Exhibit 4.2
SALE AND SERVICING AGREEMENT
by and among
MMCA AUTO OWNER TRUST 2002-5,
as the Trust
MMCA AUTO RECEIVABLES TRUST II,
as Seller
and
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.,
as Servicer
Dated as of December 1, 2002
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS AND USAGE.................................................................................1
Section 1.1 Definitions............................................................................1
Section 1.2 Business Day Certificate...............................................................1
ARTICLE II - TRUST PROPERTY.......................................................................................1
Section 2.1 Conveyance of Trust Property...........................................................1
Section 2.2 Representations and Warranties of the Seller as to the Receivables.....................3
Section 2.3 Repurchase upon Breach.................................................................8
Section 2.4 Custody of Receivable Files............................................................8
Section 2.5 Duties of Servicer as Custodian........................................................9
Section 2.6 Instructions; Authority to Act........................................................10
Section 2.7 Custodian's Indemnification...........................................................10
Section 2.8 Effective Period and Termination......................................................10
Section 2.9 Authorization to File Financing Statements............................................10
ARTICLE III - ADMINISTRATION AND SERVICING OF RECEIVABLES AND TRUST PROPERTY...................................11
Section 3.1 Duties of Servicer....................................................................11
Section 3.2 Collection and Allocation of Receivable Payments......................................14
Section 3.3 Realization upon Receivables..........................................................16
Section 3.4 Physical Damage Insurance.............................................................16
Section 3.5 Maintenance of Security Interests in Financed Vehicles................................16
Section 3.6 Covenants of Servicer.................................................................16
Section 3.7 Purchase by Servicer upon Breach......................................................17
Section 3.8 Servicing Compensation................................................................17
Section 3.9 Servicer's Certificate................................................................18
Section 3.10 Annual Statement as to Compliance; Notice of Event of Servicing Termination...........18
Section 3.11 Annual Independent Certified Public Accountants' Reports..............................18
Section 3.12 Access to Certain Documentation and Information Regarding Receivables.................19
Section 3.13 Reports to the Commission.............................................................19
Section 3.14 Reports to Rating Agencies............................................................19
ARTICLE IV - DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS...................19
Section 4.1 Accounts..............................................................................19
Section 4.2 Collections...........................................................................22
Section 4.3 Application of Collections............................................................23
Section 4.4 Advances..............................................................................23
Section 4.5 Additional Deposits...................................................................25
Section 4.6 Allocation of Total Available Funds...................................................25
Section 4.7 Reserve Account.......................................................................27
Section 4.8 Net Deposits..........................................................................28
Section 4.9 Statements to Noteholders and Certificateholders......................................29
Section 4.10 Control of Securities Accounts........................................................30
ARTICLE V - YIELD SUPPLEMENT LETTER OF CREDIT AND THE YIELD SUPPLEMENT ACCOUNT...................................30
Section 5.1 Yield Supplement Letter of Credit and the Yield Supplement Account....................30
ARTICLE VI - THE SELLER..........................................................................................32
Section 6.1 Representations, Warranties and Covenants of Seller...................................32
Section 6.2 Liability of Seller; Indemnities......................................................33
Section 6.3 Merger or Consolidation of, or Assumption of the Obligations of, Seller...............34
Section 6.4 Limitation on Liability of Seller and Others..........................................35
Section 6.5 Seller May Own Notes or Certificates..................................................35
ARTICLE VII - THE SERVICER.......................................................................................35
Section 7.1 Representations and Warranties of Servicer............................................35
Section 7.2 Liability of Servicer; Indemnities....................................................36
Section 7.3 Merger or Consolidation of, or Assumption of the Obligations of, Servicer.............38
Section 7.4 Limitation on Liability of Servicer and Others........................................38
Section 7.5 Servicer Not to Resign................................................................39
Section 7.6 Servicer May Own Notes or Certificates................................................39
ARTICLE VIII - SERVICING TERMINATION.............................................................................39
Section 8.1 Events of Servicing Termination.......................................................39
Section 8.2 Indenture Trustee to Act; Appointment of Successor Servicer...........................40
Section 8.3 Effect of Servicing Transfer..........................................................41
Section 8.4 Notification to Noteholders and Certificateholders....................................41
Section 8.5 Waiver of Past Events of Servicing Termination........................................42
ARTICLE IX - TERMINATION.........................................................................................42
Section 9.1 Optional Purchase of All Receivables..................................................42
ARTICLE X - MISCELLANEOUS PROVISIONS.............................................................................43
Section 10.1 Amendment.............................................................................43
Section 10.2 Protection of Title to Trust..........................................................44
Section 10.3 Representations of the Seller and the Trust...........................................46
Section 10.4 Governing Law.........................................................................46
Section 10.5 Notices...............................................................................46
Section 10.6 Severability of Provisions............................................................47
Section 10.7 Assignment............................................................................47
Section 10.8 Further Assurances....................................................................48
Section 10.9 No Waiver; Cumulative Remedies........................................................48
Section 10.10 Third-Party Beneficiaries.............................................................48
Section 10.11 Actions by Noteholder or Certificateholders...........................................48
Section 10.12 Counterparts..........................................................................48
Section 10.13 Agent for Service.....................................................................48
Section 10.14 No Bankruptcy Petition; Subordination; Claims Against Seller..........................49
Section 10.15 Limitation of Liability of Owner Trustee and Indenture Trustee........................49
SCHEDULES
Schedule of Receivables..................................................................................Schedule A
Locations of Receivable Files............................................................................Schedule B
EXHIBITS
Form of Servicer's Certificate............................................................................Exhibit A
Form of Statement to Noteholders..........................................................................Exhibit B
Form of Statement to Certificateholders...................................................................Exhibit C
Form of Yield Supplement Agreement....................................................................... Exhibit D
AND SERVICING AGREEMENT, dated as of December 1, 2002 (as amended,
supplemented or otherwise modified and in effect from time to time, this
"Agreement"), by and among MMCA AUTO OWNER TRUST 2002-5, a Delaware statutory
trust (the "Trust"), MMCA AUTO RECEIVABLES TRUST II, a Delaware statutory trust
(the "Seller"), and MITSUBISHI MOTORS CREDIT OF AMERICA, INC., a Delaware
corporation (the "Servicer").
WHEREAS, the Trust desires to purchase portfolios of receivables
arising in connection with motor vehicle retail installment sale contracts
generated by Mitsubishi Motors Credit of America, Inc. in the ordinary course of
its business and sold to the Seller as of the date hereof;
WHEREAS, the Seller is willing to sell such receivables to the Trust as
of the date hereof; and
WHEREAS, Mitsubishi Motors Credit of America, Inc. is willing to
service such receivables on behalf of the Trust;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I - DEFINITIONS AND USAGE
Section 1.1 Definitions. Except as otherwise specified herein or as the
context may otherwise require, capitalized terms used but not otherwise defined
herein are defined in Appendix A to the Indenture (the "Indenture"), dated as of
December 1, 2002, between MMCA Auto Owner Trust 2002-5, as issuer, and Bank of
Tokyo-Mitsubishi Trust Company, as indenture trustee (the "Indenture Trustee"),
which also contains rules as to usage that shall be applicable herein.
Section 1.2 Business Day Certificate. On the Closing Date (with respect
to the calendar year 2003) and thereafter, within 15 days prior to the end of
each succeeding calendar year while this Agreement remains in effect, the
Servicer shall deliver to the Indenture Trustee and to Wilmington Trust Company,
not in its individual capacity but solely as owner trustee (the "Owner
Trustee"), an Officer's Certificate specifying the days on which banking
institutions or trust companies in New York, New York, Wilmington, Delaware or
Los Angeles, California are authorized or obligated by law, executive order or
governmental decree to remain closed.
ARTICLE II - TRUST PROPERTY
Section 2.1 Conveyance of Trust Property. (a) In consideration of the
Trust's delivery to, or upon the written order of, the Seller of authenticated
Notes and Certificates, in authorized denominations in aggregate principal
amounts equal to the initial principal amount of the Notes and the Initial
Certificate Balance, respectively, the Seller hereby irrevocably sells,
transfers, assigns and otherwise conveys to the Trust, without recourse (subject
to the obligations herein), all right, title and interest of the Seller, whether
now owned or hereafter acquired, in, to and under the following:
(i) the Receivables;
(ii) with respect to Receivables that are Actuarial
Receivables, monies due thereunder after the Cutoff Date (including
Payaheads) and, with respect to Receivables that are Simple Interest
Receivables, monies received thereunder after the Cutoff Date;
(iii) the security interests in Financed Vehicles granted by
Obligors pursuant to the Receivables and any other interest of the
Seller in such Financed Vehicles;
(iv) all rights to receive proceeds with respect to the
Receivables from claims on any physical damage, theft, credit life or
disability insurance policies covering the related Financed Vehicles or
related Obligors;
(v) all rights to receive proceeds with respect to the
Receivables from recourse to Dealers thereon pursuant to Dealer
Agreements;
(vi) all of the Seller's rights to the Receivable Files that
relate to the Receivables;
(vii) the Trust Accounts and all amounts, securities,
financial assets, investments 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) all payments and proceeds with respect to the Receivables
held by MMCA;
(x) all property (including the right to receive Liquidation
Proceeds and Recoveries and Financed Vehicles and the proceeds thereof
acquired by the Seller pursuant to the terms of a Final Payment
Receivable), guarantees and other collateral securing a Receivable
(other than a Receivable purchased by the Servicer or repurchased by
the Seller);
(xi) all rebates of premiums and other amounts relating to
insurance policies and other items financed under the Receivables in
effect as of the Cutoff Date; and
(xii) all present and future claims, demands, causes of action
and choses in action in respect of any or all of the foregoing and all
payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all
proceeds of the conversion thereof, voluntary or involuntary, into cash
or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of
any and every kind and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part
of or are included in the proceeds of any of the foregoing.
(b) It is the intention of the Seller and the Trust that the transfer
of the Trust Property contemplated by Section 2.1(a) constitutes a sale of the
Trust Property from the Seller to the Trust, conveying good title to the Trust
Property free and clear of any liens and, in the event of the filing of a
bankruptcy petition by or against the Seller under any bankruptcy or similar
law, that the Trust Property shall not be part of the Seller's estate. However,
in the event that such transfer is deemed to be a pledge, the Seller hereby
grants to the Trust a first priority security interest in all of the Seller's
right, title and interest in, to and under the Trust Property, and all proceeds
thereof, to secure a loan deemed to have been made by the Trust to the Seller in
an amount equal to the sum of the initial principal amount of the Notes plus
accrued interest thereon and the Initial Certificate Balance.
(c) The sales, transfers, assignments and conveyances of the Trust
Property made under Section 2.1(a) shall not constitute and are not intended to
result in an assumption by the Trust of any obligation of the Seller to the
Obligors, the Dealers or any other Person in connection with the Receivables and
the other Trust Property or any agreement, document or instrument related
thereto.
Section 2.2 Representations and Warranties of the Seller as to the
Receivables. The Seller makes the following representations and warranties as to
the Receivables on which the Trust relies in accepting the Receivables. Such
representations and warranties speak as of the execution and delivery of this
Agreement, except in each case to the extent otherwise provided in the following
representations and warranties, but shall survive the sale, transfer and
assignment of the Receivables to the Trust and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
(i) Characteristics of Receivables. Each Receivable (a) shall
have been originated (x) in the United States of America by a Dealer
for the consumer or commercial sale of a Financed Vehicle in the
ordinary course of such Dealer's business or (y) by MMCA in connection
with the refinancing of a motor vehicle retail installment sale
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 an existing Dealer Agreement
with MMCA (unless such Receivable was originated by MMCA in connection
with a refinancing), and shall have been validly assigned by such
Dealer to MMCA in accordance with its terms (unless such Receivable was
originated by MMCA in connection with a refinancing), which in turn
shall have been validly assigned by MMCA to the Seller in accordance
with its terms, (b) shall have created or shall create a valid,
binding, subsisting and enforceable first priority security interest in
favor of MMCA on the related Financed Vehicle, which security interest
has been validly assigned by MMCA to the Seller, which in turn shall be
validly assigned by the Seller to the Trust and by the Trust to the
Indenture Trustee, (c) shall contain customary and enforceable
provisions such that the rights and remedies of the holder thereof
shall be adequate for realization against the collateral of the
benefits of the security, (d) in the case of Standard Receivables,
shall provide for monthly payments that fully amortize the Amount
Financed by maturity of the Receivable and yield interest at the APR,
(e) in the case of Balloon Payment Receivables and 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 and all accrued and
unpaid interest thereon, (g) is a retail installment sale contract, (h)
is secured by a new or used automobile or sports-utility vehicle and
(i) is an Actuarial Receivable or a Simple Interest Receivable (and may
also be a Balloon Payment Receivable or a Final Payment Receivable).
(ii) Schedule of Receivables. The information set forth in the
related Schedule of Receivables shall be true and correct in all
material respects as of the opening of business on the Cutoff Date and
no selection procedures believed to be adverse to the Noteholders or
the Certificateholders shall have been utilized in selecting the
Receivables from those receivables which meet the criteria contained
herein. The compact disk or other listing regarding the Receivables
made available to the Trust and its assigns (which compact disk or
other listing is required to be delivered as specified herein) is true
and correct in all respects.
(iii) Compliance with Law. Each Receivable and the sale of the
related Financed Vehicle shall have complied, at the time it was
originated or made, and shall comply on the Closing Date in all
material respects with all requirements of applicable Federal, state,
and local laws, and regulations thereunder, including, without
limitation, usury laws, the Federal Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Credit
Billing Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, the Federal Reserve
Board's Regulations B 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 pursuant to the Purchase
Agreement, each Receivable shall be secured by a validly perfected
first priority security interest in the related 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 such Financed
Vehicle for the benefit of the Trust (subject to any statutory or other
lien arising by operation of law after the Closing Date which is prior
to such security interest), or all necessary and appropriate action
with respect to such Receivables shall have been taken to perfect a
first priority security interest in such Financed Vehicle for the
benefit of the Trust.
(vii) Receivables in Force. No Receivable shall have been
satisfied, subordinated, or rescinded, nor shall any Financed Vehicle
have been released from the Lien granted by the related Receivable in
whole or in part, which security interest shall be assignable by MMCA
to the Seller and by the Seller to the Trust.
(viii) No Waiver. No provision of a Receivable shall have been
waived in such a manner that such Receivable fails to meet all of the
representations and warranties made by the Seller in this Section 2.2
with respect thereto.
(ix) No Defenses. No right of rescission, setoff,
counterclaim, or defense shall have been asserted or threatened with
respect to any Receivable.
(x) No Liens. To the best of the Seller's knowledge, no liens
or claims shall have been filed for work, labor, or materials relating
to a Financed Vehicle that shall be liens prior to, or equal or
coordinate with, the security interest in the Financed Vehicle granted
by the Receivable.
(xi) No Default; Repossession. Except for payment defaults
continuing for a period of not more than 30 days or payment defaults of
10% or less of a Scheduled 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. Each Contract shall require the related Obligor to
maintain physical damage insurance (which insurance shall not be force
placed insurance) covering the Financed Vehicle, in the amount
determined by MMCA in accordance with its customary procedures.
(xiii) Title. It is the intention of the Seller that each
transfer and assignment of the Receivables herein contemplated
constitute a sale of such Receivables from the Seller to the Trust and
that the beneficial interest in, and title to, such Receivables not be
part of the Seller's estate in the event of the filing of a bankruptcy
petition by or against the Seller under any bankruptcy law. No
Receivable has been sold, transferred, assigned, or pledged by the
Seller to any Person other than the Trust. Immediately prior to each
transfer and assignment of the Receivables herein contemplated, the
Seller had good and marketable title to such Receivables free and clear
of all Liens, encumbrances, security interests, and rights of others
and, immediately upon the transfer thereof, the Trust shall have good
and marketable title to such Receivables, free and clear of all Liens,
encumbrances, security interests, and rights of others; and the
transfer has been perfected by all necessary action under the Relevant
UCC.
(xiv) Valid Assignment. No Receivable shall have been
originated in, or shall be subject to the laws of, any jurisdiction
under which the sale, transfer, and assignment of such Receivable under
this Agreement or the Indenture or pursuant to transfers of the
Certificates shall be unlawful, void, or voidable. The Seller has not
entered into any agreement with any obligor that prohibits, restricts
or conditions the assignment of any portion of the Receivables.
(xv) All Filings Made. All filings (including, without
limitation, filings under the Relevant UCC) necessary in any
jurisdiction to give the Trust a first priority perfected security
interest in the Receivables, and to give the Indenture Trustee a first
priority perfected security interest therein, shall be made within 10
days of the Closing Date.
(xvi) Chattel Paper. Each Receivable constitutes "chattel
paper" as defined in the Relevant UCC.
(xvii) One Original. There shall be only one original executed
copy of each Receivable in existence.
(xviii) Principal Balance. Each Receivable had an original
principal balance (net of unearned precomputed finance charges) of not
more than $60,000, and a remaining Principal Balance as of the Cutoff
Date of not less than $100.
(xix) No Bankrupt Obligors. No Receivable was due from an
Obligor who, as of the Cutoff Date, was the subject of a proceeding
under the Bankruptcy Code of the United States or was bankrupt.
(xx) New and Used Vehicles. Approximately [ ]% of the Pool
Balance, constituting approximately [ ]% of the total number of the
Receivables, relate to new automobiles and sports-utility vehicles,
substantially all of which were manufactured or distributed by
Mitsubishi Motors. Approximately [ ]% of the Pool Balance, constituting
approximately [ ]% of the total number of Receivables, relate to used
automobiles and sports-utility vehicle, substantially all of which were
manufactured or distributed by Mitsubishi Motors. Approximately [ ]% of
the Pool Balance, constituting approximately [ ]% of the total number
of Receivables, relate to program automobiles and sports-utility
vehicles, substantially all of which were manufactured or distributed
by Mitsubishi Motors.
(xxi) Origination. Each Receivable shall have an origination
date during or after December 1996.
(xxii) Maturity of Receivables. Each Receivable shall have, as
of the Cutoff Date, not more than 72 remaining Scheduled Payments due
under the Receivable.
(xxiii) Weighted Average Number of Payments. As of the Cutoff
Date, the weighted average number of Scheduled Payments remaining until
the maturity of the Receivables shall be not more than 72 Scheduled
Payments.
(xxiv) Annual Percentage Rate. Each Receivable shall have an
APR of at least 0% and not more than 30%.
(xxv) Scheduled Payments. No Receivable shall have a payment
of which more than 10% of such payment is more than 30 days overdue as
of the Cutoff Date.
(xxvi) Location of Receivable Files. The Receivable Files
shall be kept at one or more of the locations listed in Schedule B
hereto.
(xxvii) Capped Receivables and Simple Interest Receivables.
Except to the extent that there has been no material adverse effect on
Noteholders or Certificateholders, each Capped Receivable has been
treated consistently by the Seller and the Servicer as a Simple
Interest Receivable and payments with respect to each Simple Interest
Receivable have been allocated consistently in accordance with the
Simple Interest Method.
(xxviii) Agreement. The representations and warranties of the
Seller in Section 6.1 are true and correct.
(xxix) Other Data. The tabular data and the numerical data
relating to the characteristics of the Receivables contained in the
Prospectus (as defined in the Purchase Agreement) are true and correct
in all material respects.
(xxx) Last Scheduled Payments. The aggregate Principal Balance
of the Last Scheduled Payments of Balloon Payment Receivables and Final
Payment Receivables, as a percentage of the aggregate Principal Balance
of the Receivables as of the Cutoff Date, shall be not greater than [
]%.
(xxxi) Receivable Yield Supplement Amounts. An amount equal to
the sum of all projected Yield Supplement Amounts for all future
Payment Dates with respect to each Deferred Payment Receivable and each
Deferred Balloon Payment Receivable, assuming that no prepayments are
made on the Deferred Payment Receivable or the Deferred Balloon Payment
Receivable, as the case may be, has been deposited to the Yield
Supplement Account on or prior to the Closing Date.
(xxxii) Prepaid Receivables. No Receivable shall have been
pre-paid by more than six monthly payments as of the Cutoff Date.
(xxxiii) Limited Credit Experience. The aggregate principal
balance of the Receivables on which the Obligor has limited credit
experience, as a percentage of the aggregate principal balance of all
Receivables, in each case as of the Cutoff Date, shall be not greater
than [ ]%.
(xxxiv) Deferred Payment Receivables. As of the Cutoff Date,
$[ ] total Principal Balance of Deferred Payment Receivables included
in the Receivables had a first payment that, as of the date of
inception of the Receivable, was deferred for 300 days or greater. As
of the Cutoff Date, $[ ] total Principal Balance of Deferred Payment
Receivables included in the Receivables had a first payment that, as of
the date of inception of the Receivable, was deferred for a period of
between 200 and 299 days. As of the Cutoff Date $[ ] total Principal
Balance of Deferred Payment Receivables included in the Receivables had
a first payment that, as of the date of inception of the Receivable,
was deferred for a period of between 100 and 199 days. As of the Cutoff
Date $[ ] total Principal Balance of Deferred Payment Receivables
included in the Receivables had a first payment that, as of the date of
inception of the Receivable, was deferred for a period of 99 days or
less. In no case will the first payment on a Deferred Payment
Receivable be due later than 450 days after the date of inception of
that Receivable.
(xxxv) Long Deferment Period Receivables. As of the Cutoff
Date $[ ] total Principal Balance of Deferred Payment Receivables
included in the Receivables were Long Deferment Period Receivables.
(xxxvi) Deferred Balloon Payment Receivables. As of the Cutoff
Date, $[ ] total principal balance of Deferred Balloon Payment
Receivables were originated with a deferral period of 90 days, and $[ ]
total principal balance of Deferred Balloon Payment Receivables were
originated with a deferral period of 180 days.
(xxxvii) Modified Receivables. The APR of any Modified
Receivable is equal to the APR of the related Deferred Payment
Receivable. The date on which the final Scheduled Payment is due on a
Modified Receivable is not different than the date set forth in the
related Contract as the date on which the final Scheduled Payment under
such Receivable is due. No Deferred Payment Receivable became a
Modified Receivable after 90 days following the date the first
Scheduled Payment on the Receivable was due.
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 60th day after the date on which the Seller
becomes aware of, or receives written notice from the Owner Trustee or the
Servicer of, such breach or failure, and such breach or failure materially and
adversely affects the interest of the Trust in a Receivable, the Seller shall
repurchase from the Trust such Receivable, on the Payment Date immediately
following such Collection Period. In consideration of the repurchase of a
Receivable hereunder, the Seller shall remit the Purchase Amount of such
Receivable in the manner specified in Section 4.5(a). The sole remedy of the
Trust, the Owner Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders with respect to a breach or failure to be true of the
representations and warranties made by the Seller pursuant to Section 2.2 shall
be to require the Seller to repurchase Receivables pursuant to this Section 2.3
and to enforce the obligation of MMCA to the Seller to repurchase such
Receivable pursuant to the Purchase Agreement. Neither the Owner Trustee nor the
Indenture Trustee shall have any duty to conduct an affirmative investigation as
to the occurrence of any condition requiring the repurchase of any Receivable
pursuant to this Section 2.3 or the eligibility of any Receivable for purposes
of this Agreement.
Section 2.4 Custody of Receivable Files. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Trust, upon
the execution and delivery of this Agreement, hereby revocably appoints the
Servicer as its agent, and the Servicer hereby accepts such appointment, to act
as custodian on behalf of the Trust and the Indenture Trustee of the following
documents or instruments, which are hereby constructively delivered to the
Indenture Trustee, as pledgee of the Trust pursuant to the Indenture, 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
tape, microfiche or other electronic medium;
(iii) the original certificate of title or such other
documents that the Servicer or MMCA shall keep on file, in accordance
with its customary practices and procedures, evidencing the security
interest of MMCA in the Financed Vehicle;
(iv) documents evidencing the existence, at the time of
origination of the Receivable, of any insurance covering the Financed
Vehicle; and
(v) any and all other documents (including any computer tape,
microfiche or other electronic medium) 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 Trust and the Indenture Trustee confirming that the Servicer
has received, on behalf of the Trust and the Indenture Trustee, all the
documents and instruments necessary for the Servicer to act as the agent of the
Trust and the Indenture Trustee for the purposes set forth in this Section 2.4,
including the documents referred to herein, and the Trust, the Owner Trustee and
the Indenture Trustee are hereby authorized to rely on such Officer's
Certificate.
Section 2.5 Duties of Servicer as Custodian (a)Safekeeping. The
Servicer, in its capacity as custodian, shall hold the Receivable Files for the
benefit of the Trust and the Indenture Trustee and maintain such accurate and
complete accounts, records, and computer systems pertaining to each Receivable
File as shall enable the Servicer and the Trust to comply with the terms and
provisions of this Agreement, and the Indenture Trustee to comply with the terms
and conditions of the Indenture. In performing its duties as custodian, the
Servicer shall act with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to the receivable files
relating to all comparable motor vehicle receivables that the Servicer services
for itself or others. In accordance with its customary practices and procedures
with respect to its retail installment sale contracts, the Servicer shall
conduct, or cause to be conducted, periodic audits of the Receivable Files held
by it under this Agreement, and of the related accounts, records, and computer
systems, in such a manner as shall enable the Trust or the Indenture Trustee to
verify the accuracy of the Servicer's record keeping. The Servicer shall
promptly report to the Owner Trustee and the Indenture Trustee any failure on
its part to hold the Receivable Files and maintain its accounts, records, and
computer systems as herein provided and promptly take appropriate action to
remedy any such failure. Nothing herein shall be deemed to require an initial
review or any periodic review by the Trust, the Owner Trustee or the Indenture
Trustee of the Receivable Files and none of the Trust, the Owner Trustee and the
Indenture Trustee shall be liable or responsible for any action or failure to
act by the Servicer in its capacity as custodian hereunder.
(b) Maintenance of and Access to Records. The Servicer shall maintain
each Receivable File at one of its offices specified in Schedule B to this
Agreement, or at such other office as shall be specified to the Trust and the
Indenture Trustee by written notice not later than 90 days after any change in
location. The Servicer shall make available to the Trust and the Indenture
Trustee or its duly authorized representatives, attorneys, or auditors a list of
locations of the Receivable Files, and the related accounts, records, and
computer systems maintained by the Servicer at such times as the Trust or the
Indenture Trustee shall instruct.
(c) Release of Documents. Upon written instructions from the Indenture
Trustee, the Servicer shall release any document in the Receivable Files to the
Indenture Trustee, the Indenture Trustee's agent, or the Indenture Trustee's
designee, as the case may be, at such place or places as the Indenture Trustee
may designate, as soon thereafter as is practicable. Any document so released
shall be handled by the Indenture Trustee with due care and returned to the
Servicer for safekeeping as soon as the Indenture Trustee or its agent or
designee, as the case may be, shall have no further need therefor.
(d) Title to Receivables. The Servicer agrees that, in respect of any
Receivable held by the Servicer as custodian hereunder, the Servicer will not at
any time have or in any way attempt to assert any interest in such Receivable or
the related Receivable File, other than for collecting or enforcing the
Receivable for the benefit of the Trust and that the entire equitable interest
in such Receivable and the related Receivable File shall at all times be vested
in the Trust.
Section 2.6 Instructions; Authority to Act. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by a Responsible 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 Responsible Officer to act and shall be
considered in full force and effect until receipt by the Servicer of written
notice to the contrary given by the Indenture Trustee.
Section 2.7 Custodian's Indemnification. The Servicer, in its capacity
as custodian, shall indemnify and hold harmless the Trust, the Owner Trustee and
the Indenture Trustee and each of their respective officers, directors,
employees and agents from and against any and all liabilities, obligations,
losses, compensatory damages, payments, costs or expenses (including legal fees
if any) of any kind whatsoever that may be imposed on, incurred, or asserted
against the Trust, the Owner Trustee and the Indenture Trustee or any of their
respective officers, directors, employees and agents as the result of any act or
omission by the Servicer relating to the maintenance and custody of the
Receivable Files; provided, however, that the Servicer shall not be liable
hereunder to the Owner Trustee to the extent, but only to the extent, that such
liabilities, obligations, losses, compensatory damages, payments, costs or
expenses result from the willful misfeasance, bad faith, or negligence of the
Owner Trustee and shall not be liable hereunder to the Indenture Trustee to the
extent, but only to the extent, that such liabilities, obligations, losses,
compensatory damages, payments, costs or expenses result from the willful
misfeasance, bad faith, or negligence of the Indenture Trustee.
Section 2.8 Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the 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.
Section 2.9 Authorization to File Financing Statements. The Seller
hereby authorizes the filing of any financing statements or continuation
statements, and amendments to financing statements, in any jurisdictions and
with any filing offices as the Trust may determine, in its sole discretion, are
necessary or advisable to perfect the security interest granted to the Trust in
connection herewith. Such financing statements may describe the collateral in
the same manner as described in any security agreement or pledge agreement
entered into by the parties in connection herewith or may contain an indication
or description of collateral that describes such property in any other manner as
the Trust may determine, in its sole discretion, is necessary, advisable or
prudent to ensure the perfection of the security interest in the collateral
granted to the Trust in connection herewith including, without limitation,
describing such property as "all assets" or "all personal property."
ARTICLE III - ADMINISTRATION AND SERVICING OF
RECEIVABLES AND TRUST PROPERTY
Section 3.1 Duties of Servicer. (a) The Servicer, acting alone and/or
through subservicers as provided in this Section 3.1, shall administer the
Receivables with reasonable care. The Servicer's duties shall include, but not
be limited to, the collection and posting of all payments, responding to
inquiries by Obligors on the Receivables, or by federal, state, or local
governmental authorities, investigating delinquencies, reporting tax information
to Obligors, furnishing monthly and annual statements to the Owner Trustee and
the Indenture Trustee with respect to distributions, providing collection and
repossession services in the event of Obligor default, coordinating or arranging
inspection of Financed Vehicles relating to Final Payment Receivables at the end
of the related Contract term, refinancing or selling Financed Vehicles relating
to Final Payment Receivables at the end of the related Contract term depending
upon the options chosen by the Obligors and making Advances pursuant to Sections
4.4(a) and (c). The Servicer shall also administer and enforce all rights and
responsibilities of the holder of the Receivables provided for in the Dealer
Agreements, to the extent that such Dealer Agreements relate to the Receivables,
the Financed Vehicles or the Obligors. In performing its duties as Servicer
hereunder, the Servicer will exercise that degree of skill and attention that
the Servicer exercises with respect to all comparable motor vehicle receivables
that it services for itself or others. Subject to Section 3.2, the Servicer
shall follow its customary standards, policies, practices and procedures in
performing its duties hereunder as Servicer. Without limiting the generality of
the foregoing, the Servicer is hereby authorized and empowered to execute and
deliver, on behalf of itself, the Trust, the Owner Trustee, the Indenture
Trustee, the Certificateholders, the Noteholders or any one or more of them, any
and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the
Receivables or to the Financed Vehicles, all in accordance with this Agreement;
provided, however, that notwithstanding the foregoing, the Servicer shall not,
except pursuant to an order from a court of competent jurisdiction, release an
Obligor from payment of any unpaid amount under any Receivable or waive the
right to collect the unpaid balance (including accrued interest) of any
Receivable from the Obligor, except in connection with a de minimis deficiency,
Excess Wear and Tear, Excess Mileage or disposition fees which the Servicer
would not attempt to collect in accordance with its customary procedures, in
which event the Servicer shall indemnify the Trust for such deficiency, Excess
Wear and Tear, Excess Mileage or disposition fee. If the Servicer shall commence
a legal proceeding to enforce a Receivable, the Owner Trustee shall thereupon be
deemed to have automatically assigned such Receivable to the Servicer, which
assignment shall be solely for purposes of collection. If in any enforcement
suit or legal proceeding it shall be held that the Servicer may not enforce a
Receivable on the ground that it shall not be a real party in interest or a
holder entitled to enforce the Receivable, the Owner Trustee shall, at the
Servicer's expense and direction, take steps to enforce the Receivable,
including bringing suit in its name or the names of the Indenture Trustee, the
Certificateholders, the Noteholders or any of them. The Owner Trustee shall
execute and deliver to the Servicer any powers of attorney and other documents
as shall be prepared by the Servicer and reasonably necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties
hereunder. The Servicer, at its expense, shall obtain on behalf of the Trust or
the Owner Trustee all licenses, if any, required by the laws of any jurisdiction
to be held by the Trust or the Owner Trustee in connection with ownership of the
Receivables, and shall make all filings and pay all fees as may be required in
connection therewith during the term hereof.
The Servicer may enter into subservicing agreements with one or more
subservicers for the servicing and administration of certain of the Receivables
and may perform its duties as Servicer hereunder utilizing the employees of
MMSA. Notwithstanding anything to the contrary herein, the Servicer shall remain
fully liable hereunder for the performance of the duties of Servicer, including
such duties as may be performed by employees of MMSA or by the subservicer. In
addition, the subservicer shall be and shall remain, for so long as it is acting
as subservicer, an Eligible Servicer, and any fees paid to the subservicer shall
be paid by the Servicer and not out of the proceeds of the Trust, and the
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 subservicing agreement providing for a successor subservicer
shall 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 successor
subservicer have agreed.
(c) The Servicer shall be entitled to terminate any subservicing
agreement in accordance with the terms and conditions of any subservicing
agreement and without any limitation by virtue of this Agreement; provided,
however, that, in the event of termination of any subservicing agreement by the
Servicer, the Servicer shall either act directly as Servicer of the related
Receivables or enter into a subservicing agreement with a successor subservicer
which will be bound by the terms of the related subservicing agreement.
(d) As a condition to the appointment of any subservicer, the Servicer
shall notify the Owner Trustee, the Indenture Trustee and the Rating Agencies in
writing before such assignment becomes effective and such subservicer shall be
required to execute and deliver an instrument in which it agrees that, for so
long as it acts as subservicer of the Receivables and the other Trust Property
being serviced by it, the covenants, conditions, indemnities, duties,
obligations and other terms and provisions of this Agreement applicable to the
Servicer hereunder shall be applicable to it as subservicer, that it shall be
required to perform its obligations as subservicer for the benefit of the Trust
as if it were Servicer hereunder (subject, however, to the right of the Servicer
to direct the performance of such obligations in accordance with this Agreement)
and that, notwithstanding any provision of a subservicing agreement to the
contrary, such subservicer shall be directly liable to the Owner Trustee and the
Trust (notwithstanding any failure by the Servicer to perform its duties and
obligations hereunder) for the failure by such subservicer to perform its
obligations hereunder or under any subservicing agreement, and that
(notwithstanding any failure by the Servicer to perform its duties and
obligations hereunder) the Owner Trustee may enforce the provisions of this
Agreement and any subservicing agreement against the subservicer for the benefit
of the Trust, without diminution of such obligations or liabilities by virtue of
any subservicing agreement, by virtue of any indemnification provided thereunder
or by virtue of the fact that the Servicer is primarily responsible hereunder
for the performance of such duties and obligations, as if a subservicer alone
were servicing and administering, under this Agreement, the Receivables and the
other Trust Property being serviced by it under the subservicing agreement.
(e) Notwithstanding any subservicing agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer or
a subservicer or reference to actions taken through such Persons or otherwise,
the Servicer shall remain obligated and liable to the Trust and the Owner
Trustee for the servicing and administering of the Receivables and the other
Trust Property in accordance with the provisions of this Agreement (including
for the deposit of payments received by a subservicer, irrespective of whether
such payments are actually remitted to the Servicer or deposited in the
Collection Account by such subservicer, provided that if such amounts are so
deposited, the Servicer shall have no further obligation to do so) without
diminution of such obligation or liability by virtue of such subservicing
agreements or arrangements or by virtue of indemnification from a subservicer,
to the same extent and under the same terms and conditions as if the Servicer
alone were servicing and administering the Receivables and the other Trust
Property. The Servicer shall be entitled to enter into any agreement with a
subservicer for indemnification of the Servicer and nothing contained in this
Agreement shall be deemed to limit or modify such indemnification.
(f) In the event the Servicer for any reason no longer shall 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.
(g) The Servicer shall be required to provide a computer tape or
compact disk each month to Lewtan Technologies, Inc. containing information
relating to the Receivables, including the name, address and telephone number of
each Obligor and the balance on the Receivables. Lewtan Technologies, Inc. shall
provide a copy of the tape or disk to the Indenture Trustee, the Indenture
Trustee's agent, or the Indenture Trustee's designee upon the written request of
the Indenture Trustee. Lewtan Technologies, Inc. shall be paid a fee for such
services and shall be reimbursed for any expenses incurred by it in connection
with such services. The Servicer shall pay these amounts from its monthly
Servicing Fee.
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 shall 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:
(i) in the case of a Deferred Payment Receivable or a Deferred
Balloon Payment Receivable upon which the related Obligor has made one
or more partial pre-payments on or prior to the date on which the first
Scheduled Payment is due under the related Contract, the Servicer may,
at any time on or before 90 days after that first Scheduled Payment is
due, modify the terms of the Receivable including by reducing the
amount of each Scheduled Payment; provided, that the Servicer may not
change (x) the APR of such Receivable, and (y) the date on which the
final Scheduled Payment under the Receivable is due from the date set
forth in the related Contract as the date on which such final Scheduled
Payment shall be due (any such Receivable, a "Modified Receivable");
and
(ii) 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 [ ] and that such
extensions, in the aggregate, do not exceed two months for each 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
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 10 days of receipt of such request).
(e) If the Obligor under any Balloon Payment Receivable or 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 Balloon Payment Receivable or 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 10 days of receipt of such
request). If MMCA is no longer the Servicer, the Trust or any Holder of the
Certificates may make arrangements for the successor Servicer or another party
to provide refinancing of Last Scheduled Payments to Obligors who desire to
satisfy the Last Scheduled Payment through refinancing and who meet such party's
credit criteria, and any reasonable costs and expenses of the successor Servicer
or such third party in determining whether to provide such refinancing shall be
payable from amounts, if any, which would otherwise be released from the Reserve
Account and paid to the Seller.
Section 3.3 Realization upon Receivables. (a) On behalf of the Trust,
the Servicer shall use reasonable efforts, in accordance with the standard of
care required by Section 3.1, to repossess or otherwise convert the ownership of
each Financed Vehicle securing a Defaulted Receivable. In taking such action,
the Servicer shall follow such customary and usual practices and procedures as
it shall deem necessary or advisable in its servicing of comparable automotive
receivables, and as are otherwise consistent with the standard of care required
under Section 3.1, which shall include the exercise of any rights of recourse to
Dealers under the Dealer Agreements. The Servicer shall be entitled to recover
all reasonable expenses incurred by it in the course of repossessing and
liquidating a Financed Vehicle into cash proceeds, but only out of the cash
proceeds of such Financed Vehicle and any deficiency obtained from the Obligor.
The foregoing shall be subject to the provision that, in any case in which a
Financed Vehicle shall have suffered damage, the Servicer shall not expend funds
in connection with the repair or the repossession of such Financed Vehicle
unless it shall determine in its discretion that such repair and/or repossession
will increase the Liquidation Proceeds (or Recoveries) of the related Receivable
by an amount equal to or greater than the amount of such expenses.
(b) If the Servicer elects to commence a legal proceeding to enforce a
Dealer Agreement, the act of commencement shall be deemed to be an automatic
assignment from the Trust to the Servicer of the rights of recourse under such
Dealer Agreement. If, however, in any enforcement suit or legal proceeding, it
is held that the Servicer may not enforce a Dealer Agreement on the grounds that
it is not a real party in interest or a Person entitled to enforce the Dealer
Agreement, the Owner Trustee, at the Servicer's expense and direction, shall
take such steps as the Servicer deems necessary to enforce the Dealer Agreement,
including bringing suit in its name or the names of the Indenture Trustee, the
Certificateholders, the Noteholders or any of them.
Section 3.4 Physical Damage Insurance. The Servicer shall follow its
customary servicing procedures to determine whether or not each Obligor shall
have maintained physical damage insurance covering the related Financed Vehicle.
Section 3.5 Maintenance of Security Interests in Financed Vehicles. The
Servicer, in accordance with the standard of care required under Section 3.1,
shall take such steps as are necessary to maintain perfection of the security
interest created by each Receivable in the related Financed Vehicle. The Trust
hereby authorizes the Servicer, and the Servicer hereby agrees, to take such
steps as are necessary to re-perfect such security interest on behalf of the
Trust and the Indenture Trustee in the event the Servicer receives notice of, or
otherwise has actual knowledge of, the relocation of a Financed Vehicle or for
any other reason.
Section 3.6 Covenants of Servicer. The Servicer hereby makes the
following covenants:
(a) Security Interest to Remain in Force. The Financed Vehicle securing
each Receivable will not be released from the security interest granted by the
Receivable in whole or in part, except as contemplated herein.
(b) No Impairment. The Servicer will not (nor will it permit any
subservicer to) impair in any material respect the rights of the Trust, the
Owner Trustee, the Indenture Trustee, the Certificateholders or the Noteholders
in the Receivables or, subject to clause (c) below, otherwise amend or alter the
terms thereof if, as a result of such amendment or alteration, the interests of
the Trust, the Owner Trustee, the Indenture Trustee, the Certificateholders or
the Noteholders hereunder would be materially adversely affected.
(c) Amendments. The Servicer will not increase or decrease the number
or amount of Scheduled Payments or the Amount Financed under a Receivable, or
extend, rewrite or otherwise modify the payment terms of a Receivable, except
pursuant to Section 3.2(a).
Section 3.7 Purchase by Servicer upon Breach. The Seller, the Servicer
or the Owner Trustee, as the case may be, shall inform the other parties to this
Agreement promptly, in writing, upon the discovery of any breach of Section
3.2(a), 3.5 or 3.6. If the breach shall not have been cured by the last day of
the Collection Period which includes the 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(a). Except as provided in Section 7.2, the sole remedy of the Trust, the
Owner Trustee, the Indenture Trustee, the Certificateholders or the Noteholders
against the Servicer with respect to a breach pursuant to Section 3.2, 3.5 or
3.6 shall be to require the Servicer to repurchase Receivables pursuant to this
Section 3.7. Neither the Owner Trustee nor the Indenture Trustee shall have any
duty to conduct an affirmative investigation as to the occurrence of any
condition requiring the repurchase of any Receivable pursuant to this Section
3.7 or the eligibility of any Receivable for purposes of this Agreement.
Section 3.8 Servicing Compensation. The "Servicing Fee" with respect to
a Collection Period shall be an amount equal to the product of one-twelfth
(1/12) of the sum of (x) 1% of the aggregate Principal Balance of all
Receivables other than Deferred Payment Receivables and Deferred Balloon Payment
Receivables and (y) 0.25% of the aggregate Principal Balance of Deferred Payment
Receivables and Deferred Balloon Payment Receivables, in each case as of the
first day of such Collection Period. As additional servicing compensation, the
Servicer shall also be entitled to earnings (net of losses and investment
expenses) on amounts on deposit in the Payahead Account, disposition fees paid
with respect to Final Payment Receivables 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),
expenses incurred in connection with distributions and reports to the
Certificateholders and the Noteholders, and any fees and reimbursements for
expenses paid to Lewtan Technologies, Inc.), 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, the Swap Counterparty 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.
Upon written request of the Owner Trustee or the Indenture Trustee, 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 or the Indenture Trustee, as the case may be, 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, also upon written request of one of the
foregoing parties, each Receivable which became a Defaulted Receivable during
the related Collection Period. The Servicer shall deliver to the Rating Agencies
any information, to the extent it is available to the Servicer, that the Rating
Agencies reasonably request in order to monitor the Trust.
Section 3.10 Annual Statement as to Compliance; Notice of Event of
Servicing Termination. (a) The Servicer shall deliver to the Owner Trustee and
the Indenture Trustee, on or before March 31 of each year, commencing March 31,
2003, an Officer's Certificate, stating that (i) a review of the activities of
the Servicer during the preceding calendar year (or such shorter period, with
respect to 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 such shorter period with respect to the first such Officer's
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 shall be delivered by the
Indenture Trustee to each Noteholder, promptly following the Indenture Trustee's
receipt of such certificate, pursuant to Section 7.4 of the Indenture. In
addition, a copy of such certificate may be obtained by any Certificateholder by
a request in writing to the Owner Trustee or by any 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 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 March 31 of
each year, commencing March 31, 2003, a report addressed to the Board of
Directors of the Servicer with respect to the preceding calendar year (or such
shorter period, with respect to 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 sports-utility vehicle loans
serviced for others that such firm is required to report under the Program. Such
report shall also indicate that the firm is independent with respect to the
Seller and the Servicer within the meaning of the Code of Professional Ethics of
the American Institute of Certified Public Accountants. A copy of such report
shall be delivered by the Indenture Trustee to each Noteholder, promptly
following the Indenture Trustee's receipt of such report, pursuant to Section
7.4 of the Indenture. In addition, a copy of such report may be obtained by any
Certificateholder by a request in writing to the Owner Trustee, or by any Person
certifying that it is a Note Owner by a request in writing to the Indenture
Trustee, in either case addressed to the applicable Corporate Trust Office.
Section 3.12 Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide the Certificateholders, the Indenture
Trustee and the Noteholders with access to the Receivable Files in the cases
where the Certificateholders, the Indenture Trustee or the Noteholders shall be
required by applicable statutes or regulations to have access to such
documentation. Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the
Servicer. Nothing in this Section 3.12 shall affect the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors, and the failure of the Servicer to provide access to
information as a result of such obligation shall not constitute a breach of this
Section 3.12. Any Certificateholder or Noteholder, by its acceptance of a
Certificate or Note, as the case may be, shall be deemed to have agreed to keep
any information obtained by it pursuant to this Section confidential, except as
may be required by applicable law.
Section 3.13 Reports to the Commission. The Servicer shall, on behalf
of the Trust, cause to be filed with the Commission any periodic reports
required to be filed under the provisions of the Exchange Act , and the rules
and regulations of the Commission thereunder. The Seller shall, at its expense,
cooperate in any reasonable request made by the Servicer in connection with such
filings.
Section 3.14 Reports to Rating Agencies. The Servicer shall deliver to each
Rating Agency, at such address as each Rating Agency may request, a copy of all
reports or notices furnished or delivered pursuant to this Article and a copy of
any amendments, supplements or modifications to this Agreement and any
subservicing agreement and any other information reasonably requested by such
Rating Agency to monitor this transaction.
ARTICLE IV - DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
Section 4.1 Accounts. (a) The Servicer shall, prior to the Closing
Date, establish and maintain a segregated trust account in the name of the
Indenture Trustee, at a Qualified Institution or Qualified Trust Institution
(which shall initially be the corporate trust department of Bank of
Tokyo-Mitsubishi Trust Company), which shall be designated as the "Collection
Account." The Collection Account shall be held in trust for the benefit of the
Noteholders and the Certificateholders. The Collection Account shall be under
the sole dominion and control of the Indenture Trustee; provided, that the
Servicer may make deposits to and direct the Indenture Trustee in writing to
make withdrawals from the Collection Account in accordance with the terms of
this Agreement, the Indenture and the Trust Agreement. All monies deposited from
time to time in the Collection Account shall be held by the Indenture Trustee as
part of the Trust Property and all deposits to and withdrawals therefrom shall
be made only upon the terms and conditions of the Basic Documents.
If the Servicer is required to remit collections pursuant to the first
sentence of Section 4.2(a), 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 10 Business Days (or such longer period not to exceed 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 exclusive 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 10 Business Days
(or such longer period not to exceed 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 Trust 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 10
Business Days (or such longer period not to exceed 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 shall be
held in trust for the benefit of the Noteholders and the Certificateholders. The
Payahead Account shall be under the sole dominion and control of the Indenture
Trustee provided, that the Servicer may make deposits to and direct the
Indenture Trustee in writing to make withdrawals from the Payahead Account in
accordance with this Agreement and the Indenture. All monies deposited from time
to time in the Payahead Account shall be held by the Indenture Trustee as part
of the Trust Property and all deposits to and withdrawals therefrom shall be
made only upon the terms and conditions of the Basic Documents.
On the Closing Date, the Seller shall deposit an amount equal to the
Initial Payahead Account Deposit into the Payahead Account from the net proceeds
of the sale of the Notes and the Certificates.
If the Servicer is required to remit collections pursuant to the first
sentence of Section 4.2(a), 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
10 Business Days (or such longer period not to exceed 30 calendar days as to
which each Rating Agency may consent).
(e) Notwithstanding the provisions of clause (d) above, for so long as
(i) MMCA is the Servicer, (ii) the rating of MMCA's short-term unsecured debt is
at least "Prime-1" by ▇▇▇▇▇'▇, at least "A-1" by S&P and at least "F1" by Fitch
Ratings 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(h) that would require remittance of the Payaheads to the Payahead Account
unless the Owner Trustee or the Indenture Trustee has received written notice of
such event or circumstance from the Seller or the Servicer in an Officer's
Certificate or from the Holders of Notes 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 a
Responsible 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, but excluding payments with respect to Purchased
Receivables and amounts included in the Supplemental Servicing Fee), including
amounts treated as collections on Balloon Payment Receivables and 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 shall be deposited in the
Collection Account, pursuant to the preceding sentence for purposes of
administrative convenience only, pending 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.
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 paragraph. It is understood that such less frequent remittances may be
made only on the specific terms and conditions set forth below in this Section
4.2(a) 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(a), 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 a Responsible 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 the amounts actually collected with
respect to the Supplemental Servicing Fee and 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 Balloon Payment Receivable or 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 Balloon Payment Receivable or Final Payment
Receivable be applied first to accrued but unpaid interest thereon, second, to
the Level Pay Balance of such Receivable and third, to the principal portion of
the related Last Scheduled Payment.
Section 4.4 Advances. (a) As of the close of business on the last day
of each Collection Period, if the payments during such Collection Period by or
on behalf of the Obligor on or in respect of an Actuarial Receivable (other than
a Purchased Receivable) after application under Section 4.3 shall be less than
the Scheduled Payment, the Payahead Balance of such Receivable shall be applied
by the Indenture Trustee to the extent of the shortfall, and such Payahead
Balance shall be reduced accordingly. Subject to the last sentence of this
Section 4.4(a), on each Payment Date the Servicer shall advance an amount equal
to the excess, if any, of the Scheduled Payment with respect to an Actuarial
Receivable over the sum of the (x) payments received on or in respect of such
Actuarial Receivable during the preceding Collection Period and (y) the Payahead
Balance with respect to such Actuarial Receivable (such advance, an "Actuarial
Advance"); provided that the Servicer shall make Actuarial Advances with respect
to the Last Scheduled Payment on Actuarial Receivables that are Final Payment
Receivables in accordance with Section 4.4(b). All applications of the Payahead
Balance of a Receivable by the Indenture Trustee and all Actuarial Advances by
the Servicer pursuant to this Section 4.4(a) shall be made based on the
information set forth in the Servicer's report attached to the Servicer's
Certificate delivered pursuant to Section 3.9. Notwithstanding anything in this
Agreement to the contrary, no successor to Mitsubishi Motors Credit of America,
Inc. as Servicer shall be required to make Actuarial Advances.
(b) As of the last day of the Collection Period in which the Last
Scheduled Payment with respect to a Final Payment Receivable is due, if the
payments during such Collection Period by or on behalf of the related Obligor on
or in respect of such Last Scheduled Payment after application under Section
4.3(a) and, in the case of an Actuarial Receivable, the amounts, if any, in the
Payahead Account allocable to such Last Scheduled Payment, shall be less than
the amount of such Last Scheduled Payment, the Servicer shall advance an amount
equal to the shortfall by depositing such amount into the Collection Account on
the related Payment Date (such advance, a "Last Scheduled Payment Advance").
Notwithstanding anything in this Agreement to the contrary, no successor to
Mitsubishi Motors Credit of America, Inc. as Servicer shall be required to make
Last Scheduled Payment Advances.
(c) (i) Upon either the written instructions of the Servicer or based
solely upon the information contained in the Servicer's Certificate delivered on
the related Determination Date pursuant to Section 3.9, the Indenture Trustee
shall release from amounts available in the Payahead Account, the amounts
required to be released from amounts available in the Payahead Account pursuant
to Sections 4.4(a) and (b) with respect to each Collection Period and shall
deposit such amounts in the Collection Account on the related Payment Date
pursuant to Section 4.5(a).
(ii) On each Payment Date, the Servicer shall deposit into the
Collection Account an amount equal to the aggregate amount of Actuarial
Advances required to be made with respect to related Collection Period.
(d) On each Payment Date, the Servicer shall instruct the Indenture
Trustee to withdraw from the Collection Account for distribution to the
Servicer, in immediately available funds, an amount equal to the sum of (i) the
aggregate amount of collections on Actuarial Receivables with respect to which
the Servicer has made Actuarial Advances in a prior Collection Period that are
allocable to the reimbursement of such Actuarial Advances pursuant to Section
4.3(a) and (ii) the aggregate amount of Actuarial Advances that the Servicer has
not been reimbursed for pursuant to this Section 4.4(d) or Section 4.5(b) 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).
Section 4.5 Additional Deposits. (a) The Indenture Trustee shall
deposit in the Collection Account amounts required pursuant to Section 4.4(c).
The Servicer shall deposit in the Collection Account amounts required to be
advanced by the Servicer pursuant to Sections 4.4(a) and (b). The Seller and the
Servicer shall deposit or cause to be deposited in the Collection Account the
aggregate Purchase Amount with respect to Purchased Receivables pursuant to
Section 2.3, 3.7 or 9.1. The Indenture Trustee shall deposit in the Collection
Account any amounts received pursuant to the Yield Supplement Agreement and any
amounts received from the Letter of Credit Bank or the Yield Supplement Account
pursuant to Article V on the date of receipt thereof. All such deposits with
respect to a Collection Period shall be made in immediately available funds no
later than 10:00 a.m., New York City time, on the Payment Date related to such
Collection Period.
(b) The Indenture Trustee shall, on or prior to 10:00 a.m., New York
City time, on the Payment Date relating to each Collection Period make the
following withdrawals from the Reserve Account in the following order of
priority (in each case as set forth in the Servicer's Certificate for such
Payment Date): (i) an amount equal to the Reserve Account Advance Draw Amount,
if any, calculated by the Servicer pursuant to Section 4.6(b), and shall pay
such amount to the Servicer and (ii) an amount equal to the Reserve Account TRP
Draw Amount, if any, calculated by the Servicer pursuant to Section 4.6(b), and
shall deposit to the Collection Account.
Section 4.6 Allocation of Total Available Funds. (a) On each Payment
Date, the Indenture Trustee shall cause to be made the following transfers and
distributions in immediately available funds in the amounts set forth in the
Servicer's Certificate for such Payment Date:
(i) To the Collection Account from the Payahead Account (if
the Monthly Remittance Conditions are not then satisfied) or otherwise
from amounts remitted by the Servicer pursuant to Section 4.1(h) an
amount equal to the sum of:
(1) the aggregate portion of Payaheads constituting
Scheduled Payments with respect to the preceding Collection
Period and prepayments in full received during the preceding
Collection Period, as required by Sections 4.3 and 4.4(a); and
(2) the Payahead Balance, if any, relating to any
Purchased Receivable;
(ii) From the Collection Account to the Payahead Account or,
if the Monthly Remittance Conditions are then satisfied, to the
Servicer, the aggregate Payaheads received during the preceding
Collection Period, as required by Section 4.3.
(b) On each Determination Date, the Servicer shall calculate the
Available Funds, the Total Servicing Fee, the Accrued Note Interest for each
Class of Notes, the Principal Distribution Amount, the Total Yield Supplement
Overcollateralization Amount, the Yield Supplement Amount, the Last Scheduled
Payment Principal Collections, in each case with respect to the following
Payment Date. In addition, on each Determination Date the Servicer shall
calculate the following amounts with respect to such Payment Date:
(i) an amount equal to the lesser of (x) the amount, if any,
by which the aggregate amount payable to the Servicer out of the
Collection Account on such Payment Date as reimbursement for Actuarial
Advances pursuant to Section 4.4(d) and for Last Scheduled Payment
Advances pursuant to Section 4.4(e) exceeds the amount in the
Collection Account available for such purpose (without giving effect to
any deposits thereto from amounts in the Reserve Account but giving
effect to all other deposits to the Collection Account required to be
made on such Payment Date) and (y) the Reserve Account Amount for such
Payment Date (without giving effect to any deposits of Total Available
Funds but giving effect to all other deposits to the Reserve Account on
such Payment Date) (the "Reserve Account Advance Draw Amount");
(ii) an amount equal to the lesser of (x) the amount, if any,
by which the Total Required Payment for such Payment Date exceeds the
Available Funds for such Payment Date and (y) an amount equal to the
Reserve Account Amount (without giving effect to any deposits of Total
Available Funds on such Payment Date) for such Payment Date, less the
Reserve Account Advance Draw Amount for such Payment Date (the "Reserve
Account TRP Draw Amount");
(iii) the Total Available Funds for such Payment Date;
(iv) the Reserve Account Amount with respect to such Payment
Date after giving effect to the Reserve Account Advance Draw Amount and
the Reserve Account TRP Draw Amount for such Payment Date, and the
difference, if any, between the Reserve Account Amount and the
Specified Reserve Balance for such Payment Date; and
(v) any Net Swap Payments, any Net Swap Receipts and any Swap
Termination Payments.
(c) On each Payment Date, the Servicer shall instruct the Indenture
Trustee (based on the information contained in the Servicer's Certificate
delivered on the related Determination Date pursuant to Section 3.9) to withdraw
the Total Available Funds on deposit in the Collection Account for the related
Collection Period and make the following payments and deposits for such Payment
Date in the following order of priority:
(i) to the Servicer, the Total Servicing Fee;
(ii) to the Swap Counterparty, the amount of any Net Swap
Payments then due under the Interest Rate Swap Agreement (exclusive of
Swap Termination Payments);
(iii) with the same priority and ratably, in accordance with
the outstanding principal balance of the Class A Notes and the amount
of any Swap Termination Payments due and payable by the Issuer to the
Swap Counterparty;
(1) to the Note Payment Account, the Accrued Note
Interest for the Class A Notes; and
(2) to the Swap Counterparty, any Swap Termination
Payments;
provided, that, if any amounts allocable to the Class A Notes are not needed to
pay interest due on such Notes, such amounts shall be applied to pay the
portion, if any, of any Swap Termination Payments remaining unpaid, pro rata
based on the amount of the Swap Termination Payments, and provided, further,
that if there are not sufficient funds available to pay the entire amount of the
Accrued Note Interest for the Class A Notes, the amounts available shall be
applied to the payment of such interest on the Class A Notes on a pro rata
basis;
(iv) to the Note Payment Account, the Accrued Note Interest
for the Class B Notes;
(v) to the Note Payment Account, the Accrued Note Interest for
the Class C Notes;
(vi) to the Note Payment Account, the Principal Distribution
Amount;
(vii) to the Reserve Account, the amount, if any, necessary to
reinstate the balance in the Reserve Account up to the Specified
Reserve Balance;
(viii) prior to the payment in full of the aggregate principal
balance of the Notes, to the Note Payment Account, any remaining
portion of the Total Available Funds; and
(ix) following the payment in full of the aggregate principal
balance of the Notes, to the Certificate Distribution Account, any
remaining portion of the Total Available Funds.
Notwithstanding the foregoing, following the occurrence and during the
continuation of an Event of Default which has resulted in an acceleration of the
Notes, on each Payment Date the Total Available Funds shall be deposited in the
Note Payment Account and applied in accordance with Section 2.8(f) of the
Indenture.
Section 4.7 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 Account 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(a). Pursuant to the Indenture, the Trust will pledge all of its right, title
and interest in, to and under the Reserve Account and the Reserve Account
Property to the Indenture Trustee on behalf of the Noteholders to secure its
obligations under the Notes and the Indenture.
The Reserve Account Property shall, to the extent permitted by
applicable law, rules and regulations, be invested, as directed in writing by
the Servicer, by the bank or trust company then maintaining the Reserve Account,
in Permitted Investments that mature not later than the Business Day immediately
preceding the next Payment Date, and such Permitted Investments shall be held to
maturity. All interest and other income (net of losses and investment expenses)
on funds on deposit in the Reserve Account shall, upon the written direction of
the Servicer, be paid to the Seller on any Payment Date to the extent that funds
on deposit therein, as certified by the Servicer, exceed the Specified Reserve
Balance. In the event the Reserve Account is no longer to be maintained at the
corporate trust department of Bank of Tokyo-Mitsubishi Trust Company, the
Servicer shall, with the Indenture Trustee's or Owner Trustee's assistance as
necessary, cause the Reserve Account to be moved to a Qualified Institution or a
Qualified Trust Institution within 10 Business Days (or such longer period not
to exceed 30 calendar days as to which each Rating Agency may consent).
(b) With respect to any Reserve Account Property:
(i) any Reserve Account Property that is a "financial asset"
as defined in Section 8-102(a)(9) of the Relevant 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 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 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 shall only be invested in securities or in
other assets which the Qualified Institution or Qualified Trust
Institution maintaining the Reserve Account agrees to treat as
"financial assets" as defined in Section 8-102(a)(9) of the Relevant
UCC.
(c) 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.
(d) Following the payment in full of the aggregate principal balance of
the Notes and the Certificate Balance and of all other amounts owing or to be
distributed hereunder or under the Indenture or the Trust Agreement to
Noteholders or Certificateholders and the termination of the Trust, any
remaining Reserve Account Property shall be distributed to the Seller.
Section 4.8 Net Deposits. As an administrative convenience only, unless
the Servicer is required to remit collections pursuant to the first sentence of
Section 4.2(a), 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, the Swap Counterparty 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 amount of the Net Swap Payments or Net Swap Receipts,
if any, due on that Payment Date;
(vi) the amount of any Swap Termination Payments due on that
Payment Date;
(vii) 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;
(viii) 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;
(ix) the amounts of the Interest Carryover Shortfall, if any,
for the next Payment Date and the portion thereof attributable to each
Class of Notes;
(x) the amount of the aggregate Realized Losses, if any, with
respect to the related Collection Period;
(xi) the balance of the Reserve Account on such Payment Date,
after giving effect to changes therein on such Payment Date;
(xii) the aggregate Purchase Amount of Receivables repurchased
by the Seller or purchased by the Servicer, if any, with respect to the
related Collection Period; and
(xiii) 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), (iv) and (vii) above shall be expressed as a dollar amount per $1,000
of original principal balance of a Certificate or Note, as applicable.
Section 4.10 Control of Securities Accounts. Notwithstanding anything
else contained herein, the Trust agrees that each of the Collection Account, the
Note Payment Account, the Reserve Account and the Yield Supplement Account will
only be established at a Qualified Institution or Qualified Trust Institution
that agrees substantially as follows: (i) it will comply with "entitlement
orders" (as defined in Section 8-102(a)(8) of the Relevant 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 Seller
or the Trust; (ii) until the termination of the Indenture, it will not enter
into any other agreement relating to any such account pursuant to which it
agrees to comply with entitlement orders of any Person other than the Indenture
Trustee; and (iii) all assets delivered or credited to it in connection with
such accounts and all investments thereof will be promptly credited to such
accounts.
ARTICLE V - YIELD SUPPLEMENT LETTER OF CREDIT AND
THE YIELD SUPPLEMENT ACCOUNT
Section 5.1 Yield Supplement Letter of Credit and the Yield Supplement
Account. (a) The Servicer shall, prior to the Closing Date, establish and
maintain a segregated trust account in the name of the Indenture Trustee at a
Qualified Institution or Qualified Trust Institution (which shall initially be
the corporate trust department of Bank of Tokyo-Mitsubishi Trust Company), which
shall be designated as the "Yield Supplement Account" (the Yield Supplement
Account (Account No. [ ]), together with the Payahead Account (Account No. [ ]),
the Collection Account (Account No. [ ]), the Note Payment Account (Account No.
[ ]) and the Reserve Account (Account No. [ ]), the "Trust Accounts"). Amounts
on deposit in the Yield Supplement Account will be used for the payment of any
Yield Supplement Amounts required to be paid on any Payment Date pursuant to the
Yield Supplement Agreement which MMCA has not paid as of such Payment Date. The
Yield Supplement Account shall be under the sole dominion and control of the
Indenture Trustee provided, that the Servicer may make deposits to and direct
the Indenture Trustee to make withdrawals from the Yield Supplement Account in
accordance with this Agreement and the Yield Supplement Agreement. On the
Closing Date, the Seller shall deposit an amount equal to the Initial Yield
Supplement Amount into the Yield Supplement Account from the net proceeds of the
sale of the Notes. To the extent, on any Payment Date, the amount on deposit in
the Yield Supplement Account (after giving effect to any withdrawals to be made
on such Payment Date, but exclusive of net investment income) is greater than
the Specified Yield Supplement Account Balance for such Payment Date, then, in
such event, the Servicer shall instruct the Indenture Trustee in writing to pay
such excess amount to the Seller.
All amounts held in the Yield Supplement Account shall be invested, as
directed in writing by the Servicer, by the bank or trust company then
maintaining the Yield Supplement Account in Permitted Investments that mature
not later than the Business Day immediately preceding the next Payment Date and
such Permitted Investments shall be held to maturity. All interest and other
income (net of losses and investment expenses) on funds on deposit in the Yield
Supplement Account shall be withdrawn from the Yield Supplement Account at the
written direction of the Servicer and shall be paid to the Seller. In the event
that the Yield Supplement Account is no longer to be maintained at the corporate
trust department of Bank of Tokyo-Mitsubishi Trust Company, the Servicer shall,
with the Indenture Trustee's assistance as necessary, cause the Yield Supplement
Account to be moved to a Qualified Institution or a Qualified Trust Institution
within 10 Business Days (or such longer period not to exceed 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 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 an Officer's Certificate of the Seller
that all conditions to the liquidation of the Yield Supplement Account
have been satisfied, any amounts on deposit in the Yield Supplement
Account shall, upon written request of the Seller, be paid to the
Seller.
(b) If a Yield Supplement Letter of Credit has been obtained by MMCA,
and if, with respect to any Collection Period, MMCA shall have failed to make or
cause to be made in full the remittance of the Yield Supplement Amount, upon
written notice by the Servicer of such failure (which notice shall be given no
later than 10:00 a.m. (New York City time) on the Payment Date for such
Collection Period), the Indenture Trustee shall draw on the Yield Supplement
Letter of Credit in accordance with the terms thereof, in the amount of the
shortfall between the amount of funds with respect to the Yield Supplement
Amount that are required to be remitted by MMCA with respect to the Yield
Supplement Agreement as set forth in the Servicer's Certificate and the amount
of funds actually so remitted as set forth in the Servicer's Certificate. Any
such draw on the Yield Supplement Letter of Credit shall be made after receipt
of the related Servicer's Certificate on or before 11:00 a.m. (New York City
time) on the Payment Date for such Collection Period. Upon receipt of a request
for a draw by the Indenture Trustee under the Yield Supplement Letter of Credit,
the Letter of Credit Bank is to promptly make a payment to the Indenture Trustee
in an amount equal to the Yield Supplement Amount (minus payments made on the
Yield Supplement Agreement), and the Indenture Trustee shall deposit into the
Collection Account pursuant to Section 4.5(a) 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.
ARTICLE VI - THE SELLER
Section 6.1 Representations, Warranties and Covenants of Seller. The
Seller makes the following representations, warranties and covenants on which
the Trust is deemed to have relied in acquiring the Trust Property. The
representations, warranties and covenants speak as of the Closing Date, and
shall survive the sale of the Trust Property to the Trust and the pledge thereof
by the Trust to the Indenture Trustee pursuant to the Indenture:
(a) Organization and Good Standing. The Seller has been duly
established and is validly existing as a statutory trust 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 business trust in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of property
or the conduct of its business shall require such qualifications.
(c) Power and Authority. The Seller has the power and authority to
execute and deliver this Agreement and the other Basic Documents to which it is
a party and to carry out their terms. The Seller has full power and authority to
sell and assign the property to be sold and assigned to and deposited with the
Trust and has duly authorized such sale and assignment to the Trust by all
necessary corporate action; and the execution, delivery, and performance of this
Agreement and the other Basic Documents to which it is a party have been 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
related thereto conveyed by the Seller to the Trust hereunder, in each case
enforceable against creditors of and purchasers from the Seller; and this
Agreement and the other Basic Documents to which the Seller is a party
constitute 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 trust or
amended and restated trust agreement of the Seller, or conflict with, or breach
any of the terms or provisions of, or constitute (with or without notice or
lapse of time or both) a default under, any indenture, agreement, mortgage, deed
of trust or other instrument to which the Seller is a party or by which the
Seller is bound or any of its properties are subject, or result in the creation
or imposition of any lien upon any of its properties pursuant to the terms of
any such indenture, agreement, mortgage, deed of trust or other instrument
(other than this Agreement), or violate any law, order, rule, or regulation,
applicable to the Seller or its properties, of any federal or state regulatory
body, any court, administrative agency, or other governmental instrumentality
having jurisdiction over the Seller or any of its properties.
(f) No Proceedings. There are no proceedings or investigations pending,
or, to the best knowledge of the Seller, threatened, before any court,
regulatory body, administrative agency, or other tribunal or governmental
instrumentality having jurisdiction over the Seller or its properties: (i)
asserting the invalidity of this Agreement, the Indenture, any of the other
Basic Documents, the Notes or the Certificates, (ii) seeking to prevent the
issuance of the Notes, the Certificates or the consummation of any of the
transactions contemplated by this Agreement, the Indenture or any of the other
Basic Documents, (iii) seeking any determination or ruling that might materially
and adversely affect the performance by the Seller of its obligations under, or
the validity or enforceability of, this Agreement, the Indenture, any of the
other Basic Documents, the Notes or the Certificates, or (iv) that may adversely
affect the Federal or Applicable Tax State income, excise, franchise or similar
tax attributes of the Notes or the Certificates.
(g) Florida Securities and Investor Protection Act. In connection with
the offering of the Notes in the State of Florida, the Seller hereby certifies
that it has complied with all provisions of Section 517.075 of the Florida
Securities and Investor Protection Act.
Section 6.2 Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement, and hereby agrees to the
following:
(a) The Seller shall indemnify, defend, and hold harmless the Trust,
the Owner Trustee and the Indenture Trustee from and against any taxes that may
at any time be asserted against any such Person with respect to, and as of the
date of, the sale of the Receivables to the Trust or the issuance and original
sale of the Notes or the Certificates, including any sales, gross receipts,
general corporation, tangible personal property, privilege, or license taxes
(but, in the case of the Trust, not including any taxes asserted with respect to
ownership of the Receivables or Federal or other Applicable Tax State income
taxes arising out of the transactions contemplated by this Agreement and the
other Basic Documents) and costs and expenses in defending against the same.
(b) The Seller shall indemnify, defend, and hold harmless the Trust,
the Owner Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders from and against any loss, liability or expense incurred by
reason of (i) the Seller's willful misfeasance, bad faith, or negligence (other
than errors in judgment) in the performance of its duties under this Agreement,
or by reason of reckless disregard of its obligations and duties under this
Agreement and (ii) the Seller's violation of Federal or state securities laws in
connection with the registration or the sale of the Notes or the Certificates.
(c) The Seller shall indemnify, defend and hold harmless the Owner
Trustee and the Indenture Trustee and their respective officers, directors,
employees and agents from and against all costs, expenses, losses, claims,
damages and liabilities arising out of or incurred in connection with the
acceptance or performance of the trusts and duties contained herein and in the
Trust Agreement, in the case of the Owner Trustee, and in the Indenture, in the
case of the Indenture Trustee, except to the extent that such cost, expense,
loss, claim, damage or liability: (i) shall be due to the willful misfeasance,
bad faith or negligence (except for errors in judgment) of the Owner Trustee or
the Indenture Trustee, as applicable; (ii) in the case of the Owner Trustee
shall arise from the breach by the Owner Trustee of any of its representations
or warranties set forth in Section 7.3 of the Trust Agreement or (iii) in the
case of the Indenture Trustee shall arise from the breach by the Indenture
Trustee of any of its representations and warranties set forth in the Indenture.
(d) The Seller shall pay any and all taxes levied or assessed upon all
or any part of the Owner Trust Estate.
(e) Indemnification under this Section 6.2 shall survive the
resignation or removal of the Owner Trustee or the Indenture Trustee and the
termination of this Agreement and shall include reasonable fees and expenses of
counsel and expenses of litigation. If the Seller shall have made any indemnity
payments pursuant to this Section 6.2 and the Person to or on behalf of whom
such payments are made thereafter shall collect any of such amounts from others,
such Person shall promptly repay such amounts to the Seller, without interest.
Section 6.3 Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person (i) into which the Seller may be merged or
consolidated, (ii) resulting from any merger, conversion, or consolidation to
which the Seller shall be a party or (iii) that may succeed by purchase and
assumption to all or substantially all of the business of the Seller, which
Person in any of the foregoing cases executes an agreement of assumption to
perform every obligation of the Seller under this Agreement, will be the
successor to the Seller under this Agreement without the execution or filing of
any document or any further act on the part of any of the parties to this
Agreement; provided, however, that (x) the Seller shall have delivered to the
Owner Trustee and the Indenture Trustee an Officer's Certificate and an Opinion
of Counsel each stating that such merger, conversion, consolidation or
succession and such agreement of assumption comply with this Section 6.3, and
(y) the Seller shall have delivered to the Owner Trustee and the Indenture
Trustee an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements and amendments
thereto have been authorized and filed that are necessary to fully preserve and
protect the interest of the Trust and the Indenture Trustee, respectively, in
the Receivables and the other Trust Property, and reciting the details of such
filings, or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to fully preserve and protect such interest. The Seller shall
provide notice of any merger, conversion, consolidation, or succession pursuant
to this Section 6.3 to the Rating Agencies. Notwithstanding anything herein to
the contrary, the execution of the foregoing agreement of assumption and
compliance with clauses (x) or (y) above shall be conditions to the consummation
of the transactions referred to in clauses (i), (ii) or (iii) above.
Section 6.4 Limitation on Liability of Seller and Others. The Seller,
and any director or officer or employee or agent of the Seller, may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Seller shall not be under any obligation to appear in, prosecute,
or defend any legal action that shall not be incidental to its obligations under
this Agreement, and that in its opinion may involve it in any expense or
liability.
Section 6.5 Seller May Own Notes or Certificates. The Seller, and any
Affiliate of the Seller, may in its individual or any other capacity become the
owner or pledgee of Notes not to exceed 20% (calculated on an aggregate basis of
the Seller and any Affiliates which are owners or pledgees of the Notes) of the
Outstanding Notes or Certificates with the same rights as it would have if it
were not the Seller or an Affiliate thereof, except as otherwise expressly
provided herein or in the other Basic Documents. Except as set forth herein or
in the other Basic Documents, Notes and Certificates so owned by or pledged to
the Seller or such controlling, controlled or commonly controlled Person shall
have an equal and proportionate benefit under the provisions of this Agreement
and the other Basic Documents, without preference, priority, or distinction as
among all of the Notes and Certificates.
ARTICLE VII - THE SERVICER
Section 7.1 Representations and Warranties of Servicer. The Servicer
makes the following representations and warranties on which the Trust is deemed
to have relied in acquiring the Trust Property, and such representations and
warranties speak as of the Closing Date, and shall survive the sale of the Trust
Property to the Trust and the pledge thereof by the Trust pursuant to the
Indenture:
(a) Organization and Good Standing. The Servicer has been duly
organized and is validly existing as a corporation in good standing under the
laws of the state of its incorporation, with power and authority to own its
properties and to conduct its business as such properties shall be currently
owned and such business is presently conducted, and had at all relevant times,
and shall have, power, authority, and legal right to acquire, own, sell, and
service the Receivables and to hold the Receivable Files as custodian on behalf
of the Trustee.
(b) Due Qualification. The Servicer is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of property
or the conduct of its business (including the servicing of the Receivables as
required by this Agreement) shall require such qualifications.
(c) Power and Authority. The Servicer has the power and authority to
execute and deliver this Agreement and the other Basic Documents to which it is
a party and to carry out their terms, and the execution, delivery and
performance of this Agreement and the other Basic Documents to which it is a
party have been duly authorized by the Servicer by all necessary corporate
action.
(d) Binding Obligation. This Agreement and the other Basic Documents to
which it is a party constitute legal, valid, and binding obligations of the
Servicer, enforceable against the Servicer in accordance with their terms,
subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization, conservatorship, receivership, liquidation and other similar
laws and to general equitable principles.
(e) No Violation. The execution, delivery and performance by the
Servicer of this Agreement and the other Basic Documents to which it is a party,
the consummation of the transactions contemplated hereby and thereby and the
fulfillment of the terms hereof and thereof will not conflict with, result in
any breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time or both) a default under, the certificate of
incorporation or bylaws of the Servicer, or conflict with, or breach any of the
terms or provisions of, or constitute (with or without notice or lapse of time
or both) a default under, any indenture, agreement, mortgage, deed of trust or
other instrument to which the Servicer is a party or by which the Servicer is
bound or to which any of its properties are subject, or result in the creation
or imposition of any lien upon any of its properties pursuant to the terms of
any such indenture, agreement, mortgage, deed of trust or other instrument
(other than this Agreement), or violate any law, order, rule, or regulation
applicable to the Servicer or its properties of any Federal or state regulatory
body, any court, administrative agency, or other governmental instrumentality
having jurisdiction over the Servicer or any of its properties.
(f) No Proceedings. There are no proceedings or investigations pending,
or, to the Servicer's knowledge, threatened, before any court, regulatory body,
administrative agency, or tribunal or other governmental instrumentality having
jurisdiction over the Servicer or its properties: (a) asserting the invalidity
of this Agreement, the Indenture, any of the other Basic Documents, the Notes,
or the Certificates, (b) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transactions contemplated by this
Agreement, the Indenture or any of the other Basic Documents, (c) seeking any
determination or ruling that might materially and adversely affect the
performance by the Servicer of its obligations under, or the validity or
enforceability of, this Agreement, the Indenture, any of the other Basic
Documents, the Notes or the Certificates, or (d) that may adversely affect the
Federal or Applicable Tax State income, excise, franchise or similar tax
attributes of the Notes or the Certificates.
Section 7.2 Liability of Servicer; Indemnities. The Servicer shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement, and hereby agrees to the
following:
(a) The Servicer shall defend, indemnify and hold harmless the Trust,
the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders and the Seller from and against any and all costs, expenses,
losses, damages, claims and liabilities, arising out of or resulting from the
use, ownership or operation by the Servicer or any Affiliate thereof of a
Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the Trust,
the Owner Trustee and the Indenture Trustee from and against any taxes that may
at any time be asserted against any such Person with respect to the transactions
contemplated herein or in the other Basic Documents, if any, including, without
limitation, any sales, gross receipts, general corporation, tangible personal
property, privilege or license taxes (but, in the case of the Trust, not
including any taxes asserted with respect to, and as of the date of, the sale of
the Receivables to the Trust or the issuance and original sale of the Notes and
the Certificates and the issuance of the Certificates, or asserted with respect
to ownership of the Receivables, or Federal or other Applicable Tax State income
taxes arising out of the transactions contemplated by this Agreement and the
other Basic Documents) and costs and expenses in defending against the same.
(c) The Servicer shall indemnify, defend and hold harmless the Trust,
the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders and the Seller from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent that such cost, expense,
loss, claim, damage or liability arose out of, or was imposed upon any such
Person through, the negligence, willful misfeasance or bad faith of the Servicer
in the performance of its duties under this Agreement or any other Basic
Document to which it is a party (except for errors in judgment), or by reason of
reckless disregard of its obligations and duties under this Agreement or any
other Basic Document to which it is a party.
(d) The Servicer shall indemnify, defend and hold harmless the Owner
Trustee and the Indenture Trustee, as applicable, from and against all costs,
expenses, losses, claims, damages and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties contained
herein and in the other Basic Documents, if any, except to the extent that such
cost, expense, loss, claim, damage or liability: (a) shall be due to the willful
misfeasance, bad faith or negligence (except for errors in judgment) of the
Owner Trustee or the Indenture Trustee, as applicable; (b) relates to any tax
other than the taxes with respect to which either the Seller or the Servicer
shall be required to indemnify the Owner Trustee or the Indenture Trustee, as
applicable; (c) in the case of the Owner Trustee, shall arise from the Owner
Trustee's breach of any of its representations or warranties set forth in
Section 7.3 of the Trust Agreement or, in the case of the Indenture Trustee,
from the Indenture Trustee's breach of any of its representations or warranties
set forth in the Indenture; or (d) in the case of the Indenture Trustee, shall
arise out of or be incurred in connection with the performance by the Indenture
Trustee of the duties of successor Servicer hereunder.
In addition to the foregoing indemnities, if the Owner Trustee or the
Indenture Trustee is entitled to indemnification by the Seller pursuant to
Section 6.2 and the Seller is unable for any reason to provide such
indemnification to the Owner Trustee or the Indenture Trustee, then the Servicer
shall be liable for any indemnification that the Owner Trustee or the Indenture
Trustee is entitled to under Section 6.2.
For purposes of this Section 7.2, in the event of the termination of
the rights and obligations of MMCA (or any successor thereto pursuant to Section
8.2) as Servicer pursuant to Section 8.1, or a resignation by such Servicer
pursuant to this Agreement, such Servicer shall be deemed to be the Servicer
pending appointment of a successor Servicer (other than the Indenture Trustee)
pursuant to Section 8.2.
Indemnification under this Section 7.2 by MMCA (or any successor
thereto pursuant to Section 8.2) as Servicer, with respect to the period such
Person was (or was deemed to be) the Servicer, shall survive the termination of
such Person as Servicer or a resignation by such Person as Servicer as well as
the termination of this Agreement or the resignation or removal of the Owner
Trustee or the Indenture Trustee and shall include reasonable fees and expenses
of counsel and expenses of litigation. If the Servicer shall have made any
indemnity payments pursuant to this Section and the recipient thereafter
collects any of such amounts from others, the recipient shall promptly repay
such amounts to the Servicer, without interest.
Section 7.3 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Any Person (i) into which the Servicer may be merged
or consolidated, (ii) resulting from any merger, conversion, or consolidation to
which the Servicer shall be a party, or (iii) that may succeed by purchase and
assumption to all or substantially all of the business of the Servicer, which
Person in any of the foregoing cases is an Eligible Servicer and executes an
agreement of assumption to perform every obligation of the Servicer under this
Agreement, will be the successor to the Servicer under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties to this Agreement; provided, however, that (x) the Servicer shall
have delivered to the Owner Trustee and the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such merger, conversion,
consolidation or succession and such agreement of assumption comply with this
Section 7.3, and (y) the Servicer shall have delivered to the Owner Trustee and
the Indenture Trustee an Opinion of Counsel either (A) stating that, in the
opinion of such counsel, all financing statements and continuation statements
and amendments thereto have been authorized and filed that are necessary to
fully preserve and protect the interest of the Trust and the Indenture Trustee,
respectively, in the Receivables, and reciting the details of such filings, or
(B) stating that, in the opinion of such Counsel, no such action shall be
necessary to fully preserve and protect such interests. The Servicer shall
provide notice of any merger, conversion, consolidation or succession pursuant
to this Section 7.3 to the Rating Agencies. Notwithstanding anything herein to
the contrary, the execution of the foregoing agreement or assumption and
compliance with clauses (x) and (y) above shall be conditions to the
consummation of the transactions referred to in clauses (i), (ii) or (iii)
above.
Section 7.4 Limitation on Liability of Servicer and Others. (a) Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust, the Noteholders or the
Certificateholders, except as provided under this Agreement, for any action
taken or for refraining from the taking of any action pursuant to this Agreement
or for errors in judgment; provided, however, that this provision shall not
protect the Servicer or any such Person against any liability that would
otherwise be imposed by reason of willful misfeasance or bad faith in the
performance of duties or by reason of reckless disregard of obligations and
duties under this Agreement, or by reason of negligence in the performance of
its duties under this Agreement (except for errors in judgment). The Servicer
and any director, officer or employee or agent of the Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person in respect of any matters arising under this Agreement.
(b) Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Receivables in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability; provided, however, that the Servicer may undertake any reasonable
action that it may deem necessary or desirable in respect of this Agreement and
the rights and duties of the parties to this Agreement and the interests of the
Noteholders and Certificateholders under this Agreement. In such event, the
legal expenses and costs of such action and any liability resulting therefrom
shall be expenses, costs and liabilities of the Servicer.
Section 7.5 Servicer Not to Resign. Subject to the provisions of
Section 7.3, the Servicer shall not resign from its obligations and duties under
this Agreement except upon a determination that the performance of its duties is
no longer permissible under applicable law. Any such determination permitting
the resignation of the Servicer shall be evidenced by an Opinion of Counsel to
such effect delivered to the Owner Trustee and the Indenture Trustee. No such
resignation shall become effective until the Indenture Trustee or a successor
Servicer shall have (i) assumed the responsibilities and obligations of the
Servicer in accordance with Section 8.2 and (ii) become the Administrator under
the Administration Agreement pursuant to Section 8 thereof.
Section 7.6 Servicer May Own Notes or Certificates. The Servicer, and
any Affiliate of the Servicer, may, in its individual or any other capacity,
become the owner or pledgee of Notes or Certificates with the same rights as it
would have if it were not the Servicer or an Affiliate thereof, except as
otherwise expressly provided herein or in the other Basic Documents. Except as
set forth herein or in the other Basic Documents, Notes and Certificates so
owned by or pledged to the Servicer or such Affiliate shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority or distinction as among all of the Notes and Certificates.
ARTICLE VIII - SERVICING TERMINATION
Section 8.1 Events of Servicing Termination. (a) The occurrence of any
one of the following events shall constitute an event of servicing termination
hereunder (each, an "Event of Servicing Termination"):
(i) Any failure by the Servicer to deliver to the Owner
Trustee or the Indenture Trustee the Servicer's Certificate for any
Collection Period, which shall continue beyond the earlier of three
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 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 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 Notes Outstanding, 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 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 51% of the aggregate principal amount
of the Notes Outstanding, 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(a), the Indenture Trustee (or an Affiliate of the Indenture Trustee that is
an Eligible Servicer appointed by 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 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 Notes Outstanding or the Holders of
Certificates evidencing not less than 51% 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 and the Certificate
Distribution 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 product of (i) the Optional Purchase
Percentage, and (ii) the aggregate Principal Balance as of the Cutoff Date, the
Servicer shall have the option to purchase the Owner Trust Estate, other than
the Trust Accounts and the Certificate Distribution Account. To exercise such
option, the Servicer shall notify the Owner Trustee and the Indenture Trustee no
later than the 15th 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 and the
Certificate Distribution 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 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, 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 Reserve Account in accordance
with Sections 4.5(b) and 4.7.
ARTICLE X - MISCELLANEOUS PROVISIONS
Section 10.1 Amendment. (a) This Agreement may be amended by the
Seller, the Servicer and the Trust with the consent of the Indenture Trustee
(which consent may not be unreasonably withheld), but without the consent of any
of the Noteholders, the Certificateholders or the Swap Counterparty to add,
change or eliminate any other provisions with respect to matters or questions
arising under this Agreement as may be necessary or advisable in order to: (i)
cure any ambiguity, to revise, correct or supplement any provisions herein, (ii)
enable the Trust to avoid becoming a member of MMCA's consolidated group under
GAAP or (iii) enable the Transferor or any Affiliate of the Transferor or any of
their Affiliates to otherwise comply with or obtain more favorable treatment
under any law or regulation or any accounting rule or principle; 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; provided,
further, that no such amendment shall be inconsistent with the derecognition by
MMCA of the Receivables under GAAP or cause the Trust to become a member of
MMCA's consolidated group under GAAP; and provided, further, that (x) such
action shall not materially adversely affect the rights or obligations of the
Swap Counterparty under the Interest Rate Swap Agreement or modify the
obligations of, or impair the ability of, the Issuer to fully perform any of its
obligations under the Interest Rate Swap Agreement or (y) the Swap Counterparty
shall have consented thereto.
(b) This Agreement may also be amended from time to time by the Seller,
the Servicer and the Trust with the consent of (i) the Indenture Trustee, (ii)
the Swap Counterparty, to the extent such amendment adversely affects the rights
or obligatinos of the Swap Counterparty under the Interest Rate Swap Agreement,
or modifies the obligations of, or impairs the ability of the Issuer to fully
perform any of its obligations under, the Interest Rate Swap Agreement (which
consent may not be unreasonably withheld), (iii) the Holders of Notes evidencing
not less than 51% of Outstanding Amount of all of the Notes, voting as a group,
and the consent of the Holders of Certificates evidencing not less than 51% of
the Certificate Balance for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement, or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
provided, however, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, or change the
allocation or priority of, collections of payments on Receivables or
distributions that shall be required to be made on any Note or Certificate or
change the Note Interest Rate or the Specified Reserve Balance, 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 mail a copy to the Swap
Counterparty and shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and each
of the Rating Agencies. It shall not be necessary for the consent of Noteholders
or the Certificateholders pursuant to this Section 10.1 to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Noteholders and Certificateholders
provided for in this Agreement) and of evidencing the authorization of the
execution thereof by Noteholders and Certificateholders shall be subject to such
reasonable requirements as the Owner Trustee and the Indenture Trustee may
prescribe.
(e) Prior to the execution of any amendment to this Agreement, the
Owner Trustee and the Indenture Trustee shall be entitled to receive and rely
upon (i) an Opinion of Counsel stating that the execution of such amendment (A)
is authorized or permitted by this Agreement, (B) will not materially adversely
affect the Federal or any Applicable Tax State income or franchise taxation of
any Outstanding Note or Certificate or any Holder thereof, and (C) will not
cause the Trust to be taxable as a corporation for Federal or any Applicable Tax
State income or franchise tax purposes and (ii) an Officer's Certificate of the
Servicer that all conditions to the execution of such amendment have been
complied with. The Owner Trustee or the Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects such Owner Trustee's
or Indenture Trustee's own rights, duties or immunities under this Agreement or
otherwise.
Section 10.2 Protection of Title to Trust. (a) The Seller or Servicer,
or both, shall authorize and file such financing statements and cause to be
authorized and filed such continuation statements, all in such manner and in
such places as may be required by law fully to preserve, maintain, and protect
the interest of the Trust and the Indenture Trustee for the benefit of the
Noteholders in the Receivables and in the proceeds thereof. The Seller or
Servicer, or both, shall deliver (or cause to be delivered) to the Owner Trustee
and the Indenture Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity, or corporate structure in any manner that would, could, or might make
any financing statement or continuation statement filed by the Seller or the
Servicer in accordance with paragraph (a) above seriously misleading within the
meaning of Section 9-506(b) of the Relevant UCC, unless it shall have given the
Owner Trustee and the Indenture Trustee at least 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 60 days' prior written notice of any change in its
jurisdiction of organization if, as a result of such relocation or change, 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
jurisdiction of organization 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 Reserve Account and the Yield Supplement Account.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the Trust, the
Servicer's master computer records (including any back-up archives) that refer
to a Receivable shall indicate clearly the interest of the Trust and the
Indenture Trustee in such Receivable and that such Receivable is owned by the
Trust and has been pledged to the Indenture Trustee pursuant to the Indenture.
Indication of the Trust's and the Indenture Trustee's interest in a Receivable
shall be deleted from or modified on the Servicer's computer systems when, and
only when, the Receivable shall have been paid in full or repurchased by the
Seller or purchased by the Servicer.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in any
automobile or sports-utility vehicle receivables to any prospective purchaser,
lender, or other transferee, the Servicer shall give to such prospective
purchaser, lender, or other transferee computer tapes, compact disks, records,
or print-outs (including any restored from back-up archives) that, if they shall
refer in any manner whatsoever to any Receivable, shall indicate clearly that
such Receivable has been sold and is owned by the Trust and has been pledged to
the Indenture Trustee unless such Receivable has been paid in full or
repurchased by the Seller or purchased by the Servicer.
(g) The Servicer shall permit the Owner Trustee, the Indenture Trustee
and their respective agents at any time during normal business hours to inspect,
audit, and make copies of and abstracts from the Servicer's records regarding
any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee and
the Indenture Trustee, within 10 Business Days, a list of all Receivables (by
contract number and name of Obligor) then held as part of the Trust, together
with a reconciliation of such list to the Schedules of Receivables and to each
of the Servicer's Certificates furnished before such request indicating removal
of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee:
(1) promptly after the execution and delivery of each
amendment to any financing statement, an Opinion of Counsel either (A)
stating that, in the opinion of such Counsel, all financing statements
and continuation statements have been authorized and filed that are
necessary fully to preserve and protect the interest of the Trust and
the Indenture Trustee in the Receivables, and reciting the details of
such filings or referring to prior Opinions of Counsel in which such
details are given, or (B) stating that, in the opinion of such Counsel,
no such action shall be necessary to preserve and protect such
interest; and
(2) within 90 days after the beginning of each calendar year
commencing in the year 2003, 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 authorized and filed that are necessary fully to preserve and
protect the interest of the Trust and the Indenture Trustee in the
Receivables, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B)
stating that, in the opinion of such Counsel, no such action shall be
necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i)(1) or (i)(2) above
shall specify any action necessary (as of the date of such opinion) to be taken
in the following year to preserve and protect such interest.
(j) The Seller shall, to the extent required by applicable law, cause
the Notes to be registered with the Commission pursuant to Section 12(b) or
Section 12(g) of the Exchange Act within the time periods specified in such
sections.
Section 10.3 Representations of the Seller and the Trust. The
respective agreements, representations, warranties and other statements by the
Seller and the Trust set forth in or made pursuant to this Agreement shall
remain in full force and effect and will survive the Closing.
Section 10.4 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York without reference to its
conflict of laws provisions (other than section 5-1401 of the general
obligations law) and the obligations, rights, and remedies of the parties
hereunder shall be determined in accordance with such laws.
Section 10.5 Notices. All demands, notices, and communications under
this Agreement shall be in writing, personally delivered, sent via facsimile,
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 10.13 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
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(e) in the case of S&P, at the following address:
Standard & Poor's Ratings Services
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(f) in the case of Fitch Ratings, at the following address:
Fitch Ratings
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Asset Backed Surveillance Department
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(g) in the case of the initial Swap Counterparty, at the following
address:
[ ]
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 10.6 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 10.7 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 and any such assignment without the required consents shall
be null and void.
Section 10.8 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 10.9 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 10.10 Third-Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Noteholders, the
Certificateholders, and their respective successors and permitted assigns.
Except as otherwise provided in this Article X, no other Person will have any
right or obligation hereunder. The parties hereto hereby acknowledge and consent
to the pledge of this Agreement by the Trust to the Indenture Trustee for the
benefit of Noteholders pursuant to the Indenture.
Section 10.11 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 10.12 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 10.13 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 10.14 No Bankruptcy Petition; Subordination; Claims Against
Seller. The Owner Trustee, the Indenture Trustee, the Trust and the Servicer
each covenants and agrees that:
(a) 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;
(b) any claim that it may have at any time against the Subtrust Assets
of any Subtrust unrelated to the Receivables, and any claim that it may have at
any time against the Seller that it may seek to enforce against the Subtrust
Assets of any Subtrust unrelated to the Receivables, shall be subordinate to the
payment in full, including post-petition interest, in the event that the Seller
becomes a debtor or debtor in possession in a case under any applicable federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect
or otherwise subject to any insolvency, reorganization, liquidation,
rehabilitation or other similar proceedings, of the claims of the holders of any
Securities related to such unrelated Subtrust and the holders of any other
notes, bonds, contracts or other obligations that are related to such unrelated
Subtrust; and
(c) it hereby irrevocably makes the election afforded by Title ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ Code Section 1111(b)(1)(A)(i) to secured creditors to receive the
treatment afforded by Title ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code Section 1111(b)(2) with
respect to any secured claim that it may have at any time against the Seller.
The obligations of the Seller under this Agreement are limited to the related
Subtrust and the related Subtrust Assets. 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 10.15 Limitation of Liability of Owner Trustee and Indenture
Trustee. (a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Wilmington Trust Company, not in its
individual capacity but solely in its capacity as Owner Trustee of the Trust and
in no event shall Wilmington Trust Company in its individual capacity or, except
as expressly provided in the Trust Agreement, as Owner Trustee of the Trust,
have any liability for the representations, warranties, covenants, agreements or
other obligations of the Trust hereunder or in any of the certificates, notices
or agreements delivered pursuant hereto, as to all of which recourse shall be
had solely to the assets of the Trust. For all purposes of this Agreement, in
the performance of its duties or obligations hereunder or in the performance of
any duties or obligations of the Trust hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by Bank of Tokyo-Mitsubishi Trust Company, not in
its individual capacity but solely as Indenture Trustee, and in no event shall
Bank of Tokyo-Mitsubishi Trust Company have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Trust hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Trust.
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 TRUST II,
as Seller
By: _____________________________
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Secretary & Treasurer
MMCA AUTO OWNER TRUST 2002-5
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By: ________________________________
Name:
Title:
MITSUBISHI MOTORS CREDIT OF
AMERICA, INC., as Servicer
By: ________________________________
Name: C. A. ▇▇▇▇▇▇▇
Title: Executive Vice President
and General Manager
Accepted and agreed:
BANK OF TOKYO-MITSUBISHI TRUST COMPANY,
as Indenture Trustee
By: ___________________________________
Name: ▇. ▇▇▇▇▇▇▇▇▇
Title: Trust Officer
Schedule A
SCHEDULE OF RECEIVABLES
Exhibit B to the Purchase Agreement
Incorporated by Reference Herein
Schedule B
LOCATIONS OF RECEIVABLES FILES
Corporate ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
National Service Center
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Exhibit A
[Form of Servicer's Certificate]
The undersigned certifies that he is a _____________________ 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
__________, _____, by and among the Company, as Servicer, MMCA Auto Receivables
Trust II, as Seller, and MMCA Auto Owner Trust ____-__ (the "Sale and Servicing
Agreement") (all capitalized terms used herein without definition have the
respective meanings specified in the Sale and Servicing Agreement), and further
certifies that:
(a) The Servicer's report for the period from __________ to
____________ attached to this certificate is complete and accurate and
contains all information required by Section 3.9 of the Sale and
Servicing Agreement; and
(b) As of the date hereof, no Event of Servicing Termination
or event that with notice or lapse of time or both would become an
Event of Servicing Termination has occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature and the
corporate seal of the Company this ___ day of __________, _____.
MITSUBISHI MOTORS CREDIT OF
AMERICA, INC.
By: ___________________________
Name:
Title:
Exhibit B
[Form of Statement to Noteholders]
--------------------------------------------------------------------------------
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.
Statement to Noteholders
MMCA Auto Owner Trust ___-__
July 1, ____ through June 30, _____
Per Original
Aggregate $1,000 Note or
Certificate
I. A. Distribution of Note Principal 1. Class A-1
2. Class A-2 3. Class A-3 4. Class A-4 5. Class B 6,. Class C
B. Distribution of Certificate Principal
II. Distribution of Note Interest A. Class A-1
B. Class A-2 C. Class A-3 D. Class A-4 E. Class B F. Class C
III. Yield Supplement Amount
IV. Total Servicing Fee
V. Principal Balances and Pool Factors
A. Note Principal Balance
1. Class A-1 2. Class A-2 3. Class A-3 4. Class A-4
5. Class B 6. Class C
B. Note Pool Factors 1. Class A-1 2. Class A-2 3. Class A-3 4. Class
A-4
5. Class B 6. Class C
C. Certificate Balance
D. Certificate Pool Factor
VI. A. Pool Balance at End of This Collection Period B. Yield
Supplement Overcollateralization Amount C. Adjusted Principal
Balance of Receivables Pool
VII. A. Level Pay Pool Balance B. Last Scheduled Payment Pool Balance
VIII. Principal Balance of Deferred Receivables
IX. Interest Carryover Shortfall 1. Class A-1 2. Class A-2 3. Class
A-3 4. Class A-4
5. Class B 6. Class C
X. Principal Carryover Shortfall 1. Class A-1 2. Class A-2 3. Class
A-3 4. Class A-4
5. Class B 6. Class C
XI. Aggregate Realized Losses for This Collection Period
XII. Reserve Account Balance on Payment Date
XIII. Amount of Advances for This Collection Period A. Actuarial Advances B.
Last Scheduled Payment Advances
XIV. Purchase Amount of Receivables Repurchased by Seller or Purchased by
Servicer
Exhibit C
[Form of Statement to Certificateholders]
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.
Statement to Certificateholders
MMCA Auto Owner Trust ___-__
July 1, ____ through June 30, _____
Per Original
Aggregate $1,000 Note or
Certificate
I. A. Distribution of Note Principal 1. Class A-1
2. Class A-2 3. Class A-3 4. Class A-4 5. Class B 6. Class C
B. Distribution of Certificate Principal
II. Distribution of Note Interest A. Class A-1
B. Class A-2 C. Class A-3 D. Class A-4 E. Class B F. Class C
III. Yield Supplement Amount
IV. Total Servicing Fee
V. Principal Balances and Pool Factors
A. Note Principal Balance
1. Class A-1 2. Class A-2 3. Class A-3 4. Class A-4
5. Class B 6. Class C
B. Note Pool Factors 1. Class A-1 2. Class A-2 3. Class A-3 4. Class
A-4
5. Class B 6. Class C
C. Certificate Balance
D. Certificate Pool Factor
VI. A. Pool Balance at End of This Collection Period B. Yield
Supplement Overcollateralization Amount C. Adjusted Principal
Balance of Receivables Pool
VII. A. Level Pay Pool Balance B. Last Scheduled Payment Pool Balance
VIII. Principal Balance of Deferred Receivables
IX. Interest Carryover Shortfall 1. Class A-1 2. Class A-2 3. Class
A-3 4. Class A-4
5. Class B 6. Class C
X. Principal Carryover Shortfall 1. Class A-1 2. Class A-2 3. Class
A-3 4. Class A-4
5. Class B 6. Class C
XI. Aggregate Realized Losses for This Collection Period
XII. Reserve Account Balance on Payment Date
XIII. Amount of Advances for This Collection Period A. Actuarial Advances B.
Last Scheduled Payment Advances
XIV. Purchase Amount of Receivables Repurchased by Seller or Purchased by
Servicer
Exhibit D
[Form of Yield Supplement Agreement]
MMCA Auto Receivables Trust II
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: MMCA Auto Owner Trust 2002-5
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 December 1,
2002 (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 Trust II, 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 2002-5 (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 Trust II
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Secretary/Treasurer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Seller:
Mitsubishi Motors Credit of America, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Executive Vice President and Treasurer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
8. This Yield Supplement Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, all
of which shall be deemed to be one and the same document.
If the foregoing satisfactorily sets forth the terms and conditions of
our agreement, please indicate your acceptance thereof by signing in the space
provided below and returning to us the enclosed duplicate original of this
letter.
Very truly yours,
MITSUBISHI MOTORS CREDIT
OF AMERICA, INC.,
as Seller
By: _______________________
Name:
Title:
Agreed and accepted as of the date first above written:
MMCA AUTO RECEIVABLES TRUST II,
as Purchaser
By: ____________________________
Name:
Title:
