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Exhibit 4.2
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SALE AND SERVICING AGREEMENT
by and among
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DAIMLER-BENZ VEHICLE OWNER TRUST 1998-A,
as Issuer,
DAIMLER-BENZ VEHICLE RECEIVABLES CORPORATION,
as Seller
and
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MERCEDES-BENZ CREDIT CORPORATION,
as Servicer
Dated as of November 1, 1998
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.................................................................................. 2
SECTION 1.2 Other Definitional Provisions................................................................ 19
ARTICLE II
TRUST PROPERTY
SECTION 2.1 Conveyance of Trust Property................................................................. 20
SECTION 2.2 Representations and Warranties of the Seller
as to the Receivables........................................................................ 20
SECTION 2.3 Repurchase upon Breach....................................................................... 25
SECTION 2.4 Custody of Receivable Files.................................................................. 26
SECTION 2.5 Duties of Servicer as Custodian.............................................................. 26
SECTION 2.6 Instructions; Authority to Act............................................................... 28
SECTION 2.7 Indemnification by the Custodian............................................................. 28
SECTION 2.8 Effective Period and Termination............................................................. 29
ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND OTHER TRUST PROPERTY
SECTION 3.1 Duties of Servicer........................................................................... 29
SECTION 3.2 Collection and Allocation of Receivable Payments............................................. 33
SECTION 3.3 Realization upon Receivables................................................................. 34
SECTION 3.4 Physical Damage Insurance.................................................................... 35
SECTION 3.5 Maintenance of Security Interests in Financed Vehicles....................................... 35
SECTION 3.6 Covenants of Servicer........................................................................ 35
SECTION 3.7 Purchase by Servicer upon Breach............................................................. 36
SECTION 3.8 Servicing Compensation....................................................................... 36
SECTION 3.9 Servicer's Certificate....................................................................... 37
SECTION 3.10 Annual Statement as to Compliance; Notice of Event
of Servicing Termination..................................................................... 37
SECTION 3.11 Annual Independent Certified Public Accountants' Reports..................................... 38
SECTION 3.12 Access to Certain Documentation and Information
Regarding Receivables........................................................................ 39
SECTION 3.13 Reports to the Commission.................................................................... 39
SECTION 3.14 Reports to Rating Agencies................................................................... 39
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ARTICLE IV ACCOUNTS; COLLECTIONS; ADVANCES; DISTRIBUTIONS;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 4.1 Accounts..................................................................................... 40
SECTION 4.2 Collections.................................................................................. 44
SECTION 4.3 Application of Collections................................................................... 45
SECTION 4.4 Advances..................................................................................... 46
SECTION 4.5 Additional Deposits.......................................................................... 47
SECTION 4.6 Distributions................................................................................ 47
SECTION 4.7 Subordination; Reserve Accounts.............................................................. 49
SECTION 4.8 Net Deposits................................................................................. 54
SECTION 4.9 Statements to Noteholders and Certificateholders............................................. 54
SECTION 4.10 Control of Securities Accounts............................................................... 55
ARTICLE V
THE SELLER
SECTION 5.1 Representations, Warranties and Covenants of Seller.......................................... 56
SECTION 5.2 Liability of Seller; Indemnities............................................................. 58
SECTION 5.3 Merger or Consolidation of, or Assumption of the
Obligations of, Seller....................................................................... 59
SECTION 5.4 Limitation on Liability of Seller and Others................................................. 60
SECTION 5.5 Seller May Own Notes or Certificates......................................................... 60
ARTICLE VI
THE SERVICER
SECTION 6.1 Representations and Warranties of Servicer................................................... 60
SECTION 6.2 Liability of Servicer; Indemnities........................................................... 62
SECTION 6.3 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer..................................................................... 64
SECTION 6.4 Limitation on Liability of Servicer and Others............................................... 65
SECTION 6.5 Servicer Not to Resign....................................................................... 65
SECTION 6.6 Servicer May Own Notes or Certificates....................................................... 66
ARTICLE VII
SERVICING TERMINATION
SECTION 7.1 Events of Servicing Termination.............................................................. 66
SECTION 7.2 Indenture Trustee to Act; Appointment of Successor Servicer.................................. 68
SECTION 7.3 Effect of Servicing Transfer................................................................. 69
SECTION 7.4 Notification to Noteholders and Certificateholders........................................... 70
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SECTION 7.5 Waiver of Past Events of Servicing Termination............................................... 70
ARTICLE VIII
TERMINATION
SECTION 8.1 Optional Purchase of All Receivables......................................................... 71
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1 Amendment.................................................................................... 72
SECTION 9.2 Protection of Title to Trust................................................................. 74
SECTION 9.3 Governing Law................................................................................ 76
SECTION 9.4 Notices...................................................................................... 77
SECTION 9.5 Severability of Provisions................................................................... 77
SECTION 9.6 Assignment................................................................................... 77
SECTION 9.7 Further Assurances........................................................................... 78
SECTION 9.8 No Waiver; Cumulative Remedies............................................................... 78
SECTION 9.9 Third-Party Beneficiaries.................................................................... 78
SECTION 9.10 Actions by Noteholder or Certificateholders.................................................. 78
SECTION 9.11 Counterparts................................................................................. 79
SECTION 9.12 Agent for Service............................................................................ 79
SECTION 9.13 No Bankruptcy Petition....................................................................... 79
SECTION 9.14 Limitation of Liability of Owner Trustee and Indenture Trustee............................... 79
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SCHEDULES
SCHEDULE A Schedule of Receivables
SCHEDULE B Location of Receivable Files
EXHIBITS
EXHIBIT A Form of Servicer's Certificate
EXHIBIT B Form of Statement to Noteholders
EXHIBIT C Form of Statement to Certificateholders
EXHIBIT D Form of Servicing Guaranty Agreement
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SALE AND SERVICING AGREEMENT, dated as of November 1, 1998 (as
the same may be amended, supplemented or otherwise modified and in effect from
time to time, this "Agreement"), by and among DAIMLER-BENZ VEHICLE OWNER TRUST
1998-A, a Delaware business trust (the "Issuer"), DAIMLER-BENZ VEHICLE
RECEIVABLES CORPORATION, a Delaware corporation (the "Seller"), and
MERCEDES-BENZ CREDIT CORPORATION, a Delaware corporation (the "Servicer").
WHEREAS, the Issuer desires to purchase a portfolio of
accounts receivable arising in connection with (i) motor vehicle retail
installment contracts generated by authorized Mercedes-Benz motor vehicle
dealers throughout the United States and (ii) commercial vehicle retail
installment contracts for, and retail loans evidenced by notes secured by, new
and used medium- and heavy-duty trucks, tractors and trailers generated by
authorized Freightliner (as defined herein) commercial vehicle dealers
throughout the United States and used trucks and tractors and new and used
trailers manufactured by companies other than Freightliner and certain other
property, as more fully described herein, in the ordinary course of business
and sold to the Seller;
WHEREAS, the Seller is willing to sell such Receivables (as
defined herein) to the Issuer; and
WHEREAS, the Servicer 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:
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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 have the meaning assigned
thereto in the Trust Agreement.
"Accrued Note Interest" shall have the meaning assigned
thereto in the Indenture.
"Actuarial Method" shall mean the method of allocating a fixed
level payment between principal and interest, pursuant to which the portion of
each such payment that is allocated to interest is the product of one-twelfth
of the APR on the Receivable multiplied by the scheduled principal balance.
"Administration Agreement" shall have the meaning assigned
thereto in the Indenture.
"Administrator" shall have the meaning assigned thereto in the
Indenture.
"Advance" shall have the meaning assigned thereto in Section
4.4.
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with such specified Person. For purposes of this
definition, "control" when used with respect to any specified Person shall mean
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agreement" shall have the meaning assigned thereto in the
recitals hereto.
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"Amount Financed" shall mean, with respect to a Receivable,
the amount originally advanced under such Receivable toward the purchase price
of the related Financed Vehicles and any related costs.
"Applicable Tax State" shall mean, as of any date of
determination, each state in the United States as to which any of the following
is then applicable: (a) a state in which the Owner Trustee maintains the
Corporate Trust Office, (b) a state in which the Owner Trustee maintains its
principal executive offices, and (c) a state in which the Servicer regularly
conducts servicing and collection operations other than purely ministerial
activities and which relate to a material portion of the Receivables.
"APR" of a Receivable shall mean the "annual percentage rate"
of interest stated in the Contract related to such Receivable.
"Assignment" shall mean the Assignment, dated as of November
1, 1998, by MBCC to the Seller.
"Authorized Officer" shall mean, in the case of the Indenture
Trustee, any duly authorized officer within the Corporate Trust Office of the
Indenture Trustee, including any vice president, assistant vice president,
senior trust officer, trust officer, secretary, assistant secretary, financial
services officer or any other officer of the Indenture Trustee 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, with respect to the Owner Trustee,
any duly authorized officer of the Owner Trustee with direct responsibility for
the administration of the Trust Agreement and the Basic Documents on behalf of
the Owner Trustee and shall also mean any officer of the Administrator.
"Available Funds" shall mean, for any Payment Date, an amount
equal to (a) the sum of the following amounts with respect to the immediately
preceding Collection Period: (i) all collections on the Receivables including
Payaheads withdrawn from the Payahead Account but excluding Payaheads deposited
into the Payahead Account; (ii) all Liquidation Proceeds; (iii) all Recoveries;
(iv) all Advances; (v) all proceeds from claims on physical damage, credit life
and disability insurance policies covering the Financed Vehicles or the
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Obligors and (vi) the Purchase Amount of each Purchased Receivable, minus (b)
the sum of the following amounts with respect to the related Collection Period:
(i) the aggregate amount of funds described in clause (a) above that are used
in the related Collection Period or to be used on or before such Payment Date
to reimburse the Servicer for the aggregate amount of Advances previously made
by the Servicer for prior Collection Periods that are due and payable to the
Servicer on such Payment Date; (ii) the Supplemental Servicing Fee, if any; and
(iii) any investment earnings and interest earned on the Reserve Accounts.
"Balloon Payment" shall mean a payment that becomes due on the
maturity date of a Balloon Receivable, which is sufficient to pay accrued
interest plus the remaining Amount Financed of such Receivable.
"Balloon Receivable" shall mean a Receivable that provides for
(a) fixed monthly payments prior to the maturity date for such Receivable that
amortize a portion of the Amount Financed of such Receivable, and (b) a Balloon
Payment on the maturity date of such Receivable.
"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 Wilmington, Delaware shall be authorized or obligated by law,
executive order, or governmental decree to remain closed.
"Certificate" shall have the meaning assigned thereto in the
Trust Agreement.
"Certificate Balance" shall have the meaning assigned thereto
in the Trust Agreement.
"Certificate Distribution Account" shall have the meaning
assigned thereto in Section 5.1 of the Trust Agreement.
"Certificateholder" shall have the meaning assigned thereto in
the Trust Agreement.
"Certificate Interest Carryover Shortfall" shall have the
meaning assigned thereto in the Trust Agreement.
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"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.
"Certificate Register" shall have the meaning assigned thereto
in the Trust Agreement.
"Certificate Registrar" shall have the meaning assigned
thereto in the Trust Agreement.
"Class" shall have the meaning assigned thereto in the
Indenture.
"Class A Reserve Account" shall mean the account established
and maintained as such pursuant to Section 4.7.
"Class A Reserve Account Amount" shall mean, with respect to
any Payment Date, the amount on deposit in the Class A Reserve Account after
giving effect to all deposits and withdrawals therefrom on the prior Payment
Date (or, in the case of the first Payment Date, the Closing Date), as
determined in accordance with Section 4.7.
"Class A Reserve Initial Deposit" shall mean, with respect to
the Closing Date, $40,786,363.79.
"Class B Reserve Account" shall have the meaning assigned
thereto in the Trust Agreement.
"Class B Reserve Account Amount" shall mean, with respect to
any Payment Date, the amount on deposit in the Class B Reserve Account after
giving effect to all deposits and withdrawals therefrom on the prior Payment
Date (or, in the case of the first Payment Date, the Closing Date), as
determined in accordance with Section 4.7.
"Class B Reserve Initial Deposit" shall mean, with respect to
the Closing Date, $0, which amount may be increased upon any sale by the Seller
of the
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Certificates and receipt of an Opinion of Counsel to the effect that such
increase would not adversely affect the status of the Trust for federal income
tax purposes.
"Closing Date" shall mean December 10, 1998.
"Collection Account" shall mean the account established and
maintained as such pursuant to Section 4.1(a).
"Collection Period" shall mean (a) with respect to each
Payment Date during the term of this Agreement, the immediately preceding
calendar month, or, (b) 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.
"Commercial Vehicle" shall mean a medium- or heavy-duty truck,
tractor or trailer securing the indebtedness of the Obligor under the related
Receivable.
"Commercial Vehicle Dealers" shall mean authorized
Freightliner commercial vehicle dealers throughout the United States.
"Commission" shall have the meaning assigned thereto in the
Indenture.
"Contract" shall mean a retail installment sale contract,
including a retail installment contract or retail loan, relating to the sale of
a Motor Vehicle or Commercial Vehicle.
"Corporate Trust Office" with respect to (a) the Indenture
Trustee, shall have the meaning assigned thereto in the Indenture, and (b) the
Owner Trustee, shall have the meaning assigned thereto in the Trust Agreement.
"Cutoff Date" shall mean November 1, 1998.
"DBNA" shall mean Daimler-Benz North America Corporation, a
Delaware corporation, and its successors and assigns.
"Dealers" shall mean the Mercedes-Benz Dealers and the
Commercial Vehicle Dealers.
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"Dealer Agreement" shall mean an agreement by and between MBCC
and any Dealer relating to the assignment of a Receivable to MBCC and all
documents and instruments relating thereto, as the same may be amended,
supplemented or otherwise modified and in effect from time to time.
"Dealers" shall mean the Mercedes-Benz Dealers and the
Commercial Vehicle Dealers.
"Defaulted Receivable" shall mean a Receivable which, by its
terms, is in default and as to which (a) a Scheduled Payment is 240 or more
days past due, (b) the Servicer has determined, in accordance with its
customary servicing procedures, that eventual payment in full is unlikely and
the outstanding balance of the Receivable has been charged-off or (c) the
Servicer has repossessed and disposed of the related Financed Vehicle.
"Determination Date" shall mean, with respect to any
Collection Period, the earlier of (a) the sixteenth (16th) calendar day of the
next succeeding calendar month and (b) the third Business Day preceding the
next succeeding Payment Date; provided, that if any of the Class A-1 Notes are
still Outstanding after the December 1999 Payment Date, an additional
Determination Date shall be established on January 2, 2000 with respect to the
Class A-1 Final Payment Date, and the calculations and deposits required to be
made for the benefit of the Class A-1 Notes in connection with the January 3,
2000 Payment Date shall be made on or before January 2, 2000.
"Due Date" shall mean the date a payment is due under a
Contract.
"Eligible Bank" shall mean (a) the corporate trust department
of the Owner Trustee, the Indenture Trustee or Citibank, N.A. so long as it
shall be Paying Agent under the Trust Agreement or (b) any depository
institution with trust powers organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia (or any
domestic branch of a foreign bank), (i) which has a net worth in excess of
$50,000,000, (ii) the deposits of which are insured to the full extent
permitted by law by the Federal Deposit Insurance Corporation (except with
respect to any domestic branch of a foreign bank), (iii) which is subject to
supervision and examination by Federal or state banking authorities and (iv)
which has a rating of P-1 from Moody's and A-1+ from S&P with respect to
short-term
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deposit obligations or if such institution has issued long-term unsecured debt
obligations, a rating of A2 or higher from Moody's and AA- from S&P with
respect to long-term unsecured debt obligations.
"Eligible Deposit Account" shall mean either (a) a segregated
account with an Eligible Bank or (b) a segregated trust account with the trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having trust powers and acting as
trustee for funds deposited in such account, so long as the long-term unsecured
debt of such depository institution will have a credit rating from each Rating
Agency in one of its generic rating categories which signifies investment grade
(which, for Moody's, is Baa3 or higher, and for S&P, is BBB- or higher).
"Eligible Servicer" shall mean a Person which, at the time of
its appointment as Servicer or as a subservicer, (a) has a net worth of not
less than $50,000,000, (b) is servicing a portfolio of motor vehicle or
commercial vehicle retail installment sale contracts and/or loans, (c) is
legally qualified, and has the capacity, to service the Receivables, (d) has
demonstrated the ability to service a portfolio of motor vehicle or commercial
vehicle retail installment sale contracts and/or loans similar to the
Receivables professionally and competently in accordance with standards of
skill and care that are consistent with prudent industry standards, and (e) 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.
"Event of Servicing Termination" shall mean an event specified
in Section 7.1.
"Exchange Act" shall have the meaning assigned thereto in the
Indenture.
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"Financed Vehicle" shall mean a new or used Motor Vehicle or
Commercial Vehicle, together with all accessions thereto, securing the
indebtedness of the Obligor under the related Receivable.
"Freightliner" shall mean Freightliner Corporation and its
subsidiaries.
"Holder" shall have the meaning assigned thereto in the
Indenture.
"Indenture" shall mean the Indenture, dated as of November 1,
1998, by and between the Issuer and Citibank, N.A., a national banking
association, as the Indenture Trustee, as the same may be amended, supplemented
or otherwise modified and in effect from time to time.
"Indenture Trustee" shall have the meaning assigned thereto in
the Indenture.
"Initial Certificate Balance" shall have the meaning assigned
thereto in the Trust Agreement.
"Initial Pool Balance" shall mean $1,631,454,551.40.
"Issuer" shall have the meaning assigned thereto in the
Indenture.
"Lien" shall mean a security interest, lien, charge, pledge,
equity or encumbrance of any kind, other than tax liens, mechanics' or
materialmen's liens, judicial liens and any liens that may attach to a Financed
Vehicle by operation of law.
"Liquidation Proceeds" shall mean, with respect to a Defaulted
Receivable, the monies collected from whatever source during the Collection
Period in which such Receivable became a Defaulted Receivable, net of the sum
of (a) any expenses incurred by the Servicer in connection with collection of
such Receivable and the disposition of the Financed Vehicle and (b) any amounts
required by law to be remitted to the Obligor. Liquidation Proceeds shall be
allocated first to accrued and unpaid interest on the Receivables and then to
the unpaid principal balance thereof.
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"MBCC" shall mean Mercedes-Benz Credit Corporation, a Delaware
corporation, and its successors and assigns.
"Mercedes-Benz Dealers" shall mean authorized Mercedes-Benz
motor vehicle dealers throughout the United States.
"Monthly Remittance Condition" shall have the meaning assigned
thereto in Section 4.1(e).
"Moody's" shall mean Moody's Investors Service, Inc., and its
successors and assigns.
"Motor Vehicle" shall mean a Mercedes-Benz motor vehicle
securing the indebtedness of the Obligor under the related Receivable.
"Note Distribution Account" shall mean the account established
and maintained as such pursuant to Section 4.1(b).
"Note Interest Carryover Shortfall" shall have the meaning
assigned thereto in the Indenture.
"Note Pool Factor" shall mean, with respect to any Class of
Notes, as of the close of business on the last day of a Collection Period, a
seven-digit decimal figure equal to the outstanding principal balance of such
Class of Notes (after giving effect to any reductions thereof to be made on the
immediately following Payment Date) divided by the original outstanding
principal balance of such Class of Notes. Each Note Pool Factor will be
1.0000000 as of the Closing Date; thereafter, the Note Pool Factor will decline
to reflect reductions in the outstanding principal amount of such Class of
Notes.
"Noteholder" shall have the meaning assigned thereto in the
Indenture.
"Obligor" on a Receivable shall mean, with respect to any
Receivable, the purchaser or co-purchasers of the related Financed Vehicle
purchased in part or in whole by the execution and delivery of such Receivable,
or any other Person who owes or may be liable for payments under such
Receivable.
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"Officer's Certificate" shall mean a certificate signed by (a)
the chairman, the president, any executive vice president, vice president or
the treasurer of the Seller or the Servicer, as the case may be or (b) an
Authorized Officer of the Owner Trustee on behalf of the Issuer, in each case
delivered to the Owner Trustee or the Indenture Trustee, as applicable.
"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 and
opinion shall be acceptable to the Indenture Trustee, the Owner Trustee, the
Rating Agencies, the Note Registrar or the Certificate Registrar, as
applicable.
"Optional Purchase Percentage" shall mean ten percent (10%).
"Outstanding" shall have the meaning assigned thereto in the
Indenture.
"Owner Trust Estate" shall have the meaning assigned thereto
in the Trust Agreement.
"Owner Trustee" shall have the meaning assigned thereto in the
Trust Agreement.
"Payahead" shall mean, with respect to a 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.
"Payahead Account" shall mean the account established and
maintained as such pursuant to Section 4.1(d).
"Payahead Balance" shall mean, with respect to a Receivable,
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
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 Receivable), as reduced by applications of
previous Payaheads with respect to such Receivable, pursuant to Sections 4.3
and 4.4.
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"Paying Agent" shall mean a Paying Agent under the Indenture
or a Paying Agent under the Trust Agreement.
"Payment Date" shall mean the twentieth (20th) day of each
month, or if such day is not a Business Day, the immediately following Business
Day, commencing on December 21, 1998; provided, that if any of the Class A-1
Notes are still Outstanding after the December 1999 Payment Date, the Class A-1
Notes shall be payable in full on January 3, 2000, such date shall be a Payment
Date (solely with respect to the Class A-1 Notes) and the Class A-1 Final
Payment Date, and the related Determination Date shall be January 2, 2000.
"Permitted Investments" shall mean, on any date of
determination, book-entry securities, negotiable instruments or securities
represented by instruments in bearer or registered form with maturities not
exceeding the next Payment Date which evidence:
(a) direct obligations of, and obligations fully
guaranteed as to timely payment by, the United States of America;
(b) demand deposits, time deposits or
certificates of deposit of any depository institution or trust company
incorporated under the laws of the United States of America or any
state thereof (or any domestic branch of a foreign bank) and subject
to supervision and examination by Federal or State banking or
depository institution authorities; provided, however, that at the
time of the investment or contractual commitment to invest therein,
the commercial paper or other short-term unsecured debt obligations
(other than such obligations the rating of which is based on the
credit of a Person other than such depository institution or trust
company) thereof shall have a credit rating from each of the Rating
Agencies in the highest investment category granted thereby;
(c) commercial paper having, at the time of the
investment or contractual commitment to invest therein, a rating from
each of the Rating Agencies in the highest investment category granted
thereby;
(d) investments in money market funds having a
rating from each of the Rating Agencies in the highest investment
category granted thereby (including funds for which the Indenture
Trustee or the Owner
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Trustee or any of their respective Affiliates is investment manager or
advisor);
(e) bankers' acceptances issued by any depository
institution or trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any
security that is a direct obligation of, or fully guaranteed by, the
United States of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of the
United States of America, in either case entered into with a
depository institution or trust company (acting as principal)
described in clause (b); and
(g) any other investment with respect to which
the Issuer or the Servicer has received written notification from the
Rating Agencies that the acquisition of such investment as a Permitted
Investment will not result in a withdrawal or downgrading of the
ratings on any Class of Notes.
"Person" shall mean a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, limited liability partnership, trust,
unincorporated organization, or government or any agency or political
subdivision thereof, or any other entity of whatever nature.
"Pool Balance" shall mean, as of any date, the aggregate
outstanding Principal Balance of the Receivables (excluding Defaulted
Receivables) as of the close of business on such date.
"Principal Balance" shall mean, with respect to any Receivable
as of any date, the Amount Financed minus the sum of: (a) that portion of all
Scheduled Payments due on or prior to such date and, with respect to periods
prior to the initial Collection Period, the amount indicated in such Receivable
as required to be paid by the Obligor in each such period, whether or not paid,
allocable to principal in accordance with the Actuarial Method, and (b) any
prepayment in full applied by the Servicer to reduce the unpaid principal
balance of such Receivable. The Principal Balance of a Defaulted Receivable
shall be zero as of the beginning of the Collection Period following the
Collection Period in which it became a Defaulted Receivable.
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"Principal Carryover Shortfall" shall mean, as of the close of
business on any Payment Date, the excess of the Principal Distribution Amount
and any outstanding Principal Carryover Shortfall from the preceding Payment
Date over the amount in respect of principal that is actually deposited into
the Note Distribution Account and the Certificate Distribution Account, as
applicable, on such Payment Date.
"Principal Distribution Amount" shall mean, with respect to
any Payment Date, the sum of (a) the Scheduled Principal for such Payment Date
plus (b) any outstanding Principal Carryover Shortfall as of the close of
business on the preceding Payment Date; provided, however, that the Principal
Distribution Amount shall not exceed the outstanding aggregate principal amount
of the Notes and the Certificate Balance, as applicable; and provided, further,
that, on the Final Payment Date for each Class of Notes or the Certificates, as
applicable, the amount required to be deposited in the Note Distribution
Account to pay principal of the Notes and the amount required to be deposited
in the Certificate Distribution Account to pay the Certificate Balance, as
applicable, shall include the amount necessary (after giving effect to the
other amounts to be deposited in the Note Distribution Account and the
Certificate Distribution Account, as applicable, on such Payment Date and
allocable to principal or the Certificate Balance) to reduce the outstanding
principal amount of the Notes of such Class or the Certificate Balance, as
applicable, to zero.
"Proceedings" shall have the meaning assigned thereto in the
Indenture.
"Program" shall have the meaning assigned thereto in Section
3.11.
"Purchase Agreement" shall mean the Purchase Agreement, dated
as of November 1, 1998, by and between the Seller and MBCC, as the same may be
amended, supplemented or otherwise modified and in effect from time to time,
relating to the purchase of the Receivables by the Seller from MBCC.
"Purchase Amount" shall mean, with respect to a Payment Date
and a Receivable to be purchased or repurchased by the Seller or 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 occurred and
(b) an amount equal to the amount of accrued and unpaid interest on such
Principal Balance at the related
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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 occurred 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 8.1 hereof.
"Rating Agency" shall mean either S&P or Moody's, and
together, the "Rating Agencies." If no such organization or successor is any
longer in existence, "Rating Agency" shall be a nationally recognized
statistical rating organization or other comparable Person designated by the
Issuer, notice of which designation shall be given to each of the Indenture
Trustee, the Owner Trustee and the Servicer.
"Rating Agency Condition" shall mean, with respect to any
action, that each Rating Agency shall have been given prior notice thereof and
that each of the Rating Agencies shall have notified each of 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 any Class of the Notes.
"Receivable" shall mean each retail installment contract,
retail loan or Contract for a Financed Vehicle described in the Schedule of
Receivables and all rights and obligations thereunder, but excluding Purchased
Receivables.
"Receivable File" shall mean, with respect to a Receivable,
the electronic entries, documents, instruments and writings specified in
Section 2.4.
"Record Date" (a) with respect to the Notes and any Payment
Date, shall mean the close of business on the day immediately preceding such
Payment Date or, if Definitive Notes have been issued, the last day of the
calendar month preceding such Payment Date and (b) with respect to the
Certificates and any Payment Date, shall have the meaning assigned thereto in
the Trust Agreement.
"Recoveries" shall mean, with respect to any Collection Period
following the Collection Period in which a Receivable became a Defaulted
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Receivable, all monies received by the Servicer with respect to any Defaulted
Receivable during any Collection Period, net of the sum of (a) any expenses
incurred by the Servicer in connection with the collection of such Receivable
and the disposition of the Financed Vehicle (to the extent not previously
reimbursed) and (b) any payments on such Receivable required by law to be
remitted to the Obligor.
"Required Rating" shall mean a rating on short-term unsecured
debt obligations of (a) P-1 by Moody's and (b) 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 Accounts" shall have the meaning assigned thereto in
Section 4.7(a).
"Reserve Account Property" shall have the meaning assigned
thereto in Section 4.7(a).
"S&P" shall mean Standard & Poor's, a division of The
McGraw-Hill Companies, Inc., and 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, computer disk or tape or any other medium acceptable to the Issuer
and the Indenture Trustee), as supplemented or amended from time to time.
"Scheduled Payment" shall mean, for any Collection Period for
any Receivable, the amount indicated in such Receivable as required to be paid
by the Obligor in such Collection Period (without giving effect to deferrals of
any Due Date or payment pursuant to Section 3.2 or any rescheduling in any
insolvency or similar Proceedings).
"Scheduled Principal" shall mean, with respect to any Payment
Date, the sum of (a) the principal portion of each Scheduled Payment due on any
Receivable during the related Collection Period, (b) without duplication of
amounts taken into account under (a), the outstanding principal balance of (i)
Receivables prepaid in full during the related Collection Period and (ii)
Receivables which became Defaulted Receivables during the related Collection
Period, (c) the Purchase
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Amount of each Receivable that was purchased or repurchased by the Seller or
the Servicer during such Collection Period, to the extent attributable to
principal, and (d) without duplication of amounts taken into account under (b),
the proceeds of any other sale of a Receivable to the extent allocable to
principal; provided, however, that in calculating the Scheduled Principal, all
payments and proceeds (including Liquidation Proceeds) of any Purchased
Receivable, the Purchase Amount of which has been included in Scheduled
Principal in a prior Collection Period (which shall be paid to the Seller or
the Servicer, as applicable), will be excluded.
"Seller" shall mean Daimler-Benz Vehicle Receivables
Corporation, 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 5.3.
"Servicer" shall mean MBCC, in its capacity as Servicer of the
Receivables under this Agreement, each successor thereto (in the same capacity)
pursuant to Section 6.3, and each Successor Servicer appointed and acting
pursuant to Section 7.2 and Section 3.7(e) of the Indenture.
"Servicer's Certificate" shall have the meaning assigned
thereto in Section 3.9.
"Servicing Fee" shall mean, with respect to any Payment Date,
the fee payable to the Servicer for services rendered during the related
Collection Period, determined pursuant to and defined in Section 3.8.
"Servicing Guarantor" shall mean DBNA, as Servicing Guarantor
under the Servicing Guaranty Agreement, and any successor thereto thereunder.
"Servicing Guaranty Agreement" shall mean an agreement,
substantially in the form of Exhibit D hereto, between DBNA, as Servicing
Guarantor, in favor of the Issuer, as the same may be amended, supplemented or
otherwise modified and in effect from time to time.
"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
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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 one percent (1.0%) per annum.
"Shortfall" have the meaning assigned in Section 4.4(a).
"Specified Class A Reserve Balance" shall mean, with respect
to the Closing Date, $40,786,363.79, and with respect to any Payment Date,
$57,100,909.30, except where on any Payment Date (a) the annualized average for
the preceding three Collection Periods of the ratios of net losses (that is,
the net balances of all Receivables which are charged off in the applicable
Collection Period, less any Liquidation Proceeds or Recoveries received in such
Collection Period) to the Pool Balance as of the first day of each such
Collection Period exceeds two and one-quarter percent (2.25%) or (b) the
average for the preceding three Collection Periods of the ratios of (i) the sum
of (A) the balance of Receivables that are delinquent sixty-one (61) days or
more plus (B) the balance of Receivables for any Contracts relating to
repossessed Vehicles which in both cases have not been charged off to (ii)
such outstanding Pool Balance exceeds four and one-quarter percent (4.25%),
then the Specified Class A Reserve Balance for such Payment Date will equal
$65,258,182.06. Notwithstanding the foregoing, if (1) each Rating Agency
delivers a letter to the Indenture Trustee that the use of any new formulation
requested by the Seller would not cause a downgrade, qualification or
withdrawal of the then current rating on any Class of Notes, and (2) there is
delivered to the Indenture Trustee an Opinion of Counsel to the effect that the
proposed change will not adversely affect the status of the Notes as debt is
delivered to the Indenture Trustee, then the Specified Class A Reserve Balance
may be reduced in accordance with such letters without an amendment hereto.
"Specified Class B Reserve Balance" shall mean, initially zero
and remain zero for so long as the Seller retains the Class B Certificates; if
the Seller sells the Class B Certificates, the Specified Class B Reserve
Balance shall be set at an amount determined by the Seller, in consultation
with the Rating Agencies, in order to achieve the desired rating for the Class
B Certificates, and provided that the Rating Agency Condition will be satisfied
with respect to each Class of the Notes.
"Successor Servicer" shall have the meaning assigned thereto
in the Indenture.
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"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 Servicing Fee" shall mean, with respect to any Payment
Date, the sum of (a) the Servicing Fee and the Supplemental Servicing Fee for
the related Collection Period plus (b) all accrued and unpaid Servicing Fees or
Supplemental Servicing Fees for prior Collection Periods.
"Trust" shall have the meaning assigned thereto in the Trust
Agreement.
"Trust Agreement" shall mean the Trust Agreement, dated as of
November 1, 1998, by and between the Owner Trustee and the Seller, as depositor
thereunder, as the same may be amended, supplemented or otherwise modified and
in effect from time to time (including the Amended and Restated Trust
Agreement, dated as of November 1, 1998, by and between the Owner Trustee and
the Seller, as depositor thereunder).
"Trust Property" shall mean, collectively, (a) the
Receivables, (b) all monies due or received thereunder on or after the Cutoff
Date, (c) all of the Seller's security interests in the Financed Vehicles, (d)
the Collection Account, the Note Distribution Account, the Certificate
Distribution Account, the Payahead Account and the Reserve Accounts and all
money, financial assets or other property from time to time held in or credited
to, or purchased with funds from, any of the foregoing accounts, (e) all of the
Seller's rights to receive proceeds from claims on physical damage, credit life
and disability insurance policies covering the Financed Vehicles or the
Obligors, (f) all of the Seller's rights to all documents contained in the
Receivables Files, (g) all of the Seller's rights under the Purchase Agreement
and this Agreement, (h) all of the Seller's rights, if any, of recourse against
Dealers arising out of breaches by Dealers in connection with the Receivables,
(i) all property (including the right to receive future Liquidation Proceeds
and Recoveries) that secures a Receivable and that will have been acquired by
or on behalf of the Indenture Trustee, (j) the Servicing Guaranty Agreement,
and (k) all proceeds (within the meaning of Section 9-306 of the UCC) of the
foregoing.
"UCC" or "Relevant UCC" shall mean the Uniform Commercial Code
as in effect in the relevant jurisdiction.
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"Vehicle" shall mean a Motor Vehicle or a Commercial Vehicle.
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, or if not defined therein, the meanings assigned to
them in the Trust Agreement.
(b) All terms defined in this Agreement shall
have the defined meanings when used in any certificate or other document made
or delivered pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in this Agreement or in any such certificate or
other document, and accounting terms partly defined in this Agreement or in any
such certificate or other document to the extent not defined, shall have the
respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this
Agreement or in any such certificate or other document are inconsistent with
the meanings of such terms under generally accepted accounting principles, the
definitions contained in this Agreement or in any such certificate or other
document shall control.
(d) The words "hereof," "herein," "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement;
Article, Section, Schedule and Exhibit references contained in this Agreement
are references to Articles, Sections, Schedules and Exhibits in or to this
Agreement unless otherwise specified, and the term "including" shall mean
"including without limitation."
(e) The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined
or referred to herein or in any instrument or certificate delivered in
connection herewith means such agreement, instrument or statute as from time to
time amended, modified or supplemented and includes (in the case of agreements
or instruments) references
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to all attachments thereto and instruments incorporated therein; references to
a Person are also to its permitted successors and assigns.
ARTICLE II
TRUST PROPERTY
SECTION 2.1 Conveyance of Trust Property. (a) In
consideration of the delivery by the Issuer to, or upon the written order of,
the Seller of authenticated Notes and Certificates, in authorized denominations
in aggregate principal amounts equal to the initial principal amount of the
Notes and the Initial Certificate Balance, respectively, the Seller hereby
irrevocably sells, transfers, assigns and conveys to the Issuer all right,
title and interest of the Seller, whether now owned or hereafter acquired, in,
to and under the Trust Property, without recourse (subject to the obligations
herein). The sale, transfer, assignment and conveyance made hereunder shall
not constitute and is not intended to result in an assumption by the Issuer of
any obligation of the Seller to the Obligors, the Dealers or any other Person
in connection with the Receivables and the other Trust Property or any
agreement, document or instrument related thereto.
(b) It is the intention of the Seller and the Issuer that the
transfer of the Trust Property contemplated herein constitute a sale of the
Trust Property, conveying good title to the Trust Property from the Seller to
the Issuer. However, in the event that such transfer is deemed to be a pledge
to secure the payment of the Notes and the Certificates, the Seller hereby
grants to the Issuer a first priority security interest in and Lien on all of
the right, title and interest of the Seller in, to and under the Trust
Property, and all proceeds thereof, to secure the payment of the Notes and the
Certificates, and in such event, this Agreement shall constitute a security
agreement under applicable law.
SECTION 2.2 Representations and Warranties of the Seller as
to the Receivables. The Seller makes the following representations and
warranties as to the Receivables on which the Issuer relies in accepting the
Receivables. Such representations and warranties speak as of the execution and
delivery of this Agreement, but shall survive the sale, transfer and assignment
of the Receivables to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture.
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(a) Characteristics of Receivables. Each
Receivable (a) was originated in the United States of America by a Dealer for
the retail sale of one or more Financed Vehicles in the ordinary course of such
Dealer's business, was fully and properly executed by the parties thereto, has
been purchased by the Seller from MBCC, which in turn purchased such Receivable
from such Dealer under an existing Dealer Agreement with MBCC, has been validly
assigned by such Dealer to MBCC, which in turn has validly assigned such
Receivable to the Seller, (b) contains 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, (c) except
in the case of a Balloon Receivable, provides for level monthly payments that
fully amortize the Amount Financed by maturity and yields interest at the APR
of such Receivable, and in the case of a Balloon Receivable, provides for fixed
monthly payments that amortize the Amount Financed to an amount equal to the
Balloon Payment by maturity, provides for a Balloon Payment at maturity that is
sufficient to pay the remaining Amount Financed of the Receivable, and yields
interest at the APR of such Receivable, (d) is a retail installment contract,
and (e) is secured by one or more Financed Vehicles.
(b) Schedule of Receivables. The information set
forth in the Schedule of Receivables was true and correct in all material
respects as of the opening of business on the Cutoff Date, and no selection
procedures believed by the Seller to be adverse to the Certificateholders were
utilized in selecting the Receivables.
(c) Compliance with Law. Each Receivable and the
sale of the related Financed Vehicle complied at the time it was originated or
made, and complies at the Closing Date, in all material respects with all
requirements of applicable federal, state, and local laws, and regulations
thereunder, including, without limitation, usury laws, the Federal Truth in
Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act,
the Fair Debt Collection Practices Act, the Federal Trade Commission Act, the
Magnuson Moss Warranty Act, the Federal Reserve Board's Regulations B and Z,
and state adaptations of the National Consumer Act and of the Uniform Consumer
Credit Code, and other consumer credit laws and equal credit opportunity and
disclosure laws.
(d) Binding Obligations. To the best of the
Seller's knowledge, each Receivable represents the legal, valid, and binding
payment obligation in writing of the related Obligor, enforceable by the holder
thereof in
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accordance with its terms except as enforceability may be limited by
bankruptcy, insolvency, reorganization, conservatorship, receivership,
liquidation or other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles.
(e) No Government Obligor. Neither the United
States of America nor any state or any agency, department, or instrumentality
of the United States of America or any state is an Obligor.
(f) Security Interest in Financed Vehicles. To the
best of the Seller's knowledge, immediately prior to the sale, assignment, and
transfer of each Receivable by MBCC to the Seller, such Receivable was secured
by a validly perfected first priority security interest and Lien in the related
Financed Vehicle in favor of MBCC as secured party. Such security interest and
Lien was validly assigned by MBCC to the Seller pursuant to the Purchase
Agreement and is being assigned by the Seller to the Issuer pursuant to this
Agreement, except that no certificate of title or certificate of ownership with
respect to such Financed Vehicle has been or will be amended to identify the
Seller or the Issuer as a secured party. At such time as enforcement of such
security interest is sought, there shall exist a valid, subsisting and
enforceable first priority security interest in such Financed Vehicle for the
benefit of the Issuer. The foregoing representations and warranties with
respect to perfection and enforceability of a security interest in a Financed
Vehicle do not cover statutory or other liens arising after the Closing Date by
operation of law or any rights of third parties arising after the Closing Date
as a result of the fraud or forgery of the Vehicle owner or administrative
error by state recording officials which are prior to such security interest.
(g) 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 MBCC to the Seller and by
the Seller to the Issuer.
(h) No Waiver. No provision of a Receivable shall
have been waived in such a manner that such Receivable fails to meet all of the
representations and warranties made by the Seller in this Section 2.2 with
respect thereto.
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(i) No Defenses. No right of rescission, setoff,
counterclaim, or defense has been asserted or, to the best of the Seller's
knowledge, threatened with respect to any Receivable.
(j) No Liens. To the best of the Seller's
knowledge, no liens or claims have been filed for work, labor, or materials
relating to a Financed Vehicle that are liens prior to, or equal or on a parity
with, the security interest in the Financed Vehicle granted by the related
Receivable.
(k) No Default; Repossession. Except for payment
defaults continuing for a period of not more than thirty (30) days in the case
of Motor Vehicles or sixty (60) days in the case of Commercial Vehicles as of
the Cutoff Date, to the best of the Seller's knowledge, no default, breach,
violation, or event permitting acceleration under the terms of any Receivable,
and no event that with notice or the lapse of time would constitute such a
default, breach, violation, or event permitting acceleration under the terms of
any Receivable has occurred; and no Financed Vehicle was repossessed on or
prior to the Cutoff Date.
(l) Insurance. Except in the case of certain fleet
customers which are permitted to be self-insured in accordance with MBCC's
customary standards, MBCC, in accordance with its customary procedures, has
determined that each Obligor has obtained or agreed to obtain physical damage
insurance covering the Financed Vehicle.
(m) 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 estate of the
Seller in the event of the filing of a bankruptcy petition or the commencement
of any Proceeding by or against the Seller under any bankruptcy or other
insolvency law. No Receivable has been sold, transferred, assigned, or pledged
by the Seller to any Person other than the Issuer. The Seller is transferring
title to each Receivable free and clear of all Liens and rights of others and
has perfected such transfer under the UCC.
(n) Valid Assignment. No Receivable was originated
in, or is subject to the laws of, any jurisdiction under which the sale,
transfer, and assignment of such Receivable under this Agreement is unlawful,
void, or voidable.
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The Seller has not entered into any agreement with any Obligor that prohibits,
restricts or conditions the assignment of any portion of the Receivables.
(o) All Filings Made. All filings (including,
without limitation, UCC filings) and agreements necessary in any jurisdiction
to give the Issuer a first priority perfected security interest in the
Receivables have been made.
(p) Chattel Paper. Each Receivable constitutes
"chattel paper" as defined in the Relevant UCC.
(q) One Original. There is only one original
executed copy of each Receivable.
(r) Principal Balances. Each Receivable had a
remaining Principal Balance as of the Cutoff Date of not more than
$5,617,494.16 and not less than $217.25.
(s) No Bankrupt Obligors. To the best of the
Seller's knowledge, no Obligor was, as of the Cutoff Date, the subject of a
Proceeding under title 11 of the United States Code or any other bankruptcy or
insolvency law.
(t) New and Used Vehicles. Approximately 70.13% of
the aggregate Principal Balance of the Receivables, constituting approximately
57.53% of the number of Receivables as of the Cutoff Date, relate to new
Financed Vehicles, and approximately 29.87% of the aggregate Principal Balance
of the Receivables, constituting 42.47% of the number of Receivables as of the
Cutoff Date, relate to used Financed Vehicles.
(u) Origination. Each Receivable has an
origination date on or after November 7, 1991.
(v) Maturity of Receivables. Each Receivable had a
remaining maturity, as of the Cutoff Date, of not more than eighty-four (84)
months, and an original maturity of not more than eighty-five (85) months.
(w) Annual Percentage Rate. Each Receivable has an
APR of at least 8.25% and not more than 13.0%.
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(x) Scheduled Payments. Each Receivable has a
first Scheduled Payment due on or prior to November 1, 1998, and no Receivable
has a payment that was more than thirty (30) days overdue in the case of Motor
Vehicles or sixty (60) days overdue in the case of Commercial Vehicles as of
the Cutoff Date.
(y) Location of Receivable Files. The Receivable
Files shall be kept at one or more of the locations listed in Schedule B
hereto, as supplemented from time to time.
(z) Billing Address. The Obligor under each
Receivable had a current billing address in the United States as of the Cutoff
Date.
(aa) Representations and Warranties. The
representations and warranties of the Seller in Section 5.1 are true and
correct.
(bb) Other Data. The tabular data and the numerical
data relating to the characteristics of the Receivables contained in the
Prospectus (as defined in the Purchase Agreement) is true and correct in all
material respects as of its date.
SECTION 2.3 Repurchase upon Breach. The Seller, the
Servicer, or the Owner Trustee, as the case may be, shall inform the other
parties to this Agreement, the Owner Trustee, the Indenture Trustee and MBCC
(if it is no longer the Servicer) 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 (and, in the case of subsections 2.2(d),
(f), (i), (j), (k) and (s), any breach or failure which would have occurred if
such warranty had not been made to the best knowledge of the Seller). Unless
any such breach or failure shall 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 receives written notice from the Owner
Trustee, the Indenture Trustee or the Servicer of, such breach or failure, and
such breach or failure materially and adversely affects the interests of the
Trust in any Receivable, the Seller shall repurchase from the Issuer any such
Receivable on the Payment Date immediately following such Collection Period,
but with effect from the first day of the Collection Period in which such
Payment Date occurs. 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 Certificateholders, the Indenture
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Trustee and the Noteholders 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 MBCC 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. (a) To assure
uniform quality in servicing the Receivables and to reduce administrative
costs, the Issuer, upon the execution and delivery of this Agreement, revocably
appoints the Servicer, and the Servicer 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 or other imaged copy thereof;
(iii) the original certificate of title or such
other documents that the Servicer or MBCC shall keep on file,
in accordance with its customary procedures, evidencing the
security interest of MBCC in the Financed Vehicle;
(iv) documents evidencing the existence of any
insurance covering the Financed Vehicle; and
(v) any and all other electronic entries, documents,
instruments and writings 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.
(b) On the Closing Date, the Servicer shall provide an
Officer's Certificate to the Issuer and the Indenture Trustee confirming that
the Servicer has
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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 herein, 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 Vehicle receivables that the Servicer services for
itself or others. In accordance with its customary practices and procedures
with respect to its retail installment sale contracts, the Servicer shall
conduct, or cause to be conducted, periodic audits of the Receivable Files held
by it under this Agreement, and of the related accounts, records, and computer
systems, in such a manner as shall enable the Issuer or the Indenture Trustee
to verify the accuracy of the recordkeeping of the Servicer. The Servicer
shall promptly report to the Owner Trustee and the Indenture Trustee any
failure on its part to hold the Receivable Files and maintain its accounts,
records, and computer systems as herein provided and promptly take appropriate
action to remedy any such failure. Nothing herein shall be deemed to require
an initial review or any periodic review by the Issuer, the Owner Trustee or
the Indenture Trustee of the Receivable Files and none of the Issuer, the Owner
Trustee and the Indenture Trustee shall be liable or responsible for any action
or failure to act by the Servicer in its capacity as custodian hereunder.
(b) Maintenance of and Access to Records. The
Servicer shall maintain each Receivable File at one of its offices specified in
Schedule B to this Agreement, or at such other office as shall be specified to
the Owner Trustee 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, the Owner Trustee and the Indenture Trustee or its
duly authorized representatives, attorneys, or auditors a list of locations of
the Receivable Files, the Receivable Files themselves,
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and the related accounts, records, and computer systems maintained by the
Servicer at such times as the Owner Trustee 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, or the agent or
designee of the Indenture Trustee, as the case may be, at such place or places
as the Indenture Trustee may designate, as soon thereafter as is practicable
and prior to the occurrence of an Event of Servicing Termination or an event
which with the passage of time and delivery of notice would constitute an Event
of Servicing Termination, so long as doing so will not adversely affect the
ability of the Servicer to perform its obligations under this Agreement. 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 and in any event at such time as may be required by the Servicer to
perform its obligations under this Agreement.
(d) Title to Receivables. The Servicer agrees
that, in respect of any Receivable held by the Servicer as custodian hereunder,
(i) 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 the
purpose of collecting or enforcing the Receivable for the benefit of the Issuer
and (ii) 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 Indemnification by the Custodian. 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,
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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 Issuer or 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,
errors in judgment 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, errors in judgment or
negligence of the Indenture Trustee or from the compliance by the Servicer with
instructions given by the Indenture Trustee or the Owner Trustee to the
Servicer pursuant hereto; and provided, further, that such indemnification
shall not extend to any credit losses on any Receivables.
SECTION 2.8 Effective Period and Termination. The
appointment of the Servicer 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 6.5, or if all of the rights and obligations of the Servicer shall have
been terminated under Section 7.1, 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 twenty-five percent (25%) of the principal amount of
the then Outstanding Notes or, with the consent of Holders of Notes evidencing
not less than twenty-five percent (25%) of the principal amount of the then
Outstanding Notes or, if the Notes have been paid in full and the Indenture
discharged in accordance with its terms, by the Owner Trustee or by Holders of
Certificates evidencing not less than twenty-five percent (25%) of the
Certificate Balance, in the same manner as the Indenture Trustee or such
Holders of the Notes may terminate the rights and obligations of the Servicer
under Section 7.1. As soon as practicable after any termination of such
appointment, the Servicer (at its own expense) shall deliver, or cause to be
delivered, the Receivable Files and the related accounts and records maintained
by the Servicer to the Indenture Trustee or an agent or designee of the
Indenture Trustee (including any Successor Servicer) at such place or places as
the Indenture Trustee may reasonably designate.
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ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND OTHER TRUST PROPERTY
SECTION 3.1 Duties of Servicer. (a) (i) The Servicer, acting
alone and/or through subservicers as provided in this Section, shall administer
the Receivables with reasonable care. The duties of the Servicer 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
Indenture Trustee and the Owner Trustee with respect to distributions and
providing collection and repossession services in the event of Obligor default
and making Advances pursuant to Section 4.4(a). 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 or commercial vehicle receivables that
it services for itself or others.
(ii) Subject to Section 3.2. the Servicer shall follow its
customary standards, policies and procedures in performing its
duties 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, Certificateholders, the Indenture Trustee, 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
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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 deemed to have automatically
assigned such Receivable on behalf of the Trust 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 expense and direction of the Servicer, take
steps to enforce the Receivable, including bringing suit in
its name or the names of the Trust, the Certificateholders,
the Indenture Trustee, 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, as applicable,
all licenses, if any, required by the laws of any jurisdiction
to be held by the Issuer or the Owner Trustee, as applicable,
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.
(iii) 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 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 Property, 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
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actions permitted to be taken by a subservicer on behalf of the Servicer and
references herein to payments received by the Servicer shall include payments
received by a subservicer, irrespective of whether such payments are actually
deposited in the Collection Account by such subservicer. Any such subservicing
agreement will contain terms and provisions substantially identical to the
terms and provisions of this Agreement and such other terms and provisions as
are not inconsistent with this Agreement and as the Servicer and the
subservicer have agreed.
(c) The Servicer shall be entitled to terminate
any subservicing agreement in accordance with the terms and conditions of such
subservicing agreement and without any limitation by virtue of this Agreement;
provided, however, that, in the event of termination of any subservicing
agreement by the Servicer, the Servicer shall either act directly as Servicer
of the related Receivables which had been serviced by the terminated
subservicer or enter into a subservicing agreement with a successor subservicer
which will be bound by the terms of the subservicing agreement with the
terminated subservicer.
(d) As conditions to the appointment of any
subservicer, (i) the Servicer shall notify each of the Owner Trustee, the
Indenture Trustee and the Rating Agencies in writing before such assignment
becomes effective, and (ii) 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 any other Trust Property being serviced by
it, (A) 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, (B) 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), (C)
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 (D) the Owner
Trustee may enforce the provisions of this Agreement and any subservicing
agreement against the subservicer for the benefit of the Issuer
(notwithstanding any failure by the Servicer to perform its duties and
obligations hereunder), without diminution of such obligations or liabilities
by virtue of (1) any subservicing agreement, (2) any indemnification
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provided thereunder or (3) 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 any other Trust Property being serviced by it under the
subservicing agreement.
(e) Notwithstanding any subservicing agreement,
any of the provisions of this Agreement relating to agreements or arrangements
between the Servicer or a subservicer or reference to actions taken through
such Persons or otherwise, the Servicer shall remain obligated and liable to
the Issuer and the Owner Trustee for the servicing and administering of the
Receivables and the other Trust Property in accordance with the provisions of
this Agreement (including for the deposit of payments received by a
subservicer, irrespective of whether such payments are actually remitted to the
Servicer or deposited in the Collection Account by such subservicer; provided
that if such amounts are so deposited, the Servicer shall have no further
obligation to do so), without diminution of such obligation or liability by
virtue of any such subservicing agreements or arrangements or by virtue of any
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 any subservicing agreement. In such event, the Successor Servicer shall
be deemed to have assumed all of the interest of the Servicer 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 the 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 any 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
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of the subservicing agreement to the Successor Servicer. In the event that the
Successor Servicer elects not to assume a subservicing agreement, such
subservicing agreement shall be immediately cancellable by the Successor
Servicer upon written notice to the subservicer and the outgoing Servicer, at
its expense, shall cause the subservicer to deliver to the Successor Servicer
all documents and records relating to the Receivables and any 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 any other Trust Property being
serviced by such subservicer to the Successor Servicer.
SECTION 3.2 Collection and Allocation of Receivable
Payments. 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 and commercial 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 or commercial 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 Due Date or other
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 or commercial 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. 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 first day of the
Collection Period following 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.
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SECTION 3.3 Realization upon Receivables. (a) On behalf
of the Issuer, the Servicer shall charge off a delinquent Receivable in
accordance with its customary standards and shall use its best efforts to
repossess and liquidate the Financed Vehicle securing any Defaulted Receivable
as soon as feasible after default, in accordance with the standard of care
required by Section 3.1. 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 motor vehicle and commercial vehicle
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 a
Financed Vehicle and liquidating a Financed Vehicle into cash proceeds, but
only out of the cash proceeds of such Financed Vehicle and any deficiency
obtained from the Obligor. The foregoing shall be subject to the provision
that, in any case in which a Financed Vehicle shall have suffered damage, the
Servicer shall not expend funds in connection with the repair or the
repossession of such Financed Vehicle unless it shall determine in its
discretion that such repair and/or repossession will increase the Liquidation
Proceeds (or Recoveries) of the related Receivable by an amount equal to or
greater than the amount of such expenses.
(b) If the Servicer elects to commence a legal
Proceeding to enforce a Dealer Agreement, the act of commencement shall be
deemed to be an automatic assignment from the Issuer to the Servicer of the
rights of recourse under such Dealer Agreement. If, however, in any
enforcement suit or legal Proceeding, it is held that the Servicer may not
enforce a Dealer Agreement on the grounds that it is not a real party in
interest or a Person entitled to enforce the Dealer Agreement, the Owner
Trustee, at the expense and direction of the Servicer, 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 Trust, the Certificateholders,
the Indenture Trustee, 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 obtained physical damage insurance covering the related
Financed Vehicle.
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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 for the benefit of
the Noteholders in the event the Servicer receives notice of, or otherwise has
actual knowledge of, the relocation of a Financed Vehicle to a location in the
United States of America or Canada 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
Servicer will not (nor will it permit any subservicer to) release the Financed
Vehicle securing any Receivable from the security interest granted by the
Receivable in whole or in part, except as contemplated herein, or voluntarily
allow an Obligor to relocate outside the United States of America or Canada.
(b) No Impairment. The Servicer will not (nor
will it permit any subservicer to) impair in any material respect the rights of
the Issuer, the Owner Trustee, the Indenture Trustee, the Certificateholders or
the Noteholders in the Receivables or, subject to clause (c) and (d) below,
otherwise amend or alter the terms thereof if, as a result of such amendment or
alteration, the interests of the Issuer, the Owner Trustee, the Indenture
Trustee, the Certificateholders or the Noteholders hereunder would be
materially adversely affected.
(c) Amendments. The Servicer will not (nor
will it permit any subservicer to) increase or decrease the number or amount of
Scheduled Payments, or the Amount Financed under or the APR of, a Receivable,
or extend, rewrite or otherwise modify the Due Pate or any other payment terms
of a Receivable, except pursuant to Section 3.2.
(d) Extensions. The Servicer will not (nor
will it permit any subservicer to) extend a Receivable except in accordance
with Section 3.2.
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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, the Owner Trustee, the Indenture Trustee and MBCC (if
it is no longer the Servicer) promptly, in writing, upon the discovery of any
breach of Sections 3.2, 3.5 or 3.6. Subject to Section 3.2, unless any such
breach shall 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 any Receivable, the Servicer
shall purchase from the Issuer any such Receivable on the immediately succeeding
Payment Date; provided, however, that with respect to a breach of Section 3.2,
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 6.2, the sole remedy of the Issuer, the Owner Trustee, the
Certificateholders, the Indenture Trustee and the Noteholders against the
Servicer with respect to a breach of Sections 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 any administrative fees and charges and all
late payment fees actually collected (from whatever source) on the Receivables
other than fees paid in connection with the extension or deferral of payments on
a Receivable (the "Supplemental Servicing Fee"). The Servicer shall be required
to pay all expenses incurred by it in connection with its activities hereunder
(including fees and expenses of the Owner Trustee and the Indenture Trustee, as
agreed upon between the Seller, the Owner Trustee and the Indenture Trustee (and
any custodian or Paying Agent appointed by the Owner Trustee and the Indenture
Trustee), 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
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distributions and reports to the Certificateholders and the
Noteholders), except expenses incurred in connection with
realizing upon Receivables under Section 3.3.
SECTION 3.9 Servicer's Certificate. On or before
the Determination Date immediately preceding each Payment Date,
the Servicer shall deliver to the Owner Trustee, each Paying
Agent, the Indenture Trustee and the Seller, with a copy to each
Rating Agency, a certificate of a Servicing Officer substantially
in the form of Exhibit A hereto (a "Servicer's Certificate") and
attached to a report of the Servicer containing all information
necessary to make the deposits, transfers and distributions
pursuant to Sections 4.2, 4.3, 4.4, 4.5, 4.6 and 4.7, together
with the written statements to be furnished by the Owner Trustee
to the Certificateholders pursuant to Section 4.9 hereof and by
the Indenture Trustee to the Noteholders pursuant to Section 4.9
hereof, and Section 5.5 of the Trust Agreement and Section 6.6 of
the Indenture. The Servicer also shall identify separately (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 purchased or
repurchased by the Seller or the Servicer, as the case may be, on
such Payment Date, and, upon request of the Owner Trustee or the
Indenture Trustee, each Receivable which became a Defaulted
Receivable during the Collection Period immediately preceding
such Payment Date. The Servicer shall deliver to each Rating
Agency any information, to the extent it is available to the
Servicer, that any Rating Agency reasonably requests 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 March 31 of each year, commencing March 31, 2000, an
Officer's Certificate, stating that 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 the supervision of such officer and to the best
of such officer's knowledge, based on such review, the Servicer
has fulfilled all its obligations under this Agreement throughout
such year (or longer period, in the case of the first such
certificate), or, if there has been a default in the fulfillment
of any such obligation, specifying each such default known to
such officer and the nature and status thereof. A copy of such
certificate may be obtained by any Certificateholder by a request
in writing to the Owner Trustee, or by any Noteholder or Person
certifying that it is a Note Owner by a request in writing to the
Indenture Trustee, in either case addressed to the applicable
Corporate Trust Office.
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(b) The Servicer shall deliver to the
Owner Trustee, the Indenture Trustee, the Seller 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 7.1.
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 MBCC) to deliver to the
Owner Trustee and the Indenture Trustee on or before
March 31 of each year, commencing March 31, 2000, a
report addressed to the Board of Directors of the
Servicer with respect to the preceding calendar year
(or longer period, in the case of the first such
report) to the effect that such firm has audited the
financial statements of the Servicer and issued its
report thereon and that such audit (a) was made in
accordance with generally accepted auditing
standards, (b) included tests relating to motor
vehicle and commercial vehicle loans serviced for
others in accordance with the requirements of the
Uniform Single Attestation Program for Mortgage
Bankers (the "Program"), to the extent the procedures
in such Program are applicable to the servicing
obligations set forth in this Agreement, and (c)
except as described in the report, disclosed no
exceptions or errors in the records relating to Motor
Vehicle and Commercial Vehicle loans serviced for
others that such firm is required to report under the
Program. Such report shall also indicate that the
firm is independent with respect to the Seller and
the Servicer within the meaning of the Code of
Professional Ethics of the American Institute of
Certified Public Accountants. A copy of such report
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. In the event such firm of independent
certified public accountants requires the Indenture
Trustee to agree or consent to the procedures
performed by such firm, the Issuer shall direct the
Indenture Trustee in writing to so agree, and the
Indenture Trustee will not make any independent
inquiry or investigation as to, and shall have no
obligation or liability in respect of the
sufficiency, validity or correctness of such
procedures.
SECTION 3.12 Access to Certain
Documentation and Information Regarding Receivables.
The Servicer shall provide the Owner Trustee, the
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Certificateholders, the Indenture Trustee and the
Noteholders with access to the Receivable Files in
the cases where the Owner Trustee, the
Certificateholders, the Indenture Trustee or the
Noteholders shall be required by applicable statutes
or regulations to have access to such documentation.
Such access shall be afforded without charge, but
only upon reasonable request and during normal
business hours at the offices of the Servicer, and,
prior to the occurrence of an Event of Servicing
Termination or an event which with the passage of
time and delivery of notice would constitute an Event
of Servicing Termination, only to the extent that
such access does not disrupt the normal business
operations of the Servicer and does not adversely
affect the ability of the Servicer to perform its
obligations under this Agreement. Nothing in this
Section 3.12 shall affect the obligation of the
Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors, and
the failure of the Servicer to provide access to
information as a result of such obligation shall not
constitute a breach of this Section 3.12. Any
Certificateholder or Noteholder, by its acceptance of
a Certificate or Note, as the case may be, and the
Owner Trustee and the Indenture Trustee 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 and not
to use any such information except as permitted by,
or to enforce, this Agreement, the Trust Agreement or
the Indenture.
SECTION 3.13 Reports to the
Commission. The Servicer shall, on behalf of the
Issuer, cause to be filed with the Commission any
periodic reports required to be filed under the
provisions of the Exchange Act, and the rules and
regulations of the Commission thereunder. The Seller
shall, at its expense, cooperate in any reasonable
request made by the Servicer in connection with such
filings.
SECTION 3.14 Reports to Rating
Agencies. The Servicer shall deliver to each Rating
Agency, at such address as each Rating Agency may
request, a copy of all reports or notices furnished
or delivered pursuant to this Article and a copy of
any amendments, supplements or modifications to this
Agreement and any subservicing agreement and any
other information reasonably requested by such Rating
Agency to monitor this transaction.
ARTICLE IV
ACCOUNTS; COLLECTIONS; ADVANCES; DISTRIBUTIONS;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
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SECTION 4.1 Accounts. (a) (i) The
Servicer shall, prior to the Closing Date, establish
and maintain a segregated trust account, in the name
of "Citibank, N.A. as Indenture Trustee, as secured
party from Daimler-Benz Vehicle Owner Trust 1998-A"
at an Eligible Bank (which shall initially be the
corporate trust department of Citibank, N.A.), which
shall be designated as the "Collection Account". The
Collection Account shall be held in trust for the
benefit of the Noteholders and the
Certificateholders. The Collection Account shall be
under the sole dominion and control of the Indenture
Trustee; provided, that the Servicer may make
deposits to and direct the Indenture Trustee in
writing to make withdrawals from the Collection
Account in accordance with the terms and conditions
of the Basic Documents. 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 thereto and withdrawals
therefrom shall be made only upon the terms and
conditions of the Basic Documents.
(ii) 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 Seller, 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 remain on deposit
therein pending distribution of all funds therein in
accordance with the Basic Documents. In the event
that the Collection Account is no longer to be
maintained at the corporate trust department of
Citibank, N.A., the Seller shall, with the assistance
of the Indenture Trustee or the Owner Trustee as
necessary, cause the Collection Account to be moved
to an Eligible Bank within ten (10) Business Days of
the date of determination that the Collection Account
shall no longer be maintained at the corporate trust
department of Citibank, N.A. (or such longer period
not to exceed thirty (30) calendar days as to which
each Rating Agency may consent).
(b) The Servicer shall, prior to the
Closing Date, establish and maintain a segregated
trust account, in the name of "Citibank, N.A. as
Indenture Trustee, as secured party from Daimler-Benz
Vehicle Owner Trust 1998-A" at an Eligible Bank
(which shall initially be the corporate trust
department of Citibank,
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N.A.), which shall be designated as the "Note
Distribution Account". The Note Distribution Account
shall be held in trust for the benefit of the
Noteholders. The Note Distribution Account shall be
under the sole dominion and control of the Indenture
Trustee; provided, that the Servicer may direct the
Indenture Trustee in writing to make withdrawals from
the Note Distribution Account in accordance with the
terms and conditions of the Basic Documents. All
monies deposited from time to time in the Note
Distribution Account 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 Distribution
Account is no longer to be maintained at the
corporate trust department of Citibank, N.A., the
Servicer shall, with the assistance of the Indenture
Trustee as necessary, cause the Note Distribution
Account to be moved to an Eligible Bank within ten
(10) Business Days of the date of determination that
the Note Distribution Account shall no longer be
maintained at the corporate trust department of
Citibank, N.A. (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 "Citibank, N.A. as
Paying Agent for Daimler- Benz Vehicle Owner Trust
1998-A" at an Eligible Bank (which shall initially be
the corporate trust department of Citibank, N.A.),
which shall be designated as the "Certificate
Distribution Account". Except as provided in the
Trust Agreement, the Certificate Distribution Account
shall be held in trust for the benefit of the
Certificateholders. The Certificate Distribution
Account shall be under the sole dominion and control
of the Owner Trustee; provided that the Servicer and
the Indenture Trustee in accordance with the
directions of the Servicer may make deposits to such
account pursuant to this Agreement and the Indenture,
and that the Servicer in the Servicer's Certificate
may direct Citibank, N.A., as Paying Agent under the
Trust Agreement, or any successor thereto as Paying
Agent, in writing to make withdrawals from the
Certificate Distribution Account in accordance with
the terms and conditions of the Basic Documents. All
monies deposited from time to time in the Certificate
Distribution Account shall be held by Citibank, N.A.,
as Paying Agent under the Trust Agreement, or any
successor Paying Agent, as part of the Trust Property
and shall be applied as provided in the Basic
Documents. In the event that the Certificate
Distribution Account is no longer to be maintained at
Citibank, N.A., the Servicer shall, with the
assistance of the Owner Trustee as necessary, cause
the Certificate Distribution Account to be moved to
an Eligible Bank within ten (10) Business Days of the
determination that the Certificate Distribution
Account shall no longer be maintained at the
corporate trust department
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of Citibank, N.A. (or such longer period not to
exceed thirty (30) calendar days as to which each
Rating Agency may consent) and shall promptly notify
the Owner Trustee in writing of the account number
and location of such account.
(d) (i) The Servicer shall, prior to
the Closing Date, establish and maintain a segregated
trust account in the name of "Citibank, N.A. as
Indenture Trustee, as secured party from Daimler-Benz
Vehicle Owner Trust 1998-A" at an Eligible Bank
(which shall initially be the corporate trust
department of Citibank, N.A.), which shall be
designated as the "Payahead Account". The Payahead
Account shall be held in trust for the benefit of the
Noteholders and the Certificateholders. The Payahead
Account shall be under the sole dominion and control
of the Indenture Trustee; provided that the Servicer
may make deposits to and direct the Indenture Trustee
in writing to make withdrawals from the Payahead
Account in accordance with the terms and conditions
of 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 thereto and
withdrawals therefrom shall be made only upon the
terms and conditions of the Basic Documents.
(ii) 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 Seller, 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
deposited into the Collection Account, for
distribution together with all other amounts on
deposit therein in accordance with the Basic
Documents. In the event that the Payahead Account is
no longer to be maintained at the corporate trust
department of Citibank, N.A., the Seller shall, with
the assistance of the Indenture Trustee or the Owner
Trustee as necessary, cause the Payahead Account to
be moved to an Eligible Bank within ten (10) Business
Days of the determination that the Payahead Account
shall no longer be maintained at the corporate trust
department of Citibank, N.A. (or such longer period
not to exceed thirty (30) calendar days as to which
each Rating Agency may consent).
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(e) Notwithstanding the provisions of
clause (d) above and of Sections 4.3 and 4.6(a)(ii),
for so long as (i) MBCC is the Servicer, (ii) the
rating of the short-term unsecured debt of the
Servicing Guarantor is at least P-1 by Moody's and is
at least A-1 by S&P and (iii) no Event of Servicing
Termination shall have occurred (each of the
conditions in clauses (i), (ii) and (iii) above, 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 each of the Monthly Remittance
Conditions is 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 any time
that a Monthly Remittance Condition is not met, the
Servicer shall deposit in the Payahead Account, as
soon as practicable but in no event after the close
of business on the second Business Day after receipt
thereof, the amount of any Payaheads then held or
received by it. Notwithstanding the foregoing, if a
Monthly Remittance Condition is not satisfied, the
Servicer may utilize, with respect to Payaheads, an
alternative remittance schedule (which may include
the remittance schedule utilized by the Servicer
before such 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 each Class of the
Notes. 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 written notice of such event or circumstance
from the Seller or the Servicer in an Officer's
Certificate or from the Holders of Notes evidencing
not less than twenty-five percent (25%) of the
principal balance of the then Outstanding Notes or
from the Holders of Certificates evidencing not less
than twenty-five percent (25%) of the Certificate
Balance or unless an Authorized Officer in the
Corporate Trust Office of the Owner Trustee or of the
Indenture Trustee 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 any
Receivable of such Obligor or such lesser amount as
is requested by such Obligor, in accordance with the
customary standards, policies, practices and
procedures of the
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Servicer, 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) (i)
Subject to the provisions of subsections 4.2(a)(ii)
and (b) below, the Servicer shall remit to the
Collection Account (A) all payments by or on behalf
of the Obligors (including, subject to the next
sentence, Payaheads on the Receivables, but excluding
payments with respect to amounts included in the
Supplemental Servicing Fee and excluding amounts
received on a particular Receivable to the extent
that unreimbursed Advances for prior Collection
Periods with respect to such Receivable have
previously been made by the Servicer), including
amounts treated as collections on Balloon
Receivables, (B) all Liquidation Proceeds (except
Liquidation Proceeds with respect to a particular
Receivable to the extent of any unreimbursed Advances
for prior Collection Periods with respect to such
Receivable), (C) all Recoveries (except Recoveries
with respect to a particular Receivable to the extent
of any unreimbursed Advances for prior Collection
Periods with respect to such Receivable), (D) all
Advances made by the Servicer of principal or
interest due on the Receivables and (E) all proceeds
from claims on physical damage, credit life and
disability insurance policies covering the Financed
Vehicles or the Obligors and (F) all proceeds for
Purchased Receivables, in each case received by the
Servicer during any Collection Period, as soon as
practicable, but in no event after the close of
business on the second Business Day after receipt
thereof. Collections of Payaheads shall be deposited
by the Servicer in the Collection Account, pursuant
to the preceding sentence for purposes of
administrative convenience only, pending
determination of any amount to be deposited in the
Payahead Account (or in the event that each Monthly
Remittance Condition is satisfied, remitted to the
Servicer pursuant to Section 4.1(e)), which amount
shall be deposited in the Payahead Account as soon as
practicable but in no event later than the Payment
Date immediately following collection, and such
amounts shall not be transferred to the Collection
Account until due, which payments upon determination
shall be made to the Servicer, and the Trust shall
not be entitled to such amounts.
(ii) MBCC, for so long as it is acting
as the Servicer, may make remittances of collections
on a less frequent basis than that specified in the
immediately preceding paragraph, provided that such
less frequent remittances may be made only on the
specific terms and conditions set forth below in this
Section 4.2, including the satisfaction of the
Monthly Remittance Condition, and only for so long
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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 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 such 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 any Class of the Notes. 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 written notice of such event or circumstance
from the Seller or the Servicer in an Officer's
Certificate or written notice from the Holders of
Notes evidencing not less than twenty-five percent
(25%) of the principal balance of the then
Outstanding Notes or from the Holders of Certificates
evidencing not less than twenty-five percent (25%) of
the Certificate Balance or an Authorized Officer in
the Corporate Trust Office of the Owner Trustee or
the Indenture Trustee with knowledge hereof or
familiarity herewith has actual knowledge of such
event or circumstance.
(b) Notwithstanding the provisions of
Section 4.2(a) hereof, the Servicer may retain, or
will be entitled to be reimbursed, from amounts
otherwise payable into, or on deposit in, the
Collection Account with respect to a Collection
Period, any amounts previously deposited in the
Collection Account but later determined to have
resulted from mistaken deposits or postings or checks
returned unpaid for insufficient funds or other
reasons, in each case, with respect to which the
Servicer has not been previously reimbursed
hereunder. The amount to be retained or reimbursed
hereunder shall not be included in collections with
respect to the related Payment Date.
SECTION 4.3 Application of
Collections. (a) For the purposes of this
Agreement, all collections with respect to each
Receivable (other than amounts received by the
Servicer with respect to the Supplemental Servicing
Fee) in each Collection Period shall be applied by
the Servicer as follows:
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Payments by or on behalf of the Obligor
with respect to such Receivable shall be
applied first, to reduce outstanding Advances
from prior Collection Periods as described in
Section 4.4(a) below. Next, any excess shall
be applied to the Scheduled Payment for such
Collection Period in respect of such
Receivable. Any remaining excess shall be
applied to prepay the Receivable, but only if
the sum of such excess and the existing
Payahead Balance in respect of such
Receivable shall be sufficient to prepay such
Receivable in full. Otherwise, any such
remaining excess shall constitute a Payahead,
shall increase the Payahead Balance with
respect to such Receivable, and shall be
deposited into the Payahead Account.
(b) Collections with respect to the
Supplemental Servicing Fee in each Collection Period
shall be applied by the Servicer as additional
compensation to the Servicer.
SECTION 4.4 Advances. (a) (i) As
of the close of business on the last day of each
Collection Period, if the payments during such
Collection Period by or on behalf of the Obligor on
or in respect of a Receivable (other than a Purchased
Receivable) after application under Section 4.3 shall
be less than the Scheduled Payment in respect of such
Receivable (a "Shortfall"), the Payahead Balance with
respect to such Receivable shall be applied by the
Indenture Trustee in accordance with the written
direction of the Servicer to the extent of such
Shortfall, and such Payahead Balance shall be reduced
accordingly. On the Payment Date immediately
following such Collection Period, subject to the
following sentence, an advance shall be made by the
Servicer to the extent of any remaining Shortfall in
respect of such Receivable (such advance, an
"Advance"); provided that notwithstanding anything in
this Agreement to the contrary, no Successor Servicer
shall be required to make Advances. Outstanding
Advances with respect to a Receivable shall be
reduced by subsequent payments by or on behalf of the
related Obligor, collections of Liquidation Proceeds
and Recoveries in respect of the related Receivables,
and payment of the Purchase Amount.
(ii) If the Servicer shall determine
that an outstanding Advance with respect to any
Receivable shall not be recoverable as described in
the preceding paragraph, the Servicer shall be
reimbursed from any collections credited to payments
made on other Receivables in the Trust (including
Liquidation Proceeds
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and Recoveries), and outstanding Advances with
respect to such Receivable shall be reduced
accordingly.
(iii) The Servicer may elect not to
make an Advance with respect to a Receivable to the
extent that the Servicer, in its sole discretion,
does not expect to recover such Advance from
subsequent payments on such Receivable.
(b) (i) Upon either the written
instructions of the Servicer or based solely upon the
information contained in the Servicer's Certificate
delivered on the related Determination Date pursuant
to Section 3.9, the Indenture Trustee shall release
from amounts available in the Payahead Account, the
amounts required to be released from amounts
available in the Payahead Account pursuant to Section
4.4(a)(i) with respect to each Collection Period and
shall deposit such amounts in the Collection Account
on the related Payment Date pursuant to Section 4.5.
(ii) On each Payment Date, the
Servicer shall deposit into the Collection
Account an amount equal to the aggregate
amount of Advances required to be made with
respect to the related Collection Period.
(c) On each Payment Date, the Servicer
shall instruct the Indenture Trustee in writing to
withdraw from the Collection Account for distribution
to the Servicer, in immediately available funds, an
amount equal to the sum of (i) the aggregate amount
of collections on Receivables with respect to which
the Servicer has made Advances in a prior Collection
Period that are allocable to the reimbursement of
such Advances pursuant to Sections 4.3(a) and 4.4(a)
and (ii) the aggregate amount of Advances that the
Servicer has not been reimbursed for pursuant to this
Section 4.4(c) or Section 4.5 that are with respect
to Receivables that became Defaulted Receivables in
the related Collection Period.
SECTION 4.5 Additional Deposits. At
the written direction of the Servicer, the Indenture
Trustee shall deposit in the Collection Account the
amounts required pursuant to Section 4.4(a)(i) and
(b). The Servicer shall deposit in the Collection
Account amounts required to be paid by the Servicer
pursuant to Sections 4.4(a) and (b). The Seller and
the Servicer shall deposit or cause to be deposited
in the Collection Account the aggregate Purchase
Amount with respect to Purchased Receivables pursuant
to Section 2.3, 3.7 or 8.1. All such deposits with
respect to a Collection Period shall be made in
immediately available funds no later
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than 10:00 a.m., New York City time, on the Payment
Date related to such Collection Period.
SECTION 4.6 Distributions. (a) On
each Payment Date, after repayment of Advances
pursuant to Sections 4.3(a) and 4.4(c), 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
pursuant to Section 3.9:
(i) If the Monthly Remittance
Conditions are not then satisfied, from the
Payahead Account, and otherwise from amounts
paid by the Servicer pursuant to Section
4.1(e), to the Collection Account in
immediately available funds, (x) the
aggregate portion of Payaheads constituting
Scheduled Payments or prepayments in full,
required by Sections 4.2 and 4.3(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 each event that the Monthly
Remittance Condition is then satisfied, in
immediately available funds, the aggregate
Payaheads required by Section 4.3 for the
Collection Period related to such Payment
Date.
(b) On each Determination Date, the
Servicer shall calculate the Available Funds, the
Total Servicing Fee, the Accrued Note Interest for
each Class of Notes, the Accrued Certificate
Interest, the Scheduled Principal, the Principal
Distribution Amount, the Class A Reserve Account
Amount, the Specified Class A Reserve Balance, the
Class B Reserve Account Amount and the Specified
Class B Reserve Balance, in each case with respect to
the next succeeding Payment Date.
(c) On each Payment Date, the
Indenture Trustee (based on, and upon receipt of, the
information contained in the Servicer's Certificate
delivered on the related Determination Date pursuant
to Section 3.9) shall (i) withdraw from the
Collection Account and pay to the Servicer any
amounts required to reimburse the Servicer for any
outstanding Advances for prior Collection Periods,
and thereafter, (ii) withdraw (A) all Available Funds
on deposit in the Collection Account for the related
Collection Period and (B) the additional amounts from
the sources specified below and make the following
payments and deposits from the sources
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specified below for such Payment Date in the
following order of priority:
(i) to the Servicer, the Total
Servicing Fee, such amount to be paid, first,
from Available Funds in the Collection
Account, second, from the Class B Reserve
Account, and third, from the Class A Reserve
Account;
(ii) to the Note Distribution
Account, the Accrued Note Interest on each
Class of Notes, such amount to be paid,
first, from Available Funds in the Collection
Account, and second, from the Class A Reserve
Account;
(iii) to the Certificate
Distribution Account, the Accrued Certificate
Interest, such amount to be paid, first, from
Available Funds in the Collection Account, and
second, from the Class B Reserve Account;
(iv) to the Note Distribution
Account, the Principal Distribution Amount
with respect to each Class of Notes, such
amount to be paid, first, from Available
Funds in the Collection Account, and second,
from the Class A Reserve Account;
(v) to the Certificate Distribution
Account, the Principal Distribution Amount
with respect to the Certificates, such amount
to be paid first, from Available Funds in the
Collection Account, and second, from the
Class B Reserve Account;
(vi) to the Class A Reserve Account,
from Available Funds in the Collection
Account, the amount required to bring the
amount in the Class A Reserve Account up to
the Class A Specified Reserve Balance;
(vii) to the Class B Reserve
Account, from Available Funds in the
Collection Account, the amount required to
bring the amount in the Class B Reserve
Account up to the Class B Specified Reserve
Balance; and
(viii) to the Seller, any remaining
Available Funds.
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(d) The rights of the
Certificateholders to receive distributions in
respect of the Certificates shall be and hereby are
subordinated, to the extent set forth in Section
4.6(c), to the rights of the Noteholders to receive
distributions in respect of the Class A Notes and the
rights of the Servicer to receive reimbursements of
Advances and payment of the Total Servicing Fee (and
any accrued and unpaid Servicing Fees or Supplemental
Servicing Fees from prior Collection Periods) in the
event of delinquency or defaults on the Receivables.
Upon the written instructions of the Servicer
included in the Servicer's Certificate delivered on
the related Determination Date pursuant to Section
3.9, the Indenture Trustee or any appropriate Paying
Agent shall release and apply amounts available in
the Class A Reserve Account and the Class B Reserve
Account, respectively, as provided in Sections 4.4(a)
and 4.7(d).
SECTION 4.7 Subordination; Reserve
Accounts. (a) The Seller shall, prior to the
Closing Date, establish and maintain a segregated
trust account in the name of "Citibank, N.A. as
Indenture Trustee, as secured party from Daimler-Benz
Vehicle Owner Trust 1998-A" at an Eligible Bank
(which shall initially be the corporate trust
department of Citibank, N.A.) which shall be
designated the "Class A Reserve Account" and shall,
prior to the Closing Date, establish and maintain a
segregated trust account in the name of "Citibank,
N.A., as Paying Agent for Daimler-Benz Vehicle Owner
Trust 1998-A" at an Eligible Bank (which shall
initially be the corporate trust department of
Citibank, N.A.) which shall be designated the "Class
B Reserve Account" (collectively, the "Reserve
Accounts"). On the Closing Date, the Seller shall
deposit the Class A Reserve Initial Deposit into the
Class A Reserve Account, and the Class B Reserve
Initial Deposit, if any, into the Class B Reserve
Account. The Class A Reserve Account shall be under
the sole dominion and control of the Indenture
Trustee, and the Class B Reserve Account shall be
under the sole dominion and control of the Owner
Trustee; provided, that the Servicer, the Indenture
Trustee and any appropriate Paying Agent may make
deposits to and withdrawals from the Reserve Accounts
in accordance with this Agreement, the Trust
Agreement and the Indenture, as applicable. The
Reserve Accounts and all amounts, securities,
investments, financial assets and other property
deposited in or credited to the respective Reserve
Accounts (the "Reserve Account Property") has been
conveyed by the Seller to the Trust pursuant to
Section 2.1. Pursuant to the Indenture, the Trust
will pledge all of its right, title and interest in,
to and under the Class A Reserve Account and the
Reserve Account Property deposited therein or
credited thereto to the Indenture Trustee on behalf
of the Noteholders to secure its
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obligations under the Notes and the Indenture. The
Class B Reserve Account and the Reserve Account
Property deposited therein or credited thereto will
not be pledged to the Indenture Trustee or the
Noteholders.
(b) The Reserve Account Property
shall, to the extent permitted by applicable law,
rules and regulations, be invested, as directed in
writing by the Seller, by the bank or trust company
(including any appropriate Paying Agent) then
maintaining the Reserve Accounts 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 Class
A Reserve Account and the Class B Reserve Account
shall, upon the written direction of the Servicer, be
paid to the Seller on any Payment Date to the extent
that funds on deposit therein, as certified by the
Servicer, exceed the Specified Class A Reserve
Balance and the Specified Class B Reserve Balance,
respectively. In the event that either of the Class
A Reserve Account or the Class B Reserve Account is
no longer to be maintained at the corporate trust
department of Citibank, N.A., the Seller shall, with
the assistance of the Indenture Trustee or the Owner
Trustee as necessary, cause such Class A Reserve
Account or Class B Reserve Account, as applicable, to
be moved to an Eligible Bank within ten (10) Business
Days (or such longer period not to exceed thirty (30)
calendar days as to which each Rating Agency may
consent).
(c) With respect to any Reserve
Account Property:
(i) any Reserve Account Property on
deposit in the Class A Reserve Account that
is a "financial asset" as defined in Section
8-102(a)(9) of the UCC shall be physically
delivered to, or credited to an account in
the name of, the Eligible Bank maintaining
such Reserve Account, in accordance with
customary procedures of such institution such
that such institution establishes a
"securities entitlement" in favor of the
Indenture Trustee with respect thereto;
(ii) any Reserve Account Property
that is held in deposit accounts shall be held
solely in the name of the Indenture Trustee,
any appropriate Paying Agent or the Owner
Trustee, as applicable, at one or more
depository institutions having the Required
Rating and such Indenture Trustee, appropriate
Paying Agent or Owner Trustee, as applicable,
shall have sole signature authority with
respect thereto; and
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(iii) except for any deposit
accounts specified in clause (ii) above, the
Reserve Account Property on deposit in the
Class A Reserve Account shall only be invested
in securities or in other assets which the
Eligible Bank maintaining such Reserve Account
agrees to treat as "financial assets" as
defined in Section 8-102(a)(9) of the UCC.
(d) On any Distribution Date (i) if
the principal amount of the Reserve Account Property
on deposit in the Class A Reserve Account (after
taking into account any withdrawals from and deposits
into the Class A Reserve Account pursuant to Section
4.6) is greater than the Specified Class A Reserve
Balance for such Distribution Date, the Indenture
Trustee or any applicable Paying Agent shall, upon
the written instructions of the Servicer, release
such excess from the Class A Reserve Account and (ii)
if the principal amount of the Reserve Account
Property on deposit in the Class B Reserve Account
(after taking into account any withdrawals from and
deposits in the Class B Reserve Account pursuant to
Section 4.6) is less than the Specified Class B
Reserve Balance for such Distribution Date, the
Indenture Trustee or any appropriate Paying Agent
shall, upon the written instructions of the Servicer,
deposit such excess to the extent of such shortfall,
in the Class B Reserve Account and (iii) to the
extent that the principal amount of the Reserve
Account Property on deposit in the Class B Reserve
Account (after taking into account any withdrawals
from and deposits in the Class B Reserve Account
pursuant to Section 4.6) is equal to or greater than
the Specified Class B Reserve Balance for such
Distribution Date, the Owner Trustee or any
appropriate Paying Agent under the Trust Agreement
shall, upon written instructions of the Servicer,
release such excess from the Class B Reserve Account
to the Seller. Amounts properly released from the
Class A Reserve Account and deposited in the Class B
Reserve Account or distributed to the Seller pursuant
to Section 4.6(c) or this Section 4.7(d), either
directly from the Collection Account without deposit
in the Class A Reserve Account and/or the Class B
Reserve Account or from the Class A Reserve Account
and/or the Class B Reserve Account, shall be deemed
released from the trust established by this Section
4.7, and neither the Indenture Trustee, the
Noteholders, nor the Certificateholders shall have
any further claim upon any such distributed amounts.
The delivery of the Servicer's Certificate pursuant
to Section 3.9 shall, unless otherwise specified by
the Servicer, be deemed an appropriate written
instruction for any and all purposes of this Section
4.7(d).
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(e) (i) Amounts held in the Reserve
Accounts shall be invested in Permitted Investments
in the manner specified in Section 4.1(a), in
accordance with written instructions from the Seller,
and such investments shall not be sold or disposed of
prior to their maturity; provided, however, that to
the extent permitted by the Rating Agencies, funds on
deposit in the Reserve Accounts may be invested in
Permitted Investments that mature later than the next
succeeding Payment Date. All such investments shall
be made in the name of the Indenture Trustee or its
nominee, in the case of the Class A Reserve Account,
and in the name of the Owner Trustee or its nominee
or Paying Agent, in the case of the Class B Reserve
Account, and all income and gain realized in either
case shall be solely for the benefit of the Seller
and subject to Section 4.7(d) shall be payable to the
Seller on each Distribution Date. Additionally, it
is understood and agreed that neither the Indenture
Trustee, the Owner Trustee nor any appropriate Paying
Agent shall be liable for any loss arising from
investments in Permitted Investments or for the
selection of Permitted Investments and neither the
Indenture Trustee, the Owner Trustee nor any
appropriate Paying Agent shall have any liability in
respect of losses incurred as a result of the
liquidation of any Permitted Investments prior to its
stated maturity or the failure of the Seller to
provide timely written investment directions.
(ii) Each of the Seller and the
Servicer agrees to take or cause to be taken
such further actions, to execute, deliver and
file or cause to be executed, delivered and
filed such further documents and instruments
(including, without limitation, any UCC
financing statements or this Agreement) as
may be determined to be necessary, in the
Opinion of Counsel of the Seller delivered to
the Indenture Trustee, in order to perfect
the security interests in favor of the
Indenture Trustee created by this Section 4.7
and otherwise fully to effectuate the
purposes, terms and conditions of this
Section 4.7. The Seller and the Servicer
shall:
(A) promptly execute, deliver and file
any financing statements, amendments,
continuation statements, assignments,
certificates and other documents with
respect to such interests and perform all
such other acts as may be necessary in
order to perfect or to maintain the
perfection of the security interest of the
Indenture Trustee for the benefit of the
Noteholders; and
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(B) make the necessary filings of
financing statements or amendments thereto
within five days after the occurrence of
any of the following: (1) any change in
their respective corporate names or any
trade names, (2) any change in the
location of their respective chief
executive offices or principal places of
business and (3) any merger or
consolidation or other change in their
respective identities or corporate
structures; and shall promptly notify the
Indenture Trustee of any such filings.
(iii) Investment earnings attributable
to the Class A Reserve Account and proceeds
therefrom shall be held by the Indenture
Trustee, and investment earnings attributable
to the Class B Reserve Account and proceeds
therefrom shall be held by the Owner Trustee
or any Paying Agent under the Trust
Agreement, for the benefit of the Seller.
Except to the extent deposited into either
Reserve Account pursuant to Section 4.7(b),
investment earnings attributable to the Class
A Reserve Account and the Class B Reserve
Account shall not be available to satisfy the
subordination provisions of this Agreement
and shall not otherwise be subject to any
claims or rights of the Noteholders, the
Certificateholders or the Servicer. The
Indenture Trustee, the Owner Trustee or any
applicable Paying Agent shall cause all
investment earnings received on or prior to
each Distribution Date and attributable to
the Class A Reserve Account and the Class B
Reserve Account, respectively, to be
distributed on such Distribution Date to the
Seller in accordance with the written
direction of the Servicer and Section 4.7(d).
Losses, if any, on investments in the Class A
Reserve Account or the Class B Reserve
Account shall be charged first against
undistributed investment earnings
attributable to the Class A Reserve Account
or Class B Reserve Account, respectively, and
then against the principal amount of the
applicable Class A Reserve Account or Class B
Reserve Account, respectively.
(iv) Neither the Indenture Trustee,
the Owner Trustee nor any Paying Agent shall
enter into any subordination or intercreditor
agreement with respect to the Class A Reserve
Account or the Class B Reserve Account.
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(f) Upon termination of this
Agreement, all remaining Reserve Account Property
shall, upon written instruction of either the
Servicer or the Seller, be paid to the Seller.
(g) Following the payment in full of
the aggregate principal balance of the Notes and the
Certificate Balance and of all other amounts owing or
to be distributed hereunder or under the Indenture or
the Trust Agreement to Noteholders or
Certificateholders and the termination of the Trust,
any remaining Reserve Account Property shall be
distributed to the Seller.
SECTION 4.8 Net Deposits. As an
administrative convenience only, unless the Servicer
is required to remit collections pursuant to Section
4.2, the Seller and the Servicer may make any
remittance pursuant to this Article IV with respect
to a Collection Period net of distributions to be
made to the Seller or the Servicer with respect to
such Collection Period. Nonetheless, such
obligations shall remain separate obligations, no
party shall have a right of offset, and each such
party shall account for all of the above described
remittances and distributions as if the amounts were
deposited and/or transferred separately.
SECTION 4.9 Statements to Noteholders
and Certificateholders. Three Business Days prior to
each Payment Date, the Servicer shall provide to the
Indenture Trustee (with copies to the Rating Agencies
and each Paying Agent) for the Indenture Trustee to
forward to each Noteholder of record as of the most
recent Record Date and to the Owner Trustee (with
copies to the Rating Agencies and to each Paying
Agent) for the Owner Trustee or the Paying Agent for
the Certificates to forward to each Certificateholder
of record as of the most recent Record Date a
statement in substantially the forms of Exhibits B
and C, respectively, setting forth at least the
following information as to the Notes and the
Certificates to the extent applicable:
(i) the amount of such distribution
allocable to principal paid to each Class of
Notes and to the Certificate Balance;
(ii) the amount of such distribution
allocable to interest paid to each Class of
Notes and to the Certificates;
(iii) the amount of the Total
Servicing Fee and Supplemental Servicing Fee
with respect to the related Collection
Period;
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(iv) the aggregate Outstanding
principal balance of each Class of Notes, the
applicable Note Pool Factor, the Certificate
Balance and the Certificate Pool Factor as of
the close of business on the last day of the
preceding Collection Period, after giving
effect to payments allocated to principal
reported under clause (i) above;
(v) the Pool Balance as of the
close of business on the last day of the
related Collection Period;
(vi) the amounts of the Note
Interest Carryover Shortfall, the Certificate
Interest Carryover Shortfall and the
Principal Carryover Shortfall, if any, for
such Payment Date and the portion thereof
attributable to each Class of Notes and to
the Certificates, as applicable;
(vii) the balance of the Class A
Reserve Account and the Class B Reserve
Account, if any, on such Payment Date, after
giving effect to changes therein on such
Payment Date; and
(viii) the aggregate Purchase Amount
of Receivables repurchased by the Seller or
purchased by the Servicer, 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 (vi) above shall be expressed as a dollar amount
per $1,000 of original principal balance of a Note or
Certificate Balance, as applicable.
SECTION 4.10 Control of Securities
Accounts. Notwithstanding anything else contained
herein, the Issuer agrees that each of the Collection
Account, the Note Distribution Account, the Payahead
Account and the Class A Reserve Account will be an
Eligible Deposit Account established at an Eligible
Bank which agrees substantially as follows: (a) it
will comply with "entitlement orders" (as defined in
Section 8-102(a)(8) of the UCC; i.e., orders
directing the transfer or redemption of any financial
asset) relating to such accounts issued by the
Indenture Trustee without further consent by the
Issuer; (b) until the termination of the Indenture,
it will not enter into any other agreement relating
to any such account pursuant to which it agrees to
comply with entitlement orders of any Person other
than the Indenture Trustee; and (c) all assets
delivered or credited to it in connection
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with such accounts and all investments thereof will
be promptly credited to such accounts.
ARTICLE V
THE SELLER
SECTION 5.1 Representations,
Warranties and Covenants of Seller. The Seller makes
the following representations, warranties and
covenants on which the Issuer is deemed to have
relied in acquiring the Trust Property. The
representations, warranties and covenants speak as of
the execution and delivery of this Agreement and
shall survive the sale of the Trust Property to the
Issuer and the pledge thereof by the Issuer to the
Indenture Trustee pursuant to the Indenture:
(a) Organization and Good Standing.
The Seller has been duly organized and is validly
existing as a corporation in good standing under the
laws of the State of Delaware, with power and
authority to own its properties and to conduct its
business as such properties shall be currently owned
and such business is presently conducted, and had at
all relevant times, and shall have, power, authority,
and legal right to acquire and own the Receivables.
(b) Due Qualification. The Seller is
duly qualified to do business as a foreign
corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions
in which the ownership or lease of property or the
conduct of its business shall require such
qualifications, except where the failure of the
Seller to so qualify or obtain such licenses or
approvals would not have a material adverse effect on
the Seller, the Issuer or any Receivable.
(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.
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(d) Valid Sale; Binding Obligation.
This Agreement effects a valid sale, transfer and
assignment of the Receivables and the other Trust
Property conveyed by the Seller to the Issuer
hereunder, enforceable against creditors of and
purchasers from the Seller; and this Agreement and
the other Basic Documents to which the Seller is a
party constitute legal, valid, and binding
obligations of the Seller, enforceable against the
Seller in accordance with their terms, subject, as to
enforceability, to applicable bankruptcy, insolvency,
reorganization, conservatorship, receivership,
liquidation and other similar laws affecting the
enforcement of creditors' rights generally and by
general equitable principles.
(e) No Violation. The execution,
delivery and performance by the Seller of this
Agreement and the other Basic Documents to which the
Seller is a party and the consummation of the
transactions contemplated hereby and thereby and the
fulfillment of the terms hereof and thereof will not
conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default
under, the certificate of incorporation or bylaws of
the Seller, or conflict with, or breach any of the
terms or provisions of, or constitute (with or
without notice or lapse of time or both) a default
under, any indenture, agreement, mortgage, deed of
trust or other instrument to which the Seller is a
party or by which the Seller is bound or any of its
properties are subject, or result in the creation or
imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other
instrument (other than this Agreement), or violate
any law, order, rule, or regulation, applicable to
the Seller or its properties, of any federal or state
regulatory body, any court, administrative agency, or
other governmental instrumentality having
jurisdiction over the Seller or any of its
properties.
(f) No Proceedings. There are no
Proceedings or investigations pending, or, to the
best knowledge of the Seller, threatened, before any
court, regulatory body, administrative agency, or
other tribunal or governmental instrumentality having
jurisdiction over the Seller or its properties: (i)
asserting the invalidity of this Agreement, the
Indenture, any of the other Basic Documents, the
Notes or the Certificates, (ii) seeking to prevent
the issuance of the Notes, the Certificates or the
consummation of any of the transactions contemplated
by this Agreement, the Indenture or any of the other
Basic Documents, (iii) seeking any determination or
ruling that might materially and adversely affect the
performance by the Seller of its obligations under,
or the validity or enforceability of, this Agreement,
the Indenture, any of the other Basic Documents, the
Notes or the
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Certificates, or (iv) that may adversely affect the
Federal or Applicable Tax State income, excise,
franchise or similar tax attributes of the Notes or
the Certificates.
(g) Officer's Certificates. Each
representation and warranty made by the Seller in
each of the Seller Officer's Certificates attached as
exhibits to the Purchase Agreement is true and
correct as of the Closing Date, and the Seller
covenants to fulfill each covenant made by it in such
Seller Officer's Certificates.
SECTION 5.2 Liability of Seller;
Indemnities. The Seller shall be liable in accordance
herewith only to the extent of the obligations
specifically undertaken by the Seller under this
Agreement, and hereby agrees to the following:
(a) The Seller shall indemnify,
defend, and hold harmless the Issuer, the Owner
Trustee and the Indenture Trustee from and against
any taxes that may at any time be asserted against
any such Person with respect to, and as of the date
of, the sale of the Receivables to the Issuer or the
issuance and original sale of the Notes or the
Certificates, including any sales, gross receipts,
general corporation, tangible personal property,
privilege, or license taxes (but, in the case of the
Issuer, not including any taxes asserted with respect
to ownership of the Receivables or Federal or other
Applicable Tax State income taxes arising out of the
transactions contemplated by this Agreement and the
other Basic Documents) and costs and expenses in
defending against the same.
(b) The Seller shall indemnify,
defend, and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee, any Paying Agents,
the Noteholders and the Certificateholders from and
against any loss, liability or expense incurred by
reason of (i) the willful misfeasance, bad faith, or
negligence of the Seller (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 violation by the Seller of Federal or state
securities laws in connection with the registration
or the sale of the Notes or the Certificates.
(c) The Seller shall indemnify, defend
and hold harmless the Owner Trustee, the Indenture
Trustee any Paying Agent 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 any
Paying Agent under the Trust Agreement,
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and in the Indenture, in the case of the Indenture
Trustee and any Paying Agent under the Indenture,
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, the
Indenture Trustee or any Paying Agent, as applicable;
(ii) in the case of the Owner Trustee or any Paying
Agent under the Trust Agreement shall arise from the
breach by the Owner Trustee or such Paying Agent of
any of its respective representations or warranties
set forth in Sections 3.9 or 7.3 of the Trust
Agreement or (iii) in the case of the Indenture
Trustee or any Paying Agent under the Indenture shall
arise from the breach by the Indenture Trustee or
such Paying Agent of any of its respective
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) Notwithstanding the foregoing,
such indemnification shall not extend to any credit
losses on any Receivables. Indemnification under
this Section 5.2 shall survive the resignation or
removal of the Owner Trustee, the Indenture Trustee
or the particular Paying Agent 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 5.2 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 5.3 Merger or Consolidation
of, or Assumption of the Obligations of, Seller. Any
Person (a) into which the Seller may be merged or
consolidated, (b) resulting from any merger,
conversion, or consolidation to which the Seller
shall be a party or (c) 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
(i) 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 5.3, and (ii) the Seller shall have
delivered to the Owner Trustee and the Indenture
Trustee an
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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 5.3, any amendment to the
Articles of Incorporation of the Seller or of the
issuance of any other securities by the Seller to the
Rating Agencies. Notwithstanding anything herein to
the contrary, the execution of the foregoing
agreement of assumption and compliance with clauses
(i) or (ii) above shall be conditions to the
consummation of the transactions referred to in
clauses (a), (b) or (c) above.
SECTION 5.4 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 and shall be protected in acting
or refraining from acting upon the advice of counsel
or on any resolution, certificate of auditors or
accountants or any other certificate, statement,
instrument, opinion, report, notice, request,
direction, consent, order, appraisal, bond, note or
other paper or document believed by it to be genuine
and to have been signed or presented by the proper
party or parties. 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 5.5 Seller May Own Notes or
Certificates . The Seller, and any Affiliate of the
Seller, may in its individual or any other capacity
become the owner or pledgee of Notes or Certificates
with the same rights as it would have if it were not
the Seller or an Affiliate thereof, except as
otherwise expressly provided herein or in the other
Basic Documents. Except as set forth herein or in
the other Basic Documents, Notes and Certificates so
owned by or pledged to the Seller or such
controlling, controlled or commonly controlled Person
shall have an equal and proportionate benefit under
the provisions of this Agreement and the other Basic
Documents, without preference, priority, or
distinction as among all of the Notes and
Certificates.
ARTICLE IV
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THE SERVICER
SECTION 6.1 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 Indenture
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, except where the failure
of the Servicer so to qualify or obtain such licenses
or approvals would not have a material adverse effect
on the Servicer, the Issuer or any Receivable.
(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
affecting the enforcement of creditors' rights
generally and by general equitable principles.
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(e) No Violation. The execution,
delivery and performance by the Servicer of this
Agreement and the other Basic Documents to which it
is a party, the consummation of the transactions
contemplated hereby and thereby and the fulfillment
of the terms hereof and thereof will not conflict
with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice
or lapse of time or both) a default under, the
certificate of incorporation or bylaws of the
Servicer, or conflict with, or breach any of the
terms or provisions of, or constitute (with or
without notice or lapse of time or both) a default
under, any indenture, agreement, mortgage, deed of
trust or other instrument to which the Servicer is a
party or by which the Servicer is bound or to which
any of its properties are subject, or result in the
creation or imposition of any lien upon any of its
properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or
other instrument (other than this Agreement), or
violate any law, order, rule, or regulation
applicable to the Servicer or its properties of any
Federal or state regulatory body, any court,
administrative agency, or other governmental
instrumentality having jurisdiction over the Servicer
or any of its properties.
(f) No Proceedings. There are no
proceedings or investigations pending, or, to the
Servicer's knowledge, threatened, before any court,
regulatory body, administrative agency, or tribunal
or other governmental instrumentality having
jurisdiction over the Servicer or its properties:
(i) asserting the invalidity of this Agreement, the
Indenture, any of the other Basic Documents, the
Notes, or the Certificates, (ii) seeking to prevent
the issuance of the Notes or the Certificates or the
consummation of any of the transactions contemplated
by this Agreement, the Indenture or any of the other
Basic Documents, (iii) seeking any determination or
ruling that might materially and adversely affect the
performance by the Servicer of its obligations under,
or the validity or enforceability of, this Agreement,
the Indenture, any of the other Basic Documents, the
Notes or the Certificates, or (iv) that may adversely
affect the Federal or Applicable Tax State income,
excise, franchise or similar tax attributes of the
Notes or the Certificates.
SECTION 6.2 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, any Paying Agents,
the
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Noteholders, the Certificateholders and the Seller
from and against any and all costs, expenses, losses,
damages, claims and liabilities, arising out of or
resulting from the use, ownership or operation by the
Servicer or any Affiliate thereof of a Financed
Vehicle.
(b) The Servicer shall indemnify,
defend and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee and any Paying Agents
from and against any taxes that may at any time be
asserted against any such Person with respect to the
transactions contemplated herein or in the other
Basic Documents, if any, including, without
limitation, any sales, gross receipts, general
corporation, tangible personal property, privilege or
license taxes (but, in the case of the Issuer, not
including any taxes asserted with respect to, and as
of the date of, the sale of the Receivables to the
Issuer or the issuance and original sale of the Notes
and the Certificates and the issuance of the
Certificates, or asserted with respect to ownership
of the Receivables, or Federal or other Applicable
Tax State income taxes arising out of the
transactions contemplated by this Agreement and the
other Basic Documents) and costs and expenses in
defending against the same.
(c) The Servicer shall indemnify,
defend and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee, any Paying Agents,
the Noteholders, the Certificateholders and the
Seller from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent
that such cost, expense, loss, claim, damage or
liability arose out of, or was imposed upon any such
Person through, the negligence, willful misfeasance
or bad faith of the Servicer in the performance of
its duties under this Agreement or any other Basic
Document to which it is a party (except for errors in
judgment), or by reason of reckless disregard of its
obligations and duties under this Agreement or any
other Basic Document to which it is a party.
(d) The Servicer shall indemnify,
defend and hold harmless the Owner Trustee, the
Indenture Trustee and any Paying Agent, 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 of the Owner
Trustee, the Indenture Trustee or the particular
Paying Agent, 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
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the Owner Trustee, the Indenture Trustee or any
Paying Agent, as applicable; (c) in the case of the
Owner Trustee or any Paying Agent under the Trust
Agreement, shall arise from the breach by the Owner
Trustee or such Paying Agent of any of its respective
representations or warranties set forth in Sections
3.9 or 7.3 of the Trust Agreement or, in the case of
the Indenture Trustee or any Paying Agent under the
Indenture, from the breach by the Indenture Trustee
or such Paying Agent of any of its representations or
warranties set forth in the Indenture; or (d) shall
be one as to which the Seller is required to
indemnify the Indenture Trustee, the Owner Trustee or
any Paying Agent.
(e) For purposes of this Section 6.2,
in the event of the termination of the rights and
obligations of MBCC (or any successor thereto
pursuant to Section 7.2) as Servicer pursuant to
Section 7.1, 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 7.2.
(f) Notwithstanding the foregoing,
such indemnification shall not extend to any credit
losses on any Receivables. Indemnification under
this Section 6.2 by MBCC (or any successor thereto
pursuant to Section 7.2) as Servicer, with respect to
the period such Person was (or was deemed to be) the
Servicer, shall survive the termination of such
Person as Servicer or a resignation by such Person as
Servicer as well as the termination of this Agreement
or the resignation or removal of the Owner Trustee,
the Indenture Trustee or any particular Paying Agent
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 6.3 Merger or Consolidation of,
or Assumption of the Obligations of, Servicer. Any
Person (i) into which the Servicer may be merged or
consolidated, (ii) resulting from any merger,
conversion, or consolidation to which the Servicer
shall be a party, or (iii) that may succeed by
purchase and assumption to all or substantially all of
the business of the Servicer, which Person in any of
the foregoing cases is an Eligible Servicer and
executes an agreement of assumption to perform every
obligation of the Servicer under this Agreement, will
be the successor to the Servicer under this Agreement
without the execution or filing of any paper or any
further act on the part of any of the parties to this
Agreement; provided,
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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 6.3, 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 6.3 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 6.4 Limitation on Liability of
Servicer and Others. (a) Neither the Servicer nor any
of the directors or officers or employees or agents of
the Servicer shall be under any liability to the
Issuer, the Noteholders or the Certificateholders,
except as provided under this Agreement, for any
action taken or for refraining from the taking of any
action pursuant to this Agreement or for errors in
judgment; provided, however, that this provision shall
not protect the Servicer or any such Person against
any liability that would otherwise be imposed by
reason of willful misfeasance or bad faith in the
performance of duties or by reason of reckless
disregard of obligations and duties under this
Agreement, or by reason of negligence in the
performance of its duties under this Agreement (except
for errors in judgment). The Servicer and any
director, officer or employee or agent of the Servicer
may rely in good faith and shall be protected in
acting or refraining from acting upon any resolution,
certificate of auditors or accountants or any other
certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, appraisal,
bond, note or other paper or document believed by it
to be genuine and to have been signed or presented by
the proper party or parties.
(b) Except as provided in this
Agreement, the Servicer shall not be under any
obligation to appear in, prosecute or defend any
legal action that shall not be incidental to its
duties to service the Receivables in accordance with
this Agreement, and that in its opinion may involve
it in any expense or liability;
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provided, however, that the Servicer may undertake
any reasonable action that it may deem necessary or
desirable in respect of this Agreement and the rights
and duties of the parties to this Agreement and the
interests of the Noteholders and Certificateholders
under this Agreement. In such event, the legal
expenses and costs of such action and any liability
resulting therefrom shall be expenses, costs and
liabilities of the Servicer.
SECTION 6.5 Servicer Not to Resign.
Subject to the provisions of Section 6.3, 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 (a) assumed the responsibilities
and obligations of the Servicer in accordance with
Section 7.2 and (b) become the Administrator under
the Administration Agreement pursuant to Section 8
thereof.
SECTION 6.6 Servicer May Own Notes or
Certificates. The Servicer, and any Affiliate of the
Servicer, may, in its individual or any other
capacity, become the owner or pledgee of Notes or
Certificates with the same rights as it would have if
it were not the Servicer or an Affiliate thereof,
except as otherwise expressly provided herein or in
the other Basic Documents. Except as set forth
herein or in the other Basic Documents, Notes and
Certificates so owned by or pledged to the Servicer
or such Affiliate shall have an equal and
proportionate benefit under the provisions of this
Agreement, without preference, priority or
distinction as among all of the Notes and
Certificates.
ARTICLE V
SERVICING TERMINATION
SECTION 7.1 Events of Servicing
Termination. (a) If any one of the following events
("Events of Servicing Termination") shall occur and
be continuing:
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(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 (or, for
so long as the Servicer is an Affiliate of
the Seller, the Seller) 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 (or, for so long as the Servicer is
an Affiliate of the Seller, the Seller) duly
to observe or to perform in any material
respect any other covenant or agreement set
forth in the Notes, the Certificates, or in
this Agreement, which failure shall
materially and adversely affect the rights of
Noteholders or Certificateholders and
continue unremedied for a period of ninety
(90) days after the date on which written
notice of such failure, requiring the same to
be remedied, shall have been given to the
Servicer (or, for so long as the Servicer is
an Affiliate of the Seller, the Seller) by
the Owner Trustee or the Indenture Trustee or
to the Owner Trustee, the Indenture Trustee,
the Seller and the Servicer by the Holders of
Notes or Certificates, as applicable,
evidencing not less than twenty-five percent
(25%) of the principal balance of the then
Outstanding Notes, in the aggregate, or if
the Notes have been paid in full and the
Indenture has been discharged in accordance
with its terms, twenty-five percent (25%) of
the Certificate Balance; or
(iii) The entry of a decree or order
by a court or agency or supervisory authority
of competent jurisdiction for the appointment
of a conservator, receiver, liquidator or
trustee for the Seller or the Servicer in any
bankruptcy, insolvency, readjustment of debt,
marshalling of assets and liabilities, or
similar Proceedings, or for the winding up or
liquidation of its affairs, and any such
decree or order continues unstayed and in
effect for a period of sixty (60) consecutive
days; or
(iv) The consent by the Seller or
the Servicer to the appointment of a
conservator, receiver, liquidator or trustee
in any bankruptcy, insolvency, readjustment
of debt, marshalling of assets and
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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
such Event of Servicing Termination shall not have
been remedied, either the Indenture Trustee, or the
Holders of Notes evidencing not less than a majority
of the Outstanding Amount of the Notes, voting as a
group, or if the Notes have been paid in full and the
Indenture discharged in accordance with its terms,
the Owner Trustee pursuant to the Trust Agreement, or
the Holders of Certificates evidencing not less than
a majority of the Certificate Balance, by notice then
given in writing to the Servicer (with a copy to the
Indenture Trustee and the Owner Trustee if given by
the Noteholders), may terminate all of the rights and
obligations of the Servicer under this Agreement. On
or after the receipt by the Servicer of such written
notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Notes,
the Certificates, or the Trust Property or otherwise,
shall pass to and be vested in the Indenture Trustee
or a Successor Servicer appointed under Section 7.2;
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
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electronic records relating to the Receivables to the
Successor Servicer in such electronic form as the
Successor Servicer may reasonably request and shall
cooperate with the successor servicer in the
enforcement of the Dealer Agreements. All reasonable
costs and expenses incurred by the Successor
Servicer, including allowable compensation of
employees and overhead costs, in connection with the
transfer of servicing shall be paid by the outgoing
Servicer (or by the initial Servicer if the outgoing
Servicer is the Indenture Trustee acting on an
interim basis) upon presentation of reasonable
documentation of such costs and expenses.
(b) If any of the foregoing Events of
Servicing Termination occur, the Indenture Trustee
and the Owner Trustee shall have no obligation to
notify Noteholders, Certificateholders or any other
Person of such occurrence prior to the continuance of
such event through the end of any cure period
specified in Section 7.1(a).
SECTION 7.2 Indenture Trustee to Act;
Appointment of Successor Servicer. Upon the
resignation by the Servicer pursuant to Section 6.5
or upon the receipt by the Servicer of notice of
termination as Servicer pursuant to Section 7.1, the
Indenture Trustee shall be the successor in all
respects to the Servicer in its capacity as Servicer
under this Agreement, 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, whether or not the
Indenture has been terminated. In the ordinary
course of business, the Indenture Trustee and any
other Person, in either case acting as Successor
Servicer, may at any time delegate any of its duties
hereunder to any Person, including any of its
affiliates, who agrees to conduct such duties in
accordance with standards comparable to those that
the Servicer executes pursuant to Section 3.1 hereof.
Such delegation shall not relieve the Indenture
Trustee and any other Person, in either case acting
as Successor Servicer, of its liabilities and
responsibilities with respect to such duties and
shall not constitute a resignation within the meaning
of Article VI of this Agreement. The Indenture
Trustee and any other Person, in either case acting
as Successor Servicer, shall provide each Rating
Agency and the Indenture Trustee with written notice
prior to the delegation of any of its duties to any
Person. 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
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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 MBCC as Servicer
hereunder. The Indenture Trustee and such Successor
Servicer shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any
such succession. The Indenture Trustee shall not be
relieved of its duties as Successor Servicer under
this Section 7.2 until a newly appointed Servicer
shall have assumed the responsibilities and
obligations of the terminated Servicer under this
Agreement. Notwithstanding anything herein or in the
Indenture to the contrary, in no event shall the
Indenture Trustee be liable for any Servicing Fee,
for any Advances or for any differential in the
amount of the Servicing Fee paid hereunder and the
amount necessary to induce any Successor Servicer to
act as Successor Servicer under this Agreement and
the transactions set forth or provided for herein.
SECTION 7.3 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 7.2
after the transfer of servicing hereunder, the
outgoing Servicer shall have no further obligations
with respect to the management, 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 records the Successor Servicer
(whether written or automated) with respect to the
Receivable Files. Such access shall be
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afforded without charge, but only upon reasonable
request and during normal business hours at the
offices of the Successor Servicer. Nothing in this
Section 7.3 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 7.3.
SECTION 7.4 Notification to Noteholders
and Certificateholders. Upon any notice of an Event of
Servicing Termination or upon any termination of, or
appointment of a successor to, the Servicer pursuant
to this Article VIII, the Indenture Trustee shall give
prompt written notice thereof to Noteholders, and the
Owner Trustee shall give prompt written notice thereof
to Certificateholders at their respective addresses of
record and to the Rating Agencies.
SECTION 7.5 Waiver of Past Events of
Servicing Termination. The Holders of Notes
evidencing not less than a majority of the Outstanding
Amount (as defined in the Indenture) of the Notes or
the Holders of Certificates evidencing not less than a
majority of the Certificate Balance (in the case of an
Event of Servicing Termination which does not
adversely affect the Indenture Trustee or the
Noteholders) may, on behalf of all Noteholders and
Certificateholders, waive any Event of Servicing
Termination hereunder and its consequences, except an
event resulting from the failure to make any required
deposits to, or payments from, any of the Collection
Account, the Note Distribution Account, the Payahead
Account, the Certificate Distribution Account or the
Reserve Accounts in accordance with this Agreement.
Upon any such waiver of a past Event of Servicing
Termination, such event shall cease to exist, and
shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall
extend to any subsequent or other event or impair any
right arising therefrom, except to the extent
expressly so waived.
ARTICLE VI
TERMINATION
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SECTION 8.1 Optional Purchase of All
Receivables. (a) On each Payment Date following the
last day of a Collection Period as to which the Pool
Balance shall be less than or equal to the Optional
Purchase Percentage (expressed as a seven-digit
decimal) multiplied by the Initial Pool Balance, the
Servicer shall have the option to purchase the Owner
Trust Estate, other than the Collection Account, the
Note Distribution Account, the Payahead Account, the
Certificate Distribution Account and the Reserve
Accounts. To exercise such option, the Servicer shall
notify the Owner Trustee and the Indenture Trustee in
writing no later than the twentieth (20th) 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, including, without
limitation, in the Collection Account, the Note
Distribution Account, the Payahead Account, the
Certificate Distribution Account and the Reserve
Accounts, 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 Redemption Price of the Notes and the
Prepayment Price of the Certificates. The Purchase
Amount for such Payment Date, plus to the extent
necessary all amounts in the Reserve Accounts, shall
be used to make payments in full to Noteholders and
Certificateholders in the manner set forth in Article
IV. Following payment of all amounts payable to the
Noteholders and the Certificateholders, all remaining
available funds (including the amounts remaining in
the Class A Reserve Account and the Class B Reserve
Account) shall be distributed to the Seller.
(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 long-term unsecured debt of the Servicer
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.
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(c) Following the satisfaction and
discharge of the Indenture and the payment in full of
the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the
Noteholders hereunder, and the Indenture Trustee will
continue to carry out its obligations hereunder with
respect to the Certificateholders, including without
limitation making distributions from the Payahead
Account and the Collection Account in accordance with
Section 4.6 and making withdrawals from the Class A
Reserve Account in accordance with Sections 4.5 and
4.7.
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ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 9.1 Amendment. (a) This
Agreement may be amended by the Seller, the Servicer
and the Issuer, with the consent of the Indenture
Trustee, but without the consent of any of the
Noteholders or the Certificateholders to cure any
ambiguity, to correct or supplement any provisions in
this Agreement which may be inconsistent with any
other provisions in this Agreement, or to add, change
or eliminate any other provisions with respect to
matters or questions arising under this Agreement that
shall not be inconsistent with the provisions of this
Agreement; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel delivered
to the Owner Trustee and the Indenture Trustee,
materially and adversely affect the interests of any
Noteholder or Certificateholder.
(b) This Agreement may also be amended
from time to time by the Seller, the Servicer and the
Issuer, with the consent of the Indenture Trustee and
the consent of the Holders of Notes evidencing not
less than a majority of Outstanding Amount of the
Notes, voting as a group, for the purpose of adding
any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement,
or of modifying in any manner the rights of the
Noteholders or the Certificateholders; provided,
however, that no such amendment shall (a) increase or
reduce in any manner the amount of, or accelerate or
delay the timing of, or change the allocation or
priority of, collections of payments on Receivables
or distributions that shall be required to be made on
any Note or Certificate or change the Note Interest
Rate or the Specified Class A Reserve Balance without
the consent of all adversely affected Noteholders or
Certificateholders, or change the Certificate
Interest Rate or the Specified Class B Reserve
Balance without the consent of all of the Class B
Certificateholders then outstanding, (b) reduce the
aforesaid percentage required to consent to any such
amendment, without the consent of the Holders of all
Notes and Certificates affected thereby or (c)
adversely affect the rating of any Class of Notes by
the Rating Agencies without the consent, as
applicable, of Noteholders evidencing not less than
sixty-six and two-thirds percent (66-2/3%) of the
Notes of such Class Outstanding or adversely affect
the rating, if any, of the Certificates by the Rating
Agencies without the consent of Certificateholders
evidencing not less than sixty-six and two thirds
percent (66-2/3)% of the Certificates then
outstanding.
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(c) Prior to the execution of any
amendment or consent pursuant to Section 9.1(b), the
Servicer shall provide written notification of the
substance of such amendment or consent to each Rating
Agency.
(d) Promptly after the execution of
any amendment or consent pursuant to this Section
9.1, the Servicer shall furnish written notification
of the substance of such amendment or consent to each
Noteholder and 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 9.1
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 conclusively 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 the respective rights, duties, indemnities or
immunities of the Owner Trustee or the Indenture
Trustee under this Agreement or otherwise.
SECTION 9.2 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-
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stamped copies of, or filing receipts for, any
document filed as provided above, as soon as
available following such filing.
(b) Neither the Seller nor the
Servicer shall change its name, identity, or
corporate structure in any manner that would, could,
or might make any financing statement or continuation
statement filed by the Seller or the Servicer in
accordance with paragraph (a) above seriously
misleading within the meaning of Section 9-402(7) of
the 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 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 and Reserve Accounts 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 master computer records of the Servicer
(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 respective
interests of the Issuer or the Indenture Trustee in a
Receivable shall be deleted from or modified on the
computer systems of the Servicer when, and only
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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 Vehicle receivables to any prospective purchaser,
lender, or other transferee, the Servicer shall give
to such prospective purchaser, lender, or other
transferee computer tapes, compact disks, records, or
print-outs (including any restored from back-up
archives) that, if they shall refer in any manner
whatsoever to any Receivable, shall indicate clearly
that such Receivable has been sold and is owned by
the 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 records of the Servicer regarding
any Receivable, but, prior to the occurrence of an
Event of Servicing Termination or an event that with
the passage of time and delivery of notice would
constitute an Event of Servicing Termination, only to
the extent that such activities do not disrupt the
normal business operations of the Servicer and do not
adversely affect the ability of the Servicer to
perform its obligations under this Agreement.
(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, vehicle number, name
and address 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
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Issuer and the Indenture Trustee in the
Receivables, and reciting the details of such
filings or referring to prior Opinions of
Counsel in which such details are given, or
(B) stating that, in the opinion of such
Counsel, no such action shall be necessary to
preserve and protect such interest; and
(2) within ninety (90) days after
the beginning of each calendar year beginning
with the first calendar year beginning more
than three months after the Cutoff Date, an
Opinion of Counsel, dated as of a date during
such 90-day period, either (A) stating that,
in the opinion of such Counsel, all financing
statements and continuation statements have
been executed and filed that are necessary
fully to preserve and protect the interest of
the Issuer and the Indenture Trustee in the
Receivables, and reciting the details of such
filings or referring to prior Opinions of
Counsel in which such details are given, or
(B) stating that, in the opinion of such
Counsel, no such action shall be necessary to
preserve and protect such interest.
Each Opinion of Counsel referred to in
clause (i)(1) or (i)(2) above shall specify any
action necessary (as of the date of such opinion) to
be taken in the following year to preserve and
protect such interest.
(j) The Seller shall, to the extent
required by applicable law, cause the Notes to be
registered with the Commission pursuant to Section
12(b) or Section 12(g) of the Exchange Act within the
time periods specified in such sections.
SECTION 9.3 Governing Law. THIS
AGREEMENT SHALL BE CONSTRUED IN ITS ENTIRETY 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 9.4 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 9.12 hereof, or at
such other address as shall be designated by the
Seller or the Servicer in a written notice to
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the Owner Trustee and the Indenture Trustee, (b) in
the case of the Issuer or 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: Moody's
Investors Service, Inc., ABS Monitoring Department,
99 Church Street, New York, New York 10007, and (e)
in the case of S&P, at the following address:
Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., 25 Broadway, 20th Floor, New York,
New York 10004, Attention: Asset Backed Surveillance
Department. Any notice required or permitted to be
mailed to a Noteholder or Certificateholder shall be
given by first class mail, postage prepaid, at the
address of such Holder as shown in the Note Register
or the Certificate Register, as applicable. Any
notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been
duly given, whether or not the Noteholder or
Certificateholder shall receive such notice. Any
notice to be delivered to the Rating Agencies
hereunder shall also be delivered to the Seller.
SECTION 9.5 Severability of
Provisions. If any one or more of the covenants,
agreements, provisions, or terms of this Agreement
shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions, or terms
shall be deemed severable from the remaining
covenants, agreements, provisions, or terms of this
Agreement and shall in no way affect the validity or
enforceability of the other provisions of this
Agreement or of the Notes, the Certificates, or the
rights of the Holders thereof.
SECTION 9.6 Assignment.
Notwithstanding anything to the contrary contained
herein, except as provided in Sections 6.3 and 7.2
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 sixty-six and
two-thirds percent (66- 2/3%) of the Outstanding
Amount of the Notes and the Holders of Certificates
evidencing not less than sixty-six and two-thirds
percent (66-2/3%) of the Certificate Balance.
SECTION 9.7 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
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statements relating to the Receivables for filing
under the provisions of the Relevant UCC of any
applicable jurisdiction.
SECTION 9.8 No Waiver; Cumulative
Remedies. No failure to exercise and no delay in
exercising, on the part of the Owner Trustee, the
Indenture Trustee, the Noteholders or the
Certificateholders, any right, remedy, power or
privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and
privileges therein provided are cumulative and not
exhaustive of any rights, remedies, powers and
privileges provided by law.
SECTION 9.9 Third-Party
Beneficiaries. This Agreement will inure to the
benefit of and be binding upon the parties hereto,
the Noteholders, the Certificateholders, and their
respective successors and permitted assigns. Except
as otherwise provided in this Article IX, 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 9.10 Actions by Noteholder or
Certificateholders. (a) Wherever in this Agreement
a provision is made that an action may be taken or a
notice, demand, or instruction given by Noteholders
or Certificateholders, such action, notice, or
instruction may be taken or given by any Noteholder
or Certificateholder, as applicable, unless such
provision requires a specific percentage of
Noteholders or Certificateholders.
(b) Any request, demand,
authorization, direction, notice, consent, waiver, or
other act by a Noteholder or Certificateholder shall
bind such Noteholder or Certificateholder and every
subsequent holder of such Note or Certificate issued
upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of
anything done or omitted to be done by the Owner
Trustee, the Indenture Trustee or the Servicer in
reliance thereon, whether or not notation of such
action is made upon such Note or Certificate.
SECTION 9.11 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
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deemed to be an original, and all of which
counterparts shall constitute but one and the same
instrument.
SECTION 9.12 Agent for Service. The
agent for service of the Seller and the Servicer in
respect of this Agreement shall be Harvey S. Traison,
Daimler-Benz North America Corporation, 375 Park
Avenue, Suite 3001, New York, New York 10152.
SECTION 9.13 No Bankruptcy Petition.
The Owner Trustee, the Indenture Trustee, the Issuer
and the Servicer each covenants and agrees that,
prior to the date which is one year and one day after
the payment in full of all securities issued by the
Seller or by a trust for which the Seller was the
depositor which securities were rated by any
nationally recognized statistical rating organization
it will not institute against, or join any other
Person in instituting against, the Seller any
bankruptcy, reorganization, arrangement, insolvency
or liquidation Proceedings, or other Proceedings
under any federal or state bankruptcy or similar law.
This Section 9.13 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 either such
Agreement.
SECTION 9.14 Limitation of Liability
of Owner Trustee and Indenture Trustee. (a)
Notwithstanding anything contained herein to the
contrary, this Agreement has been countersigned by
Chase Manhattan Bank Delaware, not in its individual
capacity but solely in its capacity as Owner Trustee
of the Issuer and in no event shall Chase Manhattan
Bank Delaware, 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 Citibank, N.A., not in its individual
capacity but solely as Indenture Trustee and as
Paying Agent, and in no event shall Citibank, N.A.
have any liability for the representations,
warranties, covenants,
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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 and under no circumstances shall Citibank,
N.A. be personally liable for the payment of any
indebtedness or expenses of the Trust.
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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.
DAIMLER-BENZ VEHICLE
RECEIVABLES CORPORATION,
as Seller
By: /s/ H.S. Traison
-----------------------------------------
Name: Harvey S. Traison
Title: President
MERCEDES-BENZ CREDIT
CORPORATION, as Servicer and in its
individual capacity
By: /s/ David A. Klanica
-----------------------------------------
Name: David A. Klanica
Title: Director,
Accounting Services
DAIMLER-BENZ VEHICLE
OWNER TRUST 1998-A,
as Issuer
By: CHASE MANHATTAN BANK DELAWARE
not in its individual
capacity but
solely as Owner Trustee
By: /s/ J. J. Cashin
-----------------------------------------
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Name: John J. Cashin
Title: Vice-President
Accepted and agreed:
CITIBANK, N.A.
as Indenture Trustee
By: /s/ Denise Banaszek
----------------------------------------------
Name: Denise Banaszek
Title: Vice President
CITIBANK, N.A.
as Paying Agent for the
Certificates under the
Trust Agreement
By: /s/ Denise Banaszek
-------------------------------------
Name: Denise Banaszek
Title: Vice President
93
SCHEDULE A
[SCHEDULE OF RECEIVABLES]
Delivered to Indenture Trustee at Closing
94
SCHEDULE B
Location of Receivable Files
Commercial Vehicles
Mercedes-Benz Credit Corporation
1011 Warrenville Road
Suite 500
Lisle, Illinois 60532
Motor Vehicles
Mercedes-Benz Credit Corporation
Seven Village Circle
Suite 300
Roanoke, Texas 76262
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EXHIBIT A
[FORM OF SERVICER'S CERTIFICATE]
The undersigned certifies that he is a
[title] of Mercedes-Benz Credit Corporation, 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 November 1, 1998, by and among the
Company, as Servicer, Daimler-Benz Vehicle
Receivables Corporation, as Seller, and Daimler-Benz
Vehicle Owner Trust 1998-A, 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 [____________], [____].
MERCEDES-BENZ CREDIT
CORPORATION, as Servicer
By:
----------------------------
Name:
Title:
A-1
96
EXHIBIT B
[FORM OF STATEMENT TO NOTEHOLDERS]
B-1
97
EXHIBIT C
[FORM OF STATEMENT TO CERTIFICATEHOLDERS]
C-1
98
EXHIBIT D
[FORM OF SERVICING GUARANTEE AGREEMENT]
D-1