized officer of DAIMLER-BENZ VEHICLE
RECEIVABLES CORP. (the "Company"), does hereby certify as follows:
(1) No financing statements or other filings have been filed naming
the Company as debtor or seller in any State of the United States of
America to perfect a sale, transfer or assignment of or lien, encumbrance,
security interest or other interest in, or which otherwise pertains to, the
Receivables.
(2) At all times since the incorporation of the Company, the Company
has had one place of business and it is and has been located in
[Wilmington, Delaware].
(3) At all times since the incorporation of the Company and on the
date hereof, the Company has had a mailing address of [1201 North Market
Street, Suite 1406, Wilmington, Delaware 19801].
(4) Attached hereto as Annex A are forms of motor vehicle retail
installment sales contracts used to create the Receivables (the "Form
Contracts"), and each Receivable is substantially in the form of a Form
Contract.
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to such terms in the Sale and Servicing Agreement, dated as of
November 1, 1998, by and among the Company, Mercedes-Benz Credit Corporation, as
Servicer, and Daimler-Benz Vehicle Owner Trust 1998-A, as Issuer, and accepted
and agreed to by Citibank, N.A., as Indenture Trustee.
IN WITNESS WHEREOF, I have set my hand this day of , 1998.
DAIMLER-BENZ VEHICLE
RECEIVABLES CORP.
By:
------------------------------------
Name:
Title:
<PAGE> 93
ANNEX A
[FORMS OF RETAIL INSTALLMENT SALES CONTRACT]
<PAGE> 1
Exhibit 4.4
ADMINISTRATION AGREEMENT
This ADMINISTRATION AGREEMENT (this "Administration Agreement"),
dated as of November 1, 1998, is by and among DAIMLER-BENZ VEHICLE OWNER TRUST
1998-A, a Delaware business trust (the "Issuer"), MERCEDES-BENZ CREDIT
CORPORATION, a Delaware corporation, as administrator (the "Administrator"), and
CITIBANK, N.A., a national banking association, 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 November 1, 1998 (as amended, supplemented or otherwise
modified and in effect from time to time, the "Indenture"), between the Issuer
and the Indenture Trustee (capitalized terms used and not otherwise defined
herein shall have the meanings assigned to such terms in, or incorporated by
reference into, the Indenture) and is concurrently issuing [_]% Class B Asset
Backed Certificates (collectively, the "Certificates") pursuant to the Amended
and Restated Trust Agreement, dated as of November 1, 1998 (as amended,
supplemented or otherwise modified and in effect from time to time, the "Trust
Agreement") between the Issuer and Chase Manhattan Bank Delaware, not in its
individual capacity but solely as Owner Trustee (the "Owner Trustee");
WHEREAS, the Issuer has entered into certain agreements in
connection with the issuance of the Notes and of the Certificates, including (i)
a Sale and Servicing Agreement, dated as of November 1, 1998 (as amended,
supplemented or otherwise modified and in effect from time to time, the "Sale
and Servicing Agreement"), among the Issuer, Mercedes-Benz Credit Corporation,
as servicer, and Daimler-Benz Vehicle Receivables Corporation, as seller (the
"Seller"), (ii) a Letter of Representations dated [____ __], 1998 (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, (iii) the Indenture and
(iv) the Trust Agreement (the Sale and
<PAGE> 2
Servicing Agreement, the Note Depository Agreement, the Indenture and the Trust
Agreement 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 Certificates (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):
2
<PAGE> 3
(A) the duty to cause the Note Register to be kept and to give the
Indenture Trustee written 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) the preparation 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);
(D) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for the release of
Collateral (Section 2.10);
(E) the maintenance of an office in the Borough of Manhattan, City
of New York, for registration of the transfer or exchange of Notes
(Section 3.2);
(F) 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);
(G) the direction to the Indenture Trustee to deposit monies with
Paying Agents, if any, other than the Indenture Trustee (Section 3.3);
(H) 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 Certificates, the Collateral and each other instrument and
agreement included in the Owner Trust Estate (Section 3.4);
(I) 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 Owner Trust
Estate or the Collateral (Section 3.5);
3
<PAGE> 4
(J) the delivery of the Opinion of Counsel on the Closing Date and
the annual delivery of Opinions of Counsel as to the Owner 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);
(K) 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));
(L) the written 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));
(M) 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 4.9 and Article VI of the Sale and
Servicing Agreement (Section 3.14);
(N) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its properties or assets
(Section 3.10(b));
(O) 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 Mercedes-Benz Credit Corporation
under the Purchase Agreement (Section 3.19);
(P) 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);
(Q) the compliance with any written directive of the Indenture
Trustee with respect to the sale of any Collateral 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);
4
<PAGE> 5
(R) 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);
(S) 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);
(T) 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);
(U) 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);
(V) 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 the
establishment and maintenance of, and the investment and reinvestment of
funds in, the Trust Accounts, the Reserve Accounts and the Certificate
Distribution Account (Sections 8.2 and 8.3);
(W) 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 Collateral (Sections 8.4 and 8.5);
(X) 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);
(Y) the execution and delivery of new Notes conforming to any
supplemental indenture (Section 9.6);
5
<PAGE> 6
(Z) the duty to notify Noteholders of redemption of the Notes or to
cause the Indenture Trustee to provide such notification (Section 10.2);
(A2) 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));
(B2) 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));
(C2) 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);
(D2) the preparation and delivery to Noteholders and the Indenture
Trustee of any agreements with respect to alternate payment and notice
provisions (Section 11.6);
(E2) the recording of the Indenture, if applicable (Section 11.15);
and
(F2) the preparation of Definitive Notes, if necessary, 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 pursuant to Section 6.7 of 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) [and pay the Servicer from time to time
the amounts payable by the Servicer pursuant to Section 3.8 of the Sale
and Servicing Agreement];
(B) except as otherwise expressly provided in the Indenture,
reimburse the Indenture Trustee upon its request for all reasonable
expenses,
6
<PAGE> 7
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, directors,
officers and employees 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, or under
any of the Basic Documents, 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 Sections 3.4 or 5.5 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
7
<PAGE> 8
5 of this Agreement, and in accordance with the directions of the Owner Trustee,
the Administrator shall administer, perform or supervise the performance of such
other activities in connection with the Collateral (including the Related
Agreements) as are not covered by any of the foregoing provisions and as are
expressly requested by the Owner Trustee and are reasonably within the
capability of the Administrator. [Such responsibilities shall include the
obtainment and maintenance of any licenses required to be obtained or maintained
by the Trust under the Pennsylvania Motor Vehicle Sales Finance Act. In
addition, the Administrator shall promptly notify the Indenture Trustee and the
Owner Trustee in writing of any amendment to the Pennsylvania Motor Vehicle
Sales Finance Act that would affect the duties or obligations of the Indenture
Trustee or the Owner Trustee under any Basic Document and shall assist the
Indenture Trustee or the Owner Trustee in its obtainment and maintenance of any
licenses required to be obtained or maintained by the Indenture Trustee or the
Owner Trustee thereunder. In connection therewith, the Administrator shall cause
the Seller to pay all fees and expenses under such Act.]
(ii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for promptly
notifying the Owner Trustee in the event that any withholding tax is imposed on
the Trust's payments (or allocations of income) to an Owner as contemplated in
Section 5.2(d) of the Trust Agreement. Any such notice shall specify the amount
of any withholding tax required to be withheld by the Owner Trustee pursuant to
such provision.
(iii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
performance of the duties of the Trust or the Owner Trustee set forth in Section
3.4(b) and (c), Section 5.5 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 [____], 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.
8
<PAGE> 9
(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 reasonable
judgment, 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 in the ordinary course of business);
(C) the amendment, change or modification of any of the Related
Agreements;
(D) the appointment of any successor Note Registrar, successor
Paying Agent and successor Indenture Trustee pursuant to the Indenture or
the appointment of any successor Administrator or Successor Servicer, or
the consent to the assignment by any Note Registrar, Paying Agent or
Indenture Trustee of its obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
9
<PAGE> 10
(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 $[_] per month
which shall be payable by the Servicer in accordance with Section 3.8 of the
Sale and Servicing Agreement and Section 8.1 of the Trust Agreement.
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
10
<PAGE> 11
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, if 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
11
<PAGE> 12
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(d) 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:
12
<PAGE> 13
(a) if to the Issuer or the Owner Trustee, to:
Daimler-Benz Vehicle Owner Trust 1998-A
c/o Chase Manhattan Bank Delaware
1201 North Market Street
Wilmington, Delaware 19801
Attention: Corporate Trustee Administration Department]
Telephone: (302) 428-3375
Telecopy: (302) 428-3390
(b) if to the Administrator, to:
Mercedes-Benz Credit Corporation
201 Merritt 7 Suite 700
Norwalk, Connecticut 06856-5425
Attention: Director, Accounting
Telephone: (203) 845-7305
Telecopy: (203) 845-7542
(c) If to the Indenture Trustee, to:
Citibank, N.A.
111 Wall Street, 5th Floor
New York, NY 10005
Attention: Global Agency and Trust Services
Telephone: (212) 657-5419
Telecopy: (212) 657-3862/4024
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 each of 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
13
<PAGE> 14
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. Any 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
14
<PAGE> 15
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. Limitation of Liability of Owner Trustee and Indenture Trustee. (a)
Notwithstanding anything contained herein to the contrary, this instrument has
been countersigned by Chase Manhattan Bank Delaware, not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer and in no
event shall Chase Manhattan Bank Delaware 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 Citibank, N.A. not in its individual
capacity but solely as Indenture Trustee and in no event shall Citibank, N.A.
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.
15
<PAGE> 16
18. 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 7.1 of the
Sale and Servicing Agreement, to enforce the provisions of Section 7.2 of the
Sale and Servicing Agreement with respect to the appointment of a Successor
Servicer. Such Successor Servicer shall, upon compliance with the last sentence
of Section 7.2 of the Sale and Servicing Agreement, become the successor
Administrator hereunder; provided however, that if the Indenture Trustee shall
become such successor Administrator, the Indenture Trustee shall not be required
to perform any obligations or duties or conduct any activities as successor
Administrator that would be prohibited by law and not within the banking and
trust powers of the Indenture Trustee. In such event, the Indenture Trustee may
appoint a sub-administrator to perform such obligations and duties.
21. Nonpetition Covenants. (a) Notwithstanding any prior termination of
this Agreement, the Seller, the Administrator, the Owner Trustee and the
Indenture Trustee shall not, prior to the date which is one year and one day
after the termination of this Agreement with respect to the Issuer, acquiesce,
petition or otherwise invoke or cause the Issuer to invoke the process of any
court or government authority for the purpose of commencing or sustaining a case
against the Issuer under any Federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of the
Issuer.
(b) Notwithstanding any prior termination of this Agreement, the
Issuer, the Administrator, the Owner Trustee and the Indenture Trustee shall
not, prior to the date which is one year and one day after the termination of
this Agreement with respect to the Seller, acquiesce, petition or otherwise
invoke or cause the Seller to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the Seller
under any Federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Seller or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Seller.
16
<PAGE> 17
22. The Indenture Trustee in acting hereunder shall be entitled to the
rights, protections and immunities which it is afforded under the Indenture.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
DAIMLER-BENZ VEHICLE OWNER
TRUST 1998-A
By: CHASE MANHATTAN BANK
DELAWARE, not in its individual capacity
but solely as Owner Trustee
By:
----------------------------------------
Name:
Title:
CITIBANK, N.A.,
not in its individual capacity
but solely as Indenture Trustee
By:
----------------------------------------
Name:
Title:
MERCEDES-BENZ CREDIT
CORPORATION, not in its individual
capacity but solely as Administrator
By:
----------------------------------------
Name:
Title:
17
<PAGE> 18
EXHIBIT A
POWER OF ATTORNEY
STATE OF DELAWARE }
}
COUNTY OF NEW CASTLE }
KNOW ALL MEN BY THESE PRESENTS, that CHASE MANHATTAN BANK DELAWARE, a
banking corporation, not in its individual capacity but solely as owner trustee
(the "Owner Trustee") for DAIMLER-BENZ VEHICLE OWNER TRUST 1998-A (the "Trust"),
does hereby make, constitute and appoint Mercedes-Benz Credit Corporation, as
administrator under the Administration Agreement dated as of November 1, 1998
(the "Administration Agreement"), among the Trust, MERCEDES-BENZ CREDIT
CORPORATION and Citibank, N.A., as Indenture Trustee, as the same may be amended
from time to time, and its agents and attorneys, as Attorneys-in-Fact to execute
on behalf of the Owner Trustee or the Trust all such documents, reports,
filings, instruments, certificates and opinions as it should be the duty of the
Owner Trustee or the Trust to prepare, file or deliver pursuant to the Related
Agreements, or pursuant to Section 5.5 of the Trust Agreement, including,
without limitation, to appear for and represent the Owner Trustee and the Trust
in connection with the preparation, filing and audit of federal, state and local
tax returns pertaining to the Trust, and with full power to perform any and all
acts associated with such returns and audits that the Owner Trustee could
perform, including without limitation, the right to distribute and receive
confidential information, defend and assert positions in response to audits,
initiate and defend litigation, and to execute waivers of restrictions on
assessments of deficiencies, consents to the extension of any statutory or
regulatory time limit, and settlements.
All powers of attorney for this purpose heretofore filed or executed by
the Owner Trustee are hereby revoked.
Capitalized terms that are used and not otherwise defined herein shall
have the meanings ascribed thereto in the Administration Agreement.
A-1
<PAGE> 19
EXECUTED this ______ day of [____], 1998.
CHASE MANHATTAN BANK
DELAWARE,
not in its individual capacity
but solely as Owner Trustee
By:
-------------------------
Name:
Title:
A-2
<PAGE> 20
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 [_], 1998.
________________________________________
Notary Public - State of Delaware
A-3
<PAGE> 1
Exhibit 5.1
December 1, 1998
Daimler-Benz Vehicle Receivables Corporation
1201 North Market Street, 14th Floor
Wilmington, DE 19801
Re: Daimler-Benz Vehicle Owner Trust 1998-A
Ladies and Gentlemen:
We have acted as counsel to Daimler-Benz Vehicle Receivables Corporation (the
"Company") in connection with the proposed issuance by Daimler-Benz Vehicle
Owner Trust 1998-A, a trust to be formed pursuant to a Trust Agreement to be
entered into between the Company, as Seller, and Chase Manhattan Bank Delaware,
as Owner Trustee, of asset-backed notes (the "Notes") in a public offering being
registered with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, pursuant to a registration statement of the Company on Form
S-1 (Registration No. 333-64671), as amended to the date hereof (the
"Registration Statement"). Any capitalized term not defined herein shall have
the same meaning ascribed to it in the Registration Statement.
We have examined originals or copies certified to our satisfaction of such
corporate records, agreements, instruments and other documents as we have deemed
necessary in order to render the opinion expressed below. In such examination,
we have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity with the originals of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. As to all facts material
to the opinion expressed below that have not been independently established, we
have relied upon certificates of officers and representatives of the Company and
Mercedes-Benz Credit Corporation.
The opinion expressed below is limited to the laws of the State of New York and
the federal laws of the United States of America, and we express no opinion on
the effect on the matters covered by such opinion of the laws of any other
jurisdiction.
Based upon and subject to the foregoing, we are of the opinion that the Notes
have been duly and validly authorized by the Company, and when the Notes are
issued and sold as contemplated by the Indenture, they will be legally issued,
fully paid and non-assessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to be named therein.
Very truly yours,
MORGAN, LEWIS & BOCKIUS LLP
<PAGE> 1
Exhibit 8.1
December 1, 1998
Daimler-Benz Vehicle Receivables Corporation
1201 North Market Street, 14th Floor
Wilmington, DE 19801
Re: Daimler-Benz Vehicle Owner Trust 1998-A
Ladies and Gentlemen:
We have acted as special tax counsel to Daimler-Benz Vehicle Receivables
Corporation (the "Company") in connection with the proposed issuance by
Daimler-Benz Vehicle Owner Trust 1998-A, a trust to be formed pursuant to a
Trust Agreement to be entered into among the Company, as Seller, and Chase
Manhattan Bank Delaware, as Owner Trustee, of asset-backed notes in a public
offering being registered with the Securities and Exchange Commission under the
United States Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a registration statement of the Company on Form S-1 (Registration
No. 333-64671), as amended to the date hereof (the "Registration Statement").
Capitalized terms used herein and not otherwise defined herein have the
respective meanings ascribed to them in the Registration Statement.
In arriving at the opinion expressed below, we have examined originals or copies
certified to our satisfaction of such corporate records, agreements, instruments
and other documents as we have deemed necessary in order to render the opinion
expressed below.
In our examination, we have assumed the authenticity of original documents, the
accuracy of copies and the genuineness of signatures. We understand and assume
that (i) any agreement which we have examined will represent the legal, valid
and binding obligation of the respective parties thereto, be enforceable in
accordance with its respective terms, and represent the entire agreement between
the parties with respect to the subject matter thereof, (ii) the parties to each
such agreement will comply with all of their respective covenants, agreements
and undertakings contained therein, and (iii) each of the transactions provided
for by each such agreement will be carried out in accordance with its terms.
Our opinion is based upon existing United States federal income tax laws,
regulations, administrative pronouncements and judicial decisions. All such
authorities are subject to change, either prospectively or retroactively. No
assurance can be provided as to the effect of any such change upon our opinion.
Based upon and subject to the foregoing, we hereby confirm the opinion referred
to in the second sentence under the sub-heading "Tax Status of the Notes and the
Trust" and, furthermore, we are of the opinion that the descriptions of matters
of law and legal conclusions set forth in the Registration Statement under the
heading "Certain Federal Income Tax Consequences" are correct in all material
respects. While such descriptions discuss the material anticipated United States
federal income tax consequences applicable to certain Note Owners, they do not
purport to discuss all federal income tax consequences and our opinion is
limited to those federal income tax consequences specifically discussed therein.
In giving the foregoing opinion, we express no opinion other than as to the
federal income tax law of the United States of America.
We are furnishing this letter in our capacity as counsel to the Company and this
letter is solely for the Company's benefit. This letter is not to be used,
circulated, quoted or otherwise referred to for any other purpose, except as set
forth below.
<PAGE> 2
Daimler-Benz Vehicle Receivables Corporation
December 1, 1998
Page 2
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and we further consent to the use of our name under the
captions "Prospectus Summary -- Tax Status" and "Certain Federal Income Tax
Consequences" in the Registration Statement. In giving this consent, we do not
thereby admit that we are within the category of persons whose consent is
required to be filed with the Registration Statement under the provisions of the
Securities Act or the rules and regulations promulgated thereunder.
Very truly yours,
MORGAN, LEWIS & BOCKIUS LLP
<PAGE> 1
EXHIBIT 10.1
PURCHASE AGREEMENT
This Purchase Agreement is made as of the 1st day of November, 1998, by and
between MERCEDES-BENZ CREDIT CORPORATION, a Delaware corporation (the "Seller"),
having its principal executive office at 201 Merritt 7, Suite 700, Norwalk,
Connecticut 06856-5425, and DAIMLER-BENZ VEHICLE RECEIVABLES CORPORATION, a
Delaware corporation (the "Purchaser"), having its principal executive office at
1201 North Market Street, Wilmington, Delaware 19801.
WHEREAS, in the regular course of its business, the Seller purchases
certain retail installment contracts for, and retail loans evidenced by notes
secured by, new and used Mercedes-Benz automobiles and new and used medium- and
heavy-duty trucks and tractors manufactured by Freightliner Corporation and its
subsidiaries (collectively, "Freightliner") and used trucks and tractors and new
and used trailers manufactured by companies other than Freightliner.
WHEREAS, the Seller and the Purchaser wish to set forth the terms pursuant
to which the Receivables (as hereinafter defined) are to be sold by the Seller
to the Purchaser, which Receivables will be transferred by the Purchaser,
pursuant to the Sale and Servicing Agreement (as hereinafter defined), to the
Daimler-Benz Vehicle Owner Trust 1998-A (the "Trust") to be created thereunder,
which Trust will issue certain classes of notes and certain certificates
representing fractional undivided interests in such Receivables and the other
property of the Trust (the "Certificates").
NOW, THEREFORE, in consideration of the foregoing and the mutual terms and
covenants contained herein, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Terms not defined in this Agreement shall have the meanings assigned to
such terms in the Sale and Servicing Agreement. 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 mean this Purchase Agreement and all amendments hereof
and supplements hereto.
"Assignment" shall mean an assignment in the form of Exhibit A hereto.
"Sale and Servicing Agreement" shall mean the Sale and Servicing Agreement
dated as of the date hereof by and among Mercedes-Benz Credit Corporation, in
its individual capacity and as Servicer, the Purchaser, as Seller, and
Daimler-Benz Vehicle Owner Trust 1998-A, as Issuer.
"Prospectus" shall have the meaning assigned to such term in the
Underwriting Agreement.
"Receivable" shall mean each retail installment contract which appears on
Exhibit B hereto and all amendments thereof and supplements thereto.
"Receivables Purchase Price" shall mean $ .
"Schedule of Receivables" shall mean the list of Receivables annexed hereto
as Exhibit B.
"Underwriting Agreement" shall mean the Underwriting Agreement dated
December , 1998 by and between Chase Securities Inc. and Salomon Smith Barney,
Inc., as representatives of the Underwriters, the Purchaser, as seller, and
Daimler-Benz North America Corporation.
<PAGE> 2
"Underwriters" shall mean the several underwriters listed in Schedule I to
the Underwriting Agreement.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.1 Purchase and Sale of Receivables.
(a) Sale of Receivables. On the Closing Date, subject to the terms and
conditions of this Agreement, the Seller shall sell, transfer, assign and
otherwise convey to the Purchaser, without recourse, and the Purchaser shall
purchase, all right, title and interest of the Seller, whether now owned or
hereafter acquired, in and to the following: (i) the Receivables, and all monies
due thereunder on or after the Cutoff Date; (ii) all of the Seller's the
security interests in the Financed Vehicles; (iii) all of the Seller's rights to
receive proceeds from claims on physical damage, credit life and disability
insurance policies covering Financed Vehicles or the Obligors; (iv) the rights
of recourse of the Seller against Dealers arising out of breaches by Dealers
with respect to the Receivables; (v) all of the Seller's rights to all documents
contained in the Receivable Files; (vi) all property (including the right to
receive future liquidation proceeds and Recoveries) that secures a Receivable
and that will have been acquired by or on behalf of the Indenture Trustee; and
(vii) all proceeds of any and all of the foregoing. The sale, transfer,
assignment and conveyance made hereunder shall not constitute and is not
intended to result in an assumption by the Purchaser of any obligation of the
Seller to the Obligors, the Dealers or any other Person in connection with the
Receivables and the property transferred under this Section 2.1(a) or any
agreement, document or instrument related thereto.
(b) Receivables Purchase Price. In consideration for the Receivables and
other properties described in Section 2.1(a), the Purchaser shall, on the
Closing Date, pay to the Seller the Receivables Purchase Price. An amount equal
to $ of the Receivables Purchase Price shall be paid to the Seller in
cash. The remaining $ of the Receivables Purchase Price shall be deemed
paid and returned to the Purchaser and be considered a contribution to the
capital of the Purchaser. The portion of the Receivables Purchase Price to be
paid in cash shall be paid by federal wire transfer (same day) funds to such
account in New York, New York as the Seller shall designate.
2.2 The Closing. The sale and purchase of the Receivables shall take
place at a closing (the "Closing") at the offices of Skadden, Arps, Slate,
Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022 on the Closing
Date, simultaneously with the closings under: (a) the Sale and Servicing
Agreement pursuant to which the Purchaser will transfer to the Trust all of the
Purchaser's right, title and interest in and to the Receivables and other
property described in Section 2.1(a) in exchange for the Notes and the
Certificates; and (b) the Underwriting Agreement, pursuant to which the
Purchaser will sell to the Underwriters the Notes.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Purchaser. The Purchaser makes
the following representations and warranties:
(a) Organization and Good Standing. The Purchaser has been duly organized
and is validly existing as a corporation in good standing under the laws of the
State of Delaware.
(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,
2
<PAGE> 3
except where the failure of the Purchaser to so qualify or obtain such licenses
or approvals would not have a material adverse affect on the Purchaser, the
Trust or any Receivable.
(c) Power and Authority. The Purchaser has the power and authority to
execute and deliver this Agreement and to carry out its terms. The Purchaser has
full power and authority to purchase the property to be sold and assigned by the
Seller and has duly authorized such purchase by all necessary corporate action;
and the execution, delivery and performance of this Agreement has been duly
authorized by the Purchaser by all necessary corporate action.
(d) Binding Obligations. This Agreement constitutes the legal, valid and
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, except as enforceability may be eliminated by
bankruptcy, insolvency, reorganization, conservatorship, receivership,
liquidation or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles.
(e) 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 do not conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the 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) 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 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 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.
(f) No Proceedings. There are no proceedings or investigations pending,
or, to the knowledge of the Purchaser, threatened, before any court, regulatory
body, administrative agency or other tribunal or governmental instrumentality
having jurisdiction over the Purchaser or its properties: (a) asserting the
invalidity of this Agreement, (b) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement, or (c) seeking any
determination or ruling that might materially and adversely affect the
performance by the Purchaser of its obligations under, or the validity or
enforceability of, this Agreement.
3.2 Representations and Warranties of the Seller
(a) The Seller makes the following representations and warranties to the
Purchaser:
(i) 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 currently conducted, and had at all
relevant times, and has, power, authority, and legal right to acquire and
own the Receivables.
(ii) 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, except where the failure of the Seller to so qualify or
obtain such licenses or approvals would not have a material adverse effect
on the Seller or any Receivable.
(iii) Power and Authority. The Seller has the power and authority to
execute and deliver this Agreement and to carry out its terms. The Seller
has full power and authority to sell and assign the property to be sold and
assigned to the Purchaser and has duly authorized such sale and assignment
to the Purchaser by all necessary corporate action; and the execution,
delivery,
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<PAGE> 4
and performance of this Agreement have been duly authorized by the Seller
by all necessary corporate action.
(iv) Valid Sale; Binding Obligations. This Agreement and the
Assignment effect a valid sale, transfer, and assignment of the Receivables
and the other property conveyed by the Seller to the Purchaser hereunder,
enforceable against creditors of and purchasers from the Seller; and this
Agreement and the Assignment constitute legal, valid and binding
obligations of the Seller, enforceable against the Seller in accordance
with their terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, conservatorship, receivership, liquidation or
other similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles.
(v) 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 do not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under, the
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) 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, 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.
(vi) No Proceedings. There are no proceedings or investigations
pending, or, to the 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: (a)
asserting the invalidity of this Agreement, (b) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement, or
(c) 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.
(b) The Seller makes the following representations and warranties as to the
Receivables on which the Purchaser relies in accepting the Receivables. Such
representations and warranties speak as of the execution and delivery of this
Agreement, but shall survive the sale, transfer, and assignment of the
Receivables to the Purchaser and the subsequent assignment and transfer pursuant
to the Sale and Servicing Agreement:
(i) Characteristics of Receivables. Each Receivable (a) was
originated in the United States of America by a Dealer for the retail sale
of a Financed Vehicle in the ordinary course of such Dealer's business, was
fully and properly executed by the parties thereto, was purchased by the
Seller from such Dealer under an existing Dealer Agreement with the Seller,
was validly assigned by such Dealer to the Seller, (b) contains 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, (c) except in the case of a Balloon Receivable,
provides for level monthly payments that fully amortize the Amount Financed
by maturity and yields interest at the APR of such Receivable, and in the
case of a Balloon Receivable, provides for fixed monthly payments that
amortize the Amount Financed to an amount equal to the Balloon Payment by
maturity, provides for a Balloon Payment at maturity that is sufficient to
pay the remaining Amount Financed of the Receivable, and yields interest at
the APR of such Receivable, (d) is a retail installment contract, (e) is
secured by one or more Financed Vehicles.
(ii) Schedule of Receivables. The information set forth in Exhibit B
to this Agreement was true and correct in all material respects as of the
opening of business on the Cutoff Date, and no
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<PAGE> 5
selection procedures believed by the Seller to be adverse to the
Certificateholders were utilized in selecting the Receivables.
(iii) Compliance with Law. Each Receivable and the sale of the
related Financed Vehicle complied at the time it was originated or made,
and complies at the execution of this Agreement, in all material respects
with all requirements of applicable federal, state, and local laws, and
regulations thereunder, including, without limitation, usury laws, the
Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair
Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal
Trade Commission Act, the Magnusson-Moss Warranty Act, the Federal Reserve
Board's Regulations B and Z, and state adaptations of the National Consumer
Act and of the Uniform Consumer Credit Code, and other consumer credit laws
and equal credit opportunity and disclosure laws.
(iv) Binding Obligations. To the best of the Seller's knowledge, each
Receivable represents the legal, valid, and binding payment obligation in
writing of the related Obligor, enforceable by the holder thereof in
accordance with its terms except as enforceability may be limited by
bankruptcy, insolvency, reorganization, conservatorship, receivership,
liquidation or other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles.
(v) No Government Obligor. Neither the United States of America nor
any State or any agency, department, or instrumentality of the United
States of America or any State is an Obligor.
(vi) Security Interest in Financed Vehicles. To the best of the
Seller's knowledge, immediately prior to the sale, assignment, and transfer
of each Receivable to the Purchaser hereunder, such Receivable shall be
secured by a validly perfected first priority security interest and lien in
the related Financed Vehicle in favor of the Seller as secured party. Such
security interest and lien is being assigned by the Seller to the Purchaser
pursuant to this Agreement except that no certificate of title or
certificate of ownership with respect to such Financed Vehicle has been or
will be amended to identify the Purchaser as a secured party. At such time
as enforcement of such security interest is sought, there shall exist a
valid, subsisting and enforceable first priority security interest in such
Financed Vehicle for the benefit of the Purchaser. The foregoing
representations and warranties with respect to perfection and
enforceability of a security interest in a Financed Vehicle do not cover
statutory or other liens arising after the Closing Date by operation of law
or any rights of third parties arising after the Closing Date as a result
of the fraud or forgery of the Vehicle owner or administrative error by
state recording officials which are 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 the Seller to the
Purchaser and by the Purchaser 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 3.2.
(ix) No Defenses. No right of rescission, setoff, counterclaim, or
defense has been asserted or, to the best of the Seller's knowledge,
threatened with respect to any Receivable.
(x) No Liens. To the best of Seller's knowledge, no liens or claims
have been filed for work, labor, or materials relating to a Financed
Vehicle that are liens prior to, or equal or on a parity with, the secured
interest in the Financed Vehicle granted by the related Receivable.
(xi) No Default, Repossession. Except for payment defaults continuing
for a period of not more than thirty (30) days in the case of Motor
Vehicles or sixty (60) days in the case of
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<PAGE> 6
Commercial Vehicles as of the Cutoff Date, to the best of the Seller's
knowledge, no default, breach, violation, or event permitting acceleration
under the terms of any Receivable and no event that with notice or the
lapse of time would constitute such a default, breach, violation, or event
permitting acceleration under the terms of any Receivable has occurred; and
no Financed Vehicle was repossessed on or prior to the Cutoff Date.
(xii) Insurance. Except in the case of certain fleet customers which
are permitted to be self-insured in accordance with the Seller's customary
standards, the Seller, in accordance with its customary procedures, has
determined that each Obligor has obtained or agreed to obtain physical
damage insurance covering the Financed Vehicle.
(xiii) Title. It is the intention of the Seller that the transfer and
assignment of the Receivables herein contemplated constitute a sale of the
Receivables from the Seller to the Purchaser and that the beneficial
interest in and title to the Receivables not be part of the Seller's estate
in the event of the filing of a bankruptcy petition or the commencement of
any Proceeding by or against the Seller under any bankruptcy or other
insolvency law. No Receivable has been sold, transferred, assigned, or
pledged by the Seller to any Person other than the Purchaser. The Seller is
transferring title to each Receivable free and clear of all Liens and
rights of others and has perfected such transfer under the UCC.
(xiv) Valid Assignment. No Receivable was originated in, or is
subject to the laws of, any jurisdiction under which the sale, transfer,
and assignment of such Receivable under this Agreement is unlawful, void,
or voidable. The Seller has not entered into any agreement with any Obligor
that prohibits, restricts or conditions the assignment of any portion of
the Receivables.
(xv) All Filings Made. All filings (including, without limitation,
UCC filings) and agreements necessary in any jurisdiction to give the
Purchaser a first priority perfected security interest in the Receivables
have been made.
(xvi) Chattel Paper. Each Receivable constitutes "chattel paper" as
defined in the UCC.
(xvii) One Original. There is only one original executed copy of each
Receivable.
(xviii) Principal Balance. Each Receivable had a remaining Principal
Balance as of the Cutoff Date of not more than $5,617,494.16 and not less
than $217.25.
(xix) No Bankrupt Obligors. To the best of the Seller's knowledge, no
Obligor under any Receivable was, as of the Cutoff Date, the subject of a
Proceeding under the Bankruptcy Code of the United States or any other
bankruptcy or insolvency law.
(xx) New and Used Vehicles. Approximately 70.13% of the aggregate
Principal Balance of the Receivables, constituting 57.53% of the
Receivables as of the Cutoff Date relate to new Financed Vehicles, and
approximately 29.87% of the aggregate Principal Balance of the Receivables,
constituting 42.47% of the number of Receivables as of the Cutoff Date,
relate to used Financed Vehicles.
(xxi) Origination. Each Receivable shall have an origination date
during or after November 7, 1991.
(xxii) Maturity of Receivables. Each Receivable had a remaining
maturity, as of the Cutoff Date, of not more than 84 months and an original
maturity of not more than 85 months.
(xxiii) Annual Percentage Rate. Each Receivable has an APR of at
least 8.25% and not more than 13.0%.
(xxiv) Scheduled Payments. Each Receivable shall have a first
Scheduled Payment due on or prior to November 1, 1998, and no Receivable
shall have a payment that was more than
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thirty (30) days overdue in the case of Motor Vehicles and sixty (60) days
overdue in the case of Commercial Vehicles as of the Cutoff Date.
(xxv) Billing Address. The Obligor under each Receivable had a
current billing address in the United States as of the Cutoff Date.
(xxvii) Location of Receivable Files. The Receivable Files shall be
kept at one or more of the locations listed in Schedule B to the Sale and
Servicing Agreement.
(xxix) Other Data. The tabular data and the numerical data relating to
the characteristics of the Receivables contained in the Prospectus is true
and correct in all material respects as of its date.
ARTICLE IV
CONDITIONS
4.1 Conditions to Obligation of the Purchaser. The obligation of the
Purchaser to purchase the Receivables is subject to the satisfaction of the
following conditions:
(a) Representations and Warranties True. The representations and
warranties of the Seller hereunder shall be true and correct on the Closing Date
with the same effect as if then made, and the Seller shall have performed all
obligations to be performed by it hereunder on or prior to the Closing Date.
(b) Computer Files Marked. The Seller shall, at its own expense, on or
prior to the Closing Date, indicate in its computer files that the Receivables
have been sold to the Purchaser pursuant to this Agreement and deliver to the
Purchaser the Schedule of Receivables certified by an officer of the Seller to
be true, correct and complete.
(c) Documents to be delivered by the Seller at the Closing.
(i) The Assignment. At the Closing, the Seller will execute and
deliver the Assignment.
(ii) Evidence of UCC Filing. On or prior to the Closing Date, the
Seller shall record and file, at its own expense, a UCC-1 financing
statement in each jurisdiction in which it is required by applicable law,
executed by the Seller, as seller or debtor, and naming the Purchaser, as
purchaser or secured party, naming the Receivables and the other property
conveyed hereunder as collateral, meeting the requirements of the laws of
each such jurisdiction and in such manner as is necessary to perfect the
sale, transfer, assignment and conveyance of such Receivable to the
Purchaser. The Seller shall deliver a file-stamped copy, or other evidence
satisfactory to the Purchaser of such filing, to the Purchaser on or prior
to the Closing Date.
(iii) Other Documents. Such other documents as the Purchaser may
reasonably request.
(d) Other Transactions. The transactions contemplated by the Sale and
Servicing Agreement shall be consummated on the Closing Date.
4.2 Conditions to Obligation of the Seller. The obligation of the Seller
to sell the Receivables to the Purchaser is subject to the satisfaction of the
following conditions:
(a) Representations and Warranties True. The representations and
warranties of the Purchaser hereunder shall be true and correct on the Closing
Date with the same effect as if then made, and the Purchaser shall have
performed all obligations to be performed by it hereunder on or prior to the
Closing Date.
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(b) Receivables Purchase Price. On the Closing Date, the Purchaser will
deliver to the Seller the Receivables Purchase Price, as provided in Section
2.1(b).
ARTICLE V
COVENANTS OF THE SELLER
The Seller agrees with the Purchaser as follows, provided, however, 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:
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 in the Receivables 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 Section 5.1(a)
above seriously misleading within the meaning of sec. 9-402(7) of the UCC,
unless it shall have given the Purchaser at least five 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 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 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.
5.2 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 and to the Receivables.
5.3 Indemnification. The Seller shall indemnify and hold harmless the
Purchaser from and against any and all taxes that may at any time be asserted
against the Purchaser with respect to the transactions contemplated herein,
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 except for income, franchise or other taxes
measured by net income. These indemnity obligations shall be in addition to any
obligation that the Seller may otherwise have.
5.4 Sale. The Seller agrees to treat this conveyance for all purposes
(including without limitation tax and financial accounting purposes) as a sale
on all relevant books, records, tax returns, financial statements and other
applicable documents.
ARTICLE VI
MISCELLANEOUS PROVISIONS
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.
6.2 Repurchase upon Breach. The Purchaser shall inform the Seller
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 3.2(b)
and, in the case of subsections 3.2(b)(iv), (vi), (ix), (x), (xi) and (xix), any
breach or failure which would have occurred if such warranty had not been
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<PAGE> 9
made to the best knowledge of the Seller. Unless the breach or failure shall
have 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 Purchaser of, such breach or failure, the Seller shall
repurchase from the Purchaser any Receivable, the interests of the Purchaser in
which are materially and adversely affected by the breach or failure, on the
Payment Date immediately following such Collection Period but with effect from
the first day of the Collection Period in which such Payment Date occurs. In
consideration of the purchase of a Receivable hereunder, the Seller shall remit
the Purchase Amount of such Receivable to the Purchaser. The sole remedy of the
Purchaser with respect to a breach or failure to be true of the representations
and warranties made by the Seller pursuant to Section 3.2(b) shall be to require
the Seller to repurchase the relevant Receivable pursuant to this Section 6.2.
6.3 Purchaser's Assignment of Repurchased Receivables. With respect to
all Receivables purchased by the Seller pursuant to Section 6.2, the Purchaser
shall assign, without recourse, representation, or warranty, to the Seller all
the Purchaser's right, title, and interest in and to such Receivables, and all
security and documents and all other property conveyed pursuant to Section
2.1(a) with respect to such Receivables. Such assignment shall be a sale and
assignment outright, and not for security. If, in any enforcement suit or legal
proceeding, it is held that the Seller may not enforce any such Receivable on
the ground that it shall not be a real party in interest or a holder entitled to
enforce the Receivable, the Purchaser and any transferee or assignee of the
Purchaser shall, at the expense of the Seller, take such steps as the Seller
deems necessary to enforce the Receivable, including bringing suit in the
Purchaser's name or in the name of any transferee or assignee of the Purchaser.
6.4 Trust. The seller acknowledges that: the Purchaser will, pursuant to
the Sale and Servicing Agreement, sell the Receivables to the Trust and assign
its rights under this Agreement to the Indenture Trustee for the benefit of the
Noteholders and Certificateholders. The Seller hereby consents to such sale and
assignment.
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.
6.6 Accountants' Letters.
(a) KPMG Peat Marwick will review the characteristics of the Receivables
described in the Schedule of Receivables hereto and will compare those
characteristics to the information with respect to the Receivables contained in
the Prospectus.
(b) The Seller will cooperate with the Purchaser and KPMG Peat Marwick in
making available all information and taking all steps reasonably necessary to
permit such accountants to complete the review set forth in Section 6.6(a) above
and to deliver the letters required of them under the Underwriting Agreement.
(c) KPMG Peat Marwick will deliver to the Purchaser a letter, dated the
date of the Prospectus, in the form previously agreed to by the Seller and the
Purchaser, with respect to the financial and statistical information contained
in the Prospectus under the caption "Delinquency and Loss Experience" and with
respect to such other information as may be agreed in the form of letter.
6.7 Waivers. No failure or delay on the part of the Purchaser in
exercising any power, right or remedy under this Agreement or the 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.
6.8 Notices. All demands, notices and communications under this Agreement
shall be in writing, personally delivered, sent by telecopier, sent by courier
or mailed by certified mail, return receipt requested, and shall be deemed to
have been given upon receipt to either party at its
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address shown in the opening portion of this Agreement or at such other address
as may be designated by a party by notice to the other party.
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 and to the Receivables
and the enforcement of any obligation of the Seller hereunder.
6.10 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 performance by the Purchaser of its obligations, or the
enforcement of the Purchaser's rights, under this Agreement, the Receivables or
the Sale and Servicing Agreement or as required by law.
6.11 Governing Law. THIS AGREEMENT AND THE ASSIGNMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS
OF LAW PRINCIPLES THEREOF, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES UNDER THIS AGREEMENT AND THE ASSIGNMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date and year first above written.
MERCEDES-BENZ CREDIT CORPORATION
By
------------------------------------
Name: David A. Klanica
Title: Director, Accounting Services
DAIMLER-BENZ VEHICLE RECEIVABLES
CORPORATION
By
------------------------------------
Name: Harvey S. Traison
Title: President
11
<PAGE> 12
EXHIBIT A
ASSIGNMENT
For value received, in accordance with the Purchase Agreement dated as of
November 1, 1998, between the undersigned and DAIMLER-BENZ VEHICLE RECEIVABLES
CORPORATION (the "Purchaser") (the "Purchase Agreement"), the undersigned does
hereby sell, assign transfer and otherwise convey unto the Purchaser, without
recourse, all right, title and interest of the undersigned whether nor owned or
hereafter acquired, in and to the following: (i) the Receivables, and all monies
due thereunder on or after the Cutoff Date; (ii) all of the Seller's the
security interests in the Financed Vehicles; (iii) all of the Seller's rights to
receive proceeds from claims on physical damage, credit life and disability
insurance policies covering Financed Vehicles or the Obligors; (iv) the rights
of recourse of the Seller against Dealers arising out of breaches by Dealers
with respect to the Receivables; (v) all of the Seller's rights to all documents
contained in the Receivable Files; (vi) all property (including the right to
receive future liquidation proceeds and Recoveries) that secures a Receivable
and that will have been acquired by or on behalf of the Indenture Trustee; and
(vii) all proceeds of any and all of the foregoing. The sale, transfer,
assignment and conveyance made hereunder shall not constitute and is not
intended to result in an assumption by the Purchaser of any obligation of the
Seller to the Obligors, the Dealers or any other Person in connection with the
Receivables and the property transferred under this Section 2.1(a) or any
agreement, document or instrument related thereto.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the
Purchase Agreement and is to be governed by the Purchase Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in or pursuant to the Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed as of November 1, 1998.
MERCEDES-BENZ CREDIT CORPORATION
By
------------------------------------
Name:
Title
<PAGE> 13
EXHIBIT B
SCHEDULE OF RECEIVABLES
DELIVERED TO PURCHASER
AT CLOSING
<PAGE> 1
Exhibit 25
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM T-1
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)___
----------------------
CITIBANK, N.A.
(Exact name of trustee as specified in its charter)
13-5266470
(I.R.S. employer
identification no.)
399 Park Avenue, New York, New York 10043
(Address of principal executive officer) (Zip Code)
----------------------
Daimler-Benz Vehicle Owner Trust 1998-A
c/o Daimler Benz Vehicle Receivables Corporation
Delaware 13-3770955
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1201 North Market Street
Wilmington, DE 19801
Asset Backed Notes
<PAGE> 2
5) Item 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
---- -------
Comptroller of the Currency Washington, D.C.
Federal Reserve Bank of New York New York, NY
33 Liberty Street
New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation
None.
Item 16. List of Exhibits.
List below all exhibits filed as a part of this Statement of
Eligibility.
Exhibits identified in parentheses below, on file with the
Commission, are incorporated herein by reference as exhibits hereto.
Exhibit 1 - Copy of Articles of Association of the Trustee, as now
in effect. (Exhibit 1 to T-1 to Registration Statement No. 2-79983)
Exhibit 2 - Copy of certificate of authority of the Trustee to
commence business. (Exhibit 2 to T-1 to Registration Statement No.
2-29577)
<PAGE> 3
Exhibit 3 - Copy of authorization of the Trustee to exercise
corporate trust powers. (Exhibit 3 to T-1 to Registration Statement
No. 2-55519)
Exhibit 4 - Copy of existing By-Laws of the Trustee. (Exhibit 4 to
T-1 to Registration Statement No. 33-34988)
Exhibit 5 - Not applicable.
Exhibit 6 - The consent of the Trustee required by Section 321(b) of
the Trust Indenture Act of 1939. (Exhibit 6 to T-1 to Registration
Statement No. 33-19227)
Exhibit 7 - Copy of the latest Report of Condition of Citibank, N.A.
(as of 6/30/98 - attached)
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
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SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Citibank, N.A., a national banking association organized and existing
under the laws of the United States of America, 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 __th day
of, ____ 199_.
CITIBANK, N.A.
By ____________________
(Authorized Officer)
