Exhibit 4.2
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SALE AND SERVICING AGREEMENT
by and among
MMCA AUTO OWNER TRUST 1999-1,
as the Trust
MMCA AUTO RECEIVABLES, INC.,
as Seller
and
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.,
as Servicer
Dated as of January [ ], 1999
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Other Definitional Provisions . . . . . . . . . . . . 28
SECTION 1.3 Business Day Certificate . . . . . . . . . . . . . . 29
ARTICLE II
TRUST PROPERTY
SECTION 2.1 Conveyance of Trust Property . . . . . . . . . . . . 29
SECTION 2.2 Representations and Warranties of the Seller
as to the Receivables . . . . . . . . . . . . . . . 36
SECTION 2.3 Repurchase upon Breach . . . . . . . . . . . . . . . 42
SECTION 2.4 Custody of Receivable Files . . . . . . . . . . . . . 43
SECTION 2.5 Duties of Servicer as Custodian . . . . . . . . . . . 44
SECTION 2.6 Instructions; Authority to Act . . . . . . . . . . . 45
SECTION 2.7 Custodian's Indemnification . . . . . . . . . . . . . 45
SECTION 2.8 Effective Period and Termination . . . . . . . . . . 46
ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND TRUST PROPERTY
SECTION 3.1 Duties of Servicer . . . . . . . . . . . . . . . . . 46
SECTION 3.2 Collection and Allocation of Receivable Payments . . 50
SECTION 3.3 Realization upon Receivables . . . . . . . . . . . . 53
SECTION 3.4 Physical Damage Insurance . . . . . . . . . . . . . . 54
SECTION 3.5 Maintenance of Security Interests in Financed
Vehicles . . . . . . . . . . . . . . . . . . . . . 54
SECTION 3.6 Covenants of Servicer . . . . . . . . . . . . . . . . 54
SECTION 3.7 Purchase by Servicer upon Breach . . . . . . . . . . 54
SECTION 3.8 Servicing Compensation . . . . . . . . . . . . . . . 55
SECTION 3.9 Servicer's Certificate . . . . . . . . . . . . . . . 55
SECTION 3.10 Annual Statement as to Compliance; Notice of
Event of Servicing Termination . . . . . . . . . . 56
SECTION 3.11 Annual Independent Certified Public
Accountants' Reports . . . . . . . . . . . . . . . 57
SECTION 3.12 Access to Certain Documentation and Information
Regarding Receivables . . . . . . . . . . . . . . . 57
SECTION 3.13 Reports to the Commission . . . . . . . . . . . . . . 58
SECTION 3.14 Reports to Rating Agencies . . . . . . . . . . . . . 58
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS
TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 4.1 Accounts . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 4.2 Collections . . . . . . . . . . . . . . . . . . . . . 65
SECTION 4.3 Application of Collections . . . . . . . . . . . . . 66
SECTION 4.4 Advances . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 4.5 Additional Deposits . . . . . . . . . . . . . . . . . 69
SECTION 4.6 Allocation of Total Available Funds . . . . . . . . . 70
SECTION 4.7 Reserve Account; Supplemental Reserve Account . . . . 72
SECTION 4.8 Pre-Funding Account . . . . . . . . . . . . . . . . . 75
SECTION 4.9 Negative Carry Account . . . . . . . . . . . . . . . 76
SECTION 4.10 Net Deposits . . . . . . . . . . . . . . . . . . . . 76
SECTION 4.11 Statements to Noteholders and Certificateholders . . 76
SECTION 4.12 Control of Securities Accounts . . . . . . . . . . . 78
ARTICLE V
YIELD SUPPLEMENT LETTER OF CREDIT
SECTION 5.1 Yield Supplement Letter of Credit and the Yield
Supplement Account . . . . . . . . . . . . . . . . 79
ARTICLE VI
THE SELLER
SECTION 6.1 Representations, Warranties and Covenants of
Seller . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 6.2 Liability of Seller; Indemnities . . . . . . . . . . 84
SECTION 6.3 Merger or Consolidation of, or Assumption of the
Obligations of, Seller . . . . . . . . . . . . . . 85
SECTION 6.4 Limitation on Liability of Seller and Others . . . . 86
SECTION 6.5 Seller May Own Notes or Certificates . . . . . . . . 86
ARTICLE VII
THE SERVICER
SECTION 7.1 Representations and Warranties of Servicer . . . . . 87
SECTION 7.2 Liability of Servicer; Indemnities . . . . . . . . . 88
SECTION 7.3 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer . . . . . . . . . . . . . 90
SECTION 7.4 Limitation on Liability of Servicer and Others . . . 91
SECTION 7.5 Servicer Not to Resign . . . . . . . . . . . . . . . 92
SECTION 7.6 Servicer May Own Notes or Certificates . . . . . . . 92
ARTICLE VIII
SERVICING TERMINATION
SECTION 8.1 Events of Servicing Termination . . . . . . . . . . . 92
SECTION 8.2 Indenture Trustee to Act; Appointment of
Successor Servicer . . . . . . . . . . . . . . . . 94
SECTION 8.3 Effect of Servicing Transfer . . . . . . . . . . . . 95
SECTION 8.4 Notification to Noteholders and
Certificateholders . . . . . . . . . . . . . . . . 96
SECTION 8.5 Waiver of Past Events of Servicing Termination . . . 96
ARTICLE IX
TERMINATION
SECTION 9.1 Optional Purchase of All Receivables . . . . . . . . 97
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1 Amendment . . . . . . . . . . . . . . . . . . . . . . 98
SECTION 10.2 Protection of Title to Trust . . . . . . . . . . . . 99
SECTION 10.3 Governing Law . . . . . . . . . . . . . . . . . . . . 102
SECTION 10.4 Notices . . . . . . . . . . . . . . . . . . . . . . . 102
SECTION 10.5 Severability of Provisions . . . . . . . . . . . . . 103
SECTION 10.6 Assignment . . . . . . . . . . . . . . . . . . . . . 103
SECTION 10.7 Further Assurances . . . . . . . . . . . . . . . . . 103
SECTION 10.8 No Waiver; Cumulative Remedies . . . . . . . . . . . 103
SECTION 10.9 Third-Party Beneficiaries . . . . . . . . . . . . . . 104
SECTION 10.10 Actions by Noteholder or Certificateholders . . . . . 104
SECTION 10.11 Counterparts . . . . . . . . . . . . . . . . . . . . 104
SECTION 10.12 Agent for Service . . . . . . . . . . . . . . . . . . 104
SECTION 10.13 No Bankruptcy Petition . . . . . . . . . . . . . . . 105
SECTION 10.14 Limitation of Liability of Owner Trustee and
Indenture Trustee . . . . . . . . . . . . . . . . . 105
SCHEDULES
SCHEDULE A Schedule of Initial Receivables
SCHEDULE B Location of Receivable Files
EXHIBITS
EXHIBIT A Form of Servicer's Certificate
EXHIBIT B Form of Statement to Noteholders
EXHIBIT C Form of Statement to Certificateholders
EXHIBIT D Form of Yield Supplement Agreement
EXHIBIT E Form of Second-Tier Subsequent Assignment
SALE AND SERVICING AGREEMENT, dated as of January [ ], 1999 (as
amended, supplemented or otherwise modified and in effect from time to
time, this "Agreement"), by and among MMCA AUTO OWNER TRUST 1999-1, a
Delaware business trust (the "Trust"), MMCA AUTO RECEIVABLES, INC., a
Delaware corporation (the "Seller"), and MITSUBISHI MOTORS CREDIT OF
AMERICA, INC., a Delaware corporation (the "Servicer").
WHEREAS, the Trust desires to purchase portfolios of receivables
arising in connection with motor vehicle retail installment sale contracts
generated by Mitsubishi Motors Credit of America, Inc. in the ordinary
course of its business and sold to the Seller as of the date hereof and
from time to time hereafter;
WHEREAS, the Seller is willing to sell such receivables to the
Trust as of the date hereof and from time to time hereafter; and
WHEREAS, Mitsubishi Motors Credit of America, Inc. is willing to
service such receivables on behalf of the Trust;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires,
whenever capitalized shall have the following meanings:
"Accrued Note Interest" shall mean, with respect to any Payment
Date and each Class of Notes, the sum of the Monthly Accrued Note Interest
and the Interest Carryover Shortfall for such Class for such Payment Date.
"Actuarial Advance" shall mean, with respect to an Actuarial
Receivable, the amount, as of the last day of a Collection Period, which is
required to be advanced with respect to such Actuarial Receivable by the
Servicer pursuant to Section 4.4(a).
"Actuarial Method" shall mean the method of allocating a fixed
level payment on a Receivable between principal and interest, pursuant to
which the portion of such payment that is allocated to interest is the
product of one-twelfth (1/12) of the APR on the Receivable multiplied by
the scheduled principal balance of the Receivable.
"Actuarial Receivable" shall mean any Receivable under which the
portion of a payment with respect thereto allocable to interest and the
portion of a payment with respect thereto allocable to principal is
determined in accordance with the Actuarial Method.
"Advance" shall mean an Actuarial Advance or a Last Scheduled
Payment Advance, as the context may require.
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct
or indirect common control with such specified Person. For purposes of
this definition, "control" when used with respect to any specified Person
shall mean the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agreement" shall have the meaning specified in the recitals
hereto.
"Amount Financed" shall mean, with respect to a Receivable, the
aggregate amount advanced under such Receivable toward the purchase price
of the Financed Vehicle and any related costs.
"Applicable Tax State" shall mean, as of any date of
determination, each state as to which any of the following is then
applicable: (a) a state in which the Owner Trustee maintains the Corporate
Trust Office, (b) a state in which the Owner Trustee maintains its
principal executive offices, and (c) a state in which the Servicer
regularly conducts servicing and collection operations other than purely
ministerial activities and which relate to a material portion of the
Receivables.
"APR" of a Receivable shall mean the annual percentage rate of
interest stated in the Contract related to such Receivable.
"Authorized Officer" shall mean any officer within the Corporate
Trust Office of the Indenture Trustee or the Owner Trustee, as the case may
be, including any vice president, assistant vice president, secretary,
assistant secretary, financial services officer or any other officer of the
Indenture Trustee or the Owner Trustee, as the case may be, customarily
performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject and shall also
mean, with respect to the Owner Trustee, any officer of the Administrator.
"Available Funds" shall mean, for any Payment Date, an amount
equal to (a) the sum of the following amounts with respect to the related
Collection Period: (i) all collections on Receivables including Payaheads
withdrawn from the Payahead Account but excluding Payaheads deposited into
the Payahead Account and excluding Rule of 78's Payments (and including the
proceeds of sale by the Servicer of any Financed Vehicle upon termination,
including a prepayment, of a Final Payment Receivable); (ii) all
Liquidation Proceeds on Defaulted Receivables and any Recoveries; (iii) all
extension and deferral fees paid with respect to the Receivables; (iv) the
Purchase Amount of each Receivable that became a Purchased Receivable
during the related Collection Period (net of applicable expenses); (v) all
Actuarial Advances and Last Scheduled Payment Advances deposited to the
Collection Account on such Payment Date by the Servicer; (vi) amounts paid
pursuant to the Yield Supplement Agreement (including amounts, if any,
withdrawn from the Yield Supplement Account, the Supplemental Reserve
Account or the Reserve Account pursuant to Section 5.1(a)(ii)) with respect
to the related Collection Period; (vii) the Negative Carry Amount for such
Payment Date; (viii) partial prepayments attributable to any refunded item
included in the Amount Financed, such as extended warranty protection plan
costs or physical damage, credit life or disability insurance premiums, or
any partial prepayment which causes a reduction in the Obligor's periodic
payment to be below the Scheduled Payment as of the related Cutoff Date;
(ix) the Pre-Funding Account Investment Earnings, if any, for the related
Collection Period; and (x) with respect to the Payment Date on or
immediately following the last day of the Pre-Funding Period, the Remaining
Pre-Funded Amount; provided, however, that in calculating the Available
Funds, all payments and proceeds (including Liquidation Proceeds) of any
Purchased Receivables the Purchase Amount of which has been included in the
Available Funds in a prior Collection Period (which shall be paid to the
Seller or the Servicer, as applicable) will be excluded, minus (b) the
aggregate amount of funds described in clause (a) above that are used in
the related Collection Period to reimburse the Servicer for the aggregate
amount of Advances previously made by the Servicer that are due and payable
to the Servicer on such Payment Date.
"Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions or trust companies in New
York, New York, Wilmington, Delaware or Los Angeles, California shall be
authorized or obligated by law, executive order, or governmental decree to
remain closed.
"Capped Receivable" shall mean a Simple Interest Receivable that
is subject to a cap on the aggregate amount of interest to be paid by the
related Obligor during the term of such Receivable.
"Certificate" shall have the meaning assigned thereto in the
Trust Agreement.
"Certificate Balance" shall mean, as the context may require, (i)
with respect to all of the Certificates, an amount equal to, initially, the
Initial Certificate Balance and, thereafter, an amount equal to the Initial
Certificate Balance, as reduced from time to time by all amounts allocable
to principal previously distributed to Certificateholders or (ii) with
respect to any Certificate, an amount equal to, initially, the initial
denomination of such Certificate and, thereafter, an amount equal to such
initial denomination, as reduced from time to time by all amounts allocable
to principal previously distributed in respect of such Certificate;
provided, that in determining whether the Holders of the requisite portion
or percentage of the Certificate Balance of all of the Certificates have
given any request, demand, authorization, direction, notice, consent, or
waiver hereunder or under any other Basic Document, Certificates owned by
the Trust, any other obligor upon the Certificates, the Seller, the
Servicer or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed to be excluded from the Certificate Balance (unless
such Persons own 100% of the Certificate Balance of the Certificates),
except that, in determining whether the Indenture Trustee and Owner Trustee
shall be protected in relying on any such request, demand, authorization,
direction, notice, consent, or waiver, only Certificates that a Responsible
Officer of the Indenture Trustee, if applicable, and an Authorized Officer
of the Owner Trustee with direct responsibility for the administration of
the Trust Agreement, if applicable, knows to be so owned shall be so
disregarded. Certificates so owned that have been pledged in good faith
may be regarded as included in the Certificate Balance if the pledgee
establishes to the satisfaction of the Indenture Trustee or the Owner
Trustee, as applicable, the pledgee's right so to act with respect to such
Certificates and that the pledgee is not the Trust, any other obligor upon
the Certificates, the Seller, the Servicer or any Affiliate of any of the
foregoing Persons.
"Certificate Distribution Account" shall mean the account
established and maintained as such pursuant to Section 4.1(e).
"Certificate Pool Factor" shall mean, as of the close of business
on the last day of a Collection Period, a seven-digit decimal figure equal
to the Certificate Balance (after giving effect to any reductions therein
to be made on the immediately following Payment Date) divided by the
Initial Certificate Balance. The Certificate Pool Factor will be 1.0000000
as of the Closing Date; thereafter, the Certificate Pool Factor will
decline to reflect reductions in the Certificate Balance.
"Certificateholder" shall have the meaning assigned thereto in
the Trust Agreement.
"Closing Date" shall mean January [ ], 1999.
"Collection Account" shall mean the account or accounts
established and maintained as such pursuant to Section 4.1(a).
"Collection Period" shall mean each calendar month during the
term of this Agreement or, in the case of the initial Collection Period,
the period from the Initial Cutoff Date to and including the [last day of
the month in which the Initial Cutoff Date occurred].
"Commission" shall mean the Securities and Exchange Commission.
"Computer Tape" shall mean any computer tape or compact disk
generated by the Seller which provides information relating to the
Receivables and which was used by the Seller in selecting the Receivables
conveyed to the Trust hereunder on the Closing Date or any Subsequent
Transfer Date.
"Contract" shall mean a motor vehicle retail installment sale
contract, including a retail installment contract relating to the sale of
an automobile or a light- or medium-duty truck for commercial use.
"Corporate Trust Office" shall mean, as applicable, (i) the
principal office of the Indenture Trustee at which at any particular time
its corporate trust business shall be administered, which office at the
date of the execution of this Agreement is located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust
Department, or at such other address as the Indenture Trustee may designate
from time to time by notice to the Noteholders, the Owner Trustee and the
Seller, or the principal corporate trust office of any successor Indenture
Trustee (of which address such successor Indenture Trustee will notify the
Noteholders, the Owner Trustee and the Seller) or (ii) the principal office
of the Owner Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date of the execution
of this Agreement is located at ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇, Attn: Corporate Trust
Administration or at such other address as the Owner Trustee may designate
from time to time by notice to the Certificateholders, the Indenture
Trustee and the Seller, or the principal corporate trust office of any
successor Owner Trustee (of which address such successor Owner Trustee will
notify the Certificateholders, the Indenture Trustee and the Seller).
"Cutoff Date" shall mean the Initial Cutoff Date or any
Subsequent Cutoff Date, as the context may require.
"Dealer" shall mean, with respect to any Receivable, the seller
of the related Financed Vehicle who originated and assigned the Receivable
relating to such Financed Vehicle to MMCA under a Dealer Agreement.
"Dealer Agreement" shall mean an agreement between MMCA and a
Dealer relating to the assignment of Receivables to MMCA and all documents
and instruments relating thereto, as the same may from time to time be
amended, supplemented or otherwise modified and in effect.
"Defaulted Receivable" shall mean a Receivable (other than a
Purchased Receivable) as to which (i) the related Financed Vehicle has been
repossessed and liquidated, (ii) more than 10% of a scheduled payment
(including, in the case of a Final Payment Receivable, the amount owed by
an Obligor with respect to a Last Scheduled Payment but excluding in each
case any Excess Wear and Tear or Excess Mileage) is, in the case of a
Contract relating to an automobile or light-duty truck, 120 or more days
past due or, in the case of a Contract relating to a medium-duty truck, 180
or more days past due and, in either case, the Servicer has not repossessed
the related Financed Vehicle or (iii) the Servicer has determined, in
accordance with its customary servicing standards, policies and procedures,
that eventual payment in full (including, in the case of a Final Payment
Receivable, the amount owed by an Obligor with respect to a Last Scheduled
Payment but excluding in each case any Excess Wear and Tear or Excess
Mileage) on the Receivable is unlikely and the Servicer has either (x)
repossessed and liquidated the related Financed Vehicle or (y) repossessed
and held the related Financed Vehicle in its repossession inventory for 90
days, which 90 days shall not be more than 180 days after the date on which
a Scheduled Payment was due.
"Depositor" shall mean the Seller, in its capacity as Depositor
under the Trust Agreement.
"Determination Date" shall mean, with respect to any Collection
Period, the seventh Business Day of the next succeeding calendar month (but
not later than the tenth calendar day of such month).
"Eligible Servicer" shall mean a Person which, at the time of its
appointment as Servicer or as a subservicer, (i) has a net worth of not
less than $50,000,000, (ii) is servicing a portfolio of motor vehicle
retail installment sale contracts and/or motor vehicle loans, (iii) is
legally qualified, and has the capacity, to service the Receivables, (iv)
has demonstrated the ability to service a portfolio of motor vehicle retail
installment sale contracts and/or motor vehicle loans similar to the
Receivables professionally and competently in accordance with standards of
skill and care that are consistent with prudent industry standards, and (v)
is qualified and entitled to use pursuant to a license or other written
agreement, and agrees to maintain the confidentiality of, the software
which the Servicer or any subservicer uses in connection with performing
its duties and responsibilities under this Agreement or the related
subservicing agreement or obtains rights to use, or develops at its own
expense, software which is adequate to perform its duties and
responsibilities under this Agreement or the related subservicing
agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Event of Servicing Termination" or "Servicer Default" shall mean
an event specified in Section 8.1.
"Excess Mileage" shall mean, with respect to any Financed Vehicle
securing a Final Payment Receivable, the amounts payable by the related
Obligor relating to the excess of the number of miles by which such
Financed Vehicle has been driven over the number of miles such Financed
Vehicle may be driven during the term of the related Final Payment
Receivable (as specified in the Contract related to such Final Payment
Receivable) without incurring an excess mileage charge pursuant to the
related Contract, net of the amount, if any, payable to a third party
collection agency as payment of its fees and expenses in connection with
collecting such amounts from the related Obligor.
"Excess Wear and Tear" shall mean, with respect to any Financed
Vehicle securing a Final Payment Receivable, all amounts payable by the
related Obligor relating to damages to such Financed Vehicle that are not
the result of normal wear and tear, as more specifically described in the
Contract related to such Final Payment Receivable, net of the amount, if
any, payable to a third party collection agency as payment of its fees and
expenses in connection with collecting such amounts from the related
Obligor.
"Final Payment Receivable" shall mean all rights and obligations
arising under a Contract listed on a Schedule of Receivables which provides
for a series of scheduled payments which, if each is made on its scheduled
due date, will amortize the initial Level Pay Balance by the due date
immediately preceding the maturity date of the Receivable. At maturity of
the Final Payment Receivable, the Obligor thereunder will owe (assuming
that all payments have been made on their scheduled due dates) an amount
consisting of interest for the period from the preceding due date through
the maturity date and the remaining Principal Balance of the Receivable.
At maturity of the Final Payment Receivable, the Obligor may either (i) pay
the remaining Principal Balance of the Receivable, all accrued and unpaid
interest, plus any fees, charges, and other amounts then owing, (ii)
refinance the amount then due, subject to certain conditions or (iii) sell
the Financed Vehicle to MMCA on behalf of the Trust for an amount equal to
the Last Scheduled Payment (reduced by charges for Excess Wear and Tear and
Excess Mileage and a disposition fee payable to the Servicer) and pay any
excess of the total amount owed by the Obligor (calculated as in clause
(i)) over the sale price to MMCA on behalf of the Trust, and satisfy all
other conditions stated under the terms of the Contract.
"Financed Vehicle" shall mean a new or used automobile or light-
or medium-duty truck, together with all accessions thereto, securing an
Obligor's indebtedness under the respective Receivable.
"Holder" shall mean a Noteholder or a Certificateholder, as the
case may be.
"Indenture" shall mean the Indenture, dated as of January [ ],
1999, between the Trust and the Indenture Trustee, as the same may be
amended, supplemented or otherwise modified and in effect from time to
time.
"Indenture Trustee" shall mean Bank of Tokyo - Mitsubishi Trust
Company, a New York banking corporation, as Indenture Trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
"Initial Certificate Balance" shall mean, as the context may
require, (i) with respect to all of the Certificates, $[
], or (ii) with respect to any Certificate, an amount equal to the initial
denomination of such Certificate.
"Initial Cutoff Date" shall mean January 1, 1999.
"Initial Payahead Account Deposit" shall mean $[ ].
"Initial Pool Balance" shall mean an amount equal to the sum of
(i) the Pool Balance as of the close of business on the Initial Cutoff
Date, which is $[ ], plus (ii) the aggregate Principal
Balance (including the aggregate principal balance of Last Scheduled
Payments) of all Subsequent Receivables as of the close of business on
their respective Subsequent Cutoff Dates.
"Initial Receivable" shall mean any Standard Receivable or Final
Payment Receivable described in the Schedule of Initial Receivables.
"Initial Yield Supplement Amount" shall mean $[ ].
"Insolvency Event" shall mean, with respect to any Person, (i)
the making of a general assignment for the benefit of creditors, (ii) the
filing of a voluntary petition in bankruptcy, (iii) being adjudged a
bankrupt or insolvent, or having had entered against such Person an order
for relief in any bankruptcy or insolvency proceeding, (iv) the filing by
such Person of a petition or answer seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under
any statute, law or regulation, (v) the filing by such Person of an answer
or other pleading admitting or failing to contest the material allegations
of a petition filed against such Person in any proceeding specified in
(vii) below, (vi) seeking, consenting to or acquiescing in the appointment
of a trustee, receiver or liquidator of such Person or of all or any
substantial part of the assets of such Person or (vii) the failure to
obtain dismissal within 60 days of the commencement of any proceeding
against such Person seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute,
law or regulation, or the entry of any order appointing a trustee,
liquidator or receiver of such Person or of such Person's assets or any
substantial portion thereof.
"Interest Accrual Period" shall mean, with respect to any Payment
Date, (i) with respect to the Class A-1 Notes, the period from and
including the previous Payment Date (or, in the case of the first Payment
Date, the Closing Date) to but excluding such Payment Date and (ii) with
respect to the Class A-2 Notes, the Class A-3 Notes and the Class A-4
Notes, the period from and including the 15th day of the calendar month
immediately preceding such Payment Date (or, in the case of the first
Payment Date, the Closing Date), to but excluding the 15th day of the
calendar month in which such Payment Date occurs.
"Interest Carryover Shortfall" shall mean, with respect to any
Payment Date and any Class of Notes, the excess of the sum of the Monthly
Accrued Note Interest for the preceding Payment Date and any outstanding
Interest Carryover Shortfall from the close of business on such preceding
Payment Date, over the amount in respect of interest that is actually
deposited in the Note Payment Account on such preceding Payment Date, plus
interest on such excess to the extent permitted by law, at the applicable
Note Interest Rate for the related Interest Accrual Period.
"Last Scheduled Payment" shall mean, with respect to each Final
Payment Receivable, the amount referred to in the Contract related to such
Final Payment Receivable as the "last scheduled payment."
"Last Scheduled Payment Advance" shall mean, with respect to a
Final Payment Receivable, the amount, as of the close of business on the
last day of a Collection Period, which is required to be advanced by the
Servicer with respect to such Final Payment Receivable pursuant to Section
4.4(c).
"Last Scheduled Payment Pool Balance" shall mean, for any Payment
Date, the aggregate principal balance of Last Scheduled Payments of Final
Payment Receivables as of the close of business on the last day of the
preceding Collection Period.
"Last Scheduled Payment Principal Collections" shall mean (a)
collections of principal on a Final Payment Receivable that are
attributable to Last Scheduled Payments, which includes any collection
attributable to principal on a Final Payment Receivable in excess of the
initial Level Pay Balance of that Receivable, whether or not such payment
is made on the due date of the related Last Scheduled Payment, and
including the proceeds of sale (net of expenses) of any Financed Vehicle
purchased by MMCA on behalf of the Trust pursuant to the terms of the
Receivable and subsequently sold on behalf of the Trust, minus (b) with
respect to any Final Payment Receivable with respect to which the Obligor
exercises its right to have MMCA, on behalf of the Trust, purchase the
related Financed Vehicle, the excess of the purchase price from the Obligor
of such Financed Vehicle over the remaining amount owed by the Obligor.
"Letter of Credit Bank" shall mean any Person having the Required
Rating that has provided a Yield Supplement Letter of Credit in accordance
with Section 5.1.
"Level Pay Balance" shall mean, with respect to each Final
Payment Receivable, (i) initially the Amount Financed under such Final
Payment Receivable minus the principal portion of the Last Scheduled
Payment thereon and (ii) thereafter, shall be the amount set forth in
clause (i) minus all collections on or with respect to principal on such
Receivable other than amounts on deposit in the Payahead Account with
respect to future due dates; provided that such Level Pay Balance for any
Final Payment Receivable shall not be less than zero.
"Level Pay Pool Balance" shall mean, for any Payment Date, the
sum of (i) the aggregate Level Pay Balance of Final Payment Receivables and
(ii) the aggregate Principal Balance of the Receivables other than Final
Payment Receivables, as of the close of business on the last day of the
preceding Collection Period.
"Lien" shall mean a security interest, lien, charge, pledge,
equity or encumbrance of any kind, other than tax liens, mechanics' or
materialmen's liens, judicial liens and any liens that may attach to a
Financed Vehicle by operation of law.
"Liquidation Proceeds" shall mean, with respect to a Defaulted
Receivable, the monies collected from whatever source during the Collection
Period in which such Receivable became a Defaulted Receivable, net of the
sum of (i) any expenses incurred by the Servicer in connection with
collection of such Receivable and the disposition of the Financed Vehicle
and (ii) any amounts required by law to be remitted to the Obligor.
"Maximum Negative Carry Amount" shall mean, as of any Payment
Date, an amount equal to the product of (a) the Weighted Average Rate as of
the immediately following Payment Date minus [ ]%, multiplied by (b)
the product of the Note Percentage as of such Payment Date and the
Pre-Funded Amount as of such Payment Date after giving effect to any
withdrawals from the Pre-Funding Account on such Payment Date, multiplied
by (c) the percentage equivalent of a fraction, the numerator of which is
the actual number of days until the expected end of the Pre-Funding Period
and the denominator of which is 360. The Maximum Negative Carry Amount as
of any Payment Date shall be calculated in the manner described in the
preceding sentence as an approximation of the maximum aggregate amount of
the Negative Carry Amounts for all subsequent Payment Dates.
"Maximum Supplemental Reserve Amount" shall mean, with respect to
any Payment Date, an amount equal to the lesser of (i) $[ ]
and (ii) the outstanding principal amount of the Notes on such Payment Date
(after giving effect to any principal payment made on such Payment Date),
as such amount may be reduced from time to time upon satisfaction of the
Rating Agency Condition.
"MMCA" shall mean Mitsubishi Motors Credit of America, Inc., a
Delaware corporation, and its successors and assigns.
"Monthly Accrued Note Interest" shall mean, with respect to any
Payment Date and (i) any Class of Notes, interest accrued for the related
Interest Accrual Period at the applicable Note Interest Rate on the
aggregate principal amount of the Notes of such Class as of the immediately
preceding Payment Date, after giving effect to all payments of principal to
Noteholders on or prior to such preceding Payment Date (or, in the case of
the first Payment Date, the initial principal amount of the Notes); and
(ii) with respect to the Notes collectively, the sum of Monthly Accrued
Note Interest for each Class.
"Monthly Remittance Condition" shall have the meaning assigned
thereto in Section 4.1(g).
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc., or its
successors and assigns.
"Negative Carry Account" shall mean the account established and
maintained as such pursuant to Section 4.1(c).
"Negative Carry Account Initial Deposit" shall mean $[ ].
"Negative Carry Amount" shall mean, with respect to any
Collection Period, the difference (if positive) between (1) the product of
(a) the Monthly Accrued Note Interest for such Collection Period,
multiplied by (b) the Pre-Funded Percentage as of the Payment Date
occurring in such Collection Period or, in the case of the first Collection
Period, the Closing Date, minus (2) the Pre-Funding Account Investment
Earnings for such Collection Period.
"Note Payment Account" shall mean the account established and
maintained as such pursuant to Section 4.1(d).
"Note Percentage" shall mean, as of any Payment Date, the
percentage equivalent of a fraction, the numerator of which is the
aggregate principal amount of the Notes as of such Payment Date (after
giving effect to any payments of principal on such Payment Date), and the
denominator of which is an amount equal to the sum of the aggregate
principal amount of the Notes and the aggregate principal amount of the
Certificates, in each case as of such Payment Date (after giving effect to
any payment of principal on such Payment Date).
"Note Pool Factor" shall mean, with respect to any Class of
Notes, as of the close of business on the last day of a Collection Period,
a seven-digit decimal figure equal to the outstanding principal balance of
such Class of Notes (after giving effect to any reductions thereof to be
made on the immediately following Payment Date) divided by the original
outstanding principal balance of such Class of Notes. Each Note Pool
Factor will be 1.0000000 as of the Closing Date; thereafter, the Note Pool
Factor will decline to reflect reductions in the outstanding principal
amount of such Class of Notes.
"Noteholder" shall mean a Person in whose name a Note is
registered on the Note Register.
"Obligor" on a Receivable shall mean the purchaser or co-
purchasers of the related Financed Vehicle purchased in part or in whole by
the execution and delivery of such Receivable, or any other Person who owes
or may be liable for payments under such Receivable.
"Officer's Certificate" shall mean a certificate signed by the
chairman, the president, any executive vice president, vice president or
the treasurer of the Seller or the Servicer, as the case may be, and
delivered to the Owner Trustee and the Indenture Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel
(who, in the case of counsel to the Seller or the Servicer, may be an
employee of, or outside counsel to, the Seller or the Servicer), which
counsel shall be acceptable to the Indenture Trustee, the Owner Trustee or
the Rating Agencies, as applicable.
"Optional Purchase Percentage" shall mean 10%.
"Owner Trust Estate" shall have the meaning assigned thereto in
the Trust Agreement.
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as Owner
Trustee under the Trust Agreement, its successors in interest and any
successor trustee under the Trust Agreement.
"Payahead" shall mean, with respect to an Actuarial Receivable,
the amount, as of the close of business on the last day of a Collection
Period, so designated in accordance with Section 4.3 with respect to such
Receivable.
"Payahead Account" shall mean the account established and
maintained as such pursuant to Section 4.1(f).
"Payahead Balance", with respect to an Actuarial Receivable,
shall mean the sum, as of the close of business on the last day of a
Collection Period, of all Payaheads made by or on behalf of the Obligor
with respect to such Actuarial Receivable (including any amount paid by or
on behalf of the Obligor prior to the related Cutoff Date that is due on or
after the related Cutoff Date and was not used to reduce the principal
balance of such Actuarial Receivable), as reduced by applications of
previous Payaheads with respect to such Actuarial Receivable, pursuant to
Sections 4.3 and 4.4.
"Payment Date" shall mean the 15th day of each month, or if such
day is not a Business Day, the immediately following Business Day,
commencing on February 15, 1999.
"Permitted Investments" shall mean, on any date of determination,
book-entry securities, negotiable instruments or securities represented by
instruments in bearer or registered form with maturities not exceeding the
next Payment Date which evidence:
(a) direct obligations of, and obligations fully guaranteed
as to timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of
deposit of any depository institution or trust company incorporated under
the laws of the United States of America or any state thereof (or any
domestic branch of a foreign bank) and subject to supervision and
examination by Federal or State banking or depository institution
authorities; provided, however, that at the time of the investment or
contractual commitment to invest therein, the commercial paper or other
short-term unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a Person other than such
depository institution or trust company) thereof shall have a credit rating
from each of the Rating Agencies in the highest investment category granted
thereby;
(c) commercial paper having, at the time of the investment
or contractual commitment to invest therein, a rating from each of the
Rating Agencies in the highest investment category granted thereby;
(d) investments in money market funds having a rating from
each of the Rating Agencies in the highest investment category granted
thereby (including funds for which the Indenture Trustee or the Owner
Trustee or any of their respective Affiliates is investment manager or
advisor);
(e) bankers' acceptances issued by any depository
institution or trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security
that is a direct obligation of, or fully guaranteed by, the United States
of America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America, in either case entered into with a depository institution or trust
company (acting as principal) described in clause (b); and
(g) any other investment with respect to which the Trust or
the Servicer has received written notification from the Rating Agencies
that the acquisition of such investment as a Permitted Investment will not
result in a withdrawal or downgrading of the ratings on any Class of Notes
or the Certificates.
"Person" shall mean a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, limited liability partnership, trust,
unincorporated organization, or government or any agency or political
subdivision thereof, or any other entity of whatever nature.
"Pool Balance" shall mean, as of any date of determination, the
aggregate Principal Balance of the Receivables (including the aggregate
Principal Balance of Last Scheduled Payments) as of the close of business
on the last day of the preceding Collection Period or, with respect to any
date of determination during the first Collection Period, as of the Initial
Cutoff Date, after giving effect to, with respect to such Collection
Period, (i) all payments received from Obligors (other than Payaheads),
(ii) all Advances to be made by the Servicer and (iii) all Purchase Amounts
to be remitted by the Seller or the Servicer, in each case for such
Collection Period, and reduced by the aggregate Principal Balance of
Receivables that became Defaulted Receivables during such Collection
Period.
"Pre-Funded Amount" shall mean, with respect to the Closing Date
or any Payment Date, the amount on deposit in the Pre-Funding Account on
such date exclusive of any interest and other income (net of losses and
expenses) on amounts on deposit in the Pre-Funding Account.
"Pre-Funded Percentage" shall mean, as of any date of
determination, the percentage equivalent of a fraction, the numerator of
which is the Pre-Funded Amount as of such date of determination (after
giving effect to any withdrawals from the Pre-Funding Account on or prior
to such date of determination), and the denominator of which is the sum of
the Pool Balance (after giving effect to all conveyances of Subsequent
Receivables to the Trust on or prior to such date of determination) and
the Pre-Funded Amount (after giving effect to any withdrawals from the
Pre-Funding Account on or prior to such date of determination).
"Pre-Funding Account" shall mean the account designated as such,
established and maintained pursuant to Section 4.1(b) of the Sale and
Servicing Agreement.
"Pre-Funding Account Investment Earnings" shall mean, with
respect to any Collection Period, the interest and other income (net of
losses and expenses) earned on amounts on deposit in the Pre-Funding
Account during such Collection Period and deposited to the Pre-Funding
Account on or prior to the related Payment Date.
"Pre-Funding Period" shall mean the period from and including the
Closing Date and ending on the earliest of: (a) the Determination Date on
which the Pre-Funded Amount (after giving effect to any transfers therefrom
in connection with the transfer of Subsequent Receivables to the Trust on
or before such Determination Date) is less than $100,000, (b) the date on
which an Event of Default or an Event of Servicing Termination occurs, (c)
the date on which an Insolvency Event occurs with respect to the Seller or
the Servicer and (d) the close of business on the [ ] Payment
Date.
"Principal Balance" shall mean, with respect to any Receivable as
of any date of determination, the Amount Financed minus the sum of the
following amounts: (i) in the case of an Actuarial Receivable, that
portion of all Scheduled Payments due on or prior to such date allocable to
principal computed in accordance with the Actuarial Method (to the extent
collected or advanced), (ii) in the case of a Simple Interest Receivable,
that portion of all Scheduled Payments actually received on or prior to
such date allocable to principal using the Simple Interest Method (to the
extent collected or advanced), (iii) any refunded portion of extended
warranty protection plan costs, or of physical damage, credit life, or
disability insurance premiums included in the Amount Financed, and (iv) any
prepayment in full or partial prepayment applied to reduce the unpaid
principal balance of such Receivable. The Principal Balance of a Defaulted
Receivable shall be zero as of the beginning of the Collection Period
following the Collection Period in which it became a Defaulted Receivable.
"Principal Carryover Shortfall" shall mean, as of the close of
business on any Payment Date, the excess of the Principal Distribution
Amount and any outstanding Principal Carryover Shortfall from the preceding
Payment Date over the amount in respect of principal that is actually
deposited in the Note Payment Account on such Payment Date.
"Principal Distribution Amount" shall mean, with respect to any
Payment Date, the sum of (i) the Scheduled Principal for such Payment Date
(including, in the case of a Final Payment Receivable, the amount owed by
an Obligor with respect to a Last Scheduled Payment), (ii) any outstanding
Principal Carryover Shortfall as of the close of business on the preceding
Payment Date and (iii) with respect to the Payment Date on or immediately
following the end of the Pre-Funding Period, the Remaining Pre-Funded
Amount; provided, however, that the Principal Distribution Amount shall not
exceed the outstanding aggregate principal amount of the Notes; and
provided, further, that, on the Final Payment Date for each Class of Notes,
the principal required to be deposited in the Note Payment Account shall
include the amount necessary (after giving effect to the other amounts to
be deposited in the Note Payment Account on such Payment Date and allocable
to principal) to reduce the outstanding principal amount of the Notes of
such Class to zero.
"Program" shall have the meaning assigned thereto in Section
3.11.
"Purchase Agreement" shall mean the Purchase Agreement, dated as
of January [ ], 1999, between the Seller and MMCA, as the same may be
amended, supplemented or otherwise modified and in effect from time to
time.
"Purchase Amount" shall mean, with respect to a Payment Date and
a Receivable to be repurchased by the Seller or purchased by the Servicer
on such Payment Date, an amount equal to the sum of (a) the Principal
Balance of such Receivable as of the first day of the Collection Period
preceding the Collection Period in which such Payment Date occurs and (b)
an amount equal to the amount of accrued and unpaid interest on such
Principal Balance at the related APR from the date a payment was last made
by or on behalf of the Obligor through the due date for payment of such
Receivable in the Collection Period preceding the Collection Period in
which such Payment Date occurs and, in the case of clauses (a) and (b),
after giving effect to the receipt of monies collected on such Receivable
in such preceding Collection Period.
"Purchased Receivable" shall mean, on any date of determination,
a Receivable as to which payment of the Purchase Amount has been made by
the Seller pursuant to Section 2.3 hereof or the Servicer pursuant to
Section 3.7 or 9.1 hereof.
"Qualified Institution" shall mean Bank of Tokyo - Mitsubishi
Trust Company, a New York banking corporation, or any depository
institution organized under the laws of the United States of America or any
one of the states thereof or incorporated under the laws of a foreign
jurisdiction with a branch or agency located in the United States of
America or one of the states thereof qualified to take deposits and subject
to supervision and examination by federal or state banking authorities
which at all times has a short-term deposit rating of P-1 by Moody's and A-
1+ by S&P and, in the case of any such institution organized under the laws
of the United States of America, whose deposits are insured by the Federal
Deposit Insurance Corporation or any successor thereto.
"Qualified Trust Institution" shall mean the corporate trust
department of Bank of Tokyo - Mitsubishi Trust Company or any other
institution organized under the laws of the United States of America or any
one of the states thereof or incorporated under the laws of a foreign
jurisdiction with a branch or agency located in the United States of
America or one of the states thereof qualified to take deposits and subject
to supervision and examination by federal or state banking authorities
which at all times (i) is authorized under such laws to act as a trustee or
in any other fiduciary capacity, (ii) has not less than one billion dollars
in assets under fiduciary management, and (iii) has a long-term deposit
rating that satisfies the Rating Agency Condition.
"Rating Agency" shall mean either S&P or Moody's, and together,
the "Rating Agencies." If no such organization or successor is any longer
in existence, "Rating Agency" shall be a nationally recognized statistical
rating organization or other comparable Person designated by the Trust,
notice of which designation shall be given to the Indenture Trustee, the
Owner Trustee and the Servicer.
"Rating Agency Condition" shall mean, with respect to any action,
that each Rating Agency shall have been given prior notice thereof and that
each of the Rating Agencies shall have notified the Seller, the Servicer,
the Owner Trustee and the Indenture Trustee in writing that such action
will not result in a reduction or withdrawal of the then current rating of
the Notes or the Certificates.
"Realized Losses" shall mean, with respect to each Payment Date
and each Receivable that became a Defaulted Receivable during the related
Collection Period, the excess of the Principal Balance of such Defaulted
Receivable (including the principal of a Last Scheduled Payment) over the
Liquidation Proceeds attributable to such Defaulted Receivable.
"Receivable" shall mean, as of any date of determination, the
Initial Receivables together with any Subsequent Receivables conveyed to
the Trust as of such date of determination pursuant to Section 2.1(b)
hereof.
"Receivable File" shall mean, with respect to a Receivable, the
electronic entries, documents, instruments and writings specified in
Section 2.4.
"Receivable Yield Supplement Amount" shall mean, with respect to
any Receivable and the related Payment Date (other than a Defaulted
Receivable or a Purchased Receivable, for Collection Periods after the
Collection Period in which such Receivable became a Defaulted Receivable or
a Purchased Receivable), the amount calculated by the Servicer equal to the
product of (a) one-twelfth (1/12) times (b) an amount equal to the
difference (if positive) between (i) interest on such Receivable's
Principal Balance as of the first day of the related Collection Period at a
rate equal to the sum of (A) the Weighted Average Rate as of the first day
of the related Collection Period, (B) the Servicing Rate and (C) 2.00%, and
(ii) interest on such Receivable's Principal Balance as of the first day of
the related Collection Period at a rate equal to its APR.
"Record Date" shall mean, with respect to any Payment Date, the
close of business on the Business Day immediately preceding such Payment
Date or, if Definitive Notes have been issued, the fifteenth (15th) day of
the calendar month preceding such Payment Date, unless such fifteenth
(15th) day is not a Business Day, in which case the immediately preceding
Business Day.
"Recoveries" shall mean, with respect to any Collection Period
following the Collection Period in which such Receivable became a Defaulted
Receivable, all monies received by the Servicer with respect to any
Defaulted Receivable during any Collection Period, net of the sum of (i)
any expenses incurred by the Servicer in connection with the collection of
such Receivable and the disposition of the Financed Vehicle (to the extent
not previously reimbursed) and (ii) any payments on such Receivable
required by law to be remitted to the Obligor.
"Relevant UCC" shall mean the Uniform Commercial Code as in
effect in any relevant jurisdiction.
"Remaining Pre-Funded Amount" shall have the meaning assigned
thereto in Section 4.8(b).
"Required Negative Carry Account Balance" shall mean, as of any
Payment Date, the lesser of (x) the Negative Carry Account Initial Deposit
minus all previous withdrawals of the Negative Carry Amount from the
Negative Carry Account, including any withdrawals of the Negative Carry
Amount therefrom on such Payment Date, and (y) the Maximum Negative Carry
Amount as of such Payment Date.
"Required Rating" shall mean a rating on (i) short-term unsecured
debt obligations of P-1 by Moody's and (ii) short-term unsecured debt
obligations of A-1+ by S&P; and any requirement that short-term unsecured
debt obligations have the "Required Rating" shall mean that such short-term
unsecured debt obligations have the foregoing required ratings from each of
such Rating Agencies.
"Reserve Account" shall mean the account established and
maintained as such pursuant to Section 4.7(a).
"Reserve Account Advance Draw Amount" shall have the meaning
assigned thereto in Section 4.6(b).
"Reserve Account Amount" shall mean, with respect to any Payment
Date, the amount on deposit in the Reserve Account. Unless specifically
stated to the contrary the Reserve Account Amount shall be calculated after
giving effect to all deposits and withdrawals therefrom on the prior
Payment Date (or, in the case of the first Payment Date, the Closing Date)
and all interest and other income (net of losses and investment expenses)
on such amounts during the related Collection Period.
"Reserve Account Property" shall have the meaning assigned
thereto in Section 4.7(a).
"Reserve Account TRP Draw Amount" shall have the meaning assigned
thereto in Section 4.6(b).
"Reserve Initial Deposit" shall mean $[ ].
"Rule of 78's Payment" shall mean, with respect to any Actuarial
Receivable which provides that, if such Receivable is prepaid in full, the
amount payable will be determined according to the Rule of 78's method
specified in the related Contract, an amount (if positive) equal to (i) the
amount due allocating payments between principal and interest based upon
the Rule of 78's minus (ii) the amount that would be due allocating
payments between principal and interest from the date of origination of the
Receivable using the Actuarial Method.
"S&P" shall mean Standard & Poor's Ratings Services, a division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies, or its successors and assigns.
"Schedule of Initial Receivables" shall mean the list identifying
the Initial Receivables attached as Schedule A (which list may be in the
form of microfiche or compact disk).
"Schedule of Receivables" shall mean the Schedule of Initial
Receivables or any Schedule of Subsequent Receivables, as the context may
require.
"Schedule of Subsequent Receivables" shall mean any list
identifying Subsequent Receivables attached as Schedule A to the related
Second-Tier Subsequent Assignment (which list may be in the form of
microfiche or compact disk).
"Scheduled Payment" shall mean, for any Collection Period for any
Receivable, the amount indicated in such Receivable as required to be paid
by the Obligor in such Collection Period (without giving effect to
deferrals of payments pursuant to Section 3.2 or any rescheduling in any
insolvency or similar proceedings).
"Scheduled Principal" shall mean, with respect to any Payment
Date, the sum of (a) the sum of (i) collections of principal on Simple
Interest Receivables received during the related Collection Period,
including collections of principal attributable to the Last Scheduled
Payment of a Simple Interest Receivable that is a Final Payment Receivable
(unless a Last Scheduled Payment Advance has been made with respect to such
Last Scheduled Payment), and including any charges for Excess Wear and Tear
and Excess Mileage, and (ii) Last Scheduled Payment Advances made during
the related Collection Period with respect to Simple Interest Receivables
that are Final Payment Receivables, (b) the principal portion of each
Scheduled Payment (including a Last Scheduled Payment on a Final Payment
Receivable) due on any Actuarial Receivable during the related Collection
Period, (c) the Principal Balance (without duplication of amounts taken
into account under (a) or (b)) of (i) each Receivable prepaid in full
during the related Collection Period and (ii) Receivables which became
Defaulted Receivables during the related Collection Period, (d) the
Purchase Amount of each Receivable that was repurchased by the Seller or
purchased by the Servicer during such Collection Period to the extent
attributable to principal, (e) the proceeds of any other sale of a
Receivable (including pursuant to Section 9.2 of the Trust Agreement), to
the extent allocable to principal, and (f) partial prepayments attributable
to any refunded item included in the Amount Financed, such as extended
warranty protection plan costs or physical damage, credit life or
disability insurance premiums, or any partial prepayment which causes a
reduction in the Obligor's periodic payment to be below the Scheduled
Payment as of the related Cutoff Date; provided, however, that in
calculating the Scheduled Principal, (x) all payments and proceeds
(including Liquidation Proceeds) of any Purchased Receivables the Purchase
Amount of which has been included in Scheduled Principal in a prior
Collection Period (which shall be paid to the Seller or Servicer, as
applicable) and (y) all amounts released from the Pre-Funding Account will
be excluded.
"Second-Tier Subsequent Assignment" shall have the meaning
assigned thereto in Section 2.1(c)(ii).
"Seller" shall mean MMCA Auto Receivables, Inc., a Delaware
corporation, in its capacity as seller of the Receivables to the Trust
under this Agreement, and each successor thereto (in the same capacity)
pursuant to Section 6.3.
"Servicer" shall mean MMCA, in its capacity as Servicer of the
Receivables under this Agreement, each successor thereto (in the same
capacity) pursuant to Section 7.3, and each successor Servicer appointed
and acting pursuant to Section 8.2.
"Servicer's Certificate" shall have the meaning assigned thereto
in Section 3.9.
"Servicing Fee" shall mean, with respect to any Payment Date, the
fee payable to the Servicer for services rendered during the related
Collection Period, determined pursuant to and defined in Section 3.8.
"Servicing Officer" shall mean any officer of the Servicer
involved in, or responsible for, the administration and servicing of the
Receivables, whose name appears on a list of servicing officers attached to
an Officer's Certificate furnished on the Closing Date to the Owner Trustee
and the Indenture Trustee by the Servicer, as such list may be amended from
time to time by the Servicer in writing.
"Servicing Rate" shall mean 1.0% per annum.
"Simple Interest Method" shall mean the method of allocating a
fixed level payment between principal and interest, pursuant to which the
portion of such payment that is allocated to interest is equal to the
product of the APR multiplied by the unpaid principal balance multiplied by
the period of time (expressed as a fraction of a year, based on the actual
number of days in the calendar month and a 365-day year) elapsed since the
preceding payment was made and the remainder of such payment is allocable
to principal.
"Simple Interest Receivable" shall mean any Receivable under
which the portion of a payment allocable to interest and the portion
allocable to principal is determined in accordance with the Simple Interest
Method.
"Specified Reserve Balance" shall mean, with respect to any
Payment Date, the lesser of (a) an amount equal to (x) [ ]% of the sum
of the aggregate Principal Balance of the Initial Receivables as of the
Initial Cutoff Date and the Principal Balances of any Subsequent
Receivables transferred to the Trust on or prior to such Payment Date as of
the related Subsequent Cutoff Dates less (y) the amounts on deposit in the
Supplemental Reserve Account on such Payment Date (after giving effect to
any deposits to or withdrawals from the Supplemental Reserve Account on
such Payment Date) and (b) the outstanding principal amount of the Notes as
of such Payment Date (after giving effect to any principal payment made on
such Payment Date). Notwithstanding the foregoing, if (i) each Rating
Agency delivers a letter to the Indenture Trustee that the use of any new
formulation requested by the Seller would not cause a downgrade,
qualification or withdrawal of the then current rating on any Class of
Notes, and (ii) an Opinion of Counsel to the effect that the proposed
change will not adversely affect the status of the Notes as debt is
delivered to the Indenture Trustee, then the Specified Reserve Balance may
be reduced in accordance with such letters without an amendment hereto.
"Specified Yield Supplement Account Balance" shall mean, on the
Closing Date, $[ ] and, as of the close of business on any
Payment Date, an amount equal to the sum of all projected Yield Supplement
Amounts for all future Payment Dates, assuming that future Scheduled
Payments on the Receivables are made on their scheduled due dates; provided
that if, on any date, MMCA shall fail to pay the amount payable under the
Yield Supplement Agreement in accordance with the terms thereof, then, in
such event, the Specified Yield Supplement Account Balance shall not be
reduced thereafter.
"Standard Receivable" shall mean all rights and obligations under
a Contract which is not a Final Payment Receivable listed on a Schedule of
Receivables.
"Subsequent Cutoff Date", with respect to any Subsequent
Receivable, shall have the meaning specified in the related Second-Tier
Subsequent Assignment.
"Subsequent Payahead Account Deposit" shall mean, with respect to
any Subsequent Transfer Date, cash or Permitted Investments having a value
equal to the aggregate amount of the Payahead Balances as of the related
Subsequent Cutoff Date of the Subsequent Receivables conveyed to the Trust
on such Subsequent Transfer Date.
"Subsequent Receivable" shall mean any Standard Receivable or
Final Payment Receivable described in a Schedule of Subsequent Receivables.
"Subsequent Reserve Account Deposit" shall mean, with respect to
any Subsequent Transfer Date, cash or Permitted Investments having a value
approximately equal to [ ]% of the aggregate Principal Balances as of
the related Subsequent Cutoff Date of the Subsequent Receivables conveyed
to the Trust on such Subsequent Transfer Date.
"Subsequent Transfer Date" shall mean, with respect to any
Subsequent Receivable, the Business Day during the Pre-Funding Period on
which such Subsequent Receivables is to be conveyed by the Seller to the
Trust pursuant to Section 2.1(b) and the related Second-Tier Subsequent
Assignment is executed and delivered by the Seller to the Trust and the
Indenture Trustee pursuant to Section 2.1(c)(ii).
"Subsequent Yield Supplement Account Deposit" shall mean, with
respect to any Subsequent Transfer Date, cash or Permitted Investments
having a value approximately equal to the sum of the projected Yield
Supplement Amounts for the Subsequent Receivables conveyed to the Trust on
such Subsequent Transfer Date for all future Payment Dates, assuming the
future Scheduled Payments on such Subsequent Receivables are made on their
scheduled due dates.
"Supplemental Reserve Account" shall mean the account established
and maintained as such pursuant to Section 4.7(b).
"Supplemental Reserve Account Advance Draw Amount" shall have the
meaning assigned thereto in Section 4.6(b).
"Supplemental Reserve Account Amount" shall mean, with respect to
any Payment Date, the amount on deposit in the Supplemental Reserve
Account. Unless specifically stated to the contrary the Supplemental
Reserve Account Amount for any Payment Date shall be calculated after
giving effect to all deposits and withdrawals therefrom on the prior
Payment Date (or, in the case of the first Payment Date, the Closing Date)
and all interest and other income (net of losses and investment expenses)
on such amounts during the related Collection Period.
"Supplemental Reserve Account Property" shall have the meaning
assigned thereto in Section 4.7(b).
"Supplemental Reserve Account TRP Draw Amount" shall have the
meaning assigned thereto in Section 4.6(b).
"Supplemental Servicing Fee" shall mean, with respect to any
Payment Date, the fee payable to the Servicer for services rendered during
the related Collection Period, determined pursuant to and defined in
Section 3.8.
"Total Available Funds" shall mean, for any Payment Date, an
amount equal to the sum of (i) the Available Funds for such Payment Date,
(ii) the Reserve Account TRP Draw Amount, if any, for such Payment Date and
(iii) the Supplemental Reserve Account TRP Draw Amount, if any, for such
Payment Date.
"Total Required Payment" shall mean, with respect to any Payment
Date, the sum of (i) the Total Servicing Fee, (ii) the Accrued Note
Interest and (iii) the Principal Distribution Amount with respect to such
Payment Date.
"Total Servicing Fee" shall mean, with respect to any Payment
Date, the sum of (i) the Servicing Fee for the related Collection Period
plus (ii) all accrued and unpaid Servicing Fees for prior Collection
Periods.
"Trust" shall mean the MMCA Auto Owner Trust 1999-1, a Delaware
business trust.
"Trust Accounts" shall have the meaning assigned thereto in
Section 4.1(f).
"Trust Agreement" shall mean the Amended and Restated Trust
Agreement, dated as of January [ ], 1999, between the Seller and the
Owner Trustee, as the same may be amended, supplemented or otherwise
modified and in effect from time to time.
"Trust Officer" shall mean, in the case of the Indenture Trustee,
any officer within the Corporate Trust Office of the Indenture Trustee with
direct responsibility for the administration of the Indenture and the other
Basic Documents on behalf of the Indenture Trustee and also, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject and, with respect to the Owner Trustee, any officer in the
Corporate Trust Administration Department of the Owner Trustee with direct
responsibility for the administration of the Trust Agreement and the other
Basic Documents on behalf of the Owner Trustee.
"Trust Property" shall mean, as of any date of determination, the
Initial Receivables and other property related thereto sold, transferred,
assigned and otherwise conveyed by the Seller to the Trust pursuant to
Section 2.1(a), together with the Subsequent Receivables and other property
related thereto sold, transferred, assigned and otherwise conveyed by the
Seller to the Trust as of such date of determination pursuant to Section
2.1(b).
"Weighted Average Rate" shall mean, with respect to any date of
determination, a per annum rate equal to (1) the sum of (a) the product of
(x) the outstanding principal amount of the Class A-1 Notes on such date,
(y) the Class A-1 Rate and (z) a fraction, the numerator of which is 360
and the denominator of which is 365, plus (b) the product of (x) the
outstanding principal amount of the Class A-2 Notes on such date and (y)
the Class A-2 Rate, plus (c) the product of (x) the outstanding principal
amount of the Class A-3 Notes on such date and (y) the Class A-3 Rate, plus
(d) the product of (x) the outstanding principal amount of the Class A-4
Notes on such date and (y) the Class A-4 Rate, divided by (2) the
outstanding principal amount of the Notes on such date; provided, that if
the date of determination is a Payment Date, then the outstanding principal
amount of any class of Notes shall be determined after giving effect to all
payments made on such date.
"Yield Supplement Account" shall have the meaning assigned
thereto in Section 5.1(a).
"Yield Supplement Agreement" shall mean the Yield Supplement
Agreement, dated as of January [ ], 1999, by and between the Seller and
MMCA, as amended, modified or supplemented from time to time, substantially
in the form of Exhibit D hereto.
"Yield Supplement Amount" shall mean, with respect to any Payment
Date, the sum of all Receivable Yield Supplement Amounts for the related
Collection Period.
"Yield Supplement Letter of Credit" shall mean any letter of
credit issued by the Letter of Credit Bank, as permitted by Section 5.1, to
support payments of the Yield Supplement Amount under the Yield Supplement
Agreement.
SECTION 1.2 Other Definitional Provisions. (a) Capitalized
terms used herein and not otherwise defined herein have the meanings
assigned to them in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such
certificate or other document to the extent not defined, shall have the
respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this
Agreement or in any such certificate or other document are inconsistent
with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Agreement or in any such
certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provision of this Agreement; Article,
Section, Schedule and Exhibit references contained in this Agreement are
references to Articles, Sections, Schedules and Exhibits in or to this
Agreement unless otherwise specified, and the term "including" shall mean
"including without limitation."
(e) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
SECTION 1.3 Business Day Certificate. On or prior to December
17, 1999 (with respect to the remainder of calendar year 1999 and calendar
year 2000) and thereafter, within 15 days prior to the end of each calendar
year while this Agreement remains in effect (with respect to the succeeding
calendar years), the Servicer shall deliver to the Owner Trustee and the
Indenture Trustee an Officer's Certificate specifying the days on which
banking institutions or trust companies in New York, New York, Wilmington,
Delaware or Los Angeles, California are authorized or obligated by law,
executive order or governmental decree to remain closed.
ARTICLE II
TRUST PROPERTY
SECTION 2.1 Conveyance of Trust Property.
(a) In consideration of the Trust's delivery to, or upon the
written order of, the Seller of authenticated Notes and Certificates, in
authorized denominations in aggregate principal amounts equal to the
initial principal amount of the Notes and the Initial Certificate Balance,
respectively, the Seller hereby irrevocably sells, transfers, assigns and
otherwise conveys to the Trust, without recourse (subject to the
obligations herein), all right, title and interest of the Seller, whether
now owned or hereafter acquired, in, to and under the following:
(i) the Initial Receivables;
(ii) with respect to Initial Receivables that are Actuarial
Receivables, monies due thereunder on or after the Initial Cutoff Date
(including Payaheads) and, with respect to Initial Receivables that
are Simple Interest Receivables, monies received thereunder on or
after the Initial Cutoff Date;
(iii) the security interests in Financed Vehicles granted
by Obligors pursuant to the Initial Receivables and any other interest
of the Trust in such Financed Vehicles;
(iv) rights to receive proceeds with respect to the Initial
Receivables from claims on any physical damage, theft, credit life or
disability insurance policies covering the related Financed Vehicles
or related Obligors;
(v) rights to receive proceeds with respect to the Initial
Receivables from recourse to Dealers thereon pursuant to Dealer
Agreements;
(vi) all of the Seller's rights to the Receivable Files
that relate to the Initial Receivables;
(vii) the Trust Accounts, the Certificate Distribution
Account, the Reserve Account, the Supplemental Reserve Account, the
Negative Carry Account and the Yield Supplement Account and all
amounts, securities, investments in financial assets, and other
property deposited in or credited to any of the foregoing and all
proceeds thereof;
(viii) all of the Seller's rights under the Yield
Supplement Agreement and the Purchase Agreement, including the right
of the Seller to cause MMCA to repurchase Receivables from the Seller;
(ix) payments and proceeds with respect to the Initial
Receivables held by MMCA;
(x) all property (including the right to receive
Liquidation Proceeds and Recoveries and Financed Vehicles and the
proceeds thereof acquired by the Seller pursuant to the terms of an
Initial Receivable that is a Final Payment Receivable), guarantees and
other collateral securing an Initial Receivable (other than an Initial
Receivable repurchased by the Servicer or purchased by the Seller);
(xi) rebates of premiums and other amounts relating to
insurance policies and other items financed under the Initial
Receivables in effect as of the Initial Cutoff Date; and
(xii) all present and future claims, demands, causes of
action and choses in action in respect of any or all of the foregoing
and all payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all
proceeds of the conversion thereof, voluntary or involuntary, into
cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment
of any and every kind and other forms of obligations and receivables,
instruments and other property which at any time constitute all or
part of or are included in the proceeds of any of the foregoing.
(b) Subject to satisfaction of the conditions set forth in
Section 2.1(c), in consideration of the Indenture Trustee's delivery on or
prior to any Subsequent Transfer Date to the Seller of the amount described
in Section 4.8(a) to be delivered to the Seller, the Seller shall
irrevocably sell, transfer, assign and otherwise convey to the Trust,
without recourse (subject to the obligations herein), on the Subsequent
Transfer Date, all right, title and interest of the Seller, whether now
owned or hereafter acquired, in, to and under the following:
(i) the Subsequent Receivables listed on Schedule A to the
related Second-Tier Subsequent Assignment;
(ii) with respect to the Subsequent Receivables that are
Actuarial Receivables, monies due thereunder on or after the related
Subsequent Cutoff Date (including Payaheads) and, with respect to
Subsequent Receivables that are Simple Interest Receivables, monies
received thereunder on or after the related Subsequent Cutoff Date;
(iii) the security interests in Financed Vehicles granted
by Obligors pursuant to the Subsequent Receivables and any other
interest of the Trust in such Financed Vehicles;
(iv) rights to receive proceeds with respect to the
Subsequent Receivables from claims on any physical damage, theft,
credit life or disability insurance policies covering the related
Financed Vehicles or related Obligors;
(v) rights to receive proceeds with respect to the
Subsequent Receivables from recourse to Dealers thereon pursuant to
Dealer Agreements;
(vi) all of the Seller's rights to the Receivable Files
that relate to the Subsequent Receivables;
(vii) payments and proceeds with respect to the Subsequent
Receivables held by the Servicer;
(viii) all property (including the right to receive
Liquidation Proceeds and Recoveries and Financed Vehicles and the
proceeds thereof acquired by the Seller pursuant to the terms of a
Subsequent Receivable that is a Final Payment Receivable), guarantees
and other collateral securing an Subsequent Receivable (other than an
Subsequent Receivable repurchased by the Servicer or purchased by the
Seller);
(ix) all of the Seller's rights under the related First
Tier Subsequent Assignment;
(x) rebates of premiums and other amounts relating to
insurance policies and other items financed under the Subsequent
Receivables in effect as of the related Subsequent Cutoff Date; and
(xi) all present and future claims, demands, causes of
action and choses in action in respect of any or all of the foregoing
and all payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all
proceeds of the conversion thereof, voluntary or involuntary, into
cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment
of any and every kind and other forms of obligations and receivables,
instruments and other property which at any time constitute all or
part of or are included in the proceeds of any of the foregoing.
(c) It is the intention of the Seller and the Trust that the
transfers of the Trust Property contemplated by Sections 2.1(a) and (b)
constitute sales of the Trust Property, conveying good title to the Trust
Property from the Seller to the Trust. However, in the event that such
transfers are deemed to be pledges to secure the payment of the Notes and
the Certificates, the Seller hereby grants to the Trust a first priority
security interest in all of the Seller's right, title and interest in, to
and under the Trust Property, and all proceeds thereof, to secure the
payment of the Notes and the Certificates, and in such event, this
Agreement shall constitute a security agreement under applicable law.
(d) The Seller shall sell, transfer, assign and otherwise convey
to the Trust on any Subsequent Transfer Date the Subsequent Receivables and
the other property and rights related thereto described in Section 2.1(b)
only upon the satisfaction of each of the following conditions on or prior
to such Subsequent Transfer Date:
(i) the Seller shall have provided the Indenture Trustee,
the Owner Trustee and the Rating Agencies (i) written notification of
the addition of such Subsequent Receivables at least five (5) Business
Days prior to the Subsequent Transfer Date and (ii) on or prior to the
Subsequent Transfer Date, a statement listing the approximate
aggregate Principal Balance of such Subsequent Receivables as of the
related Subsequent Cutoff Date and any other information reasonably
requested by any of the foregoing;
(ii) the Seller shall have delivered to each of the Owner
Trustee and the Indenture Trustee a duly executed written assignment
in substantially the form of Exhibit E hereto (the "Second-Tier
Subsequent Assignment"), which shall include a Schedule A attached
thereto listing the Subsequent Receivables;
(iii) the Seller shall, to the extent required by Section
4.2, have deposited in the Collection Account all collections in
respect of the Subsequent Receivables that are property of the Trust;
(iv) as of such Subsequent Transfer Date: (A) the Seller
shall not be insolvent and shall not become insolvent as a result of
the transfer of Subsequent Receivables on such Subsequent Transfer
Date, (B) the Seller shall not intend to incur or believe that it
would incur debts that would be beyond the Seller's ability to pay as
such debts matured, (C) such transfer shall not be made by the Seller
with actual intent to hinder, delay or defraud any Person and (D) the
assets of the Seller shall not constitute unreasonably small capital
to carry out its business as conducted;
(v) the applicable Subsequent Reserve Account Deposit for
such Subsequent Transfer Date shall have been made;
(vi) the applicable Subsequent Payahead Account Deposit for
such Subsequent Transfer Date shall have been made;
(vii) the applicable Subsequent Yield Supplement Account
Deposit for such Subsequent Transfer Date shall have been made;
(viii) the Receivables, including the Subsequent Receivables
to be conveyed to the Trust on the Subsequent Transfer Date, shall
meet the following criteria (based on the characteristics of each
Receivables as of the related Cutoff Date): (A) the weighted average
remaining maturity of the Receivables will not be more than [ ]
months; and (B) the aggregate Last Scheduled Payments as a percentage
of the Pool Balance will not be greater than [ ]% as of the related
Subsequent Cutoff Date;
(ix) the Pre-Funding Period shall not have terminated prior
to the Subsequent Transfer Date;
(x) each of the representations and warranties made by the
Seller pursuant to Section 2.2 of this Agreement and by MMCA pursuant
to Section 3.2(b) of the Purchase Agreement, in each case with respect
to the Subsequent Receivables, shall be true and correct as of the
date as of which such representations and warranties are made;
(xi) the Seller shall, at its own expense, on or prior to
the Subsequent Transfer Date, indicate in its computer files that the
Subsequent Receivables have been sold to the Trust pursuant to this
Agreement and the related Second-Tier Subsequent Assignment and
delivered to the Owner Trustee the related Schedule of Subsequent
Receivables certified by an officer of the Seller to be true, correct
and complete;
(xii) the Seller shall have taken any action required to
maintain the first perfected ownership interest of the Trust in the
Trust Property and the first perfected security interest of the
Indenture Trustee in the Collateral;
(xiii) no selection procedures believed by the Seller to be
adverse to the interests of the Trust, the Noteholders or the
Certificateholders shall have been utilized in selecting the
Subsequent Receivables;
(xiv) the addition of the Subsequent Receivables will not
result in a material adverse tax consequence to the Trust, the
Noteholders or the Certificateholders;
(xv) the Seller shall have delivered to the Owner Trustee,
the Indenture Trustee and the Rating Agencies an Opinion of Counsel
relating to the security interests of the Owner Trustee and the
Indenture Trustee in the Subsequent Receivables in substantially the
form of the Opinion of Counsel delivered the Owner Trustee, the
Indenture Trustee and the Rating Agencies regarding such matters on
the Closing Date;
(xvi) the Seller shall have delivered to the Owner Trustee
and the Indenture Trustee an Officer's Certificate confirming the
satisfaction of each condition specified in this Section 2.1(c)
(substantially in the form attached as Annex A to the form of Second-
Tier Subsequent Assignment attached hereto as Exhibit E); and
(xvii) all the conditions to the transfer of the Subsequent
Receivables by MMCA to the Seller specified in Section 4.1(b) of the
Purchase Agreement shall be satisfied.
(e) The Seller agrees to transfer to the Trust, pursuant to
Section 2.1(b), Subsequent Receivables with an aggregate Principal Balance
as of the related Subsequent Cutoff Dates of approximately $[
], subject only to availability thereof.
(f) The sales, transfers, assignments and conveyances of the
Trust Property made under Sections 2.1(a) and (b) shall not constitute and
are not intended to result in an assumption by the Trust of any obligation
of the Seller to the Obligors, the Dealers or any other Person in
connection with the Receivables and the other Trust Property or any
agreement, document or instrument related thereto.
SECTION 2.2 Representations and Warranties of the Seller as to
the Receivables. The Seller makes the following representations and
warranties as to the Receivables on which the Trust relies in accepting the
Receivables. Such representations and warranties speak as of the execution
and delivery of this Agreement in the case of the Initial Receivables and
as of the applicable Subsequent Transfer Date in the case of the Subsequent
Receivables, except in each case to the extent otherwise provided in the
following representations and warranties, but shall survive the sale,
transfer and assignment of the Receivables to the Trust and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.
(i) Characteristics of Receivables. Each Receivable (a)
shall have been originated (x) in the United States of America by a
Dealer for the consumer or commercial sale of a Financed Vehicle in
the ordinary course of such Dealer's business or (y) by MMCA in
connection with the refinancing of a motor vehicle retail installment
sales contract of the type described in subclause (x) above, shall
have been fully and properly executed by the parties thereto, shall
have been purchased by the Seller from MMCA, which in turn shall have
purchased such Receivable from such Dealer under a Dealer Agreement
with MMCA (unless such Receivable was originated by MMCA in connection
with a refinancing), and shall have been validly assigned by such
Dealer to MMCA in accordance with its terms (unless such Receivable
was originated by MMCA in connection with a refinancing), which in
turn shall have been validly assigned by MMCA to the Seller in
accordance with its terms, (b) shall have created or shall create a
valid, binding, subsisting and enforceable first priority security
interest in favor of MMCA on the related Financed Vehicle, which
security interest has been validly assigned by MMCA to the Seller,
which in turn shall be validly assigned by the Seller to the Trust and
by the Trust to the Indenture Trustee, (c) shall contain customary and
enforceable provisions such that the rights and remedies of the holder
thereof shall be adequate for realization against the collateral of
the benefits of the security, (d) in the case of Standard Receivables,
shall provide for level monthly payments (provided that the payment in
the last month in a life of the Receivable may be different from the
level payment) that fully amortize the Amount Financed by maturity and
yield interest at the APR, (e) in the case of Final Payment
Receivables, shall provide for a series of fixed level monthly
payments and a larger payment due after such level monthly payments
that fully amortize the Amount Financed by maturity and yield interest
at the APR, (f) shall provide for, in the event that such contract is
prepaid, a prepayment that fully pays the Principal Balance, (g) is a
retail installment sale contract, (h) is secured by a new or used
automobile or light-or medium-duty truck, and (i) is an Actuarial
Receivable or a Simple Interest Receivable (and may also be a Final
Payment Receivable).
(ii) Schedule of Receivables. The information set forth in
the related Schedule of Receivables shall be true and correct in all
material respects as of the opening of business on the related Cutoff
Date, and no selection procedures believed to be adverse to the
Noteholders and/or the Certificateholders shall have been utilized in
selecting the Receivables from those receivables which meet the
criteria contained herein and in the Purchase Agreement. The compact
disk or other listing regarding the Receivables made available to the
Trust and its assigns (which compact disk or other listing is required
to be delivered as specified herein) is true and correct in all
respects.
(iii) Compliance with Law. Each Receivable and the sale of
the related Financed Vehicle shall have complied, at the time it was
originated or made, and shall comply at the execution of this
Agreement, (with respect to each Initial Receivable) or the related
Subsequent Transfer Date (with respect to each Subsequent Receivable)
in all material respects with all requirements of applicable Federal,
state, and local laws, and regulations thereunder, including, without
limitation, usury laws, the Federal Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Credit
Billing Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, the Federal Reserve
Board's Regulations B, M and Z, the Soldiers' and Sailors' Civil
Relief Act of 1940, the Texas Consumer Credit Code, and State
adaptations of the Uniform Consumer Credit Code, and other consumer
credit laws and equal credit opportunity and disclosure laws.
(iv) Binding Obligation. Each Receivable shall represent
the genuine, legal, valid and binding payment obligation in writing of
the Obligor, enforceable by the holder thereof in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, or other similar laws affecting the
enforcement of creditors' rights generally and by general principles
of equity.
(v) No Government Obligor. None of the Receivables is due
from the United States of America or any state or from any agency,
department or instrumentality of the United States of America or any
state.
(vi) Security Interest in Financed Vehicle. Immediately
prior to the sale, assignment, and transfer thereof by MMCA to the
Seller, each Receivable shall be secured by a validly perfected first
priority security interest in the Financed Vehicle in favor of MMCA as
secured party and, at such time as enforcement of such security
interest is sought, there shall exist a valid, subsisting and
enforceable first priority perfected security interest in the Financed
Vehicle for the benefit of the Seller and the Trust, respectively
(subject to any statutory or other lien arising by operation of law
after the Closing Date (with respect to each Initial Receivable) or
the related Subsequent Transfer Date (with respect to each Subsequent
Receivable) which is prior to such security interest).
(vii) Receivables in Force. No Receivable shall have been
satisfied, subordinated, or rescinded, nor shall any Financed Vehicle
have been released from the Lien granted by the related Receivable in
whole or in part, which security interest shall be assignable by MMCA
to the Seller and by the Seller to the Trust.
(viii) No Waiver. No provision of a Receivable shall have
been waived in such a manner that such Receivable fails to meet all of
the representations and warranties made by the Seller in this Section
2.2 with respect thereto.
(ix) No Defenses. No right of rescission, setoff,
counterclaim, or defense shall have been asserted or threatened with
respect to any Receivable.
(x) No Liens. To the best of the Seller's knowledge, no
liens or claims shall have been filed for work, labor, or materials
relating to a Financed Vehicle that shall be liens prior to, or equal
or coordinate with, the security interest in the Financed Vehicle
granted by the Receivable.
(xi) No Default; Repossession. Except for payment defaults
continuing for a period of not more than thirty (30) days or payment
defaults of 10% or less of a payment, in each case as of the related
Cutoff Date, or the failure of the Obligor to maintain satisfactory
physical damage insurance covering the Financed Vehicle, no default,
breach, violation, or event permitting acceleration under the terms of
any Receivable shall have occurred; no continuing condition that with
notice or the lapse of time or both would constitute a default,
breach, violation, or event permitting acceleration under the terms of
any Receivable shall have arisen; the Seller shall not have waived any
of the foregoing; and no Financed Vehicle shall have been repossessed
as of the related Cutoff Date.
(xii) Insurance. MMCA, in accordance with its customary
procedures, shall have determined whether or not the Obligor has
maintained physical damage insurance (which insurance shall not be
force placed insurance) covering the Financed Vehicle.
(xiii) Title. It is the intention of the Seller that each
transfer and assignment of Receivables herein contemplated constitute
a sale of such Receivables from the Seller to the Trust and that the
beneficial interest in, and title to, such Receivables not be part of
the Seller's estate in the event of the filing of a bankruptcy
petition by or against the Seller under any bankruptcy law. No
Receivable has been sold, transferred, assigned, or pledged by the
Seller to any Person other than the Trust. Immediately prior to each
transfer and assignment herein contemplated, the Seller had good and
marketable title to such Receivables free and clear of all Liens,
encumbrances, security interests, and rights of others and,
immediately upon the transfer thereof, the Trust shall have good and
marketable title to such Receivables, free and clear of all Liens,
encumbrances, security interests, and rights of others; and the
transfer has been perfected by all necessary action under the Relevant
UCC.
(xiv) Valid Assignment. No Receivable shall have been
originated in, or shall be subject to the laws of, any jurisdiction
under which the sale, transfer, and assignment of such Receivable
under this Agreement or the Indenture or pursuant to transfers of the
Certificates shall be unlawful, void, or voidable. The Seller has not
entered into any agreement with any account debtor that prohibits,
restricts or conditions the assignment of any portion of the
Receivables.
(xv) All Filings Made. All filings (including, without
limitation, filings under the Relevant UCC) necessary in any
jurisdiction to give the Trust a first priority perfected security
interest in the Receivables, and to give the Indenture Trustee a first
priority perfected security interest therein, shall be made within ten
(10) days of the Closing Date (with respect to the Initial
Receivables) or ten (10) days of the related Subsequent Transfer Date
(with respect to the Subsequent Receivables).
(xvi) Chattel Paper. Each Receivable constitutes "chattel
paper" as defined in the Relevant UCC.
(xvii) One Original. There shall be only one original
executed copy of each Receivable.
(xviii) Principal Balance. Each Receivable had an original
principal balance (net of unearned precomputed finance charges) of not
more than $60,000.00, and a remaining Principal Balance as of the
related Cutoff Date of not less than $100.00.
(xix) No Bankrupt Obligors. As of the related Cutoff Date,
no Receivable was due from an Obligor that was the subject of a
proceeding under the Bankruptcy Code of the United States or was
bankrupt.
(xx) New and Used Vehicles. Approximately [ ]% of
the Pool Balance of the Initial Receivables, constituting
approximately [ ]% of the total number of the Initial
Receivables, as of the Initial Cutoff Date, relate to new automobiles
and light- or medium-duty trucks financed at new vehicle rates.
Approximately [ ]% of the Pool Balance of the Initial
Receivables, constituting approximately [ ]% of the total
number of Initial Receivables as of the Initial Cutoff Date, relate to
used automobiles and light- or medium-duty trucks. Approximately
[ ]% of the Pool Balance of the Initial Receivables, constituting
approximately [ ]% of the total number of Initial Receivables
as of the Initial Cutoff Date, relate to program automobiles and
light-duty trucks manufactured in the current and immediately
preceding model years which are financed at new vehicle rates.
Approximately [ ]% of the Pool Balance of the Initial
Receivables, constituting approximately [ ]% of the total
number of Initial Receivables as of the Initial Cutoff Date, relate to
refinanced program automobiles and light- or medium-duty trucks
manufactured in prior model years which are financed at the original
rates set forth in the related Contracts or at used vehicle rates.
(xxi) Origination. Each Receivable shall have an
origination date during or after [ ].
(xxii) Maturity of Receivables. Each Receivable shall have
a remaining maturity, as of the related Cutoff Date, of not more than
sixty-one (61) months, and an original maturity of not more than
sixty-one (61) months.
(xxiii) Weighted Average Maturity of Receivables. The
weighted average remaining maturity of the Receivables as of the
Initial Cutoff Date and each Subsequent Cutoff Date shall not be more
than [ ] months.
(xxiv) Annual Percentage Rate. Each Receivable shall have
an APR of at least 0%. Each Receivable shall have an APR of not more
than 30%.
(xxv) Scheduled Payments. Each Receivable shall have a
first Scheduled Payment due on or prior to [ ], 1999,
and no Receivable shall have a payment of which more than 10% of such
payment is thirty (30) days overdue as of the related Cutoff Date.
(xxvi) Location of Receivable Files. The Receivable Files
shall be kept at one or more of the locations listed in Schedule B
hereto.
(xxvii) Capped Receivables and Simple Interest Receivables.
Except to the extent that there has been no material adverse effect on
Noteholders or Certificateholders, each Capped Receivable has been
treated consistently by the Seller and the Servicer as a Simple
Interest Receivable and payments with respect to each Simple Interest
Receivable have been allocated consistently in accordance with the
Simple Interest Method.
(xxviii) Agreement. The representations and warranties of
the Seller in Section 6.1 are true and correct.
(xxix) Other Data. The tabular data and the numerical data
relating to the characteristics of the Initial Receivables contained
in the Prospectus (as defined in the Purchase Agreement) is true and
correct in all material respects.
(xxx) Last Scheduled Payments. The average Last Scheduled
Payment of the Final Payment Receivables as a percentage of the
aggregate original Principal Balances of the Final Payment
Receivables, as of the Closing Date and each Subsequent Transfer Date
(after giving effect to the Final Payment Receivables sold to the
Purchaser on such Subsequent Transfer Date pursuant to Section
2.1(b)), in each case as of the related dates of origination, shall
not be greater than [ ]%.
(xxxi) Receivable Yield Supplement Amounts. An amount
equal to the sum of all projected Yield Supplement Amounts for all
future Payment Dates with respect to each Receivable, assuming that
future Scheduled Payments on such Receivable are made on their
scheduled due dates, has been deposited to the Yield Supplement
Account on or prior to the Closing Date or the related Subsequent
Transfer Date.
SECTION 2.3 Repurchase upon Breach. The Seller, the Servicer,
or the Owner Trustee, as the case may be, shall inform the other parties to
this Agreement, the Indenture Trustee and MMCA promptly, in writing, upon
the discovery of any breach or failure to be true of the representations
and warranties made by the Seller pursuant to Section 2.2. If the breach
or failure shall not have been cured by the close of business on the last
day of the Collection Period which includes the sixtieth (60th) day after
the date on which the Seller becomes aware of, or receives written notice
from the Owner Trustee or the Servicer of, such breach or failure, and such
breach or failure materially and adversely affects the interest of the
Trust in a Receivable, the Seller shall repurchase from the Trust such
Receivable, on the Payment Date immediately following such Collection
Period. In consideration of the repurchase of a Receivable hereunder, the
Seller shall remit the Purchase Amount of such Receivable in the manner
specified in Section 4.5. The sole remedy of the Trust, the Owner Trustee,
the Indenture Trustee, the Noteholders and the Certificateholders with
respect to a breach or failure to be true of the representations and
warranties made by the Seller pursuant to Section 2.2 shall be to require
the Seller to repurchase Receivables pursuant to this Section 2.3 and to
enforce the obligation of MMCA to the Seller to repurchase such Receivable
pursuant to the Purchase Agreement. Neither the Owner Trustee nor the
Indenture Trustee shall have any duty to conduct an affirmative
investigation as to the occurrence of any condition requiring the
repurchase of any Receivable pursuant to this Section 2.3 or the
eligibility of any Receivable for purposes of this Agreement.
SECTION 2.4 Custody of Receivable Files. To assure uniform
quality in servicing the Receivables and to reduce administrative costs,
the Trust, upon the execution and delivery of this Agreement, hereby
revocably appoints the Servicer as its agent, and the Servicer hereby
accepts such appointment, to act as custodian on behalf of the Trust and
the Indenture Trustee of the following documents or instruments, which are
hereby constructively delivered to the Indenture Trustee, as pledgee of the
Trust pursuant to the Indenture (or, in the case of the Subsequent
Receivables, will as of the applicable Subsequent Transfer Date be
constructively delivered to the Indenture Trustee, as pledgee of the Trust
pursuant to the Indenture), with respect to each Receivable (collectively,
a "Receivable File"):
(i) the single original of the Receivable;
(ii) the original credit application fully executed by the
Obligor or a photocopy thereof or a record thereof on a computer file
or disc or on microfiche;
(iii) the original certificate of title or such other
documents that the Servicer or MMCA shall keep on file, in accordance
with its customary practices and procedures, evidencing the security
interest of MMCA in the Financed Vehicle;
(iv) documents evidencing the existence, at the time of
origination of the Receivable, of any insurance covering the Financed
Vehicle; and
(v) any and all other documents (including any computer
file or disc or microfiche) that the Servicer or the Seller shall keep
on file, in accordance with its customary procedures, relating to a
Receivable, an Obligor, or a Financed Vehicle.
On the Closing Date (with respect to the Initial Receivables) and
each Subsequent Transfer Date (with respect to the related Subsequent
Receivables), the Servicer shall provide an Officer's Certificate to the
Trust and the Indenture Trustee confirming that the Servicer has received,
on behalf of the Trust and the Indenture Trustee, all the documents and
instruments necessary for the Servicer to act as the agent of the Trust and
the Indenture Trustee for the purposes set forth in this Section 2.4,
including the documents referred to herein, and the Trust, the Owner
Trustee and the Indenture Trustee are hereby authorized to rely on such
Officer's Certificate.
SECTION 2.5 Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity as custodian,
shall hold the Receivable Files for the benefit of the Trust and the
Indenture Trustee and maintain such accurate and complete accounts,
records, and computer systems pertaining to each Receivable File as shall
enable the Servicer and the Trust to comply with the terms and provisions
of this Agreement, and the Indenture Trustee to comply with the terms and
conditions of the Indenture. In performing its duties as custodian, the
Servicer shall act with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to the receivable files
relating to all comparable motor vehicle receivables that the Servicer
services for itself or others. In accordance with its customary practices
and procedures with respect to its retail installment sale contracts, the
Servicer shall conduct, or cause to be conducted, periodic audits of the
Receivable Files held by it under this Agreement, and of the related
accounts, records, and computer systems, in such a manner as shall enable
the Trust or the Indenture Trustee to verify the accuracy of the Servicer's
recordkeeping. The Servicer shall promptly report to the Owner Trustee and
the Indenture Trustee any failure on its part to hold the Receivable Files
and maintain its accounts, records, and computer systems as herein provided
and promptly take appropriate action to remedy any such failure. Nothing
herein shall be deemed to require an initial review or any periodic review
by the Trust, the Owner Trustee or the Indenture Trustee of the Receivable
Files and none of the Trust, the Owner Trustee and the Indenture Trustee
shall be liable or responsible for any action or failure to act by the
Servicer in its capacity as custodian hereunder.
(b) Maintenance of and Access to Records. The Servicer shall
maintain each Receivable File at one of its offices specified in Schedule B
to this Agreement, or at such other office as shall be specified to the
Trust and the Indenture Trustee by written notice not later than ninety
(90) days after any change in location. The Servicer shall make available
to the Trust and the Indenture Trustee or its duly authorized
representatives, attorneys, or auditors a list of locations of the
Receivable Files, the Receivable Files, and the related accounts, records,
and computer systems maintained by the Servicer at such times as the Trust
or the Indenture Trustee shall instruct.
(c) Release of Documents. Upon written instructions from the
Indenture Trustee, the Servicer shall release any document in the
Receivable Files to the Indenture Trustee, the Indenture Trustee's agent,
or the Indenture Trustee's designee, as the case may be, at such place or
places as the Indenture Trustee may designate, as soon thereafter as is
practicable. Any document so released shall be handled by the Indenture
Trustee with due care and returned to the Servicer for safekeeping as soon
as the Indenture Trustee or its agent or designee, as the case may be,
shall have no further need therefor.
(d) Title to Receivables. The Servicer agrees that, in respect
of any Receivable held by the Servicer as custodian hereunder, the Servicer
will not at any time have or in any way attempt to assert any interest in
such Receivable or the related Receivable File, other than for collecting
or enforcing the Receivable for the benefit of the Trust and that the
entire equitable interest in such Receivable and the related Receivable
File shall at all times be vested in the Trust.
SECTION 2.6 Instructions; Authority to Act. The Servicer shall
be deemed to have received proper instructions with respect to the
Receivable Files upon its receipt of written instructions signed by an
Authorized Officer of the Indenture Trustee. A certified copy of excerpts
of authorizing resolutions of the Board of Directors of the Indenture
Trustee shall constitute conclusive evidence of the authority of any such
Authorized Officer to act and shall be considered in full force and effect
until receipt by the Servicer of written notice to the contrary given by
the Indenture Trustee.
SECTION 2.7 Custodian's Indemnification. The Servicer, in its
capacity as custodian, shall indemnify and hold harmless the Trust, the
Owner Trustee and the Indenture Trustee and each of their respective
officers, directors, employees and agents from and against any and all
liabilities, obligations, losses, compensatory damages, payments, costs or
expenses (including legal fees if any) of any kind whatsoever that may be
imposed on, incurred, or asserted against the Trust, the Owner Trustee and
the Indenture Trustee or any of their respective officers, directors,
employees and agents as the result of any act or omission by the Servicer
relating to the maintenance and custody of the Receivable Files; provided,
however, that the Servicer shall not be liable hereunder to the Owner
Trustee to the extent, but only to the extent, that such liabilities,
obligations, losses, compensatory damages, payments, costs or expenses
result from the willful misfeasance, bad faith, or negligence of the Owner
Trustee and shall not be liable hereunder to the Indenture Trustee to the
extent, but only to the extent, that such liabilities, obligations, losses,
compensatory damages, payments, costs or expenses result from the willful
misfeasance, bad faith, or negligence of the Indenture Trustee.
SECTION 2.8 Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Initial Cutoff
Date and shall continue in full force and effect until terminated pursuant
to this Section 2.8. If the Servicer shall resign as Servicer under
Section 7.5, or if all of the rights and obligations of the Servicer shall
have been terminated under Section 8.1, the appointment of the Servicer as
custodian hereunder may be terminated by the Indenture Trustee or by the
Holders of Notes evidencing not less than 25% of the principal amount of
the then Outstanding Notes or, with the consent of Holders of Notes
evidencing not less than 25% of the principal amount of the then
Outstanding Notes, by the Owner Trustee or by Holders of Certificates
evidencing not less than 25% of the Certificate Balance, in the same manner
as the Indenture Trustee or such Holders may terminate the rights and
obligations of the Servicer under Section 8.1. As soon as practicable
after any termination of such appointment, the Servicer shall deliver, or
cause to be delivered, the Receivable Files and the related accounts and
records maintained by the Servicer to the Indenture Trustee, the Indenture
Trustee's agent or the Indenture Trustee's designee at such place or places
as the Indenture Trustee may reasonably designate.
ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND TRUST PROPERTY
SECTION 3.1 Duties of Servicer. (a) The Servicer, acting alone
and/or through subservicers as provided in this Section 3.1, shall
administer the Receivables with reasonable care. The Servicer's duties
shall include, but not be limited to, the collection and posting of all
payments, responding to inquiries by Obligors on the Receivables, or by
federal, state, or local governmental authorities, investigating
delinquencies, reporting tax information to Obligors, furnishing monthly
and annual statements to the Owner Trustee and the Indenture Trustee with
respect to distributions, providing collection and repossession services in
the event of Obligor default, coordinating or arranging inspection of
Financed Vehicles relating to Final Payment Receivables at the end of the
related Contract term, refinancing or selling Financed Vehicles relating to
Final Payment Receivables at the end of the related Contract term depending
upon the options chosen by the Obligors and making Advances pursuant to
Sections 4.4(a) and (c). The Servicer shall also administer and enforce
all rights and responsibilities of the holder of the Receivables provided
for in the Dealer Agreements, to the extent that such Dealer Agreements
relate to the Receivables, the Financed Vehicles or the Obligors. In
performing its duties as Servicer hereunder, the Servicer will exercise
that degree of skill and attention that the Servicer exercises with respect
to all comparable motor vehicle receivables that it services for itself or
others. Subject to Section 3.2, the Servicer shall follow its customary
standards, policies, practices and procedures in performing its duties
hereunder as Servicer. Without limiting the generality of the foregoing,
the Servicer is hereby authorized and empowered to execute and deliver, on
behalf of itself, the Trust, the Owner Trustee, the Indenture Trustee, the
Certificateholders, the Noteholders or any one or more of them, any and
all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to
the Receivables or to the Financed Vehicles, all in accordance with this
Agreement; provided, however, that notwithstanding the foregoing, the
Servicer shall not, except pursuant to an order from a court of competent
jurisdiction, release an Obligor from payment of any unpaid amount under
any Receivable or waive the right to collect the unpaid balance (including
accrued interest) of any Receivable from the Obligor, except in connection
with a de minimis deficiency, Excess Wear and Tear or Excess Mileage which
the Servicer would not attempt to collect in accordance with its customary
procedures, in which event the Servicer shall indemnify the Trust for such
deficiency, Excess Wear and Tear or Excess Mileage. If the Servicer shall
commence a legal proceeding to enforce a Receivable, the Owner Trustee
shall thereupon be deemed to have automatically assigned such Receivable to
the Servicer, which assignment shall be solely for purposes of collection.
If in any enforcement suit or legal proceeding it shall be held that the
Servicer may not enforce a Receivable on the ground that it shall not be a
real party in interest or a holder entitled to enforce the Receivable, the
Owner Trustee shall, at the Servicer's expense and direction, take steps to
enforce the Receivable, including bringing suit in its name or the names of
the Indenture Trustee, the Certificateholders, the Noteholders or any of
them. The Owner Trustee shall execute and deliver to the Servicer any
powers of attorney and other documents as shall be prepared by the Servicer
and reasonably necessary or appropriate to enable the Servicer to carry out
its servicing and administrative duties hereunder. The Servicer, at its
expense, shall obtain on behalf of the Trust or the Owner Trustee all
licenses, if any, required by the laws of any jurisdiction to be held by
the Trust or the Owner Trustee in connection with ownership of the
Receivables, and shall make all filings and pay all fees as may be required
in connection therewith during the term hereof.
The Servicer may enter into subservicing agreements with one or
more subservicers for the servicing and administration of certain of the
Receivables; provided, however, that the Servicer shall remain fully liable
hereunder for the performance of the duties of Servicer and any such
subservicer shall be and shall remain, for so long as it is acting as
subservicer, an Eligible Servicer, and any fees paid to such subservicer
shall be paid by the Servicer and not out of the proceeds of the Trust, and
any such subservicer shall agree to service the Receivables in a manner
consistent with the terms of this Agreement.
(b) References in this Agreement to actions taken, to be taken,
permitted to be taken, or restrictions on actions permitted to be taken by
the Servicer in servicing the Receivables and other actions taken, to be
taken, permitted to be taken, or restrictions on actions to be taken with
respect to the Trust Property shall include actions taken, to be taken,
permitted to be taken, or restrictions on actions permitted to be taken by
a subservicer on behalf of the Servicer and references herein to payments
received by the Servicer shall include payments received by a subservicer,
irrespective of whether such payments are actually deposited in the
Collection Account by such subservicer. Any such subservicing agreement
will contain terms and provisions substantially identical to the terms and
provisions of this Agreement and such other terms and provisions as are not
inconsistent with this Agreement and as the Servicer and the subservicer
have agreed.
(c) The Servicer shall be entitled to terminate any subservicing
agreement in accordance with the terms and conditions of such subservicing
agreement and without any limitation by virtue of this Agreement; provided,
however, that, in the event of termination of any subservicing agreement by
the Servicer, the Servicer shall either act directly as Servicer of the
related Receivables or enter into a subservicing agreement with a successor
subservicer which will be bound by the terms of the related subservicing
agreement.
(d) As a condition to the appointment of any subservicer, the
Servicer shall notify the Owner Trustee, the Indenture Trustee and the
Rating Agencies in writing before such assignment becomes effective and
such subservicer shall be required to execute and deliver an instrument in
which it agrees that, for so long as it acts as subservicer of the
Receivables and the other Trust Property being serviced by it, the
covenants, conditions, indemnities, duties, obligations and other terms and
provisions of this Agreement applicable to the Servicer hereunder shall be
applicable to it as subservicer, that it shall be required to perform its
obligations as subservicer for the benefit of the Trust as if it were
Servicer hereunder (subject, however, to the right of the Servicer to
direct the performance of such obligations in accordance with this
Agreement) and that, notwithstanding any provision of a subservicing
agreement to the contrary, such subservicer shall be directly liable to the
Owner Trustee and the Trust (notwithstanding any failure by the Servicer to
perform its duties and obligations hereunder) for the failure by such
subservicer to perform its obligations hereunder or under any subservicing
agreement, and that (notwithstanding any failure by the Servicer to perform
its duties and obligations hereunder) the Owner Trustee may enforce the
provisions of this Agreement and any subservicing agreement against the
subservicer for the benefit of the Trust, without diminution of such
obligations or liabilities by virtue of any subservicing agreement, by
virtue of any indemnification provided thereunder or by virtue of the fact
that the Servicer is primarily responsible hereunder for the performance of
such duties and obligations, as if a subservicer alone were servicing and
administering, under this Agreement, the Receivables and the other Trust
Property being serviced by it under the subservicing agreement.
(e) Notwithstanding any subservicing agreement, any of the
provisions of this Agreement relating to agreements or arrangements between
the Servicer or a subservicer or reference to actions taken through such
Persons or otherwise, the Servicer shall remain obligated and liable to the
Trust and the Owner Trustee for the servicing and administering of the
Receivables and the other Trust Property in accordance with the provisions
of this Agreement (including for the deposit of payments received by a
subservicer, irrespective of whether such payments are actually remitted to
the Servicer or deposited in the Collection Account by such subservicer;
provided that if such amounts are so deposited, the Servicer shall have no
further obligation to do so) without diminution of such obligation or
liability by virtue of such subservicing agreements or arrangements or by
virtue of indemnification from a subservicer, to the same extent and under
the same terms and conditions as if the Servicer alone were servicing and
administering the Receivables and the other Trust Property. The Servicer
shall be entitled to enter into any agreement with a subservicer for
indemnification of the Servicer and nothing contained in this Agreement
shall be deemed to limit or modify such indemnification.
(f) In the event the Servicer shall for any reason no longer be
acting as such (including by reason of the occurrence of an Event of
Servicing Termination), the successor Servicer may, in its discretion,
thereupon assume all of the rights and obligations of the outgoing Servicer
under a subservicing agreement. In such event, the successor Servicer
shall be deemed to have assumed all of the Servicer's interest therein and
to have replaced the outgoing Servicer as a party to such subservicing
agreement to the same extent as if such subservicing agreement had been
assigned to the successor Servicer, except that the outgoing Servicer shall
not thereby be relieved of any liability or obligation on the part of the
outgoing Servicer to the subservicer under such subservicing agreement.
The outgoing Servicer shall, upon request of the Indenture Trustee, but at
the expense of the outgoing Servicer, deliver to the successor Servicer all
documents and records relating to each such subservicing agreement and the
Receivables and the other Trust Property then being serviced thereunder and
an accounting of amounts collected and held by it and otherwise use its
best efforts to effect the orderly and efficient transfer of the
subservicing agreement to the successor Servicer. In the event that the
successor Servicer elects not to assume a subservicing agreement, such
subservicing agreement shall be immediately cancellable by the successor
Servicer upon written notice to the subservicer and the outgoing Servicer,
at its expense, shall cause the subservicer to deliver to the successor
Servicer all documents and records relating to the Receivables and the
other Trust Property being serviced thereunder and all amounts held (or
thereafter received) by such subservicer (together with an accounting of
such amounts) and shall otherwise use its best efforts to effect the
orderly and efficient transfer of servicing of the Receivables and the
other Trust Property being serviced by such subservicer to the successor
Servicer.
SECTION 3.2 Collection and Allocation of Receivable Payments.
(a) The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Receivables as and when
the same shall become due and shall follow such collection procedures as it
follows with respect to all comparable motor vehicle receivables that it
services for itself or others. The Servicer shall allocate collections
between principal and interest in accordance with the customary servicing
practices and procedures it follows with respect to all comparable motor
vehicle receivables that it services for itself or others. The Servicer
will not increase or decrease the number or amount of any Scheduled
Payment, or the Amount Financed under a Receivable or the APR of a
Receivable, or extend, rewrite or otherwise modify the payment terms of a
Receivable; provided, however, that the Servicer may extend the due date
for one or more payments due on a Receivable for credit-related reasons
that would be acceptable to the Servicer with respect to comparable motor
vehicle receivables that it services for itself and others and in
accordance with its customary standards, policies, practices and procedures
if the cumulative extensions with respect to any Receivable shall not cause
the term of such Receivable to extend beyond the Final Scheduled Maturity
Date; and provided further that such extensions, in the aggregate, do not
exceed two (2) months for each twelve (12) months of the original term of
the Receivable. In the event that the Servicer fails to comply with the
provisions of the preceding sentence, the Servicer shall be required to
purchase the Receivable or Receivables affected thereby, for the Purchase
Amount, in the manner specified in Section 3.7, as of the close of the
Collection Period in which such failure occurs. The Servicer may, in its
discretion, (but only in accordance with its customary standards, policies,
practices and procedures), waive any late payment charge or any other fee
that may be collected in the ordinary course of servicing a Receivable.
(b) With respect to each Final Payment Receivable, the Servicer,
in accordance with its customary servicing standards, policies, practices
and procedures, shall contact the Obligor on or before the due date of the
Last Scheduled Payment specified in the related Contract. If, at such
time, the Obligor under the Final Payment Receivable has notified MMCA on
behalf of the Trust that it elects to sell the Financed Vehicle to MMCA on
behalf of the Trust in accordance with the terms of the Receivable, the
Servicer shall, upon delivery of the Financed Vehicle by the Obligor to
MMCA on behalf of the Trust, inspect the Financed Vehicle for Excess Wear
and Tear and Excess Mileage, and to determine the necessity of any repairs.
If the Servicer determines that such Financed Vehicle requires repairs as a
result of Excess Wear and Tear, the Servicer shall require the Obligor to
pay the estimated cost of such repairs to the Servicer. If the Obligor
disputes the Servicer's estimate of the cost of such repairs, the Obligor
may obtain, at the Obligor's own expense, a professional appraisal of the
Financed Vehicle's value by an independent third-party appraiser acceptable
to both the Obligor and the Servicer, and the cost of repairs for Excess
Wear and Tear as determined by such appraisal shall be binding on the
Obligor and the Servicer. The Servicer shall, pursuant to the related
Contract, offset (x) the cost of repairs for Excess Wear and Tear as
determined by the appraisal, any charges for Excess Mileage and the
disposition fee payable to the Servicer pursuant to the related Contract,
and the Principal Balance, accrued interest and any other amounts owed by
the Obligor on the Receivable against (y) the purchase price otherwise due
to the Obligor for the Financed Vehicle, and shall collect any excess of
(x) over (y) from the Obligor.
(c) In connection with an Obligor's transfer of a Financed
Vehicle to MMCA on behalf of the Trust in satisfaction of its obligation to
pay the Last Scheduled Payment under a Final Payment Receivable, pursuant
to the terms of the Contract related to such Last Scheduled Payment, the
Servicer shall require the Obligor to pay a disposition fee (which the
Servicer will retain as servicing compensation), whereupon the Servicer
shall take possession of the related Financed Vehicle and shall prepare
such Financed Vehicle for sale at auction or otherwise in accordance with
the Servicer's customary servicing standards, policies, practices and
procedures.
(d) Proceeds received by the Servicer from the payment by an
Obligor of a Financed Vehicle of amounts attributable to Last Scheduled
Payments and other amounts (including Excess Wear and Tear and Excess
Mileage) owed by the Obligor and from the sale of a Financed Vehicle at
auction or otherwise constitute proceeds of Last Scheduled Payments and
collections on the Receivables, and shall be deposited into the Collection
Account. Following the sale of the Financed Vehicle, the Servicer, on
behalf of the Trust, shall deliver the related certificate of title to the
purchaser of such Financed Vehicle. Following the Servicer's receipt of
proceeds from the sale of such Financed Vehicle and amounts to be paid by
the Obligor pursuant to subparagraph (b) above, the Servicer shall record
on its books and records the termination of the Trust's ownership and
security interest in the related Final Payment Receivable (and shall
deliver copies thereof to the Indenture Trustee and the Owner Trustee upon
written request within ten days of receipt of such request).
(e) If the Obligor under any Final Payment Receivable has
notified the Dealer that it desires to refinance the amount that it owes on
termination of the Receivable, MMCA will, in accordance with its customary
servicing standards, policies, practices and procedures, make a decision to
grant or deny credit, except for Contracts for which the Obligors have the
right to refinance without such an assessment, in which case MMCA shall
honor the Obligor's right to refinance. If credit is denied, the Servicer
shall require the Obligor to satisfy its obligation to pay the remaining
amounts owed in accordance with the terms of the Final Payment Receivable.
If credit is granted, MMCA shall deposit an amount equal to the total
amount owed by the Obligor on the Receivable to the Collection Account.
Upon deposit of such amount into the Collection Account, the Trust's
ownership and security interest in the related Financed Vehicle shall
terminate, and the Trust will assign all interest in, to and under the
Receivable and the related Financed Vehicle to MMCA. The Servicer shall
record such termination on its books and records (and shall deliver copies
thereof to the Indenture Trustee and the Owner Trustee upon written request
within ten days of receipt of such request). If MMCA is no longer the
Servicer, the Trust or any Holder of the Certificates may make
arrangements for the successor Servicer or another party to provide
refinancing of Last Scheduled Payments to Obligors who desire to satisfy
the Last Scheduled Payment through refinancing and who meet such party's
credit criteria, and any reasonable costs and expenses of the successor
Servicer or such third party in determining whether to provide such
refinancing shall be payable from amounts, if any, which would otherwise be
released from the Supplemental Reserve Account and paid to the Seller and
to the extent of any shortfall in such amounts in the Supplemental Reserve
Account shall be payable from amounts, if any, which would otherwise be
released from the Reserve Account and paid to the Seller.
SECTION 3.3 Realization upon Receivables. (a) On behalf of the
Trust, the Servicer shall use reasonable efforts, in accordance with the
standard of care required by Section 3.1, to repossess or otherwise convert
the ownership of each Financed Vehicle securing a Defaulted Receivable. In
taking such action, the Servicer shall follow such customary and usual
practices and procedures as it shall deem necessary or advisable in its
servicing of comparable automotive receivables, and as are otherwise
consistent with the standard of care required under Section 3.1, which
shall include the exercise of any rights of recourse to Dealers under the
Dealer Agreements. The Servicer shall be entitled to recover all
reasonable expenses incurred by it in the course of repossessing and
liquidating a Financed Vehicle into cash proceeds, but only out of the cash
proceeds of such Financed Vehicle and any deficiency obtained from the
Obligor. The foregoing shall be subject to the provision that, in any case
in which a Financed Vehicle shall have suffered damage, the Servicer shall
not expend funds in connection with the repair or the repossession of such
Financed Vehicle unless it shall determine in its discretion that such
repair and/or repossession will increase the Liquidation Proceeds (or
Recoveries) of the related Receivable by an amount equal to or greater than
the amount of such expenses.
(b) If the Servicer elects to commence a legal proceeding to
enforce a Dealer Agreement, the act of commencement shall be deemed to be
an automatic assignment from the Trust to the Servicer of the rights of
recourse under such Dealer Agreement. If, however, in any enforcement suit
or legal proceeding, it is held that the Servicer may not enforce a Dealer
Agreement on the grounds that it is not a real party in interest or a
Person entitled to enforce the Dealer Agreement, the Owner Trustee, at the
Servicer's expense and direction, shall take such steps as the Servicer
deems necessary to enforce the Dealer Agreement, including bringing suit in
its name or the names of the Indenture Trustee, the Certificateholders,
the Noteholders or any of them.
SECTION 3.4 Physical Damage Insurance. The Servicer shall
follow its customary servicing procedures to determine whether or not each
Obligor shall have maintained physical damage insurance covering the
related Financed Vehicle.
SECTION 3.5 Maintenance of Security Interests in Financed
Vehicles. The Servicer, in accordance with the standard of care required
under Section 3.1, shall take such steps as are necessary to maintain
perfection of the security interest created by each Receivable in the
related Financed Vehicle. The Trust hereby authorizes the Servicer, and
the Servicer hereby agrees, to take such steps as are necessary to re-
perfect such security interest on behalf of the Trust and the Indenture
Trustee in the event the Servicer receives notice of, or otherwise has
actual knowledge of, the relocation of a Financed Vehicle or for any other
reason.
SECTION 3.6 Covenants of Servicer. The Servicer hereby makes
the following covenants:
(a) Security Interest to Remain in Force. The Financed Vehicle
securing each Receivable will not be released from the security interest
granted by the Receivable in whole or in part, except as contemplated
herein.
(b) No Impairment. The Servicer will not (nor will it permit
any subservicer to) impair in any material respect the rights of the Trust,
the Owner Trustee, the Indenture Trustee, the Certificateholders or the
Noteholders in the Receivables or, subject to clause (c) below, otherwise
amend or alter the terms thereof if, as a result of such amendment or
alteration, the interests of the Trust, the Owner Trustee, the Indenture
Trustee, the Certificateholders or the Noteholders hereunder would be
materially adversely affected.
(c) Amendments. The Servicer will not increase or decrease the
number or amount of Scheduled Payments or the Amount Financed under a
Receivable, or extend, rewrite or otherwise modify the payment terms of a
Receivable, except pursuant to Section 3.2(a).
SECTION 3.7 Purchase by Servicer upon Breach. The Seller, the
Servicer or the Owner Trustee, as the case may be, shall inform the other
parties to this Agreement promptly, in writing, upon the discovery of any
breach of Section 3.2(a), 3.5 or 3.6. If the breach shall not have been
cured by the last day of the Collection Period which includes the sixtieth
(60th) day after the date on which the Servicer becomes aware of, or
receives written notice of, such breach, and such breach materially and
adversely affects the interests of the Trust in a Receivable, the Servicer
shall purchase such Receivable or Receivables on the immediately succeeding
Payment Date; provided, however, that with respect to a breach of Section
3.2(a), the Servicer shall repurchase the affected Receivable from the
Trust at the end of the Collection Period in which such breach occurs. In
consideration of the purchase of a Receivable hereunder, the Servicer shall
remit the Purchase Amount of such Receivable in the manner specified in
Section 4.5. Except as provided in Section 7.2, the sole remedy of the
Trust, the Owner Trustee, the Indenture Trustee, the Certificateholders or
the Noteholders against the Servicer with respect to a breach pursuant to
Section 3.2, 3.5 or 3.6 shall be to require the Servicer to repurchase
Receivables pursuant to this Section 3.7. Neither the Owner Trustee nor
the Indenture Trustee shall have any duty to conduct an affirmative
investigation as to the occurrence of any condition requiring the
repurchase of any Receivable pursuant to this Section 3.7 or the
eligibility of any Receivable for purposes of this Agreement.
SECTION 3.8 Servicing Compensation. The "Servicing Fee" with
respect to a Collection Period shall be an amount equal to the product of
one-twelfth (1/12) of the Servicing Rate and the Pool Balance as of the
first day of such Collection Period. As additional servicing compensation,
the Servicer shall also be entitled to earnings on amounts on deposit in
the Payahead Account, disposition fees paid with respect to Final Payment
Receivables, Rule of 78's Payments, and any administrative fees and charges
and all late payment fees actually collected (from whatever source) on the
Receivables other than fees paid in connection with the extension or
deferral of payments on a Receivable (the "Supplemental Servicing Fee").
The Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder (including fees and expenses of
the Owner Trustee and the Indenture Trustee (and any custodian appointed by
the Owner Trustee and the Indenture Trustee) and independent accountants,
any subservicer, taxes imposed on the Servicer or any subservicer (to the
extent not paid by such subservicer), and expenses incurred in connection
with distributions and reports to the Certificateholders and the
Noteholders), except expenses incurred in connection with realizing upon
Receivables under Section 3.3.
SECTION 3.9 Servicer's Certificate. On or before the
Determination Date immediately preceding each Payment Date, the Servicer
shall deliver to the Owner Trustee, each Paying Agent, the Indenture
Trustee and the Seller, with a copy to the Rating Agencies, a certificate
of a Servicing Officer substantially in the form of Exhibit A hereto (a
"Servicer's Certificate") and attached to a Servicer's report containing
all information necessary to make the transfers and distributions pursuant
to Sections 4.3, 4.4, 4.5, 4.6 and 4.7, together with the written
statements to be furnished by the Owner Trustee to Certificateholders
pursuant to Section 4.11 and by the Indenture Trustee to the Noteholders
pursuant to Section 4.11 hereof and Section 6.6 of the Indenture. The
Servicer also shall separately identify (by account number of the
Receivable as it appears in the related Schedule of Receivables) in a
written notice to the Owner Trustee and the Indenture Trustee the
Receivables to be repurchased by the Seller or to be purchased by the
Servicer, as the case may be, on the related Payment Date, and, upon
request of one of the foregoing parties, each Receivable which became a
Defaulted Receivable during the related Collection Period. The Servicer
shall deliver to the Rating Agencies any information, to the extent it is
available to the Servicer, that the Rating Agencies reasonably request in
order to monitor the Trust.
SECTION 3.10 Annual Statement as to Compliance; Notice of Event
of Servicing Termination. (a) The Servicer shall deliver to the Owner
Trustee and the Indenture Trustee, on or before May 31 of each year,
commencing May 31, 2000, an Officer's Certificate, stating that (i) a
review of the activities of the Servicer during the preceding calendar year
(or longer period, in the case of the first such Officer's Certificate) and
of its performance of its obligations under this Agreement has been made
under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement throughout such year (or longer period, in
the case of the first such certificate), or, if there has been a default in
the fulfillment of any such obligation, specifying each such default known
to such officer and the nature and status thereof. A copy of such
certificate may be obtained by any Certificateholder by a request in
writing to the Owner Trustee, or by any Noteholder or Person certifying
that it is a Note Owner by a request in writing to the Indenture Trustee,
in either case addressed to the applicable Corporate Trust Office. Upon
the telephone request of the Owner Trustee, the Indenture Trustee shall
promptly furnish the Owner Trustee a list of Noteholders as of the date
specified by the Owner Trustee.
(b) The Servicer shall deliver to the Owner Trustee, the
Indenture Trustee and the Rating Agencies, promptly upon having knowledge
thereof, but in no event later than five (5) Business Days thereafter,
written notice in an Officer's Certificate of any event which constitutes
or, with the giving of notice or lapse of time or both, would become, an
Event of Servicing Termination under Section 8.1.
SECTION 3.11 Annual Independent Certified Public Accountants'
Reports. The Servicer shall cause a firm of independent certified public
accountants (who may also render other services to the Servicer, the Seller
or to MMCA) to deliver to the Owner Trustee and the Indenture Trustee on or
before May 31 of each year, commencing May 31, 2000, a report addressed to
the Board of Directors of the Servicer with respect to the preceding
calendar year (or longer period, in the case of the first such report) to
the effect that such firm has audited the financial statements of the
Servicer and issued its report thereon and that such audit (1) was made in
accordance with generally accepted auditing standards, (2) included tests
relating to motor vehicle loans serviced for others in accordance with the
requirements of the Uniform Single Attestation Program for Mortgage Bankers
(the "Program"), to the extent the procedures in such Program are
applicable to the servicing obligations set forth in this Agreement, and
(3) except as described in the report, disclosed no exceptions or errors in
the records relating to automobile and light- or medium-duty truck loans
serviced for others that such firm is required to report under the Program.
Such report shall also indicate that the firm is independent with respect
to the Seller and the Servicer within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public
Accountants. A copy of such report may be obtained by any
Certificateholder by a request in writing to the Owner Trustee, or by any
Noteholder or Person certifying that it is a Note Owner by a request in
writing to the Indenture Trustee, in either case addressed to the
applicable Corporate Trust Office.
SECTION 3.12 Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide the Certificateholders,
the Indenture Trustee and the Noteholders with access to the Receivable
Files in the cases where the Certificateholders, the Indenture Trustee or
the Noteholders shall be required by applicable statutes or regulations to
have access to such documentation. Such access shall be afforded without
charge, but only upon reasonable request and during normal business hours
at the offices of the Servicer. Nothing in this Section 3.12 shall affect
the obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors, and the failure of the
Servicer to provide access to information as a result of such obligation
shall not constitute a breach of this Section 3.12. Any Certificateholder
or Noteholder, by its acceptance of a Certificate or Note, as the case may
be, shall be deemed to have agreed to keep any information obtained by it
pursuant to this Section confidential, except as may be required by
applicable law.
SECTION 3.13 Reports to the Commission. The Servicer shall, on
behalf of the Trust, cause to be filed with the Commission any periodic
reports required to be filed under the provisions of the Exchange Act , and
the rules and regulations of the Commission thereunder. The Seller shall,
at its expense, cooperate in any reasonable request made by the Servicer in
connection with such filings.
SECTION 3.14 Reports to Rating Agencies. The Servicer shall
deliver to each Rating Agency, at such address as each Rating Agency may
request, a copy of all reports or notices furnished or delivered pursuant
to this Article and a copy of any amendments, supplements or modifications
to this Agreement and any subservicing agreement and any other information
reasonably requested by such Rating Agency to monitor this transaction.
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS
TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 4.1 Accounts. (a) The Servicer shall, prior to the
Closing Date, establish and maintain a segregated trust account in the name
of the Indenture Trustee, at a Qualified Institution or Qualified Trust
Institution (which shall initially be the corporate trust department of
Bank of Tokyo - Mitsubishi Trust Company), which shall be designated as the
"Collection Account". The Collection Account shall be held in trust for
the benefit of the Noteholders and the Certificateholders. The Collection
Account shall be under the sole dominion and control of the Indenture
Trustee; provided, that the Servicer may make deposits to and direct the
Indenture Trustee in writing to make withdrawals from the Collection
Account in accordance with the terms of this Agreement, the Indenture and
the Trust Agreement. All monies deposited from time to time in the
Collection Account shall be held by the Indenture Trustee as part of the
Trust Property and all deposits to and withdrawals therefrom shall be made
only upon the terms and conditions of the Basic Documents.
If the Servicer is required to remit collections pursuant to the
first sentence of Section 4.2, all amounts held in the Collection Account
shall, to the extent permitted by applicable law, rules and regulations, be
invested, as directed in writing by the Servicer, by the bank or trust
company then maintaining the Collection Account in Permitted Investments
that mature not later than the Business Day immediately prior to the
Payment Date for the Collection Period to which such amounts relate and
such Permitted Investments shall be held to maturity. All interest and
other income (net of losses and investment expenses) on funds on deposit in
the Collection Account shall be withdrawn from the Collection Account at
the written direction of the Servicer and shall be deposited in the
Certificate Distribution Account. In the event that the Collection Account
is no longer to be maintained at the corporate trust department of Bank of
Tokyo - Mitsubishi Trust Company, the Servicer shall, with the Indenture
Trustee's or Owner Trustee's assistance as necessary, cause the Collection
Account to be moved to a Qualified Institution or a Qualified Trust
Institution within ten (10) Business Days (or such longer period not to
exceed thirty (30) calendar days as to which each Rating Agency may
consent).
(b) The Servicer shall, prior to the Closing Date, establish and
maintain a segregated trust account in the name of the Indenture Trustee,
at a Qualified Institution or Qualified Trust Institution (which shall
initially be the corporate trust department of Bank of Tokyo - Mitsubishi
Trust Company), which shall be designated as the "Pre-Funding Account".
The Pre-Funding Account shall be held in trust for the benefit of the
Noteholders and the Certificateholders. The Pre-Funding Account shall be
under the sole dominion and control of the Indenture Trustee; provided,
that the Servicer may make deposits to and direct the Indenture Trustee in
writing to make withdrawals from the Pre-Funding Account in accordance with
the terms of this Agreement and the other Basic Documents. All monies
deposited from time to time in the Pre-Funding Account shall be held by the
Indenture Trustee as part of the Trust Property and all deposits to and
withdrawals therefrom shall be made only upon the terms and conditions of
the Basic Documents.
All amounts held in the Pre-Funding Account shall, to the extent
permitted by applicable law, rules and regulations, be invested, as
directed in writing by the Servicer, by the bank or trust company then
maintaining the Pre-Funding Account in Permitted Investments that mature
not later than the Business Day immediately prior to each Payment Date and
such Permitted Investments shall be held until maturity. On the Business
Day preceding each Payment Date, the Servicer shall instruct the Indenture
Trustee to withdraw from the Pre-Funding Account for deposit to the
Collection Account on such date an amount equal to the Pre-Funding Account
Investment Earnings, if any, for the related Collection Period. In the
event that the Pre-Funding Account is no longer to be maintained at the
corporate trust department of Bank of Tokyo - Mitsubishi Trust Company, the
Servicer shall, with the Indenture Trustee's or Owner Trustee's assistance
as necessary, cause the Pre-Funding Account to be moved to a Qualified
Institution or a Qualified Trust Institution within ten (10) Business Days
(or such longer period not to exceed thirty (30) calendar days as to which
each Rating Agency may consent).
With respect to any amounts, securities, investments, financial
assets and other property deposited in or credited to the Pre-Funding
Account:
(i) any such property that is a "financial asset" as
defined in Section 8-102(a)(9) of the UCC shall be physically
delivered to, or credited to an account in the name of, the
Qualified Institution or Qualified Trust Institution maintaining
the Pre-Funding Account, as applicable, in accordance with such
institution's customary procedures such that such institution
establishes a "securities entitlement" in favor of the Indenture
Trustee with respect thereto;
(ii) any such property that is held in deposit accounts
shall be held solely in the name of the Indenture Trustee at one
or more depository institutions having the Required Rating and
each such deposit account shall be subject to the exclusive
custody and control of the Indenture Trustee, and the Indenture
Trustee shall have sole signature authority with respect thereto;
and
(iii) except for any deposit accounts specified in clause
(ii) above, the Pre-Funding Account shall only be invested in
securities or in other assets which the Qualified Institution or
Qualified Trust Institution maintaining the Pre-Funding Account,
as applicable, agrees to treat as "financial assets" as defined
in Section 8-102(a)(9) of the UCC.
(c) The Servicer shall, prior to the Closing Date, establish and
maintain a segregated trust account in the name of the Indenture Trustee,
at a Qualified Institution or Qualified Trust Institution (which shall
initially be the corporate trust department of Bank of Tokyo - Mitsubishi
Trust Company), which shall be designated as the "Negative Carry Account".
The Negative Carry Account shall be held in trust for the exclusive benefit
of the Noteholders. The Negative Carry Account shall be under the sole
dominion and control of the Indenture Trustee; provided, that the Servicer
may make deposits to and direct the Indenture Trustee in writing to make
withdrawals from the Negative Carry Account in accordance with the terms of
this Agreement and the other Basic Documents. All monies deposited from
time to time in the Negative Carry Account shall be held by the Indenture
Trustee as part of the Trust Property and all deposits to and withdrawals
therefrom shall be made only upon the terms and conditions of the Basic
Documents.
All amounts held in the Negative Carry Account shall, to the
extent permitted by applicable law, rules and regulations, be invested, as
directed in writing by the Servicer, by the bank or trust company then
maintaining the Negative Carry Account in Permitted Investments that mature
not later than the Business Day immediately prior to each Payment Date and
such Permitted Investments shall be held until maturity. All interest and
other income (net of losses and investment expenses) on funds on deposit in
the Negative Carry Account shall be withdrawn from the Negative Carry
Account for deposit to the Collection Account or release to the Seller at
the time and in the manner provided in Section 4.9. In the event that the
Negative Carry Account is no longer to be maintained at the corporate trust
department of Bank of Tokyo - Mitsubishi Trust Company, the Servicer shall,
with the Indenture Trustee's or Owner Trustee's assistance as necessary,
cause the Collection Account to be moved to a Qualified Institution or a
Qualified Trust Institution within ten (10) Business Days (or such longer
period not to exceed thirty (30) calendar days as to which each Rating
Agency may consent).
With respect to any amounts, securities, investments, financial
assets and other property deposited in or credited to the Negative Carry
Account:
(i) any such property that is a "financial asset" as
defined in Section 8-102(a)(9) of the UCC shall be physically
delivered to, or credited to an account in the name of, the
Qualified Institution or Qualified Trust Institution maintaining
the Negative Carry Account, as applicable, in accordance with
such institution's customary procedures such that such
institution establishes a "securities entitlement" in favor of
the Indenture Trustee with respect thereto;
(ii) any such property that is held in deposit accounts
shall be held solely in the name of the Indenture Trustee at one
or more depository institutions having the Required Rating and
each such deposit account shall be subject to the exclusive
custody and control of the Indenture Trustee and the Indenture
Trustee shall have sole signature authority with respect thereto;
and
(iii) except for any deposit accounts specified in clause
(ii) above, the Negative Carry Account shall only be invested in
securities or in other assets which the Qualified Institution or
Qualified Trust Institution maintaining the Negative Carry
Account, as applicable, agrees to treat as "financial assets" as
defined in Section 8-102(a)(9) of the UCC.
(d) The Servicer shall, prior to the Closing Date, establish and
maintain a segregated trust account in the name of the Indenture Trustee at
a Qualified Institution or Qualified Trust Institution (which shall
initially be the corporate trust department of Bank of Tokyo - Mitsubishi
Trust Company), which shall be designated as the "Note Payment Account".
The Note Payment Account shall be held in trust for the benefit of the
Noteholders. The Note Payment Account shall be under the sole dominion and
control of the Indenture Trustee. All monies deposited from time to time
in the Note Payment Account pursuant to this Agreement and the Indenture
shall be held by the Indenture Trustee as part of the Trust Property and
shall be applied as provided in this Agreement and the Indenture. In the
event that the Note Payment Account is no longer to be maintained at the
corporate trust department of Bank of Tokyo - Mitsubishi Trust Company,
the Servicer shall, with the Indenture Trustee's assistance as necessary,
cause the Note Payment Account to be moved to a Qualified Institution or a
Qualified Trust Institution within ten (10) Business Days (or such longer
period not to exceed thirty (30) calendar days as to which each Rating
Agency may consent).
(e) The Servicer shall, prior to the Closing Date, establish and
maintain a segregated trust account in the name of the Owner Trustee at a
Qualified Institution or Qualified Trust Institution (which shall initially
be Wilmington Trust Company), which shall be designated as the "Certificate
Distribution Account". Except as provided in the Trust Agreement, the
Certificate Distribution Account shall be held in trust for the benefit of
the Certificateholders. The Certificate Distribution Account shall be
under the sole dominion and control of the Owner Trustee; provided that the
Indenture Trustee may make deposits to such account in accordance with the
directions of the Servicer pursuant to this Agreement and the Indenture.
All monies deposited from time to time in the Certificate Distribution
Account pursuant to this Agreement and the Indenture shall be held by the
Owner Trustee as part of the Trust Property and shall be applied as
provided in this Agreement and the Trust Agreement. In the event that the
Certificate Distribution Account is no longer to be maintained at
Wilmington Trust Company, the Servicer shall, with the Owner Trustee's
assistance as necessary, cause the Certificate Distribution Account to be
moved to a Qualified Institution or a Qualified Trust Institution within
ten (10) Business Days (or such longer period not to exceed thirty (30)
calendar days as to which each Rating Agency may consent) and shall
promptly notify the Indenture Trustee of the account number and location of
such account.
(f) The Servicer shall, prior to the Closing Date, establish and
maintain a segregated trust account in the name of the Indenture Trustee at
a Qualified Institution or Qualified Trust Institution (which shall
initially be the corporate trust department of Bank of Tokyo - Mitsubishi
Trust Company), which shall be designated as the "Payahead Account" (the
Payahead Account, together with the Collection Account, the Pre-Funding
Account and the Note Payment Account, the "Trust Accounts"). The Payahead
Account shall be held in trust for the benefit of the Noteholders and the
Certificateholders. The Payahead Account shall be under the sole dominion
and control of the Indenture Trustee provided, that the Servicer may make
deposits to and direct the Indenture Trustee in writing to make withdrawals
from the Payahead Account in accordance with this Agreement and the
Indenture. All monies deposited from time to time in the Payahead Account
shall be held by the Indenture Trustee as part of the Trust Property and
all deposits to and withdrawals therefrom shall be made only upon the terms
and conditions of the Basic Documents.
On the Closing Date, the Seller shall deposit an amount equal to
the Initial Payahead Account Deposit into the Payahead Account from the net
proceeds of the sale of the Notes and the Certificates. On each Subsequent
Transfer Date, the Servicer shall instruct the Indenture Trustee to
withdraw from the Pre-Funding Account and deposit to the Payahead Account
an amount equal to the applicable Subsequent Payahead Account Deposit.
If the Servicer is required to remit collections pursuant to the
first sentence of Section 4.2, all amounts held in the Payahead Account
shall, to the extent permitted by applicable law, rules and regulations, be
invested, as directed in writing by the Servicer, by the bank or trust
company then maintaining the Payahead Account in Permitted Investments that
mature not later than the Business Day immediately prior to the Payment
Date for the Collection Period to which such amounts relate and such
Permitted Investments shall be held to maturity. All interest and other
income (net of losses and investment expenses) on funds on deposit in the
Payahead Account shall be withdrawn from the Payahead Account at the
direction of the Servicer and shall be paid to the Servicer as additional
servicing compensation. In the event that the Payahead Account is no
longer to be maintained at the corporate trust department of Bank of Tokyo
- Mitsubishi Trust Company, the Servicer shall, with the Indenture
Trustee's or Owner Trustee's assistance as necessary, cause the Payahead
Account to be moved to a Qualified Institution or a Qualified Trust
Institution within ten (10) Business Days (or such longer period not to
exceed thirty (30) calendar days as to which each Rating Agency may
consent).
(g) Notwithstanding the provisions of clause (d) above and of
Section 4.6(a)(ii), for so long as (i) MMCA is the Servicer, (ii) the
rating of MMCA's short-term unsecured debt is at least P-1 by ▇▇▇▇▇'▇ and
is at least A-1 by S&P and (iii) no Events of Servicing Termination shall
have occurred (each, a "Monthly Remittance Condition"), Payaheads need not
be remitted to and deposited in the Payahead Account but instead may be
remitted to and held by the Servicer. So long as such Monthly Remittance
Conditions are met, the Servicer shall not be required to segregate or
otherwise hold separate any Payaheads remitted to the Servicer as aforesaid
but shall be required to remit Payaheads to the Collection Account in
accordance with Section 4.6(a)(i). At all times as such Monthly Remittance
Conditions are not met, the Servicer shall deposit in the Payahead Account
the amount of any Payaheads then held or received by it. Notwithstanding
the foregoing, if a Monthly Remittance Condition is not satisfied, the
Servicer may utilize, with respect to Payaheads, an alternative remittance
schedule (which may include the remittance schedule utilized by the
Servicer before the Monthly Remittance Condition became unsatisfied), if
the Servicer provides to the Owner Trustee and the Indenture Trustee
written confirmation from the Rating Agencies that such alternative
remittance schedule will not result in the downgrading or withdrawal by the
Rating Agencies of the ratings then assigned to the Notes and the
Certificates. The Owner Trustee and the Indenture Trustee shall not be
deemed to have knowledge of any event or circumstance under clauses (ii) or
(iii) of the first sentence of this Section 4.1(g) that would require
remittance of the Payaheads to the Payahead Account unless the Owner
Trustee or the Indenture Trustee has received notice of such event or
circumstance from the Seller or the Servicer in an Officer's Certificate or
from the Holders of Notes evidencing not less than 25% of the principal
balance of the then Outstanding Notes or from the Holders of Certificates
evidencing not less than 25% of the Certificate Balance or unless an
Authorized Officer in the Corporate Trust Office with knowledge hereof and
familiarity herewith has actual knowledge of such event or circumstance.
(h) The Servicer shall be permitted to remit to any Obligor,
upon the request of such Obligor, the Payahead Balance with respect to such
Obligor's Receivable or such lesser amount as is requested by such Obligor,
in accordance with the Servicer's customary standards, policies, practices
and procedures, to the extent that such amount is not then due on such
Receivable. Upon any such remittance, the Payahead Balance with respect to
such Receivable shall be reduced by the amount of such remittance.
SECTION 4.2 Collections. (a) Subject to the provisions of
subsection (b) below, the Servicer shall remit to the Collection Account
(i) all payments by or on behalf of the Obligors (including, subject to the
next two sentences, Payaheads on the Receivables and Rule of 78's Payments,
but excluding payments with respect to Purchased Receivables and amounts
included in the Supplemental Servicing Fee other than Rule of 78's
Payments), including amounts treated as collections on Final Payment
Receivables pursuant to Section 3.2(d) and (ii) all Liquidation Proceeds
and all Recoveries, received by the Servicer during any Collection Period,
as soon as practicable, but in no event after the close of business on the
second Business Day after receipt thereof. Collections of Payaheads and
Rule of 78's Payments shall be deposited in the Collection Account,
pursuant to the preceding sentence for purposes of administrative
convenience only, pending, with respect to Payaheads, determination of the
amount to be deposited in the Payahead Account (or in the event that the
Monthly Remittance Conditions are satisfied, remitted to the Servicer
pursuant to Section 4.1(g)), which amount shall be deposited in the
Payahead Account as soon as practicable but in no event later than the
Payment Date immediately following collection, and such amounts shall not
be transferred to the Collection Account until due, and with respect to
Rule of 78's Payments, determination of such payments, which payments upon
determination shall be made to the Servicer, and the Trust shall not be
entitled to such amounts.
MMCA, for so long as it is acting as the Servicer, may make
remittances of collections on a less frequent basis than that specified in
the immediately preceding sentence. It is understood that such less
frequent remittances may be made only on the specific terms and conditions
set forth below in this Section 4.2 and only for so long as such terms and
conditions are fulfilled. Accordingly, notwithstanding the provisions of
the first sentence of this Section 4.2, the Servicer shall remit
collections received during a Collection Period to the Collection Account
in immediately available funds on the Business Day prior to the related
Payment Date but only for so long as each Monthly Remittance Condition is
satisfied. Notwithstanding the foregoing, if a Monthly Remittance
Condition is not satisfied, the Servicer may utilize an alternative
remittance schedule (which may include the remittance schedule utilized by
the Servicer before the Monthly Remittance Condition became unsatisfied),
if the Servicer provides to the Owner Trustee and the Indenture Trustee
written confirmation from the Rating Agencies that such alternative
remittance schedule will not result in the downgrading or withdrawal by the
Rating Agencies of the ratings then assigned to the Notes and the
Certificates. The Owner Trustee or the Indenture Trustee shall not be
deemed to have knowledge of any event or circumstance under clauses (ii) or
(iii) of the definition of Monthly Remittance Condition that would require
daily remittance by the Servicer to the Collection Account unless the Owner
Trustee or the Indenture Trustee has received notice of such event or
circumstance from the Seller or the Servicer in an Officer's Certificate or
written notice from the Holders of Notes evidencing not less than 25% of
the principal balance of the then outstanding Notes or from the Holders of
Certificates evidencing not less than 25% of the Certificate Balance or an
Authorized Officer in the Corporate Trust Office with knowledge hereof or
familiarity herewith has actual knowledge of such event or circumstance.
(b) In those cases where a subservicer is servicing a
Receivable, the Servicer shall cause the subservicer to remit to the
Collection Account, as soon as practicable, but in no event after the close
of business on the second Business Day after receipt thereof by the
subservicer (but subject to the provisions of Section 4.2(a)) the amounts
referred to in Section 4.2(a) in respect of a Receivable being serviced by
the subservicer.
SECTION 4.3 Application of Collections. (a) For the purposes
of this Agreement, as of the close of business on the last day of each
Collection Period, all collections received pursuant to Section 4.2 for
such Collection Period for each Receivable (excluding amounts received by
the Servicer with respect to Rule of 78's Payments, the amounts actually
collected with respect to the Supplemental Servicing Fee, amounts collected
with respect to a Purchased Receivable) shall be applied by the Servicer,
in the case of (i) a Simple Interest Receivable that is a Standard
Receivable, to interest and principal on the Receivable in accordance with
the Simple Interest Method, (ii) a Simple Interest Receivable that is a
Final Payment Receivable, to interest and principal in accordance with the
Simple Interest Method first, to accrued but unpaid interest, second, to
the Level Pay Balance of such Receivable, third, to the principal portion
of the Last Scheduled Payment to the extent a Last Scheduled Payment
Advance has not been made by the Servicer with respect to such Last
Scheduled Payment and fourth, to the extent of any unreimbursed Last
Scheduled Payment Advance with respect to such Simple Interest Receivable,
to reimburse the Servicer for such Last Scheduled Payment Advance and (iii)
an Actuarial Receivable, first, to the Scheduled Payment of such Actuarial
Receivable, second to the extent of any unreimbursed Actuarial Advances
with respect to such Actuarial Receivable, to reimburse the Servicer for
any such Actuarial Advances, third, to the extent of any unreimbursed Last
Scheduled Payment Advance with respect to such Actuarial Receivable, to
reimburse the Servicer for such Last Scheduled Payment Advance and fourth,
to the extent that any amounts are remaining then due to a prepayment of
such Actuarial Receivable, if the sum of such remaining amount and the
previous Payahead Balance shall be sufficient to prepay the Actuarial
Receivable in full, and otherwise to the Payahead Account (or, if all
Monthly Remittance Conditions are satisfied, to the Servicer) as a
Payahead.
(b) All Liquidation Proceeds and any Recoveries, and any
proceeds realized upon the liquidation, sale or dissolution of the Owner
Trust Estate (or any part thereof) upon the occurrence of an Event of
Default under the Indenture shall, with respect to any Final Payment
Receivable be applied first to accrued but unpaid interest thereon, second,
to the Level Pay Balance of such Receivable and third, to the principal
portion of the related Last Scheduled Payment.
SECTION 4.4 Advances. (a) As of the close of business on the
last day of each Collection Period, if the payments during such Collection
Period by or on behalf of the Obligor on or in respect of an Actuarial
Receivable (other than a Purchased Receivable) after application under
Section 4.3 shall be less than the Scheduled Payment, the Payahead Balance
of such Receivable shall be applied by the Indenture Trustee to the extent
of the shortfall, and such Payahead Balance shall be reduced accordingly.
Subject to the last sentence of this Section 4.4(a), on each Payment Date
the Servicer shall advance an amount equal to the excess, if any, of the
Scheduled Payment with respect to an Actuarial Receivable over of the sum
of the (x) payments received on or in respect of such Actuarial Receivable
during the preceding Collection Period and (y) the Payahead Balance with
respect to such Actuarial Receivable (such advance, an "Actuarial
Advance"); provided that the Servicer shall make Actuarial Advances with
respect to the Last Scheduled Payment on Actuarial Receivables that are
Final Payment Receivables in accordance with Section 4.4(b). All
applications of the Payahead Balance of a Receivable by the Indenture
Trustee and all Actuarial Advances by the Servicer pursuant to this Section
4.4(a) shall be made based on the information set forth in the Servicer's
report attached to the Servicer's Certificate delivered pursuant to Section
3.9. Notwithstanding anything in this Agreement to the contrary, no
successor to Mitsubishi Motors Credit of America, Inc. as Servicer shall be
required to make Actuarial Advances.
(b) As of the last day of the Collection Period in which the
Last Scheduled Payment with respect to a Final Payment Receivable is due,
if the payments during such Collection Period by or on behalf of the
related Obligor on or in respect of such Last Scheduled Payment after
application under Section 4.3(a) and, in the case of an Actuarial
Receivable, the amounts, if any, in the Payahead Account allocable to such
Last Scheduled Payment, shall be less than the amount of such Last
Scheduled Payment, the Servicer shall advance an amount equal to the
shortfall by depositing such amount into the Collection Account on the
related Payment Date (such advance, a "Last Scheduled Payment Advance") .
Notwithstanding anything in this Agreement to the contrary, no successor to
Mitsubishi Motors Credit of America, Inc. as Servicer shall be required to
make Last Scheduled Payment Advances.
(c) (i) Upon either the written instructions of the Servicer or
based solely upon the information contained in the Servicer's Certificate
delivered on the related Determination Date pursuant to Section 3.9, the
Indenture Trustee shall release from amounts available in the Payahead
Account, the amounts required to be released from amounts available in the
Payahead Account pursuant to Section 4.4(a) with respect to each Collection
Period and shall deposit such amounts in the Collection Account on the
related Payment Date pursuant to Section 4.5(a).
(ii) On each Payment Date, the Servicer shall deposit into
the Collection Account an amount equal to the aggregate amount of
Actuarial Advances required to be made with respect to related
Collection Period.
(d) On each Payment Date, the Servicer shall instruct the
Indenture Trustee to withdraw from the Collection Account for distribution
to the Servicer, in immediately available funds, an amount equal to the sum
of (i) the aggregate amount of collections on Actuarial Receivables with
respect to which the Servicer has made Actuarial Advances in a prior
Collection Period that are allocable to the reimbursement of such Actuarial
Advances pursuant to Section 4.3(a) and (ii) the aggregate amount of
Actuarial Advances that the Servicer has not been reimbursed for pursuant
to this Section 4.4(d), Section 4.5(b) or Section 4.5(c) with respect to
Actuarial Receivables that became Defaulted Receivables in the related
Collection Period.
(e) On each Payment Date, the Servicer shall instruct the
Indenture Trustee to withdraw from the Collection Account for distribution
to the Servicer, in immediately available funds, an amount equal to the sum
of (i) the aggregate amount of collections on Final Payment Receivables in
the related Collection Period that are allocable to the reimbursement of
Last Scheduled Payment Advances pursuant to Section 4.3(a) and (ii) the
aggregate amount of losses on Last Scheduled Payments that the Servicer has
recorded in its books and records during the related Collection Period to
the extent such losses are allocable to Last Scheduled Payments with
respect to which the Servicer has made Last Scheduled Payment Advances, but
only to the extent such Last Scheduled Payment Advances have not already
been reimbursed pursuant to this Section 4.4(e) or Section 4.5(b) or
Section 4.5(c).
SECTION 4.5 Additional Deposits. (a) The Indenture Trustee
shall deposit in the Collection Account amounts required pursuant to
Section 4.4(c). The Servicer shall deposit in the Collection Account
amounts required to be advanced by the Servicer pursuant to Sections 4.4(a)
and (b). The Seller and the Servicer shall deposit or cause to be
deposited in the Collection Account the aggregate Purchase Amount with
respect to Purchased Receivables pursuant to Section 2.3, 3.7 or 9.1. The
Indenture Trustee shall deposit in the Collection Account any amounts
received pursuant to the Yield Supplement Agreement and any amounts
received from the Letter of Credit Bank or the Yield Supplement Account
pursuant to Article V on the date of receipt thereof. All such deposits
with respect to a Collection Period shall be made in immediately available
funds no later than 10:00 a.m., New York City time, on the Payment Date
related to such Collection Period.
(b) The Indenture Trustee shall, on or prior to 10:00 a.m., New
York City time, on the Payment Date relating to each Collection Period make
the following withdrawals from the Supplemental Reserve Account in the
following order of priority (in each case as set forth in the Servicer's
Certificate for such Payment Date): (i) an amount equal to the
Supplemental Reserve Account Advance Draw Amount, if any, calculated by the
Servicer pursuant to Section 4.6(b), and shall pay such amount to the
Servicer and (ii) an amount equal to the Supplemental Reserve Account TRP
Draw Amount, if any, calculated by the Servicer pursuant to Section 4.6(b),
and shall deposit such funds to the Collection Account.
(c) The Indenture Trustee shall, on or prior to 10:00 a.m., New
York City time, on the Payment Date relating to each Collection Period make
the following withdrawals from the Reserve Account in the following order
of priority (in each case as set forth in the Servicer's Certificate for
such Payment Date): (i) an amount equal to the Reserve Account Advance
Draw Amount, if any, calculated by the Servicer pursuant to Section 4.6(b),
and shall pay such amount to the Servicer and (ii) an amount equal to the
Reserve Account TRP Draw Amount, if any, calculated by the Servicer
pursuant to Section 4.6(b), and shall deposit to the Collection Account.
SECTION 4.6 Allocation of Total Available Funds. (a) On each
Payment Date, the Indenture Trustee shall cause to be made the following
transfers and distributions in immediately available funds in the amounts
set forth in the Servicer's Certificate for such Payment Date:
(i) To the Collection Account from the Payahead Account (if
the Monthly Remittance Conditions are not then satisfied) or otherwise
from amounts remitted by the Servicer pursuant to Section 4.1(g) an
amount equal to the sum of:
(A) the aggregate portion of Payaheads constituting Scheduled
Payments with respect to the preceding Collection Period and
prepayments in full received during the preceding Collection
Period, as required by Sections 4.3 and 4.4(a); and
(B) the Payahead Balance, if any, relating to any Purchased
Receivable;
(ii) From the Collection Account to the Payahead Account
or, if the Monthly Remittance Conditions are then satisfied, to the
Servicer, the aggregate Payaheads received during the preceding
Collection Period, as required by Section 4.3.
(b) On each Determination Date, the Servicer shall calculate the
Available Funds, the Total Servicing Fee, the Accrued Note Interest for
each Class of Notes, the Scheduled Principal, the Principal Distribution
Amount, the Last Scheduled Payment Principal Collections, the Negative
Carry Amount, if any, in each case with respect to the following Payment
Date. In addition, on each Determination Date the Servicer shall calculate
the following amounts with respect to the following Payment Date:
(i) an amount equal to the lesser of (x) the amount, if any,
by which the aggregate amount payable to the Servicer out of the
Collection Account on the related Payment Date as reimbursement for
Actuarial Advances pursuant to Section 4.4(d) and for Last Scheduled
Payment Advances pursuant to Section 4.4(e) exceeds the amount in the
Collection Account available for such purpose (without giving effect
to any deposits thereto from amounts in the Reserve Account or the
Supplemental Reserve Account but giving effect to all other deposits
to the Collection Account required to be made on such Payment Date)
and (y) the Supplemental Reserve Account Amount for such Payment Date
(without giving effect to any deposits of Total Available Funds but
giving effect to all other deposits to the Supplemental Reserve
Account on such Payment Date) (the "Supplemental Reserve Account
Advance Draw Amount");
(ii) an amount equal to the lesser of (x) the amount, if
any, by which the amount specified in clause (x) of paragraph (i)
above exceeds the Supplemental Reserve Account Advance Draw Amount
for such Payment Date and (y) the Reserve Account Amount for such
Payment Date (without giving effect to any deposits of Total Available
Funds on such Payment Date) (the "Reserve Account Advance Draw
Amount");
(iii) an amount equal to the lesser of (x) the amount, if any,
by which the Total Required Payment for such Payment Date exceeds
the Available Funds for such Payment Date and (y) an amount equal to
the Supplemental Reserve Account Amount (without giving effect to any
deposits of Total Available Funds on such Payment Date) for such
Payment Date, less the Supplemental Reserve Account Advance Draw
Amount for such Payment Date (the "Supplemental Reserve Account TRP
Draw Amount");
(iv) an amount equal to the lesser of (x) the amount, if
any, by which the specified in clause (x) of paragraph (iii) above
exceeds the Supplemental Reserve Account TRP Draw Amount for such
Payment Date and (y) the Reserve Account Amount (without giving effect
to any deposits of Total Available Funds on such Payment Date) for
such Payment Date less the Reserve Account Advance Draw Amount for
such Payment Date (the "Reserve Account TRP Draw Amount");
(v) the Total Available Funds for such Payment Date;
(vi) the Reserve Account Amount with respect to such Payment
Date after giving effect to the Reserve Account Advance Draw Amount
and the Reserve Account TRP Draw Amount for such Payment Date, and
the difference, if any, between the Reserve Account Amount and the
Specified Reserve Balance for such Payment Date; and
(vii) the Supplemental Reserve Account Amount with respect to
such Payment Date after giving effect to the Supplemental Reserve
Account Advance Draw Amount and the Supplemental Reserve Account TRP
Draw Amount for such Payment Date, and the difference, if any, between
the Supplemental Reserve Account Amount and the Maximum Supplemental
Reserve Amount for such Payment Date.
(c) On each Payment Date, the Servicer shall instruct the
Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Determination Date pursuant to Section
3.9) to withdraw the Total Available Funds on deposit in the Collection
Account for the related Collection Period and make the following payments
and deposits for such Payment Date in the following order of priority:
(i) to the Servicer, the Total Servicing Fee;
(ii) to the Note Payment Account, the Accrued Note Interest
for each Class of Notes;
(iii) to the Note Payment Account, the Principal
Distribution Amount;
(iv) to the Reserve Account, the amount, if any, necessary
to reinstate the balance in the Reserve Account up to the Specified
Reserve Balance;
(v) to the Supplemental Reserve Account, the amount, if
any, necessary to reinstate the balance in the Supplemental Reserve
Account up to the Maximum Supplemental Reserve Amount; and
(vi) to the Certificate Distribution Account, any remaining
portion of the Total Available Funds.
SECTION 4.7 Reserve Account; Supplemental Reserve Account. (a)
The Seller shall, prior to the Closing Date, establish and maintain a
segregated trust account in the name of the Indenture Trustee at a
Qualified Institution or Qualified Trust Institution (which shall initially
be the corporate trust department of Bank of Tokyo - Mitsubishi Trust
Company), which shall be designated as the "Reserve Account". The Reserve
Account shall be under the sole dominion and control of the Indenture
Trustee; provided, that the Servicer may make deposits to the Reserve
Account in accordance with this Agreement and the Indenture. On the
Closing Date, the Seller will deposit the Reserve Initial Deposit into the
Reserve Account from the net proceeds of the sale of the Notes. On each
Subsequent Transfer Date, the Servicer shall instruct Indenture Trustee to
withdraw from the Pre-Funding Account and deposit to the Reserve Account on
such Subsequent Transfer Date an amount equal to the applicable Subsequent
Reserve Account Deposit as provided in Section 4.8(a). The Reserve Account
and all amounts, securities, investments, financial assets and other
property deposited in or credited to the Reserve Account (the "Reserve
Account Property") has been conveyed by the Seller to the Trust pursuant to
Section 2.1(a). Pursuant to the Indenture, the Trust will pledge all of
its right, title and interest in, to and under the Reserve Account and the
Reserve Account Property to the Indenture Trustee on behalf of the
Noteholders to secure its obligations under the Notes and the Indenture.
The Reserve Account Property shall, to the extent permitted by
applicable law, rules and regulations, be invested, as directed in writing
by the Servicer, by the bank or trust company then maintaining the Reserve
Account in Permitted Investments that mature not later than the Business
Day immediately preceding the next Payment Date, and such Permitted
Investments shall be held to maturity. All interest and other income (net
of losses and investment expenses) on funds on deposit in the Reserve
Account shall, upon the written direction of the Servicer, be paid to the
Seller on any Payment Date to the extent that funds on deposit therein, as
certified by the Servicer, exceed the Specified Reserve Balance. In the
event the Reserve Account is no longer to be maintained at the corporate
trust department of Bank of Tokyo - Mitsubishi Trust Company, the Servicer
shall, with the Indenture Trustee's or Owner Trustee's assistance as
necessary, cause the Reserve Account to be moved to a Qualified Institution
or a Qualified Trust Institution within ten (10) Business Days (or such
longer period not to exceed thirty (30) calendar days as to which each
Rating Agency may consent).
(b) The Seller shall, prior to the Closing Date, establish and
maintain a segregated trust account in the name of the Indenture Trustee at
a Qualified Institution or Qualified Trust Institution (which shall
initially be the corporate trust department of Bank of Tokyo - Mitsubishi
Trust Company), which shall be designated as the "Supplemental Reserve
Account." The Supplemental Reserve Account shall be under the sole
dominion and control of the Indenture Trustee; provided, that the Servicer
may make deposits to the Supplemental Reserve Account in accordance with
this Agreement and the Indenture. The Supplemental Reserve Account and all
amounts, securities, investments, financial assets and other property
deposited in or credited to the Supplemental Reserve Account (the
"Supplemental Reserve Account Property") has been conveyed by the Seller to
the Trust pursuant to Section 2.1(a). Pursuant to the Indenture, the Trust
will pledge all of its right, title and interest in, to and under the
Supplemental Reserve Account and the Supplemental Reserve Account Property
to the Indenture Trustee on behalf of the Noteholders to secure its
obligations under the Notes and the Indenture.
The Supplemental Reserve Account Property shall, to the extent
permitted by applicable law, rules and regulations, be invested, as
directed in writing by the Servicer, by the bank or trust company then
maintaining the Supplemental Reserve Account in Permitted Investments that
mature not later than the Business Day immediately preceding the next
Payment Date, and such Permitted Investments shall be held to maturity.
All interest and other income (net of losses and investment expenses) on
funds on deposit in the Supplemental Reserve Account shall, upon the
written direction of the Servicer, be paid to the Seller on any Payment
Date to the extent that funds on deposit therein prior to making any
deposits or withdrawals therefrom on such Payment Date, as certified by the
Servicer, exceed the Maximum Supplemental Reserve Amount. In the event the
Supplemental Reserve Account is no longer to be maintained at the corporate
trust department of Bank of Tokyo - Mitsubishi Trust Company, the Servicer
shall, with the Indenture Trustee's or Owner Trustee's assistance as
necessary, cause the Supplemental Reserve Account to be moved to a
Qualified Institution or a Qualified Trust Institution within ten (10)
Business Days (or such longer period not to exceed thirty (30) calendar
days as to which each Rating Agency may consent).
(c) With respect to any Reserve Account Property or Supplemental
Reserve Account Property:
(i) any Reserve Account Property or Supplemental Reserve
Account Property that is a "financial asset" as defined in Section 8-
102(a)(9) of the UCC shall be physically delivered to, or credited to
an account in the name of, the Qualified Institution or Qualified
Trust Institution maintaining the Reserve Account or Supplemental
Reserve Account, as applicable, in accordance with such institution's
customary procedures such that such institution establishes a
"securities entitlement" in favor of the Indenture Trustee with
respect thereto;
(ii) any Reserve Account Property or Supplemental Reserve
Account Property that is held in deposit accounts shall be held solely
in the name of the Indenture Trustee at one or more depository
institutions having the Required Rating and each such deposit account
shall be subject to the exclusive custody and control of the Indenture
Trustee and the Indenture Trustee shall have sole signature authority
with respect thereto; and
(iii) except for any deposit accounts specified in clause
(ii) above, the Reserve Account and the Supplemental Reserve Account
shall only be invested in securities or in other assets which the
Qualified Institution or Qualified Trust Institution maintaining the
Reserve Account or Supplemental Reserve Account, as applicable, agrees
to treat as "financial assets" as defined in Section 8-102(a)(9) of
the UCC.
(d) If the amount on deposit in the Reserve Account on any
Payment Date (after giving effect to all deposits thereto or withdrawals
therefrom on such Payment Date) is greater than the Specified Reserve
Balance for such Payment Date, the Servicer shall instruct the Indenture
Trustee to distribute the amount of such excess to the Seller; provided
that the Indenture Trustee and the Owner Trustee hereby release, on each
Payment Date, their security interest in, to and under Reserve Account
Property distributed to the Seller.
(e) If the amount on deposit in the Supplemental Reserve Account
on any Payment Date (after giving effect to all deposits thereto or
withdrawals therefrom on such Payment Date) is greater than the Maximum
Supplemental Reserve Amount, the Servicer shall instruct the Indenture
Trustee to distribute the amount of such excess to the Seller; provided
that the Indenture Trustee hereby releases, on each Payment Date, its
security interest, in, to and under the Supplemental Reserve Account
Property distributed to the Seller.
(f) Following the payment in full of the aggregate principal
balance of the Notes and the Certificate Balance and of all other amounts
owing or to be distributed hereunder or under the Indenture or the Trust
Agreement to Noteholders or Certificateholders and the termination of the
Trust, any remaining Reserve Account Property and Supplemental Reserve
Account Property shall be distributed to the Seller.
SECTION 4.8 Pre-Funding Account. (a) On the Closing Date, the
Indenture Trustee shall deposit, on behalf of the Seller, in the
Pre-Funding Account $[ ] from the net proceeds of the
sale of the Notes. On each Subsequent Transfer Date, the Servicer shall
instruct the Indenture Trustee to withdraw the following amounts from the
Pre-Funding Account: (i) an amount equal to the aggregate Principal
Balance of the Subsequent Receivables transferred to the Trust on such
Subsequent Transfer Date less an amount equal to the sum of the amounts
described in clauses (ii), (iii) and (iv) of this sentence, which amount
the Indenture shall distribute to the Seller, (ii) the Subsequent Reserve
Account Deposit for such Subsequent Transfer Date, which amount the
Indenture Trustee shall deposit to the Reserve Account on behalf of the
Seller, (iii) the Subsequent Yield Supplement Account Deposit, which amount
the Indenture Trustee shall deposit to the Yield Supplement Account on
behalf of the Seller and (iv) if the Yield Supplement Account has not been
replaced by a Yield Supplement Letter of Credit on or prior to such
Subsequent Transfer Date, the Subsequent Yield Supplement Account Deposit
for such Subsequent Transfer Date, which amount the Indenture Trustee shall
deposit to the Yield Supplement Account on behalf of the Seller.
(b) If the Pre-Funded Amount has not been reduced to zero on
the Payment Date on which the Pre-Funding Period ends (or, if the
Pre-Funding Period does not end on a Payment Date, on the first Payment
Date following the end of the Pre-Funding Period), after giving effect to
any reductions in the Pre-Funded Amount on such date pursuant to paragraph
(a), the Servicer shall instruct the Indenture Trustee to withdraw from the
Pre-Funding Account on such Payment Date (or, if the Pre-Funding Period
does not end on a Payment Date, on the first Payment Date following the end
of the Pre-Funding Period), the amount remaining in the Pre-Funding Account
at such time exclusive of the Pre-Funding Account Investment Earnings, if
any, for the related Collection Period (such remaining amount being the
"Remaining Pre-Funded Amount") and deposit such amount in the Collection
Account for inclusion in the Available Funds for such Payment Date. The
Pre-Funding Account Investment Earnings for the related Collection Period
(together with any other interest and other income (net of losses and
expenses) earned on amounts on deposit in the Pre-Funding Account that are
on deposit in the Pre-Funding Account) shall be deposited to the Collection
Account.
SECTION 4.9 Negative Carry Account. On the Closing Date, the
Seller shall deposit the Negative Carry Account Initial Deposit into the
Negative Carry Account. On each Payment Date, the Servicer shall instruct
the Indenture Trustee to withdraw from the Negative Carry Account and
deposit into the Collection Account an amount equal to the lesser of (x)
the amount, if any, on deposit in the Negative Carry Account on such
Payment Date and (y) the Negative Carry Amount, if any, for the related
Collection Period. If the amount on deposit in the Negative Carry Account
on any Payment Date (after giving effect to the withdrawal therefrom of the
Negative Carry Amount, if any, for such Payment Date) is greater than the
Required Negative Carry Account Balance for such Payment Date, the excess
shall be released to the Seller on such Payment Date. On the Payment Date
on which the Pre-Funding Period ends (or, if the Pre-Funding Period does
not end on a Payment Date, on the first Payment Date following the end of
the Pre-Funding Period), the Servicer shall instruct the Indenture Trustee
to release to the Seller on such Payment Date all amounts remaining on
deposit in the Negative Carry Account after giving effect to any
withdrawals of the Negative Carry Amount on such Payment Date.
SECTION 4.10 Net Deposits. As an administrative convenience
only, unless the Servicer is required to remit collections pursuant to the
first sentence of Section 4.2, the Seller and the Servicer may make any
remittance pursuant to this Article IV with respect to a Collection Period
net of distributions to be made to the Seller or the Servicer with respect
to such Collection Period. Nonetheless, such obligations shall remain
separate obligations, no party shall have a right of offset, and each such
party shall account for all of the above described remittances and
distributions as if the amounts were deposited and/or transferred
separately.
SECTION 4.11 Statements to Noteholders and Certificateholders.
On or prior to each Payment Date, the Servicer shall provide to the
Indenture Trustee (with copies to the Rating Agencies and each Paying
Agent) for the Indenture Trustee to forward to each Noteholder of record as
of the most recent Record Date and to the Owner Trustee (with copies to the
Rating Agencies and to each Paying Agent) for the Owner Trustee to forward
to each Certificateholder of record as of the most recent Record Date a
statement in substantially the forms of Exhibits B and C, respectively,
setting forth at least the following information as to the Notes and the
Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal
paid to each Class of Notes and to the Certificates;
(ii) the amount of such distribution allocable to interest
paid to each Class of Notes;
(iii) the Yield Supplement Amount;
(iv) the amount of the Total Servicing Fee with respect to
the related Collection Period;
(v) the aggregate outstanding principal balance of each
Class of Notes, the applicable Note Pool Factor, the Certificate
Balance and the Certificate Pool Factor as of the close of business on
the last day of the preceding Collection Period, after giving effect
to payments allocated to principal reported under clause (i) above;
(vi) the Pool Balance, the Level Pay Pool Balance and the
Last Scheduled Payment Pool Balance, in each case as of the close of
business on the last day of the related Collection Period;
(vii) the amounts of the Interest Carryover Shortfall, if
any, for the next Payment Date, and the Principal Carryover Shortfall,
if any, for such Payment Date and the portion thereof attributable to
each Class of Notes;
(viii) the amount of the aggregate Realized Losses, if any,
with respect to the related Collection Period;
(ix) the balance of the Reserve Account on such Payment
Date, after giving effect to changes therein on such Payment Date;
(x) the balance of the Supplemental Reserve Account on such
Payment Date, after giving effect to changes therein on such Payment
Date;
(xi) the aggregate Purchase Amount of Receivables
repurchased by the Seller or purchased by the Servicer, if any, with
respect to the related Collection Period;
(xii) the amount of Actuarial Advances and Last Scheduled
Payment Advances, if any, with respect to the related Collection
Period;
(xiii) for each such Payment Date during the Pre-Funding
Period and the Payment Date that is on or immediately following the
end of the Pre-Funding Period, (A) the amount, if any, withdrawn from
the Pre-Funding Account to purchase Subsequent Receivables during the
related Collection Period, (B) the remaining Pre-Funded Amount, if
any, (C) the Negative Carry Amount, if any, for the related Collection
Period, and (D) the amount remaining on deposit in the Negative Carry
Account, if any, after all withdrawals, if any, made on such Payment
Date; and
(xiv) for the first Payment Date on or immediately
following the end of the Pre-Funding Period, the Remaining Pre-Funded
Amount, if any.
Each amount set forth on the Payment Date statement pursuant to
clauses (i), (ii), (iii), (iv) and (vii) above shall be expressed as a
dollar amount per $1,000 of original principal balance of a Certificate or
Note, as applicable.
SECTION 4.12 Control of Securities Accounts. Notwithstanding
anything else contained herein, the Trust agrees that each of the
Collection Account, the Pre-Funding Account, the Note Payment Account, the
Reserve Account, the Supplemental Reserve Account, the Negative Carry
Account and the Yield Supplement Account will only be established at a
Qualified Institution or Qualified Trust Institution that agrees
substantially as follows: (i) it will comply with "entitlement orders" (as
defined in Section 8-102(a)(8) of the UCC; i.e., orders directing the
transfer or redemption of any financial asset) relating to such accounts
issued by the Indenture Trustee without further consent by the Trust; (ii)
until the termination of the Indenture, it will not enter into any other
agreement relating to any such account pursuant to which it agrees to
comply with entitlement orders of any Person other than the Indenture
Trustee; and (iii) all assets delivered or credited to it in connection
with such accounts and all investments thereof will be promptly credited to
such accounts.
ARTICLE V
YIELD SUPPLEMENT LETTER OF CREDIT AND
THE YIELD SUPPLEMENT ACCOUNT
SECTION 5.1 Yield Supplement Letter of Credit and the Yield
Supplement Account. (a) The Servicer shall, prior to the Closing Date,
establish and maintain a segregated trust account in the name of the
Indenture Trustee at a Qualified Institution or Qualified Trust Institution
(which shall initially be the corporate trust department of Bank of Tokyo -
Mitsubishi Trust Company), which shall be designated as the "Yield
Supplement Account." Amounts on deposit in the Yield Supplement Account
will be used for the payment of any Yield Supplement Amounts required to be
paid on any Payment Date pursuant to the Yield Supplement Agreement which
MMCA has not paid as of such Payment Date. The Yield Supplement Account
shall be under the sole dominion and control of the Indenture Trustee
provided, that the Servicer may make deposits to and direct the Indenture
Trustee to make withdrawals from the Yield Supplement Account in accordance
with this Agreement and the Yield Supplement Agreement. On the Closing
Date, the Seller shall deposit an amount equal to the Initial Yield
Supplement Amount into the Yield Supplement Account from the net proceeds
of the sale of the Notes. On each Subsequent Transfer Date, the Servicer
shall instruct the Indenture Trustee to withdraw from the Pre-Funding
Account and deposit to the Yield Supplement Account an amount equal to the
applicable Subsequent Yield Supplement Account Deposit unless the Yield
Supplement Account has been replaced by a Yield Supplement Letter of Credit
on or prior to such Subsequent Transfer Date, in which case the Servicer
shall cause the amount available to be drawn under the Yield Supplement
Letter of Credit as of such Subsequent Transfer Date to be no less than the
Specified Yield Supplement Account Balance as of such Subsequent Transfer
Date after giving effect to the transfer to the Trust of the related
Subsequent Receivables. To the extent, on any Payment Date, the amount on
deposit in the Yield Supplement Account (after giving effect to any
withdrawals to be made on such Payment Date, but exclusive of net
investment income) is greater than the Specified Yield Supplement Account
Balance for such Payment Date, then, in such event, the Servicer shall
instruct the Indenture Trustee in writing to pay such excess amount to the
Seller.
All amounts held in the Yield Supplement Account shall be
invested, as directed in writing by the Servicer, by the bank or trust
company then maintaining the Yield Supplement Account in Permitted
Investments that mature not later than the Business Day immediately
preceding the next Payment Date and such Permitted Investments shall be
held to maturity. All interest and other income (net of losses and
investment expenses) on funds on deposit in the Yield Supplement Account
shall be withdrawn from the Yield Supplement Account at the written
direction of the Servicer and shall be paid to the Seller. In the event
that the Yield Supplement Account is no longer to be maintained at the
corporate trust department of Bank of Tokyo - Mitsubishi Trust Company, the
Servicer shall, with the Indenture Trustee's assistance as necessary, cause
the Yield Supplement Account to be moved to a Qualified Institution or a
Qualified Trust Institution within ten (10) Business Days (or such longer
period not to exceed thirty (30) calendar days as to which each Rating
Agency may consent).
The Seller hereby sells, conveys and transfers to the Trust the
Yield Supplement Account, all funds and investments on deposit therein or
credited thereto and all proceeds thereof, subject, however, to the
limitations set forth below.
Pursuant to the Indenture, the Trust will pledge its rights under
the Yield Supplement Agreement (including its rights to amounts on deposit
in the Yield Supplement Account) to the Indenture Trustee to secure its
obligations under the Notes and the Indenture. Such sale, conveyance and
transfer of the Yield Supplement Account by the Seller to the Trust, and
such pledge by the Trust of its rights to amounts in the Yield Supplement
Account to the Indenture Trustee, shall be subject to the following
limitations:
(i) All or a portion of the Yield Supplement Account may be
invested and reinvested in the manner specified in Section 5.1(a) in
accordance with written instructions from the Servicer. All such
investments shall be made in the name of the Indenture Trustee and all
income and gain realized thereon shall be solely for the benefit of
the Seller and shall be payable by the Indenture Trustee to the Seller
upon written direction of the Servicer as specified in Section 5.1(a);
(ii) If, with respect to any Collection Period, MMCA shall
have failed to make or cause to be made in full the remittance of the
Yield Supplement Amount on the date required by the Yield Supplement
Agreement, the Indenture Trustee not later than 10:00 a.m. (New York
City time) on the Payment Date, shall, upon the written direction of
the Servicer, withdraw from the Yield Supplement Account and deposit
into the Collection Account the amount of the shortfall between the
amount of funds that are required to be remitted by MMCA with respect
to the Yield Supplement Agreement as set forth in the Servicer's
Certificate and the amount of funds actually so remitted and to the
extent of any remaining shortfall, the Indenture Trustee shall
withdraw an amount equal thereto from the Supplemental Reserve
Account, and to the extent of any remaining shortfall from the Reserve
Account, and deposit such amounts in the Collection Account; and
(iii) Upon termination of this Agreement in accordance with
Section 9.1 or (a) in the event that the Seller obtains a Yield
Supplement Letter of Credit or (b) the Seller otherwise satisfies the
requirements with respect to the Yield Supplement Agreement
established by the Rating Agencies, in either case as evidenced by
satisfaction of the Rating Agency Condition and, in either case,
delivers to the Indenture Trustee an Opinion of Counsel to the effect
that the contemplated action will not adversely affect the status of
the Trust as a partnership for Federal income and Applicable Tax State
income and franchise tax purposes and an Officer's Certificate of the
Seller that all conditions to the liquidation of the Yield Supplement
Account have been satisfied, any amounts on deposit in the Yield
Supplement Account shall, upon written request of the Seller, be paid
to the Seller.
(b) If a Yield Supplement Letter of Credit has been obtained by
MMCA, and if, with respect to any Collection Period, MMCA shall have failed
to make or cause to be made in full the remittance of the Yield Supplement
Amount, upon written notice by the Servicer of such failure (which notice
shall be given no later than 10:00 a.m. (New York City time) on the Payment
Date for such Collection Period), the Indenture Trustee shall draw on the
Yield Supplement Letter of Credit in accordance with the terms thereof, in
the amount of the shortfall between the amount of funds with respect to the
Yield Supplement Amount that are required to be remitted by MMCA with
respect to the Yield Supplement Agreement as set forth in the Servicer's
Certificate and the amount of funds actually so remitted as set forth in
the Servicer's Certificate. Any such draw on the Yield Supplement Letter
of Credit shall be made after receipt of the related Servicer's Certificate
on or before 11:00 a.m. (New York City time) on the Payment Date for such
Collection Period. Upon receipt of a request for a draw by the Indenture
Trustee under the Yield Supplement Letter of Credit, the Letter of Credit
Bank is to promptly make a payment to the Indenture Trustee in an amount
equal to the Yield Supplement Amount (minus payments made on the Yield
Supplement Agreement), and the Indenture Trustee shall deposit into the
Collection Account pursuant to Section 4.5 the amount received from the
Letter of Credit Bank in respect of such drawing. The Servicer shall
include in each Servicer's Certificate, or in an Officer's Certificate
provided to the Indenture Trustee with each Servicer's Certificate, the
Stated Amount (as defined in the Yield Supplement Letter of Credit) of the
Yield Supplement Letter of Credit as of the close of business on the last
day of the Collection Period preceding the date of such Servicer's
Certificate. In the event that the rating of the Letter of Credit Bank
declines below the Required Rating, the Servicer shall promptly notify the
Indenture Trustee in writing of such decline, and upon receipt of such
notification, the Indenture Trustee shall, unless a suitable replacement
letter of credit shall have been delivered, promptly draw the full amount
available under the Yield Supplement Letter of Credit and deposit such
amount in the Yield Supplement Account or obtain funds in the amount
required for deposit from the Yield Supplement Account.
ARTICLE VI
THE SELLER
SECTION 6.1 Representations, Warranties and Covenants of Seller.
The Seller makes the following representations, warranties and covenants on
which the Trust is deemed to have relied in acquiring the Trust Property.
The representations, warranties and covenants speak as of the execution and
delivery of this Agreement in the case of the Initial Receivables and the
other Trust Property related thereto, and as of the related Subsequent
Transfer Date in the case of the Subsequent Receivables and the other Trust
Property related thereto, and shall survive the sale of the Trust Property
to the Trust and the pledge thereof by the Trust to the Indenture Trustee
pursuant to the Indenture:
(a) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted, and had at all
relevant times, and shall have, power, authority, and legal right to
acquire and own the Receivables.
(b) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall require
such qualifications.
(c) Power and Authority. The Seller has the power and authority
to execute and deliver this Agreement and the other Basic Documents to
which it is a party and to carry out their terms. The Seller has full
power and authority to sell and assign the property to be sold and assigned
to and deposited with the Trust and has duly authorized such sale and
assignment to the Trust by all necessary corporate action; and the
execution, delivery, and performance of this Agreement and the other Basic
Documents to which it is a party have been, and the execution, delivery and
performance of each Second-Tier Subsequent Assignment has been or will be
on or before the related Subsequent Transfer Date, duly authorized by the
Seller by all necessary corporate action.
(d) Valid Sale; Binding Obligation. This Agreement effects a
valid sale, transfer and assignment of the Initial Receivables and the
other Trust Property related thereto conveyed by the Seller to the Trust
hereunder and this Agreement together with each Second-Tier Subsequent
Assignment will effect a valid sale, transfer and assignment of the related
Subsequent Receivables and the other Trust Property related thereto, in
each case enforceable against creditors of and purchasers from the Seller;
and this Agreement and the other Basic Documents to which the Seller is a
party constitute, and each Second-Tier Subsequent Assignment when executed
and delivered by the Seller will constitute, legal, valid, and binding
obligations of the Seller, enforceable against the Seller in accordance
with their terms, subject, as to enforceability, to applicable bankruptcy,
insolvency, reorganization, conservatorship, receivership, liquidation and
other similar laws and to general equitable principles.
(e) No Violation. The execution, delivery and performance by
the Seller of this Agreement and the other Basic Documents to which the
Seller is a party and the consummation of the transactions contemplated
hereby and thereby and the fulfillment of the terms hereof and thereof will
not conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time or both) a
default under, the certificate of incorporation or bylaws of the Seller, or
conflict with, or breach any of the terms or provisions of, or constitute
(with or without notice or lapse of time or both) a default under, any
indenture, agreement, mortgage, deed of trust or other instrument to which
the Seller is a party or by which the Seller is bound or any of its
properties are subject, or result in the creation or imposition of any lien
upon any of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument (other than this
Agreement), or violate any law, order, rule, or regulation, applicable to
the Seller or its properties, of any federal or state regulatory body, any
court, administrative agency, or other governmental instrumentality having
jurisdiction over the Seller or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
pending, or, to the best knowledge of the Seller, threatened, before any
court, regulatory body, administrative agency, or other tribunal or
governmental instrumentality having jurisdiction over the Seller or its
properties: (i) asserting the invalidity of this Agreement, the Indenture,
any of the other Basic Documents, the Notes or the Certificates, (ii)
seeking to prevent the issuance of the Notes, the Certificates or the
consummation of any of the transactions contemplated by this Agreement, the
Indenture or any of the other Basic Documents, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement, the Indenture, any of the other Basic
Documents, the Notes or the Certificates, or (iv) that may adversely affect
the Federal or Applicable Tax State income, excise, franchise or similar
tax attributes of the Notes or the Certificates.
(g) Florida Securities and Investor Protection Act. In
connection with the offering of the Notes in the State of Florida, the
Seller hereby certifies that it has complied with all provisions of Section
517.075 of the Florida Securities and Investor Protection Act.
SECTION 6.2 Liability of Seller; Indemnities. The Seller shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Seller under this Agreement, and hereby
agrees to the following:
(a) The Seller shall indemnify, defend, and hold harmless the
Trust, the Owner Trustee and the Indenture Trustee from and against any
taxes that may at any time be asserted against any such Person with respect
to, and as of the date of, the sale of the Receivables to the Trust or the
issuance and original sale of the Notes or the Certificates, including any
sales, gross receipts, general corporation, tangible personal property,
privilege, or license taxes (but, in the case of the Trust, not including
any taxes asserted with respect to ownership of the Receivables or Federal
or other Applicable Tax State income taxes arising out of the transactions
contemplated by this Agreement and the other Basic Documents) and costs and
expenses in defending against the same.
(b) The Seller shall indemnify, defend, and hold harmless the
Trust, the Owner Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders from and against any loss, liability or expense incurred
by reason of (i) the Seller's willful misfeasance, bad faith, or negligence
(other than errors in judgment) in the performance of its duties under this
Agreement, or by reason of reckless disregard of its obligations and duties
under this Agreement and (ii) the Seller's violation of Federal or state
securities laws in connection with the registration or the sale of the
Notes or the Certificates.
(c) The Seller shall indemnify, defend and hold harmless the
Owner Trustee and the Indenture Trustee and their respective officers,
directors, employees and agents from and against all costs, expenses,
losses, claims, damages and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties
contained herein and in the Trust Agreement, in the case of the Owner
Trustee, and in the Indenture, in the case of the Indenture Trustee, except
to the extent that such cost, expense, loss, claim, damage or liability:
(i) shall be due to the willful misfeasance, bad faith or negligence
(except for errors in judgment) of the Owner Trustee or the Indenture
Trustee, as applicable; (ii) in the case of the Owner Trustee shall arise
from the breach by the Owner Trustee of any of its representations or
warranties set forth in Section 7.3 of the Trust Agreement or (iii) in the
case of the Indenture Trustee shall arise from the breach by the Indenture
Trustee of any of its representations and warranties set forth in the
Indenture.
(d) The Seller shall pay any and all taxes levied or assessed
upon all or any part of the Owner Trust Estate.
(e) Indemnification under this Section 6.2 shall survive the
resignation or removal of the Owner Trustee or the Indenture Trustee and
the termination of this Agreement and shall include reasonable fees and
expenses of counsel and expenses of litigation. If the Seller shall have
made any indemnity payments pursuant to this Section 6.2 and the Person to
or on behalf of whom such payments are made thereafter shall collect any of
such amounts from others, such Person shall promptly repay such amounts to
the Seller, without interest.
SECTION 6.3 Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person (i) into which the Seller may be merged
or consolidated, (ii) resulting from any merger, conversion, or
consolidation to which the Seller shall be a party or (iii) that may
succeed by purchase and assumption to all or substantially all of the
business of the Seller, which Person in any of the foregoing cases executes
an agreement of assumption to perform every obligation of the Seller under
this Agreement, will be the successor to the Seller under this Agreement
without the execution or filing of any document or any further act on the
part of any of the parties to this Agreement; provided, however, that (x)
the Seller shall have delivered to the Owner Trustee and the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel each stating
that such merger, conversion, consolidation or succession and such
agreement of assumption comply with this Section 6.3, and (y) the Seller
shall have delivered to the Owner Trustee and the Indenture Trustee an
Opinion of Counsel either (A) stating that, in the opinion of such counsel,
all financing statements and continuation statements and amendments thereto
have been executed and filed that are necessary to fully preserve and
protect the interest of the Trust and the Indenture Trustee, respectively,
in the Receivables and the other Trust Property, and reciting the details
of such filings, or (B) stating that, in the opinion of such counsel, no
such action shall be necessary to fully preserve and protect such interest.
The Seller shall provide notice of any merger, conversion, consolidation,
or succession pursuant to this Section 6.3 to the Rating Agencies.
Notwithstanding anything herein to the contrary, the execution of the
foregoing agreement of assumption and compliance with clauses (x) or (y)
above shall be conditions to the consummation of the transactions referred
to in clauses (i), (ii) or (iii) above.
SECTION 6.4 Limitation on Liability of Seller and Others. The
Seller, and any director or officer or employee or agent of the Seller, may
rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Seller shall not be under any obligation to
appear in, prosecute, or defend any legal action that shall not be
incidental to its obligations under this Agreement, and that in its opinion
may involve it in any expense or liability.
SECTION 6.5 Seller May Own Notes or Certificates. The Seller,
and any Affiliate of the Seller, may in its individual or any other
capacity become the owner or pledgee of Notes or Certificates with the
same rights as it would have if it were not the Seller or an Affiliate
thereof, except as otherwise expressly provided herein or in the other
Basic Documents. Except as set forth herein or in the other Basic
Documents, Notes and Certificates so owned by or pledged to the Seller or
such controlling, controlled or commonly controlled Person shall have an
equal and proportionate benefit under the provisions of this Agreement and
the other Basic Documents, without preference, priority, or distinction as
among all of the Notes and Certificates.
ARTICLE VII
THE SERVICER
SECTION 7.1 Representations and Warranties of Servicer. The
Servicer makes the following representations and warranties on which the
Trust is deemed to have relied in acquiring the Trust Property, and such
representations and warranties speak as of the execution and delivery of
this Agreement, in the case of the Initial Receivables and the other Trust
Property related thereto, and as of the related Subsequent Transfer Date,
in the case of the Subsequent Receivables and the other Trust Property
related thereto, and shall survive the sale of the Trust Property to the
Trust and the pledge thereof by the Trust pursuant to the Indenture:
(a) Organization and Good Standing. The Servicer has been duly
organized and is validly existing as a corporation in good standing under
the laws of the state of its incorporation, with power and authority to own
its properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted, and had at all
relevant times, and shall have, power, authority, and legal right to
acquire, own, sell, and service the Receivables and to hold the Receivable
Files as custodian on behalf of the Trustee.
(b) Due Qualification. The Servicer is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business (including
the servicing of the Receivables as required by this Agreement) shall
require such qualifications.
(c) Power and Authority. The Servicer has the power and
authority to execute and deliver this Agreement and the other Basic
Documents to which it is a party and to carry out their terms, and the
execution, delivery and performance of this Agreement and the other Basic
Documents to which it is a party have been duly authorized by the Servicer
by all necessary corporate action.
(d) Binding Obligation. This Agreement and the other Basic
Documents to which it is a party constitute legal, valid, and binding
obligations of the Servicer, enforceable against the Servicer in accordance
with their terms, subject, as to enforceability, to applicable bankruptcy,
insolvency, reorganization, conservatorship, receivership, liquidation and
other similar laws and to general equitable principles.
(e) No Violation. The execution, delivery and performance by
the Servicer of this Agreement and the other Basic Documents to which it is
a party, the consummation of the transactions contemplated hereby and
thereby and the fulfillment of the terms hereof and thereof will not
conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time or both) a default
under, the certificate of incorporation or bylaws of the Servicer, or
conflict with, or breach any of the terms or provisions of, or constitute
(with or without notice or lapse of time or both) a default under, any
indenture, agreement, mortgage, deed of trust or other instrument to which
the Servicer is a party or by which the Servicer is bound or to which any
of its properties are subject, or result in the creation or imposition of
any lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument (other
than this Agreement), or violate any law, order, rule, or regulation
applicable to the Servicer or its properties of any Federal or state
regulatory body, any court, administrative agency, or other governmental
instrumentality having jurisdiction over the Servicer or any of its
properties.
(f) No Proceedings. There are no proceedings or investigations
pending, or, to the Servicer's knowledge, threatened, before any court,
regulatory body, administrative agency, or tribunal or other governmental
instrumentality having jurisdiction over the Servicer or its properties:
(a) asserting the invalidity of this Agreement, the Indenture, any of the
other Basic Documents, the Notes, or the Certificates, (b) seeking to
prevent the issuance of the Notes or the Certificates or the consummation
of any of the transactions contemplated by this Agreement, the Indenture or
any of the other Basic Documents, (c) seeking any determination or ruling
that might materially and adversely affect the performance by the Servicer
of its obligations under, or the validity or enforceability of, this
Agreement, the Indenture, any of the other Basic Documents, the Notes or
the Certificates, or (d) that may adversely affect the Federal or
Applicable Tax State income, excise, franchise or similar tax attributes of
the Notes or the Certificates.
SECTION 7.2 Liability of Servicer; Indemnities. The Servicer
shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Servicer under this Agreement,
and hereby agrees to the following:
(a) The Servicer shall defend, indemnify and hold harmless the
Trust, the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders and the Seller from and against any and all costs,
expenses, losses, damages, claims and liabilities, arising out of or
resulting from the use, ownership or operation by the Servicer or any
Affiliate thereof of a Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the
Trust, the Owner Trustee and the Indenture Trustee from and against any
taxes that may at any time be asserted against any such Person with respect
to the transactions contemplated herein or in the other Basic Documents, if
any, including, without limitation, any sales, gross receipts, general
corporation, tangible personal property, privilege or license taxes (but,
in the case of the Trust, not including any taxes asserted with respect to,
and as of the date of, the sale of the Receivables to the Trust or the
issuance and original sale of the Notes and the Certificates and the
issuance of the Certificates, or asserted with respect to ownership of the
Receivables, or Federal or other Applicable Tax State income taxes arising
out of the transactions contemplated by this Agreement and the other Basic
Documents) and costs and expenses in defending against the same.
(c) The Servicer shall indemnify, defend and hold harmless the
Trust, the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders and the Seller from and against any and all costs,
expenses, losses, claims, damages and liabilities to the extent that such
cost, expense, loss, claim, damage or liability arose out of, or was
imposed upon any such Person through, the negligence, willful misfeasance
or bad faith of the Servicer in the performance of its duties under this
Agreement or any other Basic Document to which it is a party (except for
errors in judgment), or by reason of reckless disregard of its obligations
and duties under this Agreement or any other Basic Document to which it is
a party.
(d) The Servicer shall indemnify, defend and hold harmless the
Owner Trustee and the Indenture Trustee, as applicable, from and against
all costs, expenses, losses, claims, damages and liabilities arising out of
or incurred in connection with the acceptance or performance of the trusts
and duties contained herein and in the other Basic Documents, if any,
except to the extent that such cost, expense, loss, claim, damage or
liability: (a) shall be due to the willful misfeasance, bad faith or
negligence (except for errors in judgment) of the Owner Trustee or the
Indenture Trustee, as applicable; (b) relates to any tax other than the
taxes with respect to which either the Seller or the Servicer shall be
required to indemnify the Owner Trustee or the Indenture Trustee, as
applicable; (c) in the case of the Owner Trustee, shall arise from the
Owner Trustee's breach of any of its representations or warranties set
forth in Section 7.3 of the Trust Agreement or, in the case of the
Indenture Trustee, from the Indenture Trustee's breach of any of its
representations or warranties set forth in the Indenture; or (d) in the
case of the Indenture Trustee, shall arise out of or be incurred in
connection with the performance by the Indenture Trustee of the duties of
successor Servicer hereunder.
In addition to the foregoing indemnities, if the Owner Trustee or
the Indenture Trustee is entitled to indemnification by the Seller pursuant
to Section 6.2 and the Seller is unable for any reason to provide such
indemnification to the Owner Trustee or the Indenture Trustee, then the
Servicer shall be liable for any indemnification that the Owner Trustee or
the Indenture Trustee is entitled to under Section 6.2.
For purposes of this Section 7.2, in the event of the termination
of the rights and obligations of MMCA (or any successor thereto pursuant to
Section 8.2) as Servicer pursuant to Section 8.1, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be
the Servicer pending appointment of a successor Servicer (other than the
Indenture Trustee) pursuant to Section 8.2.
Indemnification under this Section 7.2 by MMCA (or any successor
thereto pursuant to Section 8.2) as Servicer, with respect to the period
such Person was (or was deemed to be) the Servicer, shall survive the
termination of such Person as Servicer or a resignation by such Person as
Servicer as well as the termination of this Agreement or the resignation or
removal of the Owner Trustee or the Indenture Trustee and shall include
reasonable fees and expenses of counsel and expenses of litigation. If the
Servicer shall have made any indemnity payments pursuant to this Section
and the recipient thereafter collects any of such amounts from others, the
recipient shall promptly repay such amounts to the Servicer, without
interest.
SECTION 7.3 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Any Person (i) into which the Servicer may be
merged or consolidated, (ii) resulting from any merger, conversion, or
consolidation to which the Servicer shall be a party, or (iii) that may
succeed by purchase and assumption to all or substantially all of the
business of the Servicer, which Person in any of the foregoing cases is an
Eligible Servicer and executes an agreement of assumption to perform every
obligation of the Servicer under this Agreement, will be the successor to
the Servicer under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties to this
Agreement; provided, however, that (x) the Servicer shall have delivered to
the Owner Trustee and the Indenture Trustee an Officer's Certificate and an
Opinion of Counsel each stating that such merger, conversion, consolidation
or succession and such agreement of assumption comply with this Section
7.3, and (y) the Servicer shall have delivered to the Owner Trustee and the
Indenture Trustee an Opinion of Counsel either (A) stating that, in the
opinion of such counsel, all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary to fully preserve and protect the interest of the Trust and the
Indenture Trustee, respectively, in the Receivables, and reciting the
details of such filings, or (B) stating that, in the opinion of such
Counsel, no such action shall be necessary to fully preserve and protect
such interests. The Servicer shall provide notice of any merger,
conversion, consolidation or succession pursuant to this Section 7.3 to the
Rating Agencies. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement or assumption and compliance with
clauses (x) and (y) above shall be conditions to the consummation of the
transactions referred to in clauses (i), (ii) or (iii) above.
SECTION 7.4 Limitation on Liability of Servicer and Others. (a)
Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to the Trust, the
Noteholders or the Certificateholders, except as provided under this
Agreement, for any action taken or for refraining from the taking of any
action pursuant to this Agreement or for errors in judgment; provided,
however, that this provision shall not protect the Servicer or any such
Person against any liability that would otherwise be imposed by reason of
willful misfeasance or bad faith in the performance of duties or by reason
of reckless disregard of obligations and duties under this Agreement, or by
reason of negligence in the performance of its duties under this Agreement
(except for errors in judgment). The Servicer and any director, officer or
employee or agent of the Servicer may rely in good faith on any document of
any kind prima facie properly executed and submitted by any Person in
respect of any matters arising under this Agreement.
(b) Except as provided in this Agreement, the Servicer shall not
be under any obligation to appear in, prosecute or defend any legal action
that shall not be incidental to its duties to service the Receivables in
accordance with this Agreement, and that in its opinion may involve it in
any expense or liability; provided, however, that the Servicer may
undertake any reasonable action that it may deem necessary or desirable in
respect of this Agreement and the rights and duties of the parties to this
Agreement and the interests of the Noteholders and Certificateholders under
this Agreement. In such event, the legal expenses and costs of such action
and any liability resulting therefrom shall be expenses, costs and
liabilities of the Servicer.
SECTION 7.5 Servicer Not to Resign. Subject to the provisions
of Section 7.3, the Servicer shall not resign from its obligations and
duties under this Agreement except upon a determination that the
performance of its duties is no longer permissible under applicable law.
Any such determination permitting the resignation of the Servicer shall be
evidenced by an Opinion of Counsel to such effect delivered to the Owner
Trustee and the Indenture Trustee. No such resignation shall become
effective until the Indenture Trustee or a successor Servicer shall have
(i) assumed the responsibilities and obligations of the Servicer in
accordance with Section 8.2 and (ii) become the Administrator under the
Administration Agreement pursuant to Section 8 thereof.
SECTION 7.6 Servicer May Own Notes or Certificates. The
Servicer, and any Affiliate of the Servicer, may, in its individual or any
other capacity, become the owner or pledgee of Notes or Certificates with
the same rights as it would have if it were not the Servicer or an
Affiliate thereof, except as otherwise expressly provided herein or in the
other Basic Documents. Except as set forth herein or in the other Basic
Documents, Notes and Certificates so owned by or pledged to the Servicer or
such Affiliate shall have an equal and proportionate benefit under the
provisions of this Agreement, without preference, priority or distinction
as among all of the Notes and Certificates.
ARTICLE VIII
SERVICING TERMINATION
SECTION 8.1 Events of Servicing Termination. (a) The
occurrence of any one of the following events shall constitute an event of
servicing termination hereunder (each, an "Event of Servicing
Termination"):
(i) Any failure by the Servicer to deliver to the Owner
Trustee or the Indenture Trustee the Servicer's Certificate for any
Collection Period, which shall continue beyond the earlier of three
(3) Business Days from the date such Servicer's Certificate was due to
be delivered and the related Payment Date, or any failure by the
Servicer to make any required payment or deposit under this Agreement,
which shall continue unremedied for a period of five (5) Business Days
following the due date therefor (or, in the case of a payment or
deposit to be made no later than a Payment Date, the failure to make
such payment or deposit by such Payment Date); or
(ii) Any failure on the part of the Servicer duly to
observe or to perform in any material respect any other covenant or
agreement set forth in the Notes, the Certificates, or in this
Agreement, which failure shall materially and adversely affect the
rights of Noteholders or Certificateholders and continue unremedied
for a period of thirty (30) days after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer by the Owner Trustee or the Indenture
Trustee or to the Owner Trustee, the Indenture Trustee, the Seller and
the Servicer by the Holders of Notes or Certificates, as applicable,
evidencing not less than 25% of the principal balance of the then
Outstanding Notes, in the aggregate, or 25% of the Certificate
Balance; or
(iii) The entry of a decree or order by a court or agency
or supervisory authority of competent jurisdiction for the appointment
of a conservator, receiver, liquidator or trustee for the Seller or
the Servicer in any bankruptcy, insolvency, readjustment of debt,
marshalling of assets and liabilities, or similar proceedings, or for
the winding up or liquidation of its affairs, and any such decree or
order continues unstayed and in effect for a period of sixty (60)
consecutive days; or
(iv) The consent by the Seller or the Servicer to the
appointment of a conservator, receiver, liquidator or trustee in any
bankruptcy, insolvency, readjustment of debt, marshalling of assets
and liabilities, or similar proceedings of or relating to the Seller
or the Servicer or relating to substantially all of its property, the
admission in writing by the Servicer of its inability to pay its debts
generally as they become due, the filing by the Seller or the Servicer
of a petition to take advantage of any applicable bankruptcy,
insolvency or reorganization statute, the making by the Seller or the
Servicer of an assignment for the benefit of its creditors or the
voluntary suspension by the Seller or the Servicer of payment of its
obligations; or
(v) The failure by the Servicer to be an Eligible Servicer;
then, and in each and every case and for so long as an Event of Servicing
Termination shall not have been remedied, either the Indenture Trustee, or
the Holders of Notes evidencing not less than a majority of the Outstanding
Amount of the Notes, voting as a group, or if no Notes are Outstanding, the
Owner Trustee pursuant to the Trust Agreement by notice then given in
writing to the Servicer (with a copy to the Indenture Trustee and the Owner
Trustee if given by the Noteholders), may terminate all of the rights and
obligations of the Servicer under this Agreement. On or after the receipt
by the Servicer of such written notice, all authority and power of the
Servicer under this Agreement, whether with respect to the Notes, the
Certificates, or the Trust Property or otherwise, shall pass to and be
vested in the Indenture Trustee or a successor Servicer appointed under
Section 8.2; and, without limitation, the Indenture Trustee and the Owner
Trustee shall be authorized and empowered to execute and deliver, on behalf
of the Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the
Receivable Files, the certificates of title to the Financed Vehicles, or
otherwise. The Servicer shall cooperate with the Indenture Trustee, the
Owner Trustee and such successor Servicer in effecting the termination of
its responsibilities and rights as Servicer under this Agreement, including
the transfer to the Indenture Trustee or such successor Servicer for
administration of all cash amounts that are at the time held by the
Servicer for deposit or thereafter shall be received with respect to a
Receivable, all Receivable Files and all information or documents that the
Indenture Trustee or such successor Servicer may require. In addition, the
Servicer shall transfer its electronic records relating to the Receivables
to the successor Servicer in such electronic form as the successor Servicer
may reasonably request. All reasonable costs and expenses incurred by the
successor Servicer, including allowable compensation of employees and
overhead costs, in connection with the transfer of servicing shall be paid
by the outgoing Servicer (or by the initial Servicer if the outgoing
Servicer is the Indenture Trustee acting on an interim basis) upon
presentation of reasonable documentation of such costs and expenses.
(b) If any of the foregoing Events of Servicing Termination
occur, the Indenture Trustee and the Owner Trustee shall have no obligation
to notify Noteholders, Certificateholders or any other Person of such
occurrence prior to the continuance of such event through the end of any
cure period specified in Section 8.1(a).
SECTION 8.2 Indenture Trustee to Act; Appointment of Successor
Servicer. Upon the Servicer's resignation pursuant to Section 7.5 or upon
the Servicer's receipt of notice of termination as Servicer pursuant to
Section 8.1, the Indenture Trustee shall be the successor in all respects
to the Servicer in its capacity as Servicer under this Agreement (provided
that neither the Indenture Trustee nor any other successor Servicer shall
have any obligation, but may elect, to make available to an Obligor any
refinancing of a Last Scheduled Payment in the manner specified in the last
sentence of Section 3.2(e) hereof), and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions of this Agreement. As compensation
therefor, the Indenture Trustee shall be entitled to such compensation
(whether payable out of the Collection Account or otherwise) as the
Servicer would have been entitled to under this Agreement if no such notice
of termination or resignation had been given, except that all collections
shall be deposited in the Collection Account within two (2) Business Days
of receipt and shall not be retained by the Servicer. Notwithstanding the
above, the Indenture Trustee may, if it shall be unwilling so to act, or
shall, if it is legally unable so to act, appoint, or petition a court of
competent jurisdiction to appoint, an Eligible Servicer as the successor to
the terminated Servicer under this Agreement. In connection with such
appointment, the Indenture Trustee may make such arrangements for the
compensation of such successor Servicer out of payments on Receivables as
it and such successor shall agree, which, in no event, shall be greater
than that payable to MMCA as Servicer hereunder. The Indenture Trustee and
such successor shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession including, but not
limited to, making arrangements in respect of the last sentence of Section
3.2(e) of this Agreement. The Indenture Trustee shall not be relieved of
its duties as successor Servicer under this Section 8.2 until a newly
appointed Servicer shall have assumed the responsibilities and obligations
of the terminated Servicer under this Agreement.
SECTION 8.3 Effect of Servicing Transfer. (a) After the
transfer of servicing hereunder, the Indenture Trustee or successor
Servicer shall notify Obligors to make directly to the successor Servicer
payments that are due under the Receivables after the effective date of
such transfer.
(b) Except as provided in Section 8.2 after the transfer of
servicing hereunder, the outgoing Servicer shall have no further
obligations with respect to the administration, servicing, custody or
collection of the Receivables and the successor Servicer shall have all of
such obligations, except that the outgoing Servicer will transmit or cause
to be transmitted directly to the successor Servicer for its own account,
promptly on receipt and in the same form in which received, any amounts
held by the outgoing Servicer (properly endorsed where required for the
successor Servicer to collect any such items) received as payments upon or
otherwise in connection with the Receivables and the outgoing Servicer
shall continue to cooperate with the successor Servicer by providing
information and in the enforcement of the Dealer Agreements.
(c) Any successor Servicer shall provide the Seller with access
to the Receivable Files and to the successor Servicer's records (whether
written or automated) with respect to the Receivable Files. Such access
shall be afforded without charge, but only upon reasonable request and
during normal business hours at the offices of the successor Servicer.
Nothing in this Section 8.3 shall affect the obligation of the successor
Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors, and the failure of the Servicer to
provide access to information as a result of such obligation shall not
constitute a breach of this Section 8.3.
SECTION 8.4 Notification to Noteholders and Certificateholders.
Upon any notice of an Event of Servicing Termination or upon any
termination of, or appointment of a successor to, the Servicer pursuant to
this Article VIII, the Indenture Trustee shall give prompt written notice
thereof to Noteholders, and the Owner Trustee shall give prompt written
notice thereof to Certificateholders at their addresses of record and to
the Rating Agencies.
SECTION 8.5 Waiver of Past Events of Servicing Termination. The
Holders of Notes evidencing not less than 51% of the Outstanding Amount (as
defined in the Indenture) of the Notes or the Holders of Certificates
evidencing not less than a majority of the Certificate Balance (in the case
of an Event of Servicing Termination which does not adversely affect the
Indenture Trustee or the Noteholders) may, on behalf of all Noteholders and
Certificateholders, waive any Event of Servicing Termination hereunder and
its consequences, except an event resulting from the failure to make any
required deposits to, or payments from, any of the Trust Accounts, the
Certificate Distribution Account, the Yield Supplement Account, the
Supplemental Reserve Account or the Reserve Account in accordance with this
Agreement. Upon any such waiver of a past Event of Servicing Termination,
such event shall cease to exist, and shall be deemed to have been remedied
for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other event or impair any right arising therefrom, except to
the extent expressly so waived.
ARTICLE IX
TERMINATION
SECTION 9.1 Optional Purchase of All Receivables. (a) On each
Payment Date following the last day of a Collection Period as to which the
Pool Balance shall be less than or equal to the Optional Purchase
Percentage (expressed as a seven-digit decimal) multiplied by the Initial
Pool Balance, the Servicer shall have the option to purchase the Owner
Trust Estate, other than the Trust Accounts, the Certificate Distribution
Account, the Reserve Account, the Supplemental Reserve Account, the
Negative Carry Account and the Yield Supplement Account. To exercise such
option, the Servicer shall notify the Owner Trustee and the Indenture
Trustee no later than the fifteenth day of the month immediately preceding
the month in which such repurchase is to be effected and shall deposit an
amount equal to the aggregate Purchase Amount for the Receivables, plus the
appraised value of any other property held in the Trust other than in the
Trust Accounts, the Certificate Distribution Account, the Reserve Account,
the Supplemental Reserve Account, the Negative Carry Account and the Yield
Supplement Account, such value to be determined by an appraiser mutually
agreed upon by the Servicer, the Owner Trustee and the Indenture Trustee,
into the Collection Account on the Payment Date occurring in the month in
which such repurchase is to be effected. Upon such payment, the Servicer
shall succeed to and own all interests in and to the Trust.
Notwithstanding the foregoing, the Servicer shall not be permitted to
exercise such option unless the amount to be deposited in the Collection
Account pursuant to the second preceding sentence is greater than or equal
to the sum of the outstanding principal balance of the Notes and all
accrued but unpaid interest (including any overdue interest) thereon and
the Certificate Balance. The Purchase Amount, any Negative Carry Amount
and any Yield Supplement Amounts for such Payment Date, plus to the extent
necessary all amounts in the Supplemental Reserve Account, plus to the
extent necessary all amounts in the Reserve Account, shall be used to make
payments in full to Noteholders and Certificateholders in the manner set
forth in Article IV.
(b) Unless otherwise required by the Rating Agencies as set
forth in writing delivered to the Owner Trustee and the Indenture Trustee,
if at the time the Servicer exercises its purchase option hereunder the
Servicer's long-term unsecured debt has a rating lower than investment
grade by the Rating Agencies, the Servicer shall deliver to the Owner
Trustee and the Indenture Trustee on such Payment Date a letter from an
Independent investment bank or an Independent public accountant to the
effect that the price paid by the Servicer for the Receivables at the time
of transfer pursuant to such purchase option represented a fair market
price for such Receivables.
(c) Following the satisfaction and discharge of the Indenture
and the payment in full of the principal of and interest on the Notes and
the Certificateholders will succeed to the rights of the Noteholders
hereunder, and the Indenture Trustee will continue to carry out its
obligations hereunder with respect to the Certificateholders, including
without limitation making distributions from the Payahead Account and the
Collection Account in accordance with Section 4.6 and making withdrawals
from the Supplemental Reserve Account in accordance with Sections 4.5(b)
and 4.7 and the Reserve Account in accordance with Sections 4.5(c) and 4.7.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1 Amendment. (a) This Agreement may be amended by
the Seller, the Servicer and the Trust, with the consent of the Indenture
Trustee, but without the consent of any of the Noteholders or the
Certificateholders to cure any ambiguity, to correct or supplement any
provisions in this Agreement which may be inconsistent with any other
provisions in this Agreement, or to add, change or eliminate any other
provisions with respect to matters or questions arising under this
Agreement that shall not be inconsistent with the provisions of this
Agreement; provided, however, that such action shall not, as evidenced by
an Opinion of Counsel delivered to the Owner Trustee and the Indenture
Trustee, materially and adversely affect the interests of any Noteholder or
Certificateholder.
(b) This Agreement may also be amended from time to time by the
Seller, the Servicer and the Trust, with the consent of the Indenture
Trustee, the consent of the Holders of Notes evidencing not less than 51%
of Outstanding Amount of the Notes and the consent of the Holders of
Certificates evidencing not less than 51% of the Certificate Balance for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Noteholders or the Certificateholders; provided,
however, that no such amendment shall (a) increase or reduce in any manner
the amount of, or accelerate or delay the timing of, or change the
allocation or priority of, collections of payments on Receivables or
distributions that shall be required to be made on any Note or Certificate
or change the Note Interest Rate, the Specified Reserve Balance or the
Maximum Supplemental Reserve Amount, without the consent of all adversely
affected Noteholders or Certificateholders, (b) reduce the aforesaid
percentage required to consent to any such amendment, without the consent
of the Holders of all Notes and Certificates affected thereby or (c)
adversely affect the rating of any Class of Notes by the Rating Agencies
without the consent, as applicable, of Noteholders evidencing not less than
66-2/3% of the Notes of such Class Outstanding.
(c) Prior to the execution of any amendment or consent pursuant
to Section 10.1(b), the Servicer shall provide written notification of the
substance of such amendment or consent to each Rating Agency.
(d) Promptly after the execution of any amendment or consent
pursuant to this Section 10.1, the Owner Trustee shall furnish written
notification of the substance of such amendment or consent to each
Certificateholder, the Indenture Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of Noteholders or the
Certificateholders pursuant to this Section 10.1 to approve the particular
form of any proposed amendment or consent, but it shall be sufficient if
such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Noteholders and Certificateholders
provided for in this Agreement) and of evidencing the authorization of the
execution thereof by Noteholders and Certificateholders shall be subject to
such reasonable requirements as the Owner Trustee and the Indenture Trustee
may prescribe.
(e) Prior to the execution of any amendment to this Agreement,
the Owner Trustee and the Indenture Trustee shall be entitled to receive
and rely upon (i) an Opinion of Counsel stating that the execution of such
amendment (A) is authorized or permitted by this Agreement, (B) will not
materially adversely affect the Federal or any Applicable Tax State income
or franchise taxation of any Outstanding Note or Certificate or any Holder
thereof, and (C) will not cause the Trust to be taxable as a corporation
for Federal or any Applicable Tax State income or franchise tax purposes
and (ii) an Officer's Certificate of the Servicer that all conditions to
the execution of such amendment have been complied with. The Owner Trustee
or the Indenture Trustee may, but shall not be obligated to, enter into any
such amendment which affects such Owner Trustee's or Indenture Trustee's
own rights, duties or immunities under this Agreement or otherwise.
SECTION 10.2 Protection of Title to Trust. (a) The Seller or
Servicer, or both, shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve,
maintain, and protect the interest of the Trust and the Indenture Trustee
for the benefit of the Noteholders in the Receivables and in the proceeds
thereof. The Seller or Servicer, or both, shall deliver (or cause to be
delivered) to the Owner Trustee and the Indenture Trustee file-stamped
copies of, or filing receipts for, any document filed as provided above, as
soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity, or corporate structure in any manner that would, could, or might
make any financing statement or continuation statement filed by the Seller
or the Servicer in accordance with paragraph (a) above seriously misleading
within the meaning of section 9-402(7) of the Relevant UCC, unless it shall
have given the Owner Trustee and the Indenture Trustee at least sixty (60)
days' prior written notice thereof and shall have promptly filed
appropriate amendments to all previously filed financing statements or
continuation statements.
(c) The Seller and the Servicer shall give the Owner Trustee and
the Indenture Trustee at least sixty (60) days' prior written notice of any
relocation of its principal executive office if, as a result of such
relocation, the applicable provisions of the Relevant UCC would require the
filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any
such amendment, continuation statement or any new financing statement. The
Servicer shall at all times maintain each office from which it shall
service Receivables, and its principal executive office, within the United
States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including
payments and recoveries made and payments owing (and the nature of each)
and (ii) reconciliation between payments or recoveries on (or with respect
to) each Receivable and the amounts from time to time deposited in the
Collection Account, Payahead Account, the Yield Supplement Account, the
Reserve Account and the Supplemental Reserve Account in respect of such
Receivable.
(e) The Servicer shall maintain its computer systems so that,
from and after the time of sale under this Agreement of the Receivables to
the Trust, the Servicer's master computer records (including any back-up
archives) that refer to a Receivable shall indicate clearly the interest of
the Trust and the Indenture Trustee in such Receivable and that such
Receivable is owned by the Trust and has been pledged to the Indenture
Trustee pursuant to the Indenture. Indication of the Trust's and the
Indenture Trustee's interest in a Receivable shall be deleted from or
modified on the Servicer's computer systems when, and only when, the
Receivable shall have been paid in full or repurchased by the Seller or
purchased by the Servicer.
(f) If at any time the Seller or the Servicer shall propose to
sell, grant a security interest in, or otherwise transfer any interest in
any automobile or light- or medium-duty truck receivables to any
prospective purchaser, lender, or other transferee, the Servicer shall give
to such prospective purchaser, lender, or other transferee computer tapes,
compact disks, records, or print-outs (including any restored from back-up
archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and
is owned by the Trust and has been pledged to the Indenture Trustee unless
such Receivable has been paid in full or repurchased by the Seller or
purchased by the Servicer.
(g) The Servicer shall permit the Owner Trustee, the Indenture
Trustee and their respective agents at any time during normal business
hours to inspect, audit, and make copies of and abstracts from the
Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner
Trustee and the Indenture Trustee, within ten (10) Business Days, a list of
all Receivables (by contract number and name of Obligor) then held as part
of the Trust, together with a reconciliation of such list to the Schedules
of Receivables and to each of the Servicer's Certificates furnished before
such request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the
Indenture Trustee:
(1) promptly after the execution and delivery of
each amendment to any financing statement, an Opinion of Counsel
either (A) stating that, in the opinion of such Counsel, all
financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and
protect the interest of the Trust and the Indenture Trustee in
the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are
given, or (B) stating that, in the opinion of such Counsel, no
such action shall be necessary to preserve and protect such
interest; and
(2) within ninety (90) days after the beginning
of each calendar year beginning with the first calendar year
beginning more than three months after the Initial Cutoff Date,
an Opinion of Counsel, dated as of a date during such 90-day
period, either (A) stating that, in the opinion of such Counsel,
all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and
protect the interest of the Trust and the Indenture Trustee in
the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are
given, or (B) stating that, in the opinion of such Counsel, no
such action shall be necessary to preserve and protect such
interest.
Each Opinion of Counsel referred to in clause (i)(1) or (i)(2)
above shall specify any action necessary (as of the date of such opinion)
to be taken in the following year to preserve and protect such interest.
(j) The Seller shall, to the extent required by applicable law,
cause the Notes to be registered with the Commission pursuant to Section
12(b) or Section 12(g) of the Exchange Act within the time periods
specified in such sections.
SECTION 10.3 Governing Law. This Agreement shall be construed
in accordance with the laws of the State of New York and the obligations,
rights, and remedies of the parties under this Agreement shall be
determined in accordance with such laws.
SECTION 10.4 Notices. All demands, notices, and communications
under this Agreement shall be in writing, personally delivered, sent by
telecopier, overnight courier or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) in
the case of the Seller or the Servicer, to the agent for service as
specified in Section 10.12 hereof, or at such other address as shall be
designated by the Seller or the Servicer in a written notice to the Owner
Trustee and the Indenture Trustee, (b) in the case of the Owner Trustee, at
the Corporate Trust Office of the Owner Trustee, (c) in the case of the
Indenture Trustee, at the Corporate Trust Office of the Indenture Trustee,
(d) in the case of Moody's, at the following address: ▇▇▇▇▇'▇ Investors
Service, Inc., ABS Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, and (e) in the case of S&P, at the following address: Standard
& Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Asset Backed
Surveillance Department. Any notice required or permitted to be mailed to
a Noteholder or Certificateholder shall be given by first class mail,
postage prepaid, at the address of such Holder as shown in the Note
Register or the Certificate Register, as applicable. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed
to have been duly given, whether or not the Noteholder or Certificateholder
shall receive such notice.
SECTION 10.5 Severability of Provisions. If any one or more of
the covenants, agreements, provisions, or terms of this Agreement shall be
for any reason whatsoever held invalid, then such covenants, agreements,
provisions, or terms shall be deemed severable from the remaining
covenants, agreements, provisions, or terms of this Agreement and shall in
no way affect the validity or enforceability of the other provisions of
this Agreement or of the Notes, the Certificates, or the rights of the
Holders thereof.
SECTION 10.6 Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in Sections 7.3 and 8.2 and
as provided in the provisions of this Agreement concerning the resignation
of the Servicer, this Agreement may not be assigned by the Seller or the
Servicer without the prior written consent of the Owner Trustee, the
Indenture Trustee, the Holders of Notes evidencing not less than 66-2/3% of
the Outstanding Amount of the Notes and the Holders of Certificates
evidencing not less than 66-2/3% of the Certificate Balance.
SECTION 10.7 Further Assurances. The Seller and the Servicer
agree to do and perform, from time to time, any and all acts and to execute
any and all further instruments required or reasonably requested by the
Owner Trustee or the Indenture Trustee more fully to effect the purposes of
this Agreement, including, without limitation, the execution of any
financing statements or continuation statements relating to the Receivables
for filing under the provisions of the Relevant UCC of any applicable
jurisdiction.
SECTION 10.8 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Owner Trustee, the
Indenture Trustee, the Noteholders or the Certificateholders, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges therein provided are cumulative and not
exhaustive of any rights, remedies, powers and privileges provided by law.
SECTION 10.9 Third-Party Beneficiaries. This Agreement will
inure to the benefit of and be binding upon the parties hereto, the
Noteholders, the Certificateholders, and their respective successors and
permitted assigns. Except as otherwise provided in this Article X, no
other Person will have any right or obligation hereunder. The parties
hereto hereby acknowledge and consent to the pledge of this Agreement by
the Trust to the Indenture Trustee for the benefit of Noteholders pursuant
to the Indenture.
SECTION 10.10 Actions by Noteholder or Certificateholders. (a)
Wherever in this Agreement a provision is made that an action may be taken
or a notice, demand, or instruction given by Noteholders or
Certificateholders, such action, notice, or instruction may be taken or
given by any Noteholder or Certificateholder, as applicable, unless such
provision requires a specific percentage of Noteholders or
Certificateholders.
(b) Any request, demand, authorization, direction, notice,
consent, waiver, or other act by a Noteholder or Certificateholder shall
bind such Noteholder or Certificateholder and every subsequent holder of
such Note or Certificate issued upon the registration of transfer thereof
or in exchange therefor or in lieu thereof in respect of anything done or
omitted to be done by the Owner Trustee, the Indenture Trustee or the
Servicer in reliance thereon, whether or not notation of such action is
made upon such Note or Certificate.
SECTION 10.11 Counterparts. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same instrument.
SECTION 10.12 Agent for Service. The agent for service of the
Seller and the Servicer in respect of this Agreement shall be Executive
Vice President and Treasurer, Mitsubishi Motors Credit of America, Inc.,
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, mailing address: ▇.▇.
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
SECTION 10.13 No Bankruptcy Petition. The Owner Trustee, the
Indenture Trustee, the Trust and the Servicer each covenants and agrees
that, prior to the date which is one year and one day after the payment in
full of all securities issued by the Seller or by a trust for which the
Seller was the depositor which securities were rated by any nationally
recognized statistical rating organization it will not institute against,
or join any other Person in instituting against, the Seller any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or
other proceedings under any federal or state bankruptcy or similar law.
This Section 10.13 shall survive the resignation or removal of the Owner
Trustee under the Trust Agreement or the Indenture Trustee under the
Indenture or the termination of such Agreement.
SECTION 10.14 Limitation of Liability of Owner Trustee and
Indenture Trustee. (a) Notwithstanding anything contained herein to the
contrary, this Agreement has been countersigned by Wilmington Trust
Company, not in its individual capacity but solely in its capacity as Owner
Trustee of the Trust and in no event shall Wilmington Trust Company in its
individual capacity or, except as expressly provided in the Trust
Agreement, as Owner Trustee of the Trust, have any liability for the
representations, warranties, covenants, agreements or other obligations of
the Trust hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely
to the assets of the Trust. For all purposes of this Agreement, in the
performance of its duties or obligations hereunder or in the performance of
any duties or obligations of the Trust hereunder, the Owner Trustee shall
be subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been accepted by Bank of Tokyo - Mitsubishi Trust
Company, not in its individual capacity but solely as Indenture Trustee,
and in no event shall Bank of Tokyo - Mitsubishi Trust Company have any
liability for the representations, warranties, covenants, agreements or
other obligations of the Trust hereunder or in any of the certificates,
notices or agreements delivered pursuant hereto, as to all of which
recourse shall be had solely to the assets of the Trust.
IN WITNESS WHEREOF, the parties have caused this Sale and
Servicing Agreement to be duly executed by their respective officers
thereunto duly authorized as of the day and year first above written.
MMCA AUTO RECEIVABLES, INC.,
as Seller
By: _______________________________________
Name:
Title:
MMCA AUTO OWNER TRUST 1999-1
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By: _______________________________________
Name:
Title:
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.,
as Servicer
By: _______________________________________
Name:
Title:
Accepted and agreed:
BANK OF TOKYO - MITSUBISHI TRUST COMPANY,
as Indenture Trustee
By: _____________________________________
Name:
Title:
SCHEDULE A
[SCHEDULE OF INITIAL RECEIVABLES]
SCHEDULE B
Locations of Receivables Files
Corporate Office
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▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
National Service Center
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10805 Holder Street, ▇▇▇▇▇ ▇▇▇▇▇
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North Central Region
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▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Northeastern Region
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Southeastern Region
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Southwestern Region
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▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Western Region
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
EXHIBIT A
[FORM OF SERVICER'S CERTIFICATE]
The undersigned certifies that he is a [title] of Mitsubishi
Motors Credit of America, Inc., a corporation in good standing under the
laws of the state of its incorporation (the "Company"), and that as such he
is duly authorized to execute and deliver this certificate on behalf of the
Company pursuant to Section 3.9 of the Sale and Servicing Agreement, dated
as of January [ ], 1999, by and among the Company, as Servicer, MMCA
Auto Receivables, Inc., as Seller, and MMCA Auto Owner Trust 1999-1 (the
"Sale and Servicing Agreement") (all capitalized terms used herein without
definition have the respective meanings specified in the Sale and Servicing
Agreement), and further certifies that:
(a) The Servicer's report for the period from __________ to
____________ attached to this certificate is complete and accurate and
contains all information required by Section 3.9 of the Sale and
Servicing Agreement; and
(b) As of the date hereof, no Event of Servicing
Termination or event that with notice or lapse of time or both would
become an Event of Servicing Termination has occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature and the
corporate seal of the Company this ______ day of ____________, ____.
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.
By: _____________________________________
Name:
Title:
EXHIBIT B
[FORM OF STATEMENT TO NOTEHOLDERS]
EXHIBIT C
[FORM OF STATEMENT TO CERTIFICATEHOLDERS]
EXHIBIT D
[FORM OF YIELD SUPPLEMENT AGREEMENT]
January [ ], 1999
MMCA Auto Receivables, Inc.
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
`
Re: MMCA Auto Owner Trust 1999-1
Ladies and Gentlemen:
We hereby confirm arrangements made as of the date hereof with
you to be effective upon (i) receipt by us of the enclosed copy of this
letter agreement (as amended, supplemented or otherwise modified and in
effect from time to time, the "Yield Supplement Agreement"), executed by
you, and (ii) execution of the Purchase Agreement referred to below and
payment of the purchase price specified thereunder. Capitalized terms used
and not otherwise defined herein shall have the meanings assigned to such
terms in, or incorporated by reference into, the Purchase Agreement, dated
as of January [ ], 1999 (as amended, supplemented or otherwise modified
and in effect from time to time, the "Purchase Agreement"), between
Mitsubishi Motors Credit of America, Inc., as seller (the "Seller"), and
MMCA Auto Receivables, Inc., as purchaser (the "Purchaser").
1. On or prior to the Determination Date preceding each Payment
Date, the Servicer shall notify the Purchaser and the Seller of the Yield
Supplement Amount for such Payment Date.
2. In consideration for the Purchaser entering into the
Purchase Agreement and the purchase price paid to the Seller for the
Receivables under the Purchase Agreement, we agree to make a payment of the
Yield Supplement Amount to the Purchaser, or to the pledgee of the assignee
of the Purchaser referred to in Section 5 hereof, on the Business Day prior
to each Payment Date.
3. All payments pursuant hereto shall be made by federal wire
transfer (same day) funds or in immediately available funds, to such
account as the Purchaser or the pledgee of the assignee of the Purchaser
referred to in Section 5 hereof, may designate in writing to the Seller,
prior to the relevant Payment Date.
4. Our agreements set forth in this Yield Supplement Agreement
are our primary obligations and such obligations are irrevocable, absolute
and unconditional, shall not be subject to any counterclaim, setoff or
defense and shall remain in full force and effect without regard to, and
shall not be released, discharged or in any way affected by, any
circumstances or condition whatsoever.
5. Pursuant to the Sale and Servicing Agreement, the Purchaser
will sell, transfer, assign and convey its interest in this Yield
Supplement Agreement to MMCA Auto Owner Trust 1999-1 (the "Trust"), and the
Seller hereby acknowledges and consents to such sale, transfer, assignment
and conveyance. Concurrent with such sale, transfer, assignment and
conveyance, pursuant to the Indenture, the Trust will pledge its rights
under this Yield Supplement Agreement, along with certain other assets of
the Trust, to Bank of Tokyo - Mitsubishi Trust Company, as Indenture
Trustee, to secure its obligations under the Notes and the Indenture, and
the Seller hereby acknowledges and consents to such pledge. The Seller
hereby agrees, for the benefit of the Trust, that following such sale,
transfer, assignment, conveyance and pledge, this Yield Supplement
Agreement shall not be amended, modified or terminated without the consent
of Wilmington Trust Company, as Owner Trustee on behalf of the Trust, and,
prior to the payment in full of the Notes, the Indenture Trustee.
6. This Yield Supplement Agreement will be governed by, and
construed in accordance with, the laws of the State of New York.
7. Except as otherwise provided herein, all notices pursuant to
this Yield Supplement Agreement shall be in writing and shall be effective
upon receipt thereof. All notices shall be directed as set forth below, or
to such other address or to the attention of such other person as the
relevant party shall have designated for such purpose in a written notice.
If to the Purchaser:
MMCA Auto Receivables, Inc.
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Secretary/Treasurer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Seller:
Mitsubishi Motors Credit of America, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Executive Vice President and Treasurer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
8. This Yield Supplement Agreement may be executed in one or
more counterparts and by the different parties hereto on separate
counterparts, all of which shall be deemed to be one and the same document.
If the foregoing satisfactorily sets forth the terms and
conditions of our agreement, please indicate your acceptance thereof by
signing in the space provided below and returning to us the enclosed
duplicate original of this letter.
Very truly yours,
MITSUBISHI MOTORS CREDIT
OF AMERICA, INC.,
as Seller
By: _______________________________
Name:
Title:
Agreed and accepted as of
the date first above written:
MMCA AUTO RECEIVABLES, INC.,
as Purchaser
By: __________________________
Name:
Title:
EXHIBIT E
FORM OF SECOND-TIER SUBSEQUENT ASSIGNMENT
For value received, in accordance with and subject to the Sale
and Servicing Agreement, dated as of January [ ], 1999 (the "Sale and
Servicing Agreement"), among MMCA Auto Owner Trust 1999-1 (the "Trust"),
MMCA Auto Receivables, Inc., as the Seller (the "Seller"), and Mitsubishi
Motors Credit of America, Inc., as the Servicer (the "Servicer"), the
Seller hereby irrevocably sells, transfers, assigns and otherwise conveys
to the Trust, without recourse (subject to the obligations herein), all
right, title and interest of the Seller, whether now owned or hereafter
acquired, in, to and under the following:
(i) the Subsequent Receivables, with an aggregate Principal
Balance as of ______________, ________________ (the "Subsequent Cutoff
Date") equal to $[ ], listed on Schedule A hereto;
(ii) with respect to the Subsequent Receivables that are
Actuarial Receivables, monies due thereunder on or after the
Subsequent Cutoff Date (including Payaheads), and, with respect to the
Subsequent Receivables that are Simple Interest Receivables, monies
received thereunder on or after the Subsequent Cutoff Date;
(iii) the security interests in Financed Vehicles granted
by Obligors pursuant to the Subsequent Receivables and any other
interest of the Trust in such Financed Vehicles;
(iv) rights to receive proceeds with respect to the
Subsequent Receivables from claims on any physical damage, theft,
credit life or disability insurance policies covering the related
Financed Vehicles or related Obligors;
(v) rights to receive proceeds with respect to the
Subsequent Receivables from recourse to Dealers thereon pursuant to
Dealer Agreements;
(vi) all of the Seller's rights to the Receivable Files
that relate to the Subsequent Receivables;
(vii) payments and proceeds with respect to the Subsequent
Receivables held by the Servicer;
(viii) all property (including the right to receive
Liquidation Proceeds and Recoveries and Financed Vehicles and the
proceeds thereof acquired by the Seller pursuant to the terms of a
Subsequent Receivable that is a Final Payment Receivable), guarantees
and other collateral securing an Subsequent Receivable (other than an
Subsequent Receivable repurchased by the Servicer or purchased by the
Seller);
(ix) rebates of premiums and other amounts relating to
insurance policies and other items financed under the Subsequent
Receivables in effect as of the Subsequent Cutoff Date; and
(x) all present and future claims, demands, causes of
action and choses in action in respect of any or all of the foregoing
and all payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all
proceeds of the conversion thereof, voluntary or involuntary, into
cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment
of any and every kind and other forms of obligations and receivables,
instruments and other property which at any time constitute all or
part of or are included in the proceeds of any of the foregoing.
The foregoing sale, transfer, assignment and conveyance shall not
constitute and is not intended to result in an assumption by the Trust of
any obligation of the Seller to the Obligors, the Dealers or any other
Person with respect the Subsequent Receivables set forth in Schedule A
attached hereto and the other Trust Property related thereto or any
agreement, document or instrument related thereto.
This Second-Tier Subsequent Assignment is made pursuant to and
upon the representations, warranties and agreements on the part of the
Seller contained in the Sale and Servicing Agreement (including the
Officer's Certificate of the Seller accompanying this Second-Tier
Subsequent Assignment) and is to be governed in all respects by the Sale
and Servicing Agreement. Capitalized terms used but not otherwise defined
herein shall have the meanings assigned to them in the Sale and Servicing
Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Second-Tier
Subsequent Assignment to be duly executed as of _________________, _____.
MMCA AUTO RECEIVABLES, INC.
By: _________________________________
Name:
Title:
SCHEDULE A
[SCHEDULE OF SUBSEQUENT RECEIVABLES]
ANNEX A
OFFICER'S CERTIFICATE
The undersigned officer of MMCA Auto Receivables, Inc. (the
"Company"), does hereby certify, pursuant to Section 2.2(c)(xvi) of the
Sale and Servicing Agreement, dated as of January [ ], 1999, among MMCA
Auto Owners Trust 1999-1 ( the "Trust"), MMCA Auto Receivables, Inc., as
the Seller, and Mitsubishi Motors Credit of America, Inc., as the Servicer
(as amended, supplemented or otherwise modified as of the date hereof, the
"Agreement") that all of the conditions to the transfer to the Trust of the
Subsequent Receivables listed on Schedule A to the Second-Tier Subsequent
Assignment delivered herewith and the other property and rights related to
such Subsequent Receivable, as described in Section 2.2(c) of the
Agreement, have been satisfied on or prior to the related Subsequent
Transfer Date.
Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Agreement.
IN WITNESS WHEREOF, the undersigned have caused this certificate
to be duly executed this ____ day of __________, 19______.
By: ________________________________
Name:
Title: