Exhibit 4.2
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SALE AND SERVICING AGREEMENT
BY AND AMONG
MMCA AUTO OWNER TRUST 1998-1,
as Issuer,
MMCA AUTO RECEIVABLES, INC.,
as Seller
AND
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.,
as Servicer
Dated as of August 1, 1998
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . 1
SECTION 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Other Definitional Provisions. . . . . . . . . . . . . . 25
SECTION 1.3. Business Day Certificate . . . . . . . . . . . . . . . . 25
ARTICLE II
TRUST PROPERTY . . . . . . . . . . . . . 27
SECTION 2.1. Conveyance of Trust Property . . . . . . . . . . . . . . 27
SECTION 2.2. Representations and Warranties of the Seller as to the
Receivables. . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.3. Repurchase upon Breach . . . . . . . . . . . . . . . . . 33
SECTION 2.4. Custody of Receivable Files. . . . . . . . . . . . . . . 33
SECTION 2.5. Duties of Servicer as Custodian. . . . . . . . . . . . . 34
SECTION 2.6. Instructions; Authority to Act . . . . . . . . . . . . . 35
SECTION 2.7. Custodian's Indemnification. . . . . . . . . . . . . . . 36
SECTION 2.8. Effective Period and Termination . . . . . . . . . . . . 36
ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND TRUST PROPERTY . . . . . . . . . 38
SECTION 3.1. Duties of Servicer . . . . . . . . . . . . . . . . . . . 38
SECTION 3.2. Collection and Allocation of Receivable Payments . . . . 42
SECTION 3.3. Realization upon Receivables . . . . . . . . . . . . . . 44
SECTION 3.4. Physical Damage Insurance. . . . . . . . . . . . . . . . 45
SECTION 3.5. Maintenance of Security Interests in Financed Vehicles . 45
SECTION 3.6. Covenants of Servicer. . . . . . . . . . . . . . . . . . 45
SECTION 3.7. Purchase by Servicer upon Breach . . . . . . . . . . . . 46
SECTION 3.8. Servicing Compensation . . . . . . . . . . . . . . . . . 46
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SECTION 3.9. Servicer's Certificate . . . . . . . . . . . . . . . . . 47
SECTION 3.10. Annual Statement as to Compliance; Notice of Event of
Servicing Termination. . . . . . . . . . . . . . . . . . 47
SECTION 3.11. Annual Independent Certified Public Accountants'
Reports. . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 3.12. Access to Certain Documentation and Information
Regarding Receivables. . . . . . . . . . . . . . . . . . 49
SECTION 3.13. Reports to the Commission. . . . . . . . . . . . . . . . 49
SECTION 3.14. Reports to Rating Agencies . . . . . . . . . . . . . . . 49
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS
AND NOTEHOLDERS . . . . . . . . . . . . . 50
SECTION 4.1. Accounts . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 4.2. Collections. . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 4.3. Application of Collections . . . . . . . . . . . . . . . 55
SECTION 4.4. Advances . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 4.5. Additional Deposits. . . . . . . . . . . . . . . . . . . 58
SECTION 4.6. Allocation of Available Funds. . . . . . . . . . . . . . 59
SECTION 4.7. Reserve Account; Supplemental Reserve Account. . . . . . 60
SECTION 4.8. Net Deposits . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 4.9. Statements to Noteholders and Certificateholders . . . . 63
SECTION 4.10. Control of Securities Accounts . . . . . . . . . . . . . 65
ARTICLE V
YIELD SUPPLEMENT LETTER OF CREDIT. . . . . . . . . 66
SECTION 5.1. Yield Supplement Letter of Credit and the Yield
Supplement Account . . . . . . . . . . . . . . . . . . . 66
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ARTICLE VI
THE SELLER . . . . . . . . . . . . . . 70
SECTION 6.1. Representations, Warranties and Covenants of Seller. . . 70
SECTION 6.2. Liability of Seller; Indemnities . . . . . . . . . . . . 72
SECTION 6.3. Merger or Consolidation of, or Assumption of the
Obligations of, Seller . . . . . . . . . . . . . . . . . 73
SECTION 6.4. Limitation on Liability of Seller and Others . . . . . . 74
SECTION 6.5. Seller May Own Notes or Certificates . . . . . . . . . . 74
ARTICLE VII
THE SERVICER. . . . . . . . . . . . . . 75
SECTION 7.1. Representations and Warranties of Servicer . . . . . . . 75
SECTION 7.2. Liability of Servicer; Indemnities . . . . . . . . . . . 76
SECTION 7.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer . . . . . . . . . . . . . . . . 78
SECTION 7.4. Limitation on Liability of Servicer and Others . . . . . 79
SECTION 7.5. Servicer Not to Resign . . . . . . . . . . . . . . . . . 80
SECTION 7.6. Servicer May Own Notes or Certificates . . . . . . . . . 80
ARTICLE VIII
SERVICING TERMINATION. . . . . . . . . . . . 81
SECTION 8.1. Events of Servicing Termination. . . . . . . . . . . . . 81
SECTION 8.2. Indenture Trustee to Act; Appointment of Successor
Servicer . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 8.3. Effect of Servicing Transfer . . . . . . . . . . . . . . 84
SECTION 8.4. Notification to Noteholders and Certificateholders . . . 84
SECTION 8.5. Waiver of Past Events of Servicing Termination . . . . . 85
ARTICLE IX
TERMINATION . . . . . . . . . . . . . . 86
SECTION 9.1. Optional Purchase of All Receivables . . . . . . . . . . 86
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ARTICLE X
MISCELLANEOUS PROVISIONS. . . . . . . . . . . 88
SECTION 10.1. Amendment. . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 10.2. Protection of Title to Trust . . . . . . . . . . . . . . 89
SECTION 10.3. Governing Law. . . . . . . . . . . . . . . . . . . . . . 92
SECTION 10.4. Notices. . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 10.5. Severability of Provisions . . . . . . . . . . . . . . . 93
SECTION 10.6. Assignment . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 10.7. Further Assurances . . . . . . . . . . . . . . . . . . . 93
SECTION 10.8. No Waiver; Cumulative Remedies . . . . . . . . . . . . . 93
SECTION 10.9. Third-Party Beneficiaries. . . . . . . . . . . . . . . . 94
SECTION 10.10. Actions by Noteholder or Certificateholders. . . . . . . 94
SECTION 10.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 10.12. Agent for Service. . . . . . . . . . . . . . . . . . . . 94
SECTION 10.13. No Bankruptcy Petition . . . . . . . . . . . . . . . . . 94
SECTION 10.14. Limitation of Liability of Owner Trustee and Indenture
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . 95
SCHEDULES
SCHEDULE A Schedule of Receivables
SCHEDULE B Location of Receivable Files
EXHIBITS
EXHIBIT A Servicer's Certificate
EXHIBIT B Report to Noteholders
EXHIBIT C Report to Certificateholders
EXHIBIT D Form of Yield Supplement Agreement
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SALE AND SERVICING AGREEMENT, dated as of August 1, 1998 (as amended,
supplemented or otherwise modified and in effect from time to time, this
"AGREEMENT"), by and among MMCA AUTO OWNER TRUST 1998-1, a Delaware business
trust (the "ISSUER"), MMCA AUTO RECEIVABLES, INC., a Delaware corporation (the
"SELLER"), and MITSUBISHI MOTORS CREDIT OF AMERICA, INC., a Delaware corporation
(the "SERVICER").
WHEREAS, the Issuer desires to purchase a portfolio of receivables
arising in connection with motor vehicle retail installment sale contracts
generated by Mitsubishi Motors Credit of America, Inc. in the ordinary course of
its business and sold to the Seller;
WHEREAS, the Seller is willing to sell such receivables to the Issuer;
and
WHEREAS, Mitsubishi Motors Credit of America, Inc. is willing to
service such receivables on behalf of the Issuer;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, whenever
capitalized shall have the following meanings:
"ACCRUED NOTE INTEREST" shall mean, with respect to any Payment Date
and each Class of Notes, the sum of the Monthly Accrued Note Interest and the
Interest Carryover Shortfall for such Class for such Payment Date.
"ACTUARIAL ADVANCE" shall mean, with respect to an Actuarial
Receivable, the amount, as of the last day of a Collection Period, which is
required
to be advanced with respect to such Actuarial Receivable by the Servicer
pursuant to Section 4.4(a).
"ACTUARIAL METHOD" shall mean the method of allocating a fixed level
payment on a Receivable between principal and interest, pursuant to which the
portion of such payment that is allocated to interest is the product of
one-twelfth (1/12) of the APR on the Receivable multiplied by the scheduled
principal balance of the Receivable.
"ACTUARIAL RECEIVABLE" shall mean any Receivable under which the
portion of a payment with respect thereto allocable to interest and the portion
of a payment with respect thereto allocable to principal is determined in
accordance with the Actuarial Method.
"ADVANCE" shall mean an Actuarial Advance or a Last Scheduled Payment
Advance, as the context may require.
"AFFILIATE" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For purposes of this definition,
"CONTROL" when used with respect to any specified Person shall mean the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "CONTROLLING" and "CONTROLLED" have meanings correlative to the
foregoing.
"AGREEMENT" shall have the meaning specified in the recitals hereto.
"AMOUNT FINANCED" shall mean, with respect to a Receivable, the
aggregate amount advanced under such Receivable toward the purchase price of the
Financed Vehicle and any related costs.
"APPLICABLE TAX STATE" shall mean, as of any date of determination,
each state as to which any of the following is then applicable: (a) a state in
which the Owner Trustee maintains the Corporate Trust Office, (b) a state in
which the Owner Trustee maintains its principal executive offices, and (c) a
state in which the Servicer regularly conducts servicing and collection
operations other than purely ministerial activities and which relate to a
material portion of the Receivables.
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"APR" of a Receivable shall mean the annual percentage rate of
interest stated in the Contract related to such Receivable.
"AUTHORIZED OFFICER" shall mean any officer within the Corporate Trust
Office of the Indenture Trustee or the Owner Trustee, as the case may be,
including any vice president, assistant vice president, secretary, assistant
secretary, financial services officer or any other officer of the Indenture
Trustee or the Owner Trustee, as the case may be, customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject and shall also mean, with respect to the Owner Trustee, any
officer of the Administrator.
"AVAILABLE FUNDS" shall mean, for any Payment Date, an amount equal to
(a) the sum of the following amounts with respect to the related Collection
Period: (i) all collections on Receivables (including amounts withdrawn from the
Payahead Account but excluding amounts deposited into the Payahead Account and
excluding Rule of 78's Payments (and including the proceeds of sale by the
Servicer of any Financed Vehicle upon termination, including a prepayment, of a
Final Payment Receivable)); (ii) all Liquidation Proceeds on Defaulted
Receivables and any Recoveries; (iii) all extension and deferral fees paid with
respect to the Receivables; (iv) the Purchase Amount of each Receivable that
became a Purchased Receivable during the related Collection Period (net of
applicable expenses); (v) all Actuarial Advances and Last Scheduled Payment
Advances; (vi) amounts paid pursuant to the Yield Supplement Agreement
(including amounts, if any, withdrawn from the Yield Supplement Account, the
Supplemental Reserve Account or the Reserve Account pursuant to Section
5.1(a)(ii)); and (vii) partial prepayments attributable to any refunded item
included in the Amount Financed, such as extended warranty protection plan costs
or physical damage, credit life or disability insurance premiums, or any partial
prepayment which causes a reduction in the Obligor's periodic payment to be
below the Scheduled Payment as of the Cutoff Date; PROVIDED, HOWEVER, that in
calculating the Available Funds, all payments and proceeds (including
Liquidation Proceeds) of any Purchased Receivables the Purchase Amount of which
has been included in the Available Funds in a prior Collection Period (which
shall be paid to the Seller or the Servicer, as applicable) will be excluded,
minus (b) the aggregate amount of funds described in clause (a) above that are
used in the related Collection Period to reimburse the Servicer for the
aggregate amount of Advances that are due and payable to the Servicer on such
Payment Date.
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"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or
a day on which banking institutions or trust companies in New York, New York,
Wilmington, Delaware or Los Angeles, California shall be authorized or obligated
by law, executive order, or governmental decree to remain closed.
"CAPPED RECEIVABLE" shall mean a Simple Interest Receivable that is
subject to a cap on the aggregate amount of interest to be paid by the related
Obligor during the term of such Receivable.
"CERTIFICATE" shall have the meaning assigned thereto in the Trust
Agreement.
"CERTIFICATE BALANCE" shall mean, as the context so requires, (i) with
respect to all of the Certificates, an amount equal to, initially, the Initial
Certificate Balance and, thereafter, an amount equal to the Initial Certificate
Balance, as reduced from time to time by all amounts allocable to principal
previously distributed to Certificateholders or (ii) with respect to any
Certificate, an amount equal to, initially, the initial denomination of such
Certificate and, thereafter, an amount equal to such initial denomination, as
reduced from time to time by all amounts allocable to principal previously
distributed in respect of such Certificate; provided, that in determining
whether the Holders of the requisite portion or percentage of the Certificate
Balance of all of the Certificates have given any request, demand,
authorization, direction, notice, consent, or waiver hereunder or under any
other Basic Document, Certificates owned by the Issuer, any other obligor upon
the Certificates, the Seller, the Servicer or any Affiliate of any of the
foregoing Persons shall be disregarded and deemed to be excluded from the
Certificate Balance (unless such Persons own 100% of the Certificate Balance of
the Certificates), except that, in determining whether the Indenture Trustee and
Owner Trustee shall be protected in relying on any such request, demand,
authorization, direction, notice, consent, or waiver, only Certificates that a
Responsible Officer of the Indenture Trustee, if applicable, and an Authorized
Officer of the Owner Trustee with direct responsibility for the administration
of the Trust Agreement, if applicable, knows to be so owned shall be so
disregarded; PROVIDED, HOWEVER, that for purposes of determining whether the
Receivables will be sold upon the occurrence of an Insolvency Event with respect
to the Seller, Certificates beneficially owned by any legal entity other than
the Seller shall be entitled to vote. Certificates so owned that have been
pledged in good faith may be regarded as included in the Certificate Balance if
the pledgee establishes to the satisfaction of the Indenture Trustee or the
Owner Trustee, as applicable, the
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pledgee's right so to act with respect to such Certificates and that the pledgee
is not the Issuer, any other obligor upon the Certificates, the Seller, the
Servicer or any Affiliate of any of the foregoing Persons.
"CERTIFICATE DISTRIBUTION ACCOUNT" shall mean the account established
and maintained as such pursuant to Section 4.1(c).
"CERTIFICATE POOL FACTOR" shall mean, as of the close of business on
the last day of a Collection Period, a seven-digit decimal figure equal to the
Certificate Balance (after giving effect to any reductions therein to be made on
the immediately following Payment Date) divided by the Initial Certificate
Balance. The Certificate Pool Factor will be 1.0000000 as of the Closing Date;
thereafter, the Certificate Pool Factor will decline to reflect reductions in
the Certificate Balance.
"CERTIFICATEHOLDER" shall have the meaning assigned thereto in the
Trust Agreement.
"CLOSING DATE" shall mean August [ ], 1998.
"COLLECTION ACCOUNT" shall mean the account or accounts established
and maintained as such pursuant to Section 4.1(a).
"COLLECTION PERIOD" shall mean each calendar month during the term of
this Agreement or, in the case of the initial Collection Period, the period from
the Cutoff Date to and including the last day of the month in which the Cutoff
Date occurred.
"COMMISSION" shall mean the Securities and Exchange Commission.
"COMPUTER TAPE" shall mean the computer tape generated by the Seller
which provides information relating to the Receivables and which was used by the
Seller in selecting the Receivables conveyed to the Trust hereunder.
"CONTRACT" shall mean a motor vehicle retail installment sale
contract, including a retail installment contract relating to the sale of an
automobile or a light- or medium-duty truck for commercial use.
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"CORPORATE TRUST OFFICE" shall mean, as applicable, (i) the principal
office of the Indenture Trustee at which at any particular time its corporate
trust business shall be administered, which office at the date of the execution
of this Agreement is located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000, Attention: Corporate Trust Department, or at such other address as
the Indenture Trustee may designate from time to time by notice to the
Noteholders and the Seller, or the principal corporate trust office of any
successor Indenture Trustee (of which address such successor Indenture Trustee
will notify the Noteholders and the Seller) or (ii) the principal office of the
Owner Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of the execution of this Agreement is
located at Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx,
00000-0000, Attn: Corporate Trust Administration or at such other address as
the Owner Trustee may designate from time to time by notice to the
Certificateholders and the Seller, or the principal corporate trust office of
any successor Owner Trustee (of which address such successor Owner Trustee will
notify the Certificateholders and the Seller).
"CUTOFF DATE" shall mean August 1, 1998.
"DEALER" shall mean, with respect to any Receivable, the seller of the
related Financed Vehicle who originated and assigned the Receivable relating to
such Financed Vehicle to MMCA under a Dealer Agreement.
"DEALER AGREEMENT" shall mean an agreement between MMCA and a Dealer
relating to the assignment of Receivables to MMCA and all documents and
instruments relating thereto, as the same may from time to time be amended,
supplemented or otherwise modified and in effect.
"DEFAULTED RECEIVABLE" shall mean a Receivable (other than a Purchased
Receivable) as to which (i) the related Financed Vehicle has been repossessed
and liquidated, (ii) a scheduled payment (including, in the case of a Final
Payment Receivable, the amount owed by an Obligor with respect to a Last
Scheduled Payment but excluding in each case any Excess Wear and Tear or Excess
Mileage) is, in the case of a Contract relating to an automobile or light-duty
truck, 120 or more days past due or, in the case of a Contract relating to a
medium-duty truck, 180 or more days past due and, in either case, the Servicer
has not repossessed the related Financed Vehicle or (iii) the Servicer has
determined, in accordance with its customary servicing standards, policies and
procedures, that
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eventual payment in full (including, in the case of a Final Payment Receivable,
the amount owed by an Obligor with respect to a Last Scheduled Payment but
excluding in each case any Excess Wear and Tear or Excess Mileage) on the
Receivable is unlikely and the Servicer has either (x) repossessed and
liquidated the related Financed Vehicle or (y) repossessed and held the related
Financed Vehicle in its repossession inventory for 90 days, which 90 days shall
not be more than 180 days after the date on which a Scheduled Payment was due.
"DEPOSITOR" shall mean the Seller, in its capacity as Depositor under
the Trust Agreement.
"DETERMINATION DATE" shall mean, with respect to any Collection
Period, the seventh Business Day of the next succeeding calendar month (but not
later than the tenth calendar day of such month).
"ELIGIBLE SERVICER" shall mean a Person which, at the time of its
appointment as Servicer or as a subservicer, (i) has a net worth of not less
than $50,000,000, (ii) is servicing a portfolio of motor vehicle retail
installment sale contracts and/or motor vehicle loans, (iii) is legally
qualified, and has the capacity, to service the Receivables, (iv) has
demonstrated the ability to service a portfolio of motor vehicle retail
installment sale contracts and/or motor vehicle loans similar to the Receivables
professionally and competently in accordance with standards of skill and care
that are consistent with prudent industry standards, and (v) is qualified and
entitled to use pursuant to a license or other written agreement, and agrees to
maintain the confidentiality of, the software which the Servicer or any
subservicer uses in connection with performing its duties and responsibilities
under this Agreement or the related subservicing agreement or obtains rights to
use, or develops at its own expense, software which is adequate to perform its
duties and responsibilities under this Agreement or the related subservicing
agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EVENT OF SERVICING TERMINATION" or "SERVICER DEFAULT" shall mean an
event specified in Section 8.1.
"EXCESS MILEAGE" shall mean, with respect to any Financed Vehicle
securing a Final Payment Receivable, the amounts payable by the related Obligor
relating to the excess of the number of miles by which such Financed Vehicle has
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been driven over the number of miles such Financed Vehicle may be driven during
the term of the related Final Payment Receivable (as specified in the Contract
related to such Final Payment Receivable) without incurring an excess mileage
charge pursuant to the related Contract, net of the amount, if any, payable to a
third party collection agency as payment of its fees and expenses in connection
with collecting such amounts from the related Obligor.
"EXCESS WEAR AND TEAR" shall mean, with respect to any Financed
Vehicle securing a Final Payment Receivable, all amounts payable by the related
Obligor relating to damages to such Financed Vehicle that are not the result of
normal wear and tear, as more specifically described in the Contract related to
such Final Payment Receivable, net of the amount, if any, payable to a third
party collection agency as payment of its fees and expenses in connection with
collecting such amounts from the related Obligor.
"FINAL PAYMENT RECEIVABLE" shall mean all rights and obligations
arising under a Contract listed on the Schedule of Receivables which provides
for a series of scheduled payments which, if each is made on its scheduled due
date, will amortize the initial Level Pay Balance by the due date immediately
preceding the maturity date of the Receivable. At maturity of the Final Payment
Receivable, the Obligor thereunder will owe (assuming that all payments have
been made on their scheduled due dates) an amount consisting of interest for the
period from the preceding due date through the maturity date and the remaining
Principal Balance of the Receivable. At maturity of the Final Payment
Receivable, the Obligor may either (i) pay the remaining Principal Balance of
the Receivable, all accrued and unpaid interest, plus any fees, charges, and
other amounts then owing, (ii) refinance the amount then due, subject to certain
conditions or (iii) sell the Financed Vehicle to MMCA on behalf of the Trust for
an amount equal to the Last Scheduled Payment (reduced by charges for Excess
Wear and Tear and Excess Mileage and a disposition fee payable to the Servicer)
and pay any excess of the total amount owed by the Obligor (calculated as in
clause (i)) over the sale price to MMCA on behalf of the Trust, and satisfy all
other conditions stated under the terms of the Contract.
"FINANCED VEHICLE" shall mean a new or used automobile or light- or
medium-duty truck, together with all accessions thereto, securing an Obligor's
indebtedness under the respective Receivable.
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"HOLDER" shall mean a Noteholder or a Certificateholder, as the case
may be.
"INDENTURE" shall mean the Indenture, dated as of August [ ], 1998,
between the Issuer and the Indenture Trustee, as the same may be amended,
supplemented or otherwise modified and in effect from time to time.
"INDENTURE TRUSTEE" shall mean Bank of Tokyo - Mitsubishi Trust
Company, a New York banking corporation, as Indenture Trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
"INITIAL CERTIFICATE BALANCE" shall mean, as the context so requires,
(i) with respect to all of the Certificates, $[ ] or (ii) with
respect to any Certificate, an amount equal to the initial denomination of such
Certificate.
"INITIAL POOL BALANCE" shall mean $[ ].
"INITIAL YIELD SUPPLEMENT AMOUNT" shall mean $[ ].
"INSOLVENCY EVENT" shall mean, with respect to any Person, (i) the
making of a general assignment for the benefit of creditors, (ii) the filing of
a voluntary petition in bankruptcy, (iii) being adjudged a bankrupt or
insolvent, or having had entered against such Person an order for relief in any
bankruptcy or insolvency proceeding, (iv) the filing by such Person of a
petition or answer seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute, law
or regulation, (v) the filing by such Person of an answer or other pleading
admitting or failing to contest the material allegations of a petition filed
against such Person in any proceeding specified in (vii) below, (vi) seeking,
consenting to or acquiescing in the appointment of a trustee, receiver or
liquidator of such Person or of all or any substantial part of the assets of
such Person or (vii) the failure to obtain dismissal within 60 days of the
commencement of any proceeding against such Person seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation, or the entry of any order
appointing a trustee, liquidator or receiver of such Person or of such Person's
assets or any substantial portion thereof.
"INTEREST ACCRUAL PERIOD" shall mean, with respect to any Payment
Date, (i) with respect to the Class A-1 Notes, the period from and including the
previous Payment Date (or, in the case of the first Payment Date, the Closing
Date)
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to but excluding such Payment Date and (ii) with respect to the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes and the Class B Notes, the period from
and including the 15th day of the calendar month immediately preceding such
Payment Date (or, in the case of the first Payment Date, the Closing Date), to
but excluding the 15th day of the calendar month in which such Payment Date
occurs.
"INTEREST CARRYOVER SHORTFALL" shall mean, with respect to any Payment
Date and any Class of Notes, the excess of the sum of the Monthly Accrued Note
Interest for the preceding Payment Date and any outstanding Interest Carryover
Shortfall from the close of business on such preceding Payment Date, over the
amount in respect of interest that is actually deposited in the Note Payment
Account on such preceding Payment Date, plus interest on such excess to the
extent permitted by law, at the applicable Note Interest Rate for the related
Interest Accrual Period.
"ISSUER" shall mean MMCA Auto Owner Trust 1998-1, a Delaware business
trust.
"LAST SCHEDULED PAYMENT" shall mean, with respect to each Final
Payment Receivable, the amount referred to in the Contract related to such Final
Payment Receivable as the "LAST SCHEDULED PAYMENT."
"LAST SCHEDULED PAYMENT ADVANCE" shall mean, with respect to a Final
Payment Receivable, the amount, as of the close of business on the last day of a
Collection Period, which is required to be advanced by the Servicer with respect
to such Final Payment Receivable pursuant to Section 4.4(c).
"LAST SCHEDULED PAYMENT POOL BALANCE" shall mean, for any Payment
Date, the aggregate principal balance of Last Scheduled Payments of Final
Payment Receivables as of the close of business on the last day of the preceding
Collection Period.
"LAST SCHEDULED PAYMENT PRINCIPAL COLLECTIONS" shall mean (a)
collections of principal on a Final Payment Receivable that are attributable to
Last Scheduled Payments, which includes any collection attributable to principal
on a Final Payment Receivable in excess of the initial Level Pay Balance of
that Receivable, whether or not such payment is made on the due date of the
related Last Scheduled Payment, and including the proceeds of sale (net of
expenses) of any Financed Vehicle purchased by MMCA on behalf of the Trust
pursuant to the terms of the Receivable and subsequently sold on behalf of the
Trust, minus (b) with respect to any Final
10
Payment Receivable with respect to which the Obligor exercises its right to have
MMCA, on behalf of the Trust, purchase the related Financed Vehicle, the excess
of the purchase price from the Obligor of such Financed Vehicle over the
remaining amount owed by the Obligor.
"LETTER OF CREDIT BANK" shall mean any Person having the Required
Rating that has provided a Yield Supplement Letter of Credit in accordance with
Section 5.1.
"LEVEL PAY BALANCE" shall mean, with respect to each Final Payment
Receivable, (i) initially the Amount Financed under such Final Payment
Receivable minus the principal portion of the Last Scheduled Payment thereon and
(ii) thereafter, shall be the amount set forth in clause (i) minus all
collections on or with respect to principal on such Receivable other than
amounts on deposit in the Payahead Account with respect to future due dates;
PROVIDED that such Level Pay Balance for any Final Payment Receivable shall not
be less than zero.
"LEVEL PAY POOL BALANCE" shall mean, for any Payment Date, the sum of
(i) the aggregate Level Pay Balance of Final Payment Receivables and (ii) the
aggregate Principal Balance of the Receivables other than Final Payment
Receivables, as of the close of business on the last day of the preceding
Collection Period.
"LIEN" shall mean a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' or materialmen's
liens, judicial liens and any liens that may attach to a Financed Vehicle by
operation of law.
"LIQUIDATION PROCEEDS" shall mean, with respect to a Defaulted
Receivable, the monies collected from whatever source during the Collection
Period in which such Receivable became a Defaulted Receivable, net of the sum of
(i) any expenses incurred by the Servicer in connection with collection of such
Receivable and the disposition of the Financed Vehicle and (ii) any amounts
required by law to be remitted to the Obligor.
"MAXIMUM SUPPLEMENTAL RESERVE AMOUNT" shall mean an amount equal to
the lesser of (i) $18,603,749 and (ii) the outstanding principal amount of the
Notes on such Payment Date (after giving effect to any principal payment made on
such Payment Date), as such amount may be reduced from time to time upon
satisfaction of the Rating Agency Condition.
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"MMCA" shall mean Mitsubishi Motors Credit of America, Inc., a
Delaware corporation, and its successors and assigns.
"MONTHLY ACCRUED NOTE INTEREST" shall mean, with respect to any
Payment Date and (i) any Class of Notes, interest accrued for the related
Interest Accrual Period at the applicable Note Interest Rate on the aggregate
principal amount of the Notes of such Class as of the immediately preceding
Payment Date, after giving effect to all payments of principal to Noteholders on
or prior to such preceding Payment Date (or, in the case of the first Payment
Date, the initial principal amount of the Notes); and (ii) with respect to the
Notes collectively, the sum of Monthly Accrued Note Interest for each Class.
"MONTHLY REMITTANCE CONDITION" shall have the meaning assigned thereto
in Section 4.1(e).
"MOODY'S" shall mean Xxxxx'x Investors Service, Inc., or its
successors and assigns.
"NOTE PAYMENT ACCOUNT" shall mean the account established and
maintained as such pursuant to Section 4.1(b).
"NOTE POOL FACTOR" shall mean, with respect to any Class of Notes, as
of the close of business on the last day of a Collection Period, a seven-digit
decimal figure equal to the outstanding principal balance of such Class of Notes
(after giving effect to any reductions thereof to be made on the immediately
following Payment Date) divided by the original outstanding principal balance of
such Class of Notes. Each Note Pool Factor will be 1.0000000 as of the Closing
Date; thereafter, the Note Pool Factor will decline to reflect reductions in the
outstanding principal amount of such Class of Notes.
"NOTEHOLDER" shall mean a Person in whose name a Note is registered on
the Note Register.
"OBLIGOR" on a Receivable shall mean the purchaser or co-purchasers of
the related Financed Vehicle purchased in part or in whole by the execution and
delivery of such Receivable, or any other Person who owes or may be liable for
payments under such Receivable.
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"OFFICER'S CERTIFICATE" shall mean a certificate signed by the
chairman, the president, any executive vice president, vice president or the
treasurer of the Seller or the Servicer, as the case may be, and delivered to
the Owner Trustee and the Indenture Trustee.
"OPINION OF COUNSEL" shall mean a written opinion of counsel (who, in
the case of counsel to the Seller or the Servicer, may be an employee of, or
outside counsel to, the Seller or the Servicer), which counsel shall be
acceptable to the Indenture Trustee, the Owner Trustee or the Rating Agencies,
as applicable.
"OPTIONAL PURCHASE PERCENTAGE" shall mean 10%.
"OWNER TRUST ESTATE" shall have the meaning assigned thereto in the
Trust Agreement.
"OWNER TRUSTEE" shall mean Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as Owner Trustee
under the Trust Agreement, its successors in interest and any successor trustee
under the Trust Agreement.
"PAYAHEAD" shall mean, with respect to an Actuarial Receivable, the
amount, as of the close of business on the last day of a Collection Period, so
designated in accordance with Section 4.3 with respect to such Receivable.
"PAYAHEAD ACCOUNT" shall mean the account established and maintained
as such pursuant to Section 4.1(d).
"PAYAHEAD BALANCE", with respect to an Actuarial Receivable, shall
mean the sum, as of the close of business on the last day of a Collection
Period, of all Payaheads made by or on behalf of the Obligor with respect to
such Actuarial Receivable (including any amount paid by or on behalf of the
Obligor prior to the Cutoff Date that is due on or after the Cutoff Date and was
not used to reduce the principal balance of such Actuarial Receivable), as
reduced by applications of previous Payaheads with respect to such Actuarial
Receivable, pursuant to Sections 4.3 and 4.4.
"PAYMENT DATE" shall mean the 15th day of each month, or if such day
is not a Business Day, the immediately following Business Day, commencing on
September 15, 1998.
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"PERMITTED INVESTMENTS" shall mean, on any date of determination,
book-entry securities, negotiable instruments or securities represented by
instruments in bearer or registered form with maturities not exceeding the next
Payment Date which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any state thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or
State banking or depository institution authorities; PROVIDED, HOWEVER,
that at the time of the investment or contractual commitment to invest
therein, the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of which is based on
the credit of a Person other than such depository institution or trust
company) thereof shall have a credit rating from each of the Rating
Agencies in the highest investment category granted thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each of the Rating
Agencies in the highest investment category granted thereby;
(d) investments in money market funds having a rating from each of the
Rating Agencies in the highest investment category granted thereby
(including funds for which the Indenture Trustee or the Owner Trustee or
any of their respective Affiliates is investment manager or advisor);
(e) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America
or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States of America, in
either case entered into with a depository institution or trust company
(acting as principal) described in clause (b); and
14
(g) any other investment with respect to which the Issuer or the
Servicer has received written notification from the Rating Agencies that
the acquisition of such investment as a Permitted Investment will not
result in a withdrawal or downgrading of the ratings on any Class of Notes
or the Certificates.
"PERSON" shall mean a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, limited liability partnership, trust,
unincorporated organization, or government or any agency or political
subdivision thereof, or any other entity of whatever nature.
"POOL BALANCE" shall mean, as of any date of determination, the
aggregate Principal Balance of the Receivables (including the aggregate
Principal Balance of Last Scheduled Payments) as of the close of business on the
last day of the preceding Collection Period after giving effect to, with respect
to such Collection Period, (i) all payments received from Obligors (other than
Payaheads), (ii) all Advances to be made by the Servicer and (iii) all Purchase
Amounts to be remitted by the Seller or the Servicer, in each case for such
Collection Period, and reduced by the aggregate Principal Balance of Receivables
that became Defaulted Receivables during such Collection Period.
"PRINCIPAL BALANCE" shall mean, with respect to any Receivable as of
any date of determination, the Amount Financed minus the sum of the following
amounts: (i) in the case of an Actuarial Receivable, that portion of all
Scheduled Payments due on or prior to such date allocable to principal computed
in accordance with the Actuarial Method (to the extent collected or advanced),
(ii) in the case of a Simple Interest Receivable, that portion of all Scheduled
Payments actually received on or prior to such date allocable to principal using
the Simple Interest Method (to the extent collected or advanced), (iii) any
refunded portion of extended warranty protection plan costs, or of physical
damage, credit life, or disability insurance premiums included in the Amount
Financed, and (iv) any prepayment in full or partial prepayment applied to
reduce the unpaid principal balance of such Receivable. The Principal Balance
of a Defaulted Receivable shall be zero as of the beginning of the Collection
Period following the Collection Period in which it became a Defaulted
Receivable.
"PRINCIPAL CARRYOVER SHORTFALL" shall mean, as of the close of
business on any Payment Date, the excess of the Principal Distribution Amount
and any
15
outstanding Principal Carryover Shortfall from the preceding Payment Date over
the amount in respect of principal that is actually deposited in the Note
Payment Account on such Payment Date.
"PRINCIPAL DISTRIBUTION AMOUNT" shall mean, with respect to any
Payment Date, the sum of (i) the Scheduled Principal for such Payment Date
(including, in the case of a Final Payment Receivable, the amount owed by an
Obligor with respect to a Last Scheduled Payment) plus (ii) any outstanding
Principal Carryover Shortfall as of the close of business on the preceding
Payment Date; PROVIDED, HOWEVER, that the Principal Distribution Amount shall
not exceed the outstanding aggregate principal amount of the Notes; and
PROVIDED, FURTHER, that, on the Final Payment Date for each Class of Notes, the
principal required to be deposited in the Note Payment Account will include the
amount necessary (after giving effect to the other amounts to be deposited in
the Note Payment Account on such Payment Date and allocable to principal) to
reduce the outstanding principal amount of the Notes of such Class to zero.
"PROGRAM" shall have the meaning assigned thereto in Section 3.11.
"PURCHASE AGREEMENT" shall mean the Purchase Agreement, dated as of
September 1, 1998, between the Seller and MMCA, as the same may be amended,
supplemented or otherwise modified and in effect from time to time.
"PURCHASE AMOUNT" shall mean, with respect to a Payment Date and a
Receivable to be repurchased by the Seller or purchased by the Servicer on such
Payment Date, an amount equal to the sum of (a) the Principal Balance of such
Receivable as of the first day of the Collection Period preceding the Collection
Period in which such Payment Date occurs and (b) an amount equal to the amount
of accrued and unpaid interest on such Principal Balance at the related APR from
the date a payment was last made by or on behalf of the Obligor through the due
date for payment of such Receivable in the Collection Period preceding the
Collection Period in which such Payment Date occurs and, in the case of clauses
(a) and (b), after giving effect to the receipt of monies collected on such
Receivable in such preceding Collection Period.
"PURCHASED RECEIVABLE" shall mean, on any date of determination, a
Receivable as to which payment of the Purchase Amount has been made by the
Seller pursuant to Section 2.3 hereof or the Servicer pursuant to Section 3.7 or
9.1 hereof.
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"QUALIFIED INSTITUTION" shall mean Bank of Tokyo - Mitsubishi Trust
Company, a New York banking corporation or any depository institution organized
under the laws of the United States of America or any one of the states thereof
or incorporated under the laws of a foreign jurisdiction with a branch or agency
located in the United States of America or one of the states thereof qualified
to take deposits and subject to supervision and examination by federal or state
banking authorities which at all times has a short-term deposit rating of P-1 by
Moody's and A-1+ by S&P and, in the case of any such institution organized under
the laws of the United States of America, whose deposits are insured by the
Federal Deposit Insurance Corporation or any successor thereto.
"QUALIFIED TRUST INSTITUTION" shall mean the corporate trust
department of Bank of Tokyo - Mitsubishi Trust Company, a New York banking
corporation, or any institution organized under the laws of the United States of
America or any one of the states thereof or incorporated under the laws of a
foreign jurisdiction with a branch or agency located in the United States of
America or one of the states thereof qualified to take deposits and subject to
supervision and examination by federal or state banking authorities which at all
times (i) is authorized under such laws to act as a trustee or in any other
fiduciary capacity, (ii) has not less than one billion dollars in assets under
fiduciary management, and (iii) has a long-term deposit rating that satisfies
the Rating Agency Condition.
"RATING AGENCY" shall mean either S&P or Moody's, and together, the
"RATING AGENCIES." If no such organization or successor is any longer in
existence, "RATING AGENCY" shall be a nationally recognized statistical rating
organization or other comparable Person designated by the Issuer, notice of
which designation shall be given to the Indenture Trustee, the Owner Trustee and
the Servicer.
"RATING AGENCY CONDITION" shall mean, with respect to any action, that
each Rating Agency shall have been given prior notice thereof and that each of
the Rating Agencies shall have notified the Seller, the Servicer, the Owner
Trustee and the Indenture Trustee in writing that such action will not result in
a reduction or withdrawal of the then current rating of the Notes or the
Certificates.
"REALIZED LOSSES" shall mean, with respect to each Payment Date and
each Receivable that became a Defaulted Receivable during the related Collection
Period, the excess of the Principal Balance of such Defaulted Receivable
(including the principal of a Last Scheduled Payment) over the Liquidation
Proceeds attributable to the Principal Balance of such Defaulted Receivable.
17
"RECEIVABLE" shall mean any Standard Receivable or Final Payment
Receivable.
"RECEIVABLE FILE" shall mean, with respect to a Receivable, the
electronic entries, documents, instruments and writings specified in Section
2.4.
"RECEIVABLE YIELD SUPPLEMENT AMOUNT" shall mean, with respect to any
Receivable and the related Payment Date (other than a Defaulted Receivable or a
Purchased Receivable, for Collection Periods after the Collection Period in
which such Receivable became a Defaulted Receivable or a Purchased Receivable),
for any Collection Period the amount (if positive) calculated by the Servicer
equal to the product of one-twelfth (1/12) times (i) interest at a rate equal to
the sum of (A) the Weighted Average Rate, (B) the Servicing Rate and (C) 2.0%,
minus (ii) interest on such Receivable at its APR, multiplied by such
Receivable's Principal Balance as of the first day of the related Collection
Period.
"RECORD DATE" shall mean, with respect to any Payment Date, the close
of business on the day immediately preceding such Payment Date or, if Definitive
Notes have been issued, the fifteenth (15th) day of the calendar month preceding
such Payment Date.
"RECOVERIES" shall mean, with respect to any Collection Period
following the Collection Period in which such Receivable became a Defaulted
Receivable, all monies received by the Servicer with respect to any Defaulted
Receivable during any Collection Period, net of the sum of (i) any expenses
incurred by the Servicer in connection with the collection of such Receivable
and the disposition of the Financed Vehicle (to the extent not previously
reimbursed) and (ii) any payments on such Receivable required by law to be
remitted to the Obligor.
"RELEVANT UCC" shall mean the Uniform Commercial Code as in effect in
any relevant jurisdiction.
"REQUIRED RATING" shall mean a rating on (i) short-term unsecured debt
obligations of P-1 by Moody's and (ii) short-term unsecured debt obligations of
A-1+ by S&P; and any requirement that short-term unsecured debt obligations have
the "REQUIRED RATING" shall mean that such short-term unsecured debt obligations
have the foregoing required ratings from each of such Rating Agencies.
18
"RESERVE ACCOUNT" shall mean the account established and maintained as
such pursuant to Section 4.7(a).
"RESERVE ACCOUNT AMOUNT" shall mean, with respect to any Payment Date,
the amount on deposit in the Reserve Account after giving effect to all deposits
and withdrawals therefrom on the prior Payment Date (or, in the case of the
first Payment Date, the Closing Date).
"RESERVE ACCOUNT DRAW AMOUNT" shall have the meaning assigned thereto
in Section 4.6(b).
"RESERVE ACCOUNT PROPERTY" shall have the meaning assigned thereto in
Section 4.7(a).
"RESERVE INITIAL DEPOSIT" shall mean, with respect to the Closing
Date, $1,395,281.
"RULE OF 78'S PAYMENT" shall mean, with respect to any Actuarial
Receivable which provides that, if such Receivable is prepaid in full, the
amount payable will be determined according to the Rule of 78's method specified
in the related Contract, an amount (if positive) equal to (i) the amount due
allocating payments between principal and interest based upon the Rule of 78's
minus (ii) the amount that would be due allocating payments between principal
and interest from the date of origination of the Receivable using the Actuarial
Method.
"S&P" shall mean Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, or its successors and assigns.
"SCHEDULE OF RECEIVABLES" shall mean the list identifying the
Receivables attached hereto as Schedule A (which list may be in the form of
microfiche), as supplemented or amended from time to time.
"SCHEDULED PAYMENT" shall mean, for any Collection Period for any
Receivable, the amount indicated in such Receivable as required to be paid by
the Obligor in such Collection Period (without giving effect to deferrals of
payments pursuant to Section 3.2 or any rescheduling in any insolvency or
similar proceedings).
"SCHEDULED PRINCIPAL" shall mean, with respect to any Payment Date,
the sum of (a) the sum of (i) collections received during the related Collection
Period
19
of principal on Simple Interest Receivables, including collections of principal
attributable to the Last Scheduled Payment of a Simple Interest Receivable that
is a Final Payment Receivable, and including any charges for Excess Wear and
Tear and Excess Mileage but excluding collections received during the related
Collection Period of principal on Simple Interest Receivables that would be
attributable to a Last Scheduled Payment pursuant to Section 4.3(a) except that
a Last Scheduled Payment Advance has been made with respect to such Last
Scheduled Payment, and (ii) Last Scheduled Payment Advances made during the
related Collection Period with respect to Simple Interest Receivables that are
Final Payment Receivables, (b) the principal portion of each Scheduled Payment
(including a Last Scheduled Payment on a Final Payment Receivable) due on any
Actuarial Receivable during the related Collection Period, (c) the Principal
Balance (without duplication of amounts taken into account under (a) or (b)) of
(i) each Receivable prepaid in full during the related Collection Period and
(ii) Receivables which became Defaulted Receivables during the related
Collection Period, (d) the Purchase Amount of each Receivable that was
repurchased by the Seller or purchased by the Servicer during such Collection
Period to the extent attributable to principal, (e) the proceeds of any other
sale of a Receivable, to the extent allocable to principal, and (f) partial
prepayments attributable to any refunded item included in the Amount Financed,
such as extended warranty protection plan costs or physical damage, credit life
or disability insurance premiums, or any partial prepayment which causes a
reduction in the Obligor's periodic payment to be below the Scheduled Payment as
of the Cutoff Date; PROVIDED, HOWEVER, that in calculating the Scheduled
Principal, all payments and proceeds (including Liquidation Proceeds) of any
Purchased Receivables the Purchase Amount of which has been included in
Scheduled Principal in a prior Collection Period (which shall be paid to the
Seller or Servicer, as applicable) will be excluded.
"SELLER" shall mean MMCA Auto Receivables, Inc., a Delaware
corporation, in its capacity as seller of the Receivables to the Trust under
this Agreement, and each successor thereto (in the same capacity) pursuant to
Section 6.3.
"SERVICER" shall mean MMCA, in its capacity as Servicer of the
Receivables under this Agreement, each successor thereto (in the same capacity)
pursuant to Section 7.3, and each successor Servicer appointed and acting
pursuant to Section 8.2.
"SERVICER'S CERTIFICATE" shall have the meaning assigned thereto in
Section 3.9.
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"SERVICING FEE" shall mean, with respect to any Payment Date, the fee
payable to the Servicer for services rendered during the related Collection
Period, determined pursuant to and defined in Section 3.8.
"SERVICING OFFICER" shall mean any officer of the Servicer involved
in, or responsible for, the administration and servicing of the Receivables,
whose name appears on a list of servicing officers attached to an Officer's
Certificate furnished on the Closing Date to the Owner Trustee and the Indenture
Trustee by the Servicer, as such list may be amended from time to time by the
Servicer in writing.
"SERVICING RATE" shall mean 1.0% per annum.
"SIMPLE INTEREST METHOD" shall mean the method of allocating a fixed
level payment between principal and interest, pursuant to which the portion of
such payment that is allocated to interest is equal to the product of the APR
multiplied by the unpaid principal balance multiplied by the period of time
(expressed as a fraction of a year, based on the actual number of days in the
calendar month and a 365-day year) elapsed since the preceding payment was made
and the remainder of such payment is allocable to principal.
"SIMPLE INTEREST RECEIVABLE" shall mean any Receivable under which the
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"SPECIFIED RESERVE BALANCE" shall mean, with respect to any Payment
Date, an amount equal to the lesser of (i) $6,976,406 and (ii) an amount equal
to (x) the outstanding principal amount of the Notes as of such Payment Date
(after giving effect to any principal payment made on such Payment Date) less
(y) the amounts on deposit in the Supplemental Reserve Account on such Payment
Date (after giving effect to any deposits to or withdrawals from the
Supplemental Reserve Account on such Payment Date). Notwithstanding the
foregoing, if (i) each Rating Agency delivers a letter to the Indenture Trustee
that the use of any new formulation requested by the Seller would not cause a
downgrade, qualification or withdrawal of the then current rating on any Class
of Notes, and (ii) an Opinion of Counsel to the effect that the proposed change
will not adversely affect the status of the Notes as debt is delivered to the
Indenture Trustee, then the Specified Reserve Balance may be reduced in
accordance with such letters without an amendment hereto.
21
"SPECIFIED YIELD SUPPLEMENT ACCOUNT BALANCE" shall mean, on the
Closing Date, $[ ] and, as of the close of business on any Payment
Date, an amount equal to the sum of all projected Yield Supplement Amounts for
all future Payment Dates, assuming that future Scheduled Payments on the
Receivables are made on their scheduled due dates; PROVIDED that if, on any
date, MMCA shall fail to pay the amount payable under the Yield Supplement
Agreement in accordance with the terms thereof, then, in such event, the
Specified Yield Supplement Account Balance shall not be reduced thereafter.
"STANDARD RECEIVABLE" shall mean all rights and obligations under a
Contract which is not a Final Payment Receivable listed on the Schedule of
Receivables.
"SUPPLEMENTAL RESERVE ACCOUNT" shall mean the account established and
maintained as such pursuant to Section 4.7(b).
"SUPPLEMENTAL RESERVE ACCOUNT AMOUNT" shall mean, with respect to any
Payment Date, the amount on deposit in the Supplemental Reserve Account after
giving effect to all deposits and withdrawals therefrom on the prior Payment
Date (or, in the case of the first Payment Date, the Closing Date).
"SUPPLEMENTAL RESERVE ACCOUNT DRAW AMOUNT" shall have the meaning
assigned thereto in Section 4.6(b).
"SUPPLEMENTAL RESERVE ACCOUNT PROPERTY" shall have the meaning
assigned thereto in Section 4.7(b).
"SUPPLEMENTAL SERVICING FEE" shall mean, with respect to any Payment
Date, the fee payable to the Servicer for services rendered during the related
Collection Period, determined pursuant to and defined in Section 3.8.
"TOTAL REQUIRED PAYMENT" shall mean, with respect to any Payment Date,
the sum of (i) the Total Servicing Fee, (ii) the Accrued Note Interest and (iii)
the Principal Distribution Amount with respect to such Payment Date.
"TOTAL SERVICING FEE" shall mean, with respect to any Payment Date,
the sum of (i) the Servicing Fee for the related Collection Period plus (ii) all
accrued and unpaid Servicing Fees for prior Collection Periods.
22
"TRUST" shall mean the Issuer.
"TRUST ACCOUNTS" shall have the meaning assigned thereto in Section
4.1(d).
"TRUST AGREEMENT" shall mean the Amended and Restated Trust Agreement,
dated as of August 1, 1998, between the Seller and the Owner Trustee, as the
same may be amended, supplemented or otherwise modified and in effect from time
to time.
"TRUST OFFICER" shall mean, in the case of the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee with direct
responsibility for the administration of the Indenture and the other Basic
Documents on behalf of the Indenture Trustee and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject and,
with respect to the Owner Trustee, any officer in the Corporate Trust
Administration Department of the Owner Trustee with direct responsibility for
the administration of the Trust Agreement and the other Basic Documents on
behalf of the Owner Trustee.
"TRUST PROPERTY" shall mean, collectively, (i) the Receivables; (ii)
with respect to Actuarial Receivables, monies due thereunder on or after the
Cutoff Date (including Payaheads) and, with respect to Simple Interest
Receivables, monies due or received thereunder on or after the Cutoff Date;
(iii) the security interests in the Financed Vehicles granted by Obligors
pursuant to the Receivables and any other interest of the Issuer in the Financed
Vehicles; (iv) rights to receive proceeds with respect to the Receivables from
claims on any physical damage, theft, credit life or disability insurance
policies covering the Financed Vehicles or Obligors; (v) rights to receive
proceeds with respect to the Receivables from recourse to Dealers thereon
pursuant to the Dealer Agreements; (vi) all of the Seller's rights to the
Receivable Files; (vii) the Trust Accounts, the Certificate Distribution
Account, the Reserve Account, the Supplemental Reserve Account and the Yield
Supplement Account and all amounts, securities, investments in financial assets,
and other property deposited in or credited to any of the foregoing and all
proceeds thereof; (viii) all of the Seller's rights under the Yield Supplement
Agreement and the Purchase Agreement, including the right of the Seller to cause
MMCA to repurchase Receivables from the Seller; (ix) payments and proceeds with
respect to the Receivables held by the Servicer; (x) all property (including the
right to receive Liquidation Proceeds and Recoveries and Financed Vehicles and
the proceeds thereof acquired by the Seller pursuant to the
23
terms of a Final Payment Receivable), guarantees and other collateral securing a
Receivable (other than a Receivable repurchased by the Servicer or purchased by
the Seller); (xi) rebates of premiums and other amounts relating to insurance
policies and other items financed under the Receivables in effect as of the
Cutoff Date; and (xii) all present and future claims, demands, causes of action
and choses in action in respect of any or all of the foregoing and all payments
on or under and all proceeds of every kind and nature whatsoever in respect of
any or all of the foregoing, including all proceeds of the conversion thereof,
voluntary or involuntary, into cash or other liquid property, all cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, insurance proceeds, condemnation awards, rights to
payment of any and every kind and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part of or
are included in the proceeds of any of the foregoing.
"WEIGHTED AVERAGE RATE" shall mean, with respect to any Collection
Period, a per annum rate equal to the product of (i) twelve and (ii) the
aggregate amount of the Monthly Accrued Interest for the Notes as of the
preceding Payment Date divided by the sum of the outstanding principal amount of
the Notes and the Certificate Balance as of the preceding Payment Date (after
giving effect to any principal payment made on such Payment Date) or, with
respect to the first Payment Date, as of the Closing Date.
"YIELD SUPPLEMENT ACCOUNT" shall have the meaning assigned thereto in
Section 5.1(a).
"YIELD SUPPLEMENT AGREEMENT" shall mean the Yield Supplement
Agreement, dated as of [ ], 1998, by and between the Seller and MMCA,
as amended, modified or supplemented from time to time, substantially in the
form of Exhibit D hereto.
"YIELD SUPPLEMENT AMOUNT" shall mean, with respect to any Payment
Date, the sum of all Receivable Yield Supplement Amounts for the related
Collection Period.
"YIELD SUPPLEMENT LETTER OF CREDIT" shall mean any letter of credit
issued by the Letter of Credit Bank, as permitted by Section 5.1, to support
payments of the Yield Supplement Amount under the Yield Supplement Agreement.
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SECTION 1.2. OTHER DEFINITIONAL PROVISIONS. (a) Capitalized terms
used herein and not otherwise defined herein have the meanings assigned to them
in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Article, Section, Schedule
and Exhibit references contained in this Agreement are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified, and the term "including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
SECTION 1.3. BUSINESS DAY CERTIFICATE. On or prior to [ ],
1998 (with respect to the remainder of calendar year 1998 and calendar year
1999)
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and thereafter, within 15 days prior to the end of each calendar year while this
Agreement remains in effect (with respect to the succeeding calendar years), the
Servicer shall deliver to the Owner Trustee and the Indenture Trustee an
Officer's Certificate specifying the days on which banking institutions or trust
companies in New York, New York, Wilmington, Delaware or Los Angeles, California
are authorized or obligated by law, executive order or governmental decree to
remain closed.
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ARTICLE II
TRUST PROPERTY
SECTION 2.1. CONVEYANCE OF TRUST PROPERTY. In consideration of the
Issuer's delivery to, or upon the written order of, the Seller of authenticated
Notes and Certificates, in authorized denominations in aggregate principal
amounts equal to the initial principal amount of the Notes and the Initial
Certificate Balance, respectively, the Seller hereby irrevocably sells,
transfers, assigns and conveys to the Issuer all right, title and interest of
the Seller, whether now owned or hereafter acquired, in, to and under the Trust
Property, without recourse (subject to the obligations herein). The sale,
transfer, assignment and conveyance made hereunder shall not constitute and is
not intended to result in an assumption by the Issuer of any obligation of the
Seller to the Obligors, the Dealers or any other Person in connection with the
Receivables and the other Trust Property or any agreement, document or
instrument related thereto.
It is the intention of the Seller and the Issuer that the transfer of
the Trust Property contemplated herein constitute a sale of the Trust Property,
conveying good title to the Trust Property from the Seller to the Issuer.
However, in the event that such transfer is deemed to be a pledge to secure the
payment of the Notes and the Certificates, the Seller hereby grants to the
Issuer a first priority security interest in all of the Seller's right, title
and interest in, to and under the Trust Property, and all proceeds thereof, to
secure the payment of the Notes and the Certificates, and in such event, this
Agreement shall constitute a security agreement under applicable law.
SECTION 2.2. REPRESENTATIONS AND WARRANTIES OF THE SELLER AS TO THE
RECEIVABLES. The Seller makes the following representations and warranties as
to the Receivables on which the Issuer relies in accepting the Receivables.
Such representations and warranties speak as of the execution and delivery of
this Agreement, but shall survive the sale, transfer and assignment of the
Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(i) CHARACTERISTICS OF RECEIVABLES. Each Receivable (a) shall have
been originated 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, shall have been fully and properly executed by the parties thereto,
shall
27
have been purchased by the Seller from MMCA, which in turn shall have purchased
such Receivable from such Dealer under a Dealer Agreement with MMCA, and shall
have been validly assigned by such Dealer to MMCA in accordance with its terms,
which in turn shall have been validly assigned by MMCA to the Seller in
accordance with its terms, (b) shall have created or shall create a valid,
binding, subsisting and enforceable first priority security interest in favor of
MMCA on the related Financed Vehicle, which security interest has been validly
assigned by MMCA to the Seller, which in turn shall be validly assigned by the
Seller to the Issuer and by the Issuer to the Indenture Trustee, (c) shall
contain customary and enforceable provisions such that the rights and remedies
of the holder thereof shall be adequate for realization against the collateral
of the benefits of the security, (d) in the case of Standard Receivables, shall
provide for level monthly payments (PROVIDED that the payment in the last month
in a life of the Receivable may be different from the level payment) that fully
amortize the Amount Financed by maturity and yield interest at the APR, (e) in
the case of Final Payment Receivables, shall provide for a series of fixed level
monthly payments and a larger payment due after such level monthly payments that
fully amortize the Amount Financed by maturity and yield interest at the APR,
(f) shall provide for, in the event that such contract is prepaid, a prepayment
that fully pays the Principal Balance, (g) is a retail installment sale
contract, (h) is secured by a new or used automobile or light-or medium-duty
truck, and (i) is an Actuarial Receivable or a Simple Interest Receivable (and
may also be a Final Payment Receivable).
(ii) SCHEDULE OF RECEIVABLES. The information set forth in the
Schedule of Receivables shall be true and correct in all material respects as of
the opening of business on the Cutoff Date, and no selection procedures believed
to be adverse to the Noteholders and/or the Certificateholders shall have been
utilized in selecting the Receivables from those receivables which meet the
criteria contained herein and in the Purchase Agreement. The computer tape or
other listing regarding the Receivables made available to the Issuer and its
assigns (which computer tape or other listing is required to be delivered as
specified herein) is true and correct in all respects.
(iii) COMPLIANCE WITH LAW. Each Receivable and the sale of the
related Financed Vehicle shall have complied, at the time it was originated or
made, and shall comply at the execution of this Agreement, in all material
respects with all requirements of applicable Federal, state, and local laws, and
regulations thereunder, including, without limitation, usury laws, the Federal
Truth-in-
28
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 Xxxxxxxx-Xxxx Warranty Act, the Federal Reserve
Board's Regulations B, M and Z, the Soldiers' and Sailors' Civil Relief Act of
1940, the Texas Consumer Credit Code, and State adaptations of the Uniform
Consumer Credit Code, and other consumer credit laws and equal credit
opportunity and disclosure laws.
(iv) BINDING OBLIGATION. Each Receivable shall represent the genuine,
legal, valid and binding payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, or
other similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity.
(v) NO GOVERNMENT OBLIGOR. None of the Receivables is due from the
United States of America or any state or from any agency, department or
instrumentality of the United States of America or any state.
(vi) SECURITY INTEREST IN FINANCED VEHICLE. Immediately prior to the
sale, assignment, and transfer thereof by MMCA to the Seller, each Receivable
shall be secured by a validly perfected first priority security interest in the
Financed Vehicle in favor of MMCA as secured party and, at such time as
enforcement of such security interest is sought, there shall exist a valid,
subsisting and enforceable first priority perfected security interest in the
Financed Vehicle for the benefit of the Seller and the Issuer, respectively
(subject to any statutory or other lien arising by operation of law after the
Closing Date which is prior to such security interest).
(vii) RECEIVABLES IN FORCE. No Receivable shall have been satisfied,
subordinated, or rescinded, nor shall any Financed Vehicle have been released
from the Lien granted by the related Receivable in whole or in part, which
security interest shall be assignable by MMCA to the Seller and by the Seller to
the Issuer.
(viii) NO WAIVER. No provision of a Receivable shall have been waived
in such a manner that such Receivable fails to meet all of the representations
and warranties made by the Seller in this Section 2.2 with respect thereto.
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(ix) NO DEFENSES. No right of rescission, setoff, counterclaim, or
defense shall have been asserted or threatened with respect to any Receivable.
(x) NO LIENS. To the best of the Seller's knowledge, no liens or
claims shall have been filed for work, labor, or materials relating to a
Financed Vehicle that shall be liens prior to, or equal or coordinate with, the
security interest in the Financed Vehicle granted by the Receivable.
(xi) NO DEFAULT; REPOSSESSION. Except for payment defaults continuing
for a period of not more than thirty (30) days as of the Cutoff Date or the
failure of the Obligor to maintain satisfactory physical damage insurance
covering the Financed Vehicle, no default, breach, violation, or event
permitting acceleration under the terms of any Receivable shall have occurred;
no continuing condition that with notice or the lapse of time or both would
constitute a default, breach, violation, or event permitting acceleration under
the terms of any Receivable shall have arisen; the Seller shall not have waived
any of the foregoing; and no Financed Vehicle shall have been repossessed as of
the Cutoff Date.
(xii) INSURANCE. MMCA, in accordance with its customary procedures,
shall have determined whether or not the Obligor has maintained physical damage
insurance (which insurance shall not be force placed insurance) covering the
Financed Vehicle.
(xiii) TITLE. It is the intention of the Seller that the transfer and
assignment of the Receivables herein contemplated constitute a sale of the
Receivables from the Seller to the Issuer and that the beneficial interest in,
and title to, the Receivables not be part of the Seller's estate in the event of
the filing of a bankruptcy petition by or against the Seller under any
bankruptcy law. No Receivable has been sold, transferred, assigned, or pledged
by the Seller to any Person other than the Issuer. Immediately prior to the
transfer and assignment herein contemplated, the Seller had good and marketable
title to each Receivable free and clear of all Liens, encumbrances, security
interests, and rights of others and, immediately upon the transfer thereof, the
Issuer shall have good and marketable title to each Receivable, free and clear
of all Liens, encumbrances, security interests, and rights of others; and the
transfer has been perfected by all necessary action under the Relevant UCC.
(xiv) VALID ASSIGNMENT. No Receivable shall have been originated in,
or shall be subject to the laws of, any jurisdiction under which the sale,
30
transfer, and assignment of such Receivable under this Agreement or the
Indenture or pursuant to transfers of the Certificates shall be unlawful, void,
or voidable. The Seller has not entered into any agreement with any account
debtor that prohibits, restricts or conditions the assignment of any portion of
the Receivables.
(xv) ALL FILINGS MADE. All filings (including, without limitation,
filings under the Relevant UCC) necessary in any jurisdiction to give the Issuer
a first priority perfected security interest in the Receivables, and to give the
Indenture Trustee a first priority perfected security interest therein, shall be
made within ten (10) days of the Closing Date.
(xvi) CHATTEL PAPER. Each Receivable constitutes "CHATTEL PAPER" as
defined in the Relevant UCC.
(xvii) ONE ORIGINAL. There shall be only one original executed copy
of each Receivable.
(xviii) PRINCIPAL BALANCE. Each Receivable had an original principal
balance (net of unearned precomputed finance charges) of not more than
$60,000.00, and a remaining Principal Balance as of the Cutoff Date of not less
than $100.00.
(xix) NO BANKRUPT OBLIGORS. As of the Cutoff Date, no Receivable was
due from an Obligor that was the subject of a proceeding under the Bankruptcy
Code of the United States or was bankrupt.
(xx) NEW AND USED VEHICLES. Approximately [ ]% of the Pool Balance
of the Receivables, constituting approximately [ ]% of the total number of
the Receivables, as of the Cutoff Date, relate to new automobiles and light- or
medium-duty trucks financed at new vehicle rates. Approximately [ ]% of the
Pool Balance of the Receivables, constituting approximately [ ]% of the total
number of Receivables included in the Trust, as of the Cutoff Date, relate to
used automobiles and light- or medium-duty trucks. Of the new and used
vehicles, approximately [ ]% of the Pool Balance of the Receivables,
constituting approximately [ ]% of the total number of Receivables as of the
Cutoff Date, relate to program automobiles and light-duty trucks manufactured in
the current and immediately preceding model years which are financed at new
vehicle rates. Of the used vehicles, approximately [ ]% of the Pool Balance
of the Receivables, constituting approximately [ ]% of the total number of
Receivables
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as of the Cutoff Date, relate to refinanced program automobiles and light- or
medium-duty trucks manufactured in prior model years which are financed at the
original rates set forth in the related Contracts or at used vehicle rates.
(xxi) ORIGINATION. Each Receivable shall have an origination date
during or after April 1994.
(xxii) MATURITY OF RECEIVABLES. Each Receivable shall have a
remaining maturity, as of the Cutoff Date, of not more than sixty (60) months,
and an original maturity of not more than sixty (60) months.
(xxiii)ANNUAL PERCENTAGE RATE. Each Receivable shall have an APR of
at least 0%. Each Receivable shall have an APR of not more than 30%.
(xxiv) SCHEDULED PAYMENTS. Each Receivable shall have a first
Scheduled Payment due on or prior to August 31, 1998, and no Receivable shall
have a payment of which more than 10% of such payment is thirty (30) days
overdue as of the Cutoff Date.
(xxv) LOCATION OF RECEIVABLE FILES. The Receivable Files shall be
kept at one or more of the locations listed in Schedule B hereto.
(xxvi) CAPPED RECEIVABLES AND SIMPLE INTEREST RECEIVABLES. Except to
the extent that there has been no material adverse effect on Noteholders or
Certificateholders, each Capped Receivable has been treated consistently by the
Seller and the Servicer as a Simple Interest Receivable and payments with
respect to each Simple Interest Receivable have been allocated consistently in
accordance with the Simple Interest Method.
(xxvii) AGREEMENT. The representations and warranties of the Seller
in Section 6.1 are true and correct.
(xxviii) NO RECEIVABLES ORIGINATED IN ALABAMA. No Receivable shall
have been originated in Alabama.
(xxix) OTHER DATA. The tabular data and the numerical data relating
to the characteristics of the Receivables contained in the Prospectus (as
defined in the Purchase Agreement) is true and correct in all material respects.
32
SECTION 2.3. REPURCHASE UPON BREACH. The Seller, the Servicer, or
the Owner Trustee, as the case may be, shall inform the other parties to this
Agreement, the Indenture Trustee and MMCA promptly, in writing, upon the
discovery of any breach or failure to be true of the representations and
warranties made by the Seller pursuant to Section 2.2. If the breach or failure
shall not have been cured by the close of business on the last day of the
Collection Period which includes the sixtieth (60th) day after the date on which
the Seller becomes aware of, or receives written notice from the Owner Trustee
or the Servicer of, such breach or failure, and such breach or failure
materially and adversely affects the interest of the Issuer in a Receivable, the
Seller shall repurchase from the Issuer such Receivable, on the Payment Date
immediately following such Collection Period. In consideration of the
repurchase of a Receivable hereunder, the Seller shall remit the Purchase Amount
of such Receivable in the manner specified in Section 4.5. The sole remedy of
the Issuer, the Owner Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders with respect to a breach or failure to be true of the
representations and warranties made by the Seller pursuant to Section 2.2 shall
be to require the Seller to repurchase Receivables pursuant to this Section 2.3
and to enforce the obligation of MMCA to the Seller to repurchase such
Receivable pursuant to the Purchase Agreement. Neither the Owner Trustee nor
the Indenture Trustee shall have any duty to conduct an affirmative
investigation as to the occurrence of any condition requiring the repurchase of
any Receivable pursuant to this Section 2.3 or the eligibility of any Receivable
for purposes of this Agreement.
SECTION 2.4. CUSTODY OF RECEIVABLE FILES. To assure uniform quality
in servicing the Receivables and to reduce administrative costs, the Issuer,
upon the execution and delivery of this Agreement, hereby revocably appoints the
Servicer as its agent, and the Servicer hereby accepts such appointment, to act
as custodian on behalf of the Issuer and the Indenture Trustee of the following
documents or instruments, which are hereby constructively delivered to the
Indenture Trustee, as pledgee of the Issuer pursuant to the Indenture, with
respect to each Receivable (collectively, a "RECEIVABLE FILE"):
(i) the single original of the Receivable;
(ii) the original credit application fully executed by the Obligor or
a photocopy thereof or a record thereof on a computer file or disc or on
microfiche;
33
(iii) the original certificate of title or such other documents that
the Servicer or MMCA shall keep on file, in accordance with its customary
practices and procedures, evidencing the security interest of MMCA in the
Financed Vehicle;
(iv) documents evidencing the existence of any insurance covering the
Financed Vehicle; and
(v) any and all other documents (including any computer file or disc
or microfiche) that the Servicer or the Seller shall keep on file, in accordance
with its customary procedures, relating to a Receivable, an Obligor, or a
Financed Vehicle.
On the Closing Date, the Servicer shall provide an Officer's
Certificate to the Issuer and the Indenture Trustee confirming that the Servicer
has received, on behalf of the Issuer and the Indenture Trustee, all the
documents and instruments necessary for the Servicer to act as the agent of the
Issuer and the Indenture Trustee for the purposes set forth in this Section 2.4,
including the documents referred to herein, and the Issuer, the Owner Trustee
and the Indenture Trustee are hereby authorized to rely on such Officer's
Certificate.
SECTION 2.5. DUTIES OF SERVICER AS CUSTODIAN.
(a) SAFEKEEPING. The Servicer, in its capacity as custodian, shall
hold the Receivable Files for the benefit of the Issuer and the Indenture
Trustee and maintain such accurate and complete accounts, records, and computer
systems pertaining to each Receivable File as shall enable the Servicer and the
Issuer to comply with the terms and provisions of this Agreement, and the
Indenture Trustee to comply with the terms and conditions of the Indenture. In
performing its duties as custodian, the Servicer shall act with reasonable care,
using that degree of skill and attention that the Servicer exercises with
respect to the receivable files relating to all comparable motor vehicle
receivables that the Servicer services for itself or others. In accordance with
its customary practices and procedures with respect to its retail installment
sale contracts, the Servicer shall conduct, or cause to be conducted, periodic
audits of the Receivable Files held by it under this Agreement, and of the
related accounts, records, and computer systems, in such a manner as shall
enable the Issuer or the Indenture Trustee to verify the accuracy of the
Servicer's recordkeeping. The Servicer shall promptly report to the Owner
Trustee and the Indenture Trustee any failure on its part to hold the Receivable
34
Files and maintain its accounts, records, and computer systems as herein
provided and promptly take appropriate action to remedy any such failure.
Nothing herein shall be deemed to require an initial review or any periodic
review by the Issuer, the Owner Trustee or the Indenture Trustee of the
Receivable Files and none of the Issuer, the Owner Trustee and the Indenture
Trustee shall be liable or responsible for any action or failure to act by the
Servicer in its capacity as custodian hereunder.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall maintain
each Receivable File at one of its offices specified in Schedule B to this
Agreement, or at such other office as shall be specified to the Issuer and the
Indenture Trustee by written notice not later than ninety (90) days after any
change in location. The Servicer shall make available to the Issuer and the
Indenture Trustee or its duly authorized representatives, attorneys, or auditors
a list of locations of the Receivable Files, the Receivable Files, and the
related accounts, records, and computer systems maintained by the Servicer at
such times as the Issuer or the Indenture Trustee shall instruct.
(c) RELEASE OF DOCUMENTS. Upon written instructions from the
Indenture Trustee, the Servicer shall release any document in the Receivable
Files to the Indenture Trustee, the Indenture Trustee's agent, or the Indenture
Trustee's designee, as the case may be, at such place or places as the Indenture
Trustee may designate, as soon thereafter as is practicable. Any document so
released shall be handled by the Indenture Trustee with due care and returned to
the Servicer for safekeeping as soon as the Indenture Trustee or its agent or
designee, as the case may be, shall have no further need therefor.
(d) TITLE TO RECEIVABLES. The Servicer agrees that, in respect of any
Receivable held by the Servicer as custodian hereunder, the Servicer will not at
any time have or in any way attempt to assert any interest in such Receivable or
the related Receivable File, other than for collecting or enforcing the
Receivable for the benefit of the Issuer and that the entire equitable interest
in such Receivable and the related Receivable File shall at all times be vested
in the Issuer.
SECTION 2.6. INSTRUCTIONS; AUTHORITY TO ACT. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by an Authorized Officer of the
Indenture Trustee. A certified copy of excerpts of authorizing resolutions of
the Board of Directors of the Indenture Trustee shall constitute conclusive
evidence of
35
the authority of any such Authorized Officer to act and shall be considered in
full force and effect until receipt by the Servicer of written notice to the
contrary given by the Indenture Trustee.
SECTION 2.7. CUSTODIAN'S INDEMNIFICATION. The Servicer, in its
capacity as custodian, shall indemnify and hold harmless the Issuer, the Owner
Trustee and the Indenture Trustee and each of their respective officers,
directors, employees and agents from and against any and all liabilities,
obligations, losses, compensatory damages, payments, costs or expenses
(including legal fees if any) of any kind whatsoever that may be imposed on,
incurred, or asserted against the Issuer, the Owner Trustee and the Indenture
Trustee or any of their respective officers, directors, employees and agents as
the result of any act or omission by the Servicer relating to the maintenance
and custody of the Receivable Files; PROVIDED, HOWEVER, that the Servicer shall
not be liable hereunder to the Owner Trustee to the extent, but only to the
extent, that such liabilities, obligations, losses, compensatory damages,
payments, costs or expenses result from the willful misfeasance, bad faith, or
negligence of the Owner Trustee and shall not be liable hereunder to the
Indenture Trustee to the extent, but only to the extent, that such liabilities,
obligations, losses, compensatory damages, payments, costs or expenses result
from the willful misfeasance, bad faith, or negligence of the Indenture Trustee.
SECTION 2.8. EFFECTIVE PERIOD AND TERMINATION. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section 2.8.
If the Servicer shall resign as Servicer under Section 7.5, or if all of the
rights and obligations of the Servicer shall have been terminated under Section
8.1, the appointment of the Servicer as custodian hereunder may be terminated by
the Indenture Trustee or by the Holders of Notes evidencing not less than 25% of
the principal amount of the then Outstanding Notes or, with the consent of
Holders of Notes evidencing not less than 25% of the principal amount of the
then Outstanding Notes, by the Owner Trustee or by Holders of Certificates
evidencing not less than 25% of the Certificate Balance, in the same manner as
the Indenture Trustee or such Holders may terminate the rights and obligations
of the Servicer under Section 8.1. As soon as practicable after any termination
of such appointment, the Servicer shall deliver, or cause to be delivered, the
Receivable Files and the related accounts and records maintained by the Servicer
to the Indenture Trustee, the Indenture Trustee's agent or the Indenture
Trustee's
36
designee at such place or places as the Indenture Trustee may reasonably
designate.
37
ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND TRUST PROPERTY
SECTION 3.1. DUTIES OF SERVICER. (a) The Servicer, acting alone
and/or through subservicers as provided in this Section 3.1, shall administer
the Receivables with reasonable care. The Servicer's duties shall include, but
not be limited to, the collection and posting of all payments, responding to
inquiries by Obligors on the Receivables, or by federal, state, or local
governmental authorities, investigating delinquencies, reporting tax information
to Obligors, furnishing monthly and annual statements to the Owner Trustee and
the Indenture Trustee with respect to distributions, providing collection and
repossession services in the event of Obligor default, coordinating or arranging
inspection of Financed Vehicles relating to Final Payment Receivables at the end
of the related Contract term, refinancing or selling Financed Vehicles relating
to Final Payment Receivables at the end of the related Contract term depending
upon the options chosen by the Obligors and making Advances pursuant to Sections
4.4(a) and (c). The Servicer shall also administer and enforce all rights and
responsibilities of the holder of the Receivables provided for in the Dealer
Agreements, to the extent that such Dealer Agreements relate to the Receivables,
the Financed Vehicles or the Obligors. In performing its duties as Servicer
hereunder, the Servicer will exercise that degree of skill and attention that
the Servicer exercises with respect to all comparable motor vehicle receivables
that it services for itself or others. Subject to Section 3.2, the Servicer
shall follow its customary standards, policies, practices and procedures in
performing its duties hereunder as Servicer. Without limiting the generality of
the foregoing, the Servicer is hereby authorized and empowered to execute and
deliver, on behalf of itself, the Issuer, the Owner Trustee, the Indenture
Trustee, the Certificateholders, the Noteholders or any one or more of them,
any and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the
Receivables or to the Financed Vehicles, all in accordance with this Agreement;
PROVIDED, HOWEVER, that notwithstanding the foregoing, the Servicer shall not,
except pursuant to an order from a court of competent jurisdiction, release an
Obligor from payment of any unpaid amount under any Receivable or waive the
right to collect the unpaid balance (including accrued interest) of any
Receivable from the Obligor, except in connection with a DE MINIMIS deficiency,
Excess Wear and Tear or Excess Mileage which the Servicer would not attempt to
collect in accordance with its customary procedures, in which event the Servicer
38
shall indemnify the Issuer for such deficiency, Excess Wear and Tear or Excess
Mileage. If the Servicer shall commence a legal proceeding to enforce a
Receivable, the Owner Trustee shall thereupon be deemed to have automatically
assigned such Receivable to the Servicer, which assignment shall be solely for
purposes of collection. If in any enforcement suit or legal proceeding it shall
be held that the Servicer may not enforce a Receivable on the ground that it
shall not be a real party in interest or a holder entitled to enforce the
Receivable, the Owner Trustee shall, at the Servicer's expense and direction,
take steps to enforce the Receivable, including bringing suit in its name or the
names of the Indenture Trustee, the Certificateholders, the Noteholders or any
of them. The Owner Trustee shall execute and deliver to the Servicer any powers
of attorney and other documents as shall be prepared by the Servicer and
reasonably necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder. The Servicer, at its expense,
shall obtain on behalf of the Issuer or the Owner Trustee all licenses, if any,
required by the laws of any jurisdiction to be held by the Issuer or the Owner
Trustee in connection with ownership of the Receivables, and shall make all
filings and pay all fees as may be required in connection therewith during the
term hereof.
The Servicer may enter into subservicing agreements with one or more
subservicers for the servicing and administration of certain of the Receivables;
PROVIDED, HOWEVER, that the Servicer shall remain fully liable hereunder for the
performance of the duties of Servicer and any such subservicer shall be and
shall remain, for so long as it is acting as subservicer, an Eligible Servicer,
and any fees paid to such subservicer shall be paid by the Servicer and not out
of the proceeds of the Trust, and any such subservicer shall agree to service
the Receivables in a manner consistent with the terms of this Agreement.
(b) References in this Agreement to actions taken, to be taken,
permitted to be taken, or restrictions on actions permitted to be taken by the
Servicer in servicing the Receivables and other actions taken, to be taken,
permitted to be taken, or restrictions on actions to be taken with respect to
the Trust Property shall include actions taken, to be taken, permitted to be
taken, or restrictions on actions permitted to be taken by a subservicer on
behalf of the Servicer and references herein to payments received by the
Servicer shall include payments received by a subservicer, irrespective of
whether such payments are actually deposited in the Collection Account by such
subservicer. Any such subservicing agreement will contain terms and provisions
substantially identical to the terms and provisions of this Agreement and such
other terms and provisions as
39
are not inconsistent with this Agreement and as the Servicer and the subservicer
have agreed.
(c) The Servicer shall be entitled to terminate any subservicing
agreement in accordance with the terms and conditions of such subservicing
agreement and without any limitation by virtue of this Agreement; PROVIDED,
HOWEVER, that, in the event of termination of any subservicing agreement by the
Servicer, the Servicer shall either act directly as Servicer of the related
Receivables or enter into a subservicing agreement with a successor subservicer
which will be bound by the terms of the related subservicing agreement.
(d) As a condition to the appointment of any subservicer, the Servicer
shall notify the Owner Trustee, the Indenture Trustee and the Rating Agencies in
writing before such assignment becomes effective and such subservicer shall be
required to execute and deliver an instrument in which it agrees that, for so
long as it acts as subservicer of the Receivables and the other Trust Property
being serviced by it, the covenants, conditions, indemnities, duties,
obligations and other terms and provisions of this Agreement applicable to the
Servicer hereunder shall be applicable to it as subservicer, that it shall be
required to perform its obligations as subservicer for the benefit of the Issuer
as if it were Servicer hereunder (subject, however, to the right of the Servicer
to direct the performance of such obligations in accordance with this Agreement)
and that, notwithstanding any provision of a subservicing agreement to the
contrary, such subservicer shall be directly liable to the Owner Trustee and the
Issuer (notwithstanding any failure by the Servicer to perform its duties and
obligations hereunder) for the failure by such subservicer to perform its
obligations hereunder or under any subservicing agreement, and that
(notwithstanding any failure by the Servicer to perform its duties and
obligations hereunder) the Owner Trustee may enforce the provisions of this
Agreement and any subservicing agreement against the subservicer for the benefit
of the Issuer, without diminution of such obligations or liabilities by virtue
of any subservicing agreement, by virtue of any indemnification provided
thereunder or by virtue of the fact that the Servicer is primarily responsible
hereunder for the performance of such duties and obligations, as if a
subservicer alone were servicing and administering, under this Agreement, the
Receivables and the other Trust Property being serviced by it under the
subservicing agreement.
(e) Notwithstanding any subservicing agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer or
a subservicer or reference to actions taken through such Persons or
40
otherwise, the Servicer shall remain obligated and liable to the Issuer and the
Owner Trustee for the servicing and administering of the Receivables and the
other Trust Property in accordance with the provisions of this Agreement
(including for the deposit of payments received by a subservicer, irrespective
of whether such payments are actually remitted to the Servicer or deposited in
the Collection Account by such subservicer; PROVIDED that if such amounts are so
deposited, the Servicer shall have no further obligation to do so) without
diminution of such obligation or liability by virtue of such subservicing
agreements or arrangements or by virtue of indemnification from a subservicer,
to the same extent and under the same terms and conditions as if the Servicer
alone were servicing and administering the Receivables and the other Trust
Property. The Servicer shall be entitled to enter into any agreement with a
subservicer for indemnification of the Servicer and nothing contained in this
Agreement shall be deemed to limit or modify such indemnification.
(f) In the event the Servicer shall for any reason no longer be acting
as such (including by reason of the occurrence of an Event of Servicing
Termination), the successor Servicer may, in its discretion, thereupon assume
all of the rights and obligations of the outgoing Servicer under a subservicing
agreement. In such event, the successor Servicer shall be deemed to have
assumed all of the Servicer's interest therein and to have replaced the outgoing
Servicer as a party to such subservicing agreement to the same extent as if such
subservicing agreement had been assigned to the successor Servicer, except that
the outgoing Servicer shall not thereby be relieved of any liability or
obligation on the part of the outgoing Servicer to the subservicer under such
subservicing agreement. The outgoing Servicer shall, upon request of the
Indenture Trustee, but at the expense of the outgoing Servicer, deliver to the
successor Servicer all documents and records relating to each such subservicing
agreement and the Receivables and the other Trust Property then being serviced
thereunder and an accounting of amounts collected and held by it and otherwise
use its best efforts to effect the orderly and efficient transfer of the
subservicing agreement to the successor Servicer. In the event that the
successor Servicer elects not to assume a subservicing agreement, such
subservicing agreement shall be immediately cancellable by the successor
Servicer upon written notice to the subservicer and the outgoing Servicer, at
its expense, shall cause the subservicer to deliver to the successor Servicer
all documents and records relating to the Receivables and the other Trust
Property being serviced thereunder and all amounts held (or thereafter received)
by such subservicer (together with an accounting of such amounts) and shall
otherwise use its best efforts to effect the orderly and efficient transfer of
servicing of the
41
Receivables and the other Trust Property being serviced by such subservicer to
the successor Servicer.
SECTION 3.2. COLLECTION AND ALLOCATION OF RECEIVABLE PAYMENTS. (a)
The Servicer shall make reasonable efforts to collect all payments called for
under the terms and provisions of the Receivables as and when the same shall
become due and shall follow such collection procedures as it follows with
respect to all comparable motor vehicle receivables that it services for itself
or others. The Servicer shall allocate collections between principal and
interest in accordance with the customary servicing practices and procedures it
follows with respect to all comparable motor vehicle receivables that it
services for itself or others. The Servicer will not increase or decrease the
number or amount of any Scheduled Payment, or the Amount Financed under a
Receivable or the APR of a Receivable, or extend, rewrite or otherwise modify
the payment terms of a Receivable; PROVIDED, HOWEVER, that the Servicer may
extend the due date for one or more payments due on a Receivable for
credit-related reasons that would be acceptable to the Servicer with respect to
comparable motor vehicle receivables that it services for itself and others and
in accordance with its customary standards, policies, practices and procedures
if the cumulative extensions with respect to any Receivable shall not cause the
term of such Receivable to extend beyond the Final Scheduled Maturity Date; and
PROVIDED FURTHER that such extensions, in the aggregate, do not exceed two (2)
months for each twelve (12) months of the original term of the Receivable. In
the event that the Servicer fails to comply with the provisions of the preceding
sentence, the Servicer shall be required to purchase the Receivable or
Receivables affected thereby, for the Purchase Amount, in the manner specified
in Section 3.7, as of the close of the Collection Period in which such failure
occurs. The Servicer may, in its discretion, (but only in accordance with its
customary standards, policies, practices and procedures), waive any late payment
charge or any other fee that may be collected in the ordinary course of
servicing a Receivable.
(b) With respect to each Final Payment Receivable, the Servicer, in
accordance with its customary servicing standards, policies, practices and
procedures, shall contact the Obligor on or before the due date of the Last
Scheduled Payment specified in the related Contract. If, at such time, the
Obligor under the Final Payment Receivable has notified MMCA on behalf of the
Trust that it elects to sell the Financed Vehicle to MMCA on behalf of the Trust
in accordance with the terms of the Receivable, the Servicer shall, upon
delivery of the Financed Vehicle by the Obligor to MMCA on behalf of the Trust,
inspect the
42
Financed Vehicle for Excess Wear and Tear and Excess Mileage, and to determine
the necessity of any repairs. If the Servicer determines that such Financed
Vehicle requires repairs as a result of Excess Wear and Tear, the Servicer shall
require the Obligor to pay the estimated cost of such repairs to the Servicer.
If the Obligor disputes the Servicer's estimate of the cost of such repairs, the
Obligor may obtain, at the Obligor's own expense, a professional appraisal of
the Financed Vehicle's value by an independent third-party appraiser acceptable
to both the Obligor and the Servicer, and the cost of repairs for Excess Wear
and Tear as determined by such appraisal shall be binding on the Obligor and the
Servicer. The Servicer shall, pursuant to the related Contract, offset (x) the
cost of repairs for Excess Wear and Tear as determined by the appraisal, any
charges for Excess Mileage and the disposition fee payable to the Servicer
pursuant to the related Contract, and the Principal Balance, accrued interest
and any other amounts owed by the Obligor on the Receivable against (y) the
purchase price otherwise due to the Obligor for the Financed Vehicle, and shall
collect any excess of (x) over (y) from the Obligor.
(c) In connection with an Obligor's transfer of a Financed Vehicle to
MMCA on behalf of the Trust in satisfaction of its obligation to pay the Last
Scheduled Payment under a Final Payment Receivable, pursuant to the terms of the
Contract related to such Last Scheduled Payment, the Servicer shall require the
Obligor to pay a disposition fee (which the Servicer will retain as servicing
compensation), whereupon the Servicer shall take possession of the related
Financed Vehicle and shall prepare such Financed Vehicle for sale at auction or
otherwise in accordance with the Servicer's customary servicing standards,
policies, practices and procedures.
(d) Proceeds received by the Servicer from the payment by an Obligor
of a Financed Vehicle of amounts attributable to Last Scheduled Payments and
other amounts (including Excess Wear and Tear and Excess Mileage) owed by the
Obligor and from the sale of a Financed Vehicle at auction or otherwise
constitute proceeds of Last Scheduled Payments and collections on the
Receivables, and shall be deposited into the Collection Account. Following the
sale of the Financed Vehicle, the Servicer, on behalf of the Trust, shall
deliver the related certificate of title to the purchaser of such Financed
Vehicle. Following the Servicer's receipt of proceeds from the sale of such
Financed Vehicle and amounts to be paid by the Obligor pursuant to subparagraph
(b) above, the Servicer shall record on its books and records the termination of
the Trust's ownership and security interest in the related Final Payment
Receivable (with copies to the Indenture Trustee and the Owner Trustee).
43
(e) If the Obligor under any Final Payment Receivable has notified the
Dealer that it desires to refinance the amount that it owes on termination of
the Receivable, MMCA will, in accordance with its customary servicing standards,
policies, practices and procedures, make a decision to grant or deny credit,
except for Contracts for which the Obligors have the right to refinance without
such an assessment, in which case MMCA shall honor the Obligor's right to
refinance. If credit is denied, the Servicer shall require the Obligor to
satisfy its obligation to pay the remaining amounts owed in accordance with the
terms of the Final Payment Receivable. If credit is granted, MMCA shall deposit
an amount equal to the total amount owed by the Obligor on the Receivable to the
Collection Account. Upon deposit of such amount into the Collection Account,
the Trust's ownership and security interest in the related Financed Vehicle
shall terminate, and the Trust will assign all interest in, to and under the
Receivable and the related Financed Vehicle to MMCA. The Servicer shall record
such termination on its books and records (and shall deliver copies thereof to
the Indenture Trustee and the Owner Trustee upon written request with ten days
of receipt of such request). If MMCA is no longer the Servicer, the Issuer or
any Holder of the Certificates may make arrangements for the successor Servicer
or another party to provide refinancing of Last Scheduled Payments to Obligors
who desire to satisfy the Last Scheduled Payment through refinancing and who
meet such party's credit criteria, and any reasonable costs and expenses of the
successor Servicer or such third party in determining whether to provide such
refinancing shall be payable from amounts, if any, which would otherwise be
released from the Supplemental Reserve Account and paid to the Seller and to the
extent of any shortfall in such amounts in the Supplemental Reserve Account
shall be payable from amounts, if any, which would otherwise be released from
the Reserve Account and paid to the Seller.
SECTION 3.3. REALIZATION UPON RECEIVABLES. (a)On behalf of the
Issuer, the Servicer shall use reasonable efforts, in accordance with the
standard of care required by Section 3.1, to repossess or otherwise convert the
ownership of each Financed Vehicle securing a Defaulted Receivable. In taking
such action, the Servicer shall follow such customary and usual practices and
procedures as it shall deem necessary or advisable in its servicing of
comparable automotive receivables, and as are otherwise consistent with the
standard of care required under Section 3.1, which shall include the exercise of
any rights of recourse to Dealers under the Dealer Agreements. The Servicer
shall be entitled to recover all reasonable expenses incurred by it in the
course of repossessing and liquidating a Financed Vehicle into cash proceeds,
but only out of the cash proceeds of such Financed Vehicle and any deficiency
obtained from the Obligor. The foregoing shall be
44
subject to the provision that, in any case in which a Financed Vehicle shall
have suffered damage, the Servicer shall not expend funds in connection with the
repair or the repossession of such Financed Vehicle unless it shall determine in
its discretion that such repair and/or repossession will increase the
Liquidation Proceeds (or Recoveries) of the related Receivable by an amount
equal to or greater than the amount of such expenses.
(b) If the Servicer elects to commence a legal proceeding to enforce a
Dealer Agreement, the act of commencement shall be deemed to be an automatic
assignment from the Issuer to the Servicer of the rights of recourse under such
Dealer Agreement. If, however, in any enforcement suit or legal proceeding, it
is held that the Servicer may not enforce a Dealer Agreement on the grounds that
it is not a real party in interest or a Person entitled to enforce the Dealer
Agreement, the Owner Trustee, at the Servicer's expense and direction, shall
take such steps as the Servicer deems necessary to enforce the Dealer Agreement,
including bringing suit in its name or the names of the Indenture Trustee, the
Certificateholders, the Noteholders or any of them.
SECTION 3.4. PHYSICAL DAMAGE INSURANCE. The Servicer shall follow
its customary servicing procedures to determine whether or not each Obligor
shall have maintained physical damage insurance covering the related Financed
Vehicle.
SECTION 3.5. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES.
The Servicer, in accordance with the standard of care required under Section
3.1, shall take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle.
The Issuer hereby authorizes the Servicer, and the Servicer hereby agrees, to
take such steps as are necessary to re-perfect such security interest on behalf
of the Issuer and the Indenture Trustee in the event the Servicer receives
notice of, or otherwise has actual knowledge of, the relocation of a Financed
Vehicle or for any other reason.
SECTION 3.6. COVENANTS OF SERVICER. The Servicer hereby makes the
following covenants:
(a) SECURITY INTEREST TO REMAIN IN FORCE. The Financed Vehicle
securing each Receivable will not be released from the security interest granted
by the Receivable in whole or in part, except as contemplated herein.
45
(b) NO IMPAIRMENT. The Servicer will not (nor will it permit any
subservicer to) impair in any material respect the rights of the Issuer, the
Owner Trustee, the Indenture Trustee, the Certificateholders or the Noteholders
in the Receivables or, subject to clause (c) below, otherwise amend or alter the
terms thereof if, as a result of such amendment or alteration, the interests of
the Issuer, the Owner Trustee, the Indenture Trustee, the Certificateholders or
the Noteholders hereunder would be materially adversely affected.
(c) AMENDMENTS. The Servicer will not increase or decrease the number
or amount of Scheduled Payments or the Amount Financed under a Receivable, or
extend, rewrite or otherwise modify the payment terms of a Receivable, except
pursuant to Section 3.2(a).
SECTION 3.7. PURCHASE BY SERVICER UPON BREACH. The Seller, the
Servicer or the Owner Trustee, as the case may be, shall inform the other
parties to this Agreement promptly, in writing, upon the discovery of any breach
of Section 3.2(a), 3.5 or 3.6. If the breach shall not have been cured by the
last day of the Collection Period which includes the sixtieth (60th) day after
the date on which the Servicer becomes aware of, or receives written notice of,
such breach, and such breach materially and adversely affects the interests of
the Trust in a Receivable, the Servicer shall purchase such Receivable or
Receivables on the immediately succeeding Payment Date; PROVIDED, HOWEVER, that
with respect to a breach of Section 3.2(a), the Servicer shall repurchase the
affected Receivable from the Trust at the end of the Collection Period in which
such breach occurs. In consideration of the purchase of a Receivable hereunder,
the Servicer shall remit the Purchase Amount of such Receivable in the manner
specified in Section 4.5. Except as provided in Section 7.2, the sole remedy of
the Issuer, the Owner Trustee, the Indenture Trustee, the Certificateholders or
the Noteholders against the Servicer with respect to a breach pursuant to
Section 3.2, 3.5 or 3.6 shall be to require the Servicer to repurchase
Receivables pursuant to this Section 3.7. Neither the Owner Trustee nor the
Indenture Trustee shall have any duty to conduct an affirmative investigation as
to the occurrence of any condition requiring the repurchase of any Receivable
pursuant to this Section 3.7 or the eligibility of any Receivable for purposes
of this Agreement.
SECTION 3.8. SERVICING COMPENSATION. The "SERVICING FEE" with
respect to a Collection Period shall be an amount equal to the product of
one-twelfth (1/12) of the Servicing Rate and the Pool Balance as of the first
day of such Collection Period. As additional servicing compensation, the
Servicer shall also be
46
entitled to earnings on amounts on deposit in the Payahead Account, disposition
fees paid with respect to Final Payment Receivables, Rule of 78's Payments, and
any administrative fees and charges and all late payment fees actually collected
(from whatever source) on the Receivables other than fees paid in connection
with the extension or deferral of payments on a Receivable (the "SUPPLEMENTAL
SERVICING FEE"). The Servicer shall be required to pay all expenses incurred by
it in connection with its activities hereunder (including fees and expenses of
the Owner Trustee and the Indenture Trustee (and any custodian appointed by the
Owner Trustee and the Indenture Trustee) and independent accountants, any
subservicer, taxes imposed on the Servicer or any subservicer (to the extent not
paid by such subservicer), and expenses incurred in connection with
distributions and reports to the Certificateholders and the Noteholders), except
expenses incurred in connection with realizing upon Receivables under Section
3.3.
SECTION 3.9. SERVICER'S CERTIFICATE. On or before the Determination
Date immediately preceding each Payment Date, the Servicer shall deliver to the
Owner Trustee, each Paying Agent, the Indenture Trustee and the Seller, with a
copy to the Rating Agencies, a certificate of a Servicing Officer substantially
in the form of Exhibit A hereto (a "SERVICER'S CERTIFICATE") and attached to a
Servicer's report containing all information necessary to make the transfers and
distributions pursuant to Sections 4.3, 4.4, 4.5, 4.6 and 4.7, together with the
written statements to be furnished by the Owner Trustee to Certificateholders
pursuant to Section 4.9 and by the Indenture Trustee to the Noteholders pursuant
to Section 4.9 hereof and Section 6.6 of the Indenture. The Servicer also shall
separately identify (by account number of the Receivable as it appears in the
related Schedule of Receivables) in a written notice to the Owner Trustee and
the Indenture Trustee the Receivables to be repurchased by the Seller or to be
purchased by the Servicer, as the case may be, on the related Payment Date, and,
upon request of one of the foregoing parties, each Receivable which became a
Defaulted Receivable during the related Collection Period. The Servicer shall
deliver to the Rating Agencies any information, to the extent it is available to
the Servicer, that the Rating Agencies reasonably request in order to monitor
the Issuer.
SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF EVENT OF
SERVICING TERMINATION. (a) The Servicer shall deliver to the Owner Trustee and
the Indenture Trustee, on or before May 31 of each year, commencing May 31,
1999, an Officer's Certificate, stating that (i) a review of the activities of
the Servicer during the preceding calendar year (or shorter period, in the case
of
47
the first such Officer's Certificate) and of its performance of its obligations
under this Agreement has been made under such officer's supervision and (ii) to
the best of such officer's knowledge, based on such review, the Servicer has
fulfilled all its obligations under this Agreement throughout such year (or
longer period, in the case of the first such certificate), or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof. A copy of such
certificate may be obtained by any Certificateholder by a request in writing to
the Owner Trustee, or by any Noteholder or Person certifying that it is a Note
Owner by a request in writing to the Indenture Trustee, in either case addressed
to the applicable Corporate Trust Office. Upon the telephone request of the
Owner Trustee, the Indenture Trustee shall promptly furnish the Owner Trustee a
list of Noteholders as of the date specified by the Owner Trustee.
(b) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and the Rating Agencies, promptly upon having knowledge thereof, but in
no event later than five (5) Business Days thereafter, written notice in an
Officer's Certificate of any event which constitutes or, with the giving of
notice or lapse of time or both, would become, an Event of Servicing Termination
under Section 8.1.
SECTION 3.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
REPORTS. The Servicer shall cause a firm of independent certified public
accountants (who may also render other services to the Servicer, the Seller or
to MMCA) to deliver to the Owner Trustee and the Indenture Trustee on or before
May 31 of each year, commencing May 31, 1999, a report addressed to the Board of
Directors of the Servicer with respect to the preceding calendar year (or
shorter period, in the case of the first such report) to the effect that such
firm has audited the financial statements of the Servicer and issued its report
thereon and that such audit (1) was made in accordance with generally accepted
auditing standards, (2) included tests relating to motor vehicle loans serviced
for others in accordance with the requirements of the Uniform Single Attestation
Program for Mortgage Bankers (the "PROGRAM"), to the extent the procedures in
such Program are applicable to the servicing obligations set forth in this
Agreement, and (3) except as described in the report, disclosed no exceptions or
errors in the records relating to automobile and light- or medium-duty truck
loans serviced for others that such firm is required to report under the
Program. Such report shall also indicate that the firm is independent with
respect to the Seller and the Servicer within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants.
A copy of such report may be obtained by any
48
Certificateholder by a request in writing to the Owner Trustee, or by any
Noteholder or Person certifying that it is a Note Owner by a request in writing
to the Indenture Trustee, in either case addressed to the applicable Corporate
Trust Office.
SECTION 3.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING RECEIVABLES. The Servicer shall provide the Certificateholders, the
Indenture Trustee and the Noteholders with access to the Receivable Files in the
cases where the Certificateholders, the Indenture Trustee or the Noteholders
shall be required by applicable statutes or regulations to have access to such
documentation. Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the
Servicer. Nothing in this Section 3.12 shall affect the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors, and the failure of the Servicer to provide access to
information as a result of such obligation shall not constitute a breach of this
Section 3.12. Any Certificateholder or Noteholder, by its acceptance of a
Certificate or Note, as the case may be, shall be deemed to have agreed to keep
any information obtained by it pursuant to this Section confidential, except as
may be required by applicable law.
SECTION 3.13. REPORTS TO THE COMMISSION. The Servicer shall, on
behalf of the Issuer, cause to be filed with the Commission any periodic reports
required to be filed under the provisions of the Exchange Act , and the rules
and regulations of the Commission thereunder. The Seller shall, at its expense,
cooperate in any reasonable request made by the Servicer in connection with such
filings.
SECTION 3.14. REPORTS TO RATING AGENCIES. The Servicer shall deliver
to each Rating Agency, at such address as each Rating Agency may request, a copy
of all reports or notices furnished or delivered pursuant to this Article and a
copy of any amendments, supplements or modifications to this Agreement and any
subservicing agreement and any other information reasonably requested by such
Rating Agency to monitor this transaction.
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ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS
AND NOTEHOLDERS
SECTION 4.1. ACCOUNTS. (a) The Servicer shall, prior to the Closing
Date, establish and maintain a segregated trust account in the name of the
Indenture Trustee, at a Qualified Institution or Qualified Trust Institution
(which shall initially be the corporate trust department of Bank of Tokyo -
Mitsubishi Trust Company), which shall be designated as the "COLLECTION
ACCOUNT". The Collection Account shall be held in trust for the benefit of the
Noteholders and the Certificateholders. The Collection Account shall be under
the sole dominion and control of the Indenture Trustee; PROVIDED, that the
Servicer may make deposits to and direct the Indenture Trustee in writing to
make withdrawals from the Collection Account in accordance with the terms of
this Agreement, the Indenture and the Trust Agreement. All monies deposited
from time to time in the Collection Account shall be held by the Indenture
Trustee as part of the Trust Property and all deposits to and withdrawals
therefrom shall be made only upon the terms and conditions of the Basic
Documents.
If the Servicer is required to remit collections pursuant to the first
sentence of Section 4.2, all amounts held in the Collection Account shall, to
the extent permitted by applicable law, rules and regulations, be invested, as
directed in writing by the Servicer, by the bank or trust company then
maintaining the Collection Account in Permitted Investments that mature not
later than the Business Day immediately prior to the Payment Date for the
Collection Period to which such amounts relate and such Permitted Investments
shall be held to maturity. All interest and other income (net of losses and
investment expenses) on funds on deposit in the Collection Account shall be
withdrawn from the Collection Account at the written direction of the Servicer
and shall be deposited in the Certificate Distribution Account. In the event
that the Collection Account is no longer to be maintained at the corporate trust
department of Bank of Tokyo - Mitsubishi Trust Company, the Servicer shall, with
the Indenture Trustee's or Owner Trustee's assistance as necessary, cause the
Collection Account to be moved to a Qualified Institution or a Qualified Trust
Institution within ten (10) Business Days (or such longer period not to exceed
thirty (30) calendar days as to which each Rating Agency may consent).
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(b) The Servicer shall, prior to the Closing Date, establish and
maintain a segregated trust account in the name of the Indenture Trustee at a
Qualified Institution or Qualified Trust Institution (which shall initially be
the corporate trust department of Bank of Tokyo - Mitsubishi Trust Company),
which shall be designated as the "NOTE PAYMENT ACCOUNT". The Note Payment
Account shall be held in trust for the benefit of the Noteholders. The Note
Payment Account shall be under the sole dominion and control of the Indenture
Trustee. All monies deposited from time to time in the Note Payment Account
pursuant to this Agreement and the Indenture shall be held by the Indenture
Trustee as part of the Trust Property and shall be applied as provided in this
Agreement and the Indenture. In the event that the Note Payment Account is no
longer to be maintained at the corporate trust department of Bank of Tokyo -
Mitsubishi Trust Company, the Servicer shall, with the Indenture Trustee's
assistance as necessary, cause the Note Payment Account to be moved to a
Qualified Institution or a Qualified Trust Institution within ten (10) Business
Days (or such longer period not to exceed thirty (30) calendar days as to which
each Rating Agency may consent).
(c) The Servicer shall, prior to the Closing Date, establish and
maintain a segregated trust account in the name of the Owner Trustee at a
Qualified Institution or Qualified Trust Institution (which shall initially be
Wilmington Trust Company), which shall be designated as the "CERTIFICATE
DISTRIBUTION ACCOUNT". Except as provided in the Trust Agreement, the
Certificate Distribution Account shall be held in trust for the benefit of the
Certificateholders. The Certificate Distribution Account shall be under the
sole dominion and control of the Owner Trustee; PROVIDED that the Indenture
Trustee may make deposits to such account in accordance with the directions of
the Servicer pursuant to this Agreement and the Indenture. All monies deposited
from time to time in the Certificate Distribution Account pursuant to this
Agreement and the Indenture shall be held by the Owner Trustee as part of the
Trust Property and shall be applied as provided in this Agreement and the Trust
Agreement. In the event that the Certificate Distribution Account is no longer
to be maintained at Wilmington Trust Company, the Servicer shall, with the Owner
Trustee's assistance as necessary, cause the Certificate Distribution Account to
be moved to a Qualified Institution or a Qualified Trust Institution within ten
(10) Business Days (or such longer period not to exceed thirty (30) calendar
days as to which each Rating Agency may consent) and shall promptly notify the
Indenture Trustee of the account number and location of such account.
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(d) The Servicer shall, prior to the Closing Date, establish and
maintain a segregated trust account in the name of the Indenture Trustee at a
Qualified Institution or Qualified Trust Institution (which shall initially be
the corporate trust department of Bank of Tokyo - Mitsubishi Trust Company),
which shall be designated as the "PAYAHEAD ACCOUNT" (the Payahead Account,
together with the Collection Account and the Note Payment Account, the "TRUST
ACCOUNTS"). The Payahead Account shall be held in trust for the benefit of the
Noteholders and the Certificateholders. The Payahead Account shall be under the
sole dominion and control of the Indenture Trustee PROVIDED, that the Servicer
may make deposits to and direct the Indenture Trustee in writing to make
withdrawals from the Payahead Account in accordance with this Agreement and the
Indenture. All monies deposited from time to time in the Payahead Account shall
be held by the Indenture Trustee as part of the Trust Property and all deposits
to and withdrawals therefrom shall be made only upon the terms and conditions of
the Basic Documents.
If the Servicer is required to remit collections pursuant to the first
sentence of Section 4.2, all amounts held in the Payahead Account shall, to the
extent permitted by applicable law, rules and regulations, be invested, as
directed in writing by the Servicer, by the bank or trust company then
maintaining the Payahead Account in Permitted Investments that mature not later
than the Business Day immediately prior to the Payment Date for the Collection
Period to which such amounts relate and such Permitted Investments shall be held
to maturity. All interest and other income (net of losses and investment
expenses) on funds on deposit in the Payahead Account shall be withdrawn from
the Payahead Account at the direction of the Servicer and shall be paid to the
Servicer as additional servicing compensation. In the event that the Payahead
Account is no longer to be maintained at the corporate trust department of Bank
of Tokyo - Mitsubishi Trust Company, the Servicer shall, with the Indenture
Trustee's or Owner Trustee's assistance as necessary, cause the Payahead Account
to be moved to a Qualified Institution or a Qualified Trust Institution within
ten (10) Business Days (or such longer period not to exceed thirty (30) calendar
days as to which each Rating Agency may consent).
(e) Notwithstanding the provisions of clause (d) above and of Section
4.6(a)(ii), for so long as (i) MMCA is the Servicer, (ii) the rating of MMCA's
short-term unsecured debt is at least P-1 by Xxxxx'x and is at least A-1 by S&P
and (iii) no Events of Servicing Termination shall have occurred (each, a
"MONTHLY REMITTANCE CONDITION"), Payaheads need not be remitted to and
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deposited in the Payahead Account but instead may be remitted to and held by the
Servicer. So long as such Monthly Remittance Conditions are met, the Servicer
shall not be required to segregate or otherwise hold separate any Payaheads
remitted to the Servicer as aforesaid but shall be required to remit Payaheads
to the Collection Account in accordance with Section 4.6(a)(i). At all times as
such Monthly Remittance Conditions are not met, the Servicer shall deposit in
the Payahead Account the amount of any Payaheads then held or received by it.
Notwithstanding the foregoing, if a Monthly Remittance Condition is not
satisfied, the Servicer may utilize, with respect to Payaheads, an alternative
remittance schedule (which may include the remittance schedule utilized by the
Servicer before the Monthly Remittance Condition became unsatisfied), if the
Servicer provides to the Owner Trustee and the Indenture Trustee written
confirmation from the Rating Agencies that such alternative remittance schedule
will not result in the downgrading or withdrawal by the Rating Agencies of the
ratings then assigned to the Notes and the Certificates. The Owner Trustee and
the Indenture Trustee shall not be deemed to have knowledge of any event or
circumstance under clauses (ii) or (iii) of the first sentence of this Section
4.1(e) that would require remittance of the Payaheads to the Payahead Account
unless the Owner Trustee or the Indenture Trustee has received notice of such
event or circumstance from the Seller or the Servicer in an Officer's
Certificate or from the Holders of Notes evidencing not less than 25% of the
principal balance of the then Outstanding Notes or from the Holders of
Certificates evidencing not less than 25% of the Certificate Balance or unless
an Authorized Officer in the Corporate Trust Office with knowledge hereof and
familiarity herewith has actual knowledge of such event or circumstance.
(f) The Servicer shall be permitted to remit to any Obligor, upon the
request of such Obligor, the Payahead Balance with respect to such Obligor's
Receivable or such lesser amount as is requested by such Obligor, in accordance
with the Servicer's customary standards, policies, practices and procedures, to
the extent that such amount is not then due on such Receivable. Upon any such
remittance, the Payahead Balance with respect to such Receivable shall be
reduced by the amount of such remittance.
SECTION 4.2. COLLECTIONS. (a) Subject to the provisions of
subsection (b) below, the Servicer shall remit to the Collection Account (i) all
payments by or on behalf of the Obligors (including, subject to the next two
sentences, Payaheads on the Receivables and Rule of 78's Payments, but excluding
payments with respect to Purchased Receivables and amounts included in the
Supplemental Servicing Fee other than Rule of 78's Payments), including amounts
53
treated as collections on Final Payment Receivables pursuant to Section 3.2(d)
and (ii) all Liquidation Proceeds and all Recoveries, received by the Servicer
during any Collection Period, as soon as practicable, but in no event after the
close of business on the second Business Day after receipt thereof. Collections
of Payaheads and Rule of 78's Payments shall be deposited in the Collection
Account, pursuant to the preceding sentence for purposes of administrative
convenience only, pending, with respect to Payaheads, determination of the
amount to be deposited in the Payahead Account (or in the event that the Monthly
Remittance Conditions are satisfied, remitted to the Servicer pursuant to
Section 4.1(e)), which amount shall be deposited in the Payahead Account as soon
as practicable but in no event later than the Payment Date immediately following
collection, and such amounts shall not be transferred to the Collection Account
until due, and with respect to Rule of 78's Payments, determination of such
payments, which payments upon determination shall be made to the Servicer, and
the Trust shall not be entitled to such amounts.
MMCA, for so long as it is acting as the Servicer, may make
remittances of collections on a less frequent basis than that specified in the
immediately preceding sentence. It is understood that such less frequent
remittances may be made only on the specific terms and conditions set forth
below in this Section 4.2 and only for so long as such terms and conditions are
fulfilled. Accordingly, notwithstanding the provisions of the first sentence of
this Section 4.2, the Servicer shall remit collections received during a
Collection Period to the Collection Account in immediately available funds on
the Business Day prior to the related Payment Date but only for so long as each
Monthly Remittance Condition is satisfied. Notwithstanding the foregoing, if a
Monthly Remittance Condition is not satisfied, the Servicer may utilize an
alternative remittance schedule (which may include the remittance schedule
utilized by the Servicer before the Monthly Remittance Condition became
unsatisfied), if the Servicer provides to the Owner Trustee and the Indenture
Trustee written confirmation from the Rating Agencies that such alternative
remittance schedule will not result in the downgrading or withdrawal by the
Rating Agencies of the ratings then assigned to the Notes and the Certificates.
The Owner Trustee or the Indenture Trustee shall not be deemed to have knowledge
of any event or circumstance under clauses (ii) or (iii) of the definition of
Monthly Remittance Condition that would require daily remittance by the Servicer
to the Collection Account unless the Owner Trustee or the Indenture Trustee has
received notice of such event or circumstance from the Seller or the Servicer in
an Officer's Certificate or written notice from the Holders of Notes evidencing
not less than 25% of the principal balance of the then outstanding Notes
54
or from the Holders of Certificates evidencing not less than 25% of the
Certificate Balance or an Authorized Officer in the Corporate Trust Office with
knowledge hereof or familiarity herewith has actual knowledge of such event or
circumstance.
(b) In those cases where a subservicer is servicing a Receivable, the
Servicer shall cause the subservicer to remit to the Collection Account, as soon
as practicable, but in no event after the close of business on the second
Business Day after receipt thereof by the subservicer (but subject to the
provisions of Section 4.2(a)) the amounts referred to in Section 4.2(a) in
respect of a Receivable being serviced by the subservicer.
SECTION 4.3. APPLICATION OF COLLECTIONS.(a) For the purposes of this
Agreement, as of the close of business on the last day of each Collection
Period, all collections received pursuant to Section 4.2 for such Collection
Period for each Receivable (excluding amounts received by the Servicer with
respect to Rule of 78's Payments, the amounts actually collected with respect to
the Supplemental Servicing Fee, amounts collected with respect to a Purchased
Receivable) shall be applied by the Servicer, in the case of (i) a Simple
Interest Receivable that is a Standard Receivable, to interest and principal on
the Receivable in accordance with the Simple Interest Method, (ii) a Simple
Interest Receivable that is a Final Payment Receivable, to interest and
principal in accordance with the Simple Interest Method FIRST, to accrued but
unpaid interest, SECOND, to the Level Pay Balance of such Receivable, THIRD, to
the principal portion of the Last Scheduled Payment to the extent a Last
Scheduled Payment Advance has not been made by the Servicer with respect to such
Last Scheduled Payment and FOURTH, to the extent of any unreimbursed Last
Scheduled Payment Advance with respect to such Simple Interest Receivable, to
reimburse the Servicer for such Last Scheduled Payment Advance and (iii) an
Actuarial Receivable, FIRST, to the Scheduled Payment of such Actuarial
Receivable, SECOND to the extent of any unreimbursed Actuarial Advances with
respect to such Actuarial Receivable, to reimburse the Servicer for any such
Actuarial Advances, THIRD, to the extent of any unreimbursed Last Scheduled
Payment Advance with respect to such Actuarial Receivable, to reimburse the
Servicer for such Last Scheduled Payment Advance and FOURTH, to the extent that
any amounts are remaining then due to a prepayment of such Actuarial Receivable,
if the sum of such remaining amount and the previous Payahead Balance shall be
sufficient to prepay the Actuarial Receivable in full, and otherwise to the
Payahead Account (or, if all Monthly Remittance Conditions are satisfied, to the
Servicer) as a Payahead.
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(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
or an Insolvency Event with respect to the Seller shall, with respect to any
Final Payment Receivable be applied FIRST to accrued but unpaid interest
thereon, SECOND, to the Level Pay Balance of such Receivable and THIRD, to the
principal portion of the related Last Scheduled Payment.
SECTION 4.4. ADVANCES. (a) As of the close of business on the last
day of each Collection Period, if the payments during such Collection Period by
or on behalf of the Obligor on or in respect of an Actuarial Receivable (other
than a Purchased Receivable) after application under Section 4.3 shall be less
than the Scheduled Payment, the Payahead Balance of such Receivable shall be
applied by the Indenture Trustee to the extent of the shortfall, and such
Payahead Balance shall be reduced accordingly. On the related Payment Date,
subject to the following sentence, an advance shall be made by the Servicer to
the extent of any remaining shortfall in respect of such Actuarial Receivable
(such advance, an "ACTUARIAL ADVANCE"); PROVIDED that an Actuarial Advance shall
not be made with respect to the Last Scheduled Payment on an Actuarial
Receivable that is a Final Payment Receivable; PROVIDED FURTHER, that a Last
Scheduled Payment Advance shall be made with respect to an Actuarial Receivable
that is a Final Payment Receivable upon the occurrence of the circumstances set
forth in Section 4.4(c). All applications of the Payahead Balance of a
Receivable by the Indenture Trustee and all Actuarial Advances by the Servicer,
in each case pursuant to this Section 4.4(a), shall be made based on the
information set forth in the Servicer's report attached to the Servicer's
Certificate delivered pursuant to Section 3.9; PROVIDED FURTHER, that no
successor Servicer shall be required to make Actuarial Advances.
(b) (i) Upon either the written instructions of the Servicer or
based solely upon the information contained in the Servicer's
Certificate delivered on the related Determination Date pursuant to
Section 3.9, the Indenture Trustee shall release from amounts
available in the Payahead Account, the amounts required to be released
from amounts available in the Payahead Account pursuant to Section
4.4(a) with respect to each Collection Period and shall deposit such
amounts in the Collection Account on the related Payment Date pursuant
to Section 4.5(a).
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(ii) On each Payment Date, the Servicer shall deposit into the
Collection Account an amount equal to the aggregate amount of
Actuarial Advances required to be made with respect to related
Collection Period .
(c) As of the last day of the Collection Period in which the Last
Scheduled Payment with respect to a Final Payment Receivable is due, if the
payments during such Collection Period by or on behalf of the related Obligor on
or in respect of such Last Scheduled Payment after application under Section
4.3(a) and the amounts, if any, in the Payahead Account allocable to such Last
Scheduled Payment shall be less than the amount of such Last Scheduled Payment,
the Servicer shall advance an amount equal to the shortfall in the payment of
such Last Scheduled Payment (such advance, a "LAST SCHEDULED PAYMENT ADVANCE"),
by depositing an amount equal to the Last Scheduled Payment into the Collection
Account on the related Payment Date. Notwithstanding anything in this Agreement
to the contrary, no successor Servicer shall be required to make Last Scheduled
Payment Advances.
(d) On each Payment Date, the Servicer shall instruct the Indenture
Trustee to withdraw from the Collection Account for distribution to the
Servicer, in immediately available funds, an amount equal to the sum of (i) the
aggregate amount of collections on Actuarial Receivables with respect to which
the Servicer has made Actuarial Advances in a prior Collection Period that are
allocable to the reimbursement of such Actuarial Advances pursuant to Section
4.3(a) and (ii) the aggregate amount of Actuarial Advances that the Servicer has
not been reimbursed for pursuant to this Section 4.4(d), Section 4.5(b) or
Section 4.5(c) that are with respect to Actuarial Receivables that became
Defaulted Receivables in the related Collection Period.
(e)On each Payment Date, the Servicer shall instruct the Indenture
Trustee to withdraw from the Collection Account for distribution to the
Servicer, in immediately available funds, an amount equal to the sum of (i) the
aggregate amount of collections on Final Payment Receivables in the related
Collection Period that are allocable to the reimbursement of Last Scheduled
Payment Advances pursuant to Section 4.3(a) and (ii) the aggregate amount of
losses on Last Scheduled Payments that the Servicer has recorded in its books
and records during the related Collection Period to the extent such losses are
allocable to Last Scheduled Payments with respect to which the Servicer has made
Last Scheduled Payment Advances, but only to the extent such Last Scheduled
Payment Advances
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have not already been reimbursed pursuant to this Section 4.4(e) or Section
4.5(b) or (c).
SECTION 4.5. ADDITIONAL DEPOSITS. (a) The Indenture Trustee shall
deposit in the Collection Account amounts required pursuant to Section 4.4(b).
The Servicer shall deposit in the Collection Account amounts required to be paid
by the Servicer pursuant to Sections 4.4(a) and (c). The Seller and the
Servicer shall deposit or cause to be deposited in the Collection Account the
aggregate Purchase Amount with respect to Purchased Receivables pursuant to
Section 2.3, 3.7 or 9.1. The Indenture Trustee shall deposit in the Collection
Account the aggregate of any amounts received pursuant to the Yield Supplement
Agreement and any amounts received from the Letter of Credit Bank or the Yield
Supplement Account pursuant to Article V on the date of receipt thereof. All
such deposits with respect to a Collection Period shall be made in immediately
available funds no later than 10:00 a.m., New York City time, on the Payment
Date related to such Collection Period.
(b)The Indenture Trustee shall, on or prior to 10:00 a.m., New York
City time, on the Payment Date relating to each Collection Period make the
following withdrawals from the Supplemental Reserve Account in the following
order of priority: (i) an amount equal to the Supplemental Reserve Account Draw
Amount, if any, calculated by the Servicer pursuant to Section 4.6(b) (as set
forth in the Servicer's Certificate for such Payment Date) and shall deposit
such funds into the Collection Account and (ii) an amount equal to the amount,
if any, by which the aggregate amount payable to the Servicer out of the
Collection Account on such Payment Date pursuant to Sections 4.4(d) and (e)
exceeds the amount paid to the Servicer out of the Collection Account on such
Payment Date pursuant to Sections 4.4(d) and (e).
(c) The Indenture Trustee shall, on or prior to 10:00 a.m., New York
City time, on the Payment Date relating to each Collection Period make the
following withdrawals from the Reserve Account in the following order of
priority: (i) an amount equal to the Reserve Account Draw Amount, if any,
calculated by the Servicer pursuant to Section 4.6(b) (as set forth in the
Servicer's Certificate for such Payment Date) and shall deposit such funds into
the Collection Account and (ii) an amount equal to the amount, if any, by which
the sum of the aggregate amount payable to the Servicer out of the Collection
Account on such Payment Date pursuant to Sections 4.4(d) and (e) and out of the
Supplemental Reserve Account pursuant to Section 4.5(b) exceeds the sum of the
amounts paid to
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the Servicer out of the Collection Account on such Payment Date pursuant to
Sections 4.4(d) and (e) and out of the Supplemental Reserve Account on such
Payment Date pursuant to Section 4.5(b).
SECTION 4.6. ALLOCATION OF AVAILABLE FUNDS. (a) On each Payment
Date, the Indenture Trustee shall cause to be made the following transfers and
distributions in the amounts set forth in the Servicer's Certificate for such
Payment Date:
(i) If the Monthly Remittance Conditions are not then satisfied,
from the Payahead Account, and otherwise from amounts paid by the Servicer
pursuant to Section 4.1(e), to the Collection Account in immediately
available funds, (x) the aggregate portion of Payaheads constituting
Scheduled Payments or prepayments in full, required by Sections 4.3 and
4.4(a), and (y) the Payahead Balance, if any, relating to any Purchased
Receivable.
(ii) From the Collection Account to the Payahead Account, or to
the Servicer in the event that the Monthly Remittance Conditions are then
satisfied, in immediately available funds, the aggregate Payaheads required
by Section 4.3 for the Collection Period related to such Payment Date.
(b) On each Determination Date, the Servicer shall calculate the
Available Funds, the Total Servicing Fee, the Accrued Note Interest for each
Class of Notes, the Scheduled Principal, the Principal Distribution Amount, the
Principal Distribution Amount, the Last Scheduled Payment Principal Collections,
the Reserve Account Amount, the Supplemental Reserve Account Amount and the
Yield Supplement Amount, if any, in each case with respect to the next
succeeding Payment Date.
In addition, the Servicer shall calculate on each Determination Date
(i) the positive difference, if any, between the Total Required Payment and
Available Funds for such Payment Date (the "SUPPLEMENTAL RESERVE ACCOUNT DRAW
AMOUNT") and (ii) the positive difference, if any, between the Supplemental
Reserve Account Draw Amount and the Supplemental Reserve Account Amount for such
Payment Date (the "RESERVE ACCOUNT DRAW AMOUNT").
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(c) On each Payment Date, the Servicer shall instruct the Indenture
Trustee (based on the information contained in the Servicer's Certificate
delivered on the related Determination Date pursuant to Section 3.9) to withdraw
all Available Funds on deposit in the Collection Account for the related
Collection Period and make the following payments and deposits for such Payment
Date in the following order of priority:
(i) to the Servicer, the Total Servicing Fee;
(ii) to the Note Payment Account, the Accrued Note Interest for each
Class of Notes;
(iii) to the Note Payment Account, the Principal Distribution Amount;
(iv) to the Reserve Account, the amount, if any, necessary to
reinstate the balance in the Reserve Account up to the Specified Reserve
Balance;
(v) to the Supplemental Reserve Account, all remaining Available Funds
until the Supplemental Reserve Amount is equal to the Maximum Supplemental
Reserve Amount; and
(vi)to the Certificate Distribution Account, any remaining portion of
Available Funds.
SECTION 4.7. RESERVE ACCOUNT; SUPPLEMENTAL RESERVE ACCOUNT. (a) The
Seller shall, prior to the Closing Date, establish and maintain a segregated
trust account in the name of the Indenture Trustee at a Qualified Institution or
Qualified Trust Institution (which shall initially be the corporate trust
department of Bank of Tokyo - Mitsubishi Trust Company), which shall be
designated as the "RESERVE ACCOUNT". The Reserve Account shall be under the
sole dominion and control of the Indenture Trustee; PROVIDED, that the Servicer
may make deposits to the Reserve Account in accordance with this Agreement and
the Indenture. On the Closing Date, the Seller will deposit the Reserve Initial
Deposit into the Reserve Account from the net proceeds of the sale of the Notes.
The Reserve Account and all amounts, securities, investments, financial assets
and other property deposited in or credited to the Reserve Account (the "RESERVE
ACCOUNT PROPERTY") has been conveyed by the Seller to the Trust pursuant to
Section 2.1. Pursuant to the
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Indenture, the Trust will pledge all of its right, title and interest in, to and
under the Reserve Account and the Reserve Account Property to the Indenture
Trustee on behalf of the Noteholders to secure its obligations under the Notes
and the Indenture.
The Reserve Account Property shall, to the extent permitted by
applicable law, rules and regulations, be invested, as directed in writing by
the Servicer, by the bank or trust company then maintaining the Reserve Account
in Permitted Investments that mature not later than the Business Day immediately
preceding the next Payment Date, and such Permitted Investments shall be held to
maturity. All interest and other income (net of losses and investment expenses)
on funds on deposit in the Reserve Account shall, upon the written direction of
the Servicer, be paid to the Seller on any Payment Date to the extent that funds
on deposit therein, as certified by the Servicer, exceed the Specified Reserve
Balance. In the event the Reserve Account is no longer to be maintained at the
corporate trust department of Bank of Tokyo - Mitsubishi Trust Company, the
Servicer shall, with the Indenture Trustee's or Owner Trustee's assistance as
necessary, cause the Reserve Account to be moved to a Qualified Institution or a
Qualified Trust Institution within ten (10) Business Days (or such longer period
not to exceed thirty (30) calendar days as to which each Rating Agency may
consent).
(b) The Seller shall, prior to the Closing Date, establish and
maintain a segregated trust account in the name of the Indenture Trustee at a
Qualified Institution or Qualified Trust Institution (which shall initially be
the corporate trust department of Bank of Tokyo - Mitsubishi Trust Company),
which shall be designated as the "SUPPLEMENTAL RESERVE ACCOUNT." The
Supplemental Reserve Account shall be under the sole dominion and control of the
Indenture Trustee; PROVIDED, that the Servicer may make deposits to the
Supplemental Reserve Account in accordance with this Agreement and the
Indenture. The Supplemental Reserve Account and all amounts, securities,
investments, financial assets and other property deposited in or credited to the
Supplemental Reserve Account (the "SUPPLEMENTAL RESERVE ACCOUNT PROPERTY") has
been conveyed by the Seller to the Trust pursuant to Section 2.1. Pursuant to
the Indenture, the Trust will pledge all of its right, title and interest in, to
and under the Supplemental Reserve Account and the Supplemental Reserve Account
Property to the Indenture Trustee on behalf of the Noteholders to secure its
obligations under the Notes and the Indenture.
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The Supplemental Reserve Account Property shall, to the extent
permitted by applicable law, rules and regulations, be invested, as directed in
writing by the Servicer, by the bank or trust company then maintaining the
Supplemental Reserve Account in Permitted Investments that mature not later than
the Business Day immediately preceding the next Payment Date, and such Permitted
Investments shall be held to maturity. All interest and other income (net of
losses and investment expenses) on funds on deposit in the Supplemental Reserve
Account shall, upon the written direction of the Servicer, be paid to the Seller
on any Payment Date to the extent that funds on deposit therein prior to making
any deposits or withdrawals therefrom on such Payment Date, as certified by the
Servicer, exceed the Maximum Supplemental Reserve Amount. In the event the
Supplemental Reserve Account is no longer to be maintained at the corporate
trust department of Bank of Tokyo - Mitsubishi Trust Company, the Servicer
shall, with the Indenture Trustee's or Owner Trustee's assistance as necessary,
cause the Supplemental Reserve Account to be moved to a Qualified Institution or
a Qualified Trust Institution within ten (10) Business Days (or such longer
period not to exceed thirty (30) calendar days as to which each Rating Agency
may consent).
(c) With respect to any Reserve Account Property or Supplemental
Reserve Account Property:
(i) any Reserve Account Property or Supplemental Reserve Account
Property that is a "financial asset" as defined in Section 8-102(a)(9) of
the UCC shall be physically delivered to, or credited to an account in the
name of, the Qualified Institution or Qualified Trust Institution
maintaining the Reserve Account or Supplemental Reserve Account, as
applicable, in accordance with such institution's customary procedures such
that such Institution establishes a "securities entitlement" in favor of
the Indenture Trustee with respect thereto;
(ii) any Reserve Account Property or Supplemental Reserve Account
Property that is held in deposit accounts shall be held solely in the name
of the Indenture Trustee at one or more depository institutions having the
Required Rating and each such deposit account shall be subject to the
exclusive custody and control of the Indenture Trustee and the Indenture
Trustee shall have sole signature authority with respect thereto; and
(iii) except for any deposit accounts specified in clause (ii) above,
the Reserve Account and the Supplemental Reserve Account shall only be
62
invested in securities or in other assets which the Qualified Institution
or Qualified Trust Institution maintaining the Reserve Account or
Supplemental Reserve Account, as applicable, agrees to treat as "financial
assets" as defined in Section 8-102(a)(9) of the UCC.
(d) If the amount on deposit in the Reserve Account on any Payment
Date (after giving effect to all deposits thereto or withdrawals therefrom on
such Payment Date) is greater than the Specified Reserve Balance for such
Payment Date, the Servicer shall instruct the Indenture Trustee to distribute
the amount of such excess to the Seller; PROVIDED that the Indenture Trustee and
the Owner Trustee hereby release, on each Payment Date, their security interest
in, to and under Reserve Account Property distributed to the Seller.
(e) If the amount on deposit in the Supplemental Reserve Account on
any Payment Date (after giving effect to all deposits thereto or withdrawals
therefrom on such Payment Date) is greater than the Maximum Supplemental Reserve
Amount, the Servicer shall instruct the Indenture Trustee to deposit the amount
of such excess in the Certificate Distribution Account; PROVIDED that the
Indenture Trustee hereby releases, on each Payment Date, its security interest,
in, to and under the Supplemental Reserve Account Property deposited in the
Certificate Distribution Account.
(f) Following the payment in full of the aggregate principal balance
of the Notes and the Certificate Balance and of all other amounts owing or to be
distributed hereunder or under the Indenture or the Trust Agreement to
Noteholders or Certificateholders and the termination of the Trust, any
remaining Reserve Account Property and Supplemental Reserve Account Property
shall be distributed to the Seller.
SECTION 4.8. NET DEPOSITS. As an administrative convenience only, unless
the Servicer is required to remit collections pursuant to the first sentence of
Section 4.2, the Seller and the Servicer may make any remittance pursuant to
this Article IV with respect to a Collection Period net of distributions to be
made to the Seller or the Servicer with respect to such Collection Period.
Nonetheless, such obligations shall remain separate obligations, no party shall
have a right of offset, and each such party shall account for all of the above
described remittances and distributions as if the amounts were deposited and/or
transferred separately.
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SECTION 4.9. STATEMENTS TO NOTEHOLDERS AND CERTIFICATEHOLDERS. On or
prior to each Payment Date, the Servicer shall provide to the Indenture Trustee
(with copies to the Rating Agencies and each Paying Agent) for the Indenture
Trustee to forward to each Noteholder of record as of the most recent Record
Date and to the Owner Trustee (with copies to the Rating Agencies and to each
Paying Agent) for the Owner Trustee to forward to each Certificateholder of
record as of the most recent Record Date a statement in substantially the forms
of Exhibits B and C, respectively, setting forth at least the following
information as to the Notes and the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal paid
to each Class of Notes and to the Certificates;
(ii) the amount of such distribution allocable to interest paid
to each Class of Notes;
(iii) the Yield Supplement Amount;
(iv) the amount of the Total Servicing Fee with respect to the
related Collection Period;
(v) the aggregate outstanding principal balance of each Class of
Notes, the applicable Note Pool Factor, the Certificate Balance and the
Certificate Pool Factor as of the close of business on the last day of the
preceding Collection Period, after giving effect to payments allocated to
principal reported under clause (i) above;
(vi) the Pool Balance, the Level Pay Pool Balance and the Last
Scheduled Payment Pool Balance, in each case as of the close of business on
the last day of the related Collection Period;
(vii) the amounts of the Interest Carryover Shortfall and the
Principal Carryover Shortfall, if any, for such Payment Date and the
portion thereof attributable to each Class of Notes;
(viii) the amount of the aggregate Realized Losses, if any, with
respect to the related Collection Period;
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(ix) the balance of the Reserve Account on such Payment Date,
after giving effect to changes therein on such Payment Date;
(x)the balance of the Supplemental Reserve Account on such
Payment Date, after giving effect to changes therein on such Payment Date;
(xi) the aggregate Purchase Amount of Receivables repurchased by
the Seller or purchased by the Servicer, if any, with respect to the
related Collection Period;
(xii) the amount of Actuarial Advances and Last Scheduled Payment
Advances, if any, with respect to the related Collection Period.
Each amount set forth on the Payment Date statement pursuant to
clauses (i), (ii), (iii), (v) and (vii) above shall be expressed as a dollar
amount per $1,000 of original principal balance of a Certificate or Note, as
applicable.
SECTION 4.10. CONTROL OF SECURITIES ACCOUNTS. Notwithstanding
anything else contained herein, the Issuer agrees that with respect to each of
the Collection Account, the Note Payment Account, the Reserve Account, the
Supplemental Reserve Account and the Yield Supplement Account will only be
established at a Qualified Institution or Qualified Trust Institution which
agrees substantially as follows: (i) it will comply with "entitlement orders"
(as defined in Section 8-102(a)(8) of the UCC; I.E. orders directing the
transfer or redemption of any financial asset) relating to such accounts issued
by the Indenture Trustee without further consent by the Issuer; (ii) until the
termination of the Indenture, it will not enter into any other agreement
relating to any such account pursuant to which it agrees to comply with
entitlement orders of any Person other than the Indenture Trustee; and (iii) all
assets delivered or credited to it in connection with such accounts and all
investments thereof will be promptly credited to such accounts.
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ARTICLE V
YIELD SUPPLEMENT LETTER OF CREDIT
SECTION 5.1. YIELD SUPPLEMENT LETTER OF CREDIT AND THE YIELD
SUPPLEMENT ACCOUNT. (a) The Servicer shall, prior to the Closing Date,
establish and maintain a segregated trust account in the name of the Indenture
Trustee at a Qualified Institution or Qualified Trust Institution (which shall
initially be the corporate trust department of Bank of Tokyo - Mitsubishi Trust
Company), which shall be designated as the "YIELD SUPPLEMENT ACCOUNT." Amounts
on deposit in the Yield Supplement Account will be used for the payment of any
Yield Supplement Amounts required to be paid on any Payment Date pursuant to the
Yield Supplement Agreement which MMCA has not paid as of such Payment Date. The
Yield Supplement Account shall be under the sole dominion and control of the
Indenture Trustee PROVIDED, that the Servicer may make deposits to and direct
the Indenture Trustee to make withdrawals from the Yield Supplement Account in
accordance with this Agreement and the Yield Supplement Agreement. On the
Closing Date, the Seller will deposit the initial Specified Yield Supplement
Account Balance into the Yield Supplement Account from the net proceeds of the
sale of the Notes and Certificates. To the extent, on any Payment Date, the
amount on deposit in the Yield Supplement Account (after giving effect to any
withdrawals to be made on such Payment Date, but exclusive of net investment
income) is greater than the Specified Yield Supplement Account Balance, then, in
such event, the Servicer shall instruct the Indenture Trustee in writing to pay
such excess amount to the Seller.
All amounts held in the Yield Supplement Account shall be invested, as
directed in writing by the Servicer, by the bank or trust company then
maintaining the Yield Supplement Account in Permitted Investments that mature
not later than the Business Day immediately preceding the next Payment Date and
such Permitted Investments shall be held to maturity. All interest and other
income (net of losses and investment expenses) on funds on deposit in the Yield
Supplement Account shall be withdrawn from the Yield Supplement Account at the
written direction of the Servicer and shall be paid to the Seller. In the event
that the Yield Supplement Account is no longer to be maintained at the corporate
trust department of Bank of Tokyo - Mitsubishi Trust Company, the Servicer
shall, with the Indenture Trustee's assistance as necessary, cause the Yield
Supplement Account to be moved to a Qualified Institution or a Qualified Trust
Institution
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within ten (10) Business Days (or such longer period not to exceed thirty (30)
calendar days as to which each Rating Agency may consent).
The Seller hereby sells, conveys and transfers to the Trust the Yield
Supplement Account, all funds and investments on deposit therein or credited
thereto and all proceeds thereof, subject, however, to the limitations set forth
below.
Pursuant to the Indenture, the Trust will pledge its rights under the
Yield Supplement Agreement (including its rights to amounts on deposit in the
Yield Supplement Account) to the Indenture Trustee to secure its obligations
under the Notes and the Indenture. Such sale, conveyance and transfer of the
Yield Supplement Account by the Seller to the Trust, and such pledge by the
Trust of its rights to amounts in the Yield Supplement Account to the Indenture
Trustee, shall be subject to the following limitations:
(i) All or a portion of the Yield Supplement Account may be
invested and reinvested in the manner specified in Section 5.1(a) in
accordance with written instructions from the Servicer. All such
investments shall be made in the name of the Indenture Trustee and all
income and gain realized thereon shall be solely for the benefit of
the Seller and shall be payable by the Indenture Trustee to the Seller
upon written direction of the Servicer as specified in Section 5.1(a);
(ii) If, with respect to any Collection Period, MMCA shall
have failed to make or cause to be made in full the remittance of the
Yield Supplement Amount on the date required by the Yield Supplement
Agreement, the Indenture Trustee not later than 10:00 a.m. (New York
City time) on the Payment Date, shall, upon the written direction of
the Servicer, withdraw from the Yield Supplement Account and deposit
into the Collection Account the amount of the shortfall between the
amount of funds that are required to be remitted by MMCA with respect
to the Yield Supplement Agreement as set forth in the Servicer's
Certificate and the amount of funds actually so remitted and to the
extent of any remaining shortfall, the Indenture Trustee shall
withdraw an amount equal thereto from the Supplemental Reserve
Account, and to the
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extent of any remaining shortfall from the Reserve Account, and deposit
such amounts in the Collection Account; and
(iii) Upon termination of this Agreement in accordance with
Section 9.1 or (a) in the event that the Seller obtains a Yield
Supplement Letter of Credit or (b) the Seller otherwise satisfies the
requirements with respect to the Yield Supplement Agreement
established by the Rating Agencies, in either case as evidenced by
satisfaction of the Rating Agency Condition and, in either case,
delivers to the Indenture Trustee an Opinion of Counsel to the effect
that the contemplated action will not adversely affect the status of
the Trust as a partnership for Federal income and Applicable Tax State
income and franchise tax purposes and an Officer's Certificate of the
Seller that all conditions precedent to the liquidation of the Yield
Supplement Account have been satisfied, any amounts on deposit in the
Yield Supplement Account shall, upon written request of the Seller, be
paid to the Seller.
(b) If a Yield Supplement Letter of Credit has been obtained by MMCA,
and if, with respect to any Collection Period, MMCA shall have failed to make or
cause to be made in full the remittance of the Yield Supplement Amount, upon
written notice by the Servicer of such failure (which notice shall be given no
later than 10:00 a.m. (New York City time) on the Payment Date for such
Collection Period), the Indenture Trustee shall draw on the Yield Supplement
Letter of Credit in accordance with the terms thereof, in the amount of the
shortfall between the amount of funds with respect to the Yield Supplement
Amount that are required to be remitted by MMCA with respect to the Yield
Supplement Agreement as set forth in the Servicer's Certificate and the amount
of funds actually so remitted as set forth in the Servicer's Certificate. Any
such draw on the Yield Supplement Letter of Credit shall be made after receipt
of the related Servicer's Certificate on or before 11:00 a.m. (New York City
time) on the Payment Date for such Collection Period. Upon receipt of a request
for a draw by the Indenture Trustee under the Yield Supplement Letter of Credit,
the Letter of Credit Bank is to promptly make a payment to the Indenture Trustee
in an amount equal to the Yield Supplement Amount (minus payments made on the
Yield Supplement Agreement), and the Indenture Trustee shall deposit into the
Collection Account pursuant to Section 4.5 the amount received from the Letter
of Credit Bank in respect of such drawing. The Servicer shall include in each
Servicer's Certificate, or in an Officer's Certificate provided to the Indenture
Trustee with
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each Servicer's Certificate, the Stated Amount (as defined in the Yield
Supplement Letter of Credit) of the Yield Supplement Letter of Credit as of the
close of business on the last day of the Collection Period preceding the date of
such Servicer's Certificate. In the event that the rating of the Letter of
Credit Bank declines below the Required Rating, the Servicer shall promptly
notify the Indenture Trustee in writing of such decline, and upon receipt of
such notification, the Indenture Trustee shall, unless a suitable replacement
letter of credit shall have been delivered, promptly draw the full amount
available under the Yield Supplement Letter of Credit and deposit such amount in
the Yield Supplement Account or obtain funds in the amount required for deposit
from the Yield Supplement Account.
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ARTICLE VI
THE SELLER
SECTION 6.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER.
The Seller makes the following representations, warranties and covenants on
which the Issuer is deemed to have relied in acquiring the Trust Property. The
representations, warranties and covenants speak as of the execution and delivery
of this Agreement and shall survive the sale of the Trust Property to the Issuer
and the pledge thereof by the Issuer to the Indenture Trustee pursuant to the
Indenture:
(a) ORGANIZATION AND GOOD STANDING. The Seller has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware, with power and authority to own its properties
and to conduct its business as such properties shall be currently owned and such
business is presently conducted, and had at all relevant times, and shall have,
power, authority, and legal right to acquire and own the Receivables.
(b) DUE QUALIFICATION. The Seller is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of property
or the conduct of its business shall require such qualifications.
(c) POWER AND AUTHORITY. The Seller has the power and authority to
execute and deliver this Agreement and the other Basic Documents to which it is
a party and to carry out their terms. The Seller has full power and authority
to sell and assign the property to be sold and assigned to and deposited with
the Issuer and has duly authorized such sale and assignment to the Issuer by all
necessary corporate action; and the execution, delivery, and performance of this
Agreement and the other Basic Documents to which it is a party have been duly
authorized by the Seller by all necessary corporate action.
(d) VALID SALE; BINDING OBLIGATION. This Agreement effects a valid
sale, transfer and assignment of the Receivables and the other Trust Property
conveyed by the Seller to the Issuer hereunder, enforceable against creditors of
and purchasers from the Seller; and this Agreement and the other Basic Documents
to which the Seller is a party constitute legal, valid, and binding obligations
of the Seller, enforceable against the Seller in accordance with their terms,
subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization,
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conservatorship, receivership, liquidation and other similar laws and to general
equitable principles.
(e) NO VIOLATION. The execution, delivery and performance by the
Seller of this Agreement and the other Basic Documents to which the Seller is a
party and the consummation of the transactions contemplated hereby and thereby
and the fulfillment of the terms hereof and thereof will not conflict with,
result in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time or both) a default under, the certificate of
incorporation or bylaws of the Seller, or conflict with, or breach any of the
terms or provisions of, or constitute (with or without notice or lapse of time
or both) a default under, any indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by which the Seller is bound
or any of its properties are subject, or result in the creation or imposition of
any lien upon any of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument (other than this
Agreement), or violate any law, order, rule, or regulation, applicable to the
Seller or its properties, of any federal or state regulatory body, any court,
administrative agency, or other governmental instrumentality having jurisdiction
over the Seller or any of its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending, or, to the best knowledge of the Seller, threatened, before any court,
regulatory body, administrative agency, or other tribunal or governmental
instrumentality having jurisdiction over the Seller or its properties: (i)
asserting the invalidity of this Agreement, the Indenture, any of the other
Basic Documents, the Notes or the Certificates, (ii) seeking to prevent the
issuance of the Notes, the Certificates or the consummation of any of the
transactions contemplated by this Agreement, the Indenture or any of the other
Basic Documents, (iii) seeking any determination or ruling that might materially
and adversely affect the performance by the Seller of its obligations under, or
the validity or enforceability of, this Agreement, the Indenture, any of the
other Basic Documents, the Notes or the Certificates, or (iv) that may adversely
affect the Federal or Applicable Tax State income, excise, franchise or similar
tax attributes of the Notes or the Certificates.
(g) FLORIDA SECURITIES AND INVESTOR PROTECTION ACT. In connection
with the offering of the Notes in the State of Florida, the Seller hereby
certifies that it has complied with all provisions of Section 517.075 of the
Florida Securities and Investor Protection Act.
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(h) OFFICER'S CERTIFICATES. Each representation and warranty made by
the Seller in each of the Seller Officer's Certificates attached as exhibits to
the Purchase Agreement is true and correct as of the Closing Date, and the
Seller covenants to fulfill each covenant made by it in such Seller Officer's
Certificates.
SECTION 6.2. LIABILITY OF SELLER; INDEMNITIES. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement, and hereby agrees to the
following:
(a) The Seller shall indemnify, defend, and hold harmless the Issuer,
the Owner Trustee and the Indenture Trustee from and against any taxes that may
at any time be asserted against any such Person with respect to, and as of the
date of, the sale of the Receivables to the Issuer or the issuance and original
sale of the Notes, the Certificates, including any sales, gross receipts,
general corporation, tangible personal property, privilege, or license taxes
(but, in the case of the Issuer, not including any taxes asserted with respect
to ownership of the Receivables or Federal or other Applicable Tax State income
taxes arising out of the transactions contemplated by this Agreement and the
other Basic Documents) and costs and expenses in defending against the same.
(b) The Seller shall indemnify, defend, and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders from and against any loss, liability or expense incurred by
reason of (i) the Seller's willful misfeasance, bad faith, or negligence (other
than errors in judgment) in the performance of its duties under this Agreement,
or by reason of reckless disregard of its obligations and duties under this
Agreement and (ii) the Seller's violation of Federal or state securities laws in
connection with the registration or the sale of the Notes or the Certificates.
(c) The Seller shall indemnify, defend and hold harmless the Owner
Trustee and the Indenture Trustee and their respective officers, directors,
employees and agents from and against all costs, expenses, losses, claims,
damages and liabilities arising out of or incurred in connection with the
acceptance or performance of the trusts and duties contained herein and in the
Trust Agreement, in the case of the Owner Trustee, and in the Indenture, in the
case of the Indenture Trustee, except to the extent that such cost, expense,
loss, claim, damage or liability: (i) shall be due to the willful misfeasance,
bad faith or negligence (except for errors in judgment) of the Owner Trustee or
the Indenture Trustee, as applicable; (ii) in the case of the Owner Trustee
shall arise from the breach by the
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Owner Trustee of any of its representations or warranties set forth in Section
7.3 of the Trust Agreement or (iii) in the case of the Indenture Trustee shall
arise from the breach by the Indenture Trustee of any of its representations and
warranties set forth in the Indenture.
(d) The Seller shall pay any and all taxes levied or assessed upon all
or any part of the Owner Trust Estate.
(e) Indemnification under this Section 6.2 shall survive the
resignation or removal of the Owner Trustee or the Indenture Trustee and the
termination of this Agreement and shall include reasonable fees and expenses of
counsel and expenses of litigation. If the Seller shall have made any indemnity
payments pursuant to this Section 6.2 and the Person to or on behalf of whom
such payments are made thereafter shall collect any of such amounts from others,
such Person shall promptly repay such amounts to the Seller, without interest.
SECTION 6.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SELLER. Any Person (i) into which the Seller may be merged or
consolidated, (ii) resulting from any merger, conversion, or consolidation to
which the Seller shall be a party or (iii) that may succeed by purchase and
assumption to all or substantially all of the business of the Seller, which
Person in any of the foregoing cases executes an agreement of assumption to
perform every obligation of the Seller under this Agreement, will be the
successor to the Seller under this Agreement without the execution or filing of
any document or any further act on the part of any of the parties to this
Agreement; PROVIDED, HOWEVER, that (x) the Seller shall have delivered to the
Owner Trustee and the Indenture Trustee an Officer's Certificate and an Opinion
of Counsel each stating that such merger, conversion, consolidation or
succession and such agreement of assumption comply with this Section 6.3, and
(y) the Seller shall have delivered to the Owner Trustee and the Indenture
Trustee an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary to fully preserve and
protect the interest of the Issuer and the Indenture Trustee, respectively, in
the Receivables and the other Trust Property, and reciting the details of such
filings, or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to fully preserve and protect such interest. The Seller
shall provide notice of any merger, conversion, consolidation, or succession
pursuant to this Section 6.3 to the Rating Agencies. Notwithstanding anything
herein to the contrary, the execution of the foregoing agreement of assumption
and
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compliance with clauses (x) or (y) above shall be conditions to the consummation
of the transactions referred to in clauses (i), (ii) or (iii) above.
SECTION 6.4. LIMITATION ON LIABILITY OF SELLER AND OTHERS. The
Seller, and any director or officer or employee or agent of the Seller, may rely
in good faith on the advice of counsel or on any document of any kind, PRIMA
FACIE properly executed and submitted by any Person respecting any matters
arising hereunder. The Seller shall not be under any obligation to appear in,
prosecute, or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 6.5. SELLER MAY OWN NOTES OR CERTIFICATES . The Seller, and
any Affiliate of the Seller, may in its individual or any other capacity become
the owner or pledgee of Notes or Certificates with the same rights as it would
have if it were not the Seller or an Affiliate thereof, except as otherwise
expressly provided herein or in the other Basic Documents. Except as set forth
herein or in the other Basic Documents, Notes and Certificates so owned by or
pledged to the Seller or such controlling, controlled or commonly controlled
Person shall have an equal and proportionate benefit under the provisions of
this Agreement and the other Basic Documents, without preference, priority, or
distinction as among all of the Notes and Certificates.
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ARTICLE VII
THE SERVICER
SECTION 7.1. REPRESENTATIONS AND WARRANTIES OF SERVICER. The
Servicer makes the following representations and warranties on which the Issuer
is deemed to have relied in acquiring the Trust Property, and such
representations and warranties speak as of the execution and delivery of this
Agreement and shall survive the sale of the Trust Property to the Issuer and the
pledge thereof by the Issuer pursuant to the Indenture:
(a) ORGANIZATION AND GOOD STANDING. The Servicer has been duly
organized and is validly existing as a corporation in good standing under the
laws of the state of its incorporation, with power and authority to own its
properties and to conduct its business as such properties shall be currently
owned and such business is presently conducted, and had at all relevant times,
and shall have, power, authority, and legal right to acquire, own, sell, and
service the Receivables and to hold the Receivable Files as custodian on behalf
of the Trustee.
(b) DUE QUALIFICATION. The Servicer is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business (including the servicing of the
Receivables as required by this Agreement) shall require such qualifications.
(c) POWER AND AUTHORITY. The Servicer has the power and authority to
execute and deliver this Agreement and the other Basic Documents to which it is
a party and to carry out their terms, and the execution, delivery and
performance of this Agreement and the other Basic Documents to which it is a
party have been duly authorized by the Servicer by all necessary corporate
action.
(d) BINDING OBLIGATION. This Agreement and the other Basic Documents
to which it is a party constitute legal, valid, and binding obligations of the
Servicer, enforceable against the Servicer in accordance with their terms,
subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization, conservatorship, receivership, liquidation and other similar
laws and to general equitable principles.
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(e) NO VIOLATION. The execution, delivery and performance by the
Servicer of this Agreement and the other Basic Documents to which it is a party,
the consummation of the transactions contemplated hereby and thereby and the
fulfillment of the terms hereof and thereof will not conflict with, result in
any breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time or both) a default under, the certificate of
incorporation or bylaws of the Servicer, or conflict with, or breach any of the
terms or provisions of, or constitute (with or without notice or lapse of time
or both) a default under, any indenture, agreement, mortgage, deed of trust or
other instrument to which the Servicer is a party or by which the Servicer is
bound or to which any of its properties are subject, or result in the creation
or imposition of any lien upon any of its properties pursuant to the terms of
any such indenture, agreement, mortgage, deed of trust or other instrument
(other than this Agreement), or violate any law, order, rule, or regulation
applicable to the Servicer or its properties of any Federal or state regulatory
body, any court, administrative agency, or other governmental instrumentality
having jurisdiction over the Servicer or any of its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending, or, to the Servicer's knowledge, threatened, before any court,
regulatory body, administrative agency, or tribunal or other governmental
instrumentality having jurisdiction over the Servicer or its properties: (a)
asserting the invalidity of this Agreement, the Indenture, any of the other
Basic Documents, the Notes, or the Certificates, (b) seeking to prevent the
issuance of the Notes or the Certificates or the consummation of any of the
transactions contemplated by this Agreement, the Indenture or any of the other
Basic Documents, (c) seeking any determination or ruling that might materially
and adversely affect the performance by the Servicer of its obligations under,
or the validity or enforceability of, this Agreement, the Indenture, any of the
other Basic Documents, the Notes or the Certificates, or (d) that may adversely
affect the Federal or Applicable Tax State income, excise, franchise or similar
tax attributes of the Notes or the Certificates.
SECTION 7.2. LIABILITY OF SERVICER; INDEMNITIES. The Servicer shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Servicer under this Agreement, and hereby agrees
to the following:
(a) The Servicer shall defend, indemnify and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders and the Seller from and against any and all costs, expenses,
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losses, damages, claims and liabilities, arising out of or resulting from the
use, ownership or operation by the Servicer or any Affiliate thereof of a
Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee and the Indenture Trustee from and against any taxes that may
at any time be asserted against any such Person with respect to the transactions
contemplated herein or in the other Basic Documents, if any, including, without
limitation, any sales, gross receipts, general corporation, tangible personal
property, privilege or license taxes (but, in the case of the Issuer, not
including any taxes asserted with respect to, and as of the date of, the sale of
the Receivables to the Issuer or the issuance and original sale of the Notes and
the Certificates and the issuance of the Certificates, or asserted with respect
to ownership of the Receivables, or Federal or other Applicable Tax State income
taxes arising out of the transactions contemplated by this Agreement and the
other Basic Documents) and costs and expenses in defending against the same.
(c) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders and the Seller from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent that such cost, expense,
loss, claim, damage or liability arose out of, or was imposed upon any such
Person through, the negligence, willful misfeasance or bad faith of the Servicer
in the performance of its duties under this Agreement or any other Basic
Document to which it is a party (except for errors in judgment), or by reason of
reckless disregard of its obligations and duties under this Agreement or any
other Basic Document to which it is a party.
(d) The Servicer shall indemnify, defend and hold harmless the Owner
Trustee and the Indenture Trustee, as applicable, from and against all costs,
expenses, losses, claims, damages and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties contained
herein and in the other Basic Documents, if any, except to the extent that such
cost, expense, loss, claim, damage or liability: (a) shall be due to the
willful misfeasance, bad faith or negligence (except for errors in judgment) of
the Owner Trustee or the Indenture Trustee, as applicable; (b) relates to any
tax other than the taxes with respect to which either the Seller or the Servicer
shall be required to indemnify the Owner Trustee or the Indenture Trustee, as
applicable; (c) in the case of the Owner Trustee, shall arise from the Owner
Trustee's breach of any of
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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
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be the successor to the Servicer under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties to this
Agreement; PROVIDED, HOWEVER, that (x) the Servicer shall have delivered to the
Owner Trustee and the Indenture Trustee an Officer's Certificate and an Opinion
of Counsel each stating that such merger, conversion, consolidation or
succession and such agreement of assumption comply with this Section 7.3, and
(y) the Servicer shall have delivered to the Owner Trustee and the Indenture
Trustee an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary to fully preserve and
protect the interest of the Issuer and the Indenture Trustee, respectively, in
the Receivables, and reciting the details of such filings, or (B) stating that,
in the opinion of such Counsel, no such action shall be necessary to fully
preserve and protect such interests. The Servicer shall provide notice of any
merger, conversion, consolidation or succession pursuant to this Section 7.3 to
the Rating Agencies. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement or assumption and compliance with clauses
(x) and (y) above shall be conditions to the consummation of the transactions
referred to in clauses (i), (ii) or (iii) above.
SECTION 7.4. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Issuer, the Noteholders or the
Certificateholders, except as provided under this Agreement, for any action
taken or for refraining from the taking of any action pursuant to this Agreement
or for errors in judgment; PROVIDED, HOWEVER, that this provision shall not
protect the Servicer or any such Person against any liability that would
otherwise be imposed by reason of willful misfeasance or bad faith in the
performance of duties or by reason of reckless disregard of obligations and
duties under this Agreement, or by reason of negligence in the performance of
its duties under this Agreement (except for errors in judgment). The Servicer
and any director, officer or employee or agent of the Servicer may rely in good
faith on any document of any kind PRIMA FACIE properly executed and submitted by
any Person in respect of any matters arising under this Agreement.
(b) Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Receivables in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability;
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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.
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ARTICLE VIII
SERVICING TERMINATION
SECTION 8.1. EVENTS OF SERVICING TERMINATION. (a) The occurrence of
any one of the following events shall constitute an event of servicing
termination hereunder (each, an "EVENT OF SERVICING TERMINATION"):
(i) Any failure by the Servicer to deliver to the Owner Trustee or the
Indenture Trustee the Servicer's Certificate for any Collection Period,
which shall continue beyond the earlier of three (3) Business Days from the
date such Servicer's Certificate was due to be delivered and the related
Payment Date, or any failure by the Servicer to make any required payment
or deposit under this Agreement, which shall continue unremedied for a
period of five (5) Business Days following the due date therefor (or, in
the case of a payment or deposit to be made no later than a Payment Date,
the failure to make such payment or deposit by such Payment Date); or
(ii) Any failure on the part of the Servicer duly to observe or to
perform in any material respect any other covenant or agreement set forth
in the Notes, the Certificates, or in this Agreement, which failure shall
materially and adversely affect the rights of Noteholders or
Certificateholders and continue unremedied for a period of thirty (30) days
after the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Servicer by the Owner Trustee
or the Indenture Trustee or to the Owner Trustee, the Indenture Trustee,
the Seller and the Servicer by the Holders of Notes or Certificates, as
applicable, evidencing not less than 25% of the principal balance of the
then Outstanding Notes, in the aggregate, or 25% of the Certificate
Balance; or
(iii) The entry of a decree or order by a court or agency or
supervisory authority of competent jurisdiction for the appointment of a
conservator, receiver, liquidator or trustee for the Seller or the Servicer
in any bankruptcy, insolvency, readjustment of debt, marshalling of assets
and liabilities, or similar proceedings, or for the winding up or
liquidation of its affairs, and any such decree or order continues unstayed
and in effect for a period of sixty (60) consecutive days; or
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(iv) The consent by the Seller or the Servicer to the appointment of a
conservator, receiver, liquidator or trustee in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities, or similar
proceedings of or relating to the Seller or the Servicer or relating to
substantially all of its property, the admission in writing by the Servicer
of its inability to pay its debts generally as they become due, the filing
by the Seller or the Servicer of a petition to take advantage of any
applicable bankruptcy, insolvency or reorganization statute, the making by
the Seller or the Servicer of an assignment for the benefit of its
creditors or the voluntary suspension by the Seller or the Servicer of
payment of its obligations; or
(v) The failure by the Servicer to be an Eligible Servicer;
then, and in each and every case and for so long as an Event of Servicing
Termination shall not have been remedied, either the Indenture Trustee, or the
Holders of Notes evidencing not less than a majority of the Outstanding Amount
of the Notes, voting as a group, or if no Notes are Outstanding, the Owner
Trustee pursuant to the Trust Agreement by notice then given in writing to the
Servicer (with a copy to the Indenture Trustee and the Owner Trustee if given by
the Noteholders), may terminate all of the rights and obligations of the
Servicer under this Agreement. On or after the receipt by the Servicer of such
written notice, all authority and power of the Servicer under this Agreement,
whether with respect to the Notes, the Certificates, or the Trust Property or
otherwise, shall pass to and be vested in the Indenture Trustee or a successor
Servicer appointed under Section 8.2; and, without limitation, the Indenture
Trustee and the Owner Trustee shall be authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the Receivable
Files, the certificates of title to the Financed Vehicles, or otherwise. The
Servicer shall cooperate with the Indenture Trustee, the Owner Trustee and such
successor Servicer in effecting the termination of its responsibilities and
rights as Servicer under this Agreement, including the transfer to the Indenture
Trustee or such successor Servicer for administration of all cash amounts that
are at the time held by the Servicer for deposit or thereafter shall be received
with respect to a Receivable, all Receivable Files and all information or
documents that the Indenture Trustee or such successor Servicer may require. In
addition, the Servicer shall transfer its electronic records relating to the
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Receivables to the successor Servicer in such electronic form as the successor
Servicer may reasonably request. All reasonable costs and expenses incurred by
the successor Servicer, including allowable compensation of employees and
overhead costs, in connection with the transfer of servicing shall be paid by
the outgoing Servicer (or by the initial Servicer if the outgoing Servicer is
the Indenture Trustee acting on an interim basis) upon presentation of
reasonable documentation of such costs and expenses.
(b) If any of the foregoing Events of Servicing Termination occur, the
Indenture Trustee and the Owner Trustee shall have no obligation to notify
Noteholders, Certificateholders or any other Person of such occurrence prior to
the continuance of such event through the end of any cure period specified in
Section 8.1(a).
SECTION 8.2. INDENTURE TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR
SERVICER. Upon the Servicer's resignation pursuant to Section 7.5 or upon the
Servicer's receipt of notice of termination as Servicer pursuant to Section 8.1,
the Indenture Trustee shall be the successor in all respects to the Servicer in
its capacity as Servicer under this Agreement (PROVIDED that neither the
Indenture Trustee nor any other successor Servicer shall have any obligation,
but may elect, to make available to an Obligor any refinancing of a Last
Scheduled Payment in the manner specified in the last sentence of Section 3.2(e)
hereof), and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
of this Agreement. As compensation therefor, the Indenture Trustee shall be
entitled to such compensation (whether payable out of the Collection Account or
otherwise) as the Servicer would have been entitled to under this Agreement if
no such notice of termination or resignation had been given, except that all
collections shall be deposited in the Collection Account within two (2) Business
Days of receipt and shall not be retained by the Servicer. Notwithstanding the
above, the Indenture Trustee may, if it shall be unwilling so to act, or shall,
if it is legally unable so to act, appoint, or petition a court of competent
jurisdiction to appoint, an Eligible Servicer as the successor to the terminated
Servicer under this Agreement. In connection with such appointment, the
Indenture Trustee may make such arrangements for the compensation of such
successor Servicer out of payments on Receivables as it and such successor shall
agree, which, in no event, shall be greater than that payable to MMCA as
Servicer hereunder. The Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession including, but not limited to, making arrangements in respect
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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.
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SECTION 8.5. WAIVER OF PAST EVENTS OF SERVICING TERMINATION. The
Holders of Notes evidencing not less than 51% of the Outstanding Amount (as
defined in the Indenture) of the Notes or the Holders of Certificates evidencing
not less than a majority of the Certificate Balance (in the case of an Event of
Servicing Termination which does not adversely affect the Indenture Trustee or
the Noteholders) may, on behalf of all Noteholders and Certificateholders, waive
any Event of Servicing Termination hereunder and its consequences, except an
event resulting from the failure to make any required deposits to, or payments
from, any of the Trust Accounts, the Certificate Distribution Account, the Yield
Supplement Account, the Supplemental Reserve Account or the Reserve Account in
accordance with this Agreement. Upon any such waiver of a past Event of
Servicing Termination, such event shall cease to exist, and shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other event or impair any right arising therefrom,
except to the extent expressly so waived.
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ARTICLE IX
TERMINATION
SECTION 9.1. OPTIONAL PURCHASE OF ALL RECEIVABLES. (a) On each
Payment Date following the last day of a Collection Period as to which the Pool
Balance shall be less than or equal to the Optional Purchase Percentage
(expressed as a seven-digit decimal) multiplied by the Initial Pool Balance, the
Servicer shall have the option to purchase the Owner Trust Estate, other than
the Trust Accounts, the Certificate Distribution Account, the Reserve Account,
the Supplemental Reserve Account and the Yield Supplement Account. To exercise
such option, the Servicer shall notify the Owner Trustee and the Indenture
Trustee no later than the fifteenth day of the month immediately preceding the
month in which such repurchase is to be effected and shall deposit an amount
equal to the aggregate Purchase Amount for the Receivables, plus the appraised
value of any other property held in the Trust other than in the Trust Accounts,
the Certificate Distribution Account, the Reserve Account, the Supplemental
Reserve Account and the Yield Supplement Account, such value to be determined by
an appraiser mutually agreed upon by the Servicer, the Owner Trustee and the
Indenture Trustee, into the Collection Account on the Payment Date occurring in
the month in which such repurchase is to be effected. Upon such payment, the
Servicer shall succeed to and own all interests in and to the Trust.
Notwithstanding the foregoing, the Servicer shall not be permitted to exercise
such option unless the amount to be deposited in the Collection Account pursuant
to the second preceding sentence is greater than or equal to the sum of the
outstanding principal balance of the Notes and all accrued but unpaid interest
(including any overdue interest) thereon and the Certificate Balance. The
Purchase Amount and any Yield Supplement Amounts for such Payment Date, PLUS to
the extent necessary all amounts in the Supplemental Reserve Account, PLUS to
the extent necessary all amounts in the Reserve Account, shall be used to make
payments in full to Noteholders and Certificateholders in the manner set forth
in Article IV.
(b) Unless otherwise required by the Rating Agencies as set forth in
writing delivered to the Owner Trustee and the Indenture Trustee, if at the time
the Servicer exercises its purchase option hereunder the Servicer's long-term
unsecured debt has a rating lower than investment grade by the Rating Agencies,
the Servicer shall deliver to the Owner Trustee and the Indenture Trustee on
such Payment Date a letter from an Independent investment bank or an Independent
public accountant to the effect that the price paid by the Servicer for the
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Receivables at the time of transfer pursuant to such purchase option represented
a fair market price for such Receivables.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes and the
Certificateholders will succeed to the rights of the Noteholders hereunder, and
the Indenture Trustee will continue to carry out its obligations hereunder with
respect to the Certificateholders, including without limitation making
distributions from the Payahead Account and the Collection Account in accordance
with Section 4.6 and making withdrawals from the Supplemental Reserve Account in
accordance with Sections 4.5(b) and 4.7 and the Reserve Account in accordance
with Sections 4.5(c) and 4.7.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. AMENDMENT. (a) This Agreement may be amended by the
Seller, the Servicer and the Issuer, with the consent of the Indenture Trustee,
but without the consent of any of the Noteholders or the Certificateholders to
cure any ambiguity, to correct or supplement any provisions in this Agreement
which may be inconsistent with any other provisions in this Agreement, or to
add, change or eliminate any other provisions with respect to matters or
questions arising under this Agreement that shall not be inconsistent with the
provisions of this Agreement; PROVIDED, HOWEVER, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Owner Trustee and the
Indenture Trustee, materially and adversely affect the interests of any
Noteholder or Certificateholder.
(b) This Agreement may also be amended from time to time by the
Seller, the Servicer and the Issuer, with the consent of the Indenture Trustee,
the consent of the Holders of Notes evidencing not less than 51% of Outstanding
Amount of the Notes and the consent of the Holders of Certificates evidencing
not less than 51% of the Certificate Balance for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, or of modifying in any manner the rights of the Noteholders or
the Certificateholders; PROVIDED, HOWEVER, that no such amendment shall (a)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, or change the allocation or priority of, collections of payments on
Receivables or distributions that shall be required to be made on any Note or
Certificate or change the Note Interest Rate or the Certificate Rate, the
Specified Reserve Balance or the Maximum Supplemental Reserve Amount, without
the consent of all adversely affected Noteholders or Certificateholders, (b)
reduce the aforesaid percentage required to consent to any such amendment,
without the consent of the Holders of all Notes and Certificates affected
thereby or (c) adversely affect the rating of any Class of Notes by the Rating
Agencies without the consent, as applicable, of Noteholders evidencing not less
than 66-2/3% of the Notes of such Class Outstanding.
(c) Prior to the execution of any amendment or consent pursuant to
Section 10.1(b), the Servicer shall provide written notification of the
substance of such amendment or consent to each Rating Agency.
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(d) Promptly after the execution of any amendment or consent pursuant
to this Section 10.1, the Owner Trustee shall furnish written notification of
the substance of such amendment or consent to each Certificateholder, the
Indenture Trustee and each of the Rating Agencies. It shall not be necessary
for the consent of Noteholders or the Certificateholders pursuant to this
Section 10.1 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any other consents of
Noteholders and Certificateholders provided for in this Agreement) and of
evidencing the authorization of the execution thereof by Noteholders and
Certificateholders shall be subject to such reasonable requirements as the Owner
Trustee and the Indenture Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the
Owner Trustee and the Indenture Trustee shall be entitled to receive and rely
upon (i) an Opinion of Counsel stating that the execution of such amendment (A)
is authorized or permitted by this Agreement, (B) will not materially adversely
affect the Federal or any Applicable Tax State income or franchise taxation of
any Outstanding Note or Certificate or any Holder thereof, and (C) will not
cause the Trust to be taxable as a corporation for Federal or any Applicable Tax
State income or franchise tax purposes and (ii) an Officer's Certificate of the
Servicer that all conditions precedent to the execution of such amendment have
been complied with. The Owner Trustee or the Indenture Trustee may, but shall
not be obligated to, enter into any such amendment which affects such Owner
Trustee's or Indenture Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 10.2. PROTECTION OF TITLE TO TRUST. (a) The Seller or
Servicer, or both, shall execute and file such financing statements and cause to
be executed and filed such continuation statements, all in such manner and in
such places as may be required by law fully to preserve, maintain, and protect
the interest of the Issuer and the Indenture Trustee for the benefit of the
Noteholders in the Receivables and in the proceeds thereof. The Seller or
Servicer, or both, shall deliver (or cause to be delivered) to the Owner Trustee
and the Indenture Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity, or corporate structure in any manner that would, could, or might make
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any financing statement or continuation statement filed by the Seller or the
Servicer in accordance with paragraph (a) above seriously misleading within the
meaning of Section 9-402(7) of the Relevant UCC, unless it shall have given the
Owner Trustee and the Indenture Trustee at least sixty (60) days' prior written
notice thereof and shall have promptly filed appropriate amendments to all
previously filed financing statements or continuation statements.
(c) The Seller and the Servicer shall give the Owner Trustee and the
Indenture Trustee at least sixty (60) days' prior written notice of any
relocation of its principal executive office if, as a result of such relocation,
the applicable provisions of the Relevant UCC would require the filing of any
amendment of any previously filed financing or continuation statement or of any
new financing statement and shall promptly file any such amendment, continuation
statement or any new financing statement. The Servicer shall at all times
maintain each office from which it shall service Receivables, and its principal
executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection
Account, Payahead Account, the Yield Supplement Account, the Reserve Account and
the Supplemental Reserve Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the Issuer,
the Servicer's master computer records (including any back-up archives) that
refer to a Receivable shall indicate clearly the interest of the Issuer and the
Indenture Trustee in such Receivable and that such Receivable is owned by the
Issuer and has been pledged to the Indenture Trustee pursuant to the Indenture.
Indication of the Issuer's and the Indenture Trustee's interest in a Receivable
shall be deleted from or modified on the Servicer's computer systems when, and
only when, the Receivable shall have been paid in full or repurchased by the
Seller or purchased by the Servicer.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in any
automobile or
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light- or medium-duty truck receivables to any prospective purchaser, lender, or
other transferee, the Servicer shall give to such prospective purchaser, lender,
or other transferee computer tapes, records, or print-outs (including any
restored from back-up archives) that, if they shall refer in any manner
whatsoever to any Receivable, shall indicate clearly that such Receivable has
been sold and is owned by the Issuer and has been pledged to the Indenture
Trustee unless such Receivable has been paid in full or repurchased by the
Seller or purchased by the Servicer.
(g) The Servicer shall permit the Owner Trustee, the Indenture Trustee
and their respective agents at any time during normal business hours to inspect,
audit, and make copies of and abstracts from the Servicer's records regarding
any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee and
the Indenture Trustee, within ten (10) Business Days, a list of all Receivables
(by contract number and name of Obligor) then held as part of the Trust,
together with a reconciliation of such list to the Schedule of Receivables and
to each of the Servicer's Certificates furnished before such request indicating
removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee:
(1) promptly after the execution and delivery of each
amendment to any financing statement, an Opinion of Counsel either (A)
stating that, in the opinion of such Counsel, all financing statements
and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Issuer and
the Indenture Trustee in the Receivables, and reciting the details of
such filings or referring to prior Opinions of Counsel in which such
details are given, or (B) stating that, in the opinion of such
Counsel, no such action shall be necessary to preserve and protect
such interest; and
(2) within ninety (90) days after the beginning of each
calendar year beginning with the first calendar year beginning more
than three months after the Cutoff Date, an Opinion of Counsel, dated
as of a date during such 90-day period, either (A) stating that, in
the opinion of such Counsel, all financing statements and
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continuation statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Issuer and the Indenture
Trustee in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or
(B) stating that, in the opinion of such Counsel, no such action shall be
necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i)(1) or (i)(2) above
shall specify any action necessary (as of the date of such opinion) to be taken
in the following year to preserve and protect such interest.
(j) The Seller shall, to the extent required by applicable law, cause
the Notes to be registered with the Commission pursuant to Section 12(b) or
Section 12(g) of the Exchange Act within the time periods specified in such
sections.
SECTION 10.3. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of New York and the obligations, rights,
and remedies of the parties under this Agreement shall be determined in
accordance with such laws.
SECTION 10.4. NOTICES. All demands, notices, and communications
under this Agreement shall be in writing, personally delivered, sent by
telecopier, overnight courier or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) in the
case of the Seller or the Servicer, to the agent for service as specified in
Section 10.12 hereof, or at such other address as shall be designated by the
Seller or the Servicer in a written notice to the Owner Trustee and the
Indenture Trustee, (b) in the case of the Owner Trustee, at the Corporate Trust
Office of the Owner Trustee, (c) in the case of the Indenture Trustee, at the
Corporate Trust Office of the Indenture Trustee, (d) in the case of Moody's, at
the following address: Xxxxx'x Investors Service, Inc., ABS Monitoring
Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and (e) in the case of
S&P, at the following address: Standard & Poor's Ratings Services, a division
of The XxXxxx-Xxxx Companies, 00 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Asset Backed Surveillance Department. Any notice required or
permitted to be mailed to a Noteholder or Certificateholder shall be given by
first class mail, postage prepaid, at the address of such Holder as shown in the
Note Register or the
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Certificate Register, as applicable. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Noteholder or Certificateholder shall receive such
notice.
SECTION 10.5. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the Notes, the
Certificates, or the rights of the Holders thereof.
SECTION 10.6. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.3 and 8.2 and as provided in
the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Seller or the Servicer without the
prior written consent of the Owner Trustee, the Indenture Trustee, the Holders
of Notes evidencing not less than 66-2/3% of the Outstanding Amount of the Notes
and the Holders of Certificates evidencing not less than 66-2/3% of the
Certificate Balance.
SECTION 10.7. FURTHER ASSURANCES. The Seller and the Servicer agree
to do and perform, from time to time, any and all acts and to execute any and
all further instruments required or reasonably requested by the Owner Trustee or
the Indenture Trustee more fully to effect the purposes of this Agreement,
including, without limitation, the execution of any financing statements or
continuation statements relating to the Receivables for filing under the
provisions of the Relevant UCC of any applicable jurisdiction.
SECTION 10.8. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise
and no delay in exercising, on the part of the Owner Trustee, the Indenture
Trustee, the Noteholders or the Certificateholders, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges therein
provided are cumulative and not exhaustive of any rights, remedies, powers and
privileges provided by law.
93
SECTION 10.9. THIRD-PARTY BENEFICIARIES. This Agreement will inure
to the benefit of and be binding upon the parties hereto, the Noteholders, the
Certificateholders, and their respective successors and permitted assigns.
Except as otherwise provided in this Article X, no other Person will have any
right or obligation hereunder. The parties hereto hereby acknowledge and
consent to the pledge of this Agreement by the Issuer to the Indenture Trustee
for the benefit of Noteholders pursuant to the Indenture.
SECTION 10.10. ACTIONS BY NOTEHOLDER OR CERTIFICATEHOLDERS. (a)
Wherever in this Agreement a provision is made that an action may be taken or a
notice, demand, or instruction given by Noteholders or Certificateholders, such
action, notice, or instruction may be taken or given by any Noteholder or
Certificateholder, as applicable, unless such provision requires a specific
percentage of Noteholders or Certificateholders.
(b) Any request, demand, authorization, direction, notice, consent,
waiver, or other act by a Noteholder or Certificateholder shall bind such
Noteholder or Certificateholder and every subsequent holder of such Note or
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done or omitted to be done by
the Owner Trustee, the Indenture Trustee or the Servicer in reliance thereon,
whether or not notation of such action is made upon such Note or Certificate.
SECTION 10.11. COUNTERPARTS. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
SECTION 10.12. AGENT FOR SERVICE. The agent for service of the
Seller and the Servicer in respect of this Agreement shall be Executive Vice
President, Finance and Corporate Planning, Mitsubishi Motors Credit of America,
Inc., 0000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000-0000, mailing address:
X.X. Xxx 0000, Xxxxxxx, Xxxxxxxxxx 00000-0000.
SECTION 10.13. NO BANKRUPTCY PETITION. The Owner Trustee, the
Indenture Trustee, the Issuer and the Servicer each covenants and agrees that,
prior to the date which is one year and one day after the payment in full of all
securities issued by the Seller or by a trust for which the Seller was the
depositor which
94
securities were rated by any nationally recognized statistical rating
organization it will not institute against, or join any other Person in
instituting against, the Seller any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any federal or
state bankruptcy or similar law. This Section 10.13 shall survive the
resignation or removal of the Owner Trustee under the Trust Agreement or the
Indenture Trustee under the Indenture or the termination of such Agreement.
SECTION 10.14. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE
TRUSTEE. (a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Wilmington Trust Company, not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or,
except as expressly provided in the Trust Agreement, as beneficial owner of the
Issuer, have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer. For all
purposes of this Agreement, in the performance of its duties or obligations
hereunder or in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by Bank of Tokyo - Mitsubishi Trust Company, not in
its individual capacity but solely as Indenture Trustee, and in no event shall
Bank of Tokyo - Mitsubishi Trust Company have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer.
95
IN WITNESS WHEREOF, the parties have caused this Sale and Servicing
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
MMCA AUTO RECEIVABLES, INC.,
as Seller
By:
---------------------------------------------
Name:
Title:
MMCA AUTO OWNER TRUST 1998-1,
as Issuer
By: WILMINGTON TRUST COMPANY
not in its individual capacity but solely
as Owner Trustee
By:
---------------------------------------------
Name:
Title:
MITSUBISHI MOTORS CREDIT OF
AMERICA, INC., as Servicer
By:
---------------------------------------------
Name:
Title:
96
Accepted and agreed:
BANK OF TOKYO - MITSUBISHI TRUST COMPANY,
as Indenture Trustee
By:
-----------------------------------
Name:
Title:
97
SCHEDULE A
----------
[SCHEDULE OF RECEIVABLES]
Delivered to Indenture Trustee at Closing
SCHEDULE B
----------
LOCATIONS OF RECEIVABLES FILES
CORPORATE XXXXXX
0000 Xxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
NATIONAL SERVICE CENTER
10805 Holder Street, Third Floor
P.O. Box 6043
Cypress, CA 90630-0040
NORTH CENTRAL REGION
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
NORTHEASTERN REGION
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000-0000
SOUTHEASTERN REGION
0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
SOUTHWESTERN REGION
000 Xxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
WESTERN REGION
00000 Xxxxxxxx Xxxxxx Xxxxx, Xxxxx X
Xxxxxxx, XX 00000
EXHIBIT A
---------
[FORM OF SERVICER'S CERTIFICATE]
The undersigned certifies that he is a [title] of Mitsubishi Motors
Credit of America, Inc., a corporation in good standing under the laws of the
state of its incorporation (the "COMPANY"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Company
pursuant to Section 3.9 of the Sale and Servicing Agreement, dated as of
[ ], 1998, by and among the Company, as Servicer, MMCA Auto Receivables,
Inc., as Seller, and MMCA Auto Owner Trust 1997, as Issuer (the "SALE AND
SERVICING AGREEMENT") (all capitalized terms used herein without definition have
the respective meanings specified in the Sale and Servicing Agreement), and
further certifies that:
(a) The Servicer's report for the period from __________ to
____________ attached to this certificate is complete and accurate and
contains all information required by Section 3.9 of the Sale and Servicing
Agreement; and
(b) As of the date hereof, no Event of Servicing Termination or
event that with notice or lapse of time or both would become an Event of
Servicing Termination has occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature and the
corporate seal of the Company this ______ day of ____________, 19__.
MITSUBISHI MOTORS CREDIT
OF AMERICA, INC.
By:
-------------------------
Name:
Title:
EXHIBIT B
---------
[FORM OF REPORT TO NOTEHOLDERS]
EXHIBIT C
---------
[FORM OF REPORT TO CERTIFICATEHOLDERS]
EXHIBIT D
---------
[FORM OF YIELD SUPPLEMENT AGREEMENT]
_______,___
MMCA Auto Receivables, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Re: MMCA Auto Owner Trust 1998-1
----------------------------
Ladies and Gentlemen:
We hereby confirm arrangements made as of the date hereof with you to
be effective upon (i) receipt by us of the enclosed copy of this letter
agreement (as amended, supplemented or otherwise modified and in effect from
time to time, the "YIELD SUPPLEMENT AGREEMENT"), executed by you, and (ii)
execution of the Purchase Agreement referred to below and payment of the
purchase price specified thereunder. Capitalized terms used and not otherwise
defined herein shall have the meanings assigned to such terms in, or
incorporated by reference into, the Purchase Agreement, dated as of [ ],
1998 (as amended, supplemented or otherwise modified and in effect from
time to time, the "PURCHASE AGREEMENT"), between Mitsubishi Motors Credit of
America, Inc., as seller (the "SELLER"), and MMCA Auto Receivables, Inc., as
purchaser (the "PURCHASER").
1. On or prior to the Determination Date preceding each Payment
Date, the Servicer shall notify the Purchaser and the Seller of the Yield
Supplement Amount for such Payment Date.
2. In consideration for the Purchaser entering into the Purchase
Agreement and the purchase price paid to the Seller for the Receivables under
the Purchase Agreement, we agree to make a payment of the Yield Supplement
Amount to the Purchaser, or to the pledgee of the assignee of the Purchaser
referred to in Section 5 hereof, on the Business Day prior to each Payment Date.
MMCA Auto Receivables, Inc.
Page 2
3. All payments pursuant hereto shall be made by federal wire
transfer (same day) funds or in immediately available funds, to such account as
the Purchaser or the pledgee of the assignee of the Purchaser referred to in
Section 5 hereof, may designate in writing to the Seller, prior to the relevant
Payment Date.
4. Our agreements set forth in this Yield Supplement Agreement are
our primary obligations and such obligations are irrevocable, absolute and
unconditional, shall not be subject to any counterclaim, setoff or defense and
shall remain in full force and effect without regard to, and shall not be
released, discharged or in any way affected by, any circumstances or condition
whatsoever.
5. Pursuant to the Sale and Servicing Agreement, the Purchaser will
sell, transfer, assign and convey its interest in this Yield Supplement
Agreement to MMCA Auto Owner Trust 1998-1 (the "TRUST"), and the Seller hereby
acknowledges and consents to such sale, transfer, assignment and conveyance.
Concurrent with such sale, transfer, assignment and conveyance, pursuant to the
Indenture, the Trust will pledge its rights under this Yield Supplement
Agreement, along with certain other assets of the Trust, to Bank of Tokyo -
Mitsubishi Trust Company, as Indenture Trustee, to secure its obligations under
the Notes and the Indenture, and the Seller hereby acknowledges and consents to
such pledge. The Seller hereby agrees, for the benefit of the Trust, that
following such sale, transfer, assignment, conveyance and pledge, this Yield
Supplement Agreement shall not be amended, modified or terminated without the
consent of Wilmington Trust Company, as Owner Trustee on behalf of the Trust,
and, prior to the payment in full of the Notes, the Indenture Trustee.
6. This Yield Supplement Agreement will be governed by, and
construed in accordance with, the laws of the State of New York.
7. Except as otherwise provided herein, all notices pursuant to this
Yield Supplement Agreement shall be in writing and shall be effective upon
receipt thereof. All notices shall be directed as set forth below, or to such
other address or to the attention of such other person as the relevant party
shall have designated for such purpose in a written notice.
MMCA Auto Receivables, Inc.
Page 3
IF TO THE PURCHASER:
MMCA Auto Receivables, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Secretary/Treasurer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
IF TO THE SELLER:
Mitsubishi Motors Credit of America, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Vice President, Secretary and
Treasurer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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.
MMCA Auto Receivables, Inc.
Page 4
If the foregoing satisfactorily sets forth the terms and conditions of
our agreement, please indicate your acceptance thereof by signing in the space
provided below and returning to us the enclosed duplicate original of this
letter.
Very truly yours,
MITSUBISHI MOTORS CREDIT
OF AMERICA, INC., as
Seller
By:
-----------------------
Name:
Title:
Agreed and accepted as of
the date first above written:
MMCA AUTO RECEIVABLES, INC.,
as Purchaser
By:
-----------------------
Name:
Title:
