Exhibit 4.2
SALE AND SERVICING AGREEMENT, dated as of _______, 1997 (as amended,
supplemented or otherwise modified and in effect from time to time, this
"Agreement"), by and among MMCA AUTO OWNER TRUST 1997-1, 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 sales 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 Certificate Interest" shall mean, with respect to any
Payment Date, the sum of the Certificateholders' Monthly Accrued Certificate
Interest for such Payment Date and the Certificateholders' Interest Carryover
Shortfall for such Payment Date. Interest with respect to the Certificates shall
be computed on the basis of a 360-day year consisting of twelve 30-day months
for all purposes of this Agreement and the other Basic Documents.
"Accrued Note Interest" shall mean, with respect to any Payment
Date, the sum of the Noteholders' Monthly Accrued Note Interest for such Payment
Date and the Noteholders' Interest Carryover Shortfall for such Payment Date.
Interest with respect to the Notes shall be computed on the basis of a 360-day
year consisting of twelve 30-day months for all purposes of this Agreement and
the other Basic Documents.
"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 from the Reserve Account relating to such Actuarial
Receivable pursuant to Section 4.4(a) hereof.
"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.
"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 means 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
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the Owner Trustee maintains the Corporate Trust Office, (b) a state in which the
Owner Trustee maintains its principal executive offices, and (c) a state in
which the Servicer regularly conducts servicing and collection operations other
than purely ministerial activities and which relate to a material portion of the
Receivables.
"APR" of a Receivable shall mean the annual percentage rate of
interest stated in the Contract related to such Receivable.
"Authorized Officer" shall mean any officer within the Corporate
Trust Office of the Indenture Trustee or the Owner Trustee, as the case may be,
including any vice president, assistant vice president, secretary, assistant
secretary 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, the sum of the
following amounts with respect to the preceding Collection Period: (i) all
collections on Receivables (including amounts withdrawn from the Payahead
Account but excluding amounts deposited into the Payahead Account) other than
(a) Rule of 78's Payments and (b) late fees; (ii) all Liquidation Proceeds on
Defaulted Receivables and any Recoveries; (iii) all extension 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 made from the Reserve Account;
(vi) amounts paid pursuant to the Yield Supplement Agreement (including amounts,
if any, withdrawn from the Yield Supplement 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, 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.
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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
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 to such term 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
Basic Document, Certificates owned by the Issuer, any other obligor upon the
Certificates, the Seller, the Servicer or any Affiliate of any of the foregoing
Persons shall be disregarded and deemed to be excluded from the Certificate
Balance (unless such persons own 100% of the Certificate Balance of the
Certificates), except that, in determining whether the Indenture Trustee and
Owner Trustee shall be protected in relying on any such request, demand,
authorization, direction, notice, consent, or waiver, only Certificates that a
Responsible Officer of the Indenture Trustee, if applicable, and an Authorized
Officer of the Owner Trustee with direct responsibility for the administration
of the Trust Agreement, if applicable, knows to be so owned shall be so
disregarded. Certificates so owned that have been pledged in good faith may be
regarded as included in the Certificate Balance if the pledgee establishes to
the satisfaction of the Indenture Trustee or the Owner Trustee, as applicable,
the pledgee's right so to act with respect to such Certificates and that the
pledgee is not the Issuer, any other obligor upon the Certificates, the Seller,
the Servicer or any Affiliate of any of the foregoing Persons.
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"Certificate Distribution Account" shall mean the account
established and maintained as such pursuant to Section 4.1(c) hereof.
"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 to such term in
the Trust Agreement.
"Certificateholders' Final Scheduled Payment Date" shall mean the
_______ Payment Date.
"Certificateholders' Interest Carryover Shortfall" shall mean, with
respect to any Payment Date, the excess of the sum of the Certificateholders'
Monthly Accrued Certificate Interest for the preceding Payment Date and any
outstanding Certificateholders' Interest Carryover Shortfall from the close of
business on such preceding Payment Date, over the amount in respect of interest
that was actually deposited in the Certificate Distribution Account on such
preceding Payment Date, plus thirty (30) days' interest on such excess, to the
extent permitted by law, at the Certificate Rate.
"Certificateholders' Monthly Accrued Certificate Interest" shall
mean, with respect to any Payment Date, thirty (30) days of interest at the
Certificate Rate on the Certificate Balance as of the immediately preceding
Payment Date, after giving effect to all distributions of principal to the
Certificateholders on or prior to such preceding Payment Date [(or, in the case
of the first Payment Date, thirty-one (__) days] of interest at the Certificate
Rate on the Initial Certificate Balance).
"Certificateholders' Principal Carryover Shortfall" shall mean, as
of the close of business on any Payment Date, the excess of the
Certificateholders' Regular Principal over the amount in respect of principal
that is actually deposited in the Certificate Distribution Account.
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"Certificateholders' Regular Principal" shall mean, with respect to
any Payment Date prior to the Payment Date on which the Notes are paid in full,
zero; and with respect to any Payment Date on or after the Payment Date on which
the Notes are paid in full, the sum of (i) the Scheduled Principal for such
Payment Date (less, on the Payment Date on which the Notes are paid in full, the
portion thereof payable on the Notes) plus (ii) any outstanding
Certificateholders' Principal Carryover Shortfall from the close of business on
the preceding Payment Date; provided, however, that the Certificateholders'
Regular Principal shall not exceed the Certificate Balance; and provided,
further, that on the Certificateholders' Final Scheduled Payment Date, the
principal required to be included in the Certificateholders' Regular Principal
will include the lesser of (a) (i) any Scheduled Payments of principal due and
remaining unpaid on each Actuarial Receivable and (ii) any principal due and
remaining unpaid on each Simple Interest Receivable, in each case, in the Trust
as of the Final Scheduled Maturity Date or (b) the amount that is necessary
(after giving effect to the other amounts to be deposited in the Certificate
Distribution Account on such Payment Date and allocable to principal) to reduce
the Certificate Balance to zero.
"Certificate Rate" shall mean ____% per annum.
"Closing Date" shall mean _______.
"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" means 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 sales
contract, including a retail installment contract relating to the sale of 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, 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 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx, 00000, 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 Indenture Trustee will notify the Certificateholders and
the Seller).
"Cutoff Date" shall mean October 1, 1997.
"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 is, in the case of a
Contract relating to an automobile or light-duty truck, 120 or more days past
due or, in the case of a Contract relating to a medium-duty truck, 180 or more
days past due and, in either case, the Servicer has not repossessed the related
Financed Vehicle or (iii) the Servicer has determined, in accordance with its
customary servicing standards, policies and procedures, that eventual payment in
full is unlikely and the Servicer has either (x) repossessed and liquidated the
related Financed Vehicle within 90 days 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,
whichever occurs first.
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"Deficiency Amount" shall have the meaning assigned to such term in
the definition of "Noteholders' Accelerated Principal" below.
"Delivery", when used with respect to Reserve Account Property,
shall mean:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the Relevant
UCC and are susceptible of physical delivery, transfer thereof to the
Indenture Trustee or its nominee or custodian by physical delivery to the
Indenture Trustee or its nominee or custodian endorsed to, or registered
in the name of, the Indenture Trustee or its nominee or custodian or
endorsed in blank, and, with respect to a certificated security (as
defined in Section 8-102 of the Relevant UCC) transfer thereof (i) by
delivery of such certificated security endorsed to, or registered in the
name of, the Indenture Trustee or its nominee or custodian or endorsed in
blank to a financial intermediary (as defined in Section 8-313 of the
Relevant UCC) and the making by such financial intermediary of entries on
its books and records identifying such certificated securities as
belonging to the Indenture Trustee or its nominee or custodian and the
sending by such financial intermediary of a confirmation of the purchase
of such certificated security by the Indenture Trustee or its nominee or
custodian, or (ii) by delivery thereof to a "clearing corporation" (as
defined in Section 8-102(3) of the Relevant UCC) and the making by such
clearing corporation of appropriate entries on its books reducing the
appropriate securities account of the transferor and increasing the
appropriate securities account of a financial intermediary by the amount
of such certificated security, the identification by the clearing
corporation of the certificated securities for the sole and exclusive
account of the financial intermediary, the maintenance of such
certificated securities by such clearing corporation or a "custodian bank"
(as defined in Section 8-102(4) of the Relevant UCC) or the nominee of
either subject to the clearing corporation's exclusive control, the
sending of a confirmation by the financial intermediary of the purchase by
the Indenture Trustee or its nominee or custodian of such securities and
the making by such financial intermediary of entries on its books and
records identifying such certificated securities as belonging to the
Indenture Trustee or its nominee or custodian (all of the foregoing,
"Physical Property"), and, in any event, any such Physical Property in
registered form shall be in the name of the Indenture Trustee or its
nominee or custodian;
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and such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such
Reserve Account Property to the Indenture Trustee or its nominee or
custodian, consistent with changes in applicable law or regulations or the
interpretation thereof;
(b) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to federal book-entry regulations, the following
procedures, all in accordance with applicable law, including applicable
federal regulations and Articles 8 and 9 of the Relevant UCC: book-entry
registration of such Reserve Account Property to an appropriate book-entry
account maintained with a Federal Reserve Bank by a financial intermediary
that is also a "depository" pursuant to applicable federal regulations and
issuance by such financial intermediary of a deposit advice or other
written confirmation of such book-entry registration to the Indenture
Trustee or its nominee or custodian of the purchase by the Indenture
Trustee or its nominee or custodian of such book-entry securities; the
making by such financial intermediary of entries in its books and records
identifying such book-entry security held through the Federal Reserve
System pursuant to federal book-entry regulations as belonging to the
Indenture Trustee or its nominee or custodian and indicating that such
custodian holds such Reserve Account Property as agent for the Indenture
Trustee or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect complete transfer
of ownership of any such Reserve Account Property to the Indenture Trustee
or its nominee or custodian, consistent with changes in applicable law or
regulations or the interpretation thereof; and
(c) with respect to any item of Reserve Account Property that is an
uncertificated security under Article 8 of the Relevant UCC and that is
not governed by clause (b) above, registration on the books and records of
the issuer thereof in the name of the financial intermediary, the sending
of a confirmation by the financial intermediary of the purchase by the
Indenture Trustee or its nominee or custodian of such uncertificated
security, the making by such financial intermediary of entries on its
books and records identifying such uncertificated certificates as
belonging to the Indenture Trustee or its nominee or custodian.
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"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 sales 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 sales 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 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.
"Excess Mileage" shall mean, with respect to any Financed Vehicle
securing a Final Payment Receivable, the amounts payable by the related Obligor
relating to the excess of the number of miles by which such Financed Vehicle has
been driven over the number of miles such Financed Vehicle may be driven during
the term of the related Final Payment Receivable (as specified in the
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Contract related to such Final Payment Receivable) without incurring an excess
mileage charge pursuant to the related Contract.
"Final Payment Certificate" shall have the meaning assigned to such
term in the Trust Agreement.
"Final Payment Certificateholder" shall have the meaning assigned to
such term in the Trust Agreement.
"Final Payment Certificateholder's Final Scheduled Payment Date"
shall mean the _______ Payment Date.
"Final Payment Receivable" shall mean all rights and obligations
arising under a Contract listed on the Schedule of Receivables which provides
for amortization of the Level Pay Balance of the loan over a series of fixed
level payment monthly installments in accordance with the Actuarial Method or
the Simple Interest Method, but also requires the Obligor thereunder to make a
Last Scheduled Payment that is substantially greater than the scheduled monthly
payments and is due after payment of such scheduled monthly payments, and with
respect to which, upon termination 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 to the Servicer) and pay any excess of the
total amount owed by the Obligor over the sale price to MMCA on behalf of the
Trust, and satisfy all other conditions stated under the terms of the Contract.
"Final Scheduled Maturity Date" shall mean the last day of the
Collection Period immediately preceding the Certificateholders' Final Scheduled
Payment Date.
"Financed Vehicle" shall mean a new or used automobile or light-or
medium-duty truck, together with all accessories thereto, securing an Obligor's
indebtedness under the respective Receivable.
"Holder" shall mean a Noteholder, Certificateholder or Final Payment
Certificateholder, as the case may be.
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"Indenture" shall mean the Indenture, dated as of _______, 1997,
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 Final Payment Certificate Balance" shall have the meaning
assigned to such term in the Trust Agreement.
"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.
"Issuer" shall mean MMCA Auto Owner Trust 1997-1, a Delaware
business trust.
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"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 Principal Collections" means (a) collections
of principal on a Final Payment Receivable that are attributable to Last
Scheduled Payments, which includes any collection attributable to principal on a
Final Payment Receivable in excess of the initial Level Pay Balance of that
Receivable, whether or not such payment is made on the due date of the related
Last Scheduled Payment, and including the proceeds of sale (net of expenses) of
any Financed Vehicle purchased by MMCA on behalf of the Trust pursuant to the
terms of the Receivable and subsequently sold on behalf of the Trust, minus (b)
with respect to any Final Payment Receivable with respect to which the Obligor
exercises its right to have MMCA, on behalf of the Trust, purchase the related
Financed Vehicle, the excess of the purchase price from the Obligor of such
Financed Vehicle over the remaining amount owed by the Obligor.
"Letter of Credit Bank" shall mean any Person having the Required
Rating that has provided a Yield Supplement Letter of Credit in accordance with
Section 5.1 hereof.
"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; 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 Collection Period, 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 beginning of that 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.
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"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.
"MMCA" shall mean Mitsubishi Motors Credit of America, Inc., a
Delaware corporation, and its successors and assigns.
"Monthly Remittance Condition" shall have the meaning specified in
Section 4.1(e).
"Moody's" shall mean Xxxxx'x Investors Service, Inc., or its
successors and assigns.
"Note" shall mean one of the ____% Asset Backed Notes issued by the
Issuer pursuant to the Indenture.
"Note Interest Rate" shall mean ____% per annum.
"Note Payment Account" shall mean the account established and
maintained as such pursuant to Section 4.1(b).
"Note 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
outstanding principal balance of the 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 the Notes. The 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 the Notes.
"Noteholder" shall mean a Person in whose name a Note is registered.
"Noteholders' Accelerated Principal" means (a) with respect to each
Payment Date following the Closing Date on which the difference between the Pool
Balance (exclusive of the principal of Last Scheduled Payments) and the
aggregate outstanding principal balance of the Notes and Certificates on such
Payment Date (before giving effect to any distribution of principal of the Notes
or
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the Certificates on such Payment Date) is less than $_______ (such deficiency
with respect to any Payment Date is referred to as the "Deficiency Amount"),
100% of the portion, if any, of Available Funds remaining for such Payment Date,
and (b) with respect to the Payment Date on which the difference between the
Pool Balance (exclusive of the principal of Last Scheduled Payments) and the
aggregate outstanding principal balance of the Notes and Certificates on such
Payment Date (before giving effect to any distribution of principal of the Notes
or the Certificates on such Payment Date) equals or exceeds $_______, and on
each Payment Date following such Payment Date, 5% of the portion, if any, of
Available Funds remaining for such Payment Date, in each case after giving
effect to the payment of (i) the Total Servicing Fee, (ii) the Accrued Note
Interest, (iii) the Noteholders' Regular Principal, (iv) the Accrued Certificate
Interest, (v) the amount, if any, required to be deposited in the Reserve
Account on such Payment Date and (vi) amounts in respect of the principal of
Last Scheduled Payments remaining after payments of clauses (i)-(v) above
required to be paid to the Seller as holder of the Final Payment Certificate;
provided, however, on any Payment Date that the Noteholders' Accelerated
Principal is calculated pursuant to clause (a) above, the Noteholders'
Accelerated Principal shall not exceed the Deficiency Amount with respect to
such Payment Date; provided, further, however, that the Noteholders' Accelerated
Principal shall not exceed the outstanding principal amount of the Notes (after
giving effect to payments of Noteholders' Regular Principal on such Payment
Date).
"Noteholders' Final Scheduled Payment Date" shall mean the _______
Payment Date.
"Noteholders' Interest Carryover Shortfall" shall mean, with respect
to any Payment Date, the excess of the sum of the Noteholders' Monthly Accrued
Note Interest for the preceding Payment Date and any outstanding Noteholders'
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 thirty (30)
days' interest on such excess to the extent permitted by law, at the Note
Interest Rate.
"Noteholders' Monthly Accrued Note Interest" shall mean, with
respect to any Payment Date, thirty (30) days of interest at the Note Interest
Rate on the aggregate principal balance of the Notes as of the immediately
preceding Payment Date, after giving effect to all payments of principal to the
Noteholders on or prior to such preceding Payment Date (or, in the case of the
first Payment
15
Date, __ days of interest at the Note Interest Rate on the initial principal
balance of the Notes).
"Noteholders' Principal Carryover Shortfall" shall mean, as of the
close of business on any Payment Date, the excess of the Principal Distribution
Amount over the amount in respect of principal that is actually deposited in the
Note Payment Account.
"Noteholders' Regular Principal" shall mean, with respect to any
Payment Date, the sum of (i) the Scheduled Principal for such Payment Date plus
(ii) the Noteholders' Principal Carryover Shortfall as of the close of business
on the preceding Payment Date; provided, however, that the Noteholders' Regular
Principal shall not exceed the outstanding principal balance of the Notes; and
provided, further, that, on the Noteholders' Final Scheduled Payment Date, 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 to zero.
"Obligor" on a Receivable shall mean the purchaser or co-purchasers
of the related Financed Vehicle purchased in part or in whole by the execution
and delivery of such Receivable, or any other Person who owes or may be liable
for payments under such Receivable.
"Officer's Certificate" shall mean a certificate signed by the
chairman, the president, any executive vice president, vice president or the
treasurer of the Seller or the Servicer, as the case may be, and delivered to
the Owner Trustee and the Indenture Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel (who,
in the case of counsel to the Seller or the Servicer, may be an employee of, or
outside counsel to, the Seller or the Servicer), which counsel shall be
acceptable to the Indenture Trustee, the Owner Trustee or the Rating Agencies,
as applicable.
"Optional Purchase Percentage" shall mean 10%.
16
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware
Trust Company, as Owner Trustee under the Trust Agreement, its successors in
interest and any successor trustee under the Trust Agreement.
"Owner Trust Estate" shall have the meaning assigned to such term in
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
November 17, 1997.
"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
17
at the time of the investment or contractual commitment to invest therein,
the commercial paper or other short-term unsecured debt obligations (other
than such obligations the rating of which is based on the credit of a
Person other than such depository institution or trust company) thereof
shall have a credit rating from each of the Rating Agencies in the highest
investment category granted thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each of the Rating
Agencies in the highest investment category granted thereby;
(d) investments in money market funds having a rating from each of
the Rating Agencies in the highest investment category granted thereby
(including funds for which the Indenture Trustee or the Owner Trustee or
any of their respective Affiliates is investment manager or advisor);
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America
or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States of America, in
either case entered into with a depository institution or trust company
(acting as principal) described in clause (b); and
(g) any other investment with respect to which the Issuer or the
Servicer has received written notification from the Rating Agencies that
the acquisition of such investment as a Permitted Investment will not
result in a withdrawal or downgrading of the ratings on the Notes or the
Certificates.
"Person" shall mean a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, trust, unincorporated organization, or government or any agency or
political subdivision thereof, or any other entity of whatever nature.
"Physical Property" shall have the meaning assigned to such term in
the definition of "Delivery" above.
18
"Pool Balance" shall mean, as of any date of determination, the
aggregate Principal Balance of the Receivables 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 Actuarial Advances to be remitted from the
Reserve Account, (iii) all Purchase Amounts to be remitted by the Seller or the
Servicer and (iv) all losses realized on Receivables which became Defaulted
Receivables, all for 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, (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.
"Principal Distribution Amount" shall mean, with respect to any
Payment Date, the sum of (i) the Noteholders' Regular Principal plus (ii) the
Noteholders' Accelerated Principal; provided, however, that after the Payment
Date on which the Notes have been paid in full, the Principal Distribution
Amount with respect to the Certificates shall equal the Certificateholders'
Regular Principal.
"Program" shall have the meaning specified in Section 3.11.
"Purchase Agreement" shall mean the Purchase Agreement, dated as of
October 1, 1997, 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 outstanding 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
19
the related APR from the date a payment was last made by or on behalf of the
Obligor through the due date for payment of such Receivable in the Collection
Period preceding the Collection Period in which such Payment Date occurs and, in
the case of clauses (a) and (b), after giving effect to the receipt of monies
collected on such Receivable in such preceding Collection Period.
"Purchased Receivable" shall mean, on any date of determination, a
Receivable as to which payment of the Purchase Amount has been made by the
Seller pursuant to Section 2.3 hereof or the Servicer pursuant to Section 3.7 or
9.1 hereof.
"Qualified Institution" shall mean Bank of Tokyo - Mitsubishi Trust
Company, a New York banking corporation or any depository institution organized
under the laws of the United States of America or any one of the states thereof
or incorporated under the laws of a foreign jurisdiction with a branch or agency
located in the United States of America or one of the states thereof qualified
to take deposits and subject to supervision and examination by federal or state
banking authorities which at all times has a short-term deposit rating of P-1 by
Moody's and A-1+ by S&P and, in the case of any such institution organized under
the laws of the United States of America, whose deposits are insured by the
Federal Deposit Insurance Corporation or any successor thereto.
"Qualified Trust Institution" shall mean the corporate trust
department of Bank of Tokyo - Mitsubishi Trust Company, 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 of not less than
Baa3 from Xxxxx'x.
"Rating Agency" means 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.
20
"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 for any Payment Date the sum, for each
Receivable that became a Defaulted Receivable during the related Collection
Period, of the excess of the Principal Balance of such Defaulted Receivable
(exclusive of the principal of the related Last Scheduled Payment, if any), plus
accrued and unpaid interest thereon, over the Liquidation Proceeds relating
thereto.
"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 highest Note Interest Rate and (B) the Servicing Rate minus
(ii) interest on such Receivable at its APR, multiplied by such Receivable's
Principal Balance (other than, in the case of a Final Payment Receivable,
principal in respect of Last Scheduled Payments) as of the first day of the
related Collection Period.
"Record Date" shall mean, with respect to any Payment Date, 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, all
monies received by the Servicer with respect to any Defaulted Receivable during
any Collection Period following the Collection Period in which such Receivable
became a Defaulted Receivable, net of the sum of (i) any expenses incurred by
21
the Servicer in connection with the collection of such Receivable and the
disposition of the Financed Vehicle (to the extent not previously reimbursed)
and (ii) any payments on such Receivable required by law to be remitted to the
Obligor.
"Relevant UCC" shall mean the Uniform Commercial Code as in effect
in any relevant jurisdiction.
"Required Rating" shall mean a rating on (i) short-term unsecured
debt obligations of P-1 by Moody's and (ii) short-term unsecured debt
obligations of A-1+ by S&P; and any requirement that short-term unsecured debt
obligations have the "Required Rating" shall mean that such short-term unsecured
debt obligations have the foregoing required ratings from each of such Rating
Agencies.
"Reserve Account" shall mean the account established and maintained
as such pursuant to Section 4.7(a).
"Reserve Account Property" shall have the meaning specified in
Section 4.7(a).
"Reserve Initial Deposit" shall mean, with respect to the Closing
Date, $________.
"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 Group, a division of
XxXxxx-Xxxx, 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
22
Obligor in such Collection Period (without giving effect to deferments 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) collections received during the preceding Collection Period of
principal on Simple Interest Receivables, other than collections of principal
attributable to the Last Scheduled Payment of a Simple Interest Receivable that
is a Final Payment Receivable, and other than any charges for Excess Wear and
Tear and Excess Mileage (b) the principal portion of each Scheduled Payment
(other than a Last Scheduled Payment on a Final Payment Receivable) due on any
Actuarial Receivable during the preceding Collection Period (c) the Principal
Balance (without duplication of amounts taken into account under (a) or (b)) of
(i) Receivables prepaid in full during the related Collection Period and (ii)
Receivables which became Defaulted Receivables during the related Collection
Period in accordance with the Servicer's normal and customary servicing
practices and procedures (d) the Purchase Amount of each Receivable that became
a Purchased Receivable during such Collection Period to the extent attributable
to principal; (e) the proceeds of any other sale of a Receivable (including
pursuant to Section 9.2 of the Trust Agreement), to the extent allocable to
principal and (e) partial prepayments attributable to any refunded item included
in the Amount Financed, such as extended warranty protection plan costs or
physical damage, credit life, 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.
23
"Servicer's Certificate" shall have the meaning specified in Section
3.9.
"Servicing Fee" shall mean, with respect to any Payment Date, the
fee payable to the Servicer for services rendered during the related Collection
Period, determined pursuant to and defined in Section 3.8.
"Servicing Officer" shall mean any officer of the Servicer involved
in, or responsible for, the administration and servicing of the Receivables,
whose name appears on a list of servicing officers attached to an Officer's
Certificate furnished on the Closing Date to the Owner Trustee and the Indenture
Trustee by the Servicer, as such list may be amended from time to time by the
Servicer in writing.
"Servicing Rate" shall mean 1.0% per annum.
"Simple Interest Method" shall mean the method of allocating a fixed
level payment between principal and interest, pursuant to which the portion of
such payment that is allocated to interest is equal to the product of the APR
multiplied by the unpaid principal balance multiplied by the period of time
(expressed as a fraction of a year, based on the actual number of days in the
calendar month and 365) 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, $_______, except that, if on any Payment Date (i) the annualized average
for the preceding three (3) Collection Periods of the ratio of Realized Losses
less Recoveries for each such Collection Period to the Pool Balance (excluding,
for purposes of this calculation, the principal of Last Scheduled Payments) as
of the first day of such Collection Period exceeds ___% or (ii) the average for
the preceding three (3) Collection Periods of the ratio of the balance of
Receivables (excluding, for purposes of this calculation, the principal of Last
Scheduled Payments) that are delinquent sixty (60) days or more for each such
Collection Period (including Receivables with respect to vehicles held in
inventory which are not yet charged-off) to such Pool Balance (excluding, for
purposes
24
of this calculation, the principal of Last Scheduled Payments) exceeds ___%,
then the Specified Reserve Balance shall be an amount equal to $_______.
"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 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,
(iii) the Noteholders' Regular Principal [and (iv) the Accrued Certificate
Interest with respect to such Payment Date.]
"Total Servicing Fee" shall mean, with respect to any Payment Date,
the sum of (i) the Servicing Fee for the related Collection Period plus (ii) all
accrued and unpaid Servicing Fees for prior Collection Periods.
"Trust" shall mean the Issuer.
"Trust Accounts" shall have the meaning assigned thereto in Section
4.1(d).
"Trust Agreement" shall mean the Amended and Restated Trust
Agreement, dated as of October 1, 1997, between the Seller and the Owner
Trustee, as the same may be amended, supplemented or otherwise modified and in
effect from time to time.
25
"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 and the Yield Supplement Account and all amounts,
Securities, investments and other property deposited in or credited to any of
the foregoing and all proceeds thereof; (viii) all of the Seller's rights under
this Agreement; (ix) 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; (x) payments and proceeds with
respect to the Receivables held by the Servicer; (xi) all property (including
the right to receive Liquidation Proceeds) securing a Receivable (other than a
Receivable repurchased by the Servicer or purchased by the Seller); (xii)
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 (xiii)
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
26
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 (i) the sum of (a) the product of the Note
Interest Rate and the outstanding principal amount of the Notes as of the
preceding Payment Date (after giving effect to any principal payment made on
such Payment Date) and (b) the product of the Certificate Rate and the
Certificate Balance as of the preceding Payment Date (after giving effect to any
principal payment made on such Payment Date), divided by (ii) 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).
"Yield Supplement Account" shall have the meaning specified in
Section 5.1(a).
"Yield Supplement Agreement" shall mean the Yield Supplement
Agreement, dated as of October 1, 1997, by and between the Seller and MMCA, as
amended, modified or supplemented from time to time, substantially in the form
of Exhibit D hereto.
"Yield Supplement Amount" shall mean, with respect to any Payment
Date, the sum of all Receivable Yield Supplement Amounts for the related
Collection Period.
"Yield Supplement Letter of Credit" shall mean any letter of credit
issued by the Letter of Credit Bank, as permitted by Section 5.1, to support
payments of the Yield Supplement Amount under the Yield Supplement Agreement.
SECTION 1.2. Other Definitional Provisions. (a) Capitalized terms
used herein and not otherwise defined herein have the meanings assigned to them
in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
27
(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 _______, 1997
(with respect to the remainder of calendar year 1997 and calendar year 1998) 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 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, Certificates and the Final Payment Certificate, in authorized
denominations in aggregate principal amounts equal to the initial principal
amount of the Notes, the Initial Certificate Balance and the Initial Final
Payment 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 Certificates and the Final Payment Certificate, 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, the Certificates and
the Final Payment Certificate, 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 retail sale
of
29
a Financed Vehicle in the ordinary course of such Dealer's business, shall have
been fully and properly executed by the parties thereto, shall have been
purchased by the Seller from MMCA, which in turn shall have purchased such
Receivable from such Dealer under an existing Dealer Agreement with MMCA, 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 first or
last month in a life of the Receivable may be minimally 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 sales 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, the Certificateholders or the Final Payment
Certificateholder 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
30
regulations thereunder, including, without limitation, usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Credit Billing Act, the Fair Debt Collection Practices
Act, the Federal Trade Commission Act, the 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, each Receivable shall be secured by a
validly perfected first priority security interest in the Financed Vehicle in
favor of MMCA as secured party or all necessary and appropriate actions shall
have been commenced that would result in the valid perfection of a first
priority security interest in the Financed Vehicle in favor of MMCA as secured
party.
(vii) Receivables in Force. No Receivable shall have been satisfied,
subordinated, or rescinded, nor shall any Financed Vehicle have been released
from the Lien granted by the related Receivable in whole or in part, which
security interest shall be assignable by MMCA to the Seller and by the Seller to
the Issuer.
(viii) No Waiver. No provision of a Receivable shall have been
waived in such a manner that such Receivable fails to meet all of the
representations and warranties made by the Seller in this Section 2.2 with
respect thereto.
(ix) No Defenses. No right of rescission, setoff, counterclaim, or
defense shall have been asserted or threatened with respect to any Receivable.
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(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,
transfer, and assignment of such Receivable under this Agreement or the
Indenture or pursuant to transfers of the Certificates or the Final Payment
Certificate shall be unlawful, void, or voidable. The Seller has not entered
into any agree-
32
ment 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 perfected ownership interest in the Receivables, and to give the
Indenture Trustee a first perfected security interest therein, shall have been
made.
(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 Level Pay
Pool Balance of the Receivables, constituting ____% 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
Level Pay Pool Balance of the Receivables, constituting ____% of the total
number of Receivables included in the Trust, relate to used automobiles and
light-or medium-duty trucks. Of the used vehicles, approximately____% of the
Level Pay Pool Balance of the Receivables, constituting ____% 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.
(xxi) Origination. Each Receivable shall have an origination date on
or after _______.
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(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 October 31, 1997 and no Receivable shall
have a payment that is more than ninety (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,
Certificateholders or the Final Payment Certificateholder, 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) and the Offering Circular is true and correct
in all material respects.
SECTION 2.3. Repurchase upon Breach. The Seller, the Servicer, or
the Owner Trustee, as the case may be, shall inform the other parties to this
Agreement, the Indenture Trustee and MMCA promptly, in writing, upon the
discovery of any breach or failure to be true of the representations and
warranties made by the Seller pursuant to Section 2.2. If the breach or failure
shall not have been cured by the last day of the Collection Period which
includes the sixtieth (60th) day after the date on which the Seller becomes
aware of, or re-
34
ceives 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, the Certificateholders and the Final Payment
Certificateholder 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
micro-fiche;
(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
35
(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
sales contracts, the Servicer shall conduct, or cause to be conducted, periodic
audits of the Receivable Files held by it under this Agreement, and of the
related accounts, records, and computer systems, in such a manner as shall
enable the Issuer or the Indenture Trustee to verify the accuracy of the
Servicer's recordkeeping. The Servicer shall promptly report to the Owner
Trustee and the Indenture Trustee any failure on its part to hold the Receivable
Files and maintain its accounts, records, and computer systems as herein
provided and promptly take appropriate action to remedy any such failure.
Nothing herein shall be deemed to require an initial review or any periodic
review by the Issuer, the Owner Trustee or the Indenture Trustee of the
Receivable Files and none of the Issuer, the Owner Trustee and the Indenture
Trustee shall be liable or responsible for any action or failure to act by the
Servicer in its capacity as custodian hereunder.
36
(b) Maintenance of and Access to Records. The Servicer shall
maintain each Receivable File at one of its offices specified in Schedule B to
this Agreement, or at such other office as shall be specified to the Issuer and
the Indenture Trustee by written notice not later than ninety (90) days after
any change in location. The Servicer shall make available to the Issuer and the
Indenture Trustee or its duly authorized representatives, attorneys, or auditors
a list of locations of the Receivable Files, the Receivable Files, and the
related accounts, records, and computer systems maintained by the Servicer at
such times as the Issuer or the Indenture Trustee shall instruct.
(c) Release of Documents. Upon written instructions from the
Indenture Trustee, the Servicer shall release any document in the Receivable
Files to the Indenture Trustee, the Indenture Trustee's agent, or the Indenture
Trustee's designee, as the case may be, at such place or places as the Indenture
Trustee may designate, as soon thereafter as is practicable. Any document so
released shall be handled by the Indenture Trustee with due care and returned to
the Servicer for safekeeping as soon as the Indenture Trustee or its agent or
designee, as the case may be, shall have no further need therefor.
(d) Title to Receivables. The Servicer agrees that, in respect of
any Receivable held by the Servicer as custodian hereunder, the Servicer will
not at any time have or in any way attempt to assert any interest in such
Receivable or the related Receivable File, other than for collecting or
enforcing the Receivable for the benefit of the Issuer and that the entire
equitable interest in such Receivable and the related Receivable File shall at
all times be vested in the Issuer.
SECTION 2.6. Instructions; Authority to Act. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by an Authorized Officer of the
Indenture Trustee. A certified copy of excerpts of authorizing resolutions of
the Board of Directors of the Indenture Trustee shall constitute conclusive
evidence of the authority of any such Authorized Officer to act and shall be
considered in full force and effect until receipt by the Servicer of written
notice to the contrary given by the Indenture Trustee.
SECTION 2.7. Custodian's Indemnification. The Servicer, in its
capacity as custodian, shall indemnify and hold harmless the Issuer, the Owner
Trustee and the Indenture Trustee and each of their respective officers,
directors, employees and agents from and against any and all liabilities,
obligations, losses,
37
compensatory damages, payments, costs or expenses (including legal fees if any)
of any kind whatsoever that may be imposed on, incurred, or asserted against the
Issuer, the Owner Trustee and the Indenture Trustee or any of their respective
officers, directors, employees and agents as the result of any act or omission
by the Servicer relating to the maintenance and custody of the Receivable Files;
provided, however, that the Servicer shall not be liable hereunder to the Owner
Trustee to the extent, but only to the extent, that such liabilities,
obligations, losses, compensatory damages, payments, costs or expenses result
from the willful misfeasance, bad faith, or negligence of the Owner Trustee and
shall not be liable hereunder to the Indenture Trustee to the extent, but only
to the extent, that such liabilities, obligations, losses, compensatory damages,
payments, costs or expenses result from the willful misfeasance, bad faith, or
negligence of the Indenture Trustee.
SECTION 2.8. Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section 2.8.
If the Servicer shall resign as Servicer under Section 7.5, or if all of the
rights and obligations of the Servicer shall have been terminated under Section
8.1, the appointment of the Servicer as custodian hereunder may be terminated by
the Indenture Trustee or by the Holders of Notes evidencing not less than 25% of
the principal amount of the then outstanding Notes or, with the consent of
Holders of Notes evidencing not less than 25% of the principal amount of the
then outstanding Notes, by the Owner Trustee or by Holders of Certificates
evidencing not less than 25% of the Certificate Balance, in the same manner as
the Indenture Trustee or such Holders may terminate the rights and obligations
of the Servicer under Section 8.1. As soon as practicable after any termination
of such appointment, the Servicer shall deliver, or cause to be delivered, the
Receivable Files and the related accounts and records maintained by the Servicer
to the Indenture Trustee, the Indenture Trustee's agent or the Indenture
Trustee's designee at such place or places as the Indenture Trustee may
reasonably designate.
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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 Contract term and refinancing or selling Financed Vehicles relating to Final
Payment Receivables at the end of Contract term depending upon the options
chosen by the Obligors. 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 Final Payment Certificateholder,
the Noteholders or any one or more of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Receivables or to the
Financed Vehicles, all in accordance with this Agreement; provided, however,
that notwithstanding the foregoing, the Servicer shall not, except pursuant to
an order from a court of competent jurisdiction, release an Obligor from payment
of any unpaid amount under any Receivable or waive the right to collect the
unpaid balance (including accrued interest) of any Receivable from the Obligor,
except in connection with a de minimis deficiency which the Servicer would not
attempt to collect in accordance with its customary procedures, in which event
the Servicer shall indemnify the Issuer for such deficiency. If the Servicer
shall commence a legal proceeding to enforce a Receivable, the Owner Trustee
shall thereupon be
39
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 Final Payment Certificateholder, the Noteholders or any
of them. The Owner Trustee shall execute and deliver to the Servicer any powers
of attorney and other documents as shall be prepared by the Servicer and
reasonably necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder. The Servicer, at its expense,
shall obtain on behalf of the Issuer or the Owner Trustee all licenses, if any,
required by the laws of any jurisdiction to be held by the Issuer or the Owner
Trustee in connection with ownership of the Receivables, and shall make all
filings and pay all fees as may be required in connection therewith during the
term hereof.
The Servicer may enter into subservicing agreements with one or more
subservicers for the servicing and administration of certain of the Receivables;
provided, however, that the Servicer shall remain fully liable hereunder for the
performance of the duties of Servicer and any such subservicer shall be and
shall remain, for so long as it is acting as subservicer, an Eligible Servicer,
and any fees paid to such subservicer shall be paid by the Servicer and not out
of the proceeds of the Trust, and any such subservicer shall agree to service
the Receivables in a manner consistent with the terms of this Agreement.
(b) References in this Agreement to actions taken, to be taken,
permitted to be taken, or restrictions on actions permitted to be taken by the
Servicer in servicing the Receivables and other actions taken, to be taken,
permitted to be taken, or restrictions on actions to be taken with respect to
the Trust Property shall include actions taken, to be taken, permitted to be
taken, or restrictions on actions permitted to be taken by a subservicer on
behalf of the Servicer and references herein to payments received by the
Servicer shall include payments received by a subservicer, irrespective of
whether such payments are actually deposited in the Collection Account by such
subservicer. Any such subservicing agreement will contain terms and provisions
substantially identical to the terms and provisions of this Agreement and such
other terms and provisions as are not inconsistent with this Agreement and as
the Servicer and the subservicer have agreed.
40
(c) The Servicer shall be entitled to terminate any subservicing
agreement in accordance with the terms and conditions of such subservicing
agreement and without any limitation by virtue of this Agreement; provided,
however, that, in the event of termination of any subservicing agreement by the
Servicer, the Servicer shall either act directly as servicer of the related
Receivables or enter into a subservicing agreement with a successor subservicer
which will be bound by the terms of the related subservicing agreement.
(d) As a condition to the appointment of any subservicer, the
Servicer shall notify the Owner Trustee, the Indenture Trustee and the Rating
Agencies in writing before such assignment becomes effective and such
subservicer shall be required to execute and deliver an instrument in which it
agrees that, for so long as it acts as subservicer of the Receivables and the
other Trust Property being serviced by it, the covenants, conditions,
indemnities, duties, obligations and other terms and provisions of this
Agreement applicable to the Servicer hereunder shall be applicable to it as
subservicer, that it shall be required to perform its obligations as subservicer
for the benefit of the Issuer as if it were Servicer hereunder (subject,
however, to the right of the Servicer to direct the performance of such
obligations in accordance with this Agreement) and that, notwithstanding any
provision of a subservicing agreement to the contrary, such subservicer shall be
directly liable to the Owner Trustee and the Issuer (notwithstanding any failure
by the Servicer to perform its duties and obligations hereunder) for the failure
by such subservicer to perform its obligations hereunder or under any
subservicing agreement, and that (notwithstanding any failure by the Servicer to
perform its duties and obligations hereunder) the Owner Trustee may enforce the
provisions of this Agreement and any subservicing agreement against the
subservicer for the benefit of the Issuer, without diminution of such
obligations or liabilities by virtue of any subservicing agreement, by virtue of
any indemnification provided thereunder or by virtue of the fact that the
Servicer is primarily responsible hereunder for the performance of such duties
and obligations, as if a subservicer alone were servicing and administering,
under this Agreement, the Receivables and the other Trust Property being
serviced by it under the subservicing agreement.
(e) Notwithstanding any subservicing agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer or a subservicer or reference to actions taken through such Persons or
otherwise, the Servicer shall remain obligated and liable to the Issuer and the
Owner Trustee for the servicing and administering of the Receivables and the
other Trust Property in accordance with the provisions of this Agreement
(includ-
41
ing 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 cancelable by the successor Servicer
upon written notice to the subservicer and the outgoing Servicer, at its
expense, shall cause the subservicer to deliver to the successor Servicer all
documents and records relating to the Receivables and the other Trust Property
being serviced thereunder and all amounts held (or thereafter received) by such
subservicer (together with an accounting of such amounts) and shall otherwise
use its best efforts to effect the orderly and efficient transfer of servicing
of the Receivables and the other Trust Property being serviced by such
subservicer to the successor Servicer.
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SECTION 3.2. Collection and Allocation of Receivable Payments. (a)
The Servicer shall make reasonable efforts to collect all payments called for
under the terms and provisions of the Receivables as and when the same shall
become due and shall follow such collection procedures as it follows with
respect to all comparable motor vehicle receivables that it services for itself
or others. The Servicer shall allocate collections between principal and
interest in accordance with the customary servicing practices and procedures it
follows with respect to all comparable motor vehicle receivables that it
services for itself or others. The Servicer will not increase or decrease the
number or amount of any Scheduled Payment, or the Amount Financed under a
Receivable or the APR of a Receivable, or extend, rewrite or otherwise modify
the payment terms of a Receivable; provided, however, that the Servicer may
extend the due date for one or more payments due on a Receivable for
credit-related reasons that would be acceptable to the Servicer with respect to
comparable motor vehicle receivables that it services for itself and others and
in accordance with its customary standards, policies, practices and procedures
if the cumulative extensions with respect to any Receivable shall not cause the
term of such Receivable to extend beyond the Final Scheduled Maturity Date; and
provided further that such extensions, in the aggregate, do not exceed two (2)
months for each twelve (12) months of the original term of the Receivable. In
the event that the Servicer fails to comply with the provisions of the preceding
sentence, the Servicer shall be required to purchase the Receivable or
Receivables affected thereby, for the Purchase Amount, in the manner specified
in Section 3.7, as of the close of the Collection Period in which such failure
occurs. The Servicer may, in its discretion, (but only in accordance with its
customary standards, policies, practices and procedures), waive any late payment
charge or any other fee that may be collected in the ordinary course of
servicing a Receivable.
(b) With respect to each Final Payment Receivable, the Servicer, in
accordance with its customary servicing standards, policies, practices and
procedures, shall contact the Obligor on or before the due date of the Last
Scheduled Payment specified in the related Contract. If, at such time, the
Obligor under the Final Payment Receivable has notified MMCA on behalf of the
Trust that it elects to sell the Financed Vehicle to MMCA on behalf of the Trust
in accordance with the terms of the Receivable, the Servicer shall, upon
delivery of the Financed Vehicle by the Obligor to MMCA on behalf of the Trust,
inspect the Financed Vehicle for Excess Wear and Tear and Excess Mileage, and to
determine the necessity of any repairs. If the Servicer determines that such
Financed Vehicle requires repairs as a result of Excess Wear and Tear, the
Servicer shall require the Obligor to either (i) pay the estimated cost of such
repairs to the
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Servicer or (ii) if the Obligor disputes the Servicer's estimate of the cost of
such repairs, obtain, at the Obligor's own expense, a professional appraisal of
the Financed Vehicle's value by an independent third-party appraiser acceptable
to the both the Obligor and the Servicer. The Obligor shall be obligated,
pursuant to the related Contract, to offset (x) the cost of repairs for Excess
Wear and Tear as determined by the appraisal against plus 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 the related Last Scheduled
Payment, 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) owed by the Obligor and from the
sale of a Financed Vehicle at auction or otherwise, constitute proceeds of Last
Scheduled Payments and shall be deposited to 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).
(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
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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 Final Payment Receivable
and 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 (with copies to
the Indenture Trustee and the Owner Trustee). If MMCA is no longer the Servicer,
the Issuer or the holder of the Final Payment Certificate 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
which would otherwise be released from the Reserve Account and paid to the Final
Payment Certificateholder.
SECTION 3.3. Realization upon Receivables. (a) On behalf of the
Issuer, the Servicer shall use reasonable efforts, in accordance with the
standard of care required by Section 3.1, to repossess or otherwise convert the
ownership of each Financed Vehicle securing a Defaulted Receivable. In taking
such action, the Servicer shall follow such customary and usual practices and
procedures as it shall deem necessary or advisable in its servicing of
comparable automotive receivables, and as are otherwise consistent with the
standard of care required under Section 3.1, which shall include the exercise of
any rights of recourse to Dealers under the Dealer Agreements. The Servicer
shall be entitled to recover all reasonable expenses incurred by it in the
course of repossessing and liquidating a Financed Vehicle into cash proceeds,
but only out of the cash proceeds of such Financed Vehicle and any deficiency
obtained from the Obligor. The foregoing shall be subject to the provision that,
in any case in which a Financed Vehicle shall have suffered damage, the Servicer
shall not expend funds in connection with the repair or the repossession of such
Financed Vehicle unless it shall determine in its discretion that such repair
and/or repossession will increase the Liquidation Proceeds (or Recoveries) of
the related Receivable by an amount equal to or greater than the amount of such
expenses.
(b) If the Servicer elects to commence a legal proceeding to enforce
a Dealer Agreement, the act of commencement shall be deemed to be an automatic
assignment from the Issuer to the Servicer of the rights of recourse under such
Dealer Agreement. If, however, in any enforcement suit or legal
45
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 Final Payment Certificateholder,
the Noteholders or any of them.
SECTION 3.4. Physical Damage Insurance. The Servicer shall follow
its customary servicing procedures to determine whether or not each Obligor
shall have maintained physical damage insurance covering the related Financed
Vehicle.
SECTION 3.5. Maintenance of Security Interests in Financed Vehicles.
The Servicer, in accordance with the standard of care required under Section
3.1, shall take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle.
The Issuer hereby authorizes the Servicer, and the Servicer hereby agrees, to
take such steps as are necessary to re-perfect such security interest on behalf
of the Issuer and the Indenture Trustee in the event the Servicer receives
notice of, or otherwise has actual knowledge of, the relocation of a Financed
Vehicle or for any other reason.
SECTION 3.6. Covenants of Servicer. The Servicer hereby makes the
following covenants:
(a) Security Interest to Remain in Force. The Financed Vehicle
securing each Receivable will not be released from the security interest granted
by the Receivable in whole or in part, except as contemplated herein.
(b) No Impairment. The Servicer will not (nor will it permit any
subservicer to) impair in any material respect the rights of the Issuer, the
Owner Trustee, the Indenture Trustee, the Certificateholders, the Final Payment
Certificateholder 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, the Final Payment Certificateholder
or the Noteholders hereunder would be materially adversely affected.
46
(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,
the Final Payment Certificateholder or the Noteholders against the Servicer with
respect to a breach pursuant to Section 3.2, 3.5 or 3.6 shall be to require the
Servicer to repurchase Receivables pursuant to this Section 3.7. Neither the
Owner Trustee nor the Indenture Trustee shall have any duty to conduct an
affirmative investigation as to the occurrence of any condition requiring the
repurchase of any Receivable pursuant to this Section 3.7 or the eligibility of
any Receivable for purposes of this Agreement.
SECTION 3.8. Servicing Compensation. The "Servicing Fee" with
respect to a Collection Period shall be an amount equal to the product of
one-twelfth (1/12) of the Servicing Rate and the Pool Balance as of the first
day of such Collection Period. As additional servicing compensation, the
Servicer shall also be entitled to earnings on amounts on deposit in the
Payahead Account, disposition fees paid with respect to Final Payment
Receivables, Rule of 78's Payments, and any administrative fees and charges
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
47
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, the Final Payment Certificateholder 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
and the Final Payment Certificateholder 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 longer period, in the case
of the first such Officer's Certificate) and of its performance of its
obligations under this Agreement has been made under such officer's supervision
and (ii) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout such
year (or longer period, in the case of the first such certificate), or, if there
has been a default in the fulfillment of any such obligation, specifying each
such default known to such officer and the nature and status thereof. A copy of
such certificate may be obtained by any Certificateholder by a request in
writing to the
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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 longer
period, in the case of the first such report) to the effect that such firm has
audited the financial statements of the Servicer and issued its report thereon
and that such audit (1) was made in accordance with generally accepted auditing
standards, (2) included tests relating to motor vehicle loans serviced for
others in accordance with the requirements of the Uniform Single Audit 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, in the firm's opinion, paragraph four of such Program
requires such firm to report. Such report shall also indicate that the firm is
independent with respect to the Seller and the Servicer within the meaning of
the Code of Professional Ethics of the American Institute of Certified Public
Accountants. A copy of such report may be obtained by any Certificateholder by a
request in writing to the Owner Trustee, or by any Noteholder or Person
certifying that it is a Note Owner by a request in writing to the Indenture
Trustee, in either case addressed to the applicable Corporate Trust Office.
SECTION 3.12. Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide the Certificateholders, the
Final Payment Certificateholder, the Indenture Trustee and the Noteholders
49
with access to the Receivable Files in the cases where the Certificateholders,
the Final Payment Certificateholder, 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, Final Payment Certificateholder or
Noteholder, by its acceptance of a Certificate, Final Payment 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 Securities Exchange Act of
1934, as amended, 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,
FINAL PAYMENT CERTIFICATEHOLDER 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, the Certificateholders and the Final Payment Certificateholder. 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 paid to the Final Payment Certificateholder. 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).
51
(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. 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
_______, 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).
(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
Ac-
52
counts"). The Payahead Account shall be held in trust for the benefit of the
Noteholders, the Certificateholders and the Final Payment Certificateholder. 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 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.
53
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 (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, Rule of
78's Payments, and other amounts included in the Supplemental Servicing Fee
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
54
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
and late fees, 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 from the Holders of Notes evidencing not less than
25% of the principal balance of the then outstanding Notes or from the Holders
of Certificates evidencing not less than 25% of the Certificate Balance or an
Authorized Officer in the Corporate Trust Office with knowledge hereof or
familiarity herewith has actual knowledge of such event or circumstance.
(b) In those cases where a subservicer is servicing a Receivable,
the Servicer shall cause the subservicer to remit to the Collection Account, as
soon as practicable, but in no event after the close of business on the second
Business Day after receipt thereof by the subservicer (but subject to the provi-
55
sions 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 last day of each Collection Period, all collections
received pursuant to Section 4.2 for such Collection Period allocated to each
Receivable (which allocation excludes amounts received by the Servicer with
respect to Rule of 78's Payments, the Supplemental Servicing Fee and amounts
collected with respect to Purchased Receivables) shall be applied by the
Servicer, (i) in the case of Simple Interest Receivables which are Standard
Receivables, to interest and principal on the Receivable in accordance with the
Simple Interest Method, (ii) in the case of Simple Interest Receivables which
are Final Payment Receivables, to interest and principal in accordance with the
Simple Interest Method first to interest, second, to principal other than the
principal portion of the Last Scheduled Payments and third, to principal on the
Last Scheduled Payments and (iii) in the case of Actuarial Receivables, first to
the Scheduled Payment and, to the extent that any amounts are remaining then due
to a prepayment of the Actuarial Receivables, if the sum of such remaining
amount and the previous Payahead Balance shall be sufficient to prepay the
Receivable in full, and otherwise to the Payahead Account (or, if the Monthly
Remittance Condition is satisfied, to the Servicer) as a Payahead to the extent
of future level monthly payments.
(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 principal other than the principal portion of the related
Last Scheduled Payment and third, to principal portion of the related Last
Scheduled Payment.
SECTION 4.4. Advances. (a) As of 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. Next, an advance shall be made from the Reserve
Account by the Indenture Trustee to the extent of any remaining shortfall in
respect of
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such Actuarial Receivable (such advance, an "Actuarial Advance"); provided that,
with respect to Actuarial Receivables which are Final Payment Receivables, such
an advance shall not be made with respect to the Last Scheduled Payments
thereof. All payments and transfers pursuant to this Section 4.4(a) shall be
made by the Indenture Trustee based on the information set forth in the
Servicer's report attached to the Servicer's Certificate delivered pursuant to
Section 3.9.
(b) Upon either the written instructions of the Servicer or based
solely upon the information contained in the Servicer's Certificate delivered on
the related Determination Date pursuant to Section 3.9, the Indenture Trustee
shall release from amounts available in the Payahead Account or the Reserve
Account, as the case may be, the amounts required pursuant to this Section 4.4
and shall deposit such amounts in the Collection Account pursuant to Section
4.5.
SECTION 4.5. Additional Deposits. (a) The Indenture Trustee shall
deposit in the Collection Account amounts required pursuant to Section 4.4(b).
The Seller and the Servicer shall deposit or cause to be deposited in the
Collection Account the aggregate Purchase Amount with respect to Purchased
Receivables pursuant to Section 2.3, Section 3.7 or Section 9.1, respectively.
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 a
withdrawal from the Reserve Account in an amount equal to the amount (if
positive) calculated by the Servicer pursuant to the second sentence of Section
4.6(b) and shall deposit such funds into the Collection Account.
SECTION 4.6. Distributions. (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), in immediately available funds,
57
(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 Scheduled Principal, the Total Servicing Fee, the Accrued
Note Interest, the Noteholders' Regular Principal, the Noteholders' Accelerated
Principal, the Principal Distribution Amount, the Accrued Certificate Interest,
the Certificateholders' Regular Principal, the Last Scheduled Payment Principal
Collections 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 the difference between the Total Required Payment
(together with, after the Notes have been paid in full, the Certificateholders'
Regular Principal) and Available Funds for such Payment Date.
(c) On each Payment Date, the Servicer shall instruct the Indenture
Trustee (based on the information contained in the Servicer's Certificate
delivered on the related Determination Date pursuant to Section 3.9), to make
the following withdrawals from the Collection Account and make deposits,
distributions and payments by 11:00 a.m. (New York time), to the extent of the
Available Funds, in the following order of priority (provided that, with respect
to clauses (i)-(vi) below, each such payment or distribution shall be made, as
specified in such Servicer's Certificate, first from Available Funds not
attributable to the principal of Last Scheduled Payments, and then, to the
extent an insufficiency shall exist, from Available Funds attributable to the
principal of Last Scheduled Payments):
(i) to the Servicer, the Total Servicing Fee;
(ii) to the Note Payment Account, the Accrued Note Interest;
(iii) to the Note Payment Account, the Noteholders' Regular
Principal;
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(iv) to the Certificate Distribution Account, the Accrued
Certificate Interest;
(v) on or after the Payment Date on which the outstanding
principal amount of the Notes is reduced to zero, to the Certificate
Distribution Account, the Certificateholders' Regular Principal;
(vi) to the Reserve Account, the amount, if any, necessary to
reinstate the balance in the Reserve Account up to the Specified
Reserve Balance;
(vii) to the Final Payment Certificateholder, any remaining
Available Funds attributable to the principal of Last Scheduled Pay-
ments;
(viii) to the Note Payment Account, the Noteholders'
Accelerated Principal; and
(ix) to the Seller, any remaining portion of Available Funds.
Notwithstanding the foregoing, following the occurrence and during the
continuation of an Event of Default which has resulted in an acceleration of the
Notes or following an Insolvency Event with respect to the Seller, the Available
Funds remaining after the application of clauses (i) and (ii) above will be
deposited in the Note Payment Account to the extent necessary to reduce the
principal amount of the Notes to zero, and the Certificateholders and the Final
Payment Certificateholder will not receive any distributions until the principal
amount and accrued interest on the Notes has been paid in full.
SECTION 4.7. Reserve Account. (a) (i) The Seller shall, prior to the
Closing Date, establish and maintain an 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 and the Certificates. All amounts on
deposit in
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and credited to the Reserve Account, including the Reserve Initial Deposit and
any Permitted Investments (whether in the form of deposit accounts, Physical
Property, book-entry securities, uncertificated securities or otherwise), and
all proceeds thereof (such amounts, the "Reserve Account Property") shall hereby
be sold, conveyed and transferred by the Seller to the Trust. Pursuant to the
Indenture, the Trust will pledge all of its right, title and interest in, to and
under the Reserve Account and the Reserve Account Property to the Indenture
Trustee on behalf of the Noteholders to secure its obligations under the Notes
and the Indenture.
The Reserve Account Property shall, to the extent permitted by
applicable law, rules and regulations, be invested, as directed in writing by
the Servicer, by the bank or trust company then maintaining the Reserve Account
in Permitted Investments that mature not later than the Business Day immediately
preceding the next Payment Date, and such Permitted Investments shall be held to
maturity. All interest and other income (net of losses and investment expenses)
on funds on deposit in the Reserve Account shall, upon the written direction of
the Servicer, be paid to the Seller on any Payment Date to the extent 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).
(ii) With respect to Reserve Account Property:
(1) any Reserve Account Property that constitutes
Physical Property shall be delivered to the Indenture Trustee
in accordance with paragraph (a) of the definition of
"Delivery" and shall be held, pending maturity or disposition,
solely by the Indenture Trustee or a financial intermediary
(as such term is defined in Section 8-313(4) of the Relevant
UCC) acting solely for the Indenture Trustee; and
(2) any Reserve Account Property that is a book-entry
security held through the Federal Reserve System pursuant to
federal book-entry regulations shall be delivered
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in accordance with paragraph (b) of the definition of
"Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition, through continued book-entry
registration of such Reserve Account Property as described in
such paragraph;
(3) any Reserve Account Property that is an
"uncertificated security" under Article VIII of the Relevant
UCC shall be delivered to the Indenture Trustee in accordance
with paragraph (c) of the definition of "Delivery" and shall
be maintained by the Indenture Trustee, pending maturity or
disposition, through continued registration of the Indenture
Trustee's (or its nominee's) ownership of such security;
(4) any Reserve Account Property that is held in deposit
accounts shall be held solely in the name of the Indenture 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
(5) any property of a type which is not capable of being
delivered to the Indenture Trustee in accordance with the
definition of "Delivery" shall not constitute Reserve Account
Property.
(b) 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; and
provided further, that any portion of such excess attributable to investment
income (net of losses and investment expenses) shall be paid to the Seller.
(c) Following the payment in full of the aggregate principal balance
of the Notes, the Certificate Balance and the Final Payment Certificate
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Balance and of all other amounts owing or to be distributed hereunder or under
the Indenture or the Trust Agreement to Noteholders, Certificateholders and the
Final Payment Certificateholder and the termination of the Trust, any remaining
Reserve Account Property shall be distributed to the Seller.
SECTION 4.8. Net Deposits. As an administrative convenience only,
the Seller and the Servicer may make any remittance pursuant to this Article IV
with respect to a Collection Period net of distributions to be made to the
Seller or the Servicer with respect to such Collection Period. Nonetheless, such
obligations shall remain separate obligations, no party shall have a right of
offset, and each such party shall account for all of the above described
remittances and distributions as if the amounts were deposited and/or
transferred separately.
SECTION 4.9. Statements to Certificateholders, Noteholders and the
Final Payment Certificateholder. On 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 and the Final Payment 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, the Certificates and the Final Payment Certificate to the extent
applicable:
(i) the amount of such distribution allocable to principal
allocable to the Notes, to the Certificates and to the Final Payment
Certificate;
(ii) the amount of such distribution allocable to interest
allocable to the Notes and the Certificates;
(iii) the amount of such distribution allocable to the Yield
Supplement Amount;
(iv) the amount of the Total Servicing Fee and any
Supplemental Servicing Fee with respect to the related Collection Period;
62
(v) the aggregate outstanding principal balance of the Notes,
the Note Pool Factor, the Certificate Balance, the Certificate Pool Factor
and the Final Payment Certificate Balance 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 and the Level Pay Pool Balance as of the
close of business on the last day of the related Collection Period;
(vii) the amounts of the Noteholders' Interest Carryover
Shortfall, the Noteholders' Principal Carryover Shortfall, the
Certificateholders' Interest Carryover Shortfall and the
Certificateholders' Principal Carryover Shortfall, if any, for such
Payment Date;
(viii) the amount of the aggregate Realized Losses, if any,
with respect to the related Collection Period;
(ix) the balance of the Reserve Account on such Payment Date,
after giving effect to changes therein on such Payment Date;
(x) the aggregate Purchase Amount of Receivables repurchased
by the Seller or purchased by the Servicer, if any, with respect to the
related Collection Period; and
(xi) the amount of Actuarial Advances, if any, with respect to
the related Collection Period.
Each amount set forth on the Payment Date statement pursuant to
clauses (i), (ii), (iv) and (vii) above shall be expressed as a dollar amount
per $1,000 of original principal balance of a Certificate or Note, as
applicable.
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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 an 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. In the event that the Yield Supplement Account is no longer to be
maintained at the corporate trust department of Bank of Tokyo - Mitsubishi Trust
Company, the Servicer shall, with the Indenture Trustee's assistance as
necessary, cause the Yield Supplement Account to be moved to a Qualified
Institution or a Qualified Trust Institution within ten (10) Business Days (or
such longer period not to exceed thirty (30) calendar days as to which each
Rating Agency may consent).
The Seller hereby sells, conveys and transfers to the Trust the
Yield Supplement Account, all funds and investments on deposit therein or
credited thereto and all proceeds thereof, subject, however, to the limitations
set forth below.
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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 4.1(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 4.1(a);
(ii) If, with respect to any Collection Period, MMCA shall
have failed to make or cause to be made in full the remittance of the
Yield Supplement Amount on the date required by the Yield Supplement
Agreement, the Indenture Trustee not later than 10:00 a.m. (New York City
time) on the Payment Date, shall, upon the written direction of the
Servicer, withdraw from the Yield Supplement Account and deposit into the
Collection Account the amount of the shortfall between the amount of funds
that are required to be remitted by MMCA with respect to the Yield
Supplement Agreement as set forth in the Servicer's Certificate and the
amount of funds actually so remitted and to the extent of any remaining
shortfall, the Indenture Trustee shall withdraw an amount equal thereto
from the Reserve Account and deposit such amount 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
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the status of the Trust as a partnership for Federal income and Applicable
Tax State income and franchise tax purposes and an Officer's Certificate
of the Seller that all conditions precedent to the liquidation of the
Yield Supplement Account have been satisfied, any amounts on deposit in
the Yield Supplement Account shall, upon written request of the Seller, be
paid to the Seller.
(b) If a Yield Supplement Letter of Credit has been obtained by
MMCA, and if, with respect to any Collection Period, MMCA shall have failed to
make or cause to be made in full the remittance of the Yield Supplement Amount,
upon written notice by the Servicer of such failure (which notice shall be given
no later than 10:00 a.m. (New York City time) on the Payment Date for such
Collection Period), the Indenture Trustee shall draw on the Yield Supplement
Letter of Credit in accordance with the terms thereof, in the amount of the
shortfall between the amount of funds with respect to the Yield Supplement
Amount that are required to be remitted by MMCA with respect to the Yield
Supplement Agreement as set forth in the Servicer's Certificate and the amount
of funds actually so remitted as set forth in the Servicer's Certificate. Any
such draw on the Yield Supplement Letter of Credit shall be made after receipt
of the related Servicer's Certificate on or before 11:00 a.m. (New York City
time) on the Payment Date for such Collection Period. Upon receipt of a request
for a draw by the Indenture Trustee under the Yield Supplement Letter of Credit,
the Letter of Credit Bank is to promptly make a payment to the Indenture Trustee
in an amount equal to the Yield Supplement Amount (minus payments made on the
Yield Supplement Agreement), and the Indenture Trustee shall deposit into the
Collection Account pursuant to Section 4.5 the amount received from the Letter
of Credit Bank in respect of such drawing. The Servicer shall include in each
Servicer's Certificate, or in an Officer's Certificate provided to the Indenture
Trustee with each Servicer's Certificate, the Stated Amount (as defined in the
Yield Supplement Letter of Credit) of the Yield Supplement Letter of Credit as
of the close of business on the last day of the Collection Period preceding the
date of such Servicer's Certificate. In the event that the rating of the Letter
of Credit Bank declines below the Required Rating, the Servicer shall promptly
notify the Indenture Trustee in writing of such decline, and upon receipt of
such notification, the Indenture Trustee shall, unless a suitable replacement
letter of credit shall have been delivered, promptly draw the full amount
available under the Yield Supplement Letter of Credit and deposit such amount in
the Yield Supplement Account.
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ARTICLE VI
THE SELLER
SECTION 6.1. Representations and Warranties of Seller. The Seller
makes the following representations and warranties on which the Issuer is deemed
to have relied in acquiring the Trust Property. The 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 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, the Certificates or the Final Payment Certificate,
(ii) seeking to prevent the issuance of the Notes, the Certificates or the Final
Payment Certificate 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, the Certificates or the Final Payment Certificate, or (iv)
that may adversely affect the Federal or Applicable Tax State income, excise,
franchise or similar tax attributes of the Notes, the Certificates or the Final
Payment Certificate.
(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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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 and the Certificates and the issuance of the Final
Payment Certificate, 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, the
Certificateholders and the Final Payment Certificateholder 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, the Certificates or the Final Payment
Certificate.
(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; or (ii) in the case of the Owner Trustee
shall arise from the breach by the Owner Trustee of any of its representations
or warranties set forth in Section 7.3 of the Trust Agreement or (iii) in the
case of the Indenture
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Trustee shall arise from the breach by the Indenture Trustee of any of its
representations and warranties set forth in the Indenture.
(d) The Seller shall pay any and all taxes levied or assessed upon
all or any part of the Owner Trust Estate.
(e) Indemnification under this Section 6.2 shall survive the
resignation or removal of the Owner Trustee or the Indenture Trustee and the
termination of this Agreement and shall include reasonable fees and expenses of
counsel and expenses of litigation. If the Seller shall have made any indemnity
payments pursuant to this Section 6.2 and the Person to or on behalf of whom
such payments are made thereafter shall collect any of such amounts from others,
such Person shall promptly repay such amounts to the Seller, without interest.
SECTION 6.3. Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person (i) into which the Seller may be merged or
consolidated, (ii) resulting from any merger, conversion, or consolidation to
which the Seller shall be a party or (iii) that may succeed by purchase and
assumption to all or substantially all of the business of the Seller, which
Person in any of the foregoing cases executes an agreement of assumption to
perform every obligation of the Seller under this Agreement, will be the
successor to the Seller under this Agreement without the execution or filing of
any document or any further act on the part of any of the parties to this
Agreement; provided, however, that (x) the Seller shall have delivered to the
Owner Trustee and the Indenture Trustee an Officer's Certificate and an Opinion
of Counsel each stating that such merger, conversion, consolidation or
succession and such agreement of assumption comply with this Section 6.3, and
(y) the Seller shall have delivered to the Owner Trustee and the Indenture
Trustee an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary to fully preserve and
protect the interest of the Issuer and the Indenture Trustee, respectively, in
the Receivables and the other Trust Property, and reciting the details of such
filings, or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to fully preserve and protect such interest. The Seller shall
provide notice of any merger, conversion, consolidation, or succession pursuant
to this Section 6.3 to the Rating Agencies. Notwithstanding anything herein to
the contrary, the execution of the foregoing agreement of assumption and
compliance with clauses (x) or (y) above shall be conditions to the consummation
of the transactions referred to in clauses (i), (ii) or (iii) above.
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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, Certificates or the Final Payment
Certificate. The Seller, and any Affiliate of the Seller, may in its individual
or any other capacity become the owner or pledgee of Notes, Certificates or the
Final Payment Certificate 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. For all purposes of the Basic Documents, and
for so long as the Notes and the Certificates remain outstanding, the Seller
shall remain the sole owner of the Final Payment Certificate.
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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.
(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,
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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, the Certificates or the Final Payment Certificate,
(b) seeking to prevent the issuance of the Notes, the Certificates or the Final
Payment Certificate 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, the Certificates or the Final Payment Certificate, or (d)
that may adversely affect the Federal or Applicable Tax State income, excise,
franchise or similar tax attributes of the Notes, the Certificates or the Final
Payment Certificate.
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, the Final Payment Certificateholder and the Seller from and
against
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any and all costs, expenses, losses, damages, claims and liabilities, arising
out of or resulting from the use, ownership or operation by the Servicer or any
Affiliate thereof of a Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee and the Indenture Trustee from and against any taxes
that may at any time be asserted against any such Person with respect to the
transactions contemplated herein or in the other Basic Documents, if any,
including, without limitation, any sales, gross receipts, general corporation,
tangible personal property, privilege or license taxes (but, in the case of the
Issuer, not including any taxes asserted with respect to, and as of the date of,
the sale of the Receivables to the Issuer or the issuance and original sale of
the Notes and the Certificates and the issuance of the Final Payment
Certificate, 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, the Final Payment Certificateholder and the Seller from and
against any and all costs, expenses, losses, claims, damages and liabilities to
the extent that such cost, expense, loss, claim, damage or liability arose out
of, or was imposed upon any such Person through, the negligence, willful
misfeasance or bad faith of the Servicer in the performance of its duties under
this Agreement or any other Basic Document to which it is a party (except for
errors in judgment), or by reason of reckless disregard of its obligations and
duties under this Agreement or any other Basic Document to which it is a party.
(d) The Servicer shall indemnify, defend and hold harmless the Owner
Trustee and the Indenture Trustee, as applicable, from and against all costs,
expenses, losses, claims, damages and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties contained
herein and in the other Basic Documents, if any, except to the extent that such
cost, expense, loss, claim, damage or liability: (a) shall be due to the willful
misfeasance, bad faith or negligence (except for errors in judgment) of the
Owner Trustee or the Indenture Trustee, as applicable; (b) relates to any tax
other than the taxes with respect to which either the Seller or the Servicer
shall be required to indemnify the Owner Trustee or the Indenture Trustee, as
applicable; (c) in the case of the Owner Trustee, shall arise from the Owner
Trustee's breach of any of its representations or warranties set forth in
Section 7.3 of the Trust
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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
8.3) 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 8.3) 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 executes an agreement of assumption to
perform every obligation of the Servicer under this Agreement, will be the
successor to the Servicer under this Agreement without the execution or filing
of any paper or any further act on the part of any of the parties to this
Agreement; provided,
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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, the
Certificateholders or the Final Payment Certificateholder, except as provided
under this Agreement, for any action taken or for refraining from the taking of
any action pursuant to this Agreement or for errors in judgment; provided,
however, that this provision shall not protect the Servicer or any such Person
against any liability that would otherwise be imposed by reason of willful
misfeasance or bad faith in the performance of duties or by reason of reckless
disregard of obligations and duties under this Agreement, or by reason of
negligence in the performance of its duties under this Agreement (except for
errors in judgment). The Servicer and any director, officer or employee or agent
of the Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person in respect of any matters arising
under this Agreement.
(b) Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Receivables in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability; provided, however, that the Servicer may undertake any reasonable
action that it may deem necessary or desirable in respect of this Agreement and
the rights and duties of the parties to this Agreement and the interests of the
Noteholders, Certificateholders and Final Payment Certificateholder under this
Agreement. In
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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
(a) materially and adversely affect the rights of Noteholders or
Certificateholders and (b) 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 (1) to the Servicer by the
Owner Trustee or the Indenture Trustee, or (2) 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 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, 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, the Final Payment Certificate or the Trust
Property or otherwise, shall pass to and be vested in the Indenture Trustee or a
successor Servicer appointed under Section 8.2; and, without limitation, the
Indenture Trustee and the Owner Trustee shall be authorized and empowered to
execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement of the
Receivable Files, the certificates of title to the Financed Vehicles, or
otherwise. The Servicer shall cooperate with the Indenture Trustee, the Owner
Trustee and such successor Servicer in effecting the termination of its
responsibilities and rights as Servicer under this Agreement, including the
transfer to the Indenture Trustee or such successor Servicer for administration
of all cash amounts that are at the time held by the Servicer for deposit or
thereafter shall be received with respect to a Receivable, all Receivable Files
and all information or documents that the Indenture Trustee or such successor
Servicer may require. In addition, the Servicer shall transfer its electronic
records relating to the Receivables to the successor Servicer in such electronic
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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, the Final Payment Certificateholder or any
other Person of such occurrence prior to the continuance of such event through
the end of any cure period specified in Section 8.1(a).
SECTION 8.2. Indenture Trustee to Act; Appointment of Successor
Servicer. Upon the Servicer's resignation pursuant to Section 7.5 or upon the
Servicer's receipt of notice of termination as Servicer pursuant to Section 8.1,
the Indenture Trustee shall be the successor in all respects to the Servicer in
its capacity as Servicer under this Agreement (provided that neither the
Indenture Trustee nor any other successor Servicer shall have any obligation,
but may elect, to make available to an Obligor any refinancing of a Last
Scheduled Payment in the manner specified in the last sentence of Section 3.2(e)
hereof), and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
of this Agreement. As compensation therefor, the Indenture Trustee shall be
entitled to such compensation (whether payable out of the Collection Account or
otherwise) as the Servicer would have been entitled to under this Agreement if
no such notice of termination or resignation had been given, except that all
collections shall be deposited in the Collection Account within two (2) Business
Days of receipt and shall not be retained by the Servicer. Notwithstanding the
above, the Indenture Trustee may, if it shall be unwilling so to act, or shall,
if it is legally unable so to act, appoint, or petition a court of competent
jurisdiction to appoint, an Eligible Servicer as the successor to the terminated
Servicer under this Agreement. In connection with such appointment, the
Indenture Trustee may make such arrangements for the compensation of such
successor Servicer out of payments on Receivables as it and such successor shall
agree, which, in no event, shall be greater than that payable to MMCA as
Servicer hereunder. The Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession including, but not limited to, making arrangements in respect of
the last sentence of Section 3.2(e) of this Agreement. The Indenture Trustee
shall not be relieved of its duties as successor Servicer under this Section
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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, Certificateholders and
Final Payment 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 and the Final Payment
Certificateholder at their respective addresses of record and to the Rating
Agencies.
SECTION 8.5. Waiver of Past Events of Servicing Termination. The
Holders of Notes evidencing not less than 51% of the Outstanding Amount
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(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,
Certificateholders and the Final Payment Certificateholder, 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 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 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 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 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, the Certificate Balance and the
Final Payment Certificate Balance and all accrued but unpaid interest (including
any overdue interest) thereon. The Purchase Amount and any Yield Supplement
Amounts for such Payment Date, plus to the extent necessary all amounts in the
Reserve Account, shall be used to make payments in full to Noteholders,
Certificateholders and the Final Payment Certificateholder in the manner set
forth in Article IV.
(b) Unless otherwise required by the Rating Agencies as set forth in
writing delivered to the Owner Trustee and the Indenture Trustee, if at the time
the Servicer exercises its purchase option hereunder the Servicer's long-term
unsecured debt has a rating lower than investment grade by the Rating Agencies,
the Servicer shall deliver to the Owner Trustee and the Indenture Trustee on
such Payment Date a letter from an independent investment bank or an independent
public accountant to the effect that the price paid by the Servicer for the
Receivables at the time of transfer pursuant to such purchase option represented
a fair market price for such Receivables.
83
(c) Following the satisfaction and discharge of the Indenture and
the payment in full of the principal of and interest on the Notes, the
Certificateholders and the Final Payment Certificateholder 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 and
Final Payment Certificateholder, including without limitation making
distributions from the Payahead Account and the Collection Account in accordance
with Section 4.6 and making withdrawals from the Reserve Account in accordance
with Section 4.5(b) and Section 4.7.
84
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, the Certificateholders or the
Final Payment Certificateholder, 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, the
Certificateholders or the Final Payment Certificateholder; 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 or the Specified Reserve Balance, without the consent of all
adversely affected Noteholders or Certificateholders, (b) reduce the aforesaid
percentage required to consent to any such amendment, without the consent of the
Holders of all Notes and Certificates affected thereby or (c) adversely affect
the rating of the Notes or Certificates, as the case may be, by the Rating
Agencies without the consent, as applicable, of Noteholders evidencing not less
than 66-2/3% of the Notes Outstanding or of Certificateholders evidencing not
less than 66-2/3% of the Certificate Balance.
(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.
85
(d) Promptly after the execution of any amendment or consent
pursuant to this Section 10.1, the Owner Trustee shall furnish written
notification of the substance of such amendment or consent to each
Certificateholder, the Indenture Trustee and each of the Rating Agencies. It
shall not be necessary for the consent of Noteholders or the Certificateholders
pursuant to this Section 10.1 to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents (and any other
consents of Noteholders and Certificateholders provided for in this Agreement)
and of evidencing the authorization of the execution thereof by Noteholders and
Certificateholders shall be subject to such reasonable requirements as the Owner
Trustee and the Indenture Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the
Owner Trustee and the Indenture Trustee shall be entitled to receive and rely
upon (i) an Opinion of Counsel stating that the execution of such amendment (A)
is authorized or permitted by this Agreement, (B) will not materially adversely
affect the Federal or any Applicable Tax State income or franchise taxation of
any Outstanding Note or Certificate or any Holder thereof, and (C) will not
cause the Trust to be taxable as a corporation for Federal or any Applicable Tax
State income or franchise tax purposes and (ii) an Officer's Certificate of the
Servicer that all conditions precedent to the execution of such amendment have
been complied with. The Owner Trustee or the Indenture Trustee may, but shall
not be obligated to, enter into any such amendment which affects such Owner
Trustee's or Indenture Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 10.2. Protection of Title to Trust. (a) The Seller or
Servicer, or both, shall execute and file such financing statements and cause to
be executed and filed such continuation statements, all in such manner and in
such places as may be required by law fully to preserve, maintain, and protect
the interest of the Issuer and the Indenture Trustee for the benefit of the
Noteholders in the Receivables and in the proceeds thereof. The Seller or
Servicer, or both, shall deliver (or cause to be delivered) to the Owner Trustee
and the Indenture Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity, or corporate structure in any manner that would, could, or might make
any financing statement or continuation statement filed by the Seller or the
86
Servicer in accordance with paragraph (a) above seriously misleading within the
meaning of ss. 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 and the Reserve Account
in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from
and after the time of sale under this Agreement of the Receivables to the
Issuer, the Servicer's master computer records (including any back-up archives)
that refer to a Receivable shall indicate clearly the interest of the Issuer and
the Indenture Trustee in such Receivable and that such Receivable is owned by
the Issuer and has been pledged to the Indenture Trustee pursuant to the
Indenture. Indication of the Issuer's and the Indenture Trustee's interest in a
Receivable shall be deleted from or modified on the Servicer's computer systems
when, and only when, the Receivable shall have been paid in full or repurchased
by the Seller or purchased by the Servicer.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in any
automobile or light- or medium-duty truck receivables to any prospective
purchaser, lender, or other transferee, the Servicer shall give to such
prospective purchaser, lender, or
87
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 continuation statements have
been executed and filed that are necessary fully to preserve and protect
the interest of the
88
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 Securities and Exchange Commission
pursuant to Section 12(b) or Section 12(g) of the Securities Exchange Act of
1934, as amended, 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
XxXxxx-Xxxx, 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, Certificateholder or the Final Payment Certificateholder shall be
given by first class mail, postage prepaid, at the address of such Holder as
shown in the Note Register or the Certificate Register, as applicable. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly
89
given, whether or not the Noteholder, Certificateholder or the Final Payment
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, the Final Payment Certificate 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, the Certificateholders or the Final Payment
Certificateholder, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges therein provided are cumulative and
not exhaustive of any rights, remedies, powers and privileges provided by law.
SECTION 10.9. Third-Party Beneficiaries. This Agreement will inure
to the benefit of and be binding upon the parties hereto, the Noteholders,
90
the Certificateholders, the Final Payment Certificateholder, 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 Noteholders, Certificateholders or Final
Payment Certificateholder. (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, Certificateholder or Final Payment
Certificateholder shall bind such Noteholder, Certificateholder or Final Payment
Certificateholder and every subsequent holder of such Note, Certificate or Final
Payment 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,
Certificate or Final Payment 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 Vice President,
Secretary and Treasurer, 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 securities were rated by any nationally recognized statistical
rating organi-
91
zation 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.
92
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 1997-1,
as Issuer
By: WILMINGTON TRUST COMPANY
as Owner Trustee
By:
-------------------------------------
Name:
Title:
MITSUBISHI MOTORS CREDIT OF
AMERICA, INC., as Servicer
By:
-------------------------------------
Name:
Title:
Accepted and agreed:
BANK OF TOKYO - MITSUBISHI TRUST COMPANY,
as Indenture Trustee
93
By:
-------------------------------------
Name:
Title:
94
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
_______, 1997, by and among the Company, as Servicer, MMCA Auto Receivables,
Inc., as Seller, and MMCA Auto Owner Trust 1997-1, as Issuer (the "Sale and
Servicing Agreement") (all capitalized terms used herein without definition have
the respective meanings specified in the Sale and Servicing Agreement), and
further certifies that:
(a) The Servicer's report for the period from __________ to
____________ attached to this certificate is complete and accurate and
contains all information required by Section 3.9 of the Sale and Servicing
Agreement; and
(b) As of the date hereof, no Event of Servicing Termination
or event that with notice or lapse of time or both would become an Event
of Servicing Termination has occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature and the
corporate seal of the Company this ______ day of ____________, 19__.
MITSUBISHI MOTORS CREDIT
OF AMERICA, INC.
By:
-------------------------------------
Name:
Title:
EXHIBIT B
[FORM OF REPORT TO NOTEHOLDERS]
EXHIBIT C
[FORM OF REPORT TO CERTIFICATEHOLDERS AND
THE FINAL PAYMENT CERTIFICATEHOLDER]
EXHIBIT D
[FORM OF YIELD SUPPLEMENT AGREEMENT]
_______, 1997
MMCA Auto Receivables, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Re: MMCA Auto Owner Trust 1997-1
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 _______,
1997 (as amended, supplemented or otherwise modified and in effect from time to
time, the "Purchase Agreement"), between Mitsubishi Motors Credit of America,
Inc., as seller (the "Seller"), and MMCA Auto Receivables, Inc., as purchaser
(the "Purchaser").
1. On or prior to the Determination Date preceding each Payment
Date, the Servicer shall notify the Purchaser and the Seller of the Yield
Supplement Amount for such Payment Date.
2. In consideration for the Purchaser entering into the Purchase
Agreement and the purchase price paid to the Seller for the Receivables under
the Purchase Agreement, we agree to make a payment of the Yield Supplement
Amount to the Purchaser, or to the pledgee of the assignee of the Purchaser
referred to in Section 5 hereof, on the Business Day prior to each Payment Date.
3. All payments pursuant hereto shall be made by federal wire
transfer (same day) funds or in immediately available funds, to such account as
MMCA Auto Receivables, Inc.
, 1997
Page 2
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 1997-1 (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 _______, 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.
, 1997
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.
, 1997
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:
===================================================
SALE AND SERVICING AGREEMENT
by and among
MMCA AUTO OWNER TRUST 1997-1,
as Issuer,
MMCA AUTO RECEIVABLES, INC.,
as Seller
and
MITSUBISHI MOTORS CREDIT OF AMERICA, INC.,
as Servicer
Dated as of _______, 1997
===================================================
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions................................................... 1
SECTION 1.2. Other Definitional Provisions................................. 29
SECTION 1.3. Business Day Certificate...................................... 30
ARTICLE II
TRUST PROPERTY
SECTION 2.1. Conveyance of Trust Property.................................. 31
SECTION 2.2. Representations and Warranties of the Seller as to the
Receivables................................................ 31
SECTION 2.3. Repurchase upon Breach........................................ 38
SECTION 2.4. Custody of Receivable Files................................... 39
SECTION 2.5. Duties of Servicer as Custodian............................... 40
SECTION 2.6. Instructions; Authority to Act................................ 41
SECTION 2.7. Custodian's Indemnification................................... 42
SECTION 2.8. Effective Period and Termination.............................. 42
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
AND TRUST PROPERTY
SECTION 3.1. Duties of Servicer............................................ 44
SECTION 3.2. Collection and Allocation of Receivable Payments.............. 48
SECTION 3.3. Realization upon Receivables.................................. 51
SECTION 3.4. Physical Damage Insurance..................................... 52
SECTION 3.5. Maintenance of Security Interests in Financed Vehicles........ 52
SECTION 3.6. Covenants of Servicer......................................... 53
SECTION 3.7. Purchase by Servicer upon Breach.............................. 53
SECTION 3.8. Servicing Compensation........................................ 54
SECTION 3.9. Servicer's Certificate........................................ 54
SECTION 3.10. Annual Statement as to Compliance; Notice of Event of
Servicing Termination...................................... 55
SECTION 3.11. Annual Independent Certified Public Accountants' Reports...... 56
SECTION 3.12. Access to Certain Documentation and Information Regarding
Receivables................................................ 56
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SECTION 3.13. Reports to the Commission..................................... 57
SECTION 3.14. Reports to Rating Agencies.................................... 57
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS,
FINAL PAYMENT CERTIFICATEHOLDER AND NOTEHOLDERS
SECTION 4.1. Accounts...................................................... 58
SECTION 4.2. Collections................................................... 62
SECTION 4.3. Application of Collections.................................... 63
SECTION 4.4. Advances...................................................... 64
SECTION 4.5. Additional Deposits........................................... 65
SECTION 4.6. Distributions................................................. 65
SECTION 4.7. Reserve Account............................................... 68
SECTION 4.8. Net Deposits.................................................. 70
SECTION 4.9. Statements to Certificateholders, Noteholders and the Final
Payment Certificateholder.................................. 70
ARTICLE V
YIELD SUPPLEMENT LETTER OF CREDIT
SECTION 5.1. Yield Supplement Letter of Credit and the Yield Supplement
Account.................................................... 73
ARTICLE VI
THE SELLER
SECTION 6.1. Representations and Warranties of Seller...................... 77
SECTION 6.2. Liability of Seller; Indemnities.............................. 79
SECTION 6.3. Merger or Consolidation of, or Assumption of the Obligations
of, Seller................................................. 80
SECTION 6.4. Limitation on Liability of Seller and Others.................. 81
SECTION 6.5. Seller May Own Notes, Certificates or the Final Payment
Certificate................................................ 82
ARTICLE VII
THE SERVICER
SECTION 7.1. Representations and Warranties of Servicer.................... 83
SECTION 7.2. Liability of Servicer; Indemnities............................ 85
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SECTION 7.3. Merger or Consolidation of, or Assumption of the Obligations
of, Servicer............................................... 87
SECTION 7.4. Limitation on Liability of Servicer and Others................ 88
SECTION 7.5. Servicer Not to Resign........................................ 89
SECTION 7.6. Servicer May Own Notes or Certificates........................ 89
ARTICLE VIII
SERVICING TERMINATION
SECTION 8.1. Events of Servicing Termination............................... 90
SECTION 8.2. Indenture Trustee to Act; Appointment of Successor Servicer... 92
SECTION 8.3. Effect of Servicing Transfer.................................. 93
SECTION 8.4. Notification to Noteholders, Certificateholders and Final
Payment Certificateholders................................. 94
SECTION 8.5. Waiver of Past Events of Servicing Termination................ 94
ARTICLE IX
TERMINATION
SECTION 9.1. Optional Purchase of All Receivables.......................... 96
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Amendment..................................................... 98
SECTION 10.2. Protection of Title to Trust.................................. 99
SECTION 10.3. Governing Law.................................................103
SECTION 10.4. Notices.......................................................103
SECTION 10.5. Severability of Provisions....................................103
SECTION 10.6. Assignment....................................................104
SECTION 10.7. Further Assurances............................................104
SECTION 10.8. No Waiver; Cumulative Remedies................................104
SECTION 10.9. Third-Party Beneficiaries.....................................104
SECTION 10.10. Actions by Noteholders, Certificateholders or Final Payment
Certificateholder..........................................105
SECTION 10.11. Counterparts..................................................105
SECTION 10.12. Agent for Service.............................................105
SECTION 10.13. No Bankruptcy Petition........................................105
SECTION 10.14. Limitation of Liability of Owner Trustee and Indenture
Trustee....................................................106
SCHEDULES
SCHEDULE A Schedule of Receivables
SCHEDULE B Location of Receivable Files
EXHIBITS
EXHIBIT A Form of Servicer's Certificate
EXHIBIT B Form of Report to Noteholders
EXHIBIT C Form of Report to Certificateholders and the Final Payment
Certificateholder
EXHIBIT D Form of Yield Supplement Agreement
