Exhibit No. 4.2
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SALE AND SERVICING AGREEMENT
by and among
MMCA AUTO OWNER TRUST 1998-1,
as Issuer,
MMCA AUTO RECEIVABLES, INC.,
as Seller
and
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.,
as Servicer
Dated as of August 1, 1998
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Other Definitional Provisions . . . . . . . . . . . . 25
SECTION 1.3 Business Day Certificate . . . . . . . . . . . . . . 26
ARTICLE II
TRUST PROPERTY
SECTION 2.1 Conveyance of Trust Property . . . . . . . . . . . . 26
SECTION 2.2 Representations and Warranties of the Seller
as to the Receivables . . . . . . . . . . . . . . . 27
SECTION 2.3 Repurchase upon Breach . . . . . . . . . . . . . . . 32
SECTION 2.4 Custody of Receivable Files . . . . . . . . . . . . . 33
SECTION 2.5 Duties of Servicer as Custodian . . . . . . . . . . . 34
SECTION 2.6 Instructions; Authority to Act . . . . . . . . . . . 35
SECTION 2.7 Custodian's Indemnification . . . . . . . . . . . . . 35
SECTION 2.8 Effective Period and Termination . . . . . . . . . . 36
ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND TRUST PROPERTY
SECTION 3.1 Duties of Servicer . . . . . . . . . . . . . . . . . 36
SECTION 3.2 Collection and Allocation of Receivable Payments . . 40
SECTION 3.3 Realization upon Receivables . . . . . . . . . . . . 43
SECTION 3.4 Physical Damage Insurance . . . . . . . . . . . . . . 43
SECTION 3.5 Maintenance of Security Interests in Financed
Vehicles . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 3.6 Covenants of Servicer . . . . . . . . . . . . . . . . 44
SECTION 3.7 Purchase by Servicer upon Breach . . . . . . . . . . 44
SECTION 3.8 Servicing Compensation . . . . . . . . . . . . . . . 45
SECTION 3.9 Servicer's Certificate . . . . . . . . . . . . . . . 45
SECTION 3.10 Annual Statement as to Compliance; Notice of
Event of Servicing Termination . . . . . . . . . . . 46
SECTION 3.11 Annual Independent Certified Public Accountants'
Reports . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 3.12 Access to Certain Documentation and Information
Regarding Receivables . . . . . . . . . . . . . . . 47
SECTION 3.13 Reports to the Commission . . . . . . . . . . . . . 47
SECTION 3.14 Reports to Rating Agencies . . . . . . . . . . . . . 47
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS
TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 4.1 Accounts . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 4.2 Collections . . . . . . . . . . . . . . . . . . . . . 51
SECTION 4.3 Application of Collections . . . . . . . . . . . . . 53
SECTION 4.4 Advances . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 4.5 Additional Deposits . . . . . . . . . . . . . . . . . 55
SECTION 4.6 Allocation of Available Funds . . . . . . . . . . . . 56
SECTION 4.7 Reserve Account; Supplemental Reserve Account . . . . 58
SECTION 4.8 Net Deposits . . . . . . . . . . . . . . . . . . . . 61
SECTION 4.9 Statements to Noteholders and Certificateholders . . 61
SECTION 4.10 Control of Securities Accounts . . . . . . . . . . . 63
ARTICLE V
YIELD SUPPLEMENT LETTER OF CREDIT
SECTION 5.1 Yield Supplement Letter of Credit and the Yield
Supplement Account . . . . . . . . . . . . . . . . . 63
ARTICLE VI
THE SELLER
SECTION 6.1 Representations, Warranties and Covenants of
Seller . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 6.2 Liability of Seller; Indemnities . . . . . . . . . . 68
SECTION 6.3 Merger or Consolidation of, or Assumption of the
Obligations of, Seller . . . . . . . . . . . . . . . 70
SECTION 6.4 Limitation on Liability of Seller and Others . . . . 70
SECTION 6.5 Seller May Own Notes or Certificates . . . . . . . . 71
ARTICLE VII
THE SERVICER
SECTION 7.1 Representations and Warranties of Servicer . . . . . 71
SECTION 7.2 Liability of Servicer; Indemnities . . . . . . . . . 73
SECTION 7.3 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer . . . . . . . . . . . . . . 75
SECTION 7.4 Limitation on Liability of Servicer and Others . . . 75
SECTION 7.5 Servicer Not to Resign . . . . . . . . . . . . . . . 76
SECTION 7.6 Servicer May Own Notes or Certificates . . . . . . . 76
ARTICLE VIII
SERVICING TERMINATION
SECTION 8.1 Events of Servicing Termination . . . . . . . . . . . 77
SECTION 8.2 Indenture Trustee to Act; Appointment of Successor
Servicer . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 8.3 Effect of Servicing Transfer . . . . . . . . . . . . 80
SECTION 8.4 Notification to Noteholders and Certificateholders . 80
SECTION 8.5 Waiver of Past Events of Servicing Termination . . . 80
ARTICLE IX
TERMINATION
SECTION 9.1 Optional Purchase of All Receivables . . . . . . . . 81
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1 Amendment . . . . . . . . . . . . . . . . . . . . . 82
SECTION 10.2 Protection of Title to Trust . . . . . . . . . . . . 84
SECTION 10.3 Governing Law . . . . . . . . . . . . . . . . . . . 87
SECTION 10.4 Notices . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 10.5 Severability of Provisions . . . . . . . . . . . . . 87
SECTION 10.6 Assignment . . . . . . . . . . . . . . . . . . . . . 87
SECTION 10.7 Further Assurances . . . . . . . . . . . . . . . . . 88
SECTION 10.8 No Waiver; Cumulative Remedies . . . . . . . . . . . 88
SECTION 10.9 Third-Party Beneficiaries . . . . . . . . . . . . . 88
SECTION 10.10 Actions by Noteholder or Certificateholders . . . 88
SECTION 10.11 Counterparts . . . . . . . . . . . . . . . . . . . 89
SECTION 10.12 Agent for Service . . . . . . . . . . . . . . . . . 89
SECTION 10.13 No Bankruptcy Petition . . . . . . . . . . . . . . 89
SECTION 10.14 Limitation of Liability of Owner Trustee and
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . 89
SCHEDULES
SCHEDULE A Schedule of Receivables
SCHEDULE B Location of Receivable Files
EXHIBITS
EXHIBIT A Form of Servicer's Certificate
EXHIBIT B Form of Statement to Noteholders
EXHIBIT C Form of Statement to Certificateholders
EXHIBIT D Form of Yield Supplement Agreement
SALE AND SERVICING AGREEMENT, dated as of August 1, 1998 (as
amended, supplemented or otherwise modified and in effect from time to
time, this "Agreement"), by and among MMCA AUTO OWNER TRUST 1998-1, a
Delaware business trust (the "Issuer"), MMCA AUTO RECEIVABLES, INC., a
Delaware corporation (the "Seller"), and MITSUBISHI MOTORS CREDIT OF
AMERICA, INC., a Delaware corporation (the "Servicer").
WHEREAS, the Issuer desires to purchase a portfolio of
receivables arising in connection with motor vehicle retail installment
sale contracts generated by Mitsubishi Motors Credit of America, Inc. in
the ordinary course of its business and sold to the Seller;
WHEREAS, the Seller is willing to sell such receivables to the
Issuer; and
WHEREAS, Mitsubishi Motors Credit of America, Inc. is willing to
service such receivables on behalf of the Issuer;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires,
whenever capitalized shall have the following meanings:
"Accrued Note Interest" shall mean, with respect to any Payment
Date and each Class of Notes, the sum of the Monthly Accrued Note Interest
and the Interest Carryover Shortfall for such Class for such Payment Date.
"Actuarial Advance" shall mean, with respect to an Actuarial
Receivable, the amount, as of the last day of a Collection Period, which is
required 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; (vi) amounts paid
pursuant to the Yield Supplement Agreement (including amounts, if any,
withdrawn from the Yield Supplement Account, the Supplemental Reserve
Account or the Reserve Account pursuant to Section 5.1(a)(ii)); and (vii)
partial prepayments attributable to any refunded item included in the
Amount Financed, such as extended warranty protection plan costs or
physical damage, credit life or disability insurance premiums, or any
partial prepayment which causes a reduction in the Obligor's periodic
payment to be below the Scheduled Payment as of the Cutoff Date; provided,
however, that in calculating the Available Funds, all payments and proceeds
(including Liquidation Proceeds) of any Purchased Receivables the Purchase
Amount of which has been included in the Available Funds in a prior
Collection Period (which shall be paid to the Seller or the Servicer, as
applicable) will be excluded, minus (b) the aggregate amount of funds
described in clause (a) above that are used in the related Collection
Period to reimburse the Servicer for the aggregate amount of Advances
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 so requires, (i)
with respect to all of the Certificates, an amount equal to, initially, the
Initial Certificate Balance and, thereafter, an amount equal to the Initial
Certificate Balance, as reduced from time to time by all amounts allocable
to principal previously distributed to Certificateholders or (ii) with
respect to any Certificate, an amount equal to, initially, the initial
denomination of such Certificate and, thereafter, an amount equal to such
initial denomination, as reduced from time to time by all amounts allocable
to principal previously distributed in respect of such Certificate;
provided, that in determining whether the Holders of the requisite portion
or percentage of the Certificate Balance of all of the Certificates have
given any request, demand, authorization, direction, notice, consent, or
waiver hereunder or under any other Basic Document, Certificates owned by
the Issuer, any other obligor upon the Certificates, the Seller, the
Servicer or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed to be excluded from the Certificate Balance (unless
such Persons own 100% of the Certificate Balance of the Certificates),
except that, in determining whether the Indenture Trustee and Owner Trustee
shall be protected in relying on any such request, demand, authorization,
direction, notice, consent, or waiver, only Certificates that a Responsible
Officer of the Indenture Trustee, if applicable, and an Authorized Officer
of the Owner Trustee with direct responsibility for the administration of
the Trust Agreement, if applicable, knows to be so owned shall be so
disregarded. 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 Issuer, any other obligor upon
the Certificates, the Seller, the Servicer or any Affiliate of any of the
foregoing Persons.
"Certificate Distribution Account" shall mean the account
established and maintained as such pursuant to Section 4.1(c).
"Certificate Pool Factor" shall mean, as of the close of business
on the last day of a Collection Period, a seven-digit decimal figure equal
to the Certificate Balance (after giving effect to any reductions therein
to be made on the immediately following Payment Date) divided by the
Initial Certificate Balance. The Certificate Pool Factor will be 1.0000000
as of the Closing Date; thereafter, the Certificate Pool Factor will
decline to reflect reductions in the Certificate Balance.
"Certificateholder" shall have the meaning assigned thereto in
the Trust Agreement.
"Closing Date" shall mean August 20, 1998.
"Collection Account" shall mean the account or accounts
established and maintained as such pursuant to Section 4.1(a).
"Collection Period" shall mean each calendar month during the
term of this Agreement or, in the case of the initial Collection Period,
the period from the Cutoff Date to and including the last day of the month
in which the Cutoff Date occurred.
"Commission" shall mean the Securities and Exchange Commission.
"Computer Tape" shall mean the computer tape 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.
"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 August 1, 1998.
"Dealer" shall mean, with respect to any Receivable, the seller
of the related Financed Vehicle who originated and assigned the Receivable
relating to such Financed Vehicle to MMCA under a Dealer Agreement.
"Dealer Agreement" shall mean an agreement between MMCA and a
Dealer relating to the assignment of Receivables to MMCA and all documents
and instruments relating thereto, as the same may from time to time be
amended, supplemented or otherwise modified and in effect.
"Defaulted Receivable" shall mean a Receivable (other than a
Purchased Receivable) as to which (i) the related Financed Vehicle has been
repossessed and liquidated, (ii) a scheduled payment (including, in the
case of a Final Payment Receivable, the amount owed by an Obligor with
respect to a Last Scheduled Payment but excluding in each case any Excess
Wear and Tear or Excess Mileage) is, in the case of a Contract relating to
an automobile or light-duty truck, 120 or more days past due or, in the
case of a Contract relating to a medium-duty truck, 180 or more days past
due and, in either case, the Servicer has not repossessed the related
Financed Vehicle or (iii) the Servicer has determined, in accordance with
its customary servicing standards, policies and procedures, that 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 the Schedule of Receivables which
provides for a series of scheduled payments which, if each is made on its
scheduled due date, will amortize the initial Level Pay Balance by the due
date immediately preceding the maturity date of the Receivable. At
maturity of the Final Payment Receivable, the Obligor thereunder will owe
(assuming that all payments have been made on their scheduled due dates) an
amount consisting of interest for the period from the preceding due date
through the maturity date and the remaining Principal Balance of the
Receivable. At maturity of the Final Payment Receivable, the Obligor may
either (i) pay the remaining Principal Balance of the Receivable, all
accrued and unpaid interest, plus any fees, charges, and other amounts then
owing, (ii) refinance the amount then due, subject to certain conditions or
(iii) sell the Financed Vehicle to MMCA on behalf of the Trust for an
amount equal to the Last Scheduled Payment (reduced by charges for Excess
Wear and Tear and Excess Mileage and a disposition fee payable to the
Servicer) and pay any excess of the total amount owed by the Obligor
(calculated as in clause (i)) over the sale price to MMCA on behalf of the
Trust, and satisfy all other conditions stated under the terms of the
Contract.
"Financed Vehicle" shall mean a new or used automobile or light-
or medium-duty truck, together with all accessions thereto, securing an
Obligor's indebtedness under the respective Receivable.
"Holder" shall mean a Noteholder or a Certificateholder, as the
case may be.
"Indenture" shall mean the Indenture, dated as of August 1, 1998,
between the Issuer and the Indenture Trustee, as the same may be amended,
supplemented or otherwise modified and in effect from time to time.
"Indenture Trustee" shall mean Bank of Tokyo - Mitsubishi Trust
Company, a New York banking corporation, as Indenture Trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
"Initial Certificate Balance" shall mean, as the context so
requires, (i) with respect to all of the Certificates, $97,669,451.88 or
(ii) with respect to any Certificate, an amount equal to the initial
denomination of such Certificate.
"Initial Pool Balance" shall mean $930,187,451.88.
"Initial Yield Supplement Amount" shall mean $66,416,937.00.
"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 B Notes,
the period from and including the 15th day of the calendar month
immediately preceding such Payment Date (or, in the case of the first
Payment Date, the Closing Date), to but excluding the 15th day of the
calendar month in which such Payment Date occurs.
"Interest Carryover Shortfall" shall mean, with respect to any
Payment Date and any Class of Notes, the excess of the sum of the Monthly
Accrued Note Interest for the preceding Payment Date and any outstanding
Interest Carryover Shortfall from the close of business on such preceding
Payment Date, over the amount in respect of interest that is actually
deposited in the Note Payment Account on such preceding Payment Date, plus
interest on such excess to the extent permitted by law, at the applicable
Note Interest Rate for the related Interest Accrual Period.
"Issuer" shall mean MMCA Auto Owner Trust 1998-1, a Delaware
business trust.
"Last Scheduled Payment" shall mean, with respect to each Final
Payment Receivable, the amount referred to in the Contract related to such
Final Payment Receivable as the "last scheduled payment."
"Last Scheduled Payment Advance" shall mean, with respect to a
Final Payment Receivable, the amount, as of the close of business on the
last day of a Collection Period, which is required to be advanced by the
Servicer with respect to such Final Payment Receivable pursuant to Section
4.4(c).
"Last Scheduled Payment Pool Balance" shall mean, for any Payment
Date, the aggregate principal balance of Last Scheduled Payments of Final
Payment Receivables as of the close of business on the last day of the
preceding Collection Period.
"Last Scheduled Payment Principal Collections" shall mean (a)
collections of principal on a Final Payment Receivable that are
attributable to Last Scheduled Payments, which includes any collection
attributable to principal on a Final Payment Receivable in excess of the
initial Level Pay Balance of that Receivable, whether or not such payment
is made on the due date of the related Last Scheduled Payment, and
including the proceeds of sale (net of expenses) of any Financed Vehicle
purchased by MMCA on behalf of the Trust pursuant to the terms of the
Receivable and subsequently sold on behalf of the Trust, minus (b) with
respect to any Final Payment Receivable with respect to which the Obligor
exercises its right to have MMCA, on behalf of the Trust, purchase the
related Financed Vehicle, the excess of the purchase price from the Obligor
of such Financed Vehicle over the remaining amount owed by the Obligor.
"Letter of Credit Bank" shall mean any Person having the Required
Rating that has provided a Yield Supplement Letter of Credit in accordance
with Section 5.1.
"Level Pay Balance" shall mean, with respect to each Final
Payment Receivable, (i) initially the Amount Financed under such Final
Payment Receivable minus the principal portion of the Last Scheduled
Payment thereon and (ii) thereafter, shall be the amount set forth in
clause (i) minus all collections on or with respect to principal on such
Receivable other than amounts on deposit in the Payahead Account with
respect to future due dates; provided that such Level Pay Balance for any
Final Payment Receivable shall not be less than zero.
"Level Pay Pool Balance" shall mean, for any Payment Date, the
sum of (i) the aggregate Level Pay Balance of Final Payment Receivables and
(ii) the aggregate Principal Balance of the Receivables other than Final
Payment Receivables, as of the close of business on the last day of the
preceding Collection Period.
"Lien" shall mean a security interest, lien, charge, pledge,
equity or encumbrance of any kind, other than tax liens, mechanics' or
materialmen's liens, judicial liens and any liens that may attach to a
Financed Vehicle by operation of law.
"Liquidation Proceeds" shall mean, with respect to a Defaulted
Receivable, the monies collected from whatever source during the Collection
Period in which such Receivable became a Defaulted Receivable, net of the
sum of (i) any expenses incurred by the Servicer in connection with
collection of such Receivable and the disposition of the Financed Vehicle
and (ii) any amounts required by law to be remitted to the Obligor.
"Maximum Supplemental Reserve Amount" shall mean, with respect to
any Payment Date, an amount equal to the lesser of (i) $18,603,749 and (ii)
the outstanding principal amount of the Notes on such Payment Date (after
giving effect to any principal payment made on such Payment Date), as such
amount may be reduced from time to time upon satisfaction of the Rating
Agency Condition.
"MMCA" shall mean Mitsubishi Motors Credit of America, Inc., a
Delaware corporation, and its successors and assigns.
"Monthly Accrued Note Interest" shall mean, with respect to any
Payment Date and (i) any Class of Notes, interest accrued for the related
Interest Accrual Period at the applicable Note Interest Rate on the
aggregate principal amount of the Notes of such Class as of the immediately
preceding Payment Date, after giving effect to all payments of principal to
Noteholders on or prior to such preceding Payment Date (or, in the case of
the first Payment Date, the initial principal amount of the Notes); and
(ii) with respect to the Notes collectively, the sum of Monthly Accrued
Note Interest for each Class.
"Monthly Remittance Condition" shall have the meaning assigned
thereto in Section 4.1(e).
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc., or its
successors and assigns.
"Note Payment Account" shall mean the account established and
maintained as such pursuant to Section 4.1(b).
"Note Pool Factor" shall mean, with respect to any Class of
Notes, as of the close of business on the last day of a Collection Period,
a seven-digit decimal figure equal to the outstanding principal balance of
such Class of Notes (after giving effect to any reductions thereof to be
made on the immediately following Payment Date) divided by the original
outstanding principal balance of such Class of Notes. Each Note Pool
Factor will be 1.0000000 as of the Closing Date; thereafter, the Note Pool
Factor will decline to reflect reductions in the outstanding principal
amount of such Class of Notes.
"Noteholder" shall mean a Person in whose name a Note is
registered on the Note Register.
"Obligor" on a Receivable shall mean the purchaser or co-
purchasers of the related Financed Vehicle purchased in part or in whole by
the execution and delivery of such Receivable, or any other Person who owes
or may be liable for payments under such Receivable.
"Officer's Certificate" shall mean a certificate signed by the
chairman, the president, any executive vice president, vice president or
the treasurer of the Seller or the Servicer, as the case may be, and
delivered to the Owner Trustee and the Indenture Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel
(who, in the case of counsel to the Seller or the Servicer, may be an
employee of, or outside counsel to, the Seller or the Servicer), which
counsel shall be acceptable to the Indenture Trustee, the Owner Trustee or
the Rating Agencies, as applicable.
"Optional Purchase Percentage" shall mean 10%.
"Owner Trust Estate" shall have the meaning assigned thereto in
the Trust Agreement.
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as Owner
Trustee under the Trust Agreement, its successors in interest and any
successor trustee under the Trust Agreement.
"Payahead" shall mean, with respect to an Actuarial Receivable,
the amount, as of the close of business on the last day of a Collection
Period, so designated in accordance with Section 4.3 with respect to such
Receivable.
"Payahead Account" shall mean the account established and
maintained as such pursuant to Section 4.1(d).
"Payahead Balance", with respect to an Actuarial Receivable,
shall mean the sum, as of the close of business on the last day of a
Collection Period, of all Payaheads made by or on behalf of the Obligor
with respect to such Actuarial Receivable (including any amount paid by or
on behalf of the Obligor prior to the Cutoff Date that is due on or after
the Cutoff Date and was not used to reduce the principal balance of such
Actuarial Receivable), as reduced by applications of previous Payaheads
with respect to such Actuarial Receivable, pursuant to Sections 4.3 and
4.4.
"Payment Date" shall mean the 15th day of each month, or if such
day is not a Business Day, the immediately following Business Day,
commencing on September 15, 1998.
"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 Bank of Tokyo-Mitsubishi Trust Company or any of its Affiliates
or of any other 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 Issuer
or the Servicer has received written notification from the Rating Agencies
that the acquisition of such investment as a Permitted Investment will not
result in a withdrawal or downgrading of the ratings on any Class of Notes
or the Certificates.
"Person" shall mean a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, limited liability partnership, trust,
unincorporated organization, or government or any agency or political
subdivision thereof, or any other entity of whatever nature.
"Pool Balance" shall mean, as of any date of determination, the
aggregate Principal Balance of the Receivables (including the aggregate
Principal Balance of Last Scheduled Payments) as of the close of business
on the last day of the preceding Collection Period after giving effect to,
with respect to such Collection Period, (i) all payments received from
Obligors (other than Payaheads), (ii) all Advances to be made by the
Servicer and (iii) all Purchase Amounts to be remitted by the Seller or the
Servicer, in each case for such Collection Period, and reduced by the
aggregate Principal Balance of Receivables that became Defaulted
Receivables during such Collection Period.
"Principal Balance" shall mean, with respect to any Receivable as
of any date of determination, the Amount Financed minus the sum of the
following amounts: (i) in the case of an Actuarial Receivable, that
portion of all Scheduled Payments due on or prior to such date allocable to
principal computed in accordance with the Actuarial Method (to the extent
collected or advanced), (ii) in the case of a Simple Interest Receivable,
that portion of all Scheduled Payments actually received on or prior to
such date allocable to principal using the Simple Interest Method (to the
extent collected or advanced), (iii) any refunded portion of extended
warranty protection plan costs, or of physical damage, credit life, or
disability insurance premiums included in the Amount Financed, and (iv) any
prepayment in full or partial prepayment applied to reduce the unpaid
principal balance of such Receivable. The Principal Balance of a Defaulted
Receivable shall be zero as of the beginning of the Collection Period
following the Collection Period in which it became a Defaulted Receivable.
"Principal Carryover Shortfall" shall mean, as of the close of
business on any Payment Date, the excess of the Principal Distribution
Amount and any outstanding Principal Carryover Shortfall from the preceding
Payment Date over the amount in respect of principal that is actually
deposited in the Note Payment Account on such Payment Date.
"Principal Distribution Amount" shall mean, with respect to any
Payment Date, the sum of (i) the Scheduled Principal for such Payment Date
(including, in the case of a Final Payment Receivable, the amount owed by
an Obligor with respect to a Last Scheduled Payment) plus (ii) any
outstanding Principal Carryover Shortfall as of the close of business on
the preceding Payment Date; provided, however, that the Principal
Distribution Amount shall not exceed the outstanding aggregate principal
amount of the Notes; and provided, further, that, on the Final Payment Date
for each Class of Notes, the principal required to be deposited in the Note
Payment Account 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 September 1, 1998, between the Seller and MMCA, as the same may be
amended, supplemented or otherwise modified and in effect from time to
time.
"Purchase Amount" shall mean, with respect to a Payment Date and
a Receivable to be repurchased by the Seller or purchased by the Servicer
on such Payment Date, an amount equal to the sum of (a) the Principal
Balance of such Receivable as of the first day of the Collection Period
preceding the Collection Period in which such Payment Date occurs and (b)
an amount equal to the amount of accrued and unpaid interest on such
Principal Balance at the related APR from the date a payment was last made
by or on behalf of the Obligor through the due date for payment of such
Receivable in the Collection Period preceding the Collection Period in
which such Payment Date occurs and, in the case of clauses (a) and (b),
after giving effect to the receipt of monies collected on such Receivable
in such preceding Collection Period.
"Purchased Receivable" shall mean, on any date of determination,
a Receivable as to which payment of the Purchase Amount has been made by
the Seller pursuant to Section 2.3 hereof or the Servicer pursuant to
Section 3.7 or 9.1 hereof.
"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 Issuer,
notice of which designation shall be given to the Indenture Trustee, the
Owner Trustee and the Servicer.
"Rating Agency Condition" shall mean, with respect to any action,
that each Rating Agency shall have been given prior notice thereof and that
each of the Rating Agencies shall have notified the Seller, the Servicer,
the Owner Trustee and the Indenture Trustee in writing that such action
will not result in a reduction or withdrawal of the then current rating of
the Notes or the Certificates.
"Realized Losses" shall mean, with respect to each Payment Date
and each Receivable that became a Defaulted Receivable during the related
Collection Period, the excess of the Principal Balance of such Defaulted
Receivable (including the principal of a Last Scheduled Payment) over the
Liquidation Proceeds attributable to the Principal Balance of such
Defaulted Receivable.
"Receivable" shall mean any Standard Receivable or Final Payment
Receivable.
"Receivable File" shall mean, with respect to a Receivable, the
electronic entries, documents, instruments and writings specified in
Section 2.4.
"Receivable Yield Supplement Amount" shall mean, with respect to
any Receivable and the related Payment Date (other than a Defaulted
Receivable or a Purchased Receivable, for Collection Periods after the
Collection Period in which such Receivable became a Defaulted Receivable or
a Purchased Receivable), for any Collection Period the amount (if positive)
calculated by the Servicer equal to the product of one-twelfth (1/12) times
(i) interest 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 for such Collection Period, (B) the Servicing Rate
for such Collection Period and (C) 2.00%, minus (ii) interest on such
Receivable at its APR, multiplied by such Receivable's Principal Balance as
of the first day of the related Collection Period.
"Record Date" shall mean, with respect to any Payment Date, the
close of business on the day immediately preceding such Payment Date or, if
Definitive Notes have been issued, the fifteenth (15th) day of the calendar
month preceding such Payment Date.
"Recoveries" shall mean, with respect to any Collection Period
following the Collection Period in which such Receivable became a Defaulted
Receivable, all monies received by the Servicer with respect to any
Defaulted Receivable during any Collection Period, net of the sum of (i)
any expenses incurred by the Servicer in connection with the collection of
such Receivable and the disposition of the Financed Vehicle (to the extent
not previously reimbursed) and (ii) any payments on such Receivable
required by law to be remitted to the Obligor.
"Relevant UCC" shall mean the Uniform Commercial Code as in
effect in any relevant jurisdiction.
"Required Rating" shall mean a rating on (i) short-term unsecured
debt obligations of P-1 by Moody's and (ii) short-term unsecured debt
obligations of A-1+ by S&P; and any requirement that short-term unsecured
debt obligations have the "Required Rating" shall mean that such short-term
unsecured debt obligations have the foregoing required ratings from each of
such Rating Agencies.
"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 after giving effect to
all deposits and withdrawals therefrom on the prior Payment Date (or, in
the case of the first Payment Date, the Closing Date).
"Reserve Account 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, with respect to the Closing
Date, $1,395,281.
"Rule of 78's Payment" shall mean, with respect to any Actuarial
Receivable which provides that, if such Receivable is prepaid in full, the
amount payable will be determined according to the Rule of 78's method
specified in the related Contract, an amount (if positive) equal to (i) the
amount due allocating payments between principal and interest based upon
the Rule of 78's minus (ii) the amount that would be due allocating
payments between principal and interest from the date of origination of the
Receivable using the Actuarial Method.
"S&P" shall mean Standard & Poor's Ratings Services, a division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies, or its successors and assigns.
"Schedule of Receivables" shall mean the list identifying the
Receivables attached hereto as Schedule A (which list may be in the form of
microfiche), as supplemented or amended from time to time.
"Scheduled Payment" shall mean, for any Collection Period for any
Receivable, the amount indicated in such Receivable as required to be paid
by the Obligor in such Collection Period (without giving effect to
deferrals of payments pursuant to Section 3.2 or any rescheduling in any
insolvency or similar proceedings).
"Scheduled Principal" shall mean, with respect to any Payment
Date, the sum of (a) the sum of (i) collections received during the related
Collection Period of principal on Simple Interest Receivables, including
collections of principal attributable to the Last Scheduled Payment of a
Simple Interest Receivable that is a Final Payment Receivable, and
including any charges for Excess Wear and Tear and Excess Mileage but
excluding collections received during the related Collection Period of
principal on Simple Interest Receivables that would be attributable to a
Last Scheduled Payment pursuant to Section 4.3(a) except that a Last
Scheduled Payment Advance has been made with respect to such Last Scheduled
Payment, and (ii) Last Scheduled Payment Advances made during the related
Collection Period with respect to Simple Interest Receivables that are
Final Payment Receivables, (b) the principal portion of each Scheduled
Payment (including a Last Scheduled Payment on a Final Payment Receivable)
due on any Actuarial Receivable during the related Collection Period, (c)
the Principal Balance (without duplication of amounts taken into account
under (a) or (b)) of (i) each Receivable prepaid in full during the
related Collection Period and (ii) Receivables which became Defaulted
Receivables during the related Collection Period, (d) the Purchase Amount
of each Receivable that was repurchased by the Seller or purchased by the
Servicer during such Collection Period to the extent attributable to
principal, (e) the proceeds of any other sale of a Receivable (including
pursuant to Section 9.2 of the Trust Agreement), to the extent allocable to
principal, and (f) partial prepayments attributable to any refunded item
included in the Amount Financed, such as extended warranty protection plan
costs or physical damage, credit life or disability insurance premiums, or
any partial prepayment which causes a reduction in the Obligor's periodic
payment to be below the Scheduled Payment as of the Cutoff Date; provided,
however, that in calculating the Scheduled Principal, all payments and
proceeds (including Liquidation Proceeds) of any Purchased Receivables the
Purchase Amount of which has been included in Scheduled Principal in a
prior Collection Period (which shall be paid to the Seller or Servicer, as
applicable) will be excluded.
"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, an amount equal to the lesser of (i) $6,976,406 and (ii) an
amount equal to (x) the outstanding principal amount of the Notes as of
such Payment Date (after giving effect to any principal payment made on
such Payment Date) less (y) the amounts on deposit in the Supplemental
Reserve Account on such Payment Date (after giving effect to any deposits
to or withdrawals from the Supplemental Reserve Account on such Payment
Date). Notwithstanding the foregoing, if (i) each Rating Agency delivers a
letter to the Indenture Trustee that the use of any new formulation
requested by the Seller would not cause a downgrade, qualification or
withdrawal of the then current rating on any Class of Notes, and (ii) an
Opinion of Counsel to the effect that the proposed change will not
adversely affect the status of the Notes as debt is delivered to the
Indenture Trustee, then the Specified Reserve Balance may be reduced in
accordance with such letters without an amendment hereto.
"Specified Yield Supplement Account Balance" shall mean, on the
Closing Date, $66,416,937.00 and, as of the close of business on any
Payment Date, an amount equal to the sum of all projected Yield Supplement
Amounts for all future Payment Dates, assuming that future Scheduled
Payments on the Receivables are made on their scheduled due dates; provided
that if, on any date, MMCA shall fail to pay the amount payable under the
Yield Supplement Agreement in accordance with the terms thereof, then, in
such event, the Specified Yield Supplement Account Balance shall not be
reduced thereafter.
"Standard Receivable" shall mean all rights and obligations under
a Contract which is not a Final Payment Receivable listed on the Schedule
of Receivables.
"Supplemental Reserve Account" shall mean the account established
and maintained as such pursuant to Section 4.7(b).
"Supplemental Reserve Account 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
after giving effect to all deposits and withdrawals therefrom on the prior
Payment Date (or, in the case of the first Payment Date, the Closing Date).
"Supplemental Reserve Account 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 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 Issuer.
"Trust Accounts" shall have the meaning assigned thereto in
Section 4.1(d).
"Trust Agreement" shall mean the Amended and Restated Trust
Agreement, dated as of August 1, 1998, between the Seller and the Owner
Trustee, as the same may be amended, supplemented or otherwise modified and
in effect from time to time.
"Trust Officer" shall mean, in the case of the Indenture Trustee,
any officer within the Corporate Trust Office of the Indenture Trustee with
direct responsibility for the administration of the Indenture and the other
Basic Documents on behalf of the Indenture Trustee and also, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject and, with respect to the Owner Trustee, any officer in the
Corporate Trust Administration Department of the Owner Trustee with direct
responsibility for the administration of the Trust Agreement and the other
Basic Documents on behalf of the Owner Trustee.
"Trust Property" shall mean, collectively, (i) the Receivables;
(ii) with respect to Actuarial Receivables, monies due thereunder on or
after the Cutoff Date (including Payaheads) and, with respect to Simple
Interest Receivables, monies due or received thereunder on or after the
Cutoff Date; (iii) the security interests in the Financed Vehicles granted
by Obligors pursuant to the Receivables and any other interest of the
Issuer in the Financed Vehicles; (iv) rights to receive proceeds with
respect to the Receivables from claims on any physical damage, theft,
credit life or disability insurance policies covering the Financed Vehicles
or Obligors; (v) rights to receive proceeds with respect to the Receivables
from recourse to Dealers thereon pursuant to the Dealer Agreements; (vi)
all of the Seller's rights to the Receivable Files; (vii) the Trust
Accounts, the Certificate Distribution Account, the Reserve Account, the
Supplemental Reserve Account and the Yield Supplement Account and all
amounts, securities, investments in financial assets, and other property
deposited in or credited to any of the foregoing and all proceeds thereof;
(viii) all of the Seller's rights under the Yield Supplement Agreement and
the Purchase Agreement, including the right of the Seller to cause MMCA to
repurchase Receivables from the Seller; (ix) payments and proceeds with
respect to the Receivables held by the Servicer; (x) all property
(including the right to receive Liquidation Proceeds and Recoveries and
Financed Vehicles and the proceeds thereof acquired by the Seller pursuant
to the terms of a Final Payment Receivable), guarantees and other
collateral securing a Receivable (other than a Receivable repurchased by
the Servicer or purchased by the Seller); (xi) rebates of premiums and
other amounts relating to insurance policies and other items financed under
the Receivables in effect as of the Cutoff Date; and (xii) all present and
future claims, demands, causes of action and choses in action in respect of
any or all of the foregoing and all payments on or under and all proceeds
of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion thereof, voluntary or
involuntary, into cash or other liquid property, all cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, insurance proceeds, condemnation awards, rights
to payment of any and every kind and other forms of obligations and
receivables, instruments and other property which at any time constitute
all or part of or are included in the proceeds of any of the foregoing.
"Weighted Average Rate" shall mean, with respect to any Payment
Date, a per annum rate equal to the product of (i) twelve and (ii) the
aggregate amount of the Monthly Accrued Interest for the Notes on such
Payment Date divided by the sum of the outstanding principal amount of the
Notes as of the preceding Payment Date (after giving effect to any
principal payment made on such Payment Date) or, with respect to the first
Payment Date, as of the Closing Date.
"Yield Supplement Account" shall have the meaning assigned
thereto in Section 5.1(a).
"Yield Supplement Agreement" shall mean the Yield Supplement
Agreement, dated as of August 1, 1998, by and between the Seller and MMCA,
as amended, modified or supplemented from time to time, substantially in
the form of Exhibit D hereto.
"Yield Supplement Amount" shall mean, with respect to any Payment
Date, the sum of all Receivable Yield Supplement Amounts for the related
Collection Period.
"Yield Supplement Letter of Credit" shall mean any letter of
credit issued by the Letter of Credit Bank, as permitted by Section 5.1, to
support payments of the Yield Supplement Amount under the Yield Supplement
Agreement.
SECTION 1.2 Other Definitional Provisions. (i) Capitalized
terms used herein and not otherwise defined herein have the meanings
assigned to them in the Indenture.
(ii) 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.
(iii) 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.
(iv) 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."
(v) 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.
(vi) Any agreement, instrument or statute defined or
referred to herein or in any instrument or certificate delivered in
connection herewith means such agreement, instrument or statute as from
time to time amended, modified or supplemented and includes (in the case of
agreements or instruments) references to all attachments thereto and
instruments incorporated therein; references to a Person are also to its
permitted successors and assigns.
SECTION 1.3 Business Day Certificate. On or prior to December
17, 1998 (with respect to the remainder of calendar year 1998 and calendar
year 1999) 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. In consideration of
the Issuer's delivery to, or upon the written order of, the Seller of
authenticated Notes and Certificates, in authorized denominations in
aggregate principal amounts equal to the initial principal amount of the
Notes and the Initial Certificate Balance, respectively, the Seller hereby
irrevocably sells, transfers, assigns and conveys to the Issuer all right,
title and interest of the Seller, whether now owned or hereafter acquired,
in, to and under the Trust Property, without recourse (subject to the
obligations herein). The sale, transfer, assignment and conveyance made
hereunder shall not constitute and is not intended to result in an
assumption by the Issuer of any obligation of the Seller to the Obligors,
the Dealers or any other Person in connection with the Receivables and the
other Trust Property or any agreement, document or instrument related
thereto.
It is the intention of the Seller and the Issuer that the
transfer of the Trust Property contemplated herein constitute a sale of the
Trust Property, conveying good title to the Trust Property from the Seller
to the Issuer. However, in the event that such transfer is deemed to be a
pledge to secure the payment of the Notes and the Certificates, the Seller
hereby grants to the Issuer a first priority security interest in all of
the Seller's right, title and interest in, to and under the Trust Property,
and all proceeds thereof, to secure the payment of the Notes and the
Certificates, and in such event, this Agreement shall constitute a security
agreement under applicable law.
SECTION 2.2 Representations and Warranties of the Seller as to the
Receivables. The Seller makes the following representations and warranties
as to the Receivables on which the Issuer relies in accepting the
Receivables. Such representations and warranties speak as of the execution
and delivery of this Agreement, but shall survive the sale, transfer and
assignment of the Receivables to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
(i) Characteristics of Receivables. Each Receivable (a)
shall have been originated (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 Issuer and by the Issuer to
the Indenture Trustee, (c) shall contain customary and enforceable
provisions such that the rights and remedies of the holder thereof shall be
adequate for realization against the collateral of the benefits of the
security, (d) in the case of Standard Receivables, shall provide for level
monthly payments (provided that the payment in the last month in a life of
the Receivable may be different from the level payment) that fully amortize
the Amount Financed by maturity and yield interest at the APR, (e) in the
case of Final Payment Receivables, shall provide for a series of fixed
level monthly payments and a larger payment due after such level monthly
payments that fully amortize the Amount Financed by maturity and yield
interest at the APR, (f) shall provide for, in the event that such contract
is prepaid, a prepayment that fully pays the Principal Balance, (g) is a
retail installment sale contract, (h) is secured by a new or used
automobile or light-or medium-duty truck, and (i) is an Actuarial
Receivable or a Simple Interest Receivable (and may also be a Final Payment
Receivable).
(ii) Schedule of Receivables. The information set forth in
the Schedule of Receivables shall be true and correct in all material
respects as of the opening of business on the Cutoff Date, and no selection
procedures believed to be adverse to the Noteholders and/or the
Certificateholders shall have been utilized in selecting the Receivables
from those receivables which meet the criteria contained herein and in the
Purchase Agreement. The compact disk or other listing regarding the
Receivables made available to the Issuer 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, 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 Issuer, respectively (subject to any statutory or other lien arising by
operation of law after the Closing Date which is prior to such security
interest).
(vii) Receivables in Force. No Receivable shall have been
satisfied, subordinated, or rescinded, nor shall any Financed Vehicle have
been released from the Lien granted by the related Receivable in whole or
in part, which security interest shall be assignable by MMCA to the Seller
and by the Seller to the Issuer.
(viii) No Waiver. No provision of a Receivable shall have
been waived in such a manner that such Receivable fails to meet all of the
representations and warranties made by the Seller in this Section 2.2 with
respect thereto.
(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 Cutoff Date,
or the failure of the Obligor to maintain satisfactory physical damage
insurance covering the Financed Vehicle, no default, breach, violation, or
event permitting acceleration under the terms of any Receivable shall have
occurred; no continuing condition that with notice or the lapse of time or
both would constitute a default, breach, violation, or event permitting
acceleration under the terms of any Receivable shall have arisen; the
Seller shall not have waived any of the foregoing; and no Financed Vehicle
shall have been repossessed as of the Cutoff Date.
(xii) Insurance. MMCA, in accordance with its customary
procedures, shall have determined whether or not the Obligor has maintained
physical damage insurance (which insurance shall not be force placed
insurance) covering the Financed Vehicle.
(xiii) Title. It is the intention of the Seller that the
transfer and assignment of the Receivables herein contemplated constitute a
sale of the Receivables from the Seller to the Issuer and that the
beneficial interest in, and title to, the Receivables not be part of the
Seller's estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. No Receivable has been sold,
transferred, assigned, or pledged by the Seller to any Person other than
the Issuer. Immediately prior to the transfer and assignment herein
contemplated, the Seller had good and marketable title to each Receivable
free and clear of all Liens, encumbrances, security interests, and rights
of others and, immediately upon the transfer thereof, the Issuer shall have
good and marketable title to each Receivable, free and clear of all Liens,
encumbrances, security interests, and rights of others; and the transfer
has been perfected by all necessary action under the Relevant UCC.
(xiv) Valid Assignment. No Receivable shall have been
originated in, or shall be subject to the laws of, any jurisdiction under
which the sale, transfer, and assignment of such Receivable under this
Agreement or the Indenture or pursuant to transfers of the Certificates
shall be unlawful, void, or voidable. The Seller has not entered into any
agreement with any account debtor that prohibits, restricts or conditions
the assignment of any portion of the Receivables.
(xv) All Filings Made. All filings (including, without
limitation, filings under the Relevant UCC) necessary in any jurisdiction
to give the Issuer a first priority perfected security interest in the
Receivables, and to give the Indenture Trustee a first priority perfected
security interest therein, shall be made within ten (10) days of the
Closing Date.
(xvi) Chattel Paper. Each Receivable constitutes "chattel
paper" as defined in the Relevant UCC.
(xvii) One Original. There shall be only one original
executed copy of each Receivable.
(xviii) Principal Balance. Each Receivable had an original
principal balance (net of unearned precomputed finance charges) of not more
than $60,000.00, and a remaining Principal Balance as of the Cutoff Date of
not less than $100.00.
(xix) No Bankrupt Obligors. As of the Cutoff Date, no
Receivable was due from an Obligor that was the subject of a proceeding
under the Bankruptcy Code of the United States or was bankrupt.
(xx) New and Used Vehicles. Approximately 93.29% of the Pool
Balance of the Receivables, constituting approximately 88.51% of the total
number of the Receivables, as of the Cutoff Date, relate to new automobiles
and light- or medium-duty trucks financed at new vehicle rates.
Approximately 6.71% of the Pool Balance of the Receivables, constituting
approximately 11.49% of the total number of Receivables as of the Cutoff
Date, relate to used automobiles and light- or medium-duty trucks. Of the
new and used vehicles, approximately 2.26% of the Pool Balance of the
Receivables, constituting approximately 3.16% of the total number of
Receivables as of the Cutoff Date, relate to program automobiles and light-
duty trucks manufactured in the current and immediately preceding model
years which are financed at new vehicle rates. Of the used vehicles,
approximately 3.38% of the Pool Balance of the Receivables, constituting
approximately 6.75% of the total number of Receivables as of the Cutoff
Date, relate to refinanced program automobiles and light- or medium-duty
trucks manufactured in prior model years which are financed at the original
rates set forth in the related Contracts or at used vehicle rates.
(xxi) Origination. Each Receivable shall have an origination
date during or after April 1994.
(xxii) Maturity of Receivables. Each Receivable shall have a
remaining maturity, as of the Cutoff Date, of not more than sixty (60)
months, and an original maturity of not more than sixty (60) months.
(xxiii) Annual Percentage Rate. Each Receivable shall have
an APR of at least 0%. Each Receivable shall have an APR of not more than
30%.
(xxiv) Scheduled Payments. Each Receivable shall have a
first Scheduled Payment due on or prior to August 31, 1998, and no
Receivable shall have a payment of which more than 10% of such payment is
thirty (30) days overdue as of the Cutoff Date.
(xxv) Location of Receivable Files. The Receivable Files
shall be kept at one or more of the locations listed in Schedule B hereto.
(xxvi) Capped Receivables and Simple Interest Receivables.
Except to the extent that there has been no material adverse effect on
Noteholders or Certificateholders, each Capped Receivable has been treated
consistently by the Seller and the Servicer as a Simple Interest Receivable
and payments with respect to each Simple Interest Receivable have been
allocated consistently in accordance with the Simple Interest Method.
(xxvii) Agreement. The representations and warranties of the
Seller in Section 6.1 are true and correct.
(xxviii) No Receivables Originated in Alabama. No Receivable
shall have been originated in Alabama.
(xxix) Other Data. The tabular data and the numerical data
relating to the characteristics of the Receivables contained in the
Prospectus (as defined in the Purchase Agreement) is true and correct in
all material respects.
SECTION 2.3 Repurchase upon Breach. The Seller, the Servicer, or
the Owner Trustee, as the case may be, shall inform the other parties to
this Agreement, the Indenture Trustee and MMCA promptly, in writing, upon
the discovery of any breach or failure to be true of the representations
and warranties made by the Seller pursuant to Section 2.2. If the breach
or failure shall not have been cured by the close of business on the last
day of the Collection Period which includes the sixtieth (60th) day after
the date on which the Seller becomes aware of, or receives written notice
from the Owner Trustee or the Servicer of, such breach or failure, and such
breach or failure materially and adversely affects the interest of the
Issuer in a Receivable, the Seller shall repurchase from the Issuer such
Receivable, on the Payment Date immediately following such Collection
Period. In consideration of the repurchase of a Receivable hereunder, the
Seller shall remit the Purchase Amount of such Receivable in the manner
specified in Section 4.5. The sole remedy of the Issuer, the Owner
Trustee, the Indenture Trustee, the Noteholders and the Certificateholders
with respect to a breach or failure to be true of the representations and
warranties made by the Seller pursuant to Section 2.2 shall be to require
the Seller to repurchase Receivables pursuant to this Section 2.3 and to
enforce the obligation of MMCA to the Seller to repurchase such Receivable
pursuant to the Purchase Agreement. Neither the Owner Trustee nor the
Indenture Trustee shall have any duty to conduct an affirmative
investigation as to the occurrence of any condition requiring the
repurchase of any Receivable pursuant to this Section 2.3 or the
eligibility of any Receivable for purposes of this Agreement.
SECTION 2.4 Custody of Receivable Files. To assure uniform
quality in servicing the Receivables and to reduce administrative costs,
the Issuer, upon the execution and delivery of this Agreement, hereby
revocably appoints the Servicer as its agent, and the Servicer hereby
accepts such appointment, to act as custodian on behalf of the Issuer and
the Indenture Trustee of the following documents or instruments, which are
hereby constructively delivered to the Indenture Trustee, as pledgee of the
Issuer pursuant to the Indenture, with respect to each Receivable
(collectively, a "Receivable File"):
(i) the single original of the Receivable;
(ii) the original credit application fully executed by the
Obligor or a photocopy thereof or a record thereof on a computer file or
disc or on microfiche;
(iii) the original certificate of title or such other
documents that the Servicer or MMCA shall keep on file, in accordance with
its customary practices and procedures, evidencing the security interest of
MMCA in the Financed Vehicle;
(iv) documents evidencing the existence of any insurance
covering the Financed Vehicle; and
(v) any and all other documents (including any computer file
or disc or microfiche) that the Servicer or the Seller shall keep on file,
in accordance with its customary procedures, relating to a Receivable, an
Obligor, or a Financed Vehicle.
On the Closing Date, the Servicer shall provide an Officer's
Certificate to the Issuer and the Indenture Trustee confirming that the
Servicer has received, on behalf of the Issuer and the Indenture Trustee,
all the documents and instruments necessary for the Servicer to act as the
agent of the Issuer and the Indenture Trustee for the purposes set forth in
this Section 2.4, including the documents referred to herein, and the
Issuer, the Owner Trustee and the Indenture Trustee are hereby authorized
to rely on such Officer's Certificate.
SECTION 2.5 Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity as custodian,
shall hold the Receivable Files for the benefit of the Issuer and the
Indenture Trustee and maintain such accurate and complete accounts,
records, and computer systems pertaining to each Receivable File as shall
enable the Servicer and the Issuer to comply with the terms and provisions
of this Agreement, and the Indenture Trustee to comply with the terms and
conditions of the Indenture. In performing its duties as custodian, the
Servicer shall act with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to the receivable files
relating to all comparable motor vehicle receivables that the Servicer
services for itself or others. In accordance with its customary practices
and procedures with respect to its retail installment sale contracts, the
Servicer shall conduct, or cause to be conducted, periodic audits of the
Receivable Files held by it under this Agreement, and of the related
accounts, records, and computer systems, in such a manner as shall enable
the Issuer or the Indenture Trustee to verify the accuracy of the
Servicer's recordkeeping. The Servicer shall promptly report to the Owner
Trustee and the Indenture Trustee any failure on its part to hold the
Receivable Files and maintain its accounts, records, and computer systems
as herein provided and promptly take appropriate action to remedy any such
failure. Nothing herein shall be deemed to require an initial review or
any periodic review by the Issuer, the Owner Trustee or the Indenture
Trustee of the Receivable Files and none of the Issuer, the Owner Trustee
and the Indenture Trustee shall be liable or responsible for any action or
failure to act by the Servicer in its capacity as custodian hereunder.
(b) Maintenance of and Access to Records. The Servicer shall
maintain each Receivable File at one of its offices specified in Schedule B
to this Agreement, or at such other office as shall be specified to the
Issuer and the Indenture Trustee by written notice not later than ninety
(90) days after any change in location. The Servicer shall make available
to the Issuer and the Indenture Trustee or its duly authorized
representatives, attorneys, or auditors a list of locations of the
Receivable Files, the Receivable Files, and the related accounts, records,
and computer systems maintained by the Servicer at such times as the Issuer
or the Indenture Trustee shall instruct.
(c) Release of Documents. Upon written instructions from the
Indenture Trustee, the Servicer shall release any document in the
Receivable Files to the Indenture Trustee, the Indenture Trustee's agent,
or the Indenture Trustee's designee, as the case may be, at such place or
places as the Indenture Trustee may designate, as soon thereafter as is
practicable. Any document so released shall be handled by the Indenture
Trustee with due care and returned to the Servicer for safekeeping as soon
as the Indenture Trustee or its agent or designee, as the case may be,
shall have no further need therefor.
(d) Title to Receivables. The Servicer agrees that, in
respect of any Receivable held by the Servicer as custodian hereunder, the
Servicer will not at any time have or in any way attempt to assert any
interest in such Receivable or the related Receivable File, other than for
collecting or enforcing the Receivable for the benefit of the Issuer and
that the entire equitable interest in such Receivable and the related
Receivable File shall at all times be vested in the Issuer.
SECTION 2.6 Instructions; Authority to Act. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable
Files upon its receipt of written instructions signed by an Authorized
Officer of the Indenture Trustee. A certified copy of excerpts of
authorizing resolutions of the Board of Directors of the Indenture Trustee
shall constitute conclusive evidence of the authority of any such
Authorized Officer to act and shall be considered in full force and effect
until receipt by the Servicer of written notice to the contrary given by
the Indenture Trustee.
SECTION 2.7 Custodian's Indemnification. The Servicer, in its
capacity as custodian, shall indemnify and hold harmless the Issuer, the
Owner Trustee and the Indenture Trustee and each of their respective
officers, directors, employees and agents from and against any and all
liabilities, obligations, losses, compensatory damages, payments, costs or
expenses (including legal fees if any) of any kind whatsoever that may be
imposed on, incurred, or asserted against the Issuer, the Owner Trustee and
the Indenture Trustee or any of their respective officers, directors,
employees and agents as the result of any act or omission by the Servicer
relating to the maintenance and custody of the Receivable Files; provided,
however, that the Servicer shall not be liable hereunder to the Owner
Trustee to the extent, but only to the extent, that such liabilities,
obligations, losses, compensatory damages, payments, costs or expenses
result from the willful misfeasance, bad faith, or negligence of the Owner
Trustee and shall not be liable hereunder to the Indenture Trustee to the
extent, but only to the extent, that such liabilities, obligations, losses,
compensatory damages, payments, costs or expenses result from the willful
misfeasance, bad faith, or negligence of the Indenture Trustee.
SECTION 2.8 Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and
shall continue in full force and effect until terminated pursuant to this
Section 2.8. If the Servicer shall resign as Servicer under Section 7.5,
or if all of the rights and obligations of the Servicer shall have been
terminated under Section 8.1, the appointment of the Servicer as custodian
hereunder may be terminated by the Indenture Trustee or by the Holders of
Notes evidencing not less than 25% of the principal amount of the then
Outstanding Notes or, with the consent of Holders of Notes evidencing not
less than 25% of the principal amount of the then Outstanding Notes, by the
Owner Trustee or by Holders of Certificates evidencing not less than 25% of
the Certificate Balance, in the same manner as the Indenture Trustee or
such Holders may terminate the rights and obligations of the Servicer under
Section 8.1. As soon as practicable after any termination of such
appointment, the Servicer shall deliver, or cause to be delivered, the
Receivable Files and the related accounts and records maintained by the
Servicer to the Indenture Trustee, the Indenture Trustee's agent or the
Indenture Trustee's 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 Issuer, the Owner Trustee, the Indenture Trustee, the
Certificateholders, the Noteholders or any one or more of them, any and
all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to
the Receivables or to the Financed Vehicles, all in accordance with this
Agreement; provided, however, that notwithstanding the foregoing, the
Servicer shall not, except pursuant to an order from a court of competent
jurisdiction, release an Obligor from payment of any unpaid amount under
any Receivable or waive the right to collect the unpaid balance (including
accrued interest) of any Receivable from the Obligor, except in connection
with a de minimis deficiency, Excess Wear and Tear or Excess Mileage which
the Servicer would not attempt to collect in accordance with its customary
procedures, in which event the Servicer shall indemnify the Issuer for such
deficiency, Excess Wear and Tear or Excess Mileage. If the Servicer shall
commence a legal proceeding to enforce a Receivable, the Owner Trustee
shall thereupon be deemed to have automatically assigned such Receivable to
the Servicer, which assignment shall be solely for purposes of collection.
If in any enforcement suit or legal proceeding it shall be held that the
Servicer may not enforce a Receivable on the ground that it shall not be a
real party in interest or a holder entitled to enforce the Receivable, the
Owner Trustee shall, at the Servicer's expense and direction, take steps to
enforce the Receivable, including bringing suit in its name or the names of
the Indenture Trustee, the Certificateholders, the Noteholders or any of
them. The Owner Trustee shall execute and deliver to the Servicer any
powers of attorney and other documents as shall be prepared by the Servicer
and reasonably necessary or appropriate to enable the Servicer to carry out
its servicing and administrative duties hereunder. The Servicer, at its
expense, shall obtain on behalf of the Issuer or the Owner Trustee all
licenses, if any, required by the laws of any jurisdiction to be held by
the Issuer or the Owner Trustee in connection with ownership of the
Receivables, and shall make all filings and pay all fees as may be required
in connection therewith during the term hereof.
The Servicer may enter into subservicing agreements with one or
more subservicers for the servicing and administration of certain of the
Receivables; provided, however, that the Servicer shall remain fully liable
hereunder for the performance of the duties of Servicer and any such
subservicer shall be and shall remain, for so long as it is acting as
subservicer, an Eligible Servicer, and any fees paid to such subservicer
shall be paid by the Servicer and not out of the proceeds of the Trust, and
any such subservicer shall agree to service the Receivables in a manner
consistent with the terms of this Agreement.
(b) References in this Agreement to actions taken, to be
taken, permitted to be taken, or restrictions on actions permitted to be
taken by the Servicer in servicing the Receivables and other actions taken,
to be taken, permitted to be taken, or restrictions on actions to be taken
with respect to the Trust Property shall include actions taken, to be
taken, permitted to be taken, or restrictions on actions permitted to be
taken by a subservicer on behalf of the Servicer and references herein to
payments received by the Servicer shall include payments received by a
subservicer, irrespective of whether such payments are actually deposited
in the Collection Account by such subservicer. Any such subservicing
agreement will contain terms and provisions substantially identical to the
terms and provisions of this Agreement and such other terms and provisions
as are not inconsistent with this Agreement and as the Servicer and the
subservicer have agreed.
(c) The Servicer shall be entitled to terminate any
subservicing agreement in accordance with the terms and conditions of such
subservicing agreement and without any limitation by virtue of this
Agreement; provided, however, that, in the event of termination of any
subservicing agreement by the Servicer, the Servicer shall either act
directly as Servicer of the related Receivables or enter into a
subservicing agreement with a successor subservicer which will be bound by
the terms of the related subservicing agreement.
(d) As a condition to the appointment of any subservicer, the
Servicer shall notify the Owner Trustee, the Indenture Trustee and the
Rating Agencies in writing before such assignment becomes effective and
such subservicer shall be required to execute and deliver an instrument in
which it agrees that, for so long as it acts as subservicer of the
Receivables and the other Trust Property being serviced by it, the
covenants, conditions, indemnities, duties, obligations and other terms and
provisions of this Agreement applicable to the Servicer hereunder shall be
applicable to it as subservicer, that it shall be required to perform its
obligations as subservicer for the benefit of the Issuer as if it were
Servicer hereunder (subject, however, to the right of the Servicer to
direct the performance of such obligations in accordance with this
Agreement) and that, notwithstanding any provision of a subservicing
agreement to the contrary, such subservicer shall be directly liable to the
Owner Trustee and the Issuer (notwithstanding any failure by the Servicer
to perform its duties and obligations hereunder) for the failure by such
subservicer to perform its obligations hereunder or under any subservicing
agreement, and that (notwithstanding any failure by the Servicer to perform
its duties and obligations hereunder) the Owner Trustee may enforce the
provisions of this Agreement and any subservicing agreement against the
subservicer for the benefit of the Issuer, without diminution of such
obligations or liabilities by virtue of any subservicing agreement, by
virtue of any indemnification provided thereunder or by virtue of the fact
that the Servicer is primarily responsible hereunder for the performance of
such duties and obligations, as if a subservicer alone were servicing and
administering, under this Agreement, the Receivables and the other Trust
Property being serviced by it under the subservicing agreement.
(e) Notwithstanding any subservicing agreement, any of the
provisions of this Agreement relating to agreements or arrangements between
the Servicer or a subservicer or reference to actions taken through such
Persons or otherwise, the Servicer shall remain obligated and liable to the
Issuer and the Owner Trustee for the servicing and administering of the
Receivables and the other Trust Property in accordance with the provisions
of this Agreement (including for the deposit of payments received by a
subservicer, irrespective of whether such payments are actually remitted to
the Servicer or deposited in the Collection Account by such subservicer;
provided that if such amounts are so deposited, the Servicer shall have no
further obligation to do so) without diminution of such obligation or
liability by virtue of such subservicing agreements or arrangements or by
virtue of indemnification from a subservicer, to the same extent and under
the same terms and conditions as if the Servicer alone were servicing and
administering the Receivables and the other Trust Property. The Servicer
shall be entitled to enter into any agreement with a subservicer for
indemnification of the Servicer and nothing contained in this Agreement
shall be deemed to limit or modify such indemnification.
(f) In the event the Servicer shall for any reason no longer
be acting as such (including by reason of the occurrence of an Event of
Servicing Termination), the successor Servicer may, in its discretion,
thereupon assume all of the rights and obligations of the outgoing Servicer
under a subservicing agreement. In such event, the successor Servicer
shall be deemed to have assumed all of the Servicer's interest therein and
to have replaced the outgoing Servicer as a party to such subservicing
agreement to the same extent as if such subservicing agreement had been
assigned to the successor Servicer, except that the outgoing Servicer shall
not thereby be relieved of any liability or obligation on the part of the
outgoing Servicer to the subservicer under such subservicing agreement.
The outgoing Servicer shall, upon request of the Indenture Trustee, but at
the expense of the outgoing Servicer, deliver to the successor Servicer all
documents and records relating to each such subservicing agreement and the
Receivables and the other Trust Property then being serviced thereunder and
an accounting of amounts collected and held by it and otherwise use its
best efforts to effect the orderly and efficient transfer of the
subservicing agreement to the successor Servicer. In the event that the
successor Servicer elects not to assume a subservicing agreement, such
subservicing agreement shall be immediately cancellable by the successor
Servicer upon written notice to the subservicer and the outgoing Servicer,
at its expense, shall cause the subservicer to deliver to the successor
Servicer all documents and records relating to the Receivables and the
other Trust Property being serviced thereunder and all amounts held (or
thereafter received) by such subservicer (together with an accounting of
such amounts) and shall otherwise use its best efforts to effect the
orderly and efficient transfer of servicing of the 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 Issuer or any Holder of the Certificates may make
arrangements for the successor Servicer or another party to provide
refinancing of Last Scheduled Payments to Obligors who desire to satisfy
the Last Scheduled Payment through refinancing and who meet such party's
credit criteria, and any reasonable costs and expenses of the successor
Servicer or such third party in determining whether to provide such
refinancing shall be payable from amounts, if any, which would otherwise be
released from the Supplemental Reserve Account and paid to the Seller and
to the extent of any shortfall in such amounts in the Supplemental Reserve
Account shall be payable from amounts, if any, which would otherwise be
released from the Reserve Account and paid to the Seller.
SECTION 3.3 Realization upon Receivables. (a) On behalf of the
Issuer, the Servicer shall use reasonable efforts, in accordance with the
standard of care required by Section 3.1, to repossess or otherwise convert
the ownership of each Financed Vehicle securing a Defaulted Receivable. In
taking such action, the Servicer shall follow such customary and usual
practices and procedures as it shall deem necessary or advisable in its
servicing of comparable automotive receivables, and as are otherwise
consistent with the standard of care required under Section 3.1, which
shall include the exercise of any rights of recourse to Dealers under the
Dealer Agreements. The Servicer shall be entitled to recover all
reasonable expenses incurred by it in the course of repossessing and
liquidating a Financed Vehicle into cash proceeds, but only out of the cash
proceeds of such Financed Vehicle and any deficiency obtained from the
Obligor. The foregoing shall be subject to the provision that, in any case
in which a Financed Vehicle shall have suffered damage, the Servicer shall
not expend funds in connection with the repair or the repossession of such
Financed Vehicle unless it shall determine in its discretion that such
repair and/or repossession will increase the Liquidation Proceeds (or
Recoveries) of the related Receivable by an amount equal to or greater than
the amount of such expenses.
(b) If the Servicer elects to commence a legal proceeding to
enforce a Dealer Agreement, the act of commencement shall be deemed to be
an automatic assignment from the Issuer to the Servicer of the rights of
recourse under such Dealer Agreement. If, however, in any enforcement suit
or legal proceeding, it is held that the Servicer may not enforce a Dealer
Agreement on the grounds that it is not a real party in interest or a
Person entitled to enforce the Dealer Agreement, the Owner Trustee, at the
Servicer's expense and direction, shall take such steps as the Servicer
deems necessary to enforce the Dealer Agreement, including bringing suit in
its name or the names of the Indenture Trustee, the Certificateholders,
the Noteholders or any of them.
SECTION 3.4 Physical Damage Insurance. The Servicer shall follow
its customary servicing procedures to determine whether or not each Obligor
shall have maintained physical damage insurance covering the related
Financed Vehicle.
SECTION 3.5 Maintenance of Security Interests in Financed
Vehicles. The Servicer, in accordance with the standard of care required
under Section 3.1, shall take such steps as are necessary to maintain
perfection of the security interest created by each Receivable in the
related Financed Vehicle. The Issuer hereby authorizes the Servicer, and
the Servicer hereby agrees, to take such steps as are necessary to re-
perfect such security interest on behalf of the Issuer and the Indenture
Trustee in the event the Servicer receives notice of, or otherwise has
actual knowledge of, the relocation of a Financed Vehicle or for any other
reason.
SECTION 3.6 Covenants of Servicer. The Servicer hereby makes the
following covenants:
(a) Security Interest to Remain in Force. The Financed
Vehicle securing each Receivable will not be released from the security
interest granted by the Receivable in whole or in part, except as
contemplated herein.
(b) No Impairment. The Servicer will not (nor will it permit
any subservicer to) impair in any material respect the rights of the
Issuer, the Owner Trustee, the Indenture Trustee, the Certificateholders or
the Noteholders in the Receivables or, subject to clause (c) below,
otherwise amend or alter the terms thereof if, as a result of such
amendment or alteration, the interests of the Issuer, the Owner Trustee,
the Indenture Trustee, the Certificateholders or the Noteholders hereunder
would be materially adversely affected.
(c) Amendments. The Servicer will not increase or decrease
the number or amount of Scheduled Payments or the Amount Financed under a
Receivable, or extend, rewrite or otherwise modify the payment terms of a
Receivable, except pursuant to Section 3.2(a).
SECTION 3.7 Purchase by Servicer upon Breach. The Seller, the
Servicer or the Owner Trustee, as the case may be, shall inform the other
parties to this Agreement promptly, in writing, upon the discovery of any
breach of Section 3.2(a), 3.5 or 3.6. If the breach shall not have been
cured by the last day of the Collection Period which includes the sixtieth
(60th) day after the date on which the Servicer becomes aware of, or
receives written notice of, such breach, and such breach materially and
adversely affects the interests of the Trust in a Receivable, the Servicer
shall purchase such Receivable or Receivables on the immediately succeeding
Payment Date; provided, however, that with respect to a breach of Section
3.2(a), the Servicer shall repurchase the affected Receivable from the
Trust at the end of the Collection Period in which such breach occurs. In
consideration of the purchase of a Receivable hereunder, the Servicer shall
remit the Purchase Amount of such Receivable in the manner specified in
Section 4.5. Except as provided in Section 7.2, the sole remedy of the
Issuer, the Owner Trustee, the Indenture Trustee, the Certificateholders or
the Noteholders against the Servicer with respect to a breach pursuant to
Section 3.2, 3.5 or 3.6 shall be to require the Servicer to repurchase
Receivables pursuant to this Section 3.7. Neither the Owner Trustee nor
the Indenture Trustee shall have any duty to conduct an affirmative
investigation as to the occurrence of any condition requiring the
repurchase of any Receivable pursuant to this Section 3.7 or the
eligibility of any Receivable for purposes of this Agreement.
SECTION 3.8 Servicing Compensation. The "Servicing Fee" with
respect to a Collection Period shall be an amount equal to the product of
one-twelfth (1/12) of the Servicing Rate and the Pool Balance as of the
first day of such Collection Period. As additional servicing compensation,
the Servicer shall also be entitled to earnings on amounts on deposit in
the Payahead Account, disposition fees paid with respect to Final Payment
Receivables, Rule of 78's Payments, and any administrative fees and charges
and all late payment fees actually collected (from whatever source) on the
Receivables other than fees paid in connection with the extension or
deferral of payments on a Receivable (the "Supplemental Servicing Fee").
The Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder (including fees and expenses of
the Owner Trustee and the Indenture Trustee (and any custodian appointed by
the Owner Trustee and the Indenture Trustee) and independent accountants,
any subservicer, taxes imposed on the Servicer or any subservicer (to the
extent not paid by such subservicer), and expenses incurred in connection
with distributions and reports to the Certificateholders and the
Noteholders), except expenses incurred in connection with realizing upon
Receivables under Section 3.3.
SECTION 3.9 Servicer's Certificate. On or before the
Determination Date immediately preceding each Payment Date, the Servicer
shall deliver to the Owner Trustee, each Paying Agent, the Indenture
Trustee and the Seller, with a copy to the Rating Agencies, a certificate
of a Servicing Officer substantially in the form of Exhibit A hereto (a
"Servicer's Certificate") and attached to a Servicer's report containing
all information necessary to make the transfers and distributions pursuant
to Sections 4.3, 4.4, 4.5, 4.6 and 4.7, together with the written
statements to be furnished by the Owner Trustee to Certificateholders
pursuant to Section 4.9 and by the Indenture Trustee to the Noteholders
pursuant to Section 4.9 hereof and Section 6.6 of the Indenture. The
Servicer also shall separately identify (by account number of the
Receivable as it appears in the related Schedule of Receivables) in a
written notice to the Owner Trustee and the Indenture Trustee the
Receivables to be repurchased by the Seller or to be purchased by the
Servicer, as the case may be, on the related Payment Date, and, upon
request of one of the foregoing parties, each Receivable which became a
Defaulted Receivable during the related Collection Period. The Servicer
shall deliver to the Rating Agencies any information, to the extent it is
available to the Servicer, that the Rating Agencies reasonably request in
order to monitor the Issuer.
SECTION 3.10 Annual Statement as to Compliance; Notice of Event of
Servicing Termination. (a) The Servicer shall deliver to the Owner
Trustee and the Indenture Trustee, on or before May 31 of each year,
commencing May 31, 1999, an Officer's Certificate, stating that (i) a
review of the activities of the Servicer during the preceding calendar year
(or shorter period, in the case of the first such Officer's Certificate)
and of its performance of its obligations under this Agreement has been
made under such officer's supervision and (ii) to the best of such
officer's knowledge, based on such review, the Servicer has fulfilled all
its obligations under this Agreement throughout such year (or longer
period, in the case of the first such certificate), or, if there has been a
default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof. A copy of
such certificate may be obtained by any Certificateholder by a request in
writing to the Owner Trustee, or by any Noteholder or Person certifying
that it is a Note Owner by a request in writing to the Indenture Trustee,
in either case addressed to the applicable Corporate Trust Office. Upon
the telephone request of the Owner Trustee, the Indenture Trustee shall
promptly furnish the Owner Trustee a list of Noteholders as of the date
specified by the Owner Trustee.
(b) The Servicer shall deliver to the Owner Trustee, the
Indenture Trustee and the Rating Agencies, promptly upon having knowledge
thereof, but in no event later than five (5) Business Days thereafter,
written notice in an Officer's Certificate of any event which constitutes
or, with the giving of notice or lapse of time or both, would become, an
Event of Servicing Termination under Section 8.1.
SECTION 3.11 Annual Independent Certified Public Accountants'
Reports. The Servicer shall cause a firm of independent certified public
accountants (who may also render other services to the Servicer, the Seller
or to MMCA) to deliver to the Owner Trustee and the Indenture Trustee on or
before May 31 of each year, commencing May 31, 1999, a report addressed to
the Board of Directors of the Servicer with respect to the preceding
calendar year (or shorter period, in the case of the first such report) to
the effect that such firm has audited the financial statements of the
Servicer and issued its report thereon and that such audit (1) was made in
accordance with generally accepted auditing standards, (2) included tests
relating to motor vehicle loans serviced for others in accordance with the
requirements of the Uniform Single Attestation Program for Mortgage Bankers
(the "Program"), to the extent the procedures in such Program are
applicable to the servicing obligations set forth in this Agreement, and
(3) except as described in the report, disclosed no exceptions or errors in
the records relating to automobile and light- or medium-duty truck loans
serviced for others that such firm is required to report under the Program.
Such report shall also indicate that the firm is independent with respect
to the Seller and the Servicer within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public
Accountants. A copy of such report may be obtained by any
Certificateholder by a request in writing to the Owner Trustee, or by any
Noteholder or Person certifying that it is a Note Owner by a request in
writing to the Indenture Trustee, in either case addressed to the
applicable Corporate Trust Office.
SECTION 3.12 Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide the Certificateholders,
the Indenture Trustee and the Noteholders with access to the Receivable
Files in the cases where the Certificateholders, the Indenture Trustee or
the Noteholders shall be required by applicable statutes or regulations to
have access to such documentation. Such access shall be afforded without
charge, but only upon reasonable request and during normal business hours
at the offices of the Servicer. Nothing in this Section 3.12 shall affect
the obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors, and the failure of the
Servicer to provide access to information as a result of such obligation
shall not constitute a breach of this Section 3.12. Any Certificateholder
or Noteholder, by its acceptance of a Certificate or Note, as the case may
be, shall be deemed to have agreed to keep any information obtained by it
pursuant to this Section confidential, except as may be required by
applicable law.
SECTION 3.13 Reports to the Commission. The Servicer shall, on
behalf of the Issuer, cause to be filed with the Commission any periodic
reports required to be filed under the provisions of the Exchange Act , and
the rules and regulations of the Commission thereunder. The Seller shall,
at its expense, cooperate in any reasonable request made by the Servicer in
connection with such filings.
SECTION 3.14 Reports to Rating Agencies. The Servicer shall
deliver to each Rating Agency, at such address as each Rating Agency may
request, a copy of all reports or notices furnished or delivered pursuant
to this Article and a copy of any amendments, supplements or modifications
to this Agreement and any subservicing agreement and any other information
reasonably requested by such Rating Agency to monitor this transaction.
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 "Note Payment
Account". The Note Payment Account shall be held in trust for the benefit
of the Noteholders. The Note Payment Account shall be under the sole
dominion and control of the Indenture Trustee. All monies deposited from
time to time in the Note Payment Account pursuant to this Agreement and the
Indenture shall be held by the Indenture Trustee as part of the Trust
Property and shall be applied as provided in this Agreement and the
Indenture. In the event that the Note Payment Account is no longer to be
maintained at the corporate trust department of Bank of Tokyo - Mitsubishi
Trust Company, the Servicer shall, with the Indenture Trustee's assistance
as necessary, cause the Note Payment Account to be moved to a Qualified
Institution or a Qualified Trust Institution within ten (10) Business Days
(or such longer period not to exceed thirty (30) calendar days as to which
each Rating Agency may consent).
(c) The Servicer shall, prior to the Closing Date, establish
and maintain a segregated trust account in the name of the Owner Trustee at
a Qualified Institution or Qualified Trust Institution (which shall
initially be Wilmington Trust Company), which shall be designated as the
"Certificate Distribution Account". Except as provided in the Trust
Agreement, the Certificate Distribution Account shall be held in trust for
the benefit of the Certificateholders. The Certificate Distribution
Account shall be under the sole dominion and control of the Owner Trustee;
provided that the Indenture Trustee may make deposits to such account in
accordance with the directions of the Servicer pursuant to this Agreement
and the Indenture. All monies deposited from time to time in the
Certificate Distribution Account pursuant to this Agreement and the
Indenture shall be held by the Owner Trustee as part of the Trust Property
and shall be applied as provided in this Agreement and the Trust Agreement.
In the event that the Certificate Distribution Account is no longer to be
maintained at Wilmington Trust Company, the Servicer shall, with the Owner
Trustee's assistance as necessary, cause the Certificate Distribution
Account to be moved to a Qualified Institution or a Qualified Trust
Institution within ten (10) Business Days (or such longer period not to
exceed thirty (30) calendar days as to which each Rating Agency may
consent) and shall promptly notify the Indenture Trustee of the account
number and location of such account.
(d) The Servicer shall, prior to the Closing Date, establish
and maintain a segregated trust account in the name of the Indenture
Trustee at a Qualified Institution or Qualified Trust Institution (which
shall initially be the corporate trust department of Bank of Tokyo -
Mitsubishi Trust Company), which shall be designated as the "Payahead
Account" (the Payahead Account, together with the Collection Account and
the Note Payment Account, the "Trust Accounts"). The Payahead Account
shall be held in trust for the benefit of the Noteholders and the
Certificateholders. The Payahead Account shall be under the sole dominion
and control of the Indenture Trustee provided, that the Servicer may make
deposits to and direct the Indenture Trustee in writing to make withdrawals
from the Payahead Account in accordance with this Agreement and the
Indenture. All monies deposited from time to time in the Payahead Account
shall be held by the Indenture Trustee as part of the Trust Property and
all deposits to and withdrawals therefrom shall be made only upon the terms
and conditions of the Basic Documents.
If the Servicer is required to remit collections pursuant to the
first sentence of Section 4.2, all amounts held in the Payahead Account
shall, to the extent permitted by applicable law, rules and regulations, be
invested, as directed in writing by the Servicer, by the bank or trust
company then maintaining the Payahead Account in Permitted Investments that
mature not later than the Business Day immediately prior to the Payment
Date for the Collection Period to which such amounts relate and such
Permitted Investments shall be held to maturity. All interest and other
income (net of losses and investment expenses) on funds on deposit in the
Payahead Account shall be withdrawn from the Payahead Account at the
direction of the Servicer and shall be paid to the Servicer as additional
servicing compensation. In the event that the Payahead Account is no
longer to be maintained at the corporate trust department of Bank of Tokyo
- Mitsubishi Trust Company, the Servicer shall, with the Indenture
Trustee's or Owner Trustee's assistance as necessary, cause the Payahead
Account to be moved to a Qualified Institution or a Qualified Trust
Institution within ten (10) Business Days (or such longer period not to
exceed thirty (30) calendar days as to which each Rating Agency may
consent).
(e) Notwithstanding the provisions of clause (d) above and of
Section 4.6(a)(ii), for so long as (i) MMCA is the Servicer, (ii) the
rating of MMCA's short-term unsecured debt is at least P-1 by ▇▇▇▇▇'▇ 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(e) that would require
remittance of the Payaheads to the Payahead Account unless the Owner
Trustee or the Indenture Trustee has received notice of such event or
circumstance from the Seller or the Servicer in an Officer's Certificate or
from the Holders of Notes evidencing not less than 25% of the principal
balance of the then Outstanding Notes or from the Holders of Certificates
evidencing not less than 25% of the Certificate Balance or unless an
Authorized Officer in the Corporate Trust Office with knowledge hereof and
familiarity herewith has actual knowledge of such event or circumstance.
(f) The Servicer shall be permitted to remit to any Obligor,
upon the request of such Obligor, the Payahead Balance with respect to such
Obligor's Receivable or such lesser amount as is requested by such Obligor,
in accordance with the Servicer's customary standards, policies, practices
and procedures, to the extent that such amount is not then due on such
Receivable. Upon any such remittance, the Payahead Balance with respect to
such Receivable shall be reduced by the amount of such remittance.
SECTION 4.2 Collections. (a) Subject to the provisions of
subsection (b) below, the Servicer shall remit to the Collection Account
(i) all payments by or on behalf of the Obligors (including, subject to the
next two sentences, Payaheads on the Receivables and Rule of 78's Payments,
but excluding payments with respect to Purchased Receivables and amounts
included in the Supplemental Servicing Fee other than Rule of 78's
Payments), including amounts treated as collections on Final Payment
Receivables pursuant to Section 3.2(d) and (ii) all Liquidation Proceeds
and all Recoveries, received by the Servicer during any Collection Period,
as soon as practicable, but in no event after the close of business on the
second Business Day after receipt thereof. Collections of Payaheads and
Rule of 78's Payments shall be deposited in the Collection Account,
pursuant to the preceding sentence for purposes of administrative
convenience only, pending, with respect to Payaheads, determination of the
amount to be deposited in the Payahead Account (or in the event that the
Monthly Remittance Conditions are satisfied, remitted to the Servicer
pursuant to Section 4.1(e)), which amount shall be deposited in the
Payahead Account as soon as practicable but in no event later than the
Payment Date immediately following collection, and such amounts shall not
be transferred to the Collection Account until due, and with respect to
Rule of 78's Payments, determination of such payments, which payments upon
determination shall be made to the Servicer, and the Trust shall not be
entitled to such amounts.
MMCA, for so long as it is acting as the Servicer, may make
remittances of collections on a less frequent basis than that specified in
the immediately preceding sentence. It is understood that such less
frequent remittances may be made only on the specific terms and conditions
set forth below in this Section 4.2 and only for so long as such terms and
conditions are fulfilled. Accordingly, notwithstanding the provisions of
the first sentence of this Section 4.2, the Servicer shall remit
collections received during a Collection Period to the Collection Account
in immediately available funds on the Business Day prior to the related
Payment Date but only for so long as each Monthly Remittance Condition is
satisfied. Notwithstanding the foregoing, if a Monthly Remittance
Condition is not satisfied, the Servicer may utilize an alternative
remittance schedule (which may include the remittance schedule utilized by
the Servicer before the Monthly Remittance Condition became unsatisfied),
if the Servicer provides to the Owner Trustee and the Indenture Trustee
written confirmation from the Rating Agencies that such alternative
remittance schedule will not result in the downgrading or withdrawal by the
Rating Agencies of the ratings then assigned to the Notes and the
Certificates. The Owner Trustee or the Indenture Trustee shall not be
deemed to have knowledge of any event or circumstance under clauses (ii) or
(iii) of the definition of Monthly Remittance Condition that would require
daily remittance by the Servicer to the Collection Account unless the Owner
Trustee or the Indenture Trustee has received notice of such event or
circumstance from the Seller or the Servicer in an Officer's Certificate or
written notice from the Holders of Notes evidencing not less than 25% of
the principal balance of the then outstanding Notes 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.
On the related Payment Date, subject to the following sentence, an advance
shall be made by the Servicer to the extent of any remaining shortfall in
respect of such Actuarial Receivable (such advance, an "Actuarial
Advance"); provided that an Actuarial Advance shall not be made with
respect to the Last Scheduled Payment on an Actuarial Receivable that is a
Final Payment Receivable; provided further, that a Last Scheduled Payment
Advance shall be made with respect to an Actuarial Receivable that is a
Final Payment Receivable upon the occurrence of the circumstances set forth
in Section 4.4(c); provided, further, that 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.
All applications of the Payahead Balance of a Receivable by the Indenture
Trustee and all Actuarial Advances by the Servicer, in each case pursuant
to this Section 4.4(a), shall be made based on the information set forth in
the Servicer's report attached to the Servicer's Certificate delivered
pursuant to Section 3.9.
(b) (i) Upon either the written instructions of the Servicer
or based solely upon the information contained in the Servicer's
Certificate delivered on the related Determination Date pursuant to Section
3.9, the Indenture Trustee shall release from amounts available in the
Payahead Account, the amounts required to be released from amounts
available in the Payahead Account pursuant to Section 4.4(a) with respect
to each Collection Period and shall deposit such amounts in the Collection
Account on the related Payment Date pursuant to Section 4.5(a).
(ii) On each Payment Date, the Servicer shall deposit
into the Collection Account an amount equal to the aggregate amount of
Actuarial Advances required to be made with respect to related
Collection Period .
(c) As of the last day of the Collection Period in which the
Last Scheduled Payment with respect to a Final Payment Receivable is due,
if the payments during such Collection Period by or on behalf of the
related Obligor on or in respect of such Last Scheduled Payment after
application under Section 4.3(a) and the amounts, if any, in the Payahead
Account allocable to such Last Scheduled Payment shall be less than the
amount of such Last Scheduled Payment, the Servicer shall advance an amount
equal to the shortfall in the payment of such Last Scheduled Payment (such
advance, a "Last Scheduled Payment Advance"), by depositing an amount equal
to the Last Scheduled Payment Advance into the Collection Account on the
related Payment Date. 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.
(d) On each Payment Date, the Servicer shall instruct the
Indenture Trustee to withdraw from the Collection Account for distribution
to the Servicer, in immediately available funds, an amount equal to the sum
of (i) the aggregate amount of collections on Actuarial Receivables with
respect to which the Servicer has made Actuarial Advances in a prior
Collection Period that are allocable to the reimbursement of such Actuarial
Advances pursuant to Section 4.3(a) and (ii) the aggregate amount of
Actuarial Advances that the Servicer has not been reimbursed for pursuant
to this Section 4.4(d), Section 4.5(b) or Section 4.5(c) that are with
respect to Actuarial Receivables that became Defaulted Receivables in the
related Collection Period.
(e) On each Payment Date, the Servicer shall instruct the
Indenture Trustee to withdraw from the Collection Account for distribution
to the Servicer, in immediately available funds, an amount equal to the sum
of (i) the aggregate amount of collections on Final Payment Receivables in
the related Collection Period that are allocable to the reimbursement of
Last Scheduled Payment Advances pursuant to Section 4.3(a) and (ii) the
aggregate amount of losses on Last Scheduled Payments that the Servicer has
recorded in its books and records during the related Collection Period to
the extent such losses are allocable to Last Scheduled Payments with
respect to which the Servicer has made Last Scheduled Payment Advances, but
only to the extent such Last Scheduled Payment Advances have not already
been reimbursed pursuant to this Section 4.4(e) or Section 4.5(b) or (c).
SECTION 4.5 Additional Deposits. (a) The Indenture Trustee shall
deposit in the Collection Account amounts required pursuant to Section
4.4(b). The Servicer shall deposit in the Collection Account amounts
required to be paid by the Servicer pursuant to Sections 4.4(a) and (c).
The Seller and the Servicer shall deposit or cause to be deposited in the
Collection Account the aggregate Purchase Amount with respect to Purchased
Receivables pursuant to Section 2.3, 3.7 or 9.1. The Indenture Trustee
shall deposit in the Collection Account the aggregate of any amounts
received pursuant to the Yield Supplement Agreement and any amounts
received from the Letter of Credit Bank or the Yield Supplement Account
pursuant to Article V on the date of receipt thereof. All such deposits
with respect to a Collection Period shall be made in immediately available
funds no later than 10:00 a.m., New York City time, on the Payment Date
related to such Collection Period.
(b) The Indenture Trustee shall, on or prior to 10:00 a.m.,
New York City time, on the Payment Date relating to each Collection Period
make the following withdrawals from the Supplemental Reserve Account in the
following order of priority (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 Available Funds. (a) On each Payment
Date, the Indenture Trustee shall cause to be made the following transfers
and distributions in the amounts set forth in the Servicer's Certificate
for such Payment Date:
(i) If the Monthly Remittance Conditions are not then
satisfied, from the Payahead Account, and otherwise from amounts paid by
the Servicer pursuant to Section 4.1(e), to the Collection Account in
immediately available funds, (x) the aggregate portion of Payaheads
constituting Scheduled Payments or prepayments in full, required by
Sections 4.3 and 4.4(a), and (y) the Payahead Balance, if any, relating
to any Purchased Receivable.
(ii) From the Collection Account to the Payahead Account,
or to the Servicer in the event that the Monthly Remittance Conditions
are then satisfied, in immediately available funds, the aggregate
Payaheads required by Section 4.3 for the Collection Period related to
such Payment Date.
(b) On each Determination Date, the Servicer shall calculate
the Available Funds, the Total Servicing Fee, the Accrued Note Interest for
each Class of Notes, the Scheduled Principal, the Principal Distribution
Amount, the Last Scheduled Payment Principal Collections, the Reserve
Account Amount, the Supplemental Reserve Account Amount and the Yield
Supplement Amount, if any, in each case with respect to the next succeeding
Payment Date.
In addition, the Servicer shall calculate on each Determination
Date (i) 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 pursuant to Section 4.4(d) and (e) exceeds the
amount paid to the Servicer out of the Collection Account on such Payment
Date pursuant to Sections 4.4(d) and (e) and (y) the Supplemental Reserve
Account Amount for such Payment Date (the "Supplemental Reserve Account
Advance Draw Amount"), (ii) an amount equal to the lesser of (x) the
positive difference, if any, between the amount calculated pursuant to
subclause (i)(x) of this paragraph and the Supplemental Reserve Account
Amount for such Payment Date and (y) the Reserve Account Amount for 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 the related Payment Date exceeds the Available Funds for such
Payment Date and (y) an amount equal to the Supplemental Reserve Account
Amount for such Payment Date less the Supplemental Reserve Account Advance
Draw Amount for such Payment Date (the "Supplemental Reserve Account TRP
Draw Amount") and (iv) an amount equal to the lesser of (x) the positive
difference, if any, between the amount calculated pursuant to subclause
(iii)(x) of this paragraph and the Supplemental Reserve Account TRP Draw
Amount for such Payment Date and (y) an amount equal to the Reserve Account
Amount for such Payment Date less the Reserve Account Advance Draw Amount
for such Payment Date (the "Reserve Account TRP Draw Amount").
(c) On each Payment Date, the Servicer shall instruct the
Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Determination Date pursuant to Section
3.9) to withdraw all Available Funds on deposit in the Collection Account
for the related Collection Period and make the following payments and
deposits for such Payment Date in the following order of priority:
(i) to the Servicer, the Total Servicing Fee;
(ii) to the Note Payment Account, the Accrued Note
Interest for each Class of Notes;
(iii) to the Note Payment Account, the Principal
Distribution Amount;
(iv) to the Reserve Account, the amount, if any,
necessary to reinstate the balance in the Reserve Account up to the
Specified Reserve Balance;
(v) to the Supplemental Reserve Account, 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 Available Funds.
SECTION 4.7 Reserve Account; Supplemental Reserve Account. (a)
The Seller shall, prior to the Closing Date, establish and maintain a
segregated trust account in the name of the Indenture Trustee at a
Qualified Institution or Qualified Trust Institution (which shall initially
be the corporate trust department of Bank of Tokyo - Mitsubishi Trust
Company), which shall be designated as the "Reserve Account". The Reserve
Account shall be under the sole dominion and control of the Indenture
Trustee; provided, that the Servicer may make deposits to the Reserve
Account in accordance with this Agreement and the Indenture. On the
Closing Date, the Seller will deposit the Reserve Initial Deposit into the
Reserve Account from the net proceeds of the sale of the Notes. The
Reserve Account and all amounts, securities, investments, financial assets
and other property deposited in or credited to the Reserve Account (the
"Reserve Account Property") has been conveyed by the Seller to the Trust
pursuant to Section 2.1. Pursuant to the Indenture, the Trust will pledge
all of its right, title and interest in, to and under the Reserve Account
and the Reserve Account Property to the Indenture Trustee on behalf of the
Noteholders to secure its obligations under the Notes and the Indenture.
The Reserve Account Property shall, to the extent permitted by
applicable law, rules and regulations, be invested, as directed in writing
by the Servicer, by the bank or trust company then maintaining the Reserve
Account in Permitted Investments that mature not later than the Business
Day immediately preceding the next Payment Date, and such Permitted
Investments shall be held to maturity. All interest and other income (net
of losses and investment expenses) on funds on deposit in the Reserve
Account shall, upon the written direction of the Servicer, be paid to the
Seller on any Payment Date to the extent that funds on deposit therein, as
certified by the Servicer, exceed the Specified Reserve Balance. In the
event the Reserve Account is no longer to be maintained at the corporate
trust department of Bank of Tokyo - Mitsubishi Trust Company, the Servicer
shall, with the Indenture Trustee's or Owner Trustee's assistance as
necessary, cause the Reserve Account to be moved to a Qualified Institution
or a Qualified Trust Institution within ten (10) Business Days (or such
longer period not to exceed thirty (30) calendar days as to which each
Rating Agency may consent).
(b) The Seller shall, prior to the Closing Date, establish
and maintain a segregated trust account in the name of the Indenture
Trustee at a Qualified Institution or Qualified Trust Institution (which
shall initially be the corporate trust department of Bank of Tokyo -
Mitsubishi Trust Company), which shall be designated as the "Supplemental
Reserve Account." The Supplemental Reserve Account shall be under the sole
dominion and control of the Indenture Trustee; provided, that the Servicer
may make deposits to the Supplemental Reserve Account in accordance with
this Agreement and the Indenture. The Supplemental Reserve Account and all
amounts, securities, investments, financial assets and other property
deposited in or credited to the Supplemental Reserve Account (the
"Supplemental Reserve Account Property") has been conveyed by the Seller to
the Trust pursuant to Section 2.1. Pursuant to the Indenture, the Trust
will pledge all of its right, title and interest in, to and under the
Supplemental Reserve Account and the Supplemental Reserve Account Property
to the Indenture Trustee on behalf of the Noteholders to secure its
obligations under the Notes and the Indenture.
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 deposited in the Certificate Distribution Account.
(f) Following the payment in full of the aggregate principal
balance of the Notes and the Certificate Balance and of all other amounts
owing or to be distributed hereunder or under the Indenture or the Trust
Agreement to Noteholders or Certificateholders and the termination of the
Trust, any remaining Reserve Account Property and Supplemental Reserve
Account Property shall be distributed to the Seller.
SECTION 4.8 Net Deposits. As an administrative convenience only,
unless the Servicer is required to remit collections pursuant to the first
sentence of Section 4.2, the Seller and the Servicer may make any
remittance pursuant to this Article IV with respect to a Collection Period
net of distributions to be made to the Seller or the Servicer with respect
to such Collection Period. Nonetheless, such obligations shall remain
separate obligations, no party shall have a right of offset, and each such
party shall account for all of the above described remittances and
distributions as if the amounts were deposited and/or transferred
separately.
SECTION 4.9 Statements to Noteholders and Certificateholders. On
or prior to each Payment Date, the Servicer shall provide to the Indenture
Trustee (with copies to the Rating Agencies and each Paying Agent) for the
Indenture Trustee to forward to each Noteholder of record as of the most
recent Record Date and to the Owner Trustee (with copies to the Rating
Agencies and to each Paying Agent) for the Owner Trustee to forward to each
Certificateholder of record as of the most recent Record Date a statement
in substantially the forms of Exhibits B and C, respectively, setting forth
at least the following information as to the Notes and the Certificates to
the extent applicable:
(i) the amount of such distribution allocable to
principal paid to each Class of Notes and to the Certificates;
(ii) the amount of such distribution allocable to
interest paid to each Class of Notes;
(iii) the Yield Supplement Amount;
(iv) the amount of the Total Servicing Fee with respect
to the related Collection Period;
(v) the aggregate outstanding principal balance of each
Class of Notes, the applicable Note Pool Factor, the Certificate Balance
and the Certificate Pool Factor as of the close of business on the last
day of the preceding Collection Period, after giving effect to payments
allocated to principal reported under clause (i) above;
(vi) the Pool Balance, the Level Pay Pool Balance and the
Last Scheduled Payment Pool Balance, in each case as of the close of
business on the last day of the related Collection Period;
(vii) the amounts of the Interest Carryover Shortfall
and the Principal Carryover Shortfall, if any, for such Payment Date and
the portion thereof attributable to each Class of Notes;
(viii) the amount of the aggregate Realized Losses, if
any, with respect to the related Collection Period;
(ix) the balance of the Reserve Account on such Payment
Date, after giving effect to changes therein on such Payment Date;
(x) the balance of the Supplemental Reserve Account on
such Payment Date, after giving effect to changes therein on such
Payment Date;
(xi) the aggregate Purchase Amount of Receivables
repurchased by the Seller or purchased by the Servicer, if any, with
respect to the related Collection Period;
(xii) the amount of Actuarial Advances and Last
Scheduled Payment Advances, if any, with respect to the related
Collection Period.
Each amount set forth on the Payment Date statement pursuant to
clauses (i), (ii), (iii), (v) and (vii) above shall be expressed as a
dollar amount per $1,000 of original principal balance of a Certificate or
Note, as applicable.
SECTION 4.10 Control of Securities Accounts. Notwithstanding
anything else contained herein, the Issuer agrees that with respect to each
of the Collection Account, the Note Payment Account, the Reserve Account,
the Supplemental Reserve Account and the Yield Supplement Account will only
be established at a Qualified Institution or Qualified Trust Institution
which agrees substantially as follows: (i) it will comply with
"entitlement orders" (as defined in Section 8-102(a)(8) of the UCC; i.e.
orders directing the transfer or redemption of any financial asset)
relating to such accounts issued by the Indenture Trustee without further
consent by the Issuer; (ii) until the termination of the Indenture, it will
not enter into any other agreement relating to any such account pursuant
to which it agrees to comply with entitlement orders of any Person other
than the Indenture Trustee; and (iii) all assets delivered or credited to
it in connection with such accounts and all investments thereof will be
promptly credited to such accounts.
ARTICLE V
YIELD SUPPLEMENT LETTER OF CREDIT
SECTION 5.1 Yield Supplement Letter of Credit and the Yield
Supplement Account. (a) The Servicer shall, prior to the Closing Date,
establish and maintain a segregated trust account in the name of the
Indenture Trustee at a Qualified Institution or Qualified Trust Institution
(which shall initially be the corporate trust department of Bank of Tokyo -
Mitsubishi Trust Company), which shall be designated as the "Yield
Supplement Account." Amounts on deposit in the Yield Supplement Account
will be used for the payment of any Yield Supplement Amounts required to be
paid on any Payment Date pursuant to the Yield Supplement Agreement which
MMCA has not paid as of such Payment Date. The Yield Supplement Account
shall be under the sole dominion and control of the Indenture Trustee
provided, that the Servicer may make deposits to and direct the Indenture
Trustee to make withdrawals from the Yield Supplement Account in accordance
with this Agreement and the Yield Supplement Agreement. On the Closing
Date, the Seller will deposit the initial Specified Yield Supplement
Account Balance into the Yield Supplement Account from the net proceeds of
the sale of the Notes and Certificates. To the extent, on any Payment
Date, the amount on deposit in the Yield Supplement Account (after giving
effect to any withdrawals to be made on such Payment Date, but exclusive of
net investment income) is greater than the Specified Yield Supplement
Account Balance, then, in such event, the Servicer shall instruct the
Indenture Trustee in writing to pay such excess amount to the Seller.
All amounts held in the Yield Supplement Account shall be invested,
as directed in writing by the Servicer, by the bank or trust company then
maintaining the Yield Supplement Account in Permitted Investments that
mature not later than the Business Day immediately preceding the next
Payment Date and such Permitted Investments shall be held to maturity. All
interest and other income (net of losses and investment expenses) on funds
on deposit in the Yield Supplement Account shall be withdrawn from the
Yield Supplement Account at the written direction of the Servicer and shall
be paid to the Seller. In the event that the Yield Supplement Account is
no longer to be maintained at the corporate trust department of Bank of
Tokyo - Mitsubishi Trust Company, the Servicer shall, with the Indenture
Trustee's assistance as necessary, cause the Yield Supplement Account to be
moved to a Qualified Institution or a Qualified Trust Institution 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 precedent to the liquidation of the Yield
Supplement Account have been satisfied, any amounts on deposit in the
Yield Supplement Account shall, upon written request of the Seller, be
paid to the Seller.
(b) If a Yield Supplement Letter of Credit has been obtained
by MMCA, and if, with respect to any Collection Period, MMCA shall have
failed to make or cause to be made in full the remittance of the Yield
Supplement Amount, upon written notice by the Servicer of such failure
(which notice shall be given no later than 10:00 a.m. (New York City time)
on the Payment Date for such Collection Period), the Indenture Trustee
shall draw on the Yield Supplement Letter of Credit in accordance with the
terms thereof, in the amount of the shortfall between the amount of funds
with respect to the Yield Supplement Amount that are required to be
remitted by MMCA with respect to the Yield Supplement Agreement as set
forth in the Servicer's Certificate and the amount of funds actually so
remitted as set forth in the Servicer's Certificate. Any such draw on the
Yield Supplement Letter of Credit shall be made after receipt of the
related Servicer's Certificate on or before 11:00 a.m. (New York City time)
on the Payment Date for such Collection Period. Upon receipt of a request
for a draw by the Indenture Trustee under the Yield Supplement Letter of
Credit, the Letter of Credit Bank is to promptly make a payment to the
Indenture Trustee in an amount equal to the Yield Supplement Amount (minus
payments made on the Yield Supplement Agreement), and the Indenture Trustee
shall deposit into the Collection Account pursuant to Section 4.5 the
amount received from the Letter of Credit Bank in respect of such drawing.
The Servicer shall include in each Servicer's Certificate, or in an
Officer's Certificate provided to the Indenture Trustee with 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 Issuer is deemed to have relied in acquiring the Trust Property.
The representations, warranties and covenants speak as of the execution and
delivery of this Agreement and shall survive the sale of the Trust Property
to the Issuer and the pledge thereof by the Issuer to the Indenture Trustee
pursuant to the Indenture:
(a) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted, and had at all
relevant times, and shall have, power, authority, and legal right to
acquire and own the Receivables.
(b) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall require
such qualifications.
(c) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and the other Basic
Documents to which it is a party and to carry out their terms. The Seller
has full power and authority to sell and assign the property to be sold and
assigned to and deposited with the Issuer and has duly authorized such sale
and assignment to the Issuer by all necessary corporate action; and the
execution, delivery, and performance of this Agreement and the other Basic
Documents to which it is a party have been duly authorized by the Seller by
all necessary corporate action.
(d) Valid Sale; Binding Obligation. This Agreement effects a
valid sale, transfer and assignment of the Receivables and the other Trust
Property conveyed by the Seller to the Issuer hereunder, enforceable
against creditors of and purchasers from the Seller; and this Agreement and
the other Basic Documents to which the Seller is a party constitute legal,
valid, and binding obligations of the Seller, enforceable against the
Seller in accordance with their terms, subject, as to enforceability, to
applicable bankruptcy, insolvency, reorganization, 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.
(h) Officer's Certificates. Each representation and warranty
made by the Seller in each of the Seller Officer's Certificates attached as
exhibits to the Purchase Agreement is true and correct as of the Closing
Date, and the Seller covenants to fulfill each covenant made by it in such
Seller Officer's Certificates.
SECTION 6.2 Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Seller under this Agreement, and hereby
agrees to the following:
(a) The Seller shall indemnify, defend, and hold harmless the
Issuer, the Owner Trustee and the Indenture Trustee from and against any
taxes that may at any time be asserted against any such Person with respect
to, and as of the date of, the sale of the Receivables to the Issuer or the
issuance and original sale of the Notes or the Certificates, including any
sales, gross receipts, general corporation, tangible personal property,
privilege, or license taxes (but, in the case of the Issuer, not including
any taxes asserted with respect to ownership of the Receivables or Federal
or other Applicable Tax State income taxes arising out of the transactions
contemplated by this Agreement and the other Basic Documents) and costs and
expenses in defending against the same.
(b) The Seller shall indemnify, defend, and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Noteholders and the
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 Issuer and the Indenture Trustee, respectively,
in the Receivables and the other Trust Property, and reciting the details
of such filings, or (B) stating that, in the opinion of such counsel, no
such action shall be necessary to fully preserve and protect such interest.
The Seller shall provide notice of any merger, conversion, consolidation,
or succession pursuant to this Section 6.3 to the Rating Agencies.
Notwithstanding anything herein to the contrary, the execution of the
foregoing agreement of assumption and 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
Issuer is deemed to have relied in acquiring the Trust Property, and such
representations and warranties speak as of the execution and delivery of
this Agreement and shall survive the sale of the Trust Property to the
Issuer and the pledge thereof by the Issuer pursuant to the Indenture:
(a) Organization and Good Standing. The Servicer has been
duly organized and is validly existing as a corporation in good standing
under the laws of the state of its incorporation, with power and authority
to own its properties and to conduct its business as such properties shall
be currently owned and such business is presently conducted, and had at all
relevant times, and shall have, power, authority, and legal right to
acquire, own, sell, and service the Receivables and to hold the Receivable
Files as custodian on behalf of the Trustee.
(b) Due Qualification. The Servicer is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business (including
the servicing of the Receivables as required by this Agreement) shall
require such qualifications.
(c) Power and Authority. The Servicer has the power and
authority to execute and deliver this Agreement and the other Basic
Documents to which it is a party and to carry out their terms, and the
execution, delivery and performance of this Agreement and the other Basic
Documents to which it is a party have been duly authorized by the Servicer
by all necessary corporate action.
(d) Binding Obligation. This Agreement and the other Basic
Documents to which it is a party constitute legal, valid, and binding
obligations of the Servicer, enforceable against the Servicer in accordance
with their terms, subject, as to enforceability, to applicable bankruptcy,
insolvency, reorganization, conservatorship, receivership, liquidation and
other similar laws and to general equitable principles.
(e) No Violation. The execution, delivery and performance by
the Servicer of this Agreement and the other Basic Documents to which it is
a party, the consummation of the transactions contemplated hereby and
thereby and the fulfillment of the terms hereof and thereof will not
conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time or both) a default
under, the certificate of incorporation or bylaws of the Servicer, or
conflict with, or breach any of the terms or provisions of, or constitute
(with or without notice or lapse of time or both) a default under, any
indenture, agreement, mortgage, deed of trust or other instrument to which
the Servicer is a party or by which the Servicer is bound or to which any
of its properties are subject, or result in the creation or imposition of
any lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument (other
than this Agreement), or violate any law, order, rule, or regulation
applicable to the Servicer or its properties of any Federal or state
regulatory body, any court, administrative agency, or other governmental
instrumentality having jurisdiction over the Servicer or any of its
properties.
(f) No Proceedings. There are no proceedings or
investigations pending, or, to the Servicer's knowledge, threatened, before
any court, regulatory body, administrative agency, or tribunal or other
governmental instrumentality having jurisdiction over the Servicer or its
properties: (a) asserting the invalidity of this Agreement, the Indenture,
any of the other Basic Documents, the Notes, or the Certificates, (b)
seeking to prevent the issuance of the Notes or the Certificates or the
consummation of any of the transactions contemplated by this Agreement, the
Indenture or any of the other Basic Documents, (c) seeking any
determination or ruling that might materially and adversely affect the
performance by the Servicer of its obligations under, or the validity or
enforceability of, this Agreement, the Indenture, any of the other Basic
Documents, the Notes or the Certificates, or (d) that may adversely affect
the Federal or Applicable Tax State income, excise, franchise or similar
tax attributes of the Notes or the Certificates.
SECTION 7.2 Liability of Servicer; Indemnities. The Servicer
shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Servicer under this Agreement,
and hereby agrees to the following:
(a) The Servicer shall defend, indemnify and hold harmless
the Issuer, the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders and the Seller from and against any and all costs,
expenses, losses, damages, claims and liabilities, arising out of or
resulting from the use, ownership or operation by the Servicer or any
Affiliate thereof of a Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee and the Indenture Trustee from and against
any taxes that may at any time be asserted against any such Person with
respect to the transactions contemplated herein or in the other Basic
Documents, if any, including, without limitation, any sales, gross
receipts, general corporation, tangible personal property, privilege or
license taxes (but, in the case of the Issuer, not including any taxes
asserted with respect to, and as of the date of, the sale of the
Receivables to the Issuer or the issuance and original sale of the Notes
and the Certificates and the issuance of the Certificates, or asserted with
respect to ownership of the Receivables, or Federal or other Applicable Tax
State income taxes arising out of the transactions contemplated by this
Agreement and the other Basic Documents) and costs and expenses in
defending against the same.
(c) The Servicer shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders and the Seller from and against any and all costs,
expenses, losses, claims, damages and liabilities to the extent that such
cost, expense, loss, claim, damage or liability arose out of, or was
imposed upon any such Person through, the negligence, willful misfeasance
or bad faith of the Servicer in the performance of its duties under this
Agreement or any other Basic Document to which it is a party (except for
errors in judgment), or by reason of reckless disregard of its obligations
and duties under this Agreement or any other Basic Document to which it is
a party.
(d) The Servicer shall indemnify, defend and hold harmless
the Owner Trustee and the Indenture Trustee, as applicable, from and
against all costs, expenses, losses, claims, damages and liabilities
arising out of or incurred in connection with the acceptance or performance
of the trusts and duties contained herein and in the other Basic Documents,
if any, except to the extent that such cost, expense, loss, claim, damage
or liability: (a) shall be due to the willful misfeasance, bad faith or
negligence (except for errors in judgment) of the Owner Trustee or the
Indenture Trustee, as applicable; (b) relates to any tax other than the
taxes with respect to which either the Seller or the Servicer shall be
required to indemnify the Owner Trustee or the Indenture Trustee, as
applicable; (c) in the case of the Owner Trustee, shall arise from the
Owner Trustee's breach of any of 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 Issuer and the
Indenture Trustee, respectively, in the Receivables, and reciting the
details of such filings, or (B) stating that, in the opinion of such
Counsel, no such action shall be necessary to fully preserve and protect
such interests. The Servicer shall provide notice of any merger,
conversion, consolidation or succession pursuant to this Section 7.3 to the
Rating Agencies. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement or assumption and compliance with
clauses (x) and (y) above shall be conditions to the consummation of the
transactions referred to in clauses (i), (ii) or (iii) above.
SECTION 7.4 Limitation on Liability of Servicer and Others. (a)
Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to the Issuer, the
Noteholders or the Certificateholders, except as provided under this
Agreement, for any action taken or for refraining from the taking of any
action pursuant to this Agreement or for errors in judgment; provided,
however, that this provision shall not protect the Servicer or any such
Person against any liability that would otherwise be imposed by reason of
willful misfeasance or bad faith in the performance of duties or by reason
of reckless disregard of obligations and duties under this Agreement, or by
reason of negligence in the performance of its duties under this Agreement
(except for errors in judgment). The Servicer and any director, officer or
employee or agent of the Servicer may rely in good faith 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 and the
Yield Supplement Account. To exercise such option, the Servicer shall
notify the Owner Trustee and the Indenture Trustee no later than the
fifteenth day of the month immediately preceding the month in which such
repurchase is to be effected and shall deposit an amount equal to the
aggregate Purchase Amount for the Receivables, plus the appraised value of
any other property held in the Trust other than in the Trust Accounts, the
Certificate Distribution Account, the Reserve Account, the Supplemental
Reserve Account and the Yield Supplement Account, such value to be
determined by an appraiser mutually agreed upon by the Servicer, the Owner
Trustee and the Indenture Trustee, into the Collection Account on the
Payment Date occurring in the month in which such repurchase is to be
effected. Upon such payment, the Servicer shall succeed to and own all
interests in and to the Trust. Notwithstanding the foregoing, the Servicer
shall not be permitted to exercise such option unless the amount to be
deposited in the Collection Account pursuant to the second preceding
sentence is greater than or equal to the sum of the outstanding principal
balance of the Notes and all accrued but unpaid interest (including any
overdue interest) thereon and the Certificate Balance. The Purchase Amount
and any Yield Supplement Amounts for such Payment Date, plus to the extent
necessary all amounts in the Supplemental Reserve Account, plus to the
extent necessary all amounts in the Reserve Account, shall be used to make
payments in full to Noteholders and Certificateholders in the manner set
forth in Article IV.
(b) Unless otherwise required by the Rating Agencies as set
forth in writing delivered to the Owner Trustee and the Indenture Trustee,
if at the time the Servicer exercises its purchase option hereunder the
Servicer's long-term unsecured debt has a rating lower than investment
grade by the Rating Agencies, the Servicer shall deliver to the Owner
Trustee and the Indenture Trustee on such Payment Date a letter from an
Independent investment bank or an Independent public accountant to the
effect that the price paid by the Servicer for the 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 Issuer, with the consent of the Indenture
Trustee, but without the consent of any of the Noteholders or the
Certificateholders to cure any ambiguity, to correct or supplement any
provisions in this Agreement which may be inconsistent with any other
provisions in this Agreement, or to add, change or eliminate any other
provisions with respect to matters or questions arising under this
Agreement that shall not be inconsistent with the provisions of this
Agreement; provided, however, that such action shall not, as evidenced by
an Opinion of Counsel delivered to the Owner Trustee and the Indenture
Trustee, materially and adversely affect the interests of any Noteholder or
Certificateholder.
(b) This Agreement may also be amended from time to time by
the Seller, the Servicer and the Issuer, with the consent of the Indenture
Trustee, the consent of the Holders of Notes evidencing not less than 51%
of Outstanding Amount of the Notes and the consent of the Holders of
Certificates evidencing not less than 51% of the Certificate Balance for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Noteholders or the Certificateholders; provided,
however, that no such amendment shall (a) increase or reduce in any manner
the amount of, or accelerate or delay the timing of, or change the
allocation or priority of, collections of payments on Receivables or
distributions that shall be required to be made on any Note or Certificate
or change the Note Interest Rate or the Certificate Rate, the Specified
Reserve Balance or the Maximum Supplemental Reserve Amount, without the
consent of all adversely affected Noteholders or Certificateholders, (b)
reduce the aforesaid percentage required to consent to any such amendment,
without the consent of the Holders of all Notes and Certificates affected
thereby or (c) adversely affect the rating of any Class of Notes by the
Rating Agencies without the consent, as applicable, of Noteholders
evidencing not less than 66-2/3% of the Notes of such Class Outstanding.
(c) Prior to the execution of any amendment or consent
pursuant to Section 10.1(b), the Servicer shall provide written
notification of the substance of such amendment or consent to each Rating
Agency.
(d) Promptly after the execution of any amendment or consent
pursuant to this Section 10.1, the Owner Trustee shall furnish written
notification of the substance of such amendment or consent to each
Certificateholder, the Indenture Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of Noteholders or the
Certificateholders pursuant to this Section 10.1 to approve the particular
form of any proposed amendment or consent, but it shall be sufficient if
such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Noteholders and Certificateholders
provided for in this Agreement) and of evidencing the authorization of the
execution thereof by Noteholders and Certificateholders shall be subject to
such reasonable requirements as the Owner Trustee and the Indenture Trustee
may prescribe.
(e) Prior to the execution of any amendment to this
Agreement, the Owner Trustee and the Indenture Trustee shall be entitled to
receive and rely upon (i) an Opinion of Counsel stating that the execution
of such amendment (A) is authorized or permitted by this Agreement, (B)
will not materially adversely affect the Federal or any Applicable Tax
State income or franchise taxation of any Outstanding Note or Certificate
or any Holder thereof, and (C) will not cause the Trust to be taxable as a
corporation for Federal or any Applicable Tax State income or franchise tax
purposes and (ii) an Officer's Certificate of the Servicer that all
conditions precedent to the execution of such amendment have been complied
with. The Owner Trustee or the Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects such Owner
Trustee's or Indenture Trustee's own rights, duties or immunities under
this Agreement or otherwise.
SECTION 10.2 Protection of Title to Trust. (a) The Seller or
Servicer, or both, shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve,
maintain, and protect the interest of the Issuer and the Indenture Trustee
for the benefit of the Noteholders in the Receivables and in the proceeds
thereof. The Seller or Servicer, or both, shall deliver (or cause to be
delivered) to the Owner Trustee and the Indenture Trustee file-stamped
copies of, or filing receipts for, any document filed as provided above, as
soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its
name, identity, or corporate structure in any manner that would, could, or
might make any financing statement or continuation statement filed by the
Seller or the Servicer in accordance with paragraph (a) above seriously
misleading within the meaning of section 9-402(7) of the Relevant UCC,
unless it shall have given the Owner Trustee and the Indenture Trustee at
least sixty (60) days' prior written notice thereof and shall have promptly
filed appropriate amendments to all previously filed financing statements
or continuation statements.
(c) The Seller and the Servicer shall give the Owner Trustee
and the Indenture Trustee at least sixty (60) days' prior written notice of
any relocation of its principal executive office if, as a result of such
relocation, the applicable provisions of the Relevant UCC would require the
filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any
such amendment, continuation statement or any new financing statement. The
Servicer shall at all times maintain each office from which it shall
service Receivables, and its principal executive office, within the United
States of America.
(d) The Servicer shall maintain accounts and records as to
each Receivable accurately and in sufficient detail to permit (i) the
reader thereof to know at any time the status of such Receivable, including
payments and recoveries made and payments owing (and the nature of each)
and (ii) reconciliation between payments or recoveries on (or with respect
to) each Receivable and the amounts from time to time deposited in the
Collection Account, Payahead Account, the Yield Supplement Account, the
Reserve Account and the Supplemental Reserve Account in respect of such
Receivable.
(e) The Servicer shall maintain its computer systems so that,
from and after the time of sale under this Agreement of the Receivables to
the Issuer, the Servicer's master computer records (including any back-up
archives) that refer to a Receivable shall indicate clearly the interest of
the Issuer and the Indenture Trustee in such Receivable and that such
Receivable is owned by the Issuer and has been pledged to the Indenture
Trustee pursuant to the Indenture. Indication of the Issuer's and the
Indenture Trustee's interest in a Receivable shall be deleted from or
modified on the Servicer's computer systems when, and only when, the
Receivable shall have been paid in full or repurchased by the Seller or
purchased by the Servicer.
(f) If at any time the Seller or the Servicer shall propose
to sell, grant a security interest in, or otherwise transfer any interest
in any automobile or 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 Issuer and has been pledged to the Indenture Trustee unless
such Receivable has been paid in full or repurchased by the Seller or
purchased by the Servicer.
(g) The Servicer shall permit the Owner Trustee, the
Indenture Trustee and their respective agents at any time during normal
business hours to inspect, audit, and make copies of and abstracts from the
Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner
Trustee and the Indenture Trustee, within ten (10) Business Days, a list of
all Receivables (by contract number and name of Obligor) then held as part
of the Trust, together with a reconciliation of such list to the Schedule
of Receivables and to each of the Servicer's Certificates furnished before
such request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the
Indenture Trustee:
(1) promptly after the execution and delivery of
each amendment to any financing statement, an Opinion of Counsel
either (A) stating that, in the opinion of such Counsel, all
financing statements and continuation statements have been executed
and filed that are necessary fully to preserve and protect the
interest of the Issuer and the Indenture Trustee in the
Receivables, and reciting the details of such filings or referring
to prior Opinions of Counsel in which such details are given, or
(B) stating that, in the opinion of such Counsel, no such action
shall be necessary to preserve and protect such interest; and
(2) within ninety (90) days after the beginning of
each calendar year beginning with the first calendar year beginning
more than three months after the Cutoff Date, an Opinion of
Counsel, dated as of a date during such 90-day period, either (A)
stating that, in the opinion of such Counsel, all financing
statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of
the Issuer and the Indenture Trustee in the Receivables, and
reciting the details of such filings or referring to prior Opinions
of Counsel in which such details are given, or (B) stating that, in
the opinion of such Counsel, no such action shall be necessary to
preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i)(1) or (i)(2)
above shall specify any action necessary (as of the date of such opinion)
to be taken in the following year to preserve and protect such interest.
(j) The Seller shall, to the extent required by applicable
law, cause the Notes to be registered with the Commission pursuant to
Section 12(b) or Section 12(g) of the Exchange Act within the time periods
specified in such sections.
SECTION 10.3 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York and the obligations,
rights, and remedies of the parties under this Agreement shall be
determined in accordance with such laws.
SECTION 10.4 Notices. All demands, notices, and communications
under this Agreement shall be in writing, personally delivered, sent by
telecopier, overnight courier or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) in
the case of the Seller or the Servicer, to the agent for service as
specified in Section 10.12 hereof, or at such other address as shall be
designated by the Seller or the Servicer in a written notice to the Owner
Trustee and the Indenture Trustee, (b) in the case of the Owner Trustee, at
the Corporate Trust Office of the Owner Trustee, (c) in the case of the
Indenture Trustee, at the Corporate Trust Office of the Indenture Trustee,
(d) in the case of Moody's, at the following address: ▇▇▇▇▇'▇ 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 Issuer to
the Indenture Trustee for the benefit of Noteholders pursuant to the
Indenture.
SECTION 10.10 Actions by Noteholder or Certificateholders. (a)
Wherever in this Agreement a provision is made that an action may be taken
or a notice, demand, or instruction given by Noteholders or
Certificateholders, such action, notice, or instruction may be taken or
given by any Noteholder or Certificateholder, as applicable, unless such
provision requires a specific percentage of Noteholders or
Certificateholders.
(b) Any request, demand, authorization, direction, notice,
consent, waiver, or other act by a Noteholder or Certificateholder shall
bind such Noteholder or Certificateholder and every subsequent holder of
such Note or Certificate issued upon the registration of transfer thereof
or in exchange therefor or in lieu thereof in respect of anything done or
omitted to be done by the Owner Trustee, the Indenture Trustee or the
Servicer in reliance thereon, whether or not notation of such action is
made upon such Note or Certificate.
SECTION 10.11 Counterparts. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same instrument.
SECTION 10.12 Agent for Service. The agent for service of the
Seller and the Servicer in respect of this Agreement shall be Executive
Vice President and Treasurer, Mitsubishi Motors Credit of America, Inc.,
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, mailing address: ▇.▇.
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
SECTION 10.13 No Bankruptcy Petition. The Owner Trustee, the
Indenture Trustee, the Issuer and the Servicer each covenants and agrees
that, prior to the date which is one year and one day after the payment in
full of all securities issued by the Seller or by a trust for which the
Seller was the depositor which securities were rated by any nationally
recognized statistical rating organization it will not institute against,
or join any other Person in instituting against, the Seller any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or
other proceedings under any federal or state bankruptcy or similar law.
This Section 10.13 shall survive the resignation or removal of the Owner
Trustee under the Trust Agreement or the Indenture Trustee under the
Indenture or the termination of such Agreement.
SECTION 10.14 Limitation of Liability of Owner Trustee and
Indenture Trustee. (a) Notwithstanding anything contained herein to the
contrary, this Agreement has been countersigned by Wilmington Trust
Company, not in its individual capacity but solely in its capacity as Owner
Trustee of the Issuer and in no event shall Wilmington Trust Company in its
individual capacity or, except as expressly provided in the Trust
Agreement, as beneficial owner of the Issuer, have any liability for the
representations, warranties, covenants, agreements or other obligations of
the Issuer hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely
to the assets of the Issuer. For all purposes of this Agreement, in the
performance of its duties or obligations hereunder or in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall
be subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the
contrary, this Agreement has been accepted by Bank of Tokyo - Mitsubishi
Trust Company, not in its individual capacity but solely as Indenture
Trustee, and in no event shall Bank of Tokyo - Mitsubishi Trust Company
have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
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: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Treasurer
MMCA AUTO OWNER TRUST 1998-1,
as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Owner Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
MITSUBISHI MOTORS CREDIT OF
AMERICA, INC., as Servicer
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
Accepted and agreed:
BANK OF TOKYO - MITSUBISHI TRUST COMPANY,
as Indenture Trustee
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Title: Trust Officer
SCHEDULE A
[SCHEDULE OF RECEIVABLES]
Delivered to Indenture Trustee at Closing
SCHEDULE B
Locations of Receivables Files
Corporate ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
National Service Center
10805 Holder Street, Third Floor
P.O. Box 6043
Cypress, CA 90630-0040
North Central Region
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Northeastern Region
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Southeastern Region
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Southwestern Region
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Western Region
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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 August 1, 1998, by and among the Company, as Servicer, MMCA Auto
Receivables, Inc., as Seller, and MMCA Auto Owner Trust 1998-1, as Issuer
(the "Sale and Servicing Agreement") (all capitalized terms used herein
without definition have the respective meanings specified in the Sale and
Servicing Agreement), and further certifies that:
(a) The Servicer's report for the period from __________ to
____________ attached to this certificate is complete and accurate and
contains all information required by Section 3.9 of the Sale and Servicing
Agreement; and
(b) As of the date hereof, no Event of Servicing
Termination or event that with notice or lapse of time or both would become
an Event of Servicing Termination has occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature and the
corporate seal of the Company this ______ day of ____________, 19__.
MITSUBISHI MOTORS CREDIT
OF AMERICA, INC.
By:________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.
Monthly Servicing Report -- MMCA Auto Owner Trust 1998-1
Hypothetical Results for the Period August 1, 1998 through August 31, 1998
I. ORIGINAL DEAL PARAMETERS
-----------------------------
A Original Pool Balance $930,187,451.88
B. Original Level Payment Pool Balance $624,383,716.12
C. Last Scheduled Payment Pool Balance $305,803,735.76
D Notes
1. Class A-1
a. Initial Balance $200,000,000.00
b. Note Interest Rate 5.621%
c. Noteholders' Final Scheduled Payment Date 8/16/99
2. Class A-2
a. Initial Balance $250,000,000.00
b. Note Interest Rate 5.72%
c Noteholders' Final Scheduled Payment Date 8/15/04
d. Class A Noteholders' Percentage 90.44%
3. Class A-3
a. Initial Balance $322,056,000.00
b. Note Interest Rate 5.86%
c. Noteholders' Final Scheduled Payment Date 8/15/04
d. Class A Noteholders' Percentage 90.44%
4. Class B
a. Initial Balance $60,462,000.00
b. Note Interest Rate 6.07%
c. Noteholders' Final Scheduled Payment Date 8/15/04
d. Class B Noteholders' Percentage 9.56%
E. Certificates Initial Balance $97,669,451.88
F. Servicing Fee Rate 1.00%
G Original Weighted Average Coupon (WAC) 5.938%
H Weighted Average Original Term to Maturity (WAOM) in months 49.96
I. Weighted Average Remaining Term to Maturity (WAM) in months 38.96
J. Number of Contracts 53,764
K Reserve Account
1. Reserve Initial Deposit $1,395,281.00
2. Specified Reserve Balance $6,976,401.89
L. Yield Supplement Account Initial Deposit $66,416,937.00
M Maximum Supplemental Reserve Amount $18,603,749.04
II. INPUTS FROM PREVIOUS MONTHLY SERVICER REPORT
-------------------------------------------------
A Total Pool Balance $930,187,451.88
B. Level Payment Pool Balance $624,383,716.12
C. Last Scheduled Payment Pool Balance $305,803,735.76
D Notes
1. Class A-1
a.Prior Month Note Balance $200,000,000.00
b.Interest Carryover Shortfall 0.00
c.Principal Carryover Shortfall 0.00
2. Class A-2
a.Prior Month Note Balance $250,000,000.00
b.Interest Carryover Shortfall 0.00
c.Principal Carryover Shortfall 0.00
3. Class A-3
a.Prior Month Note Balance $322,056,000.00
b.Interest Carryover Shortfall 0.00
c.Principal Carryover Shortfall 0.00
4. Class B
a.Prior Month Note Balance $60,462,000.00
b.Interest Carryover Shortfall 0.00
c.Principal Carryover Shortfall 0.00
E. Certificates Balance $97,669,451.88
F. Reserve Account Balance $1,395,281.00
G Supplemental Reserve Account Balance $0.00
H Yield Supplement Account Balance $66,416,937.00
I. Payahead Account Balance $668,045.87
J. Cumulative Losses for All Prior Periods $0.00
K Weighted Average Coupon (WAC) 5.938%
L. Weighted Average Remaining Term to Maturity (WAM) in months 38.96
M. Number of Contracts 53,764
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.
Monthly Servicing Report -- MMCA Auto Owner Trust 1998-1
Hypothetical Results for the Period August 1, 1998 through August 31, 1998
III. INPUTS FROM THE MAINFRAME (FROM LEWTAN REPORTS)
-----------------------------------------------------
A. Precomputed Contracts Level Payment Principal
1. Scheduled Principal Reduction 7,900,000.00
2. Prepayments in Full 2,000,000.00
3. Prepayments in Full Due to Repurchases 0.00
B. Total Collections for Precomputed Contracts 12,500,000.00
C. Precomputed Contracts - Principal on Last Scheduled Payments
1. Collected Principal 1,000,000.00
2. Repurchased Receivables Principal 0.00
3. Last Scheduled Payment Principal Paid in Full Prior
to Month of Maturity 1,000,000.00
4. Last Scheduled Payment Principal Due on Loans Matured This Month 0.00
D. Simple Interest Contracts -Level Payment
1. Principal Reduction 7,000,000.00
2. Collected Principal 7,000,000.00
3. Collected Interest 3,200,000.00
4. Repurchased Receivables Principal 0.00
5. Repurchased Receivables Interest 0.00
E. Simple Interest Contracts - Principal on Last Scheduled Payments
1. Collected Principal 800,000.00
2. Repurchased Receivables Principal 0.00
3. Last Scheduled Payment Principal Collected Prior to
Month of Maturity 800,000.00
4. Last Scheduled Payment Principal Due on Loans Matured This Month 0.00
F. Yield Supplement Information
1. Yield Supplement Amount 2,000,000.00
2. Specified Yield Supplement Account Balance 63,916,937.00
G. Advances
1. Actuarial Advances
a.Beginning Actuarial Advances (or payments due
prior to Cutoff Date) 1,490,529.46
b.Current Month Actuarial Advances 500,000.00
c.Reimbursement of Actuarial Advances (or payments due
prior to Cutoff Date) 600,000.00
d.Ending Actuarial Advances 1,390,529.46
2. Precomputed Loans - Last Scheduled Payment Advances
a.Beginning Last Scheduled Payment Advances 0.00
b.Current Month Last Scheduled Payment Advances 0.00
c.Reimbursement of Last Scheduled Payment
Advances 0.00
d.Ending Last Scheduled Payment Advances 0.00
3. Simple Interest Loans - Last Scheduled Payment Advances
a.Beginning Last Scheduled Payment Advances 0.00
b.Current Month Last Scheduled Payment Advance 0.00
c.Reimbursement of Last Scheduled Payment 0.00
Advances
d.Ending Last Scheduled Payment Advances 0.00
4. Net Servicer Advances (100,000.00)
H. Payahead Account Activity
1. Net Change in Payahead Account Balance (50,000.00)
2. Payahead Balance of Loans Defaulted this Period 0.00
3. Ending Payahead Balance 618,045.87
I. Rule of 78s Payment 10,000.00
J. Weighted Average Coupon of Remaining Portfolio (WAC) 5.94%
K. Weighted Average Remaining Maturity of Portfolio (WAM) in months 38.00
L. Remaining Number of Receivables 53,500
M. Delinquent Contracts Contracts Amount
--------- --------
1.30-59 Days Delinquent 0 0.00% $0.00 0.00%
2.60-89 Days Delinquent 0 0.00% $0.00 0.00%
3.90 Days or more Delinquent 0 0.00% $0.00 0.00%
N. Net Loss and Defaulted Receivables Information
1.Vehicles Repossessed During Month 0 $0.00
▇.▇▇▇▇▇ Defaulted During the Month 0
3.Level Payment Principal Balance of Defaulted
Receivables 0.00
4.Last Scheduled Payment Principal Balance of
Defaulted Receivables 0.00
5.Level Payment Liquidation Proceeds 0.00
6.Last Scheduled Payment Liquidation Proceeds 0.00
7.Recoveries of Level Payment and Last Scheduled Payment
on Previously Defaulted Receivables 0.00
O. Pool Balances
▇.▇▇▇▇▇ Pool Balance
2.Level Pay Pool Balance 911,487,451.88
3.Last Scheduled Payment Pool Balance 607,483,716.12
304,003,735.76
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.
Monthly Servicing Report -- MMCA Auto Owner Trust 1998-1
Hypothetical Results for the Period August 1, 1998 through August 31, 1998
IV. INPUTS DERIVED FROM OTHER SOURCES
--------------------------------------
A. Reserve Account Investment Income 5,000.00
B. Collection Account Investment Income 80,000.00
C. Payahead Account Investment Income 3,000.00
D. Yield Supplement Account Investment Income 300,000.00
E. Supplemental Reserve Account Investment Income 0.00
V. COLLECTIONS
---------------
A. Level Payments Received (Excluding Repurchases)
1. Total Collections for Precomputed Contracts
(Level Payment Only) 12,500,000.00
2. Collected Principal on Simple Interest
Contracts (Level Payment Only) 7,000,000.00
3. Collected Interest on Simple Interest
Contracts (Level Payment Only) 3,200,000.00
4. Yield Supplement Amount 2,000,000.00
------------
24,700,000.00
B. Last Scheduled Payment Principal
Collections (Excluding Repurchases) 1,800,000.00
C. Net Change in Payahead Account Balance 50,000.00
D. Net Liquidation Proceeds and Recoveries Received 0.00
E. Principal and Interest on Purchased or Repurchased Contracts 0.00
F. Exclusion of Rule of 78's Payments (10,000.00)
G. Net Servicer Advances/(Reimbursements) (100,000.00)
--------------
H. Available Funds $26,440,000.00
=============
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.
Monthly Servicing Report -- MMCA Auto Owner Trust 1998-1
Hypothetical Results for the Period August 1, 1998 through August 31, 1998
VI. DISTRIBUTIONS
-------------------
A. Scheduled Principal
1. Principal Payment (Excluding Repurchases
and Defaulted Receivables) 18,700,000.00
2. Principal Payment on Purchased and Repurchased Contracts 0.00
3. Principal Payment of Defaulted Receivables 0.00
------------
4. Total Scheduled Principal 18,700,000.00
B. Total Required Payment
1. Total Servicing Fee 775,156.21
2. Accrued Note Interest Due
a.Class A-1 811,922.22
b.Class A-2 993,055.56
c.Class A-3 1,310,589.00
d.Class B 254,864.13
------------
▇.▇▇▇▇▇ Accrued Note Interest 3,370,430.91
3. Principal Distribution Amount Due
a.Class A-1 18,700,000.00
b.Class A-2 0.00
c.Class A-3 0.00
d.Class B 0.00
------------
▇.▇▇▇▇▇ Principal Distribution Amount 18,700,000.00
4. Total Required Payment 22,845,587.12
5. Available Funds 26,440,000.00
6. Supplemental Reserve Account TRP Draw Amount 0.00
7. Reserve Account TRP Draw Amount 0.00
--------------
8. Funds Available for Distribution of
Total Required Payment $22,845,587.12
C. Current Period Payments
1. Servicing Fee paid 775,156.21
2. Interest Paid
a.Class A-1 811,922.22
b.Class A-2 993,055.56
c.Class A-3 1,310,589.00
d.Class B 254,864.13
------------
▇.▇▇▇▇▇ Interest Paid 3,370,430.91
3. Remaining Available Funds 19,475,156.21
4. Principal Payments
a.Class A-1 18,700,000.00
b.Class A-2 0.00
c.Class A-3 0.00
d.Class B 0.00
------------
▇.▇▇▇▇▇ Principal Payments 18,700,000.00
C. Current Period Shortfalls
1. Interest Carryover Shortfall
a.Class A-1 0.00
b.Class A-2 0.00
c.Class A-3 0.00
d.Class B 0.00
------------
▇.▇▇▇▇▇ Interest Carryover Shortfall 0.00
2. Principal Carryover Shortfall
a.Class A-1 0.00
b.Class A-2 0.00
c.Class A-3 0.00
d.Class B 0.00
------------
▇.▇▇▇▇▇ Principal Carryover Shortfall 0.00
D. Reserve
Account
1. Beginning Reserve Account Balance 1,395,281.00
2. Plus: Reserve Account Investment Income 5,000.00
3. Less: Reserve Account Advance Draw Amout 0.00
4. Less: Reserve Account TRP Draw Amount 0.00
------------
5. Reserve Account Balance before Deposit
to Reserve Account 1,400,281.00
6. Specified Reserve Account Balance 6,976,401.89
7. Amount Necessary to Reinstate Reserve
Account to Specified
Reserve Balance 5,576,120.89
8. Funds Available for Deposit to Reserve Account 3,594,412.88
9. Amount Deposited to Reserve Account 3,594,412.88 3,594,412.88
10.Reserve Account Investment Income
Released to Seller 0.00
11.Ending Reserve Account Balance 4,994,693.88
E. Supplemental Reserve Account
1. Beginning Supplemental Reserve Account Balance 0.00
2. Plus: Supplemental Reserve Account Investment Income 0.00
3. Less: Supplemental Reserve Account
Advance Draw Amount 0.00
4. Less: Supplemental Reserve Account TRP
Draw Amount 0.00
------------
5. Supplemental Reserve Account Balance
before Deposit to Supplemental Reserve Account 0.00
6. Maximum Supplemental Reserve Account Balance 18,603,749.04
7. Amount Necessary to Reinstate Supplemental
Reserve Account to Maximum Balance 18,603,749.04
8. Funds Available for Deposit to Supplemental Reserve
Account 0.00
9. Amount Deposited to Supplemental Reserve
Account 0.00 0.00
10.Supplemental Reserve Account Investment
Income Released to Seller 0.00
11.Ending Supplemental Reserve Account Balance 0.00
F. Excess Funds Deposited to Certificate Distribution Account 0.00 0.00
---------------
G. Total Distributions $ 26,440,000.00
================
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.
Monthly Servicing Report -- MMCA Auto Owner Trust 1998-1
Hypothetical Results for the Period August 1, 1998 through August 31, 1998
VII. POOL BALANCES AND PORTFOLIO INFORMATION
--------------------------------------------- Beginning End
A. Balances and Principal Factors of Period of Period
-------------------- ------------------
1. Total Pool Balance $930,187,451.88 $911,487,451.88
2. Total Pool Factor 1.0000000 0.9798965
3. Level Payment Pool Balance $624,383,716.12 $607,483,716.12
4. Level Payment Pool Factor 1.0000000 0.9729333
5. Note Balance
a. Class A-1 200,000,000.00 181,300,000.00
b. Class A-2 250,000,000.00 250,000,000.00
c. Class A-3 322,056,000.00 322,056,000.00
d. Class B 60,462,000.00 60,462,000.00
-------------------- ------------------
e. Total 832,518,000.00 813,818,000.00
6. Pool Factor
a. Class A-1 1.0000000 0.9065000
b. Class A-2 1.0000000 1.0000000
c. Class A-3 1.0000000 1.0000000
d. Class B 1.0000000 1.0000000
7. Certificate Balance 97,669,451.88 97,669,451.88
8. Certificate Pool Factor 1.0000000 1.0000000
9. Last Scheduled Payment Pool Balance 305,803,735.76 304,003,735.76
B. Portfolio Information
1. Weighted Average Coupon of Portfolio (WAC) 5.938% 5.940%
2. Weighted Average Remaining Term to Maturity of Portfolio (WAM) in months 38.96 38.00
3. Remaining Number of Contracts 53,764 53,500
VIII. NET LOSS AND DELINQUENCY ACTIVITY
----------------------------------------
A. Losses for Collection Period Net of Recoveries 0.00
B. Cumulative Losses for all Periods 0.00
C. Delinquent and Repossessed Contracts
Contracts Amount
---------------- ----------------------------------------
1. 30-59 Days Delinquent 0 0.00% $0.00 0.00%
2. 60-89 Days Delinquent 0 0.00% $0.00 0.00%
3. 90 Days or more Delinquent 0 0.00% $0.00 0.00%
4. Vehicles Repossessed During
Collection Period 0 0.00% $0.00
IX. AVERAGE LOSS AND DELINQUENCY RATIOS
----------------------------------------
A. Annualized Ratio of Realized Losses to Pool Balance for Each Collection Period
1. Second Preceding Collection Period 0.00%
2. Preceding Collection Period 0.00%
3. Current Collection Period 0.00%
4. Three Month Average 0.00%
B. Ratio of Balance of Contracts Delinquent 60 Days or More to the
Pool Balance as of the End of the Collection Period.
1. Second Preceding Collection Period 0.00%
2. Preceding Collection Period 0.00%
3. Current Collection Period 0.00%
4. Three Month Average 0.00%
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.
Monthly Servicing Report -- MMCA Auto Owner Trust 1998-1
Hypothetical Results for the Period August 1, 1998 through August 31, 1998
X. RECONCILIATION OF COLLECTION ACCOUNT
----------------------------------------
A. Transfers Into Collection Account
1. Transfer of Daily Collections (input from bank records) 24,500,000.00
2. Yield Supplement Amount from MMCA 2,000,000.00
3. Net Servicer Advances (if positive) 0.00
4. Supplemental Reserve Account Draw for Total Required Payment 0.00
5. Reserve Account Draw for Total Required Payment 0.00
6. Deposit from Payahead Account 50,000.00
7. Collection Account Investment Income 80,000.00
---------------
8. Total Transfers Into Collection Account $ 26,630,000.00
==================
B. Transfers from Collection Account
1. To Servicer
a. Total Servicing Fee 775,156.21
b. Rule of 78's Payment 10,000.00
c. Net Reimbursement of Servicer Advance of Payments Due Prior to Cutoff Date 100,000.00
d. Less: Total Repurchases (Netted from Amounts Due Servicer) 0.00
---------------
e. Total To Servicer (Net of Total Repurchases) 885,156.21
2. Total Required Payment Distributed (Net of Total Servicing Fee) 22,070,430.91
3. Deposit to Payahead Account 0.00
4. Deposit to Reserve Account 3,594,412.88
5. Deposit to Supplemental Reserve Account 0.00
6. Deposit To Certificate Distribution Account
a. Excess Funds 0.00
b. Collection Account Investment Income 80,000.00
---------------
c. Total To Certificate Distribution Account 80,000.00
---------------
7. Total Transfers from Collection Account $ 26,630,000.00
==================
XI. RECONCILIATION OF RESERVE ACCOUNT
--------------------------------------
A. Beginning Balance of Reserve Account 1,395,281.00
B. Transfers Into Reserve Account
1. Reserve Account Deposit from Available Funds 3,594,412.88
2. Reserve Account Investment Income 5,000.00
3. Total Transfers Into Reserve Account 3,599,412.88
---------------
C. Total Transfers In and Beginning Balance $ 4,994,693.88
==================
D. Distributions From Reserve Account
1. Transfer to Servicer for Reserve Account Advance Draw Amount 0.00
2. Transfer to Collection Account for Reserve Account TRP Draw Amount 0.00
3. Reserve Account Investment Income to Seller (MARI) 0.00
4. Total Transfers From Reserve Account 0.00
E. Ending Balance 4,994,693.88
---------------
F. Total Distributions and Ending Balance $ 4,994,693.88
==================
XI. RECONCILIATION OF SUPPLEMENTAL RESERVE ACCOUNT
---------------------------------------------------
A. Beginning Balance of Supplemental Reserve Account 0.00
B. Transfers Into Supplemental Reserve Account
1. Supplemental Reserve Account Deposit from Available Funds 0.00
2. Supplemental Reserve Account Investment Income 0.00
3. Total Transfers Into Supplemental Reserve Account 0.00
---------------
C. Total Transfers In and Beginning Balance $ 0.00
==================
D. Distributions From Supplemental Reserve Account
1. Transfer to Servicer for Supplemental Reserve Account Advance Draw Amount 0.00
2. Transfer to Collection Account for Supplemental Reserve Account TRP Draw Amount 0.00
3. Supplemental Reserve Account Investment Income to Seller (MARI) 0.00
4. Total Transfers From Supplemental Reserve Account 0.00
E. Ending Balance 0.00
---------------
F. Total Distributions and Ending Balance $ 0.00
==================
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.
Monthly Servicing Report -- MMCA Auto Owner Trust 1998-1
Hypothetical Resuts for the Period August 1, 1998 through August 31, 1998
XIII. RECONCILIATION OF PAYAHEAD ACCOUNT
-----------------------------------------
A. Beginning Balance of Payahead Account 668,045.87
B. Transfers Into Payahead Account
1. Ne Payahead Transfer from Collection Account 0.00
2. Payahead Account Investment Income 3,000.00
-----------------
3. Total Transfers Into Payahead Account 3,000.00
-----------------
C. Total Transfers In and Beginning Balance $ 671,045.87
=================
D. Distributions From Payahead Account
1. Net Payahead Transfer to Collection Account 50,000.00
2. Transfer Investment Income to Servicer 3,000.00
-----------------
3. Total Transfers From Payahead Account 53,000.00
E. Payahead Account Ending Balance 618,045.87
-----------------
F. Total Distributions and Ending Balance $ 671,045.87
=================
XIV. RECONCILIATION OF YIELD SUPPLEMENT ACCOUNT
------------------------------------------------
A. Beginning Balance of Yield Supplement Account $66,416,937.00
B. Yield Supplement Account Investment Income 300,000.00
-----------------
C. Total Investment Income and Beginning Balance $ 66,716,937.00
=================
D. Distributions From Yield Supplement Account
1. Yield Supplement Amount (if not paid by MMCA) 0.00
2. Transfer Investment Income to Seller (MARI) 300,000.00
3. Transfer Reduction in Specified Yield Supplement Account Balance to
Seller (MARI) 2,500,000.00
-----------------
4. Total Transfers From Yield Supplement Account 2,800,000.00
E. Specified Yield Supplement Account Ending Balance 63,916,937.00
-----------------
F. Total Distributions and Ending Balance $ 66,716,937.00
=================
XV. RECONCILIATION OF NOTE PAYMENT ACCOUNT
-------------------------------------------
A. Beginning Balance of Note Payment Account $0.00
B. Transfers Into Note Payment Account
1. Total Required Payment Distributed (less Total Servicing Fee) from
Collection Account 22,070,430.91
-----------------
2. Total Transfers Into Note Payment Account 22,070,430.91
-----------------
C. Total Transfers In and Beginning Balance $ 22,070,430.91
=================
D. Distributions from Note Payment Account
1. Payments to Noteholders
a.Class A-1 19,511,922.22
b.Class A-2 993,055.56
c.Class A-3 1,310,589.00
d.Class B 254,864.13
-----------------
▇.▇▇▇▇▇ Payments to Noteholders 22,070,430.91
2. Ending Balance of Note Payment Account 0.00
-----------------
E. Total Distributions and Ending Balance $ 22,070,430.91
=================
XVI. RECONCILIATION OF CERTIFICATE DISTRIBUTION ACCOUNT
--------------------------------------------------------
A. Beginning Balance of Certificate Distribution Account $0.00
B. Transfers Into Certificate Distribution Account
2. Excess Funds Deposited from Collection Account 0.00
3. Collection Account Investment Income 80,000.00
-----------------
4. Total Transfers into Certificate Distribution Account 80,000.00
-----------------
C. Total Transfers In and Beginning Balance $ 80,000.00
=================
D. Distributions from Certificate Distribution Account
1. Payments to Certificateholders 80,000.00
2. Ending Balance 0.00
-----------------
E. Total Distributions and Ending Balance $ 80,000.00
=================
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.
Monthly Servicing Report -- MMCA Auto Owner Trust 1998-1
Hypothetical Results for the Period August 1, 1998 through August 31, 1998
XVII. DISTRIBUTION SUMMARY
---------------------------
A. Distributions From Collection Account
1. To Note Payment Account 22,070,430.91
2. To Servicer (MMCA) 885,156.21
3. To Payahead Account 0.00
4. To Reserve Account 3,594,412.88
5 To Supplemental Reserve Account 0.00
6. To Certificate Distribution Account 80,000.00
----------------
7. Total Distributions From Collection Account $ 26,630,000.00
B. Distributions From Reserve Account
1. To Collection Account 0.00
2. To Seller (MARI) 0.00
3. To Server (MMCA) 0.00
----------------
4. Total Distributions From Reserve Account 0.00
C. Distributions From Supplemental Reserve Account
1. To Collection Account 0.00
2. To Seller (MARI) 0.00
3. To Servicer (MMCA) 0.00
----------------
4. Total Distributions From Supplemental Reserve Account 0.00
D. Distributions From Payahead Account
1. To Collection Account 50,000.00
2. Investment Income to Servicer (MMCA) 3,000.00
----------------
3. Total Distributions From Payahead Account 53,000.00
E. Distributions From Yield Supplement Account
1. To Collection Account 0.00
2. Investment Income to Seller (MARI) 300,000.00
3. Reduction in Specified Yield Supplement Account Balance to Seller (MARI) 2,500,000.00
----------------
4. Total Distributions From Yield Supplement Account 2,800,000.00
F. Total Distributions From All Accounts to:
1. Note Payment Account 22,070,430.91
2. Servicer (MMCA) 888,156.21
3. Seller (MARI) 2,800,000.00
4. Collection Account 50,000.00
5. Certificate Distribution Account 80,000.00
6. Reserve Account 3,594,412.88
7. Supplemental Reserve Account 0.00
8. Payahead Account 0.00
----------------
9. Total Distributions From All Accounts $ 29,483,000.00
==================
EXHIBIT B
[FORM OF STATEMENT TO NOTEHOLDERS]
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.
Statement to Noteholders
MMCA Auto Owner Trust 1998-1
Hypothetical Results for the Period August 1, 1998 through August 31, 1998
Per Original
$1,000 Note
Aggregate or Certificate
------------------- ----------------
I. A. Distribution of Note Principal
1. Class A-1 18,700,000.00 93.50
2. Class A-2 0.00 0.00
3. Class A-3 0.00 0.00
4. Class B 0.00 0.00
B. Distribution of Certificate Principal 0.00 0.00
II. Distribution of Note Interest
A. Class A-1 811,922.22 4.06
B. Class A-2 993,055.56 3.97
C. Class A-3 1,310,589.00 4.07
D. Class B 254,864.13 4.22
III. Yield Supplement Amount 2,000,000.00 30.11
IV. Total Servicing Fee 775,156.21
V. Principal Balances and Pool Factors
A. Note Principal Balance
1. Class A-1 181,300,000.00 906.50
2. Class A-2 250,000,000.00 1,000.00
3. Class A-3 322,056,000.00 1,000.00
4. Class B 60,462,000.00 1,000.00
B. Note Pool Factors
1. Class A-1 0.9065000
2. Class A-2 1.0000000
3. Class A-3 1.0000000
4. Class B 1.0000000
C. Certificate Balance 97,669,451.88 1,000.00
D. Certificate Pool Factor 1.0000000
VI. Pool Balance at End of This Collection Period
A. Pool Balance 911,487,451.88
B. Level Pay Pool Balance 607,483,716.12
C. Last Scheduled Payment Pool Balance 304,003,735.76
VII. Carryover Shortfalls
A. Interest Carryover Shortfall
1. Class A-1 0.00 0.00
2. Class A-2 0.00 0.00
3. Class A-3 0.00 0.00
4. Class B 0.00 0.00
B. Principal Carryover Shortfall
1. Class A-1 0.00 0.00
2. Class A-2 0.00 0.00
3. Class A-3 0.00 0.00
4. Class B 0.00 0.00
VIII. Aggregate Realized Losses for This Collection Period 0.00
IX. Reserve Account Balance on Payment Date 4,994,693.88
X. Supplemental Reserve Account Balance on Payment Date 0.00
XI. Purchase Amount of Receivables Repurchased by Seller or Purchased by Servicer 0.00
XII. Amount of Advances for This Collection Period
1. Actuarial Advances 500,000.00
2. Last Scheduled Payment Advances 0.00
EXHIBIT C
[FORM OF STATEMENT TO CERTIFICATEHOLDERS]
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.
Statement to Certificateholders
MMCA Auto Owner Trust 1998-1
Hypothetical Results for the Period August 1, 1998 through August 31, 1998
Per Original
$1,000 Note
Aggregate or Certificate
------------------- ----------------
I. A. Distribution of Note Principal
1. Class A-1 18,700,000.00 93.50
2. Class A-2 0.00 0.00
3. Class A-3 0.00 0.00
4. Class B 0.00 0.00
B. Distribution of Certificate Principal 0.00 0.00
II. Distribution of Note Interest
A. Class A-1 811,922.22 4.06
B. Class A-2 993,055.56 3.97
C. Class A-3 1,310,589.00 4.07
D. Class B 254,864.13 4.22
III. Yield Supplement Amount 2,000,000.00 30.11
IV. Total Servicing Fee 775,156.21
V. Principal Balances and Pool Factors
A. Note Principal Balance
1. Class A-1 181,300,000.00 906.50
2. Class A-2 250,000,000.00 1,000.00
3. Class A-3 322,056,000.00 1,000.00
4. Class B 60,462,000.00 1,000.00
B. Note Pool Factors
1. Class A-1 0.9065000
2. Class A-2 1.0000000
3. Class A-3 1.0000000
4. Class B 1.0000000
C. Certificate Balance 97,669,451.88 1,000.00
D. Certificate Pool Factor 1.0000000
VI. Pool Balance at End of This Collection Period
A. Pool Balance 911,487,451.88
B. Level Pay Pool Balance 607,483,716.12
C. Last Scheduled Payment Pool Balance 304,003,735.76
VII. Carryover Shortfalls
A. Interest Carryover Shortfall
1. Class A-1 0.00 0.00
2. Class A-2 0.00 0.00
3. Class A-3 0.00 0.00
4. Class B 0.00 0.00
B. Principal Carryover Shortfall
1. Class A-1 0.00 0.00
2. Class A-2 0.00 0.00
3. Class A-3 0.00 0.00
4. Class B 0.00 0.00
VIII. Aggregate Realized Losses for This Collection Period 0.00
IX. Reserve Account Balance on Payment Date 4,994,693.88
X. Supplemental Reserve Account Balance on Payment Date 0.00
XI. Purchase Amount of Receivables Repurchased by Seller or Purchased by Servicer 0.00
XII. Amount of Advances for This Collection Period
1. Actuarial Advances 500,000.00
2. Last Scheduled Payment Advances 0.00
EXHIBIT D
[FORM OF YIELD SUPPLEMENT AGREEMENT]
August 1, 1998
MMCA Auto Receivables, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
`
Re: MMCA Auto Owner Trust 1998-1
Ladies and Gentlemen:
We hereby confirm arrangements made as of the date hereof with
you to be effective upon (i) receipt by us of the enclosed copy of this
letter agreement (as amended, supplemented or otherwise modified and in
effect from time to time, the "Yield Supplement Agreement"), executed by
you, and (ii) execution of the Purchase Agreement referred to below and
payment of the purchase price specified thereunder. Capitalized terms used
and not otherwise defined herein shall have the meanings assigned to such
terms in, or incorporated by reference into, the Purchase Agreement, dated
as of August 1, 1998 (as amended, supplemented or otherwise modified and
in effect from time to time, the "Purchase Agreement"), between Mitsubishi
Motors Credit of America, Inc., as seller (the "Seller"), and MMCA Auto
Receivables, Inc., as purchaser (the "Purchaser").
1. On or prior to the Determination Date preceding each Payment
Date, the Servicer shall notify the Purchaser and the Seller of the Yield
Supplement Amount for such Payment Date.
2. In consideration for the Purchaser entering into the
Purchase Agreement and the purchase price paid to the Seller for the
Receivables under the Purchase Agreement, we agree to make a payment of the
Yield Supplement Amount to the Purchaser, or to the pledgee of the assignee
of the Purchaser referred to in Section 5 hereof, on the Business Day prior
to each Payment Date.
3. All payments pursuant hereto shall be made by federal wire
transfer (same day) funds or in immediately available funds, to such
account as the Purchaser or the pledgee of the assignee of the Purchaser
referred to in Section 5 hereof, may designate in writing to the Seller,
prior to the relevant Payment Date.
4. Our agreements set forth in this Yield Supplement Agreement
are our primary obligations and such obligations are irrevocable, absolute
and unconditional, shall not be subject to any counterclaim, setoff or
defense and shall remain in full force and effect without regard to, and
shall not be released, discharged or in any way affected by, any
circumstances or condition whatsoever.
5. Pursuant to the Sale and Servicing Agreement, the Purchaser
will sell, transfer, assign and convey its interest in this Yield
Supplement Agreement to MMCA Auto Owner Trust 1998-1 (the "Trust"), and the
Seller hereby acknowledges and consents to such sale, transfer, assignment
and conveyance. Concurrent with such sale, transfer, assignment and
conveyance, pursuant to the Indenture, the Trust will pledge its rights
under this Yield Supplement Agreement, along with certain other assets of
the Trust, to Bank of Tokyo - Mitsubishi Trust Company, as Indenture
Trustee, to secure its obligations under the Notes and the Indenture, and
the Seller hereby acknowledges and consents to such pledge. The Seller
hereby agrees, for the benefit of the Trust, that following such sale,
transfer, assignment, conveyance and pledge, this Yield Supplement
Agreement shall not be amended, modified or terminated without the consent
of Wilmington Trust Company, as Owner Trustee on behalf of the Trust, and,
prior to the payment in full of the Notes, the Indenture Trustee.
6. This Yield Supplement Agreement will be governed by, and
construed in accordance with, the laws of the State of New York.
7. Except as otherwise provided herein, all notices pursuant to
this Yield Supplement Agreement shall be in writing and shall be effective
upon receipt thereof. All notices shall be directed as set forth below, or
to such other address or to the attention of such other person as the
relevant party shall have designated for such purpose in a written notice.
If to the Purchaser:
MMCA Auto Receivables, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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: President
Agreed and accepted as of
the date first above written:
MMCA AUTO RECEIVABLES, INC.,
as Purchaser
By:___________________________
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Treasurer