<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 17, 1997
REGISTRATION NO. 333-1664
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
NISSAN AUTO RECEIVABLES
1997-A GRANTOR TRUST
(IN WHICH THE CERTIFICATES REPRESENT UNDIVIDED INTERESTS)
----------------
NISSAN AUTO RECEIVABLES CORPORATION
(ORIGINATOR OF THE TRUST DESCRIBED HEREIN)
DELAWARE 9999 33-0479655
(PRIMARY STANDARD (IRS EMPLOYER NO.)
(STATE OR OTHER INDUSTRIAL
JURISDICTION OF CLASSIFICATION CODE
INCORPORATION OR NUMBER)
ORGANIZATION)
----------------
990 W. 190TH STREET
TORRANCE, CALIFORNIA 90502
(310) 719-8013
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
JOY CROSE, ESQ.
NISSAN AUTO RECEIVABLES CORPORATION
990 W. 190TH STREET
TORRANCE, CALIFORNIA 90502
(310) 719-8024
(NAME, ADDRESS INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
DANIEL METTE, ESQ. DAVID MERCADO, ESQ.
WEIL, GOTSHAL & MANGES LLP CRAVATH, SWAINE & MOORE
767 FIFTH AVENUE 825 EIGHTH AVENUE
NEW YORK, NEW YORK 10153 NEW YORK, NEW YORK 10019
(212-310-8000) (212-474-1000)
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable on or after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
MAXIMUM PROPOSED
OFFERING MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
Asset Backed Certificates,
Class A........................ $755,564,579 100%(1) $755,564,579 $228,958.96(2)
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) $344.83 has been previously paid in connection with the initial filing of
the Registration Statement.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD OR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BY ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS Subject to Completion,
Dated October 17, 1997
$755,564,579
NISSAN AUTO RECEIVABLES 1997-A GRANTOR TRUST
% ASSET BACKED CERTIFICATES, CLASS A
NISSAN AUTO RECEIVABLES CORPORATION
Seller
NISSAN MOTOR ACCEPTANCE CORPORATION
Servicer
The % Asset Backed Certificates (the "Certificates") will consist of two
Classes of Certificates, the Class A Certificates and the Class B Certificates.
Only the Class A Certificates are being offered hereby. The Class A
Certificates will evidence in the aggregate an undivided ownership interest of
87% of a trust (the "Trust") to be formed pursuant to a Pooling and Servicing
Agreement to be entered into among Nissan Auto Receivables Corporation, as
Seller (the "Seller"), Nissan Motor Acceptance Corporation, as Servicer (the
"Servicer") and in its individual capacity, and The Fuji Bank and Trust
Company, as Trustee. The Class B Certificates, which initially will be retained
by the Seller, will evidence in the aggregate an undivided ownership interest
of 13% of the Trust. The rights of the Class B Certificateholders to receive
distributions with respect to the Receivables (as defined below) are
subordinated to the rights of the Class A Certificateholders, to the extent
described herein.
Principal, and interest to the extent of the Pass-Through Rate of % per
annum, will be distributed on or about the 15th day of each month beginning
November 17, 1997 (the "Distribution Date"). The Final Scheduled Distribution
Date on the Certificates will be the February 2003 Distribution Date. The Trust
property will consist of a pool of retail installment sale contracts originated
on or after September 12, 1992, secured by new and used automobiles and light
trucks (the "Receivables"), certain monies due or paid thereunder on or after
October 1, 1997, security interests in the vehicles financed thereby, any
proceeds from claims on any insurance policies covering such vehicles or the
obligors thereunder, the rights of the Seller under certain Agreements
(described herein), the rights of the Seller to seek recourse, if any, against
the dealers that originated the Receivables and the proceeds of any and all of
the foregoing.
There currently is no secondary market for the Class A Certificates and there
is no assurance that one will develop. The Underwriters expect, but are not
obligated, to make a market in the Class A Certificates. There is no assurance
that any such market, if one develops, will continue.
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN THE CLASS A CERTIFICATES, SEE "RISK FACTORS" BEGINNING ON
PAGE 10.
THE CLASS A CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT INTERESTS IN OR OBLIGATIONS OF THE SELLER, THE SERVICER OR ANY OF
THEIR RESPECTIVE AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT SELLER(1)(2)
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<S> <C> <C> <C>
Per Class A Certificate % % %
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Total $ $ $
</TABLE>
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(1) Plus accrued interest at the Pass-Through Rate calculated from ,
1997.
(2) Before deducting expenses payable by the Seller estimated to be $688,000.
The Class A Certificates are offered by the Underwriters when, as, and if
issued and accepted by the Underwriters and subject to their right to reject
orders in whole or in part. It is expected that the Class A Certificates will
be delivered in book-entry form on or about , 1997.
J.P. MORGAN & CO.
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
The date of this Prospectus is , 1997.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE CLASS A CERTIFICATES
OFFERED HEREBY. SUCH TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF THE
CLASS A CERTIFICATES TO COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF
PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
AVAILABLE INFORMATION
Nissan Auto Receivables Corporation (the "Seller"), as originator and on be-
half of the Trust, has filed a Registration Statement on Form S-1 under the
Securities Act of 1933, as amended (the "Securities Act"), with the Securities
and Exchange Commission (the "Commission") with respect to the Class A Certif-
icates offered pursuant to this Prospectus. For further information, reference
is made to the Registration Statement and amendments thereof and to the exhib-
its thereto, which are available for inspection without charge at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; Seven World Trade Center, Suite 1300, New York, New
York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of the Registration Statement and amendments thereof
and exhibits thereto may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission also maintains a site on the World Wide Web at
"http://www.sec.gov" at which users can view and download copies of reports,
proxy, information statements and other information filed electronically
through the Electronic Data Gathering, Analysis and Retrieval system.
REPORTS TO CLASS A CERTIFICATEHOLDERS BY THE TRUSTEE
The Fuji Bank and Trust Company (the "Trustee"), as Trustee for the Class A
Certificateholders and Class B Certificateholders (collectively, the
"Certificateholders") under the Pooling and Servicing Agreement to be dated as
of October 1, 1997, by and among the Seller, the Servicer, Nissan Motor Ac-
ceptance Corporation and the Trustee, will provide to Class A
Certificateholders (which shall be Cede & Co. as the nominee of DTC unless De-
finitive Certificates (as defined herein) are issued under the limited circum-
stances described herein) monthly and annual reports concerning the Receiv-
ables. Copies of such reports may be obtained by beneficial owners of Class A
Certificates by delivering a request in writing to the Trustee at The Fuji
Bank and Trust Company, Two World Trade Center, 81st Floor, New York, New York
10048, Attention: Corporate Trust Administration. See "The Certificates--
Statements to Class A Certificateholders," "--General," and "--Book-Entry Reg-
istration." The Seller, as originator of the Trust, will be subject to the in-
formational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and, in accordance therewith, will file reports and
other information with the Commission. Copies of reports and other information
may be inspected and copied at the public reference facilities of the Commis-
sion identified above in "Available Information". The Seller intends to dis-
continue filing such reports upon completion of the reporting period required
by Section 15(d) of the Exchange Act. The Trustee, however, will continue to
provide the Class A Certificateholders with the monthly and annual reports
concerning the Receivables as described above.
2
<PAGE>
SUMMARY
This summary is qualified in its entirety by reference to the detailed informa-
tion appearing elsewhere in this Prospectus. Certain capitalized terms used in
the Summary are defined elsewhere in this Prospectus. A listing of the pages on
which some of such terms are defined is found in the "Index of Terms."
ISSUER.................
Nissan Auto Receivables 1997-A Grantor Trust (the
"Trust"), to be formed by the Seller pursuant to a
Pooling and Servicing Agreement to be dated as of
October 1, 1997 (the "Agreement"), among the Seller,
Nissan Motor Acceptance Corporation ("NMAC"), as
Servicer (in such capacity, the "Servicer") and in
its individual capacity, and The Fuji Bank and Trust
Company, as trustee (the "Trustee").
SELLER................. Nissan Auto Receivables Corporation, a wholly-owned
subsidiary of NMAC.
SERVICER............... NMAC, a wholly-owned subsidiary of Nissan Motor Cor-
poration in U.S.A. ("NMC"). NMC, the primary dis-
tributor of Nissan and Infiniti vehicles in the con-
tinental United States, is an indirect wholly-owned
subsidiary of Nissan Motor Co., Ltd., a Japanese
corporation.
SECURITIES OFFERED.....
The Certificates consist of two classes, entitled %
Asset Backed Certificates, Class A (the "Class A
Certificates"), and % Asset Backed Certificates,
Class B (the "Class B Certificates," and collec-
tively with the Class A Certificates, the "Certifi-
cates"). Only the Class A Certificates are being of-
fered hereby. Each Certificate will represent a
fractional undivided interest in the Trust. The
Trust property will consist of a pool of retail in-
stallment sale contracts originated on or after Sep-
tember 12, 1992, secured by new and used automobiles
and light trucks (the "Receivables"), certain monies
paid thereunder on or after October 1, 1997 (the
"Cutoff Date"), security interests in the vehicles
securing the Receivables ("Financed Vehicles"), any
proceeds from claims on any physical damage, credit
life, credit disability or other insurance policies
covering such vehicles or the obligors thereunder,
the rights of the Seller under the Purchase Agree-
ment, the Custody and Pledge Agreement and the Yield
Supplement Agreement (each as defined herein), the
rights of the Seller to seek recourse, if any,
against the dealers that originated the Receivables,
the rights of the Seller in certain rebates of pre-
miums and other amounts relating to insurance poli-
cies and other items financed under the Receivables
and the proceeds of any and all of the foregoing.
The Class A Certificates shall be issued in fully
registered form in denominations of $1,000 and inte-
gral multiples thereof (except that one Certificate
may be issued in an amount not an integral multiple
of $1,000). The Receivables will be purchased by the
Seller from NMAC pursuant to a Purchase Agreement
(the "Purchase Agreement") between the Seller and
NMAC providing for such purchase on or before the
date of issuance of the Certificates.
The Class A Certificates will evidence in the aggre-
gate an undivided ownership interest of 87% (the
"Class A Percentage") of the Trust (initially repre-
senting $755,564,579) and the Class B Certificates
will evidence in the aggregate an undivided owner-
ship interest of 13% (the "Class B Percentage") of
the Trust (initially representing $112,900,454.86).
The Class B Certificates are subordinated to the
Class A Certificates to the extent described herein.
The Class B Certificates are not being offered
hereby and initially will be retained by the Seller.
The Class B Certificates may be transferred in ac-
cordance with the terms of the Agreement.
3
<PAGE>
REGISTRATION OF THE
CLASS A CERTIFICATES..
The Class A Certificates initially will be repre-
sented by one or more Class A Certificates regis-
tered in the name of Cede & Co. ("Cede"), as the
nominee of The Depository Trust Company ("DTC"). No
person acquiring an interest in the Class A Certifi-
cates (a "Class A Certificate Owner") will be enti-
tled to receive a definitive certificate represent-
ing such person's interest, except in the event that
Definitive Certificates (as defined herein) are is-
sued under the limited circumstances described here-
in. All references herein to Class A
Certificateholders shall reflect the rights of Class
A Certificate Owners, as such rights may be exer-
cised through DTC and its Participants (as defined
herein), except as otherwise specified herein. See
"The Certificates--Definitive Certificates."
PASS-THROUGH RATE...... % per annum.
INTEREST............... On each Distribution Date, the Trustee shall pass
through and distribute pro rata to the holders of
record of Class A Certificates (the "Class A
Certificateholders") as of the fourteenth day of the
current calendar month or, if Definitive Certifi-
cates are issued, the last day of the related Col-
lection Period (the "Record Date"), interest at one-
twelfth of the Pass-Through Rate, calculated on the
basis of a 360-day year consisting of twelve 30-day
months, on the Class A Certificate Balance (as de-
fined herein) as of the last day of the related Col-
lection Period (as defined herein) generally to the
extent of funds available from (i) Available Inter-
est (as Available Interest has been reduced by reim-
bursing the Servicer for any outstanding Advances
and paying the Servicing Fee); (ii) the Subordina-
tion Spread Account; and (iii) the Class B Percent-
age of Available Principal. The "Class A Certificate
Balance" shall equal, initially, the Class A Per-
centage of the Pool Balance as of the Cutoff Date
and thereafter shall equal the initial Class A Cer-
tificate Balance reduced by all principal distribu-
tions on the Class A Certificates.
PRINCIPAL.............. On each Distribution Date, the Trustee shall pass
through and distribute pro rata to Class A
Certificateholders as of the related Record Date the
Class A Percentage of all collections on the Receiv-
ables allocable to principal. Such principal, gener-
ally to the extent of funds available from (i)
Available Principal (as Available Principal has been
reduced as described above with respect to interest
distributions to the Class A Certificateholders);
(ii) the Subordination Spread Account; and (iii)
Available Interest (as Available Interest has been
reduced by reimbursing the Servicer for any out-
standing Advances and paying the Servicing Fee and
from making interest distributions to the Class A
Certificateholders), will be passed through on each
Distribution Date to the Class A Certificateholders
in an amount equal to the Class A Percentage of: (a)
the principal portion of all payments received dur-
ing the related Collection Period, including prepay-
ments of principal; (b) the principal balance of
each Receivable that was purchased by the Servicer
or repurchased by the Seller, in each case, under an
obligation that arose during the related Collection
Period; and (c) the principal balance of each Re-
ceivable liquidated by the Servicer during the re-
lated Collection Period. A "Collection Period" with
respect to a Distribution Date will be the calendar
month preceding the month in which such Distribution
Date occurs, or, in the case of the initial Distri-
bution Date, the period from the Cutoff Date through
the last day of the calendar month preceding the
month in which the initial Distribution Date occurs.
4
<PAGE>
SUBORDINATION.......... The rights of the holders of record of the Class B
Certificates (the "Class B Certificateholders" and,
together with the Class A Certificateholders, the
"Certificateholders") to receive distributions to
which they would otherwise be entitled with respect
to the Receivables will be subordinated to the
rights of the Class A Certificateholders, as more
fully described under "The Certificates--Subordina-
tion of the Class B Certificates; Subordination
Spread Account." The Class B Certificateholders will
not receive any distributions of interest or princi-
pal with respect to a Distribution Date until the
full amount of interest and principal on the Class A
Certificates relating to such Distribution Date has
been distributed to the Class A Certificateholders.
This subordination is intended to enhance the like-
lihood of timely receipt by Class A
Certificateholders of the full amount of interest
and principal required to be distributed to them,
and to afford such Class A Certificateholders lim-
ited protection against losses in respect of the Re-
ceivables.
The protection afforded to the Class A
Certificateholders by the subordination feature
described above will be effected by the preferential
right of the Class A Certificateholders to receive
current distributions from collections on or in
respect of the Receivables to the extent described
herein. In addition, the Class A Certificateholders
will have the benefit of a segregated trust account
held by the Trustee for their exclusive benefit (the
"Subordination Spread Account"), as described below.
SUBORDINATION SPREAD
ACCOUNT...............
The Subordination Spread Account will be created pur-
suant to a Custody and Pledge Agreement dated as of
October 1, 1997 (the "Custody and Pledge Agreement")
between the Seller and The Fuji Bank and Trust Com-
pany, as custodian for the benefit of the Class A
Certificateholders, and will be funded with an ini-
tial deposit by the Seller of cash or Eligible In-
vestments maturing on or prior to the initial Dis-
tribution Date and having a value of $8,684,650.34
(the "Subordination Initial Deposit"). The Subordi-
nation Initial Deposit thereafter will be augmented
by the deposit in the Subordination Spread Account
of all amounts otherwise distributable to the Class
B Certificateholders and all Excess Amounts other-
wise distributable to the Seller until the amount in
the Subordination Spread Account reaches an amount
equal to the Specified Subordination Spread Account
Balance. "Excess Amounts" in respect of a Distribu-
tion Date will be all interest collections on or in
respect of the Receivables on deposit in the Certif-
icate Account in respect of such Distribution Date,
after the Servicer has been reimbursed for any out-
standing Advances and has been paid the Servicing
Fee (including any unpaid Servicing Fees with re-
spect to one or more prior Collection Periods) and
after giving effect to all distributions of interest
and principal required to be made to the Class A and
Class B Certificateholders on such Distribution
Date. Thereafter, amounts otherwise distributable to
the Class B Certificateholders and Excess Amounts
otherwise distributable to the Seller will be depos-
ited in the Subordination Spread Account to the ex-
tent necessary to maintain the amount in the Subor-
dination Spread Account at an amount equal to the
Specified Subordination Spread Account Balance. On
each Distribution Date, funds will be withdrawn from
the Subordination Spread Account as described herein
for distribution to the Class A Certificateholders
to
5
<PAGE>
cover any shortfalls in the amount of interest and
principal required to be distributed to them. The
"Specified Subordination Spread Account Balance"
with respect to any Distribution Date will be equal
to $13,026,975.51 except that in the event that on
any Distribution Date (i) the annualized average for
the preceding three Collection Periods of the per-
centage equivalents of the ratios of net losses
(i.e., the net balances of all Receivables which are
determined to be uncollectible in the Collection Pe-
riod, less any Liquidation Proceeds with respect to
such net balances from that or prior Collection Pe-
riods) to the Pool Balance as of the first day of
each such Collection Period exceeds 2.5% or (ii) the
average for the preceding three Collection Periods
of the percentage equivalents of the ratios of the
number of Receivables that are delinquent 60 days or
more to the outstanding number of Receivables ex-
ceeds 2.0%, then the Specified Subordination Spread
Account Balance for such Distribution Date (and for
each succeeding Distribution Date until the relevant
averages have not exceeded the specified percentages
in clauses (i) and (ii) above for three successive
Distribution Dates) shall be a dollar amount equal
to (x) 22% of the Pool Balance as of the first day
of the related Collection Period minus (y) the ex-
cess of the Pool Balance over the Class A Certifi-
cate Balance both as of the first day of such Col-
lection Period, but in no event shall the Specified
Subordination Spread Account Balance be more than
$86,846,503.39, or less than $13,026,975.51. On any
Distribution Date on which the aggregate balance of
the Class A Certificates is $113,334,686.85 or less,
after giving effect to the distributions on such
Distribution Date, the Specified Subordination
Spread Account Balance shall be the greater of the
balance described above or $21,711,625.85. The Sub-
ordination Spread Account will be maintained as a
segregated account with The Fuji Bank and Trust Com-
pany and will not be part of the Trust.
The Seller may, from time to time after the date of
this Prospectus, request each rating agency then
rating the Class A Certificates to approve a
different formula for determining the Specified
Subordination Spread Account Balance or a change in
the manner by which the Subordination Spread Account
is funded, if such new formula or manner would not
affect the then-current rating of the Class A
Certificates. See "The Certificates--Subordination
of the Class B Certificates; Subordination Spread
Account."
On each Distribution Date, after giving effect to all
distributions made on such Distribution Date, any
amounts in the Subordination Spread Account in
excess of the Specified Subordination Spread Account
Balance will be distributed as described under "The
Certificates--Subordination of the Class B
Certificates; Subordination Spread Account" and,
upon such distribution, the Class A
Certificateholders will have no further rights in,
or claims to, such amounts.
YIELD SUPPLEMENT
RESERVE ACCOUNT AND
YIELD SUPPLEMENT
AGREEMENT.............
In order to maintain the rating of the Class A
Certificates at the initial level, a segregated
trust account will be established by the Seller and
pledged to and maintained by the Class A Agent for
the benefit of the Class A Certificateholders (the
"Yield Supplement Reserve Account"). Pursuant to the
Agreement, on each Distribution Date, to the extent
funds are available, the Class A Agent will withdraw
from the Yield Supplement Reserve Account and
deposit in the Certificate Account an
6
<PAGE>
amount equal to the Yield Supplement Amount. The
"Yield Supplement Amount" is an amount (if positive)
calculated by the Servicer, which is the amount with
respect to each Receivable (other than a Liquidated
Receivable, after the Collection Period in which
such Receivable became a Liquidated Receivable), for
any Collection Period, equal to one-twelfth times
(i) interest calculated at a rate equal to the sum
of the Pass-Through Rate and 1.00% (the "Servicing
Rate"), minus (ii) interest at such Receivable's
APR, in each case on such Receivable's principal
balance as of the first day of the Collection
Period.
The initial amount of the Yield Supplement Reserve
Account will be $ (the "Initial Yield
Supplement Reserve Amount"). The amount required to
be on deposit in the Yield Supplement Reserve
Account (the "Required Yield Supplement Reserve
Amount") will be equal to the lesser of (i) the
maximum aggregate Yield Supplement Amounts that will
become due under the Yield Supplement Agreement,
assuming that payments on the Receivables are made
on their scheduled due dates and that no Receivable
becomes a Prepaid Receivable, or (ii) the Initial
Yield Supplement Reserve Amount. To the extent that
amounts on deposit in the Yield Supplement Reserve
Account exceed the Required Yield Supplement Reserve
Amount, the excess will be released to the Seller.
The Yield Supplement Reserve Account will be
maintained by the Class A Agent for the benefit of
the Class A Certificateholders and will not be part
of the Trust. See "The Certificates--Yield
Supplement Reserve Account and Yield Supplement
Agreement." A "Prepaid Receivable" is a Receivable
which during a Collection Period is prepaid in full
or accelerated under certain circumstances, or with
respect to which the related Financed Vehicle is
repossessed or becomes a total loss.
The Seller will enter into a yield supplement agree-
ment (the "Yield Supplement Agreement") with the
Class A Agent and the Servicer, and the Seller will
assign the Yield Supplement Agreement to the Trust.
The Seller has no obligation to further fund the
Yield Supplement Reserve Account after the deposit
of the Initial Yield Supplement Reserve Amount. See
"The Certificates--Yield Supplement Reserve Account
and Yield Supplement Agreement."
DISTRIBUTION DATE...... The 15th day of each month (or if such 15th day is
not a business day, the next following business
day).
ADVANCES............... The Servicer will advance each month to the Trust, in
respect of each Receivable, an amount equal to the
product of the principal balance of the Receivable
as of the first day of the related Collection Period
and one-twelfth of its APR minus the amount of in-
terest actually received on the Receivable with re-
spect to such Collection Period (an "Advance"). The
Servicer will not be required to make any Advance
(other than an Advance of an interest shortfall
arising from a Prepaid Receivable) to the extent
that it does not expect to recoup the Advance from
subsequent collections or recoveries. No advances of
principal will be made with respect to the Receiv-
ables. See "The Certificates--Advances." The
Servicer will be reimbursed for Advances from col-
lections of interest on the Receivables prior to
distribution of any Available Interest to
Certificateholders. See "The Certificates--Distribu-
tions on Certificates."
7
<PAGE>
REPURCHASES OF CERTAIN
RECEIVABLES...........
The Seller will be obligated to repurchase any Re-
ceivable if the interest of the Trust therein is ma-
terially adversely affected by a breach of any rep-
resentation or warranty made by the Seller with
respect to such Receivable if the breach has not
been cured by the last day of the second month fol-
lowing the discovery by or notice to the Seller of
the breach. NMAC will be obligated to repurchase
such Receivable from the Seller pursuant to the Pur-
chase Agreement contemporaneously with the Seller's
repurchase from the Trust. See "The Certificates--
Sale and Assignment of Receivables."
SERVICER FEE........... The Servicer will receive each month a fee for ser-
vicing the Receivables (the "Servicing Fee"). The
monthly Servicing Fee shall be one-twelfth of 1.00%
of the Pool Balance as of the first day of the re-
lated Collection Period. The Servicer shall also re-
ceive any late, prepayment and other administrative
fees and expenses collected during such month plus
reinvestment proceeds on any payments received in
respect of the Receivables (the "Supplemental Ser-
vicing Fee" and together with the Servicing Fee, the
"Servicer Fee"). See "The Certificates--Servicing
Compensation."
OPTIONAL PURCHASE...... The Servicer may purchase all of the Receivables as
of the last day of any month on or after which the
aggregate principal balance of the Receivables (af-
ter giving effect to the current calendar month's
collections) declines below 10% of the aggregate
face amount of the original Pool Balance. The pur-
chase price will be equal to the aggregate Purchase
Amounts, and will be distributed to
Certificateholders on the next following Distribu-
tion Date. See "The Certificates--Termination."
TRUSTEE................
The Fuji Bank and Trust Company.
CLASS A AGENT.......... The Fuji Bank and Trust Company.
TAX STATUS............. The Trust will be characterized as a grantor trust
for federal income tax purposes and will not be sub-
ject to federal income tax. Class A Certificate Own-
ers must report their respective allocable shares of
all income earned on the Trust assets, and, subject
to certain limitations, individuals, estates and
trusts may deduct their respective allocable shares
of reasonable servicing and other fees. See "Federal
Income Tax Consequences--Classification of the
Trust." Individuals should consult their own tax ad-
visors to determine the federal, state, local and
other tax consequences of the purchase, ownership
and disposition of the Class A Certificates. Pro-
spective investors should note that no rulings have
been or will be sought from the Internal Revenue
Service (the "Service") with respect to any of the
federal income tax consequences discussed herein,
and no assurance can be given that the Service will
not take contrary positions. See "Federal Income Tax
Consequences."
The exact characterization for federal income tax
purposes of the payments received with respect to
the Yield Supplement Agreement is not clear. Argua-
bly, the arrangement set forth in the Yield Supple-
ment Agreement should be treated as a loan made by
the Class A Certificate Owners to the Seller in an
amount equal to the discounted present value of the
Yield Supplement Amounts, if any, which are expected
to be received, resulting in original issue discount
to the Class A Certificate
8
<PAGE>
Owners for the amount of the discount. Alternative-
ly, it is possible that the entire amount of Yield
Supplement Amounts should be included in income as
accrued or received and not treated as interest and
that the Class A Certificate Owners should also be
entitled to amortize the portion of the purchase
price allocable to their right to receive Yield Sup-
plement Amounts, possibly on a straight-line basis
over the term of the Class A Certificates. See "Fed-
eral Income Tax Consequences--Payments Under the
Yield Supplement Agreement." In such latter case,
such payments may not constitute "portfolio inter-
est." See "Federal Income Tax Consequences--Foreign
Class A Certificate Owners."
ERISA CONSIDERATIONS... As described herein, the Class A Certificates may, in
general, be purchased by employee benefit plans that
are subject to the Employee Retirement Income Secu-
rity Act of 1974, as amended ("ERISA"), subject to
certain conditions. See "ERISA Considerations."
RATING................. As a condition of issuance, the Class A Certificates
will be rated in the highest rating category by at
least one nationally recognized rating agency (each
such agency, a "Rating Agency"). There is no assur-
ance that a rating will not be lowered or withdrawn
by a Rating Agency based on a change in circum-
stances deemed by such Rating Agency to adversely
affect the Class A Certificates. See "Rating of the
Class A Certificates."
9
<PAGE>
RISK FACTORS
Prospective investors in the Class A Certificates should consider the follow-
ing risk factors in connection with the purchase of the Class A Certificates.
LIMITED ASSETS
The Trust will not have, nor is it permitted or expected to have, any signifi-
cant assets or sources of funds other than the Receivables and the Subordina-
tion Spread Account. The Certificates represent interests solely in the Trust
and are not obligations of, and will not be insured or guaranteed by, the
Seller, the Servicer or any of their respective affiliates, or the Trustee or
any other person or entity. Holders of the Class A Certificates must rely for
repayment upon payments on the Receivables and, if and to the extent avail-
able, amounts on deposit in the Subordination Spread Account. Similarly, al-
though funds in the Subordination Spread Account will be available on each
Distribution Date to cover shortfalls in distributions of interest and princi-
pal on the Class A Certificates, amounts to be deposited in the Subordination
Spread Account are limited in amount, and if the Subordination Spread Account
is exhausted, the Trust will depend solely on current distributions on the Re-
ceivables to make payments on the Certificates. On any Distribution Date when
the amount on deposit in the Subordination Spread Account exceeds the Speci-
fied Subordination Spread Account Balance, the amount of such excess will not
be available to the Class A Certificateholders on any subsequent Distribution
Date. See "The Certificates-Subordination of the Class B Certificates; Subor-
dination Spread Account." In limited circumstances, the Trust will also have
access to funds in the Yield Supplement Reserve Account. See "The Certifi-
cates-Yield Supplement Reserve Account and Yield Supplement Agreements."
PREPAYMENT CONSIDERATIONS
The weighted average lives of the Class A Certificates will be reduced by full
or partial prepayments on the Receivables. The Receivables are prepayable at
any time without penalty. Prepayments may result from payments by or on behalf
of the related Obligors, the receipt of proceeds from physical damage or
credit life and/or credit disability insurance, repurchases by NMAC or the
Seller as a result of certain uncured breaches of representations and warran-
ties made with respect to the Receivables and purchases by the Servicer as a
result of certain uncured breaches of the covenants made by it with respect to
the servicing of the Receivables. See "The Receivables--Maturity and Prepay-
ment Considerations." Prepayments can also result from the liquidation of ve-
hicles and the Receivables. NMAC's retail loss experience with respect to its
total portfolio of receivables serviced for itself and third parties in the
year ended March 31, 1997 is higher than in previous years due to an effort to
finance a broader credit range of customers to support the sale of Nissan and
Infiniti vehicles and a general increase in personal bankruptcy filings. If
the Trust experiences high levels of losses on the Receivables, correspond-
ingly high levels of liquidations and prepayments may result. Such prepayments
could shorten the weighted average life of the Class A Certificates.
The Seller maintains only limited records regarding prepayment rates and is
not aware of publicly available industry statistics that set forth principal
prepayment experience for retail installment sales contracts similar to the
Receivables. The Seller can make no prediction as to the actual prepayment
rates that will be experienced on the Receivables. The Seller, however, be-
lieves that the actual rate of prepayments will result in the weighted average
life of the Receivables, and therefore of the Class A Certificates, being
shorter than the period from the Closing Date to the Final Scheduled Maturity
Date.
Substantially all reinvestment risks (which will vary from investor to invest-
or, but which may include the risk that principal payments will have to be re-
invested at a lower yield) resulting from a faster or slower incidence of pre-
payment of Receivables will be borne by the Certificateholders.
SECURITY INTEREST IN FINANCED VEHICLES
Because of the administrative burden and expense that would be entailed in do-
ing so, the certificates of title for the Financed Vehicles, which will name
NMAC as secured party, will not be amended or reissued to reflect the assign-
ment of the security interests in the Financed Vehicles by NMAC to the Seller
or by the Seller to the Trust. In most states, as against creditors of the re-
lated obligor, such assignment is an effective conveyance of such security in-
terest. In the absence of fraud or forgery by the related Obligor (as herein
defined) or administrative error by state or local recording officials, the
notation of the lien of NMAC on the certificates of title and NMAC's posses-
sion of the certificates of title (for purposes of servicing the Receivables)
should be sufficient to protect the
10
<PAGE>
Trust against the rights of subsequent purchasers of the related Financed Vehi-
cles and subsequent lenders who take security interests in the related Financed
Vehicles. If there are any Financed Vehicles as to which NMAC failed to obtain
perfected security interests, such security interests would be subordinate to,
among others, subsequent purchasers of such Financed Vehicles and holders of
perfected security interests in such Financed Vehicles. In addition, because
neither the Trust nor the Trustee will be listed as legal owner on the certifi-
cates of title to the Financed Vehicles, the security interests in the Financed
Vehicles could be defeated through fraud, forgery or negligence. See "Certain
Legal Aspects of the Receivables--Security Interest in Financed Vehicles."
CONSUMER PROTECTION LAWS
The Receivables are subject to federal and state consumer protection laws which
impose requirements with respect to the making, transfer, acquisition, enforce-
ment and collection of consumer loans. Such laws, as well as any new laws or
rules which may be adopted, may adversely affect the Servicer's ability to col-
lect on the Receivables. In addition, failure by the Seller to have complied,
or the Servicer to comply, with such requirements could adversely affect the
enforceability of the Receivables. Each of NMAC and the Seller will make repre-
sentations and warranties relating to the validity and enforceability of the
Receivables and their compliance with applicable law in connection with their
performance of the transactions contemplated by the Purchase Agreement and the
Agreement. Pursuant to the Purchase Agreement and the Agreement, if the Trust's
interest in a Receivable is materially and adversely affected by the failure of
such Receivable to comply with applicable requirements of consumer protection
law, such representation or warranty is not complied with and such noncompli-
ance continues beyond the applicable cure period, the Receivables affected
thereby will be repurchased by NMAC or the Seller under the Purchase Agreement
and Agreement, respectively. See "Certain Legal Aspects of the Receivables--
Consumer Protection Laws."
CREDIT ENHANCEMENT
Credit enhancement with respect to the Class A Certificates will be provided by
the subordination of the Class B Certificates and the funds in the Subordina-
tion Spread Account. These funds consist of the amounts (both principal and in-
terest) otherwise distributable to holders of the Class B Certificates that are
required under the Agreement to be deposited in the Subordination Spread Ac-
count. The amount available for distribution to the
Certificateholders on any Distribution Date and the time necessary for the Sub-
ordination Spread Account to reach the specified Subordination Spread Account
Balance after the Closing Date will be affected by the delinquency, net loss,
repossession and prepayment experience of the Receivables and, therefore, can-
not be accurately predicted. In addition, the amount required to be on deposit
in the Subordination Spread Account with respect to any Distribution Date will
be limited to the Specified Subordination Spread Account Balance for such Dis-
tribution Date.
CERTAIN LEGAL ASPECTS--BANKRUPTCY CONSIDERATIONS
The Seller will warrant to the Trust in the Agreement that the sale of the Re-
ceivables by the Seller to the Trust is a valid sale of the Receivables to the
Trust. Notwithstanding the foregoing, if the Seller were to become a debtor in
a bankruptcy case and a creditor or trustee-in-bankruptcy of such debtor or
such debtor itself were to take the position that the sale of Receivables to
the Trust should instead be treated as a pledge of such Receivables to secure a
borrowing of such debtor, delays in payments of collections of Receivables to
the related security holders could occur or (should the court rule in favor of
any such trustee, debtor or creditor) reductions in the amounts of such pay-
ments could result. If the transfer of Receivables to the Trust is treated as a
pledge instead of a sale, a tax or government lien on the property of the
Seller arising before the transfer of a Receivable to the Trust may have prior-
ity over the Trust's interest in such Receivable. If the transactions contem-
plated herein are treated as a sale, the Receivables would not be part of the
Seller's bankruptcy estate and would not be available to the Seller's credi-
tors. See "Certain Legal Aspects of the Receivables--Certain Bankruptcy Consid-
erations."
The Agreement will provide that the Servicer may retain all payments on or in
respect of the Receivables received from Obligors and all proceeds of Receiv-
ables collected during each Collection Period without segregation in its own
accounts until deposited in the Collection Account (as defined below) on the
business day prior to the related Distribution Date unless and until (i) NMAC
ceases to be the Servicer, (ii) an Event of Default exists and is continuing or
(iii) the short-term unsecured debt of NMAC ceases to be rated at least P-1 by
Moody's and A-1 by S&P, and alternative arrangements acceptable to the Rating
Agencies are not made. The Servicer does not currently have the rating referred
to in clause (iii). As a result, following execution of the Agreement, the
Servicer will be required to deposit all such payments and proceeds into the
Collection Account not later than one Business
11
<PAGE>
Day after receipt. Pending deposit into the Collection Account, collections on
the related Receivables will not be segregated from funds of the Servicer. If
the Servicer were to become a debtor in a bankruptcy case or were otherwise un-
able to remit such funds, the Class A Certificateholders might incur a delay in
the distribution or a loss of funds.
LIMITED LIQUIDITY
There is currently no secondary market for the Class A Certificates. The Under-
writers currently intend to make a market in the Class A Certificates, but they
are under no obligation to do so. There can be no assurance that a secondary
market will develop or, if a secondary market does develop with respect to the
Class A Certificates, that it will provide the Class A Certificateholders with
liquidity of investment or that it will continue for the life of the Class A
Certificates.
UNCERTAINTY OF FEDERAL INCOME TAX CONSEQUENCES OF YIELD SUPPLEMENT AGREEMENT
Tax counsel is unable to opine as to the Federal income tax consequences of the
Yield Supplement Agreement. See "Federal Income Tax Consequences--Payments Un-
der the Yield Supplement Agreement."
FORMATION OF THE TRUST
The Seller will establish the Trust by selling and assigning the Trust proper-
ty, as described below, to the Trustee in exchange for the Certificates. The
Servicer will service the Receivables pursuant to the Agreement and will be
compensated for acting as the Servicer. See "The Certificates--Servicing Com-
pensation." To facilitate servicing and to minimize administrative burden and
expense, the Servicer will retain physical possession of the Receivables and
documents relating thereto as custodian for the Trustee. Due to the administra-
tive burden and expense, the certificates of title to the Financed Vehicles
will not be amended to reflect the assignment of the security interest in the
Financed Vehicles to the Trustee. In the absence of such amendment, the Trustee
may not have a perfected security interest in the Financed Vehicles in all
states. See "Certain Legal Aspects of the Receivables--Security Interests in
the Financed Vehicles." The Trustee will not be responsible for the legality,
validity or enforceability of any security interest in any Financed Vehicle.
If the protection provided to the Class A Certificateholders by the subordina-
tion of the Class B Certificates and by the Subordination Spread Account is in-
sufficient, the Class A Certificateholders would have to look solely to the Ob-
ligors (as defined below) on the Receivables, the proceeds from the
repossession and sale of Financed Vehicles which secure defaulted Receivables
and the proceeds from Dealer Recourse (as defined below). In such event, cer-
tain factors, such as the Trustee's not having perfected security interests in
the Financed Vehicles in all states, may affect the Trust's ability to repos-
sess and sell the collateral securing the Receivables, and thus may reduce the
proceeds to be distributed to Certificateholders. See "The Certificates--Subor-
dination of the Class B Certificates; Subordination Spread Account" and "Cer-
tain Legal Aspects of the Receivables."
PROPERTY OF THE TRUST
Each Certificate represents a fractional undivided interest in the Trust. The
property of the Trust will consist of a pool of retail installment sale con-
tracts originated on or after September 12, 1992, between Nissan and Infiniti
dealers (the "Dealers") and retail purchasers (the "Obligors") secured by new
and used automobiles and light trucks and all principal and interest payments
made on or after the Cutoff Date and certain other property. In some states, a
"demonstration" vehicle is not titled so that vehicles used as demonstration
vehicles in such states may be classified as new vehicles. The Receivables were
originated by Dealers in accordance with NMAC's requirements under agreements
with Dealers governing the assignment of the Receivables to NMAC. The Receiv-
ables have been so assigned and evidence the indirect financing made available
by NMAC to the Obligors. On or prior to the issuance of the Certificates, the
Receivables will be sold to the Seller by NMAC, but will be serviced by NMAC.
The property of the Trust also will include (i) such amounts as from time to
time may be held in separate trust accounts (the "Collection Account" and the
"Certificate Account") established and maintained pursuant to the Agreement;
(ii) security interests in the Financed Vehicles and any accessions thereto;
(iii) any Dealer Recourse; (iv) the right to proceeds of credit life and credit
disability insurance covering the Financed Vehicles or Obligors; (v) the rights
of the Seller under the Purchase Agreement, the Custody and Pledge Agreement
and the Yield Supplement Agreement; (vi) certain rebates of premiums and other
amounts relating to certain insurance policies and other items financed under
the Receivables in effect as of the Cutoff Date; and (vii) any and all proceeds
of the foregoing. The property of the Trust does not include amounts on deposit
from time to time in the Yield Supplement Reserve Account or the Subordination
Spread Account.
Additionally, pursuant to agreements between NMAC and the Dealers, the Dealers
are obligated to repurchase Receivables from NMAC which do not meet certain
representations made by the Dealers ("Dealer Recourse"). Such Dealer Recourse
is limited to breaches of representations and warranties and is not related to
credit losses on the Receivables. See "The Receivables."
12
<PAGE>
THE RECEIVABLES
The Receivables were purchased by NMAC from Dealers in the ordinary course of
business in accordance with NMAC's underwriting standards. The Receivables were
selected from NMAC's portfolio by several criteria, including the following:
each Receivable (i) was originated in the United States, (ii) has a contractual
Annual Percentage Rate ("APR") that equals or exceeds 5.00%, (iii) provides for
level monthly payments which provide interest at the APR on a simple interest
basis and fully amortize the amount financed over an original term to maturity
no greater than 60 months, (iv) has a remaining term to maturity, as of the
Cutoff Date, of not less than three months and not greater than 57 months, (v)
had an original balance of not more than $50,000.00 and a remaining principal
balance as of the Cutoff Date of not less than $298.74 nor more than
$47,421.00, (vi) is not more than 30 days past due as of the Cutoff Date, (vii)
is attributable to the purchase of a new or used automobile or light truck and
is secured thereby, (viii) was originated on or after September 12, 1992, (ix)
has been entered into by an Obligor that was not in bankruptcy proceedings (ac-
cording to the records of NMAC) as of the Cutoff Date, (x) is secured by a Fi-
nanced Vehicle that as of the Cutoff Date has not been repossessed (according
to the records of NMAC), (xi) has not had forced-placed insurance premiums
added to the amount financed, and (xii) has not been extended by more than two
months. The Receivables are secured by Nissan, Infiniti and other vehicles. No
selection procedures believed to be adverse to the Certificateholders were uti-
lized in selecting the Receivables from qualifying retail installment sale con-
tracts. Except as described in item (ii) above, the Receivables were not se-
lected on the basis of their APRs.
The composition, geographical distribution and distribution by annual percent-
age rate of the Receivables as of the Cutoff Date are as set forth in the fol-
lowing tables.
COMPOSITION OF THE RECEIVABLES
<TABLE>
<S> <C>
Aggregate Principal Balance............ $868,465,033.86
Number of Receivables.................. 79,532
Average Principal Balance.............. $10,919.69
Average Original Amount Financed....... $15,214.80
(Range)............................... $1,000.00 to $50,000.00
Weighted Average APR................... 10.26%
(Range)............................... 5.00% to 25.32%
Approximate Weighted Average Original
Term to Maturity...................... 57.19 months
(Range)............................... 12 to 60 months
Weighted Average Remaining Term to
Maturity.............................. 40.81 months
(Range)............................... 3 to 57 months
Percentage by Principal Balance of
Receivables of New and Used Vehicles.. 58.56% (New) and 41.44% (Used)
Percentage by Principal Balance of
Receivables Financed Through Nissan
and Infiniti Dealers.................. 78.69% (Nissan) and 21.31% (Infiniti)
</TABLE>
13
<PAGE>
GEOGRAPHIC DISTRIBUTION OF THE
RECEIVABLES
<TABLE>
------------
<CAPTION>
PERCENTAGE OF
AGGREGATE PRINCIPAL
STATE(1)(2) BALANCE
- ----------- -------------------
<S> <C>
Alaska...................................................... 0.06%
Arizona..................................................... 3.71
Arkansas.................................................... 1.54
California.................................................. 13.93
Colorado.................................................... 1.22
Connecticut................................................. 1.82
Delaware.................................................... 0.32
Florida..................................................... 7.66
Georgia..................................................... 5.06
Idaho....................................................... 0.05
Illinois.................................................... 4.77
Indiana..................................................... 0.79
Iowa........................................................ 0.41
Kansas...................................................... 0.77
Kentucky.................................................... 0.01
Louisana.................................................... 4.11
Maine....................................................... 0.12
Maryland.................................................... 2.34
Massachusetts............................................... 2.18
Michigan.................................................... 0.90
Minnesota................................................... 0.50
Mississippi................................................. 1.79
Missouri.................................................... 1.53
Montana..................................................... 0.05
Nebraska.................................................... 0.12
Nevada...................................................... 1.14
New Hampshire............................................... 0.35
New Jersey.................................................. 3.87
New Mexico.................................................. 0.87
New York.................................................... 6.41
North Carolina.............................................. 4.42
North Dakota................................................ 0.02
Ohio........................................................ 1.23
Oklahoma.................................................... 1.45
Oregon...................................................... 0.88
Rhode Island................................................ 0.52
South Carolina.............................................. 2.17
South Dakota................................................ 0.07
Tennessee................................................... 3.79
Texas....................................................... 12.25
Utah........................................................ 0.46
Vermont..................................................... 0.19
Virginia.................................................... 2.73
Washington.................................................. 1.25
West Virginia............................................... 0.16
Wyoming..................................................... 0.01
------
Total(3)................................................... 100.00%
======
</TABLE>
- -------
(1) Based on the addresses of the originating Dealers.
(2) Retail installment sale contracts originated in Alabama, Pennsylvania and
Wisconsin have been excluded for administrative reasons.
(3) Percentages do not add to 100.00% due to rounding.
14
<PAGE>
DISTRIBUTION BY APR OF THE RECEIVABLES
<TABLE>
---------------------------------
<CAPTION>
PERCENTAGE
NUMBER OF PRINCIPAL OF AGGREGATE
APR RANGE (%) RECEIVABLES BALANCE PRINCIPAL BALANCE
- ------------- ----------- --------------- -----------------
<S> <C> <C> <C>
5.0 to 5.99..................... 6,719 $ 84,571,739.48 9.74%
6.0 to 6.99..................... 2,049 19,891,508.77 2.29
7.0 to 7.99..................... 6,549 79,126,450.82 9.11
8.0 to 8.99..................... 16,172 187,702,001.51 21.61
9.0 to 9.99..................... 12,407 139,347,949.50 16.05
10.0 to 10.99..................... 9,285 97,226,313.98 11.20
11.0 to 11.99..................... 6,677 68,992,371.97 7.94
12.0 to 12.99..................... 4,674 45,472,543.21 5.24
13.0 to 13.99..................... 3,364 35,735,940.29 4.11
14.0 to 14.99..................... 3,293 33,222,108.98 3.83
15.0 to 15.99..................... 2,398 19,812,390.89 2.28
16.0 to 16.99..................... 1,463 14,751,378.88 1.70
17.0 to 17.99..................... 2,110 21,142,716.63 2.43
18.0 to 18.99..................... 1,892 16,423,574.22 1.89
19.0 and above.................... 480 5,046,044.73 0.58
------ --------------- ------
Totals(1)......................... 79,532 $868,465,033.86 100.00%
====== =============== ======
</TABLE>
- -------
(1) Percentages do not add to 100.00% due to rounding.
MATURITY AND PREPAYMENT CONSIDERATIONS
All the Receivables are prepayable at any time. If prepayments are received on
the Receivables, the actual weighted average life of the Receivables will be
shorter than would otherwise be the case. (For this purpose the term "prepay-
ments" includes prepayments in full, partial prepayments and liquidations due
to default, as well as receipt of proceeds from credit life, credit disability
and casualty insurance policies and certain other Receivables repurchased by
the Seller or the Servicer.) Weighted average life means the average amount of
time during which each dollar of principal on a receivable is outstanding.
The rate of prepayments on the Receivables may be influenced by a variety of
economic, social and other factors, including the fact that an Obligor gener-
ally may not sell or transfer a Financed Vehicle securing a Receivable without
the consent of NMAC. NMAC believes that the actual rate of prepayments will
result in a shorter weighted average life than would be the case in the ab-
sence of such prepayments. Increases in the rate of prepayment will shorten
the weighted average life of the Class A Certificates and decreases in the
rate of prepayment will lengthen the weighted average life of the Class A Cer-
tificates. Substantially all reinvestment risks (which will vary from investor
to investor, but which may include the risk that principal payments will have
to be reinvested at a lower yield) resulting from a faster or slower incidence
of prepayment of Receivables will be borne by the Certificateholders. See also
"The Certificates--Termination" regarding the Servicer's option to purchase
the Receivables when the aggregate principal balance of the Receivables (the
"Pool Balance") is less than 10% of the Pool Balance as of the Cutoff Date.
Interest on the Receivables will be passed through to Class A
Certificateholders on each Distribution Date to the extent of the Pass-Through
Rate, applied to the Class A Certificate Balance on the last day of the re-
lated Collection Period from funds available from Available Interest (reduced
by the amounts distributed to reimburse the Servicer for outstanding Advances
and payment of Servicing Fees). In the event of prepayments on Receivables,
Class A Certificateholders will receive an amount equal to thirty (30) days'
interest on such Class A Certificate Balance to the extent that amounts, in-
cluding amounts otherwise allocable to the Class B Certificates or the Seller,
are available from Available Interest after payment of the Servicing Fee and
reimbursement of outstanding Advances, and if such amounts are insufficient,
the Class A Certificateholders will receive such excess first, from amounts on
deposit in the Subordination Spread Account, and second, from the Class B Per-
centage of Available Principal. If such amounts are insufficient, the amount
of interest distributed to the Class A Certificateholders may be less than
that described above. See "The Certificates--Distributions on Certificates."
Although the Receivables have different APRs, disproportionate rates of pre-
payments between Receivables with APRs greater than or less than a
15
<PAGE>
rate equal to the sum of the Pass-Through Rate and the Servicing Rate will gen-
erally not affect the yield to Class A Certificateholders because the Seller
has assigned to the Trust the Seller's rights under the Yield Supplement Agree-
ment and rights to receive payments from the Yield Supplement Reserve Account.
However, higher rates of prepayments of Receivables with higher APRs will de-
crease the amount available to cover delinquencies and defaults on the Receiv-
ables and may decrease the amount available to be deposited in the Subordina-
tion Spread Account.
No prediction can be made as to the rate of prepayments on the Receivables in
either stable or changing interest rate environments. NMAC maintains limited
records of the historical prepayment experience of the retail installment sale
contracts included in its portfolio and its experience with respect to the re-
tail installment sale contracts now included in its portfolio is insufficient
to draw any specific conclusions with respect to the expected rates of prepay-
ments in full on the Receivables. NMAC is not aware of any publicly available
statistics for the entire auto finance industry on an aggregate basis that set
forth principal prepayment experience for retail installment sale contracts
similar to the Receivables over an extended period of time.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Set forth below is certain information concerning NMAC's experience with re-
spect to its total portfolio of U.S. retail installment sale contracts for new
and used automobiles and light trucks. The portfolio consists of retail in-
stallment sale contracts in all fifty states, the District of Columbia and
Guam. 89% of NMAC's total portfolio of U.S. retail installment sales contracts
(excluding those with original maturities of 64 months or more) consists of new
and used automobiles and light trucks financed through Nissan dealers, with the
remaining 11% financed through Infiniti dealers.
There can be no assurance that the behavior of the Receivables will be compara-
ble to NMAC's experience shown in the following tables.
DELINQUENCY EXPERIENCE(1)
<TABLE>
<CAPTION>
----------- ----------------------------------------------------------
AT SEPTEMBER
30, AT MARCH 31,
----------- ----------------------------------------------------------
1997 1997 1996 1995 1994 1993
----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Number of Contracts Out-
standing............... 317,584 317,238 274,807 226,684 239,592 295,708
Delinquencies as a
Percent of Contracts
Outstanding(2)
30-59 Days............. 2.84% 3.10% 2.40% 2.10% 2.50% 2.44%
60-89 Days............. 0.49% 0.49% 0.25% 0.15% 0.24% 0.23%
90 Days or More........ 0.11% 0.17% 0.05% 0.02% 0.24% 0.17%
NET CREDIT LOSS AND REPOSSESSION EXPERIENCE(1)
(DOLLARS IN THOUSANDS)
---------------- -----------------------------------------------------------------
<CAPTION>
AT OR FOR SIX
MONTHS ENDED
SEPTEMBER 30, AT OR FOR TWELVE MONTHS ENDED MARCH 31,
---------------- ----------------------------------------------------------
1997 1997 1996 1995 1994 1993
---------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Principal Amount
Outstanding............ $3,256,986 $3,276,423 $2,659,232 $1,921,100 $1,794,943 $2,313,616
Average Principal Amount
Outstanding............ $3,262,020 $3,181,569 $2,308,058 $1,822,669 $2,029,439 $2,598,612
Number of Contracts
Outstanding............ 317,584 317,238 274,807 226,684 239,592 295,708
Average Number of
Contracts Outstanding.. 317,283 309,257 250,040 229,248 266,020 318,686
Charge-offs(3).......... $ 71,630 $ 158,969 $ 72,838 $ 46,201 $ 55,051 $ 93,659
Recoveries(4)........... $ 20,384 $ 31,874 $ 20,489 $ 16,465 $ 21,785 $ 30,014
Net Losses.............. $ 51,246 $ 127,095 $ 52,349 $ 29,736 $ 33,266 $ 63,645
Net Losses as a Percent
of Principal Amount
Outstanding............ 3.15%(6) 3.88% 1.97% 1.55% 1.85% 2.75%
Number of
Repossessions(5)....... 7,751 17,569 9,841 8,530 12,834 18,407
Number of Repossessions
as a Percent of the
Average Number of
Contracts Outstanding.. 4.89%(6) 5.68% 3.94% 3.72% 4.82% 5.78%
</TABLE>
16
<PAGE>
- -------
(1) The information in the Delinquency Experience and Net Credit Loss and
Repossession Experience tables includes retail installment sale contracts
for new and used automobiles and light trucks and includes contracts which
NMAC has sold to third parties but continues to service; it does not
include retail installment sale contracts purchased by NMAC under certain
special financing programs. The information in the tables relates only to
retail installment sales contracts with original terms of less than 64
months. The Trust does not include Receivables with original maturities of
64 months or greater. In general, NMAC has experienced higher overall
levels of losses with respect to contracts with original maturities of 64
to 72 months than with respect to contracts with shorter original
maturities. All amounts and percentages, except as indicated, are based on
the principal balances of the contracts net of unearned finance and other
charges. Averages are computed by taking a simple average of month end
outstandings for each period presented.
(2) An account is considered delinquent if 20% or more of the scheduled
payment is past due.
(3) Charge-offs represent the total aggregate net principal balance of
contracts determined to be uncollectible in the period less proceeds from
disposition of related vehicles, other than recoveries described in
Note (4). Charge-offs do not include expenses associated with collection,
repossession or disposition of the vehicle.
(4) Recoveries generally include amounts received on contracts following the
time at which the contract is charged off. Recoveries do not include
expenses associated with collection.
(5) The number of repossessions excludes accounts that have been subsequently
reinstated.
(6) Annualized Rate. The six month period ending September 30, 1997 is not
necessarily indicative of a full year's actual results.
NMAC's retail loss experience is dependent upon receivables levels, the number
of repossessions, the amount outstanding at the time of repossession and the
resale value of repossessed vehicles. The losses in the year ended March 31,
1997 are higher than in previous years due to an effort to finance a broader
credit range of customers to support the sale of Nissan and Infiniti vehicles
and a general increase in personal bankruptcy filings.
All of the Receivables are simple interest contracts. In general, as payments
are received under a simple interest contract, interest accrued to date is
paid first, the remaining amount of the payment is applied to principal until
the principal balance is brought current and then the remaining payment is ap-
plied to reduce any unpaid late charges or associated fees as provided in the
Receivable and any excess then remaining will further reduce remaining princi-
pal. Accordingly, if an Obligor pays the fixed monthly installment in advance
of the due date, the portion of the payment allocable to interest for the pe-
riod since the preceding payment will be less than it would be if the payment
were made on the due date, and the portion of the payment allocable to reduce
the principal balance will be correspondingly greater. Conversely, if the Ob-
ligor pays the fixed monthly installment after its due date, the portion of
the payment allocable to interest for the period since the last payment will
be greater than it would be if the payment were made on the due date, and the
portion of the payment allocable to reduce the principal balance will be cor-
respondingly smaller. Accordingly, the scheduled final monthly payment will be
smaller or larger depending on the timing of prior payments.
UNDERWRITING OF MOTOR VEHICLE LOANS
NMAC purchases automobile and/or light duty truck retail installment sales
contracts from approximately 1,149 Nissan and Infiniti Dealers located
throughout the United States, including the District of Columbia, and in Guam.
Underwriting of such retail installment sales contracts is performed by using
standard underwriting procedures. The Receivables are originated by Dealers in
accordance with NMAC's requirements under existing agreements with such Deal-
ers and will be purchased in accordance with NMAC's underwriting procedures
which emphasize, among other factors, the applicant's willingness and ability
to pay and the value of the vehicle to be financed.
Applications received from Dealers must be signed by the applicant and must
contain, among other information, the applicant's name, address, social secu-
rity number, residential status, source and amount of monthly income and
amount of monthly rent or mortgage payment. Upon receipt of the above informa-
tion, NMAC obtains a credit report from an independent credit bureau reporting
agency.
The credit decision is influenced by the applicant's credit score as obtained
from a statistically derived empirical credit scoring process and other con-
siderations. The credit scoring process considers credit bureau, application
and contract information. Other considerations include ratios such as car pay-
ment to income and total debt payments to total income, residential status,
monthly mortgage or rent payment, bank accounts and other personal informa-
tion. The final credit decision is made based upon the degree of credit risk
perceived and the amount of credit requested.
17
<PAGE>
NMAC uses risk-based pricing which includes a tiered system of interest rates
and loan-to-value ratios representing the varying degrees of risk assigned to
different ranges of credit risk. The less credit worthy (and the greater de-
gree of risk assigned to) an Obligor, the higher will be the interest rate
(and the lower will be the permissible loan-to-value ratio) assigned to such
Obligor.
NMAC's retail contract requires that Obligors maintain specific levels and
types of insurance coverage to protect the Financed Vehicle against loss. NMAC
requires evidence of insurance coverage by Obligors at the time of origination
of the Receivable, but performs no verification of continued coverage thereaf-
ter. NMAC will not be obligated to make payments to the Trust with respect to
any loss as to which third party insurance has not been maintained, except to
the extent of its obligations under the Purchase Agreement.
SERVICING OF THE RECEIVABLES
NMAC considers a receivable to be past due when the Obligor fails to make a
payment by the due date and delinquent when a payment is 15 days past due.
Mail notices and telephone contacts requesting payment are initiated shortly
thereafter. If the delinquent receivable cannot be brought current or com-
pletely collected within 60 to 90 days, NMAC generally attempts to take action
to repossess the vehicle. Repossessed vehicles are held in inventory to comply
with any applicable statutory requirements for reinstatement and then are
sold. Any deficiencies remaining after repossession and sale of the vehicle or
after the full charge-off of the receivable are pursued by or on behalf of
NMAC to the extent practicable and legally permitted. See "Certain Legal As-
pects of the Receivables -- Deficiency Judgments and Excess Proceeds." Obli-
gors are contacted and repayment schedules are established and monitored until
the deficiencies are either paid in full or become impractical to pursue.
18
<PAGE>
CLASS A CERTIFICATE AND POOL FACTORS
The "Class A Certificate Factor" is a seven-digit decimal which the Servicer
will compute each month indicating the Class A Certificate Balance as of the
close of business on the Distribution Date in that month as a fraction of the
original Class A Certificate Balance. The Class A Certificate Factor will be
1.0000000 as of the Cutoff Date; thereafter, the Class A Certificate Factor
will decline to reflect reductions in the Class A Certificate Balance. The
amount of a Class A Certificateholder's pro rata share of the Class A Certifi-
cate Balance can be determined by multiplying the original denomination of the
holder's Certificate by the Class A Certificate Factor as of the close of busi-
ness on the most recent Distribution Date. The Class A Certificate Factor will
be made available through the Trustee.
The "Class A Pool Factor" is a seven-digit decimal figure which the Servicer
will compute each month and will be calculated by dividing the Class A Certifi-
cate Balance as of the close of business on the Distribution Date in that month
by the Pool Balance as of the Cutoff Date.
Pursuant to the Agreement, the Servicer provides the Trustee with monthly re-
ports concerning the payments received on the Receivables, the Class A Certifi-
cate Balance, the Class A Certificate Factor, the Class A Pool Factor and vari-
ous other items of information. Class A Certificate Owners may obtain copies of
such monthly reports from the Trustee upon delivery of a written request to the
Trustee. Class A Certificateholders of record during any calendar year will be
furnished information by the Trustee for tax reporting purposes not later than
the latest date permitted by law. See "The Certificates-- Statements to Class A
Certificateholders."
USE OF PROCEEDS
The net proceeds to be received by the Seller from the sale of the Class A Cer-
tificates (i.e., the proceeds of sale minus expenses related to the offering)
will be applied to the purchase of the Receivables from NMAC.
THE SELLER
The Seller, a wholly owned subsidiary of NMAC, was incorporated in the State of
Delaware on August 5, 1991. The Seller was organized for limited purposes,
which include purchasing receivables from NMAC and transferring such receiv-
ables to third parties and any activities incidental to and necessary or conve-
nient for the accomplishment of such purposes. The Seller's certificate of in-
corporation limits the activities of the Seller to the foregoing purposes. The
Seller has no substantial assets other than those related to this and similar
transactions. The principal executive offices of the Seller are located at 990
W. 190th Street, Torrance, California 90502. The telephone number of such of-
fices is (310) 719-8013.
THE SERVICER
NMAC was incorporated in California in November 1981 and began operations in
February 1982. It is a wholly owned subsidiary of NMC, the primary distributor
of Nissan vehicles in the continental United States. NMC is an indirect wholly
owned subsidiary of Nissan Motor Co., Ltd., a Japanese corporation ("Nissan"),
which is a worldwide manufacturer and distributor of motor vehicles, industrial
equipment and aerospace products.
NMAC offers indirect automotive consumer loan and lease financing and direct
dealer financing, through (and to) approximately 1,097 Nissan and 52 Infiniti
dealers in the United States. NMAC's underwriting, servicing and collection ac-
tivities are conducted principally at a processing center in Dallas, Texas.
The mailing address of NMAC's executive offices is 990 W. 190th Street,
Torrance, California 90502. The telephone number of such offices is (310) 719-
8000.
19
<PAGE>
THE CERTIFICATES
The Class A Certificates offered hereby will be issued pursuant to the Agree-
ment. Copies of the Agreement (without exhibits) may be obtained by the Class A
Certificateholders upon request in writing to the Servicer, at its address set
forth above. Citations to the relevant sections of the Agreement appear below
in parentheses. The following summary does not purport to be complete and is
subject to and qualified in its entirety by reference to the Agreement.
GENERAL
The Class A Certificates will be offered for purchase in denominations of
$1,000 and integral multiples thereof and will be represented initially by
physical certificates registered in the name of Cede as the nominee of DTC, ex-
cept that, as described below under "The Certificates--Book-Entry Registra-
tion," one Class A Certificate may be issued to the Seller in a denomination
that includes any residual portion of the Class A Percentage of the original
Pool Balance. No Class A Certificate Owner will be entitled to receive a cer-
tificate representing such person's interest in the Class A Certificates, ex-
cept as set forth below under "The Certificates--Definitive Certificates." Un-
less and until Definitive Certificates are issued under the limited
circumstances described herein, all references to actions by Class A
Certificateholders shall refer to actions taken by DTC upon instructions from
its Participants (as defined below), and all references herein to distribu-
tions, notices, reports and statements to Class A Certificateholders shall re-
fer to distributions, notices, reports and statements to DTC or Cede, as the
registered holder of the Class A Certificates, as the case may be, for distri-
bution to Class A Certificate Owners in accordance with DTC procedures. See
"The Certificates-- Book-Entry Registration."
In general, it is intended that Class A Certificateholders receive, on each
Distribution Date, the Class A Percentage of all payments of principal received
on the Receivables made during or with respect to the preceding calendar month
(the "Collection Period"), plus interest at the Pass-Through Rate on the Class
A Certificate Balance as of the last day of the related Collection Period, cal-
culated on the basis of a 360-day year consisting of twelve 30-day months, plus
the Class A Percentage of the outstanding amount of each Receivable that became
a Liquidated Receivable during such Collection Period. (Section 5.06.) See "The
Certificates--Distributions on Certificates." If a scheduled payment is not
made by or on behalf of the Obligor, the portion of interest included in such
scheduled payment will be paid to the Class A Certificateholders out of amounts
otherwise payable to the Class B Certificateholders. A prepayment of a Receiv-
able may be made by or on behalf of an Obligor, by application of certain in-
surance proceeds, as a result of a purchase of a Receivable made by the Seller
or the Servicer or upon the repossession and liquidation of the respective Fi-
nanced Vehicle or other enforcement measures taken with respect to a defaulted
Receivable. See "The Certificates--Sale and Assignment of Receivables," and "--
Servicing Procedures."
The Certificates will evidence interests in the Trust created pursuant to the
Agreement. The Class A Certificates will evidence in the aggregate an undivided
ownership interest of 87% (the "Class A Percentage") of the principal amount of
Receivables held by the Trust and the Class B Certificates will evidence in the
aggregate an undivided ownership interest of 13% (the "Class B Percentage")
thereof. The Class B Certificates, which are not being offered hereby, will be
held initially by the Seller. The Class B Certificates may be transferred in
accordance with the terms of the Agreement. (Sections 7.01, 7.02 and 7.03.)
BOOK-ENTRY REGISTRATION
DTC is a limited purpose trust company organized under the laws of the State of
New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York UCC and a "clearing agency" registered pur-
suant to Section 17A of the Securities Exchange Act of 1934, as amended. DTC
was created to hold securities for its participating organizations ("Partici-
pants") and to facilitate the clearance and settlement of securities transac-
tions between Participants through electronic book-entries, thereby eliminating
the need for physical movement of certificates. Participants include securities
brokers and dealers, banks, trust companies and clearing corporations. Indirect
access to the DTC system also is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial rela-
tionship with a Participant, either directly or indirectly ("Indirect Partici-
pants").
20
<PAGE>
Class A Certificate Owners that are not Participants or Indirect Participants
but desire to purchase, sell or otherwise transfer ownership of, or other in-
terests in, Class A Certificates may do so only through Participants and Indi-
rect Participants. In addition, Class A Certificate Owners will receive all
distributions of principal and interest from the Trustee through DTC Partici-
pants. Under a book-entry format, Class A Certificate Owners may experience
some delay in their receipt of payments, since such payments will be forwarded
by the Trustee to Cede, as nominee for DTC. DTC will forward such payments to
its Participants, which thereafter will forward them to Indirect Participants
or Class A Certificate Owners. It is anticipated that the only "Class A
Certificateholder" will be Cede, as nominee of DTC. Class A Certificate Owners
will not be recognized by the Trustee as Class A Certificateholders, as such
term is used in the Agreement, and Class A Certificate Owners will be permit-
ted to exercise the rights of Class A Certificateholders only indirectly
through DTC and its Participants.
Under the rules, regulations and procedures creating and affecting DTC and its
operations (the "Rules"), DTC is required to make book-entry transfers of
Class A Certificates among Participants on whose behalf it acts with respect
to the Class A Certificates and to receive and transmit distributions of prin-
cipal of, and interest on, the Class A Certificates. Participants and Indirect
Participants with which Class A Certificate Owners have accounts with respect
to the Class A Certificates similarly are required to make book-entry trans-
fers and receive and transmit such payments on behalf of their respective
Class A Certificate Owners. Accordingly, although Class A Certificate Owners
will not possess Class A Certificates, the Rules provide a mechanism by which
Participants will receive payments and will be able to transfer their inter-
ests.
Because DTC can only act on behalf of Participants, who in turn act on behalf
of Indirect Participants and certain banks, the ability of a Class A Certifi-
cate Owner to pledge Class A Certificates to persons or entities that do not
participate in the DTC system, or to otherwise act with respect to such Class
A Certificates, may be limited due to the lack of a physical certificate for
such Class A Certificates.
DTC has advised the Seller that it will take any action permitted to be taken
by a Class A Certificateholder under the Agreement only at the direction of
one or more Participants to whose accounts with DTC the Class A Certificates
are credited. Additionally, DTC has advised the Seller that it will take such
actions with respect to specified percentages of the Class A Certificates only
at the direction of and on behalf of Participants whose holdings include undi-
vided interests that satisfy such specified percentages. DTC may take con-
flicting actions with respect to other undivided interests to the extent that
such actions are taken on behalf of Participants whose holdings include such
other undivided interests.
Neither the Seller nor the Trustee will have any liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of the Class A Certificates held by Cede, as nominee for DTC, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
DEFINITIVE CERTIFICATES
The Class A Certificates will be issued in fully registered, certificated form
("Definitive Certificates") to Class A Certificate Owners or their nominees,
rather than to DTC or its nominee, only if (i) the Seller advises the Trustee
in writing that DTC is no longer willing or able to discharge properly its re-
sponsibilities as depository with respect to the Class A Certificates and the
Seller is unable to locate a qualified successor, (ii) the Seller, at its op-
tion, elects to terminate the book-entry system through DTC or (iii) after the
occurrence of an Event of Default (as defined herein), Class A Certificate
Owners representing not less than 51% of the Class A Certificate Balance ad-
vise the Trustee through DTC in writing that the continuation of a book-entry
system through DTC (or a successor thereto) is no longer in the Class A Cer-
tificate Owners' best interest. (Section 7.10.)
Upon the occurrence of any event described in the immediately preceding para-
graph, the Trustee will be required to notify all Class A Certificate Owners
through Participants of the availability of Definitive Certificates. Upon sur-
render by DTC of the definitive certificates representing the Class A Certifi-
cates and receipt of instructions for re-registration, the Trustee will reis-
sue the Class A Certificates as Definitive Certificates to Class A Certificate
Owners.
Distributions of principal of, and interest on, the Class A Certificates will
thereafter be made by the Trustee directly to holders of Definitive Certifi-
cates in whose names the Definitive Certificates were registered at the close
of business on the Record Date in accordance with the procedures set forth in
the Agreement. Such distributions will be made by check mailed to the address
of such holder as it appears on the register maintained by the Trustee.
21
<PAGE>
The final payment on any Class A Certificate, however (whether Definitive Cer-
tificates or the Class A Certificates registered in the name of Cede or other-
wise), will be made only upon presentation and surrender of such Class A Cer-
tificate at the office or agency specified in the notice of final distribution
to Certificateholders.
Definitive Certificates will be transferable and exchangeable at the offices
of the Trustee or of a certificate registrar named in a notice delivered to
holders of Definitive Certificates. No service charge will be imposed for any
registration of transfer or exchange, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge imposed in con-
nection therewith.
SALE AND ASSIGNMENT OF RECEIVABLES
Prior to or at the time of issuance of the Class A Certificates, pursuant to a
Purchase Agreement (the "Purchase Agreement"), NMAC will sell and assign to
the Seller, without recourse, its entire interest in the Receivables, includ-
ing its security interests in the Financed Vehicles. At the time of issuance
of the Class A Certificates, the Seller will sell and assign to the Trustee,
without recourse, the Seller's entire interest in the Receivables, including
the security interests in the Financed Vehicles. Each Receivable will be iden-
tified in a schedule to the Agreement, but the existence and characteristics
thereof will not be verified by the Trustee. The Trustee will, concurrently
with such sale and assignment, execute, authenticate and deliver the Certifi-
cates to the Seller in exchange for the Receivables. (Section 7.02.) The
Seller will sell the Class A Certificates to the Underwriters and will ini-
tially retain the Class B Certificates. See "Underwriting."
In the Purchase Agreement, NMAC will represent and warrant to the Seller, and
in the Agreement, the Seller will represent and warrant to the Trustee, among
other things, that (i) the information provided with respect to the Receiv-
ables is correct in all material respects; (ii) the Obligor on each Receivable
is required to maintain physical damage insurance in accordance with NMAC's
normal requirements; (iii) at the date of issuance of the Certificates, the
Receivables are free and clear of all security interests, liens, charges and
encumbrances and no offsets, defenses or counterclaims against it have been
asserted or threatened; (iv) at the date of issuance of the Certificates, each
of the Receivables is or will be secured by a first priority perfected secu-
rity interest in the Financed Vehicle in favor of NMAC; and (v) each Receiv-
able, at the time it was originated, complied, and at the date of issuance of
the Certificates, complies in all material respects with applicable federal
and state laws, including consumer credit, truth in lending, equal credit op-
portunity and disclosure laws. As of the last day of the second (or, if the
Seller elects, the first) month following the discovery by or notice to the
Seller of a breach of any representation or warranty of the Seller which mate-
rially and adversely affects the interests of the Certifi- cateholders in a
Receivable (the initial determination of a material adverse effect generally
being made by the Servicer), the Seller, unless it cures the breach, will pur-
chase such Receivable from the Trustee, and NMAC will purchase such Receivable
from the Seller, at a price equal to the amount required to be paid by the re-
lated Obligor to prepay the Receivable (including interest accrued thereon,
through the due date for the Obligor's payment in such Collection Period, at
the APR), after giving effect to the receipt of any monies collected (from
whatever source) on such Receivable, if any (such price, the "Purchase
Amount"). The obligation of the Seller to repurchase a Receivable is not con-
ditioned on performance by NMAC of its obligation to repurchase a Receivable.
The purchase obligation will constitute the sole remedy available to the
Certificateholders or the Trustee for any such uncured breach (other than rem-
edies that may be available under federal securities laws or other laws).
(Sections 7.01 and 7.02.)
Pursuant to the Agreement, the Servicer will service and administer the Re-
ceivables. The Agreement will also designate the Servicer as custodian to
maintain possession as the Trustee's agent of the retail installment sale con-
tracts and any other documents relating to the Receivables. (Section 3.03.) To
assure uniform quality in servicing both the Receivables and the Servicer's
own portfolio of receivables, as well as to facilitate servicing and save ad-
ministrative costs, the documents will not be physically segregated from other
similar documents that are in the Servicer's possession or otherwise stamped
or marked to reflect the transfer to the Trust so long as NMAC is servicing
the Receivables. However, Uniform Commercial Code financing statements re-
flecting the sale and assignment of the Receivables by NMAC to the Seller and
by the Seller to the Trustee will be filed, and the Servicer's accounting rec-
ords and computer systems will reflect such sale and assignment. Because the
Receivables will remain in the Servicer's possession and will not be stamped
or otherwise marked to reflect the assignment to the Trustee, if a subsequent
purchaser were able to take physical possession of the Receivables without
knowledge of the assignment, the Trustee's interest in the Receivables could
be defeated. In such event, distributions to Certificateholders may be ad-
versely affected. In addition, under certain circumstances the Trustee's secu-
rity inter-
22
<PAGE>
est in collections that have been received by the Servicer but not yet remitted
to the Collection Account could be defeated. See "Certain Legal Aspects of the
Receivables -- Security Interests in the Financed Vehicles."
ACCOUNTS
The Servicer will establish two segregated trust accounts in the name of the
Trustee on behalf of the Certificateholders, the first into which certain pay-
ments made on or with respect to the Receivables will be deposited (the "Col-
lection Account"), and the second from which all distributions with respect to
the Receivables and the Certificates will be made (the "Certificate Account").
The Collection Account and the Certificate Account each shall be maintained
with the Trustee so long as (i) the Trustee's short-term unsecured debt obliga-
tions have a rating of P-1 by Moody's Investors Service, Inc. and a rating of
A-1+ by Standard & Poor's Ratings Services (the "Required Deposit Rating") or
(ii) such account is maintained in a segregated trust account in the trust de-
partment of the Trustee. If the short-term unsecured debt obligations of the
Trustee do not have the Required Deposit Rating, the Servicer shall, with the
Trustee's assistance as necessary, cause the Collection Account and the Certif-
icate Account to be moved to a bank whose short-term unsecured debt obligations
have such a rating or moved to the trust department of the Trustee. The Collec-
tion Account and the Certificate Account shall initially be maintained in the
trust department of the Trustee. (Section 5.01.)
ELIGIBLE INVESTMENTS
Funds in the Collection Account and the Certificate Account will be invested in
Eligible Investments at the direction of or by the Servicer and funds in the
Yield Supplement Reserve Account and the Subordination Spread Account (collec-
tively with the Collection Account and the Certificate Account, the "Accounts")
will be invested in Eligible Investments at the direction of NMAC, each as pro-
vided in the Agreement. "Eligible Investments" are limited to investments ac-
ceptable to the rating agencies then rating the Class A Certificates as being
consistent with the then-current rating of the Class A Certificates (including
obligations of the Servicer and its affiliates, to the extent consistent with
such rating). Examples of Eligible Investments as of the consummation of this
offering include obligations which are guaranteed as to timely payment of prin-
cipal and interest by the United States, certificates of deposit of federal or
state banks and commercial paper and money market funds, that at the date of
investment, have the highest rating issuable by the rating agencies then rating
the Class A Certificates. Eligible Investments with respect to monies in the
Collection Account and the Certificate Account are limited to obligations or
securities that mature not later than the next Distribution Date. If permitted
by the rating agencies then rating the Class A Certificates, however, monies on
deposit in the Yield Supplement Reserve Account and the Subordination Spread
Account may be invested in obligations or securities that mature later than the
next Distribution Date. Any earnings (net of losses and investment expenses) on
amounts on deposit in the Accounts will be paid to the Seller or NMAC as pro-
vided in the Agreement and will not be available to the Class A
Certificateholders.
SERVICING PROCEDURES
The Servicer will make reasonable efforts to collect all payments due with re-
spect to the Receivables and will continue such collection procedures as it
follows with respect to its own automotive retail installment sale contracts,
in a manner consistent with the Agreement. (Section 4.01.) Consistent with its
normal procedures, the Servicer may, in its discretion, grant credit-related
extensions but shall not otherwise change the terms of a Receivable (except
that the Servicer may change the number or amount of an Obligor's monthly pay-
ments in the event of a prepayment resulting from refunds of credit life and
disability insurance premiums and service contracts and make similar adjust-
ments to payment terms to the extent required by law). If the Servicer deter-
mines that eventual payment in full of a Receivable is unlikely, the Servicer
will follow its normal practices and procedures to realize upon the Receivable,
including the repossession and disposition of the Financed Vehicle securing the
Receivable at a public or dealer sale, or the taking of any other action per-
mitted by applicable law. (Section 4.03.) See "The Receivables--Servicing of
the Receivables."
COLLECTIONS
The Servicer will deposit all payments on Receivables received from Obligors
and all proceeds of Receivables collected during each Collection Period into
the Collection Account not later than the business day after receipt. However,
so long as NMAC is the servicer and provided that (i) there exists no Event of
Default and (ii) each other condition to making monthly deposits as may be re-
quired by the Agreement is satisfied, the Servicer may retain such amounts un-
til the related Distribution Date. The Servicer or the Seller, as the case may
be, will remit the aggregate Purchase Amount of Receivables to be purchased
from the Trust to the Collection Account on the business day immediately pre-
ceding the Distribution Date. The Servicer will be entitled to withhold, or to
be reimbursed from amounts otherwise payable into or on deposit in the Collec-
tion Account, amounts previously
23
<PAGE>
deposited in the Collection Account but later determined to have resulted from
mistaken deposits or postings. Except in certain circumstances described in the
Agreement, pending deposit into the Collection Account, collections may be em-
ployed by the Servicer at its own risk and for its own benefit and will not be
segregated from its own funds. (Section 5.02.)
For purposes of the Agreement, collections on a Receivable made during a Col-
lection Period shall be applied first to interest accrued to date, second to
principal until the principal balance is brought current, third to reduce the
unpaid late charges as provided in the Receivable and finally to prepay princi-
pal on the Receivable. (Sections 5.03 and 5.06.)
ADVANCES
On or before the business day prior to each Distribution Date, the Servicer
will make a payment into the Collection Account for each Receivable of an
amount equal to the product of the principal balance of the Receivable as of
the first day of the related Collection Period and one-twelfth of its APR minus
the amount of interest actually received on the Receivable during the Collec-
tion Period (such amount, an "Advance"). If such a calculation results in a
negative number, an amount equal to such negative amount shall be paid to the
Servicer in reimbursement of outstanding Advances. In addition, in the event
that a Receivable becomes a Liquidated Receivable, the amount of accrued and
unpaid interest thereon (but not including interest for the current Collection
Period) shall, up to the amount of outstanding Advances in respect thereof, be
withdrawn from the Collection Account and paid to the Servicer in reimbursement
of such outstanding Advances. The amount of any such Advance made in respect of
the related Collection Period and the outstanding amount of unreimbursed Ad-
vances on such Distribution Date will be reflected on the Trustee's report to
the Class A Certificateholders. See "Statement to Class A Certificateholders."
The Servicer will not be required to make any Advance (other than the Advance
of an interest shortfall arising from a Prepaid Receivable) to the extent that
it does not expect to recoup the Advance from subsequent collections or recov-
eries. No advances of principal will be made with respect to the Receivables.
SERVICING COMPENSATION
The Servicer is entitled under the Agreement to receive a servicing fee (the
"Servicing Fee") for each Collection Period equal to one-twelfth of 1.00% mul-
tiplied by the Pool Balance as of the first day of such Collection Period. The
Servicer is also entitled to receive a supplemental servicing fee (the "Supple-
mental Servicing Fee") for each Collection Period equal to any late, prepayment
and other administrative fees and expenses collected during the Collection Pe-
riod, plus any interest earned during the Collection Period on deposits made in
the Collection Account with respect to the Receivables. The Servicer is not en-
titled to any other compensation for servicing the Receivables. The Servicer
will be paid the Servicing Fee and the Supplemental Servicing Fee (collective-
ly, the "Servicer Fee") for each Collection Period on the following Distribu-
tion Date. However, if it is acceptable to each Rating Agency without a reduc-
tion in the rating of the Class A Certificates (or, if applicable, the Class B
Certificates), the Servicing Fee in respect of a Collection Period (together
with any portion of the Servicing Fee that remains unpaid from prior Distribu-
tion Dates) will be paid at the beginning of such Collection Period out of col-
lections of interest on the Receivables for such Collection Period. The Servic-
ing Fee shall be paid from Available Interest prior to the payment of the Class
A Interest Distributable Amount to the Class A Certificateholders.
The Servicer Fee is intended to compensate the Servicer for performing the
functions of a third party servicer of the Receivables as an agent for the
Certificateholders, including collecting and posting all payments, responding
to inquiries of Obligors on the Receivables, investigating delinquencies, send-
ing payment statements to Obligors, reporting tax information to Obligors, pay-
ing costs of collections and policing the collateral. The Servicer Fee will
also compensate the Servicer for administering the Receivables, including mak-
ing Advances, accounting for collections and furnishing monthly statements to
the Trustee with respect to distributions. The Servicer Fee also will reimburse
the Servicer for certain taxes, the Trustee's fees, accounting fees, outside
auditor fees, data processing costs and other costs incurred in connection with
administering the Receivables. (Section 4.08 and 4.13.)
YIELD SUPPLEMENT RESERVE ACCOUNT AND YIELD SUPPLEMENT AGREEMENT
Payments of the Yield Supplement Amounts will be made from funds on deposit in
a segregated trust account to be established by the Seller and pledged to and
maintained with the Class A Agent for the benefit of the holders of the Class A
Certificates (the "Yield Supplement Reserve Account"). The initial amount of
the Yield Supplement
24
<PAGE>
Reserve Account will be $ (the "Initial Yield Supplement Reserve Amount").
If the Yield Supplement Amounts with respect to any Distribution Date exceed
the amount available for withdrawal from the Yield Supplement Reserve Account
on such Distribution Date, the Seller will not have any further obligation un-
der the Yield Supplement Agreement to deposit any further amounts into the
Yield Supplement Reserve Account. The amount required to be on deposit in the
Yield Supplement Reserve Account (the "Required Yield Supplement Reserve
Amount") will be equal to the lesser of (i) maximum aggregate Yield Supplement
Amounts that will become due under the Yield Supplement Agreement, assuming
that payments on the Receivables are made on their scheduled due dates and
that no Receivable becomes a Prepaid Receivable, or (ii) the Initial Yield
Supplement Reserve Amount. The maximum aggregate Yield Supplement Amounts may
decline as a result of prepayments or repayments in full of the Receivables.
To the extent that on any Distribution Date the amount on deposit in the Yield
Supplement Reserve Account exceeds the Required Yield Supplement Reserve
Amount on such Distribution Date, the excess shall be paid to the Seller. The
Yield Supplement Reserve Account will be maintained by the Class A Agent for
the benefit of the Class A Certificateholders and will not be part of the
Trust.
Simultaneously with the sale and assignment of the Receivables by NMAC to the
Seller, the Seller will enter into the Yield Supplement Agreement with the
Class A Agent and the Servicer. The Seller will assign the Yield Supplement
Agreement to the Trust.
DISTRIBUTIONS ON CERTIFICATES
On or before the tenth calendar day of each month (or, if such tenth day is
not a business day, the next succeeding business day), the Servicer will in-
form the Trustee of the amount of aggregate collections on the Receivables,
the aggregate Advances to be made by the Servicer and the aggregate Purchase
Amount of Receivables to be purchased by the Seller or the Servicer, all with
respect to the related Collection Period. (Section 4.09.)
The Servicer shall determine prior to each Distribution Date the Total Avail-
able Amount, the Available Interest, the Available Principal, the Class A Dis-
tributable Amount and the Class B Distributable Amount and, based on the Total
Available Amount and the other distributions to be made on such Distribution
Date, as described below, determine the amount to be distributed to
Certificateholders of each Class. (Section 5.06(b).)
Determination of Available Amounts. The "Total Available Amount" for a Distri-
bution Date (being the funds available for distribution to Certificateholders
of each Class with respect to such Distribution Date in accordance with the
priorities described below) shall be the sum of the Available Interest and the
Available Principal.
The "Available Interest" for a Distribution Date shall be the sum of the fol-
lowing amounts with respect to the related Collection Period: (i) that portion
of all collections on the Receivables allocable to interest; (ii) all pro-
ceeds, including recoveries, of the liquidation of defaulted Receivables
("Liquidated Receivables"), net of expenses incurred by the Servicer and any
amounts required by law to be remitted to the Obligors on such Liquidated Re-
ceivables, received in connection with such liquidation ("Liquidation Pro-
ceeds"), to the extent attributable to interest due thereon in accordance with
the Servicer's customary servicing procedures; (iii) all Advances made by the
Servicer; (iv) the Purchase Amount received with respect to each Receivable
purchased by the Seller or Servicer under an obligation which arose during
such Collection Period, to the extent attributable to interest thereon; and
(v) the Yield Supplement Amount received by the Trustee.
The "Available Principal" for a Distribution Date shall be the sum of the
following amounts with respect to the related Collection Period: (i) that
portion of all collections on the Receivables allocable to principal; (ii) all
Liquidation Proceeds, to the extent attributable to principal due thereon, in
accordance with the Servicer's customary servicing procedures; and (iii) the
Purchase Amount received with respect to each Receivable purchased by the
Seller or the Servicer under an obligation which arose during such Collection
Period, to the extent attributable to principal thereon.
The Available Interest on any Distribution Date shall exclude amounts paid to
the Servicer as reimbursement for Advances.
Calculation of Distributable Amounts. The "Class A Distributable Amount" with
respect to a Distribution Date shall be an amount equal to the sum of:
(a) the "Class A Principal Distributable Amount," consisting of the Class A
Percentage of:
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<PAGE>
(i) all payments of principal received during the related Collection Pe-
riod, including prepayments of principal;
(ii) the principal balance of each Receivable that was purchased by the
Seller or the Servicer under an obligation that arose during the related
Collection Period (except to the extent included in (i) above); and
(iii) the principal balance of each Receivable that became a Liquidated
Receivable during the related Collection Period (except to the extent
included in (i) or (ii) above); plus
(b) the "Class A Interest Distributable Amount," consisting of thirty (30)
days' interest at the Pass-Through Rate on the Class A Certificate Balance
as of the close of business on the last day of the related Collection Peri-
od.
The "Class A Certificate Balance" shall equal, initially, the Class A Percent-
age of the Pool Balance as of the Cutoff Date and, thereafter shall equal the
initial Class A Certificate Balance, reduced by all amounts previously dis-
tributed to Class A Certificateholders that were allocable to principal.
The "Class B Distributable Amount" with respect to a Distribution Date shall
be an amount equal to the sum of:
(a) the "Class B Principal Distributable Amount," consisting of the Class B
Percentage of the amounts set forth under (a)(i) through (a)(iii) above
with respect to the Class A Principal Distributable Amount, plus
(b) the "Class B Interest Distributable Amount," consisting of thirty (30)
days' interest at the Pass-Through Rate on the Class B Certificate Balance
as of the close of business on the last day of the related Collection Peri-
od.
The "Class B Certificate Balance" shall equal, initially, the Class B Percent-
age of the Pool Balance as of the Cutoff Date and, thereafter shall equal the
amount by which the Pool Balance on the last day of the related Collection Pe-
riod exceeds the Class A Certificate Balance on such Distribution Date.
Calculation of Amounts to be Distributed. Prior to each Distribution Date, the
Servicer will calculate the amount to be distributed to the
Certificateholders. On each Distribution Date, the Trustee will distribute to
the Certificateholders the following amounts in the following order of priori-
ty, to the extent of funds available for distribution on such Distribution
Date:
(i) to the Class A Certificateholders, an amount equal to the Class A In-
terest Distributable Amount and any unpaid Class A Interest Carryover
Shortfall, such amount to be paid from Available Interest (as Available In-
terest has been reduced by reimbursing the Servicer for any outstanding Ad-
vances and paying the Servicer the Servicing Fee, including any unpaid Ser-
vicing Fees with respect to one or more prior Collection Periods); and if
such Available Interest is insufficient, the Class A Certificateholders
will receive such excess first, from monies on deposit in the Subordination
Spread Account and second, if such amounts are insufficient, from the Class
B Percentage of Available Principal;
(ii) to the Class A Certificateholders, an amount equal to the Class A
Principal Distributable Amount and any unpaid Class A Principal Carryover
Shortfall, such amount to be paid from Available Principal (as Available
Principal has been reduced as described in clause (i) above); and if such
Available Principal is insufficient, the Class A Certificateholders will be
entitled to receive such excess first, from amounts on deposit in the Sub-
ordination Spread Account and second, if such amounts are insufficient,
from Available Interest (as Available Interest has been reduced as de-
scribed in clause (i) above);
(iii) to the Class B Certificateholders, an amount equal to the Class B In-
terest Distributable Amount and any unpaid Class B Interest Carryover
Shortfall, such amount to be paid from Available Interest (after giving ef-
fect to the reduction in Available Interest described in clauses (i) and
(ii) above);
(iv) to the Class B Certificateholders, an amount equal to the Class B
Principal Distributable Amount and any unpaid Class B Principal Carryover
Shortfall, such amount to be paid from Available Principal (after giving
effect to the reduction in Available Principal described in clauses (i) and
(ii) above); and if such Available Principal is insufficient, from Avail-
able Interest (after giving effect to the reduction in Available Interest
described in clauses (i), (ii) and (iii) above); and
(v) to the Seller, any Excess Amounts, except as required to be deposited
in the Subordination Spread Account (Section 5.06);
26
<PAGE>
provided, however, that amounts otherwise distributable to the Class B
Certificateholders will be deposited by the Trustee in the Subordination
Spread Account to cover any deficiency in the Specified Subordination Spread
Account Balance.
Notwithstanding anything herein to the contrary, no amount shall be paid to
the Class A Certificateholders in respect of any Yield Supplement Amount with
respect to a Receivable, except to the extent of amounts withdrawn from the
Yield Supplement Reserve Account and deposited in the Certificate Account, ex-
cept that if the Yield Supplement Amounts exceed funds available in the Yield
Supplement Reserve Account, such excess shall be withdrawn from the Subordina-
tion Spread Account.
The "Class A Interest Carryover Shortfall" with respect to any Distribution
Date will equal the excess, if any, of (x) the Class A Interest Distributable
Amount for such Distribution Date and any outstanding unpaid interest owed to
holders of Class A Certificates from the immediately preceding Distribution
Date plus interest on such outstanding unpaid interest amount, to the extent
permitted by law, at the Pass-Through Rate from such immediately preceding
Distribution Date through the current Distribution Date, over (y) the amount
of interest distributed to the Class A Certificateholders on such Distribution
Date. The "Class A Principal Carryover Shortfall" with respect to any Distri-
bution Date will equal the excess of the Class A Principal Distributable
Amount for such Distribution Date plus any outstanding unpaid principal owed
to holders of Class A Certificates with respect to one or more prior Distribu-
tion Dates over the amount of principal that the holders of the Class A Cer-
tificates actually received on such Distribution Date. The "Class B Interest
Carryover Shortfall" and the "Class B Principal Carryover Shortfall" with re-
spect to any Distribution Date will be calculated in the same manner as the
Class A Interest Carryover Shortfall and the Class A Principal Carryover
Shortfall, as the case may be, appropriately modified to relate to the Class B
Certificates.
Any excess amounts in the Certificate Account with respect to any Distribution
Date, after giving effect to the distributions described in clauses (i)
through (iv) of the third preceding paragraph ("Excess Amounts"), will be dis-
tributed to the Seller, except in the case of deficits in the Subordination
Spread Account, in which case such amounts will be distributed in the follow-
ing amounts and in the following order of priority: (i) to the Subordination
Spread Account until the amount on deposit therein equals the Specified Subor-
dination Spread Account Balance and (ii) to the Seller.
Notwithstanding the foregoing distribution priorities, if the Servicer shall
fail to make an Advance, the portion of any such shortfall attributable
thereto shall be paid only from amounts available in the Subordination Spread
Account. (Section 5.06(c).)
SUBORDINATION OF THE CLASS B CERTIFICATES; SUBORDINATION SPREAD ACCOUNT
The rights of the Class B Certificateholders to receive distributions with re-
spect to the Receivables will be subordinated to the rights of the Class A
Certificateholders in the event of defaults or delinquencies on the Receiv-
ables as provided in the Agreement. The Class B Certificateholders will not
receive any distributions of interest or principal with respect to a Distribu-
tion Date until the full amount of interest and principal relating to such
Distribution Date has been distributed to the Class A Certificateholders. This
subordination is intended to enhance the likelihood of timely receipt by Class
A Certificateholders of the full amount of interest and principal required to
be paid to them, and to afford such Class A Certificateholders limited protec-
tion against losses in respect of the Receivables.
The protection afforded to the Class A Certificateholders will be effected
both by the preferential right, as described above, of the Class A
Certificateholders to receive current distributions with respect to the Re-
ceivables and by the establishment of the Subordination Spread Account. The
Subordination Spread Account will be created with an initial deposit by the
Seller of the Subordination Initial Deposit in the amount set forth in the
"Summary--Subordination Spread Account" and will be augmented by deposit
therein of all amounts otherwise distributable to the Class B
Certificateholders and all Excess Amounts otherwise distributable to the
Seller until the amount in the Subordination Spread Account reaches the amount
set forth in the "Summary--Subordination Spread Account" as the Specified Sub-
ordination Spread Account Balance. Thereafter, amounts otherwise distributable
to the Class B Certificateholders and Excess Amounts otherwise distributable
to the Seller will be deposited in the Subordination Spread Account to the ex-
tent necessary to maintain the amount in the Subordination Spread Account at
the Specified Subordination Spread Account Balance.
Amounts held from time to time in the Subordination Spread Account will
continue to be held for the benefit of holders of the Class A Certificates.
Funds in the Subordination Spread Account shall be invested in Eligible
27
<PAGE>
Investments. Investment income on amounts in the Subordination Spread Account
will not be available for distribution to the holders of the Class A
Certificates or otherwise subject to any claims or rights of the holders of
the Class A Certificates.
The time necessary for the Subordination Spread Account to reach and maintain
the Specified Subordination Spread Account Balance at any time after the date
of issuance of the Certificates will be affected by the delinquency, credit
loss and repossession and prepayment experience of the Receivables and, there-
fore, cannot be accurately predicted.
If on any Distribution Date the holders of the Class A Certificates do not re-
ceive the sum of the Class A Distributable Amount, the Class A Interest Carry-
over Shortfall and the Class A Principal Carryover Shortfall for such Distri-
bution Date (after giving effect to any amounts withdrawn from the
Subordination Spread Account and the Class B Distributable Amount and applied
to such deficiency, as described above), the holders of the Class B Certifi-
cates will not receive any portion of the Total Available Amount.
The subordination of the Class B Certificates and the establishment of the
Subordination Spread Account described above are intended to enhance the like-
lihood of receipt by Class A Certificateholders of the full amount of princi-
pal and interest on the Receivables due them and to decrease the likelihood
that the Class A Certificateholders will experience losses. However, in cer-
tain circumstances, the Subordination Spread Account could be depleted and
shortfalls on the Class A Certificates could result.
The Seller may, from time to time after the date of this Prospectus, request
each rating agency then rating the Class A Certificates to approve a formula
for determining the Specified Subordination Spread Account Balance that is
different from the one described above and would result in a decrease in the
amount of the Specified Subordination Spread Account Balance or a change in
the manner by which the Subordination Spread Account is funded. If each rating
agency then rating the Class A Certificates delivers a letter to the Trustee
to the effect that the use of any such new formulation will not result in a
qualification, reduction or withdrawal of its then-current rating of the Class
A Certificates, then the Specified Subordination Spread Account Balance will
be determined in accordance with such new formula. The Agreement will accord-
ingly be amended, without the consent of any Certificateholder, to reflect
such new calculation.
On each Distribution Date, the Trustee will remit all Excess Amounts to the
Seller, except in the case of deficits in the Subordination Spread Account, in
which case the Trustee will deposit all Excess Amounts into the Subordination
Spread Account until the amount on deposit therein equals the Specified Subor-
dination Spread Account Balance, prior to remitting such amounts to the Sell-
er. If the amount on deposit in the Subordination Spread Account on such Dis-
tribution Date (after giving effect to all deposits or withdrawals therefrom
on such Distribution Date) is greater than the Specified Subordination Spread
Account Balance, the Trustee will release and distribute such excess, together
with any Excess Amounts not required to be deposited into the Subordination
Spread Account, first, to the Class B Certificateholders, an amount equal to
the sum of outstanding Class B Interest Carryover Shortfall and Class B Prin-
cipal Carryover Shortfall and, to the extent available, any excess shall be
distributed to the Seller. Upon any such release of amounts from the Subordi-
nation Spread Account, the Class A Certificateholders will have no further
rights in, or claims to, such amounts. (Section 5.06).
Neither the Class B Certificateholders, the Seller nor the Servicer will be
required to refund any amounts properly distributed or paid to them, whether
or not there are sufficient funds on any subsequent Distribution Date to make
full distributions to the Class A Certificateholders.
NET DEPOSITS
As an administrative convenience and for so long as certain conditions are
satisfied, the Servicer will be permitted to make the deposit of collections
and aggregate Advances and Purchase Amounts for or with respect to the Collec-
tion Period net of distributions to the Servicer as reimbursement of Advances
or payment of the Servicer Fee with respect to the Collection Period. The
Servicer, however, will account to the Trustee and to the Certificateholders
as if all deposits, distributions and transfers were made individually. (Sec-
tion 5.08.)
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<PAGE>
The following chart sets forth an example of the application of the foregoing
provisions to a monthly distribution:
<TABLE>
<C> <S>
October 1.......... Cutoff Date. The original Pool Balance equals the
aggregate principal balance of the Receivables.
October 1-31....... Collection Period. The Servicer receives monthly
payments, prepayments and other proceeds in respect of
the Receivables.
November 10........ Determination Date. On or before the tenth calendar day
of the month (or, if such tenth day is not a business
day, the next succeeding business day). On this date the
Servicer notifies the Trustee of, among other things, the
amounts to be distributed on the Distribution Date.
November 14........ Record Date. Distributions on the Distribution Date are
made to Certificateholders of record at the close of
business on this date.
November 17........ Distribution Date. On or before this date, the Seller and
the Servicer (or the Trustee) make the required
remittances and transfers to the Collection Account and
the Certificate Account in immediately available funds,
and the Trustee distributes to holders of the Class A
Certificates and the Class B Certificates amounts payable
in respect of the Certificates and pays the Servicer Fee
and remits amounts to the Subordination Spread Account
(if required).
</TABLE>
STATEMENTS TO CLASS A CERTIFICATEHOLDERS
On each Distribution Date, the Trustee will include with each distribution to
each record owner of a Class A Certificate (which, except as described herein,
shall be Cede as the nominee for DTC unless Definitive Certificates are issued
under the limited circumstances described herein) as of the close of business
on the related Record Date a statement, setting forth the following informa-
tion with respect to the related Collection Period as to each Class of Certif-
icates, to the extent applicable:
(i) the amount of the distribution allocable to principal on the Certifi-
cates;
(ii) the amount of the distribution allocable to interest on the Certifi-
cates;
(iii) the amount of the distribution allocable to the Yield Supplement
Amount;
(iv) the amount on deposit in the Yield Supplement Reserve Account;
(v) the Pool Balance as of the close of business on the last day of the re-
lated Collection Period;
(vi) the amount of the Servicing Fee paid to the Servicer with respect to
the related Collection Period and the Class A Percentage of the Servicing
Fee, the amount of any unpaid Servicing Fees and the change in such amount
from that of the prior Distribution Date and the amount of any additional
servicing compensation paid to the Servicer with respect to the related
Collection Period;
(vii) the amount of the Class A Interest Carryover Shortfall and Class A
Principal Carryover Shortfall, if any, as of the close of such Distribution
Date and the change in such amounts from those of the prior Distribution
Date;
(viii) the Class A Certificate Balance, the Class A Certificate Factor, the
Class A Pool Factor and Class B Certificate Balance as of such Distribution
Date;
(ix) the amount, if any, otherwise distributable to the Class B
Certificateholders that is distributed to Class A Certificateholders on
such Distribution Date;
(x) the balance of the Subordination Spread Account on such Distribution
Date, after giving effect to distributions made on such Distribution Date
and the change in such balance from that of the prior Distribution Date;
and
(xi) the amount of Advances made in respect of the related Collection Pe-
riod and the amount of unreimbursed Advances on such Distribution Date.
29
<PAGE>
Each amount set forth pursuant to subclauses (i), (ii), (vi) and (vii) above
shall be expressed in the aggregate and as a dollar amount per $1,000 of origi-
nal principal balance of a Class A Certificate.
Copies of such statements may be obtained by Class A Certificate Owners by de-
livering a request in writing addressed to the Trustee at its address set forth
above in "Reports To Class A Certificateholders By The Trustee".
Within the prescribed period of time for tax reporting purposes after the end
of each calendar year during the term of the Agreement, the Trustee shall mail
to each person who at any time during such calendar year shall have been a
Class A Certificateholder and received any payment thereon a statement contain-
ing the sum of the amounts or the amount as of the end of each calendar year,
as the case may be, described in (i), (ii), (iii), (v), (vi) and (vii) above
for the purposes of such Class A Certificateholder's preparation of federal in-
come tax returns. (Section 5.09.) See "Certain Federal Income Tax Conse-
quences."
EVIDENCE AS TO COMPLIANCE
The Agreement will provide that a firm of independent public accountants will
furnish to the Trustee on or before June 30th of each year, beginning June 30,
1998, a report as to compliance by the Servicer during the preceding twelve
months ended March 31 (or for the initial report, for such shorter period as
shall have elapsed from the date of issuance of the Certificates) with certain
standards relating to the servicing of the Receivables and certain other mat-
ters. (Section 4.11.)
The Agreement will also provide for delivery to the Trustee, on or before June
30th of each year, commencing June 30, 1998, of a certificate signed by an of-
ficer of the Servicer stating that the Servicer has fulfilled its obligations
under the Agreement throughout the preceding twelve months ended March 31 (or
for the initial report, for such shorter period as shall have elapsed from the
date of issuance of the Certificates) or, if there has been a default in the
fulfillment of any such obligation, describing each such default. (Section
4.10.)
Copies of such reports and certificates may be obtained by Class A Certificate
Owners by a request in writing addressed to the Trustee.
CERTAIN MATTERS REGARDING THE SERVICER
The Agreement will provide that NMAC may not resign from its obligations and
duties as servicer thereunder, except upon determination that NMAC's perfor-
mance of such duties is no longer permissible under applicable law. No such
resignation will become effective until the Trustee or a successor servicer has
assumed NMAC's servicing obligations and duties under the Agreement. (Section
9.06.)
The Agreement will further provide that neither the Servicer, nor any of its
directors, officers, employees or agents will be under any liability to the
Trust or the Certificateholders for taking any action or for refraining from
taking any action pursuant to the Agreement, or for errors in judgment; provid-
ed, however, that neither the Servicer nor any such person will be protected
against any liability that would otherwise be imposed by reason of willful mis-
feasance, bad faith or negligence (except for errors in judgment) in the per-
formance of duties, or by reason of reckless disregard of obligations and du-
ties thereunder. In addition, the Agreement will provide that the Servicer is
under no obligation to appear in, prosecute or defend any legal action that is
not incidental to the Servicer's servicing responsibilities under the Agreement
and that, in its opinion, may cause it to incur any expense or liability. The
Servicer may, however, undertake any reasonable action that it may deem neces-
sary or desirable in respect of the Agreement, the rights and duties of the
parties thereto and the interests of the Certificateholders thereunder. In such
event, the legal expenses and costs of such action and any liability resulting
therefrom will be expenses, costs and liabilities of the Servicer, and the
Servicer will not be entitled to be reimbursed therefor. (Section 9.04.)
Any entity into which the Servicer or the Seller, as applicable, may be merged
or consolidated, or any entity resulting from any merger, conversion or consol-
idation to which the Servicer or the Seller, as applicable, is a party, or any
entity succeeding to the business of the Servicer or the Seller, as applicable,
or any corporation, more than 50% of the voting stock of which is owned, di-
rectly or indirectly, by Nissan, which assumes the obligations of the Servicer
or the Seller, as applicable, will be the successor of the Servicer or the
Seller, as applicable, under the Agreement. (Sections 8.03 and 9.03.) For as
long as NMAC is the Servicer, it may at any time subcon-
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tract substantially all of its duties as servicer under the Agreement to any
corporation more than 50% of the voting stock of which is owned, directly or
indirectly, by Nissan, and the Servicer may at any time perform certain spe-
cific duties as servicer through other subcontractors. (Section 9.05.)
EVENTS OF DEFAULT
"Events of Default" under the Agreement will consist of (i) any failure by the
Servicer or the Seller, as applicable, to deliver to the Trustee for distribu-
tion to the Certificateholders or deposit in the Subordination Spread Account
any required payment, which failure continues unremedied for three business
days after written notice from the Trustee is received by the Servicer or the
Seller, as applicable, or after discovery by an officer of the Servicer or the
Seller, as applicable; (ii) any failure by the Seller or the Servicer duly to
observe or perform in any material respect any other covenant or agreement in
the Agreement which failure materially and adversely affects the rights of
Certificateholders and which continues unremedied for 90 days after the giving
of written notice of such failure (1) to the Seller or the Servicer, as appli-
cable, by the Trustee or (2) to the Seller or the Servicer, as applicable, and
to the Trustee by holders of Class A Certificates evidencing not less than 25%
of the Class A Certificate Balance; and (iii) certain events of insolvency,
readjustment of debt, marshalling of assets and liabilities or similar pro-
ceedings with respect to the Servicer indicating its insolvency, reorganiza-
tion pursuant to bankruptcy proceedings or inability to pay its obligations.
(Section 10.01.)
RIGHTS UPON EVENT OF DEFAULT
As long as an Event of Default under the Agreement remains unremedied, the
Trustee or holders of Class A Certificates evidencing not less than 25% of the
Class A Certificate Balance may terminate all the rights and obligations of
the Servicer under the Agreement, whereupon the Trustee (or a successor
servicer appointed by the Trustee, as described below) will succeed to all the
responsibilities, duties and liabilities of the Servicer under the Agreement
and will be entitled to similar compensation arrangements. If, however, a
bankruptcy trustee or similar official has been appointed for the Servicer,
and no Event of Default other than such appointment has occurred, such trustee
or official may have the power to prevent the Trustee or the Class A
Certificateholders from effecting a transfer of servicing. In the event that
the Trustee is unwilling or unable to so act, it may appoint, or petition a
court of competent jurisdiction for the appointment of, a successor with a net
worth of at least $100,000,000 and whose regular business includes the servic-
ing of automotive receivables. The Trustee, or any person appointed as succes-
sor Servicer, shall be the successor in all respects to the predecessor
Servicer under the Agreement and all references therein to the Servicer shall
apply to such successor Servicer. The Trustee may make arrangements for com-
pensation to be paid to the successor Servicer, which in no event may be
greater than the Servicer Fee. (Sections 10.01 and 10.02.)
WAIVER OF PAST DEFAULTS
The holders of Class A Certificates evidencing not less than 51% of the Class
A Certificate Balance may, on behalf of all Certificateholders, waive any de-
fault by the Servicer in the performance of its obligations under the Agree-
ment and its consequences, except a default in making any required deposits to
the Collection Account or the Certificate Account in accordance with the
Agreement. No such waiver shall impair the Certificateholders' rights with re-
spect to subsequent defaults. (Section 10.05.)
AMENDMENT
The Agreement may be amended by the Seller, the Servicer, NMAC (so long as
NMAC has rights or obligations thereunder) and the Trustee, without the con-
sent of the Certificateholders, (i) to cure any ambiguity, correct or supple-
ment any provision therein which may be inconsistent with any other provision
therein, or make any other provisions with respect to matters or questions
arising under the Agreement which are not inconsistent with the provisions of
the Agreement; provided that such action will not, in the opinion of counsel
satisfactory to the Trustee, materially and adversely affect the interest of
any Certificateholder, and (ii) to change the formula for determining the
Specified Subordination Spread Account Balance upon certain confirmation from
the Rating Agencies as described above in "The Certificates--Subordination of
the Class B Certificates; Subordination Spread Account." The Agreement may
also be amended by the Seller, the Servicer, NMAC (so long as NMAC has rights
or obligations thereunder) and the Trustee with the consent of the holders of
Class A Certificates and Class B Certificates, each voting as a Class, evi-
dencing not less than 51% of the Class A Certificate Balance and Class B
Certifi-
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cate Balance, respectively, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Agreement or
modifying in any manner the rights of Certificateholders; provided, however,
that no such amendment may (i) increase or reduce in any manner the amount of,
or accelerate or delay the timing of, collections of payments on Receivables or
distributions that are required to be made on any Certificate or change the
Pass-Through Rate or the Specified Subordination Spread Account Balance (except
as described above under clause (ii) of the immediately preceding sentence)
without the consent of each "adversely affected" Certificateholder or (ii) re-
duce the aforesaid percentage of the Class A Certificate Balance or Class B
Certificate Balance which is required to consent to any such amendment, without
the consent of the holders of all Certificates of such Class. (Section 13.01.)
An amendment referred to in clause (i) of the immediately preceding sentence
will be deemed not to "adversely affect" a Certificateholder of any Class only
if each Rating Agency then rating the Certificates confirms that such amendment
will not result in a reduction or withdrawal of its rating on the Certificates
of such Class.
LIST OF CERTIFICATEHOLDERS
Upon written request of the Servicer, the Trustee will provide to the Servicer
within 15 days after receipt of such request a list of the names and addresses
of all Certificateholders of record as of the most recent Record Date. Upon
written request by three or more Class A Certificateholders or by holders of
Class A Certificates evidencing not less than 25% of the Class A Certificate
Balance, and upon compliance by such Certificateholders with certain other pro-
visions of the Agreement, the Trustee will afford such Class A
Certificateholders access during business hours to the current list of
Certificateholders for purposes of communicating with other Class A
Certificateholders with respect to their rights under the Agreement. (Section
7.06.)
The Agreement will not provide for the holding of any annual or other meetings
of Certificateholders.
TERMINATION
The respective obligations of the Seller, the Servicer, NMAC (so long as NMAC
has rights or obligations thereunder) and the Trustee pursuant to the Agreement
will terminate upon (i) the maturity or other liquidation of the last Receiv-
able and the disposition of any amounts received upon liquidation of any re-
maining Receivables and (ii) the payment to Certificateholders of all amounts
required to be paid to them pursuant to the Agreement. In order to avoid exces-
sive administrative expense, the Servicer, or its successor, is permitted at
its option to purchase from the Trust, as of the last day of any month as of
which the then outstanding Pool Balance (after giving effect to such calendar
month's collections) is less than 10% of the original Pool Balance, all remain-
ing Receivables at a price equal to the aggregate of the Purchase Amounts
thereof as of such last day. Exercise of such right will effect early retire-
ment of the Certificates. The Trustee will give written notice of termination
to each Certificateholder of record. The final distribution to any
Certificateholder will be made only upon surrender and cancellation of such
holder's Certificate at any office or agency of the Trustee specified in the
notice of termination. Any funds remaining in the Trust, after the Trustee has
taken certain measures to locate a Certificateholder and such measures have
failed, will be distributed, subject to applicable law, to the Childrens Hospi-
tal Los Angeles. (Sections 12.01 and 12.02.)
DUTIES OF THE TRUSTEE
The Trustee will make no representations as to the validity or sufficiency of
the Agreement, the Certificates (other than the authentication of the Certifi-
cates), or any Receivables or related documents, and is not accountable for the
use or application by the Servicer of any funds paid to the Seller or the
Servicer in respect of the Certificates or the Receivables, or the investment
of any monies by the Servicer before such monies are deposited into the Certif-
icate Account. The Trustee will not independently verify the Receivables. If no
Event of Default has occurred, the Trustee is required to perform only those
duties specifically required of it under the Agreement. In addition to making
distributions to the Certificateholders, those duties generally are limited to
the receipt of the various certificates, reports or other instruments required
to be furnished to the Trustee under the Agreement, in which case it will only
be required to examine them to determine whether they conform to the require-
ments of the Agreement. The Trustee shall not be charged with knowledge of a
failure by the Servicer to perform its duties under the Agreement which failure
constitutes an Event of Default unless the Trustee obtains actual knowledge of
such failure as specified in the Agreement. (Sections 11.01 and 11.05.)
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The Trustee will be under no obligation to exercise any of the rights or powers
vested in it by the Agreement or to make any investigation of matters arising
thereunder or to institute, conduct or defend any litigation thereunder or in
relation thereto at the request, order or direction of any of the
Certificateholders, unless such Certificateholders have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that may be incurred therein or thereby. (Section 11.04.) No Class A
Certificateholder will have any right under the Agreement to institute any pro-
ceeding with respect to the Agreement, other than with respect to the failure
by the Seller or Servicer, as applicable, to remit payments, unless such holder
previously has given to the Trustee written notice of default and unless the
holders of Class A Certificates evidencing not less than 25% of the Class A
Certificate Balance have made written request upon the Trustee to institute
such proceeding in its own name as Trustee thereunder and have offered to the
Trustee reasonable indemnity and the Trustee for 30 days has neglected or re-
fused to institute any such proceeding. (Section 13.03.)
THE TRUSTEE
The Fuji Bank and Trust Company is the Trustee under the Agreement. The Trust-
ee, in its individual capacity or otherwise, may hold Certificates in its own
name or as pledgee. (Section 11.06.) For the purpose of meeting the legal re-
quirements of certain jurisdictions, the Servicer and the Trustee acting
jointly (or in some instances, the Trustee acting alone) shall have the power
to appoint co-trustees or separate trustees of all or any part of the Trust. In
the event of such appointment, all rights, powers, duties and obligations con-
ferred or imposed upon the Trustee by the Agreement shall be conferred or im-
posed upon the Trustee and such separate trustee or co-trustee jointly, or, in
any jurisdiction in which the Trustee shall be incompetent or unqualified to
perform certain acts, singly upon such separate trustee or co-trustee who shall
exercise and perform such rights, powers, duties and obligations solely at the
direction of the Trustee. (Section 11.13.)
The Trustee may resign at any time, in which event the Servicer will be obli-
gated to appoint a successor trustee. The Servicer may also remove the Trustee
if the Trustee ceases to be eligible to continue as such under the Agreement,
becomes legally unable to act, or becomes insolvent. In such circumstances, the
Servicer will be obligated to appoint a successor trustee. Any resignation or
removal of the Trustee and appointment of a successor trustee does not become
effective until acceptance of the appointment by the successor trustee. (Sec-
tion 11.10.)
The Agreement will provide that the Servicer will pay the Trustee's fees. (Sec-
tion 11.07.) The Agreement will further provide that the Trustee will be enti-
tled to indemnification by the Seller and the Servicer for, and will be held
harmless against, any loss, liability, fee, disbursement or expense incurred by
the Trustee not resulting from the Trustee's own willful misfeasance, bad faith
or negligence (other than by reason of a breach of any of its representations
or warranties set forth in the Agreement). The Agreement will further provide
that the Seller and the Servicer will indemnify the Trustee for certain taxes
that may be asserted in connection with the transaction.
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RATING OF THE CLASS A CERTIFICATES
It is a condition to issuance of the Class A Certificates that they be rated in
the highest rating category by at least one nationally recognized Rating Agen-
cy. The rating is not a recommendation to purchase, hold or sell Class A Cer-
tificates, inasmuch as such rating does not comment as to market price or suit-
ability for a particular investor. There is no assurance that the rating will
remain for any given period of time or that the rating will not be lowered or
withdrawn entirely by any Rating Agency if in its judgment circumstances in the
future so warrant.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
SECURITY INTERESTS IN THE FINANCED VEHICLES
In all states in which the Receivables have been originated, retail installment
sale contracts such as the Receivables evidence the credit sale of vehicles by
dealers to obligors; the contracts also constitute personal property security
agreements and include grants of security interests in the vehicles under the
Uniform Commercial Code (the "UCC") and pursuant to Motor Vehicle Retail In-
stallment Sales Acts (the "MVRISA") and applicable Retail Installment Sales
Acts (the "RISA") or the Consumer Credit Codes (generally pursuant to the Uni-
form Consumer Credit Code (the "UCCC")) of the various states. Perfection of
security interests in the vehicles is generally governed by the motor vehicle
registration laws of the state in which the vehicle is located. In most states
in which the Receivables have been originated, a security interest in a vehicle
is perfected by notation of the secured party's lien on the vehicle's certifi-
cate of title. Each Receivable prohibits the sale or transfer of the Financed
Vehicle without NMAC's consent.
Pursuant to the Purchase Agreement, NMAC will assign its security interests in
the Financed Vehicles securing the Receivables to the Seller and, pursuant to
the Agreement, the Seller will assign its security interests in the Financed
Vehicles securing the Receivables to the Trustee. However, because of the ad-
ministrative burden and expense, the Servicer, the Seller and the Trustee will
not amend any certificate of title to identify the Trust as the new secured
party on the certificates of title relating to the Financed Vehicles. Also, the
Servicer will continue to hold any certificates of title relating to the Fi-
nanced Vehicles in its possession as custodian for the Trustee pursuant to the
Agreement. See "The Certificates--Sale and Assignment of Receivables."
In most states, assignments such as those under the Purchase Agreement and the
Agreement are an effective conveyance of a security interest without amendment
of any lien noted on a vehicle's certificate of title, and the assignee suc-
ceeds thereby to the assignor's rights as secured party. In such states, in the
absence of fraud or forgery by the vehicle owner or the Servicer or administra-
tive error by state or local agencies, the notation of NMAC's lien on the cer-
tificates of title will be sufficient to protect the Trust against the rights
of subsequent purchasers of a Financed Vehicle or subsequent lenders who take a
security interest in a Financed Vehicle. If there are any Financed Vehicles as
to which NMAC failed to obtain a perfected security interest, its security in-
terest would be subordinate to, among others, subsequent purchasers of the Fi-
nanced Vehicles and holders of perfected security interests. Such a failure,
however, would constitute a breach of NMAC's warranties under the Purchase
Agreement and of the Seller's warranties under the Agreement and would create
an obligation of NMAC under the Purchase Agreement and of the Seller under the
Agreement to purchase the related Receivable unless the breach is cured. See
"The Certificates--Sale and Assignment of Receivables." By not identifying the
Trust as the secured party on the certificate of title, the security interest
of the Trust in the Financed Vehicle could be defeated through fraud or negli-
gence. The Seller will assign its rights under the Purchase Agreement to the
Trust.
Under the laws of most states, the perfected security interest in a vehicle
would continue for four months after a vehicle is moved to a state other than
the state in which it is initially registered and thereafter until the vehicle
owner re-registers the vehicle in the new state. Most states require surrender
of a certificate of title to re-register a vehicle; accordingly, to re-register
a vehicle in any such state, a secured party must surrender possession if it
holds the certificate of title to the vehicle, or, in the case of vehicles reg-
istered in states providing for the notation of a lien on the certificate of
title but not possession by the secured party, the secured party would receive
notice of surrender if the security interest is noted on the certificate of ti-
tle. Thus, the secured party would have the opportunity to re-perfect its secu-
rity interest in the vehicle in the state of relocation. In states that do not
require a certificate of title for registration of a motor vehicle, re-regis-
tration could defeat perfection. In the ordinary course of servicing receiv-
ables, NMAC takes steps to effect re-perfection upon receipt of notice of re-
registration or
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information from the obligor as to relocation. Similarly, when an obligor
sells a vehicle, NMAC must surrender possession of the certificate of title or
will receive notice as a result of its lien noted thereon and accordingly will
have an opportunity to require satisfaction of the related Receivable before
release of the lien. Under the Agreement, the Servicer is obligated to take
appropriate steps, at the Servicer's expense, to maintain perfection of secu-
rity interests in the Financed Vehicles.
Under the laws of most states, liens for repairs performed on a motor vehicle
and liens for certain unpaid taxes take priority over even a perfected secu-
rity interest in a Financed Vehicle. The Internal Revenue Code of 1986 also
grants priority to certain federal tax liens over the lien of a secured party.
The laws of certain states and federal law permit the confiscation of motor
vehicles under certain circumstances if used in unlawful activities, which may
result in the loss of a secured party's perfected security interest in the
confiscated motor vehicle. NMAC will represent to the Seller and the Seller
will represent to the Trust that each security interest in a Financed Vehicle
is or will be prior to all other present liens (other than tax liens and liens
that arise by operation of law) upon, and security interests in, such Financed
Vehicle. However, liens for repairs or taxes, or the confiscation of a Fi-
nanced Vehicle, could arise or occur at any time during the term of a Receiv-
able. No notice will be given to the Trustee or Certificateholders in the
event such a lien arises or confiscation occurs.
REPOSSESSION
In the event of default by an obligor under a retail installment sales
contract, the holder of such sale contract has all the remedies of a secured
party under the UCC, except where specifically limited by other state laws
(such as MVRISA, RISA or UCCC). The UCC remedies of a secured party in most
states include the right to repossession by self-help means, unless such means
would constitute a breach of the peace. Unless a vehicle is voluntarily
surrendered, self-help repossession is the method employed by NMAC in the
majority of instances in which a default occurs and is accomplished simply by
retaking possession of the financed vehicle. In cases where the obligor
objects or raises a defense to repossession, or if otherwise required by
applicable state law, a court order must be obtained from the appropriate
state court, and the vehicle must then be repossessed in accordance with that
order.
NOTICE OF SALE; REDEMPTION RIGHTS
In the event of default by an obligor, some jurisdictions require that such
obligor be notified of the default and be given a time period within which the
obligor may cure the default prior to repossession. Generally, this cure right
may be exercised on a limited number of occasions in any one-year period.
The UCC and other state laws require the secured party to provide the obligor
with reasonable notice of the date, time and place of any public sale and/or
the date after which any private sale of the collateral may be held. The obli-
gor generally has the right to redeem the collateral prior to actual sale by
paying the secured party the unpaid accelerated balance of the obligation plus
reasonable expenses for repossessing, holding and preparing the collateral for
disposition and arranging for the sale, plus, in some jurisdictions, reason-
able attorneys' fees, or, in some states, by payment of delinquent install-
ments or the unpaid balance.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the repossessed vehicles generally will be applied
to the expenses of resale and repossession and then to the satisfaction of the
indebtedness of the obligor on the receivable. While some states impose prohi-
bitions or limitations on the pursuit of deficiencies if the unpaid balance at
the time of such default does not exceed a certain threshold amount, a defi-
ciency judgment can be sought in those states that do not prohibit or limit
such pursuits. However, the deficiency judgment would be a personal judgment
against the obligor for the shortfall, and a defaulting obligor can be ex-
pected to have very little capital or sources of income available following
repossession. Therefore, in many cases, it may not be useful to seek a defi-
ciency judgment or, if one is obtained, it may be settled at a significant
discount.
Occasionally, after resale of a vehicle and payment of all expenses and in-
debtedness, there is a surplus of funds. In that case, the UCC requires the
lender to remit the surplus to any holder of any lien with respect to the ve-
hicle or if no such lien holder exists or there are remaining funds, the UCC
requires the lender to remit the surplus to the former obligor.
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CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related regulations im-
pose substantial requirements upon lenders and servicers involved in consumer
finance. These laws include the Truth-in-Lending Act, the Equal Credit Opportu-
nity Act, the Federal Trade Commission Act, the Fair Credit Reporting Act, the
Fair Debt Collection Practices Act, the Magnuson-Moss Warranty Act, the Sol-
diers and Sailors Civil Relief Act of 1940, the Federal Reserve Board's Regula-
tions B and Z, state adaptations of the National Consumer Credit Protection Act
and of the UCCC, state "Lemon Laws" designed to prevent fraud in the sale of
used vehicles and state motor vehicle retail installment sales acts, retail in-
stallment sales acts and other similar laws. Also, state laws impose finance
charge ceilings and other restrictions on consumer transactions and require
contract disclosures in addition to those required under federal law. These re-
quirements impose specific statutory liabilities upon creditors who fail to
comply with their provisions. In some cases, this liability could attach to an
assignee or affect an assignee's ability to enforce consumer finance contracts
such as the Receivables.
The Federal Trade Commission's Trade Regulation Rule on Preservation of Consum-
er's Claims and Defenses (the "FTC Rule"), the provisions of which are gener-
ally duplicated by the UCCC, other state statutes, or the common law in certain
states, has the effect of subjecting a seller (and certain related lenders and
their assignees) in a consumer credit transaction and any assignee of the
seller to all claims and defenses which the obligor in the transaction could
assert against the seller of the goods. Liability under the FTC Rule is limited
to the amounts paid by the obligor under the contract, and the holder of the
contract may also be unable to collect any balance remaining due thereunder
from the obligor.
The Receivables are subject to the requirements of the FTC Rule. Accordingly,
the Trustee, as holder of the Receivables, will be subject to any claims or de-
fenses that the purchaser of the Financed Vehicle may assert against the seller
of the Financed Vehicle. Such claims are limited to a maximum liability equal
to the amounts paid by the obligor on the Receivable. Under most state motor
vehicle dealer licensing laws, sellers of motor vehicles are required to be li-
censed to sell motor vehicles at retail sale. Furthermore, Federal Odometer
Regulations promulgated under the Motor Vehicle Information and Cost Savings
Act require that all sellers of new and used vehicles furnish a written state-
ment signed by the seller certifying the accuracy of the odometer reading. If a
seller is not properly licensed or if an Odometer Disclosure Statement was not
provided to the purchaser of the related financed vehicle, the obligor may be
able to assert a defense against the seller of the vehicle. If an obligor were
successful in asserting any such claim or defense, such claim or defense would
constitute a breach of NMAC's and the Seller's representations and warranties
under the Purchase Agreement and the Agreement, respectively, and would create
an obligation of NMAC and the Seller to repurchase the Receivable unless the
breach is cured. See "The Certificates -- Sale and Assignment of the Receiv-
ables."
Courts have imposed general equitable principles on secured parties pursuing
repossession of collateral or litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some or
all of the legal consequences of a default.
NMAC and the Seller will warrant under the Purchase Agreement and the Agree-
ment, respectively, that each Receivable complies with all requirements of law
in all material respects. Accordingly, if an Obligor has a claim against the
Trust for violation of any law and such claim materially and adversely affects
the Trust's interest in a Receivable (the initial determination of a material
adverse effect generally being made by the Servicer), such violation would con-
stitute a breach of warranty under the Purchase Agreement and the Agreement and
would create an obligation of NMAC and the Seller to repurchase the Receivable
unless the breach is cured. See "The Certificates -- Sale and Assignment of the
Receivables."
CERTAIN BANKRUPTCY CONSIDERATIONS
The Seller has taken steps in structuring the transactions contemplated hereby
that are intended to ensure that the voluntary or involuntary application for
relief by NMAC or its parent, NMC, under the United States Bankruptcy Code or
similar applicable state laws ("Insolvency Laws") will not result in consolida-
tion of the assets and liabilities of the Seller with those of NMAC or NMC.
These steps include the creation of the Seller as a separate, limited-purpose
subsidiary pursuant to a certificate of incorporation containing certain limi-
tations (including re-
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strictions on the nature of the Seller's business and a restriction on the
Seller's ability to commence a voluntary case or proceeding under any Insol-
vency Law without the unanimous affirmative vote of all of its directors).
The Seller has received the advice of counsel to the effect, based on a rea-
soned analysis of analogous case law (although there is no precedent based on
directly similar facts), that, subject to certain facts, assumptions and quali-
fications specified therein, it would not be a proper exercise by a court of
its equitable discretion to disregard the separate corporate existence of the
Seller and to require the consolidation of the assets and liabilities of the
Seller with the assets and liabilities of NMAC or NMC in the event of the ap-
plication of the federal bankruptcy laws to NMAC or NMC. Among other things,
counsel in rendering such advice assumed that the Seller will follow certain
procedures in the conduct of its affairs, including maintaining records and
books of account separate from those of NMAC, refraining from commingling its
assets with those of NMAC and refraining from holding itself out as having
agreed to pay, or being liable for, the debts of NMAC. The Seller intends to
follow and has represented to such counsel that it will follow these and other
procedures related to maintaining its separate corporate identity. However, in
the event that the Seller did not follow these procedures, there can be no as-
surance that a court would not conclude that the assets and liabilities of the
Seller should be consolidated with those of NMAC. Such court also might con-
clude that the holding by NMAC (as a result of consolidation) of a subordinated
interest in the Receivables requires that the transfer of the Receivables be
deemed a pledge to secure a borrowing by NMAC rather than a sale of the Receiv-
ables. If a court were to reach such conclusions, or a filing were made under
any Insolvency Law by or against the Seller, or if an attempt were made to lit-
igate any of the foregoing issues, delays in distributions on the Certificates
(and possible reductions in the amount of such distributions) could occur.
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments, numerous
other statutory provisions, including federal bankruptcy laws and related state
laws, may interfere with or affect the ability of a lender to realize upon col-
lateral or enforce a deficiency judgment. For example, in a Chapter 13 proceed-
ing under the federal bankruptcy law, a court may prevent a lender from repos-
sessing a motor vehicle, and, as part of the rehabilitation plan, reduce the
amount of the secured indebtedness to the market value of the motor vehicle at
the time of bankruptcy (as determined by the court), leaving the party provid-
ing financing as a general unsecured creditor for the remainder of the indebt-
edness. A bankruptcy court may also reduce the monthly payments due under a
contract or change the rate of interest and time of repayment of the indebted-
ness.
TRANSFERS OF VEHICLES
The Receivables prohibit the sale or transfer of the vehicle securing a Receiv-
able without NMAC's consent and permit NMAC to accelerate the maturity of the
Receivable upon a sale or transfer without its consent. If the Servicer con-
sents to such a sale or transfer, the Servicer may enter into a transfer of eq-
uity agreement with the secondary purchaser for the purpose of effecting the
transfer of the Financed Vehicle.
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FEDERAL INCOME TAX CONSEQUENCES
The following discussion, insofar as it constitutes statements of law or legal
conclusions, represents the opinion of Weil, Gotshal & Manges LLP, special
counsel to the Seller, and is subject to the qualifications set forth herein.
The discussion summarizes the material U.S. federal income tax consequences of
the acquisition, ownership and disposition of the Class A Certificates. This
discussion is a summary of the material U.S. federal income tax consequences
only and is not a complete analysis of the tax considerations that may be ap-
plicable to every prospective investor. The following discussion does not con-
sider all aspects of U.S. federal income tax law that may be relevant to the
purchase, ownership and disposition of the Class A Certificates by such holder
in light of its circumstances. This discussion also does not address the fed-
eral income tax consequences of ownership of Class A Certificates not held as
capital assets within the meaning of Section 1221 of the U.S. Internal Revenue
Code of 1986 (the "Code"), the consequences to investors subject to special
treatment under the federal income tax laws, such as dealers in securities or
foreign currency, tax-exempt entities, foreign investors, financial institu-
tions, insurance companies or persons that either hold the Class A Certifi-
cates as part of a "straddle","hedge" or a "conversion transaction" or have a
"functional currency" other than the U.S. dollar, or the indirect consequences
to an equity owner of an entity acquiring a Class A Certificate. Finally, any
U.S. federal gift or estate tax consequences or any tax consequences arising
out of the tax laws of any state, local or foreign jurisdiction are also not
described.
This summary is based upon the Code, existing and proposed regulations there-
under, and current administrative rulings and court decisions, all of which
are subject to change, possibly on a retroactive basis. Prospective investors
should note that no rulings have been or will be sought from the Internal Rev-
enue Service (the "Service") with respect to any of the federal tax conse-
quences discussed below, and no assurance can be given that the Service will
not take contrary positions. PERSONS CONSIDERING THE PURCHASE OF CLASS A CER-
TIFICATES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION OF
FEDERAL INCOME TAX LAWS, AS WELL AS THE LAWS OF ANY STATE, LOCAL OR FOREIGN
TAXING JURISDICTION, TO THEIR PARTICULAR SITUATIONS. IN PARTICULAR, SUCH PER-
SONS SHOULD CONSULT THEIR TAX ADVISORS AS TO WHETHER STATE OR LOCAL TAXING JU-
RISDICTIONS WHERE SERVICING AND OTHER ACTIVITIES OF THE TRUST OCCUR MAY ASSERT
THAT A CERTIFICATE HOLDER IS SUBJECT TO TAX SOLELY AS A RESULT OF SUCH CERTIF-
ICATE HOLDER'S BENEFICIAL OWNERSHIP IN THE TRUST.
Unless the context otherwise requires, for the balance of this discussion, the
term "Class A Certificateholder" means the holder of a Class A Certificate and
a "holder" or a "Class A Certificate holder" means the beneficial owner of a
Class A Certificate.
CLASSIFICATION OF THE TRUST
Under current law and assuming execution of, and compliance with, the Agree-
ment, the Custody and Pledge Agreement and the Yield Supplement Agreement, the
Trust will be classified for federal income tax purposes as a grantor trust
and not as an association taxable as a corporation.
For federal income tax purposes, each holder will be considered to own an un-
divided interest in the Trust's assets, be required to include in its gross
income, for federal income tax purposes, its share of the gross income of the
Trust and be entitled to deduct (subject both to possible recharacterization
of certain fees paid by the Trust to the Servicer and to any limitations gen-
erally applicable to such holder) its share of the expenses of the Trust allo-
cable to it.
Although each Class A Certificate holder will be considered, for federal in-
come tax purposes, to own its pro rata share of the principal of the Receiv-
ables in the Trust and of the Yield Supplement Amounts, each holder's share of
the right to interest on the Receivables, however, is not entirely certain.
Each Class A Certificate holder's right to interest with respect to a particu-
lar Receivable should be limited to its pro rata share of the lesser of (i)
the interest that accrues on the principal of that Receivable at the Pass-
Through Rate plus its pro rata share of the Servicing and Trustee fees alloca-
ble to it (which fees will be deemed to be paid over, on behalf of the holder,
to the Servicer and the Trustee, respectively) and (ii) the total interest
payable on that Receivable.
For administrative convenience, however, the Trustee may report information
with respect to a Class A Certificate holder's investment in a Class A Certif-
icate on an aggregate basis as though such Class A Certificate holder's in-
vestment in the Receivables and other assets were equal to such Class A Cer-
tificate holder's share of the initial Class A Principal Balance and on which
interest and Yield Supplement Amounts are payable at a combined rate equal to
the sum of the Pass-Through Rate and the Servicing Rate. If the Service were
to require reporting on an asset-by-asset basis, the amount of income report-
able for a period could differ from the amount reportable on an
38
<PAGE>
aggregate basis. In particular, as described more fully below, High Yield Re-
ceivables (as defined below) are subject to the "stripped bond" rules of the
Code which could result in such Receivables having original issue discount
("OID"), and Low Yield Receivables (as defined below) may be subject to the
market discount or imputed interest rules.
PAYMENTS UNDER THE YIELD SUPPLEMENT AGREEMENT
A Class A Certificate holder should allocate a portion of its purchase price
or other tax basis in the Class A Certificate to its right to receive Yield
Supplement Amounts. See "Original Issue Discount, Imputed Interest and Market
Discount."
Tax counsel is unable to opine as to the federal income tax characterization
of the right to receive Yield Supplement Amounts. Arguably, the arrangement is
economically analogous to a loan made by the Class A Certificate holder to the
Seller in an amount equal to the discounted present value of the Yield Supple-
ment Amounts, if any, which are expected to be received, resulting in OID to
the Class A Certificate holder's for the amount of the discount. In that case,
each Class A Certificate holder will accrue income in respect of its interest
in such discounted present value under the rules relating to OID under a
method that takes account of the compounding of interest and the holder's ex-
pected yield to maturity. Alternatively, it is possible that the entire amount
of Yield Supplement Amounts should be included in income as accrued or re-
ceived and not treated as interest and that the Class A Certificate holder
should also be entitled to amortize the portion of its purchase price alloca-
ble to its right to receive Yield Supplement Amounts, possibly on a straight-
line basis over the term of the Class A Certificates. In that case, the Yield
Supplement Amounts also might be unrelated taxable income for a tax-exempt in-
vestor. Although the Seller believes that these two characterizations of the
Yield Supplement Agreement are the most likely characterizations, no assurance
can be given, however, that either of these two characterizations will be ac-
cepted by the Service.
ORIGINAL ISSUE DISCOUNT, IMPUTED INTEREST AND MARKET DISCOUNT
Original Issue Discount; General. The Receivables bear interest at varying
rates. Because a Class A Certificate holder will be viewed as owning an inter-
est in each of the Trust's assets, a portion of the Class A Certificate hold-
er's purchase price of a Class A Certificate (whether on initial sale or in a
subsequent transaction) may be required to be allocated among each of the
Trust's assets based on their respective fair market values. See discussion
below under "--Effect of Allocation of Basis."
Because the Seller will retain the right to receive interest at a rate equal
to the excess of the APR of each Receivable over the sum of the Pass-Through
Rate and the Servicing Rate, the issuance of a Class A Certificate will result
in the separation of ownership ("stripping") of a portion of the rights to in-
terest payments on those Receivables (the "High Yield Receivables") that bear
an interest rate which is greater than the sum of the Pass-Through Rate and
the Servicing Rate from the principal of such Receivables. Those Receivables
(the "Low Yield Receivables") that bear an interest rate which is less than or
equal to the sum of the Pass-Through Rate and the Servicing Rate do not pro-
vide rights to receive interest in excess of the sum of the Pass-Through Rate
and the Servicing Rate and, therefore, will not be treated as stripped instru-
ments. Instead, yield supplement amounts will be paid to eliminate the differ-
ence between the actual yield on each Low Yield Receivable and the yield which
would have resulted on such Receivable if its interest rate had equaled the
sum of the Pass-Through Rate and the Servicing Rate.
The Trust intends to take the position that, under the Code, the stripping of
the High Yield Receivables will result in OID. Accordingly, each Class A Cer-
tificate holder will accrue income in respect of its interest in such Receiv-
ables under the rules relating to original issue discount under a method that
takes account of the compounding of interest, based on the particular Class A
Certificate holder's expected yield to maturity.
A Class A Certificate holder that purchases a Class A Certificate for an
amount greater than its outstanding principal balance will be required to make
an election under Section 171 of the Code to amortize premium in respect of
the Receivables in order to accrue income based on the Class A Certificate
holder's yield rather than at the Pass-Through Rate. Such an election would
apply to all of the taxable debt instruments held at or acquired after the
first day of the holder's first taxable year to which such election applies,
and may be revoked only with the consent of the Service.
39
<PAGE>
Imputed Interest and Market Discount. For the reasons discussed above, the Low
Yield Receivables will not be treated as stripped bonds.
Some or all of the Low Yield Receivables may have imputed interest and/or mar-
ket discount. If a Low Yield Receivable did not have "adequate stated interest"
(as the term is defined in Section 483 of the Code) when originated, then such
Receivable would be treated as having "imputed interest." Under the imputed in-
terest rules of the Code, a portion of the Receivable's stated principal amount
equal to such total unstated interest would be recharacterized as interest and
the Receivable's principal amount would be correspondingly reduced. If the im-
puted interest rules applied, the total unstated interest would be included in
the Class A Certificate holder's gross income over the term of the Receivable
using a constant yield-to-maturity method.
It is uncertain whether the imputed interest rules would apply to a Class A
Certificate holder. If these rules do not apply, or with respect to Low Yield
Receivables which had adequate stated interest when issued, the market discount
rules instead may be applicable.
In general, under the market discount provisions of the Code, principal pay-
ments received by the Trust, and all or a portion of the gain recognized upon a
sale or other disposition of a Receivable or upon the sale or other disposition
of a Class A Certificate by a Class A Certificate holder, will be treated as
ordinary income to the extent of accrued market discount. Any payments received
by a Class A Certificate holder upon a sale or other disposition of a Class A
Certificate in an amount in excess of accrued market discount will be treated
as capital gain. The character of any gain from the sale of a Class A Certifi-
cate allocable to rights pursuant to the Yield Supplement Agreement as ordinary
or capital gain, however, is uncertain. In addition, a portion of the interest
deductions of the Class A Certificate holder attributable to any indebtedness
treated as incurred or continued to purchase or carry a Receivable may have to
be deferred, unless a Class A Certificate holder makes an election to include
market discount in income currently as it accrues (in lieu of including accrued
market discount in income at the time of disposition). Such election would ap-
ply to all debt instruments acquired by the taxpayer on or after the first day
of the first taxable year to which such election applies, and may be revoked
only with consent of the Service. Taxpayers may, in general, elect to accrue
market discount either (i) under a constant yield-to-maturity method or (ii) in
the proportion that the stated interest paid on the obligation for the current
period bears to the total remaining interest on the obligation.
Effect of Allocation of Basis. In determining whether a Class A Certificate
holder has purchased its interest in the Receivables (or any Receivable) at a
discount or whether such Receivables (or any Receivable) have OID or, in the
case of Low Yield Receivables, have market discount, a portion of the purchase
price of a Class A Certificate should be allocated to the Class A Certificate
holder's undivided interest in accrued but unpaid interest (which, upon re-
ceipt, will constitute a return of basis and not interest income), amounts col-
lected as of the time of purchase but not yet distributed, rights to receive
Yield Supplement Amounts pursuant to the Yield Supplement Agreement and, possi-
bly, to contingent rights to receivable Shortfall Amounts pursuant to the Yield
Supplement Agreement. As a result, the portion of the purchase price allocable
to a Class A Certificate holder's undivided interest in the Receivables (or any
Receivable) could be decreased and the potential OID and/or market discount on
the Receivables (or any Receivable) could be increased. Although the matter is
not entirely certain, it appears that, as a technical matter, each holder
should calculate income separately for its interest in each Receivable (by
first allocating to each Receivable and to each other asset in the Trust a por-
tion of the holder's basis in the Class A Certificate). Further, in the case of
any "affected investor" (as defined below), in computing yield to maturity, all
interest on the Receivables allocable to the Class A Certificates, including
interest effectively paid over to the Servicer and the Trustee (and, if either
of the credit support arrangements is treated as a separate asset, as discussed
below, the Class B Certificate holder or the Seller, as the case may be), is
taken into account. For this purpose "affected investors" are individuals, per-
sons, including estates and trusts, that compute taxable income in the same
manner as an individual and certain "pass-through entities". If required to re-
port income in respect of the Class A Certificates to the Service and Class A
Certificate holders, however, the Servicer and Trustee currently intend to ac-
crue income on an aggregate basis, based on an assumed initial offering price
of the Class A Certificates and based on the net amounts distributable on the
Class A Certificates. This method of reporting on a net basis may not be per-
mitted. Furthermore, subsequent purchasers of Class A Certificates will have to
adjust the amounts reported to them based upon their basis in the Class A Cer-
tificates.
40
<PAGE>
Possible Alternative Characterization. Prospective investors should be aware
that the Service could take the position that, in accruing OID and, possibly,
market discount, a Receivable-by-Receivable or pool-wide prepayment assumption
should be used to determine yield and time to maturity. If the holder purchased
its Class A Certificate at a yield higher than the Pass-Through Rate on the
Class A Certificates (that is, for an amount less than the principal amount of
Receivables allocable to the Class A Certificate), such an assumption could ac-
celerate income on the Class A Certificate.
Prospective investors should also be aware that, although the Seller believes
that neither the Class A Certificate holders' right to be paid prior to payment
being made on the Class B Certificates nor the Class A Certificate holders'
right to be paid out of the Subordination Spread Account should be treated as
an asset separate from the Class A Certificate holders' rights in the Receiv-
ables, the Service could take a contrary view. If either of those rights were
characterized as a separate asset, a portion of such holder's basis in its
Class A Certificate could be required to be allocated to those rights or a
Class A Certificate holder might be considered to own a greater percentage of
the right to interest on the Receivables (and be deemed to pay over that addi-
tional interest as a guarantee or other fee as it is paid or accrued).
SALE OR PREPAYMENT
Upon the sale, exchange or retirement of a Class A Certificate, a Class A Cer-
tificate holder will recognize taxable gain or loss in respect of its undivided
interest in each asset held by the Trust. Gain or loss with respect to each un-
divided interest in a Trust asset is equal to the difference between the allo-
cable portion of the amount realized and the Class A Certificate holder's ad-
justed basis in such asset. A Class A Certificate holder's initial basis in
each Receivable (see "Original Issue Discount, Imputed Interest and Market Dis-
count--Effect of Allocation of Basis" above) generally would be increased by
any OID, imputed interest or market discount amortization and decreased by any
premium amortization attributable to such Receivable and taken into account in
determining the Class A Certificate holder's taxable income and any distribu-
tions (other than "qualified stated interest") received.
As a consequence of the foregoing, a disposition or retirement of a Class A
Certificate for no net gain or loss may for tax purposes consist of a sale of
one asset (e.g., an interest in some Receivables) for a gain and the disposi-
tion of another asset at a loss (e.g., an interest in other Receivables). Al-
though such gains or losses generally should be treated as offsetting capital
gains and losses (unless earned by a dealer), absent the making of an election
to include market discount currently in income (as discussed above), gain real-
ized on an interest in Receivables acquired with market discount may yield or-
dinary gain to the extent of accrued market discount, which (i) for a corporate
taxpayer could not be offset by, and (ii) for an individual taxpayer could only
be offset by up to $3,000 of, any capital loss attributable to an interest in
any other Receivables or Trust assets. See "Original Issue Discount, Imputed
Interest and Market Discount--Effect of Allocation of Basis" above. The charac-
ter of any gain realized allocable to the Class A Certificate holder's rights
under the Yield Supplement Agreement as ordinary or capital also is uncertain.
Any loss realized would be treated as a capital loss.
In general, gain or loss on any sale, exchange or retirement of a Class A Cer-
tificate would be capital gain or loss. However, it is possible that the Serv-
ice will take the position that, under the rules for accruing OID, gain on any
prepayment of the Receivables will be ordinary income.
DEDUCTIONS
Each holder of a Class A Certificate will generally be allowed to deduct, con-
sistent with its method of accounting, any fees paid or deemed paid by the
Trust allocable to that Class A Certificate. The Service could take the posi-
tion that some or all of the fees paid to the Servicer are not deductible by
the Trust as compensation for servicing but rather represent some sort of re-
tained interest in the Receivables. Except to the extent described in the fol-
lowing paragraph, the overall tax consequences should be substantially the same
in either event.
Prospective investors also should be aware, however, that individuals, estates
and trusts that own Class A Certificates (directly or indirectly through pass-
through entities) will be allowed to deduct such fees for regular income tax
purposes only to the extent such fees and all of the investor's other miscella-
neous itemized deductions exceed two percent of the holder's adjusted gross in-
come. (Further, certain itemized deductions otherwise allowable to individuals
are further reduced to the extent the Class A Certificate holder's adjusted
gross income exceeds a statutory threshold.) Additionally, no deduction will be
allowed in respect of fees for such persons for alternative minimum tax purpos-
es.
41
<PAGE>
FOREIGN CLASS A CERTIFICATE OWNERS
Interest attributable to Receivables which is received by a Class A Certifi-
cate holder that is not a "United States person" and has no connection with
the United States other than owning the Class A Certificate should generally
constitute "portfolio interest" and, accordingly, not be subject to the normal
30% withholding tax imposed with respect to such payments, provided that such
Class A Certificate holder fulfills certain certification requirements. Under
such requirements, the holder must certify, under penalties of perjury, that
it is not a "United States person" and provide its name and address. For this
purpose, "United States person" means a citizen or resident of the United
States, a corporation, partnership, or other entity created or organized in or
under the laws of the United States or any political subdivision thereof, an
estate or trust the income of which is includible in gross income for United
States federal income tax purposes regardless of its source or a trust with
respect to which a court within the United States is able to exercise primary
supervision over its administration and one or more United States fiduciaries
have the authority to control all of its substantial decisions.
PAYMENTS RECEIVED OUT OF THE YIELD SUPPLEMENT RESERVE ACCOUNT OR IN RESPECT OF
THE YIELD SUPPLEMENT AGREEMENT MAY NOT QUALIFY FOR EXEMPTION FROM THE 30%
WITHHOLDING TAX AND THE TRUST INTENDS TO WITHHOLD WITH RESPECT TO SUCH
PAYMENTS. NONE OF THE TRUST, THE SELLER, THE SERVICER OR THE TRUSTEE IS
REQUIRED TO "GROSS-UP" A HOLDER FOR ANY AMOUNTS WITHHELD FROM PAYMENTS TO
CLASS A CERTIFICATE HOLDERS.
BACKUP WITHHOLDING
Payments made on the Class A Certificates and proceeds from the sale of the
Class A Certificates will not be subject to a "backup" withholding tax of 31%
unless, in general, the Class A Certificate holder fails to comply with cer-
tain reporting procedures and is not an exempt recipient under applicable pro-
visions of the Code.
42
<PAGE>
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"), im-
poses certain responsibilities on fiduciaries of employee benefit plans subject
to ERISA ("ERISA Plans"). A fiduciary of an ERISA Plan should consider, among
other matters, whether an investment in the Certificates is prudent, is permit-
ted by the documents governing the ERISA Plan, and is appropriate in view of
the ERISA Plan's investment policy and portfolio.
ERISA Section 406 prohibits a fiduciary of an ERISA Plan from causing such plan
to directly or indirectly engage in a broad range of transactions involving the
assets of such plan and a person who is "party in interest" (as defined in
ERISA) to such plan unless a statutory or administrative exemption applies to
the transaction. Code Section 4975 prohibits similar transactions involving a
plan subject to such Section (including individual retirement accounts) and a
person who is a "disqualified person" (as defined in the Code) with respect to
such plan. These transactions (referred to as "prohibited transactions") in-
volving an ERISA Plan or other plan subject to Code Section 4975 (collectively,
"Plans") include sales, exchanges, loans, extensions of credit, leases and cer-
tain other transactions. A party in interest or disqualified person is herein-
after referred to as a "Party in Interest".
Code Section 4975 and ERISA Sections 502(i) and 502(l) of ERISA impose certain
excise taxes and civil penalties on a Party in Interest (and possibly other
persons) that engages or participates in a prohibited transaction.
Under regulations issued by the United States Department of Labor (the "Plan
Asset Regulations"), the assets of an entity in which a Plan owns an equity in-
terest may be treated as if they were "plan assets" of such Plan. The Certifi-
cates may be treated as equity interests under the Plan Asset Regulations, and
the assets of the Trust may constitute "plan assets" of Plans owning Certifi-
cates unless an exception applies (such as the exception for certain publicly
offered securities). There are no assurances that the assets of the Trust would
not be treated as "plan assets" of Plans owning Certificates. Therefore, pro-
spective Plan investors should consider the applicability of an exemption from
the prohibited transaction provisions of ERISA and the Code to their purchase,
holding or sale of Certificates, and to the operations of the Trust.
The purchase and holding of Class A Certificates by Plans may be exempt from
the prohibited transaction restrictions under an administrative exemption
granted to J.P. Morgan Securities Inc., Prohibited Transaction Exemption 90-23,
as amended ("Exemption"). The Exemption applies to certain prohibited transac-
tion restrictions of ERISA and related excise tax provisions of the Code with
respect to (i) the initial purchase, the holding and the subsequent resale by
Plans of certificates in an asset-backed pass-through trust that holds certain
receivables, loans and other obligations that meet the conditions and require-
ments of the Exemption, and (ii) the servicing, management and operation of
such trust. The obligations that such a trust might hold include secured motor
vehicle installment obligations, such as the Receivables. The United States De-
partment of Labor has clarified in Prohibited Transaction Exemption 97-34 that
the rights of a trustee under a yield supplement arrangement of the type de-
scribed under "Description of the Certificates--Yield Supplement Reserve Ac-
count and Yield Supplement Agreement" above may be held as assets of a trust
without jeopardizing the availability of the Exemption.
The Exemption does not apply to Plans sponsored by the Seller, any Underwriter,
the Trustee, the Servicer, any obligor with respect to Receivables included in
the Trust and constituting more than 5% of the aggregate unamortized principal
balance of the assets in the Trust, or any affiliate of such persons (the "Re-
stricted Group").
Among the conditions that must be satisfied for the Exemption to apply are the
following:
1. the acquisition of the certificates by a Plan is on terms (including
the price for the certificates) that are at least as favorable to the Plan
as they would be in an arm's-length transaction with an unrelated party;
2. the rights and interests evidenced by the certificates acquired by the
Plan are not subordinated to the rights and interests evidenced by other
certificates of the trust (such as the Class B Certificates which are not
eligible for the Exemption);
3. the certificates acquired by the Plan have received a rating at the
time of such acquisition that is one of the three highest generic rating
categories from either Standard & Poor's Ratings Services ("S&P"), Moody's
Investors Service, Inc. ("Moody's") or Duff & Phelps, Inc. ("D&P");
4. the Trustee must not be an affiliate of any other member of the Re-
stricted Group;
43
<PAGE>
5. the sum of all payments made to and retained by the Underwriter in con-
nection with the distribution of the certificates represents not more than
reasonable compensation for underwriting the certificates; the sum of all
payments made to and retained by the sponsor of the trust pursuant to the
transfer of the obligations to the trust represents not more than the fair
market value of such obligations; and the sum of all payments made to and
retained by the servicers of the obligations represents not more than rea-
sonable compensation for such persons' services and reimbursement of such
persons' reasonable expenses in connection therewith; and
6. the Plan investing in the certificates is an "accredited investor" as
defined in Rule 501(a)(1) of Regulation D of the Securities and Exchange
Commission under the Securities Act of 1933.
The Trust must also meet the following requirements:
1. the corpus of the Trust must consist solely of assets of the type that
have been included in other investment pools;
2. certificates in such other investment pools must have been rated in one
of the three highest rating categories of S&P, Moody's or D&P for at least
one year prior to the Plan's acquisition of Certificates; and
3. certificates evidencing interests in such other investment pools must
have been purchased by investors other than Plans for at least one year
prior to the Plan's acquisition of Certificates.
Moreover, the Exemption provides relief from certain prohibited transactions
that may occur when a fiduciary causes a Plan to acquire certificates in a
trust in which the fiduciary (or its affiliate) is an obligor on the obliga-
tions held in the trust; provided that, among other requirements, (i) in the
case of an acquisition in connection with the initial issuance of certificates,
at least fifty percent of each class of certificates in which Plans have in-
vested is acquired by persons independent of the Restricted Group and at least
fifty percent of the aggregate interest in the trust is acquired by persons in-
dependent of the Restricted Group; (ii) such fiduciary (or its affiliate) is an
obligor with respect to five percent or less of the fair market value of the
obligations contained in the trust; (iii) the Plan's investment in certificates
of any class does not exceed twenty-five percent of all of the certificates of
that class outstanding at the time of the acquisition; and (iv) immediately af-
ter the acquisition, no more than twenty-five percent of the assets of the Plan
with respect to which such person is a fiduciary are invested in certificates
representing an interest in one or more trusts containing assets sold or serv-
iced by the same entity.
None of the Receivables of any one Obligor shall exceed 5% of the principal of
the Trust at the outset, and the Trustee will try to dispose of assets of the
Trust to avoid violating such limit.
The Seller believes that the Exemption could apply to the acquisition and hold-
ing of Class A Certificates (but not Class B Certificates) by Plans. However,
no assurances can be provided that the conditions for the application of such
exemption have or will be satisfied, and each fiduciary with respect to a Plan
should review the applicability of the Exemption with its counsel prior to ac-
quiring Class A Certificates. Class B Certificates should not be acquired by a
Plan in the absence of a determination that another exemption applies.
Certain employee benefit plans, such as governmental plans and church plans (if
no election has been made under Code Section 410(d)), are not subject to the
requirements of ERISA, and assets of such plans may be invested in Certificates
without regard to the ERISA considerations described herein, subject to the
provisions of other applicable federal and state law. Any such plan which is
exempt from taxation under Code Section 501(a) may, however, forfeit its tax-
exempt status if it engages in a prohibited transaction in violation of Code
Section 503.
Prospective Plan investors should consult with their legal advisors concerning
the impact of ERISA and the Code, the applicability of the Exemption, and the
potential consequences of their specific circumstances, prior to making an in-
vestment in the Class A Certificates.
44
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement be-
tween the Seller and J.P. Morgan Securities Inc., acting for itself and as rep-
resentative of the other Underwriters named below (the "Underwriting Agree-
ment"), the Seller has agreed to sell to the Underwriters, and each of the
Underwriters has agreed to purchase, the principal amount of the Class A Cer-
tificates set forth opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
UNDERWRITERS CLASS A CERTIFICATES
------------ --------------------
<S> <C>
J.P. Morgan Securities Inc. ......................... $
Chase Securities Inc. ...............................
Credit Suisse First Boston Corporation...............
Goldman, Sachs & Co. ................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................
Salomon Brothers Inc.................................
---------------
Total.............................................. $
===============
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all of the Class A Cer-
tificates offered hereby if any of the Class A Certificates are purchased. The
Seller has been advised by the Underwriters that they propose initially to of-
fer the Class A Certificates to the public at the price set forth herein, and
to certain dealers at such price less a concession not in excess of % of the
Class A Certificate amounts. The Underwriters may allow and such dealers may
reallow a concession not in excess of % of the Class A Certificate amounts
to certain other dealers. After the initial public offering, the public offer-
ing price and such concessions may be changed.
In connection with the offering of the Class A Certificates, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Class A Certificates. Specifically, the Underwriters may overallot
the offering, creating a syndicate short position. Underwriters may bid for and
purchase Class A Certificates in the open market to cover syndicate short posi-
tions. In addition, the Underwriters may bid for and purchase Class A Certifi-
cates in the open market to stabilize the price of the Class A Certificates.
These activities may stabilize or maintain the market price of the Class A Cer-
tificates above independent market levels. The Underwriters are not required to
engage in these activities, and may end these activities at any time.
The Seller and NMAC have agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act, or to con-
tribute to payments which the Underwriters may be required to make in respect
thereof. In the opinion of the Commission, certain indemnification provisions
for liability arising under the federal securities law are contrary to public
policy and therefore unenforcable.
In the ordinary course of their respective businesses, the Underwriters and
their respective affiliates have engaged and may engage in investment banking
and/or commercial banking transactions with Nissan and its affiliates.
LEGAL OPINIONS
Certain legal matters relating to the Certificates will be passed upon for the
Seller and the Servicer by Joy Crose, Esq., and by Weil, Gotshal & Manges LLP,
New York, New York, and for the Underwriters by Cravath, Swaine & Moore. Cer-
tain federal income tax and other matters will be passed upon for the Seller by
Weil, Gotshal & Manges LLP.
45
<PAGE>
INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus and the
pages on which the definitions of such terms may be found herein.
<TABLE>
<S> <C>
Accounts................................................................ 23
Advance................................................................. 7, 24
Agreement............................................................... 3
APR..................................................................... 13
Available Interest...................................................... 25
Available Principal..................................................... 25
Cede.................................................................... 4
Certificate Account..................................................... 12, 23
Certificateholders...................................................... 2, 5
Certificates............................................................ 1, 3
Class A Agent........................................................... 8
Class A Certificate Balance............................................. 4, 26
Class A Certificateholders.............................................. 4, 38
Class A Certificate holder.............................................. 38
Class A Certificate Factor.............................................. 19
Class A Certificate Owner............................................... 4
Class A Certificates.................................................... 3
Class A Distributable Amount............................................ 25
Class A Interest Carryover Shortfall.................................... 27
Class A Interest Distributable Amount................................... 26
Class A Percentage...................................................... 3, 20
Class A Pool Factor..................................................... 19
Class A Principal Carryover Shortfall................................... 27
Class A Principal Distributable Amount.................................. 25
Class B Certificate Balance............................................. 26
Class B Certificateholders.............................................. 5
Class B Certificates.................................................... 3
Class B Distributable Amount............................................ 26
Class B Interest Carryover Shortfall.................................... 27
Class B Interest Distributable Amount................................... 26
Class B Percentage...................................................... 3, 20
Class B Principal Carryover Shortfall................................... 27
Class B Principal Distributable Amount.................................. 26
Code.................................................................... 38
Collection Account...................................................... 12, 23
Collection Period....................................................... 4, 20
Commission.............................................................. 2
Custody and Pledge Agreement............................................ 5
Cutoff Date............................................................. 3
D&P..................................................................... 43
Dealer Recourse......................................................... 12
Dealers................................................................. 12
Definitive Certificates................................................. 21
Determination Date...................................................... 29
Distribution Date....................................................... 1, 7
DTC..................................................................... 4
Eligible Investments.................................................... 23
ERISA................................................................... 9, 43
ERISA Plans............................................................. 43
Events of Default....................................................... 31
Excess Amounts.......................................................... 5, 27
Exchange Act............................................................ 2
Exemption............................................................... 43
Final Scheduled Distribution Date....................................... 1
</TABLE>
46
<PAGE>
<TABLE>
<S> <C>
Financed Vehicles...................................................... 3
FTC Rule............................................................... 36
High Yield Receivables................................................. 39
holder................................................................. 38
Indirect Participants.................................................. 20
Initial Yield Supplement Reserve Amount................................ 7, 25
Insolvency Laws........................................................ 36
Liquidated Receivables................................................. 25
Liquidation Proceeds................................................... 25
Low Yield Receivables.................................................. 39
Moody's................................................................ 43
MVRISA................................................................. 34
Nissan................................................................. 19
NMAC................................................................... 3
NMC.................................................................... 3
Obligors............................................................... 12
OID.................................................................... 39
Participants........................................................... 20
party in interest...................................................... 43
Pass-Through Rate...................................................... 4
Plan Asset Regulations................................................. 43
Plans.................................................................. 43
Pool Balance........................................................... 15
Prepaid Receivable..................................................... 7
prohibited transactions................................................ 43
Purchase Agreement..................................................... 3, 22
Purchase Amount........................................................ 22
Rating Agency.......................................................... 9
Receivables............................................................ 1, 3
Record Date............................................................ 4
Required Deposit Rating................................................ 23
Required Yield Supplement Reserve Amount............................... 7, 25
Restricted Group....................................................... 43
RISA................................................................... 34
Rules.................................................................. 21
S&P.................................................................... 43
Securities Act......................................................... 2
Seller................................................................. 1, 2, 3
Service................................................................ 8, 38
Servicer............................................................... 1, 3
Servicer Fee........................................................... 8, 24
Servicing Fee.......................................................... 8, 24
Servicing Rate......................................................... 7
Specified Subordination Spread Account Balance......................... 6
Subordination Initial Deposit.......................................... 5
Subordination Spread Account........................................... 5
Supplemental Servicing Fee............................................. 8, 24
Total Available Amount................................................. 25
Trust.................................................................. 1, 3
Trustee................................................................ 2, 3, 8
UCC.................................................................... 34
UCCC................................................................... 34
Underwriters........................................................... 45
Underwriting Agreement................................................. 45
United States person................................................... 42
Yield Supplement Agreement............................................. 7
Yield Supplement Amount................................................ 7
Yield Supplement Reserve Account....................................... 6, 24
</TABLE>
47
<PAGE>
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE SELLER, THE SERVICER OR THE UN-
DERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICI-
TATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURIS-
DICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HERE-
UNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMA-
TION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 2
Reports to Class A Certificateholders by the Trustee....................... 2
Summary.................................................................... 3
Risk Factors............................................................... 10
Formation of the Trust..................................................... 12
Property of the Trust...................................................... 12
The Receivables............................................................ 13
Class A Certificate and Pool Factors....................................... 19
Use of Proceeds............................................................ 19
The Seller................................................................. 19
The Servicer............................................................... 19
The Certificates........................................................... 20
Rating of the Class A Certificates......................................... 34
Certain Legal Aspects of the Receivables................................... 34
Federal Income Tax Consequences............................................ 38
ERISA Considerations....................................................... 43
Underwriting............................................................... 45
Legal Opinions............................................................. 45
Index of Terms............................................................. 46
</TABLE>
---------------
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS, ALL DEALERS EFFECTING
TRANSACTIONS IN THE CLASS A CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
$755,564,579
NISSAN AUTO RECEIVABLES
1997-A GRANTOR TRUST
% ASSET BACKED
CERTIFICATES, CLASS A
NISSAN AUTO RECEIVABLES
CORPORATION
SELLER
NISSAN MOTOR
ACCEPTANCE CORPORATION
SERVICER
J.P. MORGAN & CO.
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
PROSPECTUS
DATED , 1997
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with the
offering described in this Registration Statement:
<TABLE>
<S> <C>
Securities and Exchange Commission fee............................. $228,958.96
Rating agency fees................................................. 210,000.00
Printing expenses.................................................. 50,000.00
Accountants' fees.................................................. 50,000.00
Fees and expenses of Trustee....................................... 10,000.00
Blue Sky fees and expenses......................................... 10,000.00
Legal fees and expenses............................................ 125,000.00
Miscellaneous expenses............................................. 4,041.04
-----------
Total............................................................ $688,000.00
===========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Set forth below are certain provisions of law and of the Certificate of Incor-
poration of Nissan Auto Receivables Corporation. The general effect of such
provisions is to provide indemnification to officers and directors of such cor-
poration for actions taken in good faith. In addition, set forth below are the
indemnification provisions of the Underwriting Agreement.
Section 145 of the General Corporation Law of Delaware provides as follows:
145. Indemnification of Officers, Directors, Employees and Agents; Insurance--
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed ac-
tion, suit or proceeding, whether civil, criminal, administrative or inves-
tigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partner-
ship, joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with such action, suit or pro-
ceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presump-
tion that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed ac-
tion or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer, em-
ployee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another corpo-
ration, partnership, joint venture, trust or other enterprise against ex-
penses (including attorneys' fees) actually and reasonably incurred by him
in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no indem-
nification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in
which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circum-
stances of the case,
II-1
<PAGE>
such person is fairly and reasonably entitled to indemnity for such ex-
penses which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a corpora-
tion has been successful on the merits or otherwise in defense of any ac-
tion, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and rea-
sonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section (un-
less ordered by a court) shall be made by the corporation only as autho-
rized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in subsections (a)
and (b) of this section. Such determination shall be made (1) by the board
of directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (2) if such a quo-
rum is not obtainable, or, even if obtainable a quorum of disinterested di-
rectors so directs, by independent legal counsel in a written opinion, or
(3) by the stockholders.
(e) Expenses (including attorney's fees) incurred by an officer or director
in defending any civil, criminal, administrative or investigative action,
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertak-
ing by or on behalf of such director or officer to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses (including at-
torney's fees) incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the board of directors deems appro-
priate.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed ex-
clusive of any other rights to which those seeking indemnification or ad-
vancement of expenses may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding
such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partner-
ship, joint venture, trust or other enterprise against any liability as-
serted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the corporation would have the power
to indemnify him against such liability under this section.
(h) For purposes of this section, references to "the corporation" shall in-
clude, in addition to the resulting corporation, any constituent corpora-
tion (including any constituent of a constituent) absorbed in a consolida-
tion or merger which, if its separate existence had continued, would have
had power and authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director, officer, employee
or agent of such constituent or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of an-
other corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under this section with respect to the re-
sulting or surviving corporation as he would have with respect to such con-
stituent corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; reference to "fines" shall include any ex-
cise taxes assessed on a person with respect to any employee benefit plan;
and reference to "serving at the request of the corporation" shall include
any service as a director, officer, employee or agent of the corporation
which imposes duties on, or involves services by, such director, officer,
employee, or agent with respect to an employee benefit plan, its partici-
pants or beneficiaries; and a person who acted in good faith and in a man-
ner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in
a manner "not opposed to the best interest of the corporation" as referred
to in this section.
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<PAGE>
(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized
or ratified, continue as to a person who has ceased to be a director, offi-
cer, employee or agent and shall inure to the benefit of their heirs, exec-
utors and administrators of such a person.
Article Five of the Certificate of Incorporation of Nissan Auto Receivables
Corporation provides as follows:
"(a) A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fidu-
ciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the corporation
or its stockholders,
(ii) for acts or omissions not in good faith or which involve inten-
tional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law or
(iv) for any transaction from which the director derived an improper
personal benefit.
If the Delaware General Corporation Law is amended after approval by the
stockholders of this Article Five to authorize corporate action further
eliminating or limiting the personal liability of directors, then the lia-
bility of a director of the corporation shall be eliminated or limited to
the fullest extent permitted by the Delaware General Corporation law, as so
amended.
(b) Any repeal or modification of paragraph (a) of this Article Five by the
stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such
repeal or modification.
(c) (i) Each person who was or is made a party or is threatened to be made
a party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative, investigative or otherwise (hereinafter a "pro-
ceeding"), by reason of the fact that he or she, or a person of whom he or
she is the legal representative, is or was a director, officer or employee
of the corporation or is or was serving at the request of the corporation
as a director, officer or employee of another corporation or of a partner-
ship, joint venture, trust or other enterprise, including service with re-
spect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer or employee
or in any other capacity while serving as a director, officer or employee,
shall be indemnified and held harmless by the corporation to the fullest
extent authorized by the Delaware General Corporation Law, as the same ex-
ists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the corporation to provide
broader indemnification rights than said law permitted the corporation to
provide prior to such amendment), against all expense, liability and loss
(including penalties, fines, judgments, attorneys' fees, amounts paid or to
be paid in settlement and excise taxes imposed on fiduciaries with respect
to (i) employee benefit plans, (ii) charitable organizations or (iii) simi-
lar matters) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has
ceased to be a director, officer or employee and shall inure to the benefit
of his or her heirs, executors and administrators; provided, however, that
the corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person
(other than pursuant to subparagraph (c)(ii) of this Article Five) only if
such proceeding (or part thereof) was authorized by the Board of Directors
of the corporation. The right to indemnification conferred in this subpara-
graph (c)(i) of Article Five shall be a contract right and shall include
the right to be paid by the corporation the expenses incurred in defending
any such proceeding in advance of its final disposition; provided, however,
that, if the Delaware General Corporation Law requires, the payment of such
expenses incurred by a director or officer in his or her capacity as a di-
rector or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding shall be made only upon delivery to the corpo-
ration of an undertaking, by or on behalf of such director or
II-3
<PAGE>
officer, to repay all amounts so advanced if it shall ultimately be deter-
mined that such director or officer is not entitled to be indemnified under
this subparagraph (c)(i) of Article Five or otherwise.
(ii) If a claim which the corporation is obligated to pay under subpara-
graph (c)(i) of this Article Five is not paid in full by the corporation
within 60 days after a written claim has been received by the corporation,
the claimant may at any time thereafter bring suit against the corporation
to recover the unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expense of prose-
cuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertak-
ing, if any is required, has been tendered to the corporation) that the
claimant has not met the standards of conduct which make it permissible un-
der the Delaware General Corporation Law for the corporation to indemnify
the claimant for the amount claimed, but the burden of proving such defense
shall be on the corporation. Neither the failure of the corporation (in-
cluding its Board of Directors, independent legal counsel or its stockhold-
ers) to have made a determination prior to the commencement of such action
that indemnification of the claimant is proper in the circumstances because
he or she has not met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the corpo-
ration (including its Board of Directors, independent legal counsel or its
stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
(iii) The provisions of this paragraph (c) of Article Five shall cover
claims, actions, suits and proceedings, civil or criminal, whether now
pending or hereafter commenced, and shall be retroactive to cover acts or
omissions or alleged acts or omissions which heretofore have taken place.
If any part of this paragraph (c) of Article Five should be found to be in-
valid or ineffective in any proceeding, the validity and effect of the re-
maining provisions shall not be affected.
(iv) The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in
this paragraph (c) of Article Five shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, By-Law, agreement, vote of
stockholders or disinterested directors or otherwise.
(v) The corporation may maintain insurance, at its expense, to protect it-
self and any director, officer, employee or agent of the corporation or an-
other corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the corporation
would have the power to indemnify such person against such expense, liabil-
ity or loss under the Delaware General Corporation Law.
(vi) The corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification, and rights to be paid
by the corporation the expenses incurred in defending any proceeding in ad-
vance of its final disposition, to any agent of the corporation to the
fullest extent of the provisions of this paragraph (c) of Article Five with
respect to the indemnification and advancement of expenses of directors,
officers and employees of the corporation."
Section 7 of the Underwriting Agreement provides as follows:
(a) The Seller shall indemnify and hold each Underwriter harmless against
any losses, claims, damages or liabilities, joint or several to which such
Underwriter may become subject, under the Securities Act of 1933, as
amended (the "Securities Act"), or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement thereto, or any related preliminary prospectus,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will
II-4
<PAGE>
reimburse each Underwriter for any legal or other expenses reasonably in-
curred by such Underwriter in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are in-
curred; provided, however, that the Seller will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement in
or omission or alleged omission from any of such documents in reliance upon
and in conformity with written information furnished to the Seller by any
Underwriter through J.P. Morgan Securities Inc., as representative of the
several Underwriters (the "Representative"), specifically for use therein;
and provided, further, that the Seller shall not be liable to any Under-
writer or any person controlling any Underwriter under the indemnity agree-
ment in this subsection (a) with respect to any of such documents to the
extent that any such loss, claim, damage or liability of the Underwriters
or such controlling person results from the fact that such Underwriter sold
the Class A Certificates to a person to whom there was not sent or given,
at or prior to the written confirmation of such sale, a copy of the Pro-
spectus or of the Prospectus as then amended or supplemented (excluding
documents incorporated by reference), whichever is most recent, if the
Seller has previously furnished copies thereof to such Underwriter.
(b) Each Underwriter shall indemnify and hold harmless the Seller against
any losses, claims, damages or liabilities to which the Seller may become
subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus or
any amendment or supplement thereto, or any related preliminary prospectus,
or arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Seller by such Underwriter
through the Representative specifically for use therein, and will reimburse
any legal or other expenses reasonably incurred by the Seller in connection
with investigating or defending any such action or claim as such expenses
are incurred.
(c) If any suit, action, proceeding (including any governmental or regula-
tory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either
of the two preceding paragraphs, such person (the "Indemnified Party")
shall promptly notify the person against whom such indemnity may be sought
(the "Indemnifying Party") in writing of the commencement thereof, but the
omission to so notify the Indemnifying Party will not relieve it from any
liability which it may have to any Indemnified Party otherwise than under
such preceding paragraphs. In case any such action is brought against any
Indemnified Party and it notifies the Indemnifying Party of the commence-
ment thereof, the Indemnifying Party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other Indem-
nifying Party similarly notified, to assume the defense thereof, with coun-
sel satisfactory to such Indemnified Party (who shall not, except with the
consent of the Indemnified Party, be counsel to the Indemnifying Party) and
after notice from the Indemnifying Party to such Indemnified Party of its
election so to assume the defense thereof and after acceptance by the In-
demnified Party of counsel, the Indemnifying Party will not be liable to
such Indemnified Party under this Section for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the de-
fense thereof other than reasonable costs of investigation. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (i) the Indemnifying Party and the Indem-
nified Party shall have mutually agreed to the contrary or (ii) the Indem-
nifying Party has elected to assume the defense of such proceeding but has
failed within a reasonable time to retain counsel reasonably satisfactory
to the Indemnified Person. It is understood that the Indemnifying Party
shall not, with respect to any action brought against any Indemnified Par-
ty, be liable for the fees and expenses of more than one firm (in addition
to any local counsel) for all Indemnified Parties, and
II-5
<PAGE>
that all such fees and expenses shall be reimbursed within a reasonable pe-
riod of time as they are incurred. Any separate firm appointed for the Un-
derwriters and such control persons of Underwriters in accordance with this
subsection (c) shall be designated in writing by the Representative, and
any such separate firm appointed for the Seller, its directors, its offi-
cers who sign the Registration Statement and such control persons of the
Seller in accordance with this subsection (c) shall be designated in writ-
ing by the Seller. The Indemnifying Party shall not be liable for any set-
tlement of any proceeding effected without its written consent, but if set-
tled with such consent, with respect to an action which the Indemnifying
Party was notified of and had the opportunity to participate in (whether or
not it chose to so participate), the Indemnifying Party agrees to indemnify
any Indemnified Party from and against any loss or liability by reason of
such settlement. Notwithstanding the foregoing sentence, if at any time an
Indemnified Party shall have requested an Indemnifying Party to reimburse
the Indemnified Party for fees and expenses of counsel as contemplated by
the fourth sentence of this paragraph, the Indemnifying Party agrees that
it shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than 60
days after receipt by such Indemnifying Party of the aforesaid request and
during such 60 day period, the Indemnifying Party has not responded thereto
and (ii) such Indemnifying Party shall not have reimbursed the Indemnified
Party in accordance with such request prior to the date of such settlement.
No Indemnifying Party shall, without the prior written consent of the In-
demnified Party, effect any settlement of any pending or threatened pro-
ceeding in respect of which any Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified
Party, unless such settlement includes an unconditional release of such In-
demnified Party from all liability on claims that are the subject matter of
such proceeding.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an Indemnified Party under the subsection (a)
or (b) above, then each Indemnifying Party shall contribute to the amount
paid or payable by such Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above
in such proportion as is appropriate to reflect the relative benefits re-
ceived by the Seller on the one hand and the Underwriters on the other from
the offering of the Class A Certificates. If, however, the allocation pro-
vided by the immediately preceding sentence is not permitted by applicable
law, then each Indemnifying Party shall contribute to such amount paid or
payable by such Indemnified Party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Seller on the one hand and the Underwriters on the other in connection with
the statements or omissions which resulted in such losses, claims, damages
or liabilities as well as any other relevant equitable considerations. The
relative benefits received by the Seller on the one hand and the Underwrit-
ers on the other shall be deemed to be in the same proportion as the total
net proceeds from the offering (before deducting expenses) received by the
Seller bear to the total underwriting discounts and commissions received by
the Underwriters. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a ma-
terial fact or the omission or alleged omission to state a material fact
relates to information supplied by the Seller or by the Underwriters and
the parties' relative intent, knowledge, access to information and opportu-
nity to correct or prevent such untrue statement or omission. The amount
paid by an Indemnified Party as a result of the losses, claims, damages or
liabilities referred to above in this subsection (d) shall be deemed to in-
clude any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any action or claim
which is the subject of this subsection (d). Notwithstanding the provisions
of this subsection (d), no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Class
A Certificates underwritten by it and distributed to the public were of-
fered to the public exceeds the amount of any damages which such Under-
writer has otherwise been required to pay by reason of such untrue or al-
leged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11 (f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Under-
II-6
<PAGE>
writers' obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Seller under this subsection shall be in addi-
tion to any liability which the Seller may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Securities Act; and the obliga-
tions of the Underwriters under this subsection shall be in addition to any
liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each director of the Seller,
to each officer of the Seller who has signed the Registration Statement and
to each person, if any, who controls the Seller within the meaning of the
Securities Act.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Not Applicable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<C> <S>
1.1 --Form of Underwriting Agreement.
3.1 --Certificate of Incorporation of the Seller (filed as Exhibit 3.1 to
the Seller's Registration Statement on Form S-1, No. 33-47413).*
3.2 --By-Laws of the Seller (filed as Exhibit 3.2 to the Seller's
Registration Statement on Form S-1, No. 33-47413).*
4.1 --Form of Pooling and Servicing Agreement among the Seller, the
Servicer, Nissan Motor Acceptance Corporation and the Trustee.
4.2 --Form of Custody and Pledge Agreement between the Seller and the
Custodian.
5.1 --Opinion of Weil, Gotshal & Manges LLP with respect to legality.
8.1 --Opinion of Weil, Gotshal & Manges LLP with respect to tax matters.
10.1 --Form of Purchase Agreement between NMAC and the Seller.
10.2 --Form of Yield Supplement Agreement among the Seller, the Servicer
and the Class A Agent.
23.1 --Consent of Weil, Gotshal & Manges LLP (included as part of Exhibit
5.1).
23.2 --Consent of Weil, Gotshal & Manges LLP (included as part of Exhibit
8.1).
</TABLE>
- --------
* Incorporated by reference.
(b) Financial Statement Schedules:
Not applicable.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such de-
nominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 14 above, or other-
wise, the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for in-
demnification against such liabilities (other than the payment by the regis-
trant of expenses incurred or paid by a director, officer or controlling person
of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer
II-7
<PAGE>
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been set-
tled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as ex-
pressed in the Act and will be governed by the final adjudication of such is-
sue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this reg-
istration statement in reliance upon Rule 430A and contained in a form of pro-
spectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) un-
der the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-8
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT HAS
DULY CAUSED THIS AMENDMENT #3 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF TORRANCE
AND STATE OF CALIFORNIA, ON THE 17TH DAY OF OCTOBER 1997.
Nissan Auto Receivables Corporation
/s/ Yoichiro Nagashima
By:___________________________________
(YOICHIRO NAGASHIMA, PRESIDENT
AND CHAIRMAN OF THE BOARD OF
DIRECTORS)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT #3
TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURES TITLE DATE
/s/ Yoichiro Nagashima President, Chairman
- ------------------------------------ of the Board of October 17,
YOICHIRO NAGASHIMA Directors and 1997
Director
(principal
executive officer)
/s/ Katsumi Ishii Treasurer,
- ------------------------------------ Assistant October 17,
KATSUMI ISHII Secretary and 1997
Director
(principal
financial officer
and principal
accounting
officer)
/s/ Joy M. Crose Secretary and
- ------------------------------------ Director October 17,
JOY M. CROSE 1997
II-9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
1.1 --Form of Underwriting Agreement.
3.1 --Certificate of Incorporation of the Seller (filed as Exhibit
3.1 to the Seller's Registration Statement on Form S-1, No.
33-47413).*
3.2 --By-Laws of the Seller (filed as Exhibit 3.2 to the Seller's
Registration Statement on Form S-1, No. 33-47413).*
4.1 --Form of Pooling and Servicing Agreement among the Seller, the
Servicer, Nissan Motor Acceptance Corporation and the Trustee.
4.2 --Form of Custody and Pledge Agreement between the Seller and
the Custodian.
5.1 --Opinion of Weil, Gotshal & Manges LLP with respect to
legality.
8.1 --Opinion of Weil, Gotshal & Manges LLP with respect to tax
matters.
10.1 --Form of Purchase Agreement between NMAC and the Seller.
10.2 --Form of Yield Supplement Agreement among the Seller, the
Servicer and the Class A Agent.
23.1 --Consent of Weil, Gotshal & Manges LLP (included as part of
Exhibit 5.1).
23.2 --Consent of Weil, Gotshal & Manges LLP (included as part of
Exhibit 8.1).
</TABLE>
- --------
* Incorporated by reference.
<PAGE>
EXHIBIT 1.1
[Draft--10/16/97]
NISSAN AUTO RECEIVABLES 1997-A GRANTOR TRUST
[ ]% ASSET BACKED CERTIFICATES, CLASS A
NISSAN AUTO RECEIVABLES CORPORATION
(SELLER)
October [ ], 1997
Form of Underwriting Agreement
------------------------------
J.P. Morgan Securities Inc.,
As Representative of the
Several Underwriters,
60 Wall Street
New York, NY 10260
Dear Sirs:
1. Introductory Nissan Auto Receivables Corporation, a Delaware
------------
corporation (the "Seller"), proposes to sell $755,564,579 principal amount of
[ ]% Asset Backed Certificates, Class A (the "Class A Certificates"), issued by
the Nissan Auto Receivables 1997-A Grantor Trust (the "Trust"). Each Class A
Certificate will represent a fractional undivided interest in the Trust. The
assets of the Trust will include, among other things, a pool of retail
installment sale contracts secured by new and used automobiles and light trucks
(the "Receivables") and certain monies due thereunder on or after October 1,
1997 (the "Cutoff Date"), such Receivables to be sold to the Trust by the Seller
and to be serviced for the Trust by Nissan Motor Acceptance Corporation, a
California corporation (the "Servicer"). The Class A Certificates will be issued
in an aggregate principal amount of $755,564,579, which is equal to 87% of the
aggregate principal balance of the Receivables as of the Cutoff Date.
Simultaneously with the issuance and sale of the Class A Certificates as
contemplated herein, the Trust will also issue the [ ]% Asset Backed
Certificates, Class B (the "Class B Certificates", and together with the Class A
Certificates, the "Certificates"), evidencing an undivided ownership interest of
13% in the Trust, payments
<PAGE>
2
in respect of which are, to the extent specified in the Pooling and Servicing
Agreement (as defined below), subordinated to the rights of the holders of the
Class A Certificates. The Certificates will be issued pursuant to a Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") to be dated as of
October 1, 1997, among the Seller, Nissan Motor Acceptance Corporation, in its
individual capacity and as the Servicer, and The Fuji Bank and Trust Company
(the "Trustee").
Capitalized terms used herein and not otherwise defined shall have
the meanings given them in the Pooling and Servicing Agreement.
2. Representations and Warranties of the Seller. The Seller
--------------------------------------------
represents and warrants to and agrees with the several underwriters named in
Schedule I hereto (the "Underwriters") that:
(a)A registration statement (No. 333-1664), including a form of
prospectus, relating to the Class A Certificates has been filed with the
Securities and Exchange Commission (the "Commission") and either (i) has been
declared effective under the Securities Act of 1933, as amended (the "Act"), and
is not proposed to be amended or (ii) is proposed to be amended by amendment or
post-effective amendment. If the Seller does not propose to amend such
registration statement and if any post-effective amendment to such registration
statement has been filed with the Commission prior to the execution and delivery
of this Agreement, the most recent such amendment has been declared effective by
the Commission. For purposes of this Agreement, "Effective Time" means (i) if
the Seller has advised the Representative that it does not propose to amend such
registration statement, the date and time as of which such registration
statement, or the most recent post-effective amendment thereto (if any) filed
prior to the execution and delivery of this Agreement, was declared effective by
the Commission, or (ii) if the Seller has advised the Representative that it
proposes to file an amendment or post-effective amendment to such registration
statement, the date and time as of which such registration statement, as amended
by such amendment or post-effective amendment, as the case may be, is declared
effective by the Commission. "Effective Date" means the date of the Effective
Time. Such registration statement, as amended at
<PAGE>
3
the Effective Time, including all information (if any) deemed to be a part of
such registration statement as of the Effective Time pursuant to Rule 430A(b)
under the Act, is hereinafter referred to as the "Registration Statement", and
the form of prospectus relating to the Class A Certificates, as first filed with
the Commission pursuant to and in accordance with Rule 424(b) ("Rule 424(b)")
under the Act or (if no such filing is required) as included in the Registration
Statement, is hereinafter referred to as the "Prospectus".
(b)If the Effective Time is prior to the execution and delivery of
this Agreement: (i) on the Effective Date, the Registration Statement conformed
in all respects to the requirements of the Act and the rules and regulations of
the Commission (the "Rules and Regulations") and did not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(ii) on the date of this Agreement, the Registration Statement conforms, and at
the time of filing of the Prospectus pursuant to Rule 424(b), the Registration
Statement and the Prospectus will conform, in all respects to the requirements
of the Act and the Rules and Regulations, and neither of such documents
includes, or will include, any untrue statement of a material fact or omits, or
will omit, to state any material fact required to be stated therein or necessary
to make the statements therein not misleading. If the Effective Time is
subsequent to the execution and delivery of this Agreement: on the Effective
Date, the Registration Statement and the Prospectus will conform in all respects
to the requirements of the Act and the Rules and Regulations, and neither of
such documents will include any untrue statement of a material fact or will omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading. The two preceding sentences do not apply
to statements in or omissions from the Registration Statement or Prospectus
based upon written information furnished to the Seller by any Underwriter
through the Representative specifically for use therein.
(c)The Seller has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware with full
corporate power and authority to own its properties and conduct its
<PAGE>
4
business as described in the Prospectus, and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct of
its business or the ownership of its property requires such qualification.
(d) The consummation of the transactions contemplated by this
Agreement, the Purchase Agreement, the Pooling and Servicing Agreement and the
Yield Supplement Agreement, and the fulfillment of the terms thereof, will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation of any lien, charge, or
encumbrance upon any of the property or assets of the Seller pursuant to the
terms of, any indenture, mortgage, deed of trust, loan agreement, guarantee,
lease financing agreement, or similar agreement or instrument under which the
Seller is a debtor or guarantor.
(e) No consent, approval, authorization or order of, or filing with,
any court or governmental agency or body is required to be obtained or made by
the Seller for the consummation of the transactions contemplated by this
Agreement except such as have been obtained and made under the Act, such as may
be required under state securities laws and the filing of any financing
statements required to perfect the Trust's interest in the Receivables.
(f) The Seller is not in violation of its certificate of
incorporation or by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any agreement or
instrument to which it is a party or by which it or its properties are bound
which could have a material adverse effect on the transactions contemplated
herein, in the Purchase Agreement, in the Pooling and Servicing Agreement or in
the Yield Supplement Agreement. The execution, delivery and performance of this
Agreement, the Purchase Agreement and the Pooling and Servicing Agreement and
the issuance and sale of the Certificates and compliance with the terms and
provisions thereof will not, subject to obtaining any consents or approvals as
may be required under the securities or "blue sky" laws of various
jurisdictions, result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, rule, regulation or
order of any governmental agency or body or any court having jurisdiction over
the
<PAGE>
5
Seller or its properties or any agreement or instrument to which it is a
party or by which it is bound or to which any of its properties is subject, or
its certificate of incorporation or by-laws, and it has full corporate power and
authority to enter into this Agreement, the Purchase Agreement, the Pooling and
Servicing Agreement and the Yield Supplement Agreement and to consummate the
transactions contemplated hereby and thereby.
(g) This Agreement, the Purchase Agreement, the Pooling and
Servicing Agreement and the Yield Supplement Agreement have been duly
authorized, executed and delivered by, and (assuming due authorization and
delivery thereof by the other parties hereto and thereto) constitute valid and
binding obligations of the Seller, enforceable against the Seller in accordance
with their terms, except as limited by bankruptcy, insolvency, reorganization or
other similar laws relating to or affecting the enforcement of creditors' rights
generally and by general equitable principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(h) The Class A Certificates have been duly authorized and, when
executed and authenticated by the Trustee in accordance with the Pooling and
Servicing Agreement and delivered and paid for pursuant to this Agreement, the
Class A Certificates will constitute valid and binding obligations of the Trust
entitled to the benefits provided by the Pooling and Servicing Agreement.
(i) There are no legal or governmental proceedings pending to which
the Seller or the Servicer is a party or of which any property of the Seller or
the Servicer is the subject, and to the Seller's knowledge no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others, (A) that are required to be disclosed in the Registration Statement or
(B)(1) asserting the invalidity of all or part of this Agreement, the
Indemnification Agreement, the Purchase Agreement, the Pooling and Servicing
Agreement or the Yield Supplement Agreement, (2) seeking to prevent the issuance
of the Certificates, (3) that could materially and adversely affect the Seller's
obligations under this Agreement, the Purchase Agreement, the Pooling and
Servicing Agreement or the Yield Supplement Agreement or the Servicer's
obligations under the Indemnification
<PAGE>
6
Agreement, the Purchase Agreement, the Pooling and Servicing Agreement or the
Yield Supplement Agreement, or (4) seeking to affect adversely the federal or
state income tax attributes of the Class A Certificates.
(j) Any taxes, fees and other governmental charges that have been
assessed and are known to the Seller to be due in connection with the execution,
delivery and issuance of this Agreement, the Purchase Agreement, the Pooling and
Servicing Agreement and the Yield Supplement Agreement shall have been paid by
the Seller or the Servicer at or prior to the closing date.
(k) Each of the Seller and the Servicer possesses all material
licenses, certificates, authorizations or permits issued by the appropriate
state, federal or foreign regulatory agencies or bodies, the absence of which
would have a material adverse effect on the ability of the Seller or the
Servicer to perform its duties under the Pooling and Servicing Agreement, and
neither of the Seller or Servicer has received notice of proceedings relating to
the revocation or modification of any such license, certificate, authorization
or permit which, singly or in the aggregate, if the subject of any unfavorable
decision, ruling or finding, would materially and adversely affect the conduct
of the business, operations, financial condition or income of the Seller or the
Servicer.
(l) As of the Closing Date, the Trustee (for the benefit of the
Certificateholders) will have good title, free and clear of all prior liens,
charges and encumbrances, to the Receivables and such other items comprising the
corpus of the Trust transferred to the Trust pursuant to the Pooling and
Servicing Agreement.
(m) As of the Closing Date, the Certificates will conform in all
material respects to the description thereof contained in the Prospectus.
(n) Deloitte & Touche LLP are independent public accountants with
respect to the Seller within the meaning of the Act and the Rules and
Regulations.
3. Purchase, Sale and Delivery of Certificates. On the basis of the
-------------------------------------------
representations, warranties and
<PAGE>
7
agreements herein contained, but subject to the terms and conditions herein set
forth, the Seller agrees to sell to the Underwriters, and the Underwriters
agree, severally and not jointly, to purchase from the Seller, the aggregate
principal amounts of the Class A Certificates set forth opposite the names of
the Underwriters in Schedule I hereto. The Class A Certificates are to be
purchased at the purchase price of [ ]% of the aggregate principal amount
thereof plus accrued interest at the Pass-Through Rate (as defined in the
Prospectus) calculated from (and including) October [ ], 1997, to (but
excluding) the Closing Date.
Against payment of the purchase price by wire transfer of
immediately available funds to the Seller, the Seller will deliver the Class A
Certificates to the Representative, for the account of the Underwriters, at the
office of Weil, Gotshal & Manges LLP, at 767 Fifth Avenue, New York, New York,
on October [ ], 1997, at 10:00 a.m., New York time, or at such other time not
later than seven full business days thereafter as the Representative and the
Seller determine, such time being herein referred to as the "Closing Date". The
Class A Certificates to be so delivered will be initially represented by one or
more Class A Certificates registered in the name of Cede & Co., the nominee of
The Depository Trust Company ("DTC"). The interests of beneficial owners of the
Class A Certificates will be represented by book entries on the records of DTC
and participating members thereof. Definitive Class A Certificates will be
available only under the limited circumstances set forth in the Pooling and
Servicing Agreement.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Class A Certificates for sale to the public as
set forth in the Prospectus.
5. Covenants of the Seller. The Seller covenants and agrees with the
several Underwriters that:
(a)If the Effective Time is prior to the execution and delivery of
this Agreement, the Seller will file the Prospectus with the Commission pursuant
to and in accordance with subparagraph (1) (or, if applicable and if consented
to by you, subparagraph (4)) of Rule 424(b) not
<PAGE>
8
later than the earlier of (i) the second business day following the execution
and delivery of this Agreement or (ii) the fifth business day after the
Effective Date. The Seller will advise the Representative promptly of any such
filing pursuant to Rule 424(b).
(b) The Seller will advise the Representative promptly of any
proposal to amend or supplement the registration statement as filed or the
related prospectus or the Registration Statement or the Prospectus, and will not
effect such amendment or supplementation without the Representative's consent;
and the Seller will also advise the Representative promptly of the effectiveness
of the Registration Statement (if the Effective Time is subsequent to the
execution and delivery of this Agreement) and of any amendment or
supplementation of the Registration Statement or the Prospectus and of the
institution by the Commission of any stop order proceedings in respect of the
Registration Statement and will use its best efforts to prevent the issuance of
any such stop order and to obtain as soon as possible its lifting, if issued.
(c) The Seller will arrange for the qualification of the Class A
Certificates for offering and sale under the securities laws of such
jurisdictions in the United States as the Representative may reasonably
designate and to continue such qualifications in effect so long as necessary
under such laws for the distribution of such Class A Certificates, provided that
in connection therewith the Seller shall not be required to qualify as a foreign
corporation to do business, or to file a general consent to service of process,
in any jurisdiction.
(d) If, at any time when the delivery of a prospectus shall be
required by law in connection with sales of any Class A Certificates, either (i)
any event shall have occurred as a result of which the Prospectus would include
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or (ii) for any other
reason it shall be necessary to amend or supplement the Prospectus, the Seller
will promptly notify the Representative and will promptly prepare and file with
the Commission an amendment or a supplement to the Prospectus which will correct
such statement or omission or effect
<PAGE>
9
such compliance. Neither your consent to, nor the Underwriters' delivery of, any
such amendment or supplement shall constitute a waiver of any of the conditions
set forth in Section 6.
(e) The Seller will cause the Trust to make generally available to
Class A Certificateholders as soon as practicable, but not later than fourteen
months after the Effective Date, an earnings statement of the Trust covering a
period of at least twelve consecutive months beginning after such Effective Date
and satisfying the provisions of Section 11(a) of the Act (including Rule 158
promulgated thereunder).
(f) The Seller will furnish to you copies of the Registration
Statement (two of which will be signed and include all exhibits), each related
preliminary prospectus, the Prospectus and all amendments and supplements to
such documents, in each case as soon as available and in such quantities as the
Representative may from time to time reasonably request.
(g) So long as any of the Class A Certificates are outstanding, the
Seller will furnish to the Representa tive copies of all reports or other
communications (financial or otherwise) furnished to Class A Certificate
holders, and deliver to the Representative during such same period, (i) as soon
as they are available, copies of any reports and financial statements furnished
to or filed with the Commission and (ii) such additional information concerning
the business and financial condition of the Seller as the Representative may
from time to time reasonably request.
(h) The Seller will pay or cause to be paid all expenses incident to
the performance of its obligations under this Agreement, including (i) the
printing (or otherwise reproducing) and filing of the Registration Statement as
originally filed and of each amendment thereto; (ii) the preparation, issuance
and delivery of the certificates for the Class A Certificates to the
Underwriters; (iii) the fees and disbursements of the Seller's and the
Servicer's counsel and accountants; (iv) the fees of DTC in connection with the
book-entry registration of the Class A Certificates; (v) the qualification of
the Class A Certificates under state
<PAGE>
10
securities law in accordance with the provisions of Section 5(c) hereof,
including filing fees and the fees and disbursements of counsel for the
Underwriters in connection therewith and in connection with the preparation of
the Blue Sky Survey; (vi) the printing (or otherwise reproducing) and delivery
to the Underwriters of copies of each preliminary prospectus and the Prospectus
and any amendments or supplements thereto; (vii) the reproducing and delivery to
the Underwriters of copies of the Blue Sky Survey and (viii) the fees charged by
Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings
Services ("S&P") for rating the Class A Certificates. The Underwriters shall not
be responsible for the fees and disbursements of the Trustee and its counsel.
(i) Until the retirement of the Class A Certificates, or until such
time as the Underwriters shall cease to maintain a secondary market in the Class
A Certificates, whichever occurs first, the Seller will deliver to the
Representative the annual statements of compliance and the annual independent
certified public accountants' reports furnished to the Trustee pursuant to
Article IV of the Pooling and Servicing Agreement, as soon as such statements
and reports are furnished to the Trustee.
(j) On or before the Closing Date, the Seller shall cause its and
the Servicer's computer records relating to the Receivables to be marked to show
the Trust's absolute ownership of the Receivables, and from and after the
Closing Date neither the Seller nor the Servicer shall take any action
inconsistent with the Trust's ownership of such Receivables, other than as
permitted by the Pooling and Servicing Agreement.
(k) To the extent, if any, that the rating provided with respect to
the Class A Certificates by Moody's or S&P is conditional upon the furnishing of
documents or the taking of any other actions by the Seller, the Seller shall
furnish such documents and take any such other actions.
6. Conditions of the Obligations of the Underwriters. The
-------------------------------------------------
obligations of the several Underwriters to purchase and pay for the Class A
Certificates will be subject to the accuracy of the representations and
<PAGE>
11
warranties on the part of the Seller herein, to the accuracy of the statements
of officers of the Seller made pursuant to the provisions hereof, to the
performance by the Seller of its obligations hereunder and to the following
additional conditions precedent :
(a) At the time this Agreement is executed and delivered by the
Seller and at the Closing Date, Deloitte & Touche LLP shall have furnished to
the Representative letters dated respectively as of the date of this Agreement
and as of the Closing Date substantially in the forms of the drafts to which the
Representative previously agreed.
(b) If the Effective Time is not prior to the execution and delivery
of this Agreement, the Effective Time shall have occurred not later than 10:00
p.m., New York time, on the date of this Agreement or such later date as shall
have been consented to by the Representative. If the Effective Time is prior to
the execution and delivery of this Agreement, the Prospectus shall have been
filed with the Commission in accordance with the Rules and Regulations and
Section 5(a) of this Agreement. Prior to the Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or, to the
knowledge of the Seller, shall be contemplated by the Commission.
(c) You shall have received an officer's certificate, dated the
Closing Date, signed by the Chairman of the Board, the President or any Vice
President and by a principal financial or accounting officer of the Seller
representing and warranting that, to the best of such officers' knowledge after
reasonable investigation, as of the Closing Date, the representations and
warranties of the Seller in this Agreement are true and correct in all material
respects, that the Seller has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date in all material respects, that no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the best of their knowledge, are
contemplated by the Commission.
<PAGE>
12
(d) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting particularly the business or properties of
the Seller, Nissan Motor Co. Ltd., Nissan Motor Corporation in U.S.A. ("NMC") or
the Servicer which, in the judgment of the Representative, materially impairs
the investment quality of the Class A Certificates or makes it impractical or
inadvisable to proceed with completion of the sale of and payment for the Class
A Certificates; (ii) any downgrading in the rating of any debt securities of NMC
or any of its direct or indirect subsidiaries by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Act), or any public announcement that any such organization has under
surveillance or review its rating of any such debt securities (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (iii) any suspension or
limitation of trading in securities generally on the New York Stock Exchange or
any setting of minimum prices for trading on such exchange; (iv) any banking
moratorium declared by Federal or New York authorities; or (v) any outbreak or
escalation of major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of the Representative,
the effect of any such outbreak, escalation, declaration, calamity or emergency
makes it impractical or inadvisable to proceed with completion of the sale of
and payment for the Class A Certificates.
(e) Joy Crose, Esq., General Counsel of the Seller, or other counsel
satisfactory to the Representative in its reasonable judgment, shall have
furnished to the Representative such counsel's written opinion, dated the
Closing Date, in substantially the form set forth below, with such changes
therein as counsel for the Underwriters shall reasonably agree:
(i) The Seller has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware
with full corporate power and authority to own its properties and conduct
its business as described in the Prospectus, and is duly qualified to
transact business
<PAGE>
13
and is in good standing in each jurisdiction in which the conduct of its
business or the ownership of its property requires such qualification.
(ii) The Servicer has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
California with full corporate power and authority to own its properties
and conduct its business as described in the Prospectus, and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or the ownership of its
property requires such qualification.
(iii) The Pooling and Servicing Agreement and the Purchase Agreement
have been duly authorized, executed and delivered by the Servicer.
(iv) The indemnification agreement dated the date hereof (the
"Indemnification Agreement") between the Servicer and Representative, on
behalf of the several Underwriters, has been duly authorized, executed and
delivered by the Servicer; and this Agreement has been duly authorized,
executed and delivered by the Seller.
(v) The Pooling and Servicing Agreement and the Purchase Agreement
have been duly authorized, executed and delivered by the Seller.
(vi) The Yield Supplement Agreement has been duly authorized,
executed and delivered by the Seller and by Nissan Motor Acceptance
Corporation (in its own capacity and not in its capacity as Servicer).
(vii) The execution, delivery and performance of this Agreement by
the Seller, the Pooling and Servicing Agreement and the Purchase Agreement
by the Seller and the Servicer and the Indemnification Agreement by the
Servicer will not conflict with or result in a breach of any of the terms
or provisions of, or constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any of the
properties or assets of the Seller or the Servicer, pursuant to the terms
of the Certificate or Articles of Incorporation or the
<PAGE>
14
By-Laws of the Seller or the Servicer, any statute, any rule, regulation
or order of any governmental agency or body or any court having
jurisdiction over the Seller or the Servicer or any of their respective
properties or any material agreement or instrument to which the Seller or
the Servicer is a party or by which either the Seller or the Servicer or
any of their respective properties is bound.
(viii) No authorization, approval or consent of any court or
governmental agency or authority is necessary in connection with the
execution, delivery and performance by the Seller of this Agreement, the
Pooling and Servicing Agreement or the Purchase Agreement or by the
Servicer of the Indemnification Agreement, the Pooling and Servicing
Agreement or the Purchase Agreement, except such as may be required under
the Act or the Rules and Regulations and state securities laws, and except
for such authorizations, approvals or consents (specified in such opinion)
as are in full force and effect as of the Effective Date and the Closing
Date.
(ix) The Class A Certificates have been duly authorized and, when
executed and authenticated by the Trustee in accordance with the Pooling
and Servicing Agreement and delivered and paid for pursuant to this
Agreement, the Class A Certificates will constitute valid and binding
obligations of the Trust entitled to the benefits provided by the Pooling
and Servicing Agreement.
(x) Nothing has come to such counsel's attention that would cause it
to believe that as of the Effective Date and at the Closing Date the
Registration Statement and the Prospectus (other than the financial
statements and the other accounting information contained therein or
omitted therefrom, as to which such counsel need express no belief)
contained or contain any untrue statement of a material fact or omitted or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or that the descriptions therein of
statutes and governmental proceedings and contracts
<PAGE>
15
and other documents are inaccurate and do not fairly present the
information required to be shown therein.
(xi) Such counsel does not know of any contract or other document of
a character required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration Statement or the
Prospectus which is not filed or described as required.
(xii) There are no legal or governmental proceedings pending to
which the Seller or the Servicer is a party or of which any property of
the Seller or the Servicer is the subject, and no such proceedings are
known by such counsel to be threatened or contemplated by governmental
authorities or threatened by others, (A) that are required to be disclosed
in the Registration Statement or (B)(1) asserting the invalidity of all or
part this Agreement, the Indemnification Agreement, the Purchase Agreement
or the Pooling and Servicing Agreement, (2) seeking to prevent the
issuance of the Certificates, (3) that could materially and adversely
affect the Seller's obligations under this Agreement, the Purchase
Agreement or the Pooling and Servicing Agreement or the Servicer's
obligations under the Indemnification Agreement, the Purchase Agreement or
the Pooling and Servicing Agreement, or (4) seeking to affect adversely
the federal or state income tax attributes of the Class A Certificates.
(xiii) The Servicer has full power and authority to sell and assign
the property to be sold and assigned to the Seller pursuant to the
Purchase Agreement and has duly authorized such sale and assignment to the
Seller by all necessary corporate action.
(xiv) The Seller has full power and authority to sell and assign the
property to be sold and assigned to and deposited with the Trustee as part
of the Trust and has duly authorized such sale and assignment to the
Trustee by all necessary corporate action.
<PAGE>
16
(xv)The Receivables are "chattel paper" as defined in the Uniform
Commercial Code, as in effect in the State of California.
(xvi)The undersigned is familiar with the Servicer's standard
operating procedures relating to the Servicer's acquisition of a perfected
first priority security interest in the vehicles financed by the retail
installment sale contracts purchased by the Servicer in the ordinary
course of the Servicer's business and relating to the sale by the Servicer
to NARC of such contracts and such security interests in the financed
vehicles in the ordinary course of the Servicer's and NARC's business.
Assuming that the Servicer's standard procedures are followed with respect
to the perfection of security interests in the Financed Vehicles (and such
counsel has no reason to believe that the Servicer has not or will not
continue to follow its standard procedures in connection with the
perfection of security interests in the Financed Vehicles), the Servicer
has acquired or will acquire a perfected first priority security interest
in the Financed Vehicles.
(f) Weil, Gotshal & Manges LLP, special counsel to the Seller, shall
have furnished to the Representative their written opinion, dated as of the
Closing Date, in substantially the form set forth below, with such changes
therein as counsel for the Underwriters shall reasonably agree:
(i) Each of the Pooling and Servicing Agreement and the Purchase
Agreement constitutes a valid and binding obligation of the Servicer,
enforceable against the Servicer in accordance with its terms.
(ii) Each of the Pooling and Servicing Agreement and the Purchase
Agreement constitutes a valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms.
(iii) The Yield Supplement Agreement constitutes a valid and binding
obligation of each of the Seller and Nissan Motor Acceptance Corporation
(in its own capacity and not in its capacity as Servicer), and is
<PAGE>
17
enforceable against each of them in accordance with its terms.
(iv) The execution, delivery and performance of this Agreement by
the Seller, the Pooling and Servicing Agreement, the Purchase Agreement
and the Yield Supplement Agreement by the Seller and the Servicer, and the
Indemnification Agreement by the Servicer will not conflict with or result
in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the property or assets of the Seller or the
Servicer, pursuant to any statute, or any rule, regulation or order of any
governmental agency or body or any court having jurisdiction over the
Seller or the Servicer or any of their respective properties.
(v) The Class A Certificates, when executed and authenticated by the
Trustee in accordance with the Pooling and Servicing Agreement and
delivered and paid for pursuant to this Agreement, will be duly issued and
entitled to the benefits provided by the Pooling and Servicing Agreement.
(vi) Nothing has come to such counsel's attention that would cause
it to believe that as of the Effective Date and at the Closing Date the
Registration Statement and the Prospectus (other than the financial
statements and the other accounting information contained therein or
omitted therefrom, as to which such counsel need express no belief)
contained or contain any untrue statement of a material fact and omitted
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and that the
descriptions therein of statutes and governmental proceedings and
contracts and other documents are accurate and fairly present the
information required to be shown therein.
(vii) The statement in the Prospectus under the caption "Certain
Legal Aspects of the Receivables," to the extent they constitute matters
of New York or
<PAGE>
18
federal law or legal conclusions, are correct in all material respects.
(viii) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended, and the Trust
is not required to be registered as an "investment company" under the
Investment Company Act of 1940, as amended.
(ix) No authorization, approval or consent of any court or
governmental agency or authority is necessary under the Federal law of the
United States or the laws of the state of New York in connection with the
execution, delivery and performance by the Seller of this Agreement, the
Pooling and Servicing Agreement or the Purchase Agreement or by the
Servicer of the Indemnification Agreement, the Pooling and Servicing
Agreement or the Purchase Agreement, except such as may be required under
the Act or the Rules and Regulations and state securities laws, and except
for such authorizations, approvals or consents (specified in such opinion)
as are in full force and effect as of the Effective Date and the Closing
Date.
(x) The Registration Statement has become effective under the Act
and no stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued and no proceeding for that
purpose has been instituted or, to the best of such counsel's knowledge,
threatened by the Commission; the Registration Statement and the
Prospectus (other than the financial statements and other accounting
information contained in the Registration Statement or the Prospectus, or
omitted therefrom, as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of the
Act and the Rules and Regulations.
(xi) The Class A Certificates, the Pooling and Servicing Agreement,
the Purchase Agreement and this Agreement each conform in all material
respects with the descriptions thereof contained in the Registration
Statement and the Prospectus.
<PAGE>
19
Such opinion may be made subject to the qualifications that the
enforceability of the terms of the Pooling and Servicing Agreement and the
Purchase Agreement may be limited by bankruptcy, insolvency, reorganization or
other similar laws relating to or affecting the enforcement of creditors' rights
generally and by general equitable principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(g) Weil, Gotshal & Manges LLP shall have furnished their written
opinion, dated the Closing Date, with respect to the characterization of the
transfer of the Receivables by the Servicer to the Seller and such opinion shall
be in substantially the form previously discussed with the Representative and
its counsel and in any event satisfactory in form and in substance to the
Representative and its counsel.
(h) Weil, Gotshal & Manges LLP, special tax counsel to the Seller,
shall have furnished to the Representative their written opinion, dated the
Closing Date, in form and substance satisfactory to the Representative and its
counsel, in substantially the form set forth below, with such changes therein as
counsel for the Underwriters shall reasonably agree:
(i) the statements in the Registration Statement and the Prospectus
under the heading "Federal Income Tax Consequences" and "ERISA
Considerations," to the extent they constitute matters of federal law or
legal conclusions with respect thereto, have been reviewed by such counsel
and are correct in all material respects; and
(ii) under the law in effect on the Closing Date, assuming
compliance with the Pooling and Servicing Agreement and the Custody and
Pledge Agreement, the Trust created by the Pooling and Servicing Agreement
will be classified for federal income tax purposes, as a grantor trust,
and not as an association taxable as a corporation.
(i) You shall have received an opinion of Cravath, Swaine & Moore,
dated the Closing Date, with respect to the validity of the Class A Certificates
and such other related matters as the Representative shall
<PAGE>
20
require and the Seller shall have furnished or caused to be furnished to such
counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(j) You shall have received an opinion addressed to you, the Seller
and the Servicer of Shearman & Sterling, counsel to the Trustee, dated the
Closing Date and satisfactory in form and substance to the Representative and
its counsel, to the effect that:
(i) The Trustee is a banking corporation duly incorporated, validly
existing and in good standing under the laws of the State of New York with
full power and authority (corporate and other) to own its properties and
conduct its business, as presently conducted by it, and to enter into and
perform its obligations under the Pooling and Servicing Agreement.
(ii) The Pooling and Servicing Agreement has been duly authorized,
executed and delivered by the Trustee, and, assuming that such agreement
is a legally effective and enforceable obligation of each of the other
parties thereto, constitutes the legal, valid and binding agreement of the
Trustee, enforceable against the Trustee in accordance with its terms,
except as the enforceability thereof may be (a) limited by bankruptcy,
insolvency, reorganization, moratorium, liquidation or other similar laws
affecting the enforceability of creditors' rights generally and (b)
subject to general principles of equity (regardless of whether considered
in proceedings in equity or at law) as well as concepts of reasonableness,
good faith and fair dealing.
(iii) The Certificates have been duly executed, authenticated and
delivered by The Fuji Bank and Trust Company as Trustee under the Pooling
and Servicing Agreement.
(iv) Neither the execution nor delivery by the Trustee of the
Pooling and Servicing Agreement nor the consummation of any of the
transactions by the Trustee contemplated thereby requires the consent or
approval of, the giving of notice to, the registration with, or the taking
of any other action with respect to, any
<PAGE>
21
governmental authority or agency under any existing Federal or New York
State law governing the banking or trust powers of the Trustee.
(k) You shall have received an opinion of counsel addressed to you
of Weil, Gotshal & Manges LLP, special tax counsel to the Seller, dated the
Closing Date and satisfactory in form and substance to the Representative and
its counsel to the effect that for Texas franchise tax purposes, the Trust will
not be subject to Texas franchise taxes.
(l) The Representative shall have received an officer's certificate
dated the Closing Date of the Chairman of the Board, the President or any Vice
President and by a principal financial or accounting officer of each of the
Seller and the Servicer in which each such officer shall state that, to the best
of such officer's knowledge after reasonable investigation, the representations
and warranties of the Seller or the Servicer, as applicable, contained in the
Pooling and Servicing Agreement and the representations and warranties of the
Servicer or the Seller, as applicable, contained in the Purchase Agreement are
true and correct in all material respects and that the Seller or the Servicer,
as applicable, has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied under such agreements at or prior to the
Closing Date in all material respects.
(m) The Class A Certificates shall have been rated in the highest
rating category by Moody's and S&P.
(n) On or prior to the Closing Date, the Seller shall have furnished
to the Representative such further certificates and documents as the
Representative shall reasonably have required.
7. Indemnification and Contribution. (a) The Seller shall indemnify
--------------------------------
and hold each Underwriter harmless against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any
<PAGE>
22
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Seller will not be
-------- -------
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the Seller
by any Underwriter through the Representative specified in the last sentence of
subsection (b) below specifically for use therein; and provided, further, that
-------- -------
the Seller shall not be liable to any Underwriter or any person controlling any
Underwriter under the indemnity agreement in this subsection (a) with respect to
any of such documents to the extent that any such loss, claim, damage or
liability of such Underwriter or such controlling person results from the fact
that such Underwriter sold the Class A Certificates to a person to whom there
was not sent or given, at or prior to the written confirmation of such sale, a
copy of the Prospectus or of the Prospectus as then amended or supplemented
(excluding documents incorporated by reference), whichever is most recent, if
the Seller has previously furnished copies thereof to such Underwriter.
(b) Each Underwriter shall indemnify and hold harmless the Seller
against any losses, claims, damages or liabilities to which the Seller may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission
<PAGE>
23
was made in reliance upon and in conformity with written information furnished
to the Seller by such Underwriter through the Representative specifically for
use therein, and will reimburse any legal or other expenses reasonably incurred
by the Seller in connection with investigating or defending any such action or
claim as such expenses are incurred. The Seller acknowledges and agrees that the
only such written information furnished to the Seller by any Underwriter through
the Representative consists of the following: (i) the statements in the last
paragraph of the cover page of the Prospectus; (ii) the statements in the first
paragraph on page 2 of the Prospectus concerning stabilizing and other
activities; and (iii) the statements in the second and third sentences in the
second paragraph (concerning initial offering prices, concessions and
reallowances) and in the third paragraph (concerning stabilizing and other
activities) under the heading "Underwriting" in the Prospectus.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Party") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Party") in writing of the commencement thereof, but the omission to so notify
the Indemnifying Party will not relieve it from any liability which it may have
to any Indemnified Party otherwise than under such preceding paragraphs. In case
any such action is brought against any Indemnified Party and it notifies the
Indemnifying Party of the commencement thereof, the Indemnifying Party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other Indemnifying Party similarly notified, to assume the defense
thereof, with counsel satisfactory to such Indemnified Party (who shall not,
except with the consent of the Indemnified Party, be counsel to the Indemnifying
Party) and after notice from the Indemnifying Party to such Indemnified Party of
its election so to assume the defense thereof and after acceptance by the
Indemnified Party of counsel, the Indemnifying Party will not be liable to such
Indemnified Party under this Section for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof other than reasonable
<PAGE>
24
costs of investigation. In any such proceeding, any Indemnified Party shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (i) the Indemnifying
Party and the Indemnified Party shall have mutually agreed to the contrary or
(ii) the Indemnifying Party has elected to assume the defense of such proceeding
but has failed within a reasonable time to retain counsel reasonably
satisfactory to the Indemnified Person. It is understood that the Indemnifying
Party shall not, with respect to any action brought against any Indemnified
Party, be liable for the fees and expenses of more than one firm (in addition to
any local counsel) for all Indemnified Parties, and that all such fees and
expenses shall be reimbursed within a reasonable period of time as they are
incurred. Any separate firm appointed for the Underwriters and such control
persons of Underwriters in accordance with this subsection (c) shall be
designated in writing by the Representative, and any such separate firm
appointed for the Seller, its directors, its officers who sign the Registration
Statement and such control persons of the Seller in accordance with this
subsection (c) shall be designated in writing by the Seller. The Indemnifying
Party shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent, with respect to an action
which the Indemnifying Party was notified of and had the opportunity to
participate in (whether or not it chose to so participate), the Indemnifying
Party agrees to indemnify any Indemnified Party from and against any loss or
liability by reason of such settlement. Notwithstanding the foregoing sentence,
if at any time an Indemnified Party shall have requested an Indemnifying Party
to reimburse the Indemnified Party for fees and expenses of counsel as
contemplated by the fourth sentence of this paragraph, the Indemnifying Party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 60
days after receipt by such Indemnifying Party of the aforesaid request and
during such 60 day period, the Indemnifying Party has not responded thereto and
(ii) such Indemnifying Party shall not have reimbursed the Indemnified Party in
accordance with such request prior to the date of such settlement. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending or threatened
<PAGE>
25
proceeding in respect of which any Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Party from all liability on claims that are the subject matter of such
proceeding.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an Indemnified Party under
subsection (a) or (b) above, then each Indemnifying Party shall contribute to
the amount paid or payable by such Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above in
such proportion as is appropriate to reflect the relative benefits received by
the Seller on the one hand and the Underwriters on the other from the offering
of the Class A Certificates. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then each
Indemnifying Party shall contribute to such amount paid or payable by such
Indemnified Party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Seller on the one hand and
the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities as well as any
other relevant equitable considerations. The relative benefits received by the
Seller on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Seller bear to the total underwriting
discounts and commissions received by the Underwriters. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Seller or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an Indemnified Party as a result of the losses, claims, damages
or liabilities referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any action or claim which is
the subject of this subsection (d). Notwithstanding the
<PAGE>
26
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Class A Certificates underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Seller under this Section shall be in
addition to any liability which the Seller may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section shall be in addition to any liability which the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Seller, to each officer of the Seller
who has signed the Registration Statement and to each person, if any, who
controls the Seller within the meaning of the Act.
8. Survival of Certain Representations and Obligations. The
---------------------------------------------------
respective indemnities, agreements, representations, warranties and other
statements of the Seller or its officers and of the Underwriters set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation or statement as to the results thereof, made by or on
behalf of any Underwriter or the Seller or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Class A Certificates. If this Agreement
is terminated pursuant to Section 9 or if for any reason the purchase of the
Class A Certificates by the Underwriters is not consummated, the Seller shall
remain responsible for the expenses to be paid or reimbursed by it pursuant to
Section 5, and the respective obligations of the Seller and the Underwriters
pursuant to Section 7 shall remain in effect. If the purchase of the Class A
Certificates by the
<PAGE>
27
Underwriters is not consummated for any reason other than solely because of the
termination of this Agreement pursuant to Section 9 or the occurrence of any
event specified in clause (iii), (iv) or (v) of Section 6(d), the Seller will
reimburse the Underwriters for all out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by them in connection with the
offering of the Class A Certificates.
9. Failure to Purchase the Class A Certificates. If any Underwriter
--------------------------------------------
or Underwriters default on their obligations to purchase Class A Certificates
hereunder and the aggregate principal amount of Class A Certificates that such
defaulting Underwriter or Underwriters agreed but failed to purchase does not
exceed 10% of the total principal amount of Class A Certificates, the
Representative may make arrangements satisfactory to the Seller for the purchase
of such Class A Certificates by other persons, including the nondefaulting
Underwriter or Underwriters, but if no such arrangements are made by the Closing
Date, the nondefaulting Underwriter or Underwriters shall be obligated, in
proportion to their commitments hereunder, to purchase the Class A Certificates
that such defaulting Underwriter or Underwriters agreed but failed to purchase.
If any Underwriter or Underwriters so default and the aggregate principal amount
of Class A Certificates with respect to which such default or defaults occur
exceeds 10% of the total principal amount of Class A Certificates and
arrangements satisfactory to the nondefaulting Underwriter or Underwriters and
the Seller for the purchase of such Class A Certificates by other persons are
not made within 36 hours after such default, this Agreement will terminate
without liability on the part of any nondefaulting Underwriter or the Seller,
except as provided in Section 8.
As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section. Nothing herein will
relieve a defaulting Underwriter or Underwriters from liability for its default.
10. Notices. All communications hereunder will be in writing and, if
-------
sent to the Representative or the Underwriters will be mailed, delivered or sent
by facsimile transmission and confirmed to J.P. Morgan Securities Inc., 60 Wall
Street, New York, New York 10260, Attention:
<PAGE>
28
Syndicate Desk (facsimile number (212) 648-5909); and if sent to the Seller,
will be mailed, delivered or sent by facsimile transmission and confirmed to it
at Nissan Auto Receivables Corporation, 990 West 190th Street, Torrance,
California 90502-1019, attention of the Assistant Secretary (facsimile number
(310) 324-2542).
11. No Bankruptcy Petition. Each Underwriter 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.
12. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the Underwriters and the Seller and their respective successors and
the officers and directors and controlling persons referred to in Section 7, and
no other person will have any right or obligations hereunder.
13. Representation of Underwriters. The Representative will act for
------------------------------
the several Underwriters in connection with the transactions described in this
Agreement, and any action taken by the Representative under this Agreement will
be binding upon all the Underwriters.
<PAGE>
29
14. Applicable Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the laws of
the State of New York.
15. Counterparts. This Agreement may be executed by each of the
------------
parties hereto in any number of counterparts, and by each of the parties hereto
on separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
If the foregoing is in accordance with your understanding, please
sign and return to us a counterpart hereof, whereupon it will become a binding
agreement between the Seller and the several Underwriters in accordance with its
terms.
Very truly yours,
NISSAN AUTO RECEIVABLES
CORPORATION,
by
----------------------------
Name:
Title:
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the
date first above written:
J.P. MORGAN SECURITIES INC.,
by
------------------------------
Name:
Title:
Acting on behalf of itself
and as the Representative
of the several Underwriters.
<PAGE>
SCHEDULE I
Initial Principal
Amount of
Underwriter Class A Certificates
- ----------- ---------------------
J.P. Morgan Securities Inc.
- ------------- ----------------------
Total $
<PAGE>
EXHIBIT 4.1
[Draft - 10/17/97]
NISSAN AUTO RECEIVABLES 1997-A GRANTOR TRUST
[-]% ASSET BACKED CERTIFICATES
- --------------------------------------------------------------------------------
NISSAN AUTO RECEIVABLES CORPORATION
Seller
NISSAN MOTOR ACCEPTANCE CORPORATION
Servicer and in its individual capacity
THE FUJI BANK AND TRUST COMPANY
Trustee
- --------------------------------------------------------------------------------
FORM OF POOLING AND SERVICING AGREEMENT
Dated as of October 1, 1997
- --------------------------------------------------------------------------------
<PAGE>
Page
----
TABLE OF CONTENTS
Page
ARTICLE I.
INTRODUCTION.............................. 1
Section 1.01. DEFINITIONS..................................... 1
-----------
Section 1.02. USAGE OF TERMS.................................. 20
--------------
Section 1.03. CUTOFF DATE AND RECORD DATE..................... 20
---------------------------
Section 1.04. SECTION REFERENCES.............................. 20
------------------
ARTICLE II.
THE TRUST............................... 21
Section 2.01. CREATION OF TRUST............................... 21
-----------------
Section 2.02. CONVEYANCE OF RECEIVABLES....................... 21
-------------------------
Section 2.03. ACCEPTANCE BY TRUSTEE........................... 22
---------------------
ARTICLE III.
THE RECEIVABLES............................ 22
Section 3.01. REPRESENTATIONS AND WARRANTIES OF SELLER
.............................................................. 22
Section 3.02. REPURCHASE UPON BREACH.......................... 26
----------------------
Section 3.03. CUSTODY OF RECEIVABLE FILES..................... 27
---------------------------
Section 3.04. DUTIES OF SERVICER AS CUSTODIAN................. 28
-------------------------------
Section 3.05. INSTRUCTIONS; AUTHORITY TO ACT.................. 28
------------------------------
Section 3.06. CUSTODIAN'S INDEMNIFICATION..................... 28
---------------------------
Section 3.07. EFFECTIVE PERIOD AND TERMINATION................ 29
--------------------------------
ARTICLE IV.
ADMINISTRATION AND SERVICING OF RECEIVABLES.............. 29
Section 4.01. DUTIES OF SERVICER.................. 29
Section 4.02. COLLECTION OF RECEIVABLE PAYMENTS............... 31
Section 4.03. REALIZATION UPON RECEIVABLES.................... 31
Section 4.04. PHYSICAL DAMAGE INSURANCE....................... 31
Section 4.05. MAINTENANCE OF SECURITY INTERESTS IN
FINANCED VEHICLES........................................... 31
Section 4.06. COVENANTS OF SERVICER........................... 31
Section 4.07. REPURCHASE OF RECEIVABLES UPON BREACH........... 32
Section 4.08. SERVICER FEE.................................... 33
Section 4.09. SERVICER'S CERTIFICATE.......................... 33
<PAGE>
Section 4.10. ANNUAL STATEMENT AS TO COMPLIANCE;
NOTICE OF DEFAULT........................................... 34
Section 4.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANT'S REPORT......................................... 34
Section 4.12. ACCESS TO CERTAIN DOCUMENTATION AND
INFORMATION REGARDING RECEIVABLES........................... 35
Section 4.13. SERVICER EXPENSES............................... 35
ARTICLE V.
DISTRIBUTIONS; SUBORDINATION SPREAD ACCOUNTS;
STATEMENTS TO CERTIFICATEHOLDERS.................... 36
Section 5.01. ACCOUNTS........................................ 36
--------
Section 5.02. COLLECTIONS..................................... 36
-----------
Section 5.03. APPLICATION OF COLLECTIONS...................... 38
--------------------------
Section 5.04. ADVANCES........................................ 38
--------
Section 5.05. ADDITIONAL DEPOSITS............................. 39
-------------------
Section 5.06. DISTRIBUTIONS................................... 39
-------------
Section 5.07. [RESERVED] ..................................... 42
Section 5.08. NET DEPOSITS.................................... 42
------------
Section 5.09. STATEMENTS TO CERTIFICATEHOLDERS................ 43
--------------------------------
Section 5.10. NO PETITION..................................... 45
-----------
ARTICLE VI.
ADDITIONAL AGREEMENTS......................... 45
Section 6.01. YIELD SUPPLEMENT RESERVE ACCOUNT................ 45
--------------------------------
Section 6.02. CUSTODY AND PLEDGE AGREEMENT. .................. 45
----------------------------
ARTICLE VII.
THE CERTIFICATES............................ 46
Section 7.01. THE CERTIFICATES................................ 46
Section 7.02. AUTHENTICATION OF CERTIFICATES.................. 46
Section 7.03. REGISTRATION OF TRANSFER AND EXCHANGE OF
CERTIFICATES................................................ 46
Section 7.04. MUTILATED, DESTROYED, LOST, OR STOLEN
CERTIFICATES................................................ 48
Section 7.05. PERSONS DEEMED OWNERS........................... 49
Section 7.06. ACCESS TO LIST OF CERTIFICATEHOLDERS'
NAMES AND ADDRESSES......................................... 49
Section 7.07. MAINTENANCE OF OFFICE OR AGENCY................. 49
Section 7.08. BOOK-ENTRY CERTIFICATES......................... 50
Section 7.09. NOTICES TO CLEARING AGENCY...................... 51
Section 7.10. DEFINITIVE CERTIFICATES......................... 51
ARTICLE VIII.
<PAGE>
THE SELLER............................... 52
Section 8.01. REPRESENTATIONS OF SELLER....................... 52
Section 8.02. LIABILITY OF SELLER; INDEMNITIES................ 53
Section 8.03. MERGER OR CONSOLIDATION OF, OR
ASSUMPTION OF THE OBLIGATIONS OF, SELLER.................... 54
Section 8.04. LIMITATION ON LIABILITY OF SELLER AND
OTHERS...................................................... 55
Section 8.05. SELLER MAY OWN CERTIFICATES..................... 55
ARTICLE IX.
THE SERVICER.............................. 58
Section 9.01. REPRESENTATIONS OF SERVICER......... 58
Section 9.02. INDEMNITIES OF SERVICER......................... 59
Section 9.03. MERGER OR CONSOLIDATION OF, OR
ASSUMPTION OF THE OBLIGATIONS OF, SERVICER.................. 61
Section 9.04. LIMITATION ON LIABILITY OF SERVICER AND
OTHERS...................................................... 61
Section 9.05. DELEGATION OF DUTIES............................ 62
ARTICLE X.
DEFAULT................................ 63
Section 10.01. EVENTS OF DEFAULT.................. 63
Section 10.02. APPOINTMENT OF SUCCESSOR....................... 65
------------------------
Section 10.03. REPAYMENT OF ADVANCES.......................... 66
---------------------
Section 10.04. NOTIFICATION TO CERTIFICATE-HOLDERS............ 66
-----------------------------------
Section 10.05. WAIVER OF PAST DEFAULTS........................ 66
-----------------------
ARTICLE XI.
THE TRUSTEE.............................. 67
SECTION 11.01. DUTIES OF TRUSTEE.............................. 67
Section 11.02. TRUSTEE'S CERTIFICATE.......................... 69
Section 11.03. TRUSTEE'S ASSIGNMENT OF REPURCHASED
RECEIVABLES................................................. 70
Section 11.04. CERTAIN MATTERS AFFECTING THE TRUSTEE.......... 70
Section 11.05. TRUSTEE NOT LIABLE FOR CERTIFICATES OR
RECEIVABLES................................................. 72
Section 11.06. TRUSTEE MAY OWN CERTIFICATES................... 73
Section 11.07. TRUSTEE'S FEES AND EXPENSES.................... 73
Section 11.08. INDEMNITY OF TRUSTEE........................... 74
Section 11.09. ELIGIBILITY REQUIREMENTS FOR TRUSTEE........... 74
Section 11.10. RESIGNATION OR REMOVAL OF TRUSTEE.............. 75
Section 11.11. SUCCESSOR TRUSTEE.............................. 75
Section 11.12. MERGER OR CONSOLIDATION OF TRUSTEE............. 76
<PAGE>
Section 11.13. APPOINTMENT OF CO-TRUSTEE OR SEPARATE
TRUSTEE..................................................... 76
Section 11.14. REPRESENTATIONS AND WARRANTIES OF
TRUSTEE..................................................... 78
Section 11.15. TAX RETURNS.................................... 78
Section 11.16. TRUSTEE MAY ENFORCE CLAIMS WITHOUT
POSSESSION OF CERTIFICATES.................................. 79
Section 11.17. SUITS FOR ENFORCEMENT.......................... 79
Section 11.18. RIGHTS OF CERTIFICATEHOLDERS TO DIRECT
TRUSTEE..................................................... 79
Section 11.19. APPOINTMENT OF CUSTODIAN....................... 79
ARTICLE XII.
TERMINATION.............................. 80
Section 12.01. TERMINATION OF THE TRUST....................... 80
------------------------
Section 12.02. OPTIONAL PURCHASE OF ALL RECEIVABLES........... 81
------------------------------------
ARTICLE XIII.
MISCELLANEOUS PROVISIONS........................ 82
Section 13.01. AMENDMENT...................................... 82
Section 13.02. PROTECTION OF TITLE TO TRUST................... 83
Section 13.03. LIMITATION ON RIGHTS OF
CERTIFICATEHOLDERS.......................................... 86
Section 13.04. GOVERNING LAW.................................. 87
Section 13.05. NOTICES........................................ 87
Section 13.06. SEVERABILITY OF PROVISIONS..................... 88
Section 13.07. ASSIGNMENT..................................... 88
Section 13.08. CERTIFICATES NONASSESSABLE AND FULLY
PAID........................................................ 88
Section 13.09. FURTHER ASSURANCES............................. 88
Section 13.10. NO WAIVER; CUMULATIVE REMEDIES................. 88
Section 13.11. THIRD-PARTY BENEFICIARIES...................... 89
Section 13.12. ACTIONS BY CERTIFICATEHOLDERS.................. 89
Section 13.13. QUALIFICATION AS GRANTOR TRUST; SEPARATE
ASSETS...................................................... 89
SECTION 13.14. COUNTERPARTS................................... 89
<PAGE>
Page
____
EXHIBITS
- --------
Exhibit A Class A Certificate
Exhibit B Class B Certificate
Exhibit C Depository Agreement
Exhibit D-1 Trustee's Certificate to Seller
Exhibit D-2 Trustee's Certificate to Servicer
Exhibit E Custody and Pledge Agreement
Exhibit F Yield Supplement Agreement
SCHEDULES
- ---------
Schedule A List of Receivables
Schedule B Location of Receivables
<PAGE>
FORM OF POOLING AND SERVICING AGREEMENT
This Pooling and Servicing Agreement, dated as of _October 1, 1997, is made
with respect to the formation of the Nissan Auto Receivables 1997-A Grantor
Trust, among NISSAN AUTO RECEIVABLES CORPORATION, a Delaware corporation, as
Seller ("Seller"), NISSAN MOTOR ACCEPTANCE CORPORATION, a California
------
corporation, as Servicer ("Servicer") and in its individual capacity ("NMAC"),
-------- ----
and THE FUJI BANK AND TRUST COMPANY, a bank organized under the laws of New York
(the "Trustee").
-------
WITNESSETH THAT: In consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I.
INTRODUCTION
SECTION 1.01. DEFINITIONS. Whenever used in the Agreement, the following
-----------
words and phrases, unless the context otherwise requires, shall have the
following meanings:
"Accrued Interest" on a Receivable, as of the last day of any Collection
----------------
Period, means that amount of interest accrued on the Principal Balance at the
APR but not paid by or on behalf of the Obligor.
"Advance" means the amount, as of the last day of a Collection Period,
-------
which the Servicer is required to advance on the respective Receivable pursuant
to Section 5.04(a).
"Agreement" means this Agreement and all amendments, amendments and
---------
restatements, and supplements thereto.
"Amount Financed" with respect to a Receivable means the amount advanced
---------------
under the Receivable toward the purchase price of the Financed Vehicle and any
related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate of
---------------------- ---
finance charges stated in the Receivable.
<PAGE>
"Annual USAP Report" shall have the meaning specified in Section 4.11.
------------------
"Available Interest" means, for any Distribution Date, the sum of the
------------------
following amounts received during the related Collection Period: (i) that
portion of all collections on Receivables allocable to interest, (ii)
Liquidation Proceeds to the extent allocable to interest due on a Liquidated
Receivable in accordance with the Servicer's customary servicing procedures,
(iii) all Advances made by the Servicer pursuant to Section 5.04, (iv) without
duplication of any amounts described above in clauses (i) and (ii), the
Repurchase Amount of each Receivable that became a Repurchased Receivable during
the related Collection Period to the extent attributable to interest thereon,
and (v) the Yield Supplement Amount received by the Trustee; provided, however,
-------- -------
that in calculating the Available Interest, amounts paid to the Servicer as
reimbursement for Advances shall be excluded.
"Available Principal" means, for any Distribution Date, the sum of the
-------------------
following amounts received during the related Collection Period: (i) that
portion of all collections on Receivables allocable to principal, (ii)
Liquidation Proceeds attributable to principal due on a Liquidated Receivable in
accordance with the Servicer's customary servicing procedures, and (iii) without
duplication of any amounts described above in clauses (i) and (ii), to the
extent attributable to principal, the Repurchase Amount of each Receivable that
became a Repurchased Receivable during such Collection Period.
"Book-Entry Certificates" means a beneficial interest in the Class A
-----------------------
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 7.08.
"Business Day" means any day other than a Saturday, a Sunday or a day on
------------
which banking institutions or trust companies in New York, New York shall be
authorized or obligated by law, executive order or governmental decree to remain
closed.
"Certificate" means a Class A Certificate or a Class B Certificate.
-----------
"Certificate Account" means the account designated as such, established and
-------------------
maintained pursuant to Section 5.01.
"Certificateholder" or "Holder" means the Person in whose name a
----------------- ------
Certificate shall be registered in the
2
<PAGE>
Certificate Register, except that, solely for the purposes of giving any
consent, waiver, request, or demand pursuant to the Agreement, the interest
evidenced by any Class A Certificate registered in the name of the Seller, the
Servicer, or any Person controlling, controlled by, or under common control with
the Seller or the Servicer, shall not be taken into account in determining
whether the requisite percentage necessary to effect any such consent, waiver,
request, or demand shall have been obtained; provided, that the Trustee shall
--------
not be liable for the inclusion in any such determination of any interest
evidenced by any Class A Certificate registered in the name of any Person
controlling, controlled by, or under common control with the Seller or the
Servicer unless a Trustee Officer in the Corporate Trust Office with knowledge
hereof and familiarity herewith had actual knowledge that such Person so
controlled, was controlled by, or was under common control with, the Seller or
the Servicer, as the case may be.
"Certificate Owner" shall mean, with respect to a Book-Entry Certificate,
-----------------
the Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant, in accordance
with the rules of such Clearing Agency) and shall mean, with respect to a
Definitive Certificate, the Certificateholder.
"Certificate Register" and "Certificate Registrar" mean the register
-------------------- ---------------------
maintained and the registrar appointed pursuant to Section 7.03.
"Class A Agent" means The Fuji Bank and Trust Company, or any successor.
-------------
"Class A Certificate" means any one of the Certificates executed by the
-------------------
Trust and authenticated by the Trustee, in substantially the form set forth in
Exhibit A hereto.
"Class A Certificate Balance" shall equal, initially, the Original Class A
---------------------------
Certificate Balance and, thereafter, shall equal the Original Class A
Certificate Balance, reduced by all amounts previously distributed to the Class
A Certificateholders and allocable to principal.
"Class A Certificate Factor" means, as of a Distribution Date, a seven-
--------------------------
digit decimal figure equal to the Class A Certificate Balance as of the close of
business on such Distribution Date divided by the Original Class A Certificate
Balance.
3
<PAGE>
"Class A Distributable Amount" means, with respect to any Distribution
----------------------------
Date, the sum of the Class A Principal Distributable Amount and the Class A
Interest Distributable Amount.
"Class A Interest Carryover Shortfall" means, as of the close of business
------------------------------------
on any Distribution Date, the excess, if any, of the Class A Interest
Distributable Amount for such Distribution Date plus any outstanding unpaid
interest owed to holders of Class A Certificates from the preceding Distribution
Date, plus interest on such outstanding unpaid interest amount, to the extent
permitted by law, at the Pass-Through Rate from such preceding Distribution Date
to but not including such current Distribution Date, over the amount of interest
that the holders of the Class A Certificates actually received on such
Distribution Date.
"Class A Interest Distributable Amount" means, with respect to any
-------------------------------------
Distribution Date, thirty (30) days of interest at the Pass-Through Rate on the
Class A Certificate Balance as of the close of business on the last day of the
related Collection Period, calculated on the basis of a 360-day year consisting
of twelve 30-day months.
"Class A Percentage" means [_]%
------------------
"Class A Pool Factor" means, as of any Distribution Date, a seven-digit
-------------------
decimal figure equal to the Class A Certificate Balance as of the close of
business on such Distribution Date divided by the Original Pool Balance.
"Class A Principal Carryover Shortfall" means, as of the close of business
-------------------------------------
on any Distribution Date, the excess, if any, of the Class A Principal
Distributable Amount plus any outstanding unpaid principal owed to holders of
Class A Certificates from preceding Distribution Dates over the amount of
principal that the holders of the Class A Certificates actually received on such
current Distribution Date.
"Class A Principal Distributable Amount" means, with respect to any
--------------------------------------
Distribution Date, the Class A Percentage of the sum of: (i) the principal
portion of all payments on Receivables, including prepayments of principal,
received during the related Collection Period, (ii) the aggregate outstanding
principal balance as of the beginning of the related Collection Period of all
Receivables that became Repurchased Receivables under obligations that arose
during a related Collection Period (without duplication of amounts referred to
in clause (i) above) and (iii) the aggregate outstanding principal balance as of
the beginning
4
<PAGE>
of the related Collection Period of all Receivables that became Liquidated
Receivables during the related Collection Period (without duplication of amounts
referred to in clauses (i) or (ii) above).
"Class A Specified Subordination Spread Account Balance" with respect to
------------------------------------------------------
any Distribution Date shall be $[_]; provided, however, that in the event that
-------- -------
on any Distribution Date (i) the annualized average for the preceding three
Collection Periods (or such shorter number of Collection Periods as have elapsed
since the Cutoff Date) of the percentage equivalents of the ratios of net losses
(i.e., the net balances of all Liquidated Receivables, less any Liquidation
----
Proceeds with respect to such Liquidated Receivables from that or prior
Collection Periods) to the Pool Balance as of the first day of each such
Collection Period exceeds [_]% or (ii) the average for the preceding three
Collection Periods (or such shorter number of Collection Periods as have elapsed
since the Cutoff Date) of the percentage equivalents of the ratios of the number
of Receivables that are delinquent [_] days or more to the outstanding number of
Receivables exceeds [_]%, then the Class A Specified Subordination Spread
Account Balance for such Distribution Date shall be a dollar amount equal to (x)
[_]% of the Pool Balance as of the first day of the related Collection Period
minus (y) the excess of the Pool Balance over the Class A Certificate Balance
both as of the opening of business of the first day of such Collection Period,
but in no event shall the Class A Specified Subordination Spread Account Balance
be more than $[_] or less than $[_]; and provided further, that on any
-------- -------
Distribution Date on which the aggregate balance of the Class A Certificates is
$[_] or less, after giving effect to the distributions on such Distribution
Date, the Class A Specified Subordination Spread Account Balance shall be the
greater of the balance described above or $[_].
Notwithstanding any contrary practice of the Servicer in accounting for
receivables generally, if a repossessed Financed Vehicle shall remain unsold 90
days after repossession, any remaining balance of the related Receivable shall
be charged off and treated as a net loss for purposes of clause (i) above,
regardless of the Servicer's expectations as to collection or receipt of sale
proceeds.
"Class A Subordination Spread Account" means the account established and
------------------------------------
maintained pursuant to the Custody and Pledge Agreement for the benefit of the
holders of the Class A Certificates.
5
<PAGE>
"Class B Certificate" means any one of the Certificates executed by the
-------------------
Trust and authenticated by the Trustee, in substantially the form set forth in
Exhibit B hereto.
"Class B Certificate Balance" shall equal, initially, the Original Class B
---------------------------
Certificate Balance and, thereafter, shall equal the amount by which the Pool
Balance on the last day of the related Collection Period exceeds the Class A
Certificate Balance on such Distribution Date.
"Class B Distributable Amount" means, with respect to any Distribution
----------------------------
Date, the sum of the Class B Principal Distributable Amount and the Class B
Interest Distributable Amount.
"Class B Interest Carryover Shortfall" means, as of the close of business
------------------------------------
on any Distribution Date, the excess, if any, of the Class B Interest
Distributable Amount for such Distribution Date plus any outstanding unpaid
interest owed to holders of Class B Certificates from the preceding Distribution
Date plus interest on such outstanding unpaid interest amount, to the extent
permitted by law, at the Pass-Through Rate from such preceding Distribution Date
to but not including such Distribution Date over the amount of interest that the
holders of the Class B Certificates actually received on such Distribution Date.
"Class B Interest Distributable Amount" means, with respect to any
-------------------------------------
Distribution Date, thirty (30) days of interest at the Pass-Through Rate on the
Class B Certificate Balance as of the close of business on the last day of the
related Collection Period.
"Class B Percentage" means [_]%.
------------------
"Class B Principal Carryover Shortfall" means, as of the close of any
-------------------------------------
Distribution Date, the excess of the Class B Principal Distributable Amount and
any outstanding unpaid principal owed to holders of Class B Certificates from
the preceding Distribution Date over the amount of principal that the holders of
the Class B Certificates received on such current Distribution Date.
"Class B Principal Distributable Amount" means, with respect to any
--------------------------------------
Distribution Date, the Class B Percentage of the sum of: (i) the principal
portion of all payments on Receivables, including prepayments of principal,
received during the related Collection Period, (ii) the aggregate outstanding
principal balance as of the beginning of the related Collection Period of all
Receivables that
6
<PAGE>
became Repurchased Receivables under an obligation that arose during a related
Collection Period (without duplication of amounts included in clause (i) above)
and (iii) the aggregate outstanding principal balance as of the beginning of the
related Collection Period of all Receivables that become Liquidated Receivables
during the related Collection Period (without duplication of amounts included in
clauses (i) or (ii) above).
"Class B Specified Subordination Spread Account Balance" with respect to
------------------------------------------------------
any Distribution Date shall be equal to $1.00 until such time as the Seller
requests a rating for the Class B Certificates, at which time the Class B
Specified Subordination Spread Account Balance shall be increased to the amount
specified by the rating agencies requested by the Seller to rate the Class B
Certificates.
"Class B Subordination Spread Account" means the account established and
------------------------------------
maintained pursuant to the Custody and Pledge Agreement for the benefit of the
holders of Class B Certificates.
"Clearing Agency" means an organization registered as a "clearing agency"
---------------
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
---------------------------
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Collection Account" means the account designated as such, established and
------------------
maintained pursuant to Section 5.01.
"Collection Period" means, with respect to any Distribution Date, the
-----------------
preceding calendar month. Any amount stated "as of the close of business of the
last day of a Collection Period" shall give effect to the following calculations
as determined as of the end of the day on such last day: 1) all applications of
collections, 2) all Advances and reductions of Outstanding Advances and 3) all
distributions.
"Corporate Trust Office" means the office of the Trustee, which at the date
----------------------
hereof, is located at The Fuji Bank and Trust Company, Two World Trade Center,
81st Floor, New York, New York 10048 Attention: Corporate Trust Administration
Department.
7
<PAGE>
"Custodian" means the party named as such in the Custody and Pledge
---------
Agreement.
"Custody and Pledge Agreement" means the agreement, substantially in the
----------------------------
form attached hereto as Exhibit E.
"Cutoff Date" shall be October 1, 1997.
-----------
"Damages" shall have the meaning specified in Section 9.02.
-------
"Dealer" means the dealer who sold a Financed Vehicle and who originated
------
and assigned the respective Receivable to Nissan Motor Acceptance Corporation
under an existing agreement between such dealer and Nissan Motor Acceptance
Corporation.
"Dealer Recourse" means, with respect to a Receivable, all recourse rights
---------------
against the Dealer which originated the Receivable and any successor Dealer.
"Definitive Certificates" shall have the meaning specified in Section 7.08.
-----------------------
"Delivery" when used with respect to Subordination Spread Account Property
--------
means:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9-105(1)(i) of the UCC and are susceptible of
physical delivery, transfer thereof to the Custodian by physical delivery to the
Custodian indorsed to, or registered in the name of, the Custodian or indorsed
in blank, and, with respect to a certificated security (as defined in Section 8-
102 of the UCC), transfer thereof (i) by delivery of such certificated security
to the Custodian or by delivery of such certificated security to a financial
intermediary indorsed to, or registered in the name of, the Custodian or
indorsed in blank (as defined in Section 8-313 of the UCC) and the making by
such financial intermediary of entries on its books and records identifying such
certificated securities as belonging to the Custodian and the sending by such
financial intermediary of a confirmation of the purchase of such certificated
security by the Custodian, or (ii) by delivery thereof to a "clearing
corporation" (as defined in section 8-102(3) of the UCC) and the making by such
clearing corporation of appropriate entries on its books reducing the
appropriate securities account of the transferor and increasing the appropriate
securities account of a financial intermediary by the amount
8
<PAGE>
of such certificated security, the identification by the clearing corporation of
the certificated securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such clearing
corporation or a "custodian bank" (as defined in Section 8-102(4) of the UCC) or
the nominee of either subject to the clearing corporation's exclusive control,
the sending of a confirmation by the financial intermediary of the purchase by
the Custodian of such securities and the making by such financial intermediary
of entries on its books and records identifying such certificated securities as
belonging to the Custodian (all of the foregoing, "Physical Property"), and, in
any event, any such Physical Property in registered form shall be in the name of
the Custodian or its nominee; and such additional or alternative procedures as
may hereafter become appropriate to effect the complete transfer of ownership of
any such Subordination Spread Account Property to the Custodian, consistent with
changes in applicable law or regulations or the interpretation thereof;
(b) with respect to any security issued by the U.S. Treasury, the Federal
Home Loan Mortgage Corporation or by the Federal National Mortgage Association
that is a book-entry security held through the Federal Reserve System pursuant
to Federal book-entry regulations, the following procedures, all in accordance
with applicable law, including applicable federal regulations and Articles 8 and
9 of the UCC: book-entry registration of such Property to an appropriate book-
entry account maintained with a Federal Reserve Bank by a financial intermediary
which is also a "depositary" pursuant to applicable federal regulations and
issuance by such financial intermediary of a deposit advice or other written
confirmation of such book-entry registration to the Custodian of the purchase by
the Custodian of such book-entry securities; the making by such financial
intermediary of entries in its books and records identifying such book-entry
security held through the Federal Reserve System pursuant to Federal book-entry
regulations as belonging to the Custodian and indicating that such financial
intermediary holds such Subordination Spread Account Property solely as agent
for the Custodian; and such additional or alternative procedures as may
hereafter become appropriate to effect complete transfer of ownership of any
such Subordination Spread Account Property to the Custodian, consistent with
changes in applicable law or regulations or the interpretation thereof; and
(c) with respect to any item of Subordination Spread Account Property that
is an uncertificated security under Article 8 of the UCC and that is not
governed by clause (b) above, registration on the books and records of
9
<PAGE>
the issuer thereof in the name of the financial intermediary, the sending of a
confirmation by the financial intermediary of the purchase by the Custodian of
such uncertificated security and the making by such financial intermediary of
entries on its books and records identifying such uncertificated certificates as
belonging to the Custodian.
"Depository Agreement" means the agreement between the Seller, the
--------------------
Custodian and the initial Clearing Agency, dated as of the date of the
Agreement, substantially in the form attached hereto as Exhibit C.
"Determination Date" means the tenth calendar day of each calendar month,
------------------
or if such tenth day is not a Business Day, the next succeeding Business Day.
"Distribution Date" means, for each Collection Period, the 15th day of the
-----------------
following month, or if the 15th day is not a Business Day, the next following
Business Day, commencing with November 17, 1997.
"Eligible Investments" mean book entry securities, negotiable instruments
--------------------
or securities represented by instruments in bearer or registered form which
evidence;
(a) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest 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 then rating the
Certificates 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
10
<PAGE>
then rating the Certificates in the highest investment category
granted thereby;
(d) investments in money market funds having a rating from each
of the rating agencies then rating the Certificates in the highest
investment category granted thereby (including funds for which the
Trustee or any of its 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);
(g) repurchase obligations with respect to any security or whole
loan, entered into with (a) a depository institution or trust company
(acting as principal) described in clause (b) above (except that the
rating referred to in the proviso in such clause (b) shall be A-1 or
higher in the case of Standard & Poor's Ratings Services) (such
depository institution or trust company being referred to in this
definition as a "financial institution"), (b) a broker/dealer (acting
as principal) registered as a broker or dealer under Section 15 of the
Securities Exchange Act of 1934, as amended (a "broker/dealer"), the
unsecured short-term debt obligations of which are rated P-1 by
Moody's Investors Service, Inc. and at least A-1 by Standard & Poor's
Ratings Services at the time of entering into such repurchase
obligation (a "rated broker/dealer"), (c) an unrated broker/dealer (an
"unrated broker/dealer"), acting as principal that is a wholly-owned
subsidiary of a non-bank holding company the unsecured short-term debt
obligations of which are rated P-1 by Moody's Investors Service, Inc.
and at least A-1 by Standard & Poor's Ratings Services at the time of
entering into such repurchase obligation (a "Rated Holding Company")
or (d) an unrated subsidiary (a "Guaranteed Counterparty"), acting as
principal, that is a wholly-owned subsidiary of
11
<PAGE>
a direct or indirect parent Rated Holding Company, which guarantees
such subsidiary's obligations under such repurchase agreement;
provided that the following conditions are satisfied:
(A) the aggregate amount of funds invested in repurchase
obligations of a financial institution, a rated broker/dealer, an
unrated broker/dealer or Guaranteed Counterparty in respect of
which the unsecured short-term ratings of Standard & Poor's
Ratings Services are A-1 (in the case of an unrated broker/dealer
or Guaranteed Counterparty, such rating being that of the related
Rated Holding Company) shall not exceed 20% of the outstanding
Pool Balance (there being no limit on the amount of funds that
may be invested in repurchase obligations in respect of which
such Standard & Poor's Ratings Services rating is A-1+ (in the
case of an unrated broker/dealer or Guaranteed Counterparty, such
rating being that of the related Rated Holding Company));
(B) in the case of the Subordination Spread Accounts and the
Yield Supplement Reserve Account, the rating from Standard &
Poor's Ratings Services in respect of the unsecured short term
debt obligations of the financial institution, rated
broker/dealer, unrated broker/dealer or Guaranteed Counterparty
(in the case of an unrated broker/dealer or Guaranteed
Counterparty, such rating being that of the related Rated Holding
Company) shall be A-1+;
(C) the repurchase obligation must mature within 30 days of
the date on which the Trustee, the Custodian or the Class A
Agent, as applicable, enters into such repurchase obligation;
(D) the repurchase obligation shall not be subordinated to
any other obligation of the related financial institution, rated
broker/dealer, unrated broker/dealer or Guaranteed Counterparty;
(E) the collateral subject to the repurchase obligation is
held, in the appropriate form, by a custodial bank on
12
<PAGE>
behalf of the Trustee, the Custodian or the Class A Agent, as
applicable;
(F) the repurchase obligation shall require that the
collateral subject thereto shall be marked to market daily;
(G) in the case of a repurchase obligation of a Guaranteed
Counterparty, the following conditions shall also be satisfied:
(i) the Trustee, the Custodian or the Class A Agent, as
applicable, shall have received an Opinion of Counsel to the
effect that the guarantee of the related Rated Holding
Company is a legal, valid and binding agreement of the Rated
Holding Company, enforceable in accordance with its terms,
subject as to enforceability to bankruptcy insolvency,
reorganization and moratorium or other similar laws
affecting creditors' rights generally and to general
equitable principles:
(ii) the Trustee, the Custodian or the Class A Agent,
as applicable, shall have received (x) an incumbency
certificate for the signer of such guarantee, certified by
an officer of such Rated Holding Company, and (y) a
resolution, certified by an officer of the Rated Holding
Company, of the board of directors (or applicable committee
thereof) of the Rated Holding Company authorizing the
execution, delivery and performance of such guarantee by the
Rated Holding Company;
(iii) the only conditions to the obligation of such
Rated Holding Company to pay on behalf of the Guaranteed
Counterparty shall be that the Guaranteed Counterparty shall
not have paid under such repurchase obligation when required
(it being understood that no notice to, demand on or other
action in respect of the Guaranteed Counterparty is
necessary) and that the Trustee, the Custodian or the Class
A Agent, as applicable, shall make a demand on the Rated
Holding Company to
13
<PAGE>
make the payment due under such guarantee;
(iv) the guarantee of the Rated Holding Company shall
be irrevocable with respect to such repurchase obligation
and shall not be subordinated to any other obligation of the
Rated Holding Company; and
(v) each of the rating agencies then rating the
Certificates has confirmed in writing to the Trustee, the
Custodian or the Class A Agent, as applicable, that it has
reviewed the form of the guarantee of the Rated Holding
Company and has determined that the issuance of such
guarantee will not result in the downgrade or withdrawal of
the ratings assigned to the Certificates
; and
(H) the repurchase obligation shall require that the
repurchase obligation be overcollateralized and shall provide
that, upon any failure to maintain such overcollateralization,
the repurchase obligation shall become due and payable, and
unless the repurchase obligation is satisfied immediately, the
collateral subject to the repurchase agreement shall be
liquidated and the proceeds applied to satisfy the unsatisfactory
portion of the repurchase obligation; and
(h) any other investment with respect to which the Servicer has
received written notification from the rating agencies then rating the
Certificates that the acquisition of such investment as an Eligible
Investment will not result in a withdrawal or downgrading of the
ratings on the Certificates.
"Event of Default" means an event specified in Section 10.01.
----------------
"Excess Amounts" means, with respect to each Distribution Date, all
--------------
interest collections on or in respect of the Receivables on deposit in the
Certificate Account in respect of such Distribution Date, after making the
14
<PAGE>
distributions to the Servicer and the Certificateholders pursuant to Section
5.06(c).
"Final Scheduled Distribution Date" shall be [_].
---------------------------------
"Financed Vehicle" means a new or used automobile or light truck,
----------------
together with all accessions thereto, securing an Obligor's indebtedness under
the respective Receivable.
"High-Yield Receivable" means a Receivable that bears interest at a
---------------------
rate which is greater than the sum of the Pass-Through Rate and the Servicing
Rate.
"Lien" means a security interest, lien, charge, pledge, equity or
----
encumbrance of any kind other than (in the case of a Financed Vehicle) tax
liens, mechanics' liens and any liens which attach to the Financed Vehicle by
operation of law.
"Liquidated Receivable" means a Receivable which, by its terms, is
---------------------
delinquent more than 120 days or, with respect to Receivables that are
delinquent less than 120 days, the Servicer has (i) determined, in accordance
with its customary servicing procedures, that eventual payment in full is
unlikely or (ii) repossessed the Financed Vehicle.
"Liquidation Proceeds" means the monies collected from whatever
--------------------
source, during the respective Collection Period, on a Liquidated Receivable, net
of the sum of any amounts expended by the Servicer for the account of the
Obligor, plus any amounts required by law to be remitted to the Obligor.
"Monthly Remittance Condition" has the meaning assigned to such term
----------------------------
in Section 5.02 hereof.
"NMAC" means Nissan Motor Acceptance Corporation, and its successors,
----
in its individual capacity and not as Servicer.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
-------
Financed Vehicle or any other Person who owes payments under the Receivable (not
including any Dealer in respect of Dealer Recourse).
"Officer's Certificate" means a certificate signed by the chairman of
---------------------
the board, the president, any executive vice president, any vice president, the
treasurer, any assistant treasurer or the controller of the Seller or the
Servicer, as appropriate.
15
<PAGE>
"Opinion of Counsel" means a written opinion of counsel who may but
------------------
need not be counsel to the Seller or Servicer, and who shall be acceptable to
the Trustee.
"Optional Purchase Percentage" shall be 10%.
----------------------------
"Original Class A Certificate Balance" is $[_].
------------------------------------
"Original Class B Certificate Balance" is $[_].
------------------------------------
"Original Pool Balance" is $868,465,033.86.
---------------------
"Outstanding Advances" on a Receivable means the sum, as of the close
--------------------
of business on the last day of a Collection Period, of all Advances as reduced
by payments made as specified in Section 5.04(a) with respect to such
Receivable.
"Pass-Through Rate" is [_]% per annum.
-----------------
"Person" means any individual, corporation, estate, partnership, joint
------
venture, association, joint stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Pool Balance" as of the close of business on the last day of a
------------
Collection Period means the aggregate Principal Balance of the Receivables
(excluding Repurchased Receivables and Liquidated Receivables) as of the close
of business on the last day of a Collection Period; provided, however, that
-------- -------
where the Pool Balance is relevant in determining whether the requisite
percentage of Class A Certificateholders necessary to effect any consent,
waiver, request or demand shall have been obtained, the Pool Balance shall be
deemed to be reduced by the amount equal to the portion of the Pool Balance
(before giving effect to this provision) represented by the interests evidenced
by any Class A Certificate registered in the name of the Seller, the Servicer or
any Person controlling, controlled by, or under common control with the Seller
or the Servicer.
"Pool Factor" as of the last day of a Collection Period means a seven-
-----------
digit decimal figure equal to the Pool Balance divided by the Original Pool
Balance.
"Principal Balance" of a Receivable, as of any date of determination,
-----------------
means the Amount Financed minus the sum of (i) all payments on such Receivable
attributable to principal, (ii) any refunded portion of extended warranty
protection plan or service contract costs, or of physical damage, credit life or
disability insurance premiums
16
<PAGE>
included in the Amount Financed, (iii) any payment of the Repurchase Amount with
respect to the Receivable allocable to principal and (iv) any Liquidation
Proceeds to the extent allocable to principal.
"Purchase Agreement" is the agreement dated as of October 1, 1997,
------------------
relating to the purchase by the Seller from Nissan Motor Acceptance Corporation
of the Receivables.
"Receivable" means any retail installment sale contract which appears
----------
on Schedule A to the Agreement (which Schedule A may be in the form of
microfiche) and which has not been released by the Trustee from the Trust.
"Receivable Files" means the documents specified in Section 3.03.
----------------
"Record Date" means the fourteenth day of the current calendar month
-----------
or, if Definitive Certificates are issued, the last day of the Collection Period
preceding the related Distribution Date.
"Repurchase Amount" for any Repurchased Receivable as of the close of
-----------------
any Collection Period, means the sum of the Principal Balance thereof as of the
beginning of such Collection Period plus interest accrued thereon through the
due date for the Obligor's payment in such Collection Period, at the APR, after
giving effect to the receipt of monies collected (from whatever source other
than Advances) on such Repurchased Receivable, if any, in such Collection
Period.
"Repurchased Receivable" means a Receivable purchased as of the close
----------------------
of business on the last day of the respective Collection Period by the Servicer
pursuant to Section 4.07 or 12.02 or by the Seller pursuant to Section 3.02.
"Required Deposit Rating," for so long as the Certificates shall be
-----------------------
outstanding, shall be a rating on (i) short-term unsecured debt obligations of
P-1 by Moody's Investors Service, Inc. and (ii) short-term unsecured debt
obligations of A-1+ by Standard & Poor's Ratings Services; and any requirement
that short-term unsecured debt obligations have the "Required Deposit Rating"
shall mean that such short-term unsecured debt obligations have the foregoing
required ratings from each of such rating agencies.
"Residual Certificate" has the meaning assigned to such term in
--------------------
Section 7.01 hereof.
17
<PAGE>
"Scheduled Payment" on a Receivable means the payment required to be
-----------------
made by the Obligor during each Collection Period, which is sufficient to
amortize the Principal Balance under the Simple Interest Method over the term of
the Receivable and to provide interest at the APR.
"Seller" means Nissan Auto Receivables Corporation as the seller of
------
the Receivables under the Agreement, and each successor to Nissan Auto
Receivables Corporation (in the same capacity) pursuant to Section 8.03.
"Servicer" means Nissan Motor Acceptance Corporation as the servicer
--------
of the Receivables, and each successor to Nissan Motor Acceptance Corporation
(in the same capacity) pursuant to Section 9.03 or 10.02.
"Servicer Fees" means the sum of the Servicing Fee and the
-------------
Supplemental Servicing Fee.
"Servicer's Certificate" means a certificate completed and executed on
----------------------
behalf of the Servicer by any executive vice president, any vice president, the
treasurer, any assistant treasurer, the controller or any assistant controller
of the Servicer pursuant to Section 4.09.
"Servicing Fee" means, with respect to a Collection Period, the fee
-------------
payable to the Servicer for services rendered during such Collection Period,
which shall be equal to one-twelfth of the Servicing Rate multiplied by the Pool
Balance as of the first day of such Collection Period.
"Servicing Rate" means 1.00% per annum.
--------------
"Simple Interest Method" means the method of allocating a fixed level
----------------------
payment to principal and interest, pursuant to which the portion of such payment
that is allocated to interest is equal to the product of the fixed rate of
interest multiplied by the unpaid principal balance, multiplied by the quotient
obtained by calculating the period of time elapsed since the preceding payment
of interest was made and dividing such period of time by 365.
"Simple Interest Receivable" means any Receivable under which the
--------------------------
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"State" means any state or commonwealth of the United States of
-----
America or the District of Columbia.
"Subordination Initial Deposit" is $[_].
-----------------------------
18
<PAGE>
"Subordination Spread Account Property" has the meaning set forth in
-------------------------------------
the Custody and Pledge Agreement.
"Subordination Spread Accounts" means the Class A Subordination Spread
-----------------------------
Account and the Class B Subordination Spread Account.
"Supplemental Servicing Fee" means the fee payable to the Servicer for
--------------------------
certain services rendered during a Collection Period, determined pursuant to and
defined in Section 4.08.
"Total Available Amount" shall mean, for each Distribution Date, the
----------------------
sum of the Available Interest and the Available Principal.
"Trust" means the Nissan Auto Receivables 1997-A Grantor Trust created
-----
hereunder, the estate of which shall consist of the Receivables (other than
Repurchased Receivables for which the Servicer or the Seller has paid the
Repurchase Amount in accordance with Section 4.07 or 3.02, as the case may be),
and all monies paid thereon, and all monies accrued thereon (other than amounts
accrued thereon as interest on a High-Yield Receivable in excess of the Pass-
Through Rate and the Servicing Rate, which interest shall not be transferred to
the Trust but instead shall be distributed by the Servicer to the Seller and
simultaneously contributed by the Seller to the Servicer for inclusion in the
Collection Account pursuant to Section 5.02), on or after the Cutoff Date;
security interests in the Financed Vehicles and any accessions thereto; funds
deposited in the Collection Account and the Certificate Account; any property
(including the right to receive Liquidation Proceeds) that shall have secured a
Receivable and that shall have been acquired by or on behalf of the Trustee;
proceeds from claims on any physical damage, credit life or disability insurance
policies covering Financed Vehicles or Obligors; any Dealer Recourse; all right,
title and interest of the Seller in and to the Purchase Agreement, the Yield
Supplement Agreement and the Custody and Pledge Agreement; certain rebates of
premiums and other amounts relating to certain insurance policies and other
items financed under the Receivables in effect as of the Cutoff Date; and the
proceeds of any and all of the foregoing.
"Trustee" means the Person acting as Trustee under the Agreement
-------
(which initially shall be The Fuji Bank and Trust Company), its successor in
interest, and any successor trustee appointed pursuant to Section 11.11.
"Trustee Officer" means the chairman or vice-chairman of the board of
---------------
directors, the chairman or
19
<PAGE>
vice-chairman of the executive committee of the board of directors, the
president, any vice president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, the cashier, any assistant cashier, any
trust officer or assistant trust officer, the controller and any assistant
controller, or any other officer or administrator of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Trustee's Certificate" means a certificate completed and executed on
---------------------
behalf of the Trustee by a Trustee Officer pursuant to Section 11.02,
substantially in the form of, in the case of assignment to the Seller, Exhibit
D-1 and, in the case of an assignment to the Servicer, Exhibit D-2.
"UCC" means the Uniform Commercial Code as in effect in the respective
---
jurisdiction.
"Yield Supplement Agreement" means the agreement, substantially in the
--------------------------
form attached hereto as Exhibit F.
"Yield Supplement Amount" has the meaning set forth in the Yield
-----------------------
Supplement Agreement.
"Yield Supplement Reserve Account" shall have the meaning specified in
--------------------------------
Section 6.01.
SECTION 1.02. USAGE OF TERMS. With respect to all terms in the
--------------
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by the Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."
SECTION 1.03. CUTOFF DATE AND RECORD DATE. All references to the
---------------------------
Record Date prior to the first Record Date in the life of the Trust shall be to
the Cutoff Date.
SECTION 1.04. SECTION REFERENCES. All section references shall be to
------------------
Sections in this Agreement.
20
<PAGE>
ARTICLE II.
THE TRUST
SECTION 2.01. CREATION OF TRUST. Upon the execu tion of this
-----------------
Agreement by the parties hereto, there is hereby created the Trust.
SECTION 2.02. CONVEYANCE OF RECEIVABLES. In con sideration of the
-------------------------
Trustee's delivery to, or upon the order of, the Seller of Certificates in an
aggregate amount equal to the Original Pool Balance, the Seller does hereby
irrevocably sell, transfer, assign and otherwise convey to the Trustee, in trust
for the benefit of the Certificate holders, without recourse (subject to the
obligations herein):
(i) all right, title, and interest of the Seller in and to the
Receivables listed in Schedule A hereto and all monies paid thereon, on or
after the Cutoff Date;
(ii) the interest of the Seller in the security interests in the
Financed Vehicles granted by Obligors pursuant to the Receivables and any
accessions thereto;
(iii) the interest of the Seller in any proceeds from claims on
any physical damage, credit life, credit disability or other insurance
policies covering Financed Vehicles or Obligors;
(iv) all right, title and interest of the Seller in and to the
Purchase Agreement, including the right of the Seller to cause Nissan Motor
Acceptance Corporation to repurchase Receivables from the Seller under
certain circumstances;
(v) the interest of the Seller in Dealer Recourse;
(vi) the interest of the Seller in certain rebates of premiums and
other amounts relating to insurance policies and other items financed under
the Receivables in effect as of the Cutoff Date;
(vii) all right, title and interest of the Seller under the Yield
Supplement Agreement and the Custody and Pledge Agreement; and
(viii) the proceeds of any and all of the foregoing.
21
<PAGE>
SECTION 2.03. ACCEPTANCE BY TRUSTEE. The Trustee does hereby accept
---------------------
all consideration conveyed by the Seller pursuant to Section 2.02, and declares
that the Trustee shall hold such consideration upon the trust herein set forth
for the benefit of all present and future Certificate Owners, subject to the
terms and provisions of this Agreement.
ARTICLE III.
THE RECEIVABLES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF SELLER. The Seller
----------------------------------------
makes the following representations and warranties as to the Receivables on
which the Trustee relies in accepting the Receivables in trust and executing and
authenticating the Certificates. Such representations and warranties speak as
of the execution and delivery of the Agreement, but shall survive the sale,
transfer and assignment of the Receivables to the Trust in accordance with the
terms hereof:
(i) Characteristics of Receivables. Each Receivable (a) has been
------------------------------
originated in the United States of America by a Dealer for the retail sale
of a Financed Vehicle in the ordinary course of such Dealer's business, has
been fully and properly executed by the parties thereto, has been purchased
by the Seller from NMAC pursuant to the Purchase Agreement, which in turn
has purchased such Receivables from such Dealer under an existing dealer
agreement with NMAC, and has been validly assigned by such Dealer to NMAC,
which in turn has been validly assigned pursuant to the Purchase Agreement
by NMAC to the Seller in accordance with its terms, (b) created a valid,
subsisting and enforceable first priority security interest in favor of
NMAC in the Financed Vehicle, which security interest has been assigned
pursuant to the Purchase Agreement by NMAC to the Seller, which in turn has
been assigned by the Seller to the Trustee in accordance with the terms
hereof, (c) contains customary and enforceable provisions such that the
rights and remedies of the holder thereof are adequate for realization
against the collateral of the benefits of the security, and (d) provides
for level monthly payments (provided that the payment in the first or last
month in the life of the Receivable may be minimally different from the
level payment) that fully amortize the Amount Financed over an original
term of no greater than 60 months and yield interest at the Annual
Percentage Rate.
22
<PAGE>
(ii) Schedule of Receivables. The information set forth in Schedule
-----------------------
A to the Agreement was true and correct in all material respects as of the
opening of business on the Cutoff Date; the Receivables were selected at
random from NMAC's retail installment sale contracts meeting the criteria
of the Trust set forth in this Agreement; and no selection procedures
believed to be adverse to the Certificateholders were utilized in selecting
the Receivables.
(iii) Compliance with Law. Each Receivable and the sale
-------------------
of the Financed Vehicle complied at the time it was originated or made and
at the execution of the Agreement complies in all material respects with
all requirements of applicable federal, State, and local laws, and
regulations thereunder, including 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 Soldiers and Sailors Civil Relief Act of
1940, the Federal Reserve Board's Regulations B and Z, and State
adaptations of the National Consumer Credit Protection Act and of the
Uniform Consumer Credit Code, State "Lemon Laws" designed to prevent fraud
in the sale of automobiles and other consumer credit laws and equal credit
opportunity and disclosure laws.
(iv) Binding Obligation. Each Receivable represents the genuine,
------------------
legal, valid and binding payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance with its terms subject to
the effect of bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally.
(v) Security Interest in Financed Vehicle. (a) Immediately prior
-------------------------------------
to the sale, assignment and transfer thereof to the Trust, each Receivable
was secured by a validly perfected first priority security interest in the
Financed Vehicle in favor of NMAC as secured party or all necessary and
appropriate actions shall have been commenced that would result in the
valid perfection of a first priority security interest in the Financed
Vehicle in favor of NMAC as secured party and (b) as of the Cutoff Date,
according to the records of NMAC, no Financed Vehicle has been repossessed
and not reinstated.
(vi) Receivables in Force. No Receivable has been satisfied,
--------------------
subordinated or rescinded, nor has any
23
<PAGE>
Financed Vehicle been released from the lien granted by the related
Receivable in whole or in part.
(vii) No Waiver. No provision of a Receivable has been waived.
---------
(viii) No Defenses. No Receivable is subject to any right of
-----------
rescission, setoff, counterclaim or defense, including the defense of
usury, and the operation of any of the terms of any Receivable, or the
exercise of any right thereunder, will not render such Receivable
unenforceable in whole or in part or subject such Receivable to any right
of rescission, setoff, counterclaim or defense, including the defense of
usury, and no such right of rescission, setoff, counterclaim or defense has
been asserted with respect thereto.
(ix) No Liens. To the Seller's knowledge, no liens have been filed
--------
for work, labor or materials relating to a Financed Vehicle that shall be
liens prior to, or equal or coordinate with, the security interest in the
Financed Vehicle granted by the Receivable.
(x) No Default. Except for payment defaults continuing for a
----------
period of not more than 29 days as of the Cutoff Date, no default, breach,
violation or event permitting acceleration under the terms of any
Receivable has occurred; and no continuing condition that with notice or
the lapse of time would constitute a default, breach, violation or event
permitting acceleration under the terms of any Receivable has arisen; and
the Seller shall not waive any of the foregoing except as otherwise
permitted hereunder.
(xi) Insurance. NMAC, in accordance with its customary procedures,
---------
has determined that the Obligor has agreed to obtain physical damage
insurance covering the Financed Vehicle and the Obligor is required under
the terms of its Receivable to maintain such insurance.
(xii) Title. It is the intention of the Seller that the transfer
-----
and assignment herein contemplated constitute a sale of the Receivables
from the Seller to the Trust and that the beneficial interest in and title
to the Receivables not be part of the Seller's estate in the event of the
filing of a bankruptcy petition by or against the Seller under any
bankruptcy law. No Receivable has been sold, transferred, assigned or
pledged by the Seller to any Person other than the Trustee. Immediately
prior to the transfer and
24
<PAGE>
assignment herein contemplated, the Seller had good and marketable title to
each Receivable free and clear of all Liens and rights of others and no
offsets, defenses or counterclaims against it had been asserted or
threatened and, immediately upon the transfer thereof, the Trustee, for the
benefit of the Certificateholders, shall have good and marketable title to
each Receivable, free and clear of all Liens and rights of others and no
offsets, defenses or counterclaims against it have been asserted or
threatened; and the transfer has been perfected under the UCC.
(xiii) Lawful Assignment. No Receivable has been originated in,
-----------------
or shall be subject to the laws of, any jurisdiction under which the sale,
transfer and assignment of such Receivable under the Agreement or pursuant
to transfers of the Certificates are unlawful, void or voidable.
(xiv) All Filings Made. All filings (including, without
----------------
limitation, UCC filings) necessary in any jurisdiction to give the Trustee
a first priority perfected ownership interest in the Receivables have been
made.
(xv) Chattel Paper. Each Receivable constitutes "chattel paper" as
-------------
defined in the UCC.
(xvi) Simple Interest Receivables. All of the Receivables are
---------------------------
Simple Interest Receivables.
(xvii) One Original. There is only one original executed copy of
------------
each Receivable.
(xviii) No Amendments. No Receivable has been amended such that
-------------
the amount of the Obligor's Scheduled Payments has been increased.
(xix) APR. The Annual Percentage Rate of each Receivable equals
---
or exceeds 5.0%.
(xx) Maturity. As of the Cutoff Date, each Receivable had a
--------
remaining term to maturity of not less than three months and not greater
than 57 months.
(xxi) Balance. Each Receivable had an original Principal Balance
-------
of not more than $50,000 and, as of the Cutoff Date, had a principal
balance of not less than $298.74 and not more than $47,421.00.
25
<PAGE>
(xxii) Delinquency. No Receivable was more than 29 days past due
-----------
as of the Cutoff Date and no Receivable has been extended by more than two
months.
(xxiii) Bankruptcy. No Obligor was the subject of a bankruptcy
----------
proceeding (according to the records of NMAC) as of the Cutoff Date.
(xxiv) Transfer. Each Receivable prohibits the sale or transfer
--------
of the Financed Vehicle without the consent of NMAC.
(xxv) New and Used Vehicles. Each Financed Vehicle was a new or
---------------------
used automobile or light truck at the time the related Obligor executed the
retail installment sale contract.
(xxvi) Origination. Each Receivable has an origina tion date on
-----------
or after September 12, 1992.
(xxvii) Maturity of Receivables. Each Receivable provides for
-----------------------
level monthly payments which provide interest at the APR and fully amortize
the amount financed over an original term no greater than 60 months.
(xxviii) Location of Receivable Files. The Receivable Files shall
----------------------------
be kept at one or more of the locations listed in Schedule B hereto.
(xxix) Rating Agencies. The rating agencies rating the Class A
---------------
Certificates are Moody's Investors Service, Inc. and Standard & Poor's
Ratings Services.
(xxx) Forced-Placed Insurance Premiums. No contract relating to
--------------------------------
any Receivable has had forced-placed insurance premiums added to the amount
financed.
(xxxi) No Fraud or Misrepresentation. To the best knowledge of
------------------------------
the Seller, no Receivable was originated by a Dealer and sold by such
Dealer to the Seller with any conduct constituting fraud or
misrepresentation on the part of such Dealer.
SECTION 3.02. REPURCHASE UPON BREACH. The Seller, the Servicer or
----------------------
the Trustee, as the case may be, shall inform the other parties to the Agreement
promptly, in writing, upon the discovery of any breach of the Seller's
representations and warranties pursuant to Section 3.01. Unless the breach
shall have been cured by the last day of the second Collection Period following
the discovery, the Seller shall be obligated (whether or not such breach was
26
<PAGE>
known to the Seller on the Closing Date (as defined in the Purchase Agreement)),
and the Trustee shall enforce the obligation of the Seller under this Agreement,
and, if necessary, the Seller shall enforce the obligation of NMAC under the
Purchase Agreement, to repurchase any Receivable materially and adversely
affected by the breach as of such last day (or, at the Seller's option, the last
day of the first Collection Period following such discovery). A breach of the
representation in Section 3.01(i)(d), (xx) or (xxi) shall be deemed to affect
materially and adversely the interest of Certificateholders. In consideration
of the purchase of the Receivables, the Seller shall remit the Repurchase Amount
in the manner specified in Section 5.05. For purposes of this Section 3.02, the
Repurchase Amount of a Receivable which is not consistent with the Seller's
warranty pursuant to Section 3.01(i)(d) shall include such additional amount as
shall be necessary to provide the full amount of interest as contemplated
therein to the date of repurchase. The sole remedy of the Trustee, the Trust,
or the Certificateholders with respect to a breach of the Seller's
representations and warranties pursuant to Section 3.01 shall be to require the
Seller to repurchase Receivables pursuant to this Section 3.02 or to enforce the
obligation of NMAC to the Seller to repurchase such Receivables pursuant to the
Purchase Agreement.
SECTION 3.03. CUSTODY OF RECEIVABLE FILES. To assure uniform quality
---------------------------
in servicing the Receivables and to reduce administrative costs, the Trustee,
upon the execution and delivery of the Agreement, hereby revocably appoints the
Servicer, and the Servicer hereby accepts such appointment, to act as the agent
of the Trustee as custodian of the following documents or instruments which are
hereby constructively delivered to the Trustee with respect to each Receivable:
(i) The original of the Receivable (or an image thereof that the
Servicer shall keep on file in accordance with its customary procedures)
fully executed by the Obligor;
(ii) The original credit application fully executed by the Obligor (or
a photocopy or other image thereof that the Servicer shall keep on file in
accordance with its customary procedures);
(iii) The original certificate of title or a photocopy or other image
thereof or such documents that the Servicer or NMAC shall keep on file, in
accordance with its customary procedures, evidencing the security interest
of NMAC in the Financed Vehicle; and
27
<PAGE>
(iv) Any and all other documents that NMAC or the Seller shall keep on
file, in accordance with its customary procedures, relating to a
Receivable, an Obligor or a Financed Vehicle.
SECTION 3.04. DUTIES OF SERVICER AS CUSTODIAN.
-------------------------------
(i) Safekeeping. The Servicer shall hold the Receivable Files on
-----------
behalf of the Trustee for the use and benefit of all present and future
Certificateholders, and maintain such accurate and complete accounts, records
and computer systems pertaining to each Receivable File as shall enable the
Trustee to comply with the Agreement. 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 automotive receivables that the Servicer services for
itself or others. In accordance with its customary practices 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 the
Agreement, and of the related accounts, records and computer systems, in such a
manner as shall enable the Trustee to verify the accuracy of the Servicer's
record keeping. The Servicer shall promptly report to the 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 Trustee of the Receivable Files.
(ii) Maintenance of and Access to Records. The Servicer shall
------------------------------------
maintain each Receivable File at one of its offices specified in Schedule B to
the Agreement, or at such other office as shall be specified to the Trustee by
written notice not later than 90 days after any change in location. The
Servicer shall make available to the Trustee or its duly authorized
representatives, attorneys or auditors a list of locations of the Receivable
Files and the related accounts, records and computer systems maintained by the
Servicer at such times as the Trustee shall instruct.
SECTION 3.05. INSTRUCTIONS; AUTHORITY TO ACT. All instructions from
------------------------------
the Trustee shall be in writing and signed by a Trustee Officer, and the
Servicer shall be deemed to have received proper instructions with respect to
the Receivable Files upon its receipt of such written instructions.
SECTION 3.06. CUSTODIAN'S INDEMNIFICATION. The Servicer, as
---------------------------
custodian, shall indemnify the Trustee for any
28
<PAGE>
and all liabilities, obligations, losses, compensatory damages, payments, costs
or expenses of any kind whatsoever that may be imposed on, incurred or asserted
against the Trustee as the result of any improper act or omission in any way
relating to the maintenance and custody by the Servicer, as custodian of the
Receivable Files; provided, however, that the Servicer shall not be liable for
-------- -------
any portion of any such amount resulting from the willful misfeasance, bad faith
or negligence of the Trustee.
SECTION 3.07. EFFECTIVE PERIOD AND TERMINATION. The Servicer's
--------------------------------
appointment as custodian pursuant to Section 3.03 shall become effective as of
the Cutoff Date and shall continue in full force and effect until terminated
pursuant to this Section 3.07. If Nissan Motor Acceptance Corporation shall
resign as Servicer in accordance with the provisions of the Agreement or if all
of the rights and obligations of the Servicer shall have been terminated under
Section 10.01, the appointment of the Servicer as custodian may be terminated by
the Trustee, or by the Holders of Class A Certificates evidencing not less than
25% of the Class A Certificate Balance, in the same manner as the Trustee or
such Holders may terminate the rights and obligations of the Servicer under
Section 10.01. As soon as practicable after any termination of such
appointment, the Servicer shall deliver the Receivable Files and the related
accounts and records maintained by the Servicer to the Trustee or the Trustee's
agent at such place or places as the Trustee may reasonably designate.
ARTICLE IV.
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.01. DUTIES OF SERVICER. The Servicer shall manage,
------------------
service, administer and make collections on the Receivables with reasonable
care, using that degree of skill and attention that the Servicer exercises with
respect to all comparable receivables that it services for itself or others.
Except with respect to Liquidated Receivables or Repurchased Receivables, the
Servicer shall not change the amount of or reschedule the due date of any
Scheduled Payment, change the Annual Percentage Rate of, or extend any
Receivable except as provided herein or change any material term of a
Receivable; provided, however, that if a default, breach, violation, delinquency
-------- -------
or event permitting acceleration under the terms of any Receivable shall have
occurred or, in the judgment of the Servicer, is imminent, the Servicer may (i)
extend such Receivable for credit related reasons that would be acceptable to
the Servicer with respect to comparable new or used automobile or light
29
<PAGE>
truck receivables that it services for itself, if (a) the final scheduled
payment date of such Receivable as extended would not be later than the
Collection Period preceding the Final Scheduled Distribution Date and (b) the
rescheduling or extension would not modify the terms of such Receivable in such
a manner as to constitute a cancellation of such Receivable and the creation of
a new receivable for federal income tax purposes; or (ii) reduce an Obligor's
monthly payment amount in the event of a prepayment resulting from refunds of
credit life and disability insurance premiums and service contracts and make
similar adjustments in payment terms to the extent required by law. The
Servicer's duties shall include collection and posting of all payments,
responding to inquiries of Obligors on such Receivables, investigating
delinquencies, sending remittance advices to Obligors, reporting tax information
to Obligors, accounting for collections, furnishing monthly and annual
statements to the Trustee with respect to distributions and making Advances
pursuant to Section 5.04. 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 authorized and empowered by the
Trustee to execute and deliver, on behalf of itself, the Trust, the
Certificateholders or the Trustee or any of them, any and all instruments of
satisfaction or cancellation, or partial or full release or discharge, and all
other comparable instruments, with respect to such Receivables or to the
Financed Vehicles securing such Receivables. If the Servicer shall commence a
legal proceeding to enforce a Receivable, the Trustee (in the case of a
Receivable other than a Repurchased Receivable) shall thereupon be deemed to
have automatically assigned, solely for the purpose of collection, such
Receivable to the Servicer. 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 such
Receivable, the Trustee shall, at the Servicer's expense and direction, take
steps to enforce the Receivable, including bringing suit in its name or the name
of the Certificateholders. The Trustee shall furnish the Servicer with any
powers of attorney and other documents reasonably necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties
hereunder. The Servicer, at its expense, shall obtain on behalf of the Trust
all licenses, if any, required by the laws of any jurisdiction to be held by the
Trust 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.
30
<PAGE>
SECTION 4.02. COLLECTION OF RECEIVABLE PAYMENTS. The Servicer shall
---------------------------------
make reasonable efforts to collect all payments called for under the terms and
provisions of such Receivables as and when the same shall become due and shall
follow such collection procedures as it follows with respect to all comparable
receivables that it services for itself or others. The Servicer may in its
discretion waive any late payment charge or any other fees that may be collected
in the ordinary course of servicing a Receivable.
SECTION 4.03. REALIZATION UPON RECEIVABLES. On behalf of the Trust,
----------------------------
the Servicer shall use reasonable efforts, consistent with its customary
servicing procedures, to repossess or otherwise convert the ownership of the
Financed Vehicle securing any Receivable as to which the Servicer shall have
determined eventual payment in full is unlikely. The Servicer shall follow such
customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of comparable receivables, which may include
reasonable efforts to realize upon any Dealer Recourse and selling the Financed
Vehicle at public or private sale. The foregoing shall be subject to the
provision that, in any case in which the 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 by an amount greater than the amount of such expenses.
SECTION 4.04. PHYSICAL DAMAGE INSURANCE. The Servicer, in accordance
-------------------------
with its customary servicing procedures, shall determine that each Obligor has
obtained or agreed to obtain physical damage insurance covering the Financed
Vehicle as of the execution of the Receivable.
SECTION 4.05. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES.
------------------------------------------------------
The Servicer shall, in accordance with its customary servicing procedures, take
such steps as are necessary to maintain perfection of the security interest
created by each Receivable in the related Financed Vehicle. The Trustee hereby
authorizes the Servicer to take such steps as are necessary to re-perfect such
security interest on behalf of the Trust in the event of the relocation of a
Financed Vehicle or for any other reason.
SECTION 4.06. COVENANTS OF SERVICER. (a) The Servicer shall not
---------------------
release the Financed Vehicle securing each Receivable from the security interest
granted by such Receivable in whole or in part except in the event of payment in
full by or on behalf of the Obligor thereunder or repossession, nor shall the
Servicer impair the rights of
31
<PAGE>
the Certificateholders in the Receivables, nor shall the Servicer change the
Annual Percentage Rate with respect to any Receivable.
(b) The Servicer shall not modify the number of payments under a
Receivable, nor increase the Amount Financed under a Receivable, nor extend or
forgive payments on a Receivable, except as specifically provided in Section
4.01. If the Servicer shall determine not to make an Advance related to
delinquency or non-payment of any Receivable pursuant to Section 5.04 because it
determines that such Advance would not be recoverable from subsequent
collections on such Receivable or from subsequent payments of the Servicing Fee,
such Receivable shall be designated by the Servicer to be a Liquidated
Receivable, provided that such Receivable otherwise meets the definition of a
Liquidated Receivable. In the event that at the end of the scheduled term of
any Receivable, the outstanding principal amount thereof is such that the final
payment to be made by the related Obligor is larger than the regularly scheduled
payment of principal and interest made by such Obligor, the Servicer may permit
such Obligor to pay such remaining principal amount in more than one payment of
principal and interest, provided that the last such payment shall be due on or
prior to the Collection Period preceding the Final Scheduled Distribution Date.
SECTION 4.07. REPURCHASE OF RECEIVABLES UPON BREACH. The Servicer or
-------------------------------------
the Trustee shall inform the other party promptly, in writing, upon the
discovery of any breach pursuant to the second sentence of Section 4.01 or
Section 4.02, 4.05 or 4.06. Unless the breach shall have been cured by the last
day of the second Collection Period following such discovery (or, at the
Servicer's election, the last day of the first Collection Period following such
discovery), the Servicer shall (whether or not such breach was known to the
Servicer on the Closing Date (as defined in the Purchase Agreement)) purchase
any Receivable materially and adversely affected by such breach (which shall
include any Receivable as to which a breach of Section 4.06 has occurred). In
consideration of the purchase of such Receivable, the Servicer shall remit the
Repurchase Amount in the manner specified in Section 5.05. For the purposes of
this Section 4.07, the Repurchase Amount shall consist in part of a release by
the Servicer of all rights of reimbursement with respect to Outstanding Advances
of the Receivable. The sole remedy of the Trustee, the Trust or the
Certificateholders with respect to a breach pursuant to the second sentence of
Section 4.01 or Section 4.02, 4.05 or 4.06 shall be to require the Servicer to
purchase Receivables pursuant to this Section 4.07.
32
<PAGE>
SECTION 4.08. SERVICER FEE. As additional servicing compensation,
------------
the Servicer shall be entitled to an amount equal to any interest earned on the
amounts deposited in the Collection Account and the Certificate Account or
earned on funds held by the Servicer pending deposit therein during such
Collection Period, plus all late fees, prepayment charges and other
administrative fees and expenses or similar charges allowed by applicable law
with respect to Receivables, collected (from whatever source) on the Receivables
during such Collection Period (the "Supplemental Servicing Fee"). The Servicer
also shall be entitled to the Servicing Fee, as provided herein.
SECTION 4.09. SERVICER'S CERTIFICATE. (a) On or before the tenth
----------------------
day of each month (or, if such tenth day is not a Business Day, then on the next
succeeding Business Day), the Servicer shall deliver to (i) the Trustee (with a
copy to each of the rating agencies requested to provide a rating on the Class A
Certificates or, if applicable, the Class B Certificates), (ii) for so long as
the Custody and Pledge Agreement is in existence, to the Custodian, and (iii) if
any Class B Certificate is held by a Person other than the Seller or any Person
controlling, controlled by or under common control with the Seller, to such
Class B Certificateholder, a Servicer's Certificate containing all information
necessary to make the distributions pursuant to Section 5.06 (including the
amount of the aggregate collections on the Receivables, the aggregate Advances
to be made by the Servicer, if any, and the aggregate Repurchase Amount of
Receivables to be purchased by the Seller or the Servicer) for the Collection
Period preceding the date of such Servicer's Certificate, all information
necessary for the Trustee to send statements to Certificateholders pursuant to
Section 5.09 and, for so long as there is a related Custody and Pledge Agreement
in existence, all information necessary for the Custodian to determine the
amounts necessary to be deposited in the Subordination Spread Accounts and the
amount that may be released to the Seller. Receivables purchased or to be
purchased by the Servicer or the Seller shall be identified by the Servicer by
the Seller's account number with respect to such Receivable (as specified in
Schedule A of the Agreement).
(b) On or before the seventh Business Day of each month, but in no
event later than the tenth calendar day of such month, the Servicer shall
deliver to the underwriters of the Class A Certificates and, if any Class B
Certificate is held by a Person other than the Seller or any Person controlling,
controlled by or under common control with the Seller, to such Class B
Certificateholder, the Class A Certificate Factor as of the close of business on
the Distribution Date occurring in such month.
33
<PAGE>
SECTION 4.10. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT.
----------------------------------------------------
(a) The Servicer shall deliver to the Trustee and to each of the rating
agencies requested by the Seller or an affiliate to provide a rating on the
Class A Certificates or the Class B Certificates which is then rating the Class
A Certificates or the Class B Certificates, as the case may be, on or before
June 30th of each year beginning June 30, 1998, an Officer's Certificate, dated
as of March 31 of such calendar year (or with respect to the initial
certificate, from the initial issuance of Certificates hereunder to March 31,
1998), stating that (i) a review of the activities of the Servicer during the
preceding 12-month (or shorter) period and of its performance under the
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
its obligations under the Agreement throughout such twelve-month (or shorter)
period, 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 Officer's Certificate may be obtained by any
Certificateholder by a request in writing to the Trustee addressed to the
Corporate Trust Office.
(b) The Servicer shall deliver to the Trustee and to each of the
rating agencies requested by the Seller or an affiliate to provide a rating on
the Class A Certificates or the Class B Certificates which is then rating the
Class A Certificates or the Class B Certificates, as the case may be, promptly
after having obtained knowledge thereof, but in no event later than five
Business Days thereafter, written notice in an Officer's Certificate of any
Event of Default or event which with the giving of notice or lapse of time, or
both, would become an Event of Default under Section 10.01. The Seller shall
deliver to the Trustee and to each of such rating agencies then rating such
Certificates, promptly after having obtained knowledge thereof, but in no event
later than five Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become an Event of Default under clause (ii) of Section 10.01 (a) or
of any lowering of the rating described in clause (ii) of the fifth sentence of
Section 5.02.
SECTION 4.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S
------------------------------------------------
REPORT. The Servicer shall cause a firm of independent certified public
accountants, who may also render other services to the Servicer or to the
Seller, to deliver to the Trustee and each of the rating agencies then rating
the Class A Certificates or the Class B Certificates on or before June 30 of
each year beginning June 30, 1998
34
<PAGE>
with respect to the prior twelve months ended on March 31 of such year (or with
respect to the initial reports, the initial issuance of Certificates hereunder
to March 31, 1998) the following reports: (a) a report that such firm has
audited the consolidated financial statements of the Servicer in accordance with
generally accepted auditing standards, that such firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants ("AICPA"), and expressing such firm's
opinion thereon; and (b) a report indicating that such firm has examined, in
accordance with standards established by the AICPA, management's assertion about
the Servicer's compliance with the minimum servicing standards identified in the
Mortgage Bankers Association of America's Uniform Single Attestation Program for
--------------------------------------
Mortgage Bankers (USAP) as such standards relate to automobile and light truck
- ----------------
loans serviced for others, and expressing such firm's opinion on such management
assertion (the "Annual USAP Report"). Upon the request of a Certificate Owner,
the Trustee shall promptly provide such Certificate Owner with a copy of such
Annual USAP Report. For all purposes of the Agreement, the Trustee may rely on
the representation of any Person that it is a Certificate Owner.
SECTION 4.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
-----------------------------------------------
REGARDING RECEIVABLES. The Servicer shall provide to the Certificateholders
- ---------------------
access to the Receivables Files in such cases where the Certificateholders shall
be required by applicable statutes or regulations to review such documentation.
Access shall be afforded without charge, but only upon reasonable request and
during the normal business hours at the respective offices of the Servicer.
Nothing in this Agreement 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 4.12.
SECTION 4.13. SERVICER EXPENSES. The Servicer shall be required to
-----------------
pay all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants and the Trustee,
taxes imposed on the Servicer, data processing costs and expenses incurred in
connection with distributions and reports to Certificateholders.
ARTICLE V.
DISTRIBUTIONS; SUBORDINATION SPREAD ACCOUNTS;
35
<PAGE>
STATEMENTS TO CERTIFICATEHOLDERS
SECTION 5.01. ACCOUNTS. The Servicer shall establish the Collection
--------
Account and the Certificate Account in the name of the Trustee for the benefit
of the Certificateholders. Each of the Collection Account and the Certificate
Account shall be a segregated trust account initially established with the
Trustee and maintained with the Trustee so long as (i) the deposits of the
Trustee have the Required Deposit Rating or (ii) the Collection Account or the
Certificate Account, as the case may be, is maintained in a segregated trust
account in the trust department of the Trustee; provided, however, that all
-------- -------
amounts held in the Collection Account and Certificate Account shall, to the
extent permitted by applicable laws, rules and regulations and as directed by
the Servicer, be invested by the Trustee in Eligible Investments and such
Eligible Investments shall mature not later than the Business Day preceding the
next Distribution Date, in such manner that such amounts invested shall be
available to make the required distributions on the Distribution Date. Servicer
hereby certifies that any such investment directed by it pursuant to this
Section is authorized by this Section. Should the short-term unsecured debt
obligations of the Trustee no longer have the Required Deposit Rating then,
unless the Collection Account and the Certificate Account are maintained in
segregated trust accounts in the trust department of the Trustee, the Servicer
shall, with the Trustee's assistance as necessary and within ten Business Days
of receipt of notice from the Trustee that the Trustee no longer has the
Required Deposit Rating, cause the Collection Account and the Certificate
Account (i) to be moved to segregated trust accounts in a bank or trust company,
the short-term unsecured debt obligations of which shall have the Required
Deposit Rating or (ii) to be moved to the trust department of the Trustee.
Earnings on investments of funds in the Collection Account and the Certificate
Account shall be paid to the Servicer.
SECTION 5.02. COLLECTIONS. The Servicer shall remit to the
-----------
Collection Account (i) all payments by or on behalf of the Obligors (excluding
payments on Repurchased Receivables) and (ii) all Liquidation Proceeds, not
later than the first Business Day after receipt. Prior to each Distribution
Date, for so long as the Custody and Pledge Agreement or any similar agreement
is in existence, the Servicer shall notify the Custodian that it will be
required to remit to the Collection Account from the (A) Class A Subordination
Spread Account the lesser of (i) the amount of the Class A Subordination Spread
Account and (ii) the amounts, if any, required to be distributed to Class A
Certificateholders from the Class A Subordination Spread
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Account pursuant to Sections 5.06(c)(ii) and (iii) hereof and (B) Class B
Subordination Spread Account the lesser of (i) the amount of the Class B
Subordination Spread Account and (ii) the amounts, if any, required to be
distributed to Class B Certificateholders, from the Class B Subordination Spread
Account pursuant to Sections 5.06(c)(iv) and (v) hereof and not otherwise
distributable to the Class A Subordination Spread Account. The Servicer shall
be entitled to withhold, however, or to be reimbursed from amounts otherwise
payable into or on deposit in the Collection Account, as the case may be,
amounts previously deposited in the Collection Account but later determined to
have resulted from mistaken deposits or postings. Nissan Motor Acceptance
Corporation, so long as it is acting as the Servicer, may make remittances of
collections on a less frequent basis than that specified in the first sentence
of this paragraph. It is understood that such less frequent remittances may be
made only on the specific terms and conditions set forth below in this Section
5.02 and only for so long as such terms and conditions are fulfilled.
Accordingly, notwithstanding the provisions of the first sentence of this
Section 5.02, the Servicer shall remit collections received during a Collection
Period to the Collection Account in immediately available funds on the Business
Day prior to the related Distribution Date but only for so long as (i) Nissan
Motor Acceptance Corporation is the Servicer, (ii) the rating of the Servicer's
short-term unsecured debt obligations is at least P-1 by Moody's Investors
Service, Inc. and the rating of the Servicer's (or, if the Servicer then has no
short-term rating from Standard & Poor's Ratings Services, Nissan Capital of
America, Inc.'s) short-term unsecured debt obligations is at least A-1 by
Standard & Poor's Ratings Services and (iii) no Event of Default shall have
occurred (each a "Monthly Remittance Condition"); except that the requirement in
clause (ii) above shall not apply if the Class A Certificates are not then
outstanding and the Class B Certificates do not have an investment grade rating.
Notwithstanding the foregoing, if a Monthly Remittance Condition is not
satisfied, the Servicer may utilize an alternative remittance schedule (which
may include the remittance schedule utilized by the Servicer before the Monthly
Remittance Condition became unsatisfied), if the Servicer provides to the
Trustee written confirmation from each rating agency which has an outstanding
rating on the Class A Certificates or the Class B Certificates and was requested
by the Seller or an affiliate to rate such Certificates that such alternative
remittance schedule will not result in the downgrading or withdrawal by such
rating agency of the ratings then assigned to such Certificates. The Trustee
shall not be deemed to have knowledge of any event or circumstance under clause
(iii) of the definition
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of Monthly Remittance Condition that would require daily remittance by the
Servicer to the Collection Account unless the Trustee has received notice of
such event or circumstance from the Seller or the Servicer in an Officer's
Certificate or from the Holders of Class A Certificates evidencing not less than
25% of the Class A Certificate Balance or a Trustee Officer in the Corporate
Trust Office with knowledge hereof or familiarity herewith has actual knowledge
of such event or circumstance. For purposes of this Article V the phrase
"payments by or on behalf of Obligors" shall mean payments made by Persons other
than the Servicer or by other means.
SECTION 5.03. APPLICATION OF COLLECTIONS. Collections with respect
--------------------------
to a Receivable made during a Collection Period shall be applied first to
interest accrued to date, second to principal until the Principal Balance is
brought current, third to reduce the unpaid late charges (if any) as provided in
such Receivable and finally to prepay principal on such Receivable.
SECTION 5.04. ADVANCES. (a) The Servicer shall make a payment with
--------
respect to each Receivable (other than a Liquidated Receivable) equal to the
excess if any, of (x) the product of the Principal Balance of such Receivable as
of the first day of the related Collection Period and its APR (calculated on the
basis of a 360-day year comprised of twelve 30-day months), over (y) the
interest actually received by the Servicer with respect to such Receivable from
the Obligor or from payments of the Repurchase Amount during such Collection
Period. The Servicer will be obligated to make an Advance in respect of a
Receivable only to the extent that the Servicer, in its sole discretion, shall
determine that the Advance (other than an Advance in respect of an interest
shortfall arising from the prepayment of a Receivable) shall be recoverable from
subsequent collections or recoveries on any Receivable. With respect to each
Receivable, the Advance shall increase Outstanding Advances. The Servicer shall
deposit all such Advances into the Collection Account in immediately available
funds no later than 12:00 noon, New York time, on the Business Day immediately
preceding the related Distribution Date. The Servicer may elect not to make any
Advance (other than an Advance in respect of an interest shortfall arising from
the prepayment of a Receivable) with respect to a Receivable to the extent that
the Servicer, in its sole discretion, shall determine that such Advance is not
recoverable from subsequent payments on such Receivable or from subsequent
payments of the Servicing Fee. To the extent that the amount set forth in
clause (y) above with respect to a Receivable is greater than the amount set
forth in clause (x) above with respect thereto, such amount shall be
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distributed to the Servicer pursuant to Section 5.06(a); provided, however,
-------- -------
that, notwithstanding anything else herein, the Servicer shall not be reimbursed
for any amounts representing an Advance, or any portion thereof, made in respect
of an interest shortfall arising from the prepayment of a Receivable.
(b) In the event that a Receivable becomes a Liquidated Receivable,
the amount of accrued and unpaid interest thereon (but not including interest
from the current Collection Period) shall, up to the amount of aggregate
Advances previously made in respect of such Receivable and to the extent not
previously reimbursed pursuant to the last sentence of (a) above, be withdrawn
from the Collection Account and paid to the Servicer in reimbursement of such
Advances.
SECTION 5.05. ADDITIONAL DEPOSITS. The Servicer shall deposit in the
-------------------
Collection Account the aggregate Advances pursuant to Section 5.04(a). The
Servicer and the Seller shall deposit in the Collection Account the aggregate
Repurchase Amount with respect to Repurchased Receivables and the Servicer shall
deposit therein all amounts to be paid under Sections 12.02, 3.02 and 4.07. All
such deposits with respect to a Collection Period shall be made, in immediately
available funds, by 5:00 p.m., New York time, on the Business Day immediately
preceding the Distribution Date related to such Collection Period.
SECTION 5.06. DISTRIBUTIONS. (a) On each Distribution Date, the
-------------
Trustee shall cause to be made the following transfers and distributions in the
amounts set forth in the Servicer's Certificate for such Distribution Date:
(i) From the Collection Account to the Certificate Account, in
immediately available funds, the entire amount then on deposit in the
Collection Account; provided, however, that in the event that the Servicer
-------- -------
is required to make deposits to the Collection Account on a daily basis
pursuant to Section 5.02, the amount of the funds transferred from the
Collection Account to the Certificate Account will include only those funds
that were deposited in the Collection Account for the Collection Period
related to such Distribution Date.
(ii) From the Certificate Account to the Servicer, in immediately
available funds, from amounts on deposit and allocable to interest, the
amount payable pursuant to Section 5.04 in repayment of Outstanding
Advances pursuant to Section 5.04.
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(b) The Servicer shall calculate on each Determination Date the Total
Available Amount, the Available Interest, the Available Principal, the Class A
Distributable Amount and the Class B Distributable Amount and, based on the
Total Available Amount and the other distributions to be made on such
Distribution Date, determine the amount distributable to Certificateholders of
each Class.
(c) The rights of the Class B Certificateholders to receive
distributions in respect of the Class B Certificates shall be and hereby are
subordinated to the rights of the Class A Certificateholders to receive
distributions in respect of the Class A Certificates in the event of delinquency
or defaults on the Receivables as provided below. On each Distribution Date,
the Trustee (based on the information contained in the Servicer's Certificate
delivered on the related Determination Date pursuant to Section 4.09) shall make
the following distributions (after payment of the Supplemental Servicing Fee, to
the extent collected) from the Certificate Account in the following order of
priority:
(i) first, to the Servicer, from Available Interest, the Servicing
Fee and all unpaid Servicing Fees from prior Collection Periods, if any;
provided, however, that, if acceptable to each rating agency then rating
-------- -------
the Certificates and without resulting in a reduction or withdrawal of the
rating on such Certificates, the Servicing Fee in respect of the current
Collection Period (together with any unpaid Servicing Fees from prior
Collection Periods) shall be paid at the beginning of such Collection
Period;
(ii) second, to the Class A Certificateholders, from the Class A
Percentage of Available Interest (as such Available Interest has been
reduced by Servicer Fee payments), an amount equal to the sum of the Class
A Interest Distributable Amount and any outstanding Class A Interest
Carryover Shortfall as of the close of business on the preceding
Distribution Date, and if the Class A Percentage of Available Interest is
insufficient, from the Class B Percentage of Available Interest, and, if
such amounts are insufficient, from monies on deposit in the Class A
Subordination Spread Account and, if such amounts are insufficient, from
the Class B Percentage of Available Principal;
(iii) third, to the Class A Certificateholders, from the Class A
Percentage of Available Principal, an amount equal to the sum of the Class
A Principal Distributable Amount and any outstanding Class A Principal
Carryover Shortfall (as such Available
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<PAGE>
Principal has been reduced as described in clause (ii) above) as of the
close of business on the preceding Distribution Date, and if the Class A
Percentage of Available Principal is insufficient, from the Class B
Percentage of Available Principal, and if such amounts are insufficient,
from monies on deposit in the Class A Subordination Spread Account and, if
such amounts are insufficient, from Available Interest (as such Available
Interest has been reduced as described in clauses (i) and (ii) above);
(iv) fourth, to the Class B Certificateholders, from Available
Interest (as such Available Interest has been reduced by the distributions
described above in clauses (i), (ii) and (iii) above), an amount equal to
the sum of the Class B Interest Distributable Amount and any outstanding
Class B Interest Carryover Shortfall as of the close of business on the
preceding Distribution Date, and, if such Available Interest is
insufficient, from monies on deposit in the Class B Subordination Spread
Account;
(v) fifth, to the Class B Certificateholders, from Available
Principal, an amount equal to the sum of the Class B Principal
Distributable Amount and any outstanding Class B Principal Carryover
Shortfall (as such Available Principal has been reduced as described in
clauses (ii) and (iii) above) as of the close of business on the preceding
Distribution Date; and if such Available Principal is insufficient, from
Available Interest (as such Available Interest has been reduced as
described in clauses (i), (ii), (iii) and (iv) above) and, if such amounts
are insufficient, from monies on deposit in the Class B Subordination
Spread Account; and
(vi) sixth, to the Seller, any Excess Amounts, except to the extent
required to be deposited in the Subordination Spread Accounts pursuant to
the Custody and Pledge Agreement;
provided, however, that amounts otherwise distributable to the holders of Class
- -------- -------
B Certificates pursuant to clauses (iv) and (v) above shall be deposited by the
Trustee on behalf of such holders in the Class A Subordination Spread Account to
the extent of any deficiency in the Class A Specified Subordination Spread
Account Balance. For purposes of all of the provisions of this Agreement, all
such amounts deposited in the Class A Subordination Spread Account shall be
deemed to have been distributed pro rata to the holders of Class B Certificates
and contributed by such holders to
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the Class A Subordination Spread Account pursuant to the Custody and Pledge
Agreement.
Notwithstanding anything herein to the contrary, no amount shall be
paid to the Certificateholders in respect of any Yield Supplement Amount with
respect to a Receivable, except to the extent of amounts withdrawn from the
Yield Supplement Reserve Account and deposited in the Certificate Account or
paid to the Certificate Account by the Seller pursuant to the Yield Supplement
Agreement; provided, however, that, if an insufficiency of funds in the Yield
-------- -------
Supplement Reserve Account would result in a shortfall of interest, the amount
of such shortfall shall be withdrawn from the Class A Subordination Spread
Account and deposited in the Certificate Account prior to such Distribution
Date.
(d) For so long as the Custody and Pledge Agreement or any similar
agreement is in existence, to the extent that the Custodian is instructed to
withdraw any amounts from the Subordination Spread Accounts pursuant to Section
5.06(c), recoveries from subsequent payments on a Receivable of amounts with
respect to which such withdrawal has been made shall be delivered to the
Custodian for deposit in the Class A Subordination Spread Account or the Class B
Subordination Spread Account, as the case may be.
(e) Subject to Section 12.01 respecting the final payment upon
retirement of each Certificate, the Servicer shall on each Distribution Date
instruct the Trustee to distribute to each Certificateholder of any Class of
record on the preceding Record Date either by wire transfer, in immediately
available funds to the account of such holder at a bank or other entity having
appropriate facilities therefor, if such Certificateholder is the Seller or a
Clearing Agency and shall have provided to the Trustee appropriate instructions
prior to such Distribution Date, or, if not, by check mailed to such
Certificateholder (such check to be mailed as soon as reasonably practicable on
or after such Distribution Date) at the address of such holder appearing in the
Certificate Register, the amounts to be distributed to such Certificateholder
pursuant to such holder's Certificates.
SECTION 5.07. [RESERVED]
SECTION 5.08. NET DEPOSITS. For so long as each Monthly Remittance
------------
Condition is satisfied, Nissan Motor Acceptance Corporation (in whatever
capacity) may make the remittances pursuant to Sections 5.02 and 5.05 above, net
of amounts to be distributed to Nissan Motor Acceptance Corporation (in whatever
capacity) pursuant to Section 5.06(c) or Section 5.06(a)(ii). In addition, the
Seller
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agrees that such remittances may be made net of amounts to be distributed to the
Seller hereunder and under the Custody and Pledge Agreement, if any. Accounts
between the Seller and Nissan Motor Acceptance Corporation will be adjusted
accordingly. Nonetheless, the Servicer shall account for all of the above
described remittances and distributions (except for the Supplemental Servicing
Fee to the extent that the Servicer is entitled to retain such amounts) in the
Servicer's Certificate as if the amounts were deposited and/or transferred
separately.
SECTION 5.09. STATEMENTS TO CERTIFICATEHOLDERS.
--------------------------------
(a) On each Distribution Date, the Trustee shall include with each
distribution to each Class A Certificateholder, and, if the Class B
Certificateholder is not the Seller or any Person controlling, controlled by or
under the common control with the Seller, to the Class B Certificateholder, a
statement (which statement shall also be provided to each rating agency then
rating such Certificates) based on information in the Servicer's Certificate
furnished pursuant to Section 4.09, setting forth for the Collection Period
relating to such Distribution Date the following information:
(i) the amount of such distribution allocable to principal;
(ii) the amount of such distribution allocable to interest;
(iii) the amount of such distribution allocable to the Yield
Supplement Amount;
(iv) the amount on deposit in the Yield Supplement Reserve
Account;
(v) the Pool Balance as of the close of business on the last
day of the related Collection Period;
(vi) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period, the Class A Certificateholder's
or the Class B Certificateholder's Class A Percentage or Class B
Percentage, as the case may be, of the Servicing Fees, the amount of any
unpaid Servicing Fees and the change in such amount from that of the prior
Distribution Date and any additional servicing compensation paid to the
Servicer with respect to the related Collection Period, if any;
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(vii) the amount of the Class A Interest Carryover Shortfall
and the Class A Principal Carryover Shortfall (and the Class B Interest
Carryover Shortfall and the Class B Principal Carryover Shortfall, as the
case may be), if any, on such Distribution Date and the change in such
amounts from the preceding Distribution Date;
(viii) the Class A Certificate Balance, the Class A
Certificate Factor, the Class A Pool Factor and Class B Certificate Balance
as of such Distribution Date;
(ix) the amounts otherwise distributable to the Class B
Certificateholders that are distributed to Class A Certificateholders
and/or deposited in the Class A Subordination Spread Account on such
Distribution Date;
(x) f or so long as there is a related Custody and Pledge
Agreement in existence, the balance of the Class A Subordination Spread
Account or the Class B Subordination Spread Account, as the case may be, on
such Distribution Date, after giving effect to distributions made on such
Distribution Date, and the change in such balance from the preceding
Distribution Date; and
(xi) the amount of Advances made in respect of the related
Collection Period and the amount of the unreimbursed Advances on such
Distribution Date.
(b) Each amount set forth pursuant to subclauses (i), (ii), (vi) and
(vii) above shall be expressed in the aggregate and as a dollar amount per
$1,000 of original principal balance of a Class A Certificate or Class B
Certificate, as the case may be.
(c) Copies of such statements may be obtained by Certificate Owners
from the Trustee by a request in writing. The Trustee shall provide such copies
promptly after such requests.
(d) Within the prescribed period of time for tax reporting purposes
after the end of each calendar year during the term of the Agreement, but not
later than the latest date permitted by law, the Trustee shall mail to each
Person who at any time during such calendar year shall have been a holder of a
Class A Certificate or a holder of a Class B Certificate (other than the Seller
or any Person controlling, controlled by or under common control with the
Seller) a statement containing the sum of the amounts or the amount as of the
end of such calendar year, as the case may be, set forth in clauses (i), (ii),
(iii), (v), (vi) and
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(vii) and such other information, if any, as the Servicer determines is
necessary to ascertain the Certificateholder's share of the gross income and
deductions of the Trust (exclusive of the Supplemental Servicing Fee) or is
otherwise necessary under applicable law for the preparation of the federal
income tax returns by Certificateholders, for such calendar year or, in the
event such Person shall have been a holder of a Certificate during a portion of
such calendar year, for the applicable portion of such year, for the purposes of
such Certificateholder's preparation of federal income tax returns.
SECTION 5.10. NO PETITION. The Trustee covenants and agrees that,
-----------
prior to the date which is one year and one day after the date upon which the
Certificates are paid in full, the Trustee will not institute against, or join
any other person in instituting against, the Seller any bankruptcy,
reorganization arrangement, insolvency or liquidation proceeding or other
proceedings under any Federal or state bankruptcy or similar law. This Section
5.10 shall survive the termination of the Agreement.
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.01. YIELD SUPPLEMENT RESERVE ACCOUNT. Pursuant to the
--------------------------------
Yield Supplement Agreement, the Seller shall establish and maintain with the
Class A Agent for the benefit of the Class A Certificateholders a separate trust
account in the name of the Class A Agent (the "Yield Supplement Reserve
Account"), or such other account as may be acceptable to the rating agencies
then rating the Class A Certificates. The Yield Supplement Reserve Account (or
such other account acceptable to the rating agencies then rating the Class A
Certificates) shall not be part of the Trust. Subject to the limitations set
forth in the Yield Supplement Agreement, the Seller hereby conveys and transfers
to the Trustee (and its successors and assigns), as Class A Agent, the Yield
Supplement Reserve Account, all funds on deposit therein and all proceeds
thereof.
Section 6.02. CUSTODY AND PLEDGE AGREEMENT. The Seller and the
----------------------------
Trustee, as Custodian, shall enter into the Custody and Pledge Agreement or
otherwise provide such partial credit support, if any, as may be necessary for
each rating agency requested to provide a rating on the Class A Certificates
(and/or, if applicable, the Class B Certificates) to provide that rating
necessary to satisfy the related condition precedent to the underwriters'
obligation to purchase the Class A Certificates.
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SECTION 6.03. LIMITATIONS ON THE TRUST. The Trust shall not (a)
------------------------
incur any indebtedness or obligations or (b) engage in any business activity
other than acquiring and holding the assets of the Trust, issuing the
Certificates and making payments thereon, each in accordance with the terms of
the Agreement.
ARTICLE VII.
THE CERTIFICATES
SECTION 7.01. THE CERTIFICATES. The Class A Certificates shall be
----------------
issued in denominations of $1,000; the Class B Certificates shall be issued in
denominations of $100,000 or in any amount in excess thereof, in each case in
fully registered form and integral multiples thereof; provided, however, that
-------- -------
one Class A Certificate and one Class B Certificate may be issued in a
denomination equal to the residual amount (the "Residual Certificate"). The
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of a Trustee Officer of the Trustee. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of the Trust,
shall be valid and binding obligations of the Trust, notwithstanding that such
individuals or any of them shall have ceased to be so authorized prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of such Certificates.
SECTION 7.02. AUTHENTICATION OF CERTIFICATES. The Trustee shall
------------------------------
cause the Certificates to be executed on behalf of the Trust, authenticated and
delivered to or upon the written order of the Seller, signed by its chairman of
the board, its president or any vice president, without further corporate action
by the Seller, in authorized denominations, pursuant to the Agreement. No
Certificate shall entitle its holder to any benefit under the Agreement, or
shall be valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication substantially in the form set forth in Exhibit A
or Exhibit B hereto executed by the Trustee by manual signature; such
authentication shall constitute conclusive evidence that such Certificate shall
have been duly authenticated and delivered hereunder. All Certificates shall be
dated the date of their authentication.
SECTION 7.03. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
-----------------------------------------------------
(a) The Certificate Registrar shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 7.07, a Certificate Register
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in which, subject to such reasonable regulations as it may prescribe, the
Trustee shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Trustee shall be the initial
Certificate Registrar.
(b) The Class B Certificates shall initially be retained by the
Seller. No transfer of a Class B Certificate shall be made unless
(i) the registration requirements of the Securities Act of 1933, as amended, and
any applicable State securities laws are complied with, (ii) such transfer is
exempt from the registration requirements under said Act and laws or (iii) the
prospective transferee of the Class B Certificate certifies in writing to the
Seller and the Trustee, to the Seller's satisfaction, that such transferee is a
Qualified Institutional Buyer (as defined in Rule 144A under said Act);
provided, however, that no such transfer pursuant to clause (i), (ii) or (iii)
- -------- -------
shall be made (x) if such transfer would result in a downgrading or withdrawal
of the rating of any rating agency then rating the Class A Certificates or (y)
if such transfer would cause the Trust or any arrangements identified in the
Custody and Pledge Agreement to be characterized as an association taxable as a
corporation or otherwise adversely affect the federal, state or local income tax
status of the Trust and (z) unless the Custody and Pledge Agreement is amended,
in form and substance satisfactory to the Trustee and the Seller, in order to
reflect such transfer and cause such transferee to be bound by the obligations
thereunder. In the event that a transfer is to be made in reliance upon an
exemption from said Act or laws to a Person other than a Qualified Institutional
Buyer, the Class B Certificateholder desiring to effect such transfer and such
Certificateholder's prospective transferee must each certify in writing to the
Seller and the Trustee the facts surrounding such transfer and, at the request
of the Seller, provide both the Seller and the Trustee with an Opinion of
Counsel in form and substance satisfactory to the Seller that such transfer may
be made pursuant to an exemption from said Act or laws and such transfer will
not result in the Trust or any arrangements identified in the Custody and Pledge
Agreement from being characterized as an association taxable as a corporation or
otherwise adversely affect the federal, state or local income tax status of the
Trust, which Opinion of Counsel shall not be an expense of the Seller or the
Trustee. Neither the Seller nor the Trustee is under an obligation to register
the Class B Certificates under said Act or any other securities law.
(c) Upon surrender for registration of transfer of any Certificate at
the Corporate Trust Office, the
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Trustee shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates in authorized
denominations of a like aggregate amount dated the date of authentication by the
Trustee. At the option of a Holder, Certificates may be exchanged for other
Certificates of authorized denominations of a like aggregate amount upon
surrender of the Certificates to be exchanged at the Corporate Trust Office.
(d) Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Trustee and the Certificate Registrar duly executed by
the Holder or his attorney duly authorized in writing. Each Certificate
surrendered for registration of transfer or exchange shall be cancelled and
subsequently disposed of by the Trustee.
(e) No service charge shall be made for any registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
SECTION 7.04. MUTILATED, DESTROYED, LOST, OR STOLEN CERTIFICATES. If
--------------------------------------------------
(a) any mutilated Certificate shall be surrendered to the Certificate Registrar,
or if the Certificate Registrar shall receive evidence to its satisfaction of
the destruction, loss or theft of any Certificate and (b) there shall be
delivered to the Certificate Registrar and the Trustee such security or
indemnity as may be required by them to save each of them harmless, then in the
absence of notice that such Certificate shall have been acquired by a bona fide
purchaser, the Trustee on behalf of the Trust shall execute and the Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and denomination. In connection with the issuance of any new Certificate
under this Section 7.04, the Trustee and the Certificate Registrar may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection therewith. Any duplicate Certificate issued
pursuant to this Section 7.04 shall constitute conclusive evidence of ownership
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
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SECTION 7.05. PERSONS DEEMED OWNERS. Prior to due presentation of a
---------------------
certificate for registration of transfer, the Trustee or the Certificate
Registrar shall treat the Person in whose name any Certificate shall be
registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 5.06 and for all other purposes whatsoever,
and neither the Trustee nor the Certificate Registrar shall be bound by any
notice to the contrary.
SECTION 7.06. ACCESS TO LIST OF CERTIFICATE HOLDERS' NAMES AND
------------------------------------------------
ADDRESSES. The Trustee shall furnish or cause to be furnished to the Servicer,
- ---------
within 15 days after receipt by the Trustee of a request therefor from the
Servicer in writing, a list, in such form as the Servicer may reasonably
require, of the names and addresses of all Certificateholders as of the most
recent Record Date. If three or more Certificateholders, or one or more Holders
of Class A Certificates aggregating not less than 25% of the Class A Certificate
Balance, apply in writing to the Trustee, and such application states that the
applicants desire to communicate with other Certificateholders of such Class
with respect to their rights under the Agreement or under the Certificates and
such application shall be accompanied by a copy of the communication that such
applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, request from the Clearing Agency and
make available to such Certificateholders access during normal business hours to
the current list of Certificateholders. Each Holder, by receiving and holding a
Certificate, shall be deemed to have agreed to hold neither the Servicer nor the
Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 7.07. MAINTENANCE OF OFFICE OR AGENCY. The Trustee shall
-------------------------------
maintain in the Borough of Manhattan, The City of New York, an office or offices
or agency or agencies where Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Trustee in
respect of the Certificates and the Agreement may be served. The Trustee
initially designates the Corporate Trust Office as its office for such purposes.
The Trustee shall give prompt written notice to the Servicer and to
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
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SECTION 7.08. BOOK-ENTRY CERTIFICATES. The Class A Certificates,
-----------------------
upon original issuance (except for the Residual Certificate), will be issued in
the form of typewritten Certificates representing the Book-Entry Certificates,
to be delivered to The Depository Trust Company, the initial Clearing Agency,
by, or on behalf of, the Seller. The Class A Certificates delivered to The
Depository Trust Company shall initially be registered on the Certificate
Register in the name of CEDE & Co., the nominee of the initial Clearing Agency,
and no Certificate Owner will receive a definitive certificate representing such
Certificate Owner's interest in the Class A Certificates, except as provided in
Section 7.10. Unless and until definitive, fully registered Certificates (the
"Definitive Certificates") have been issued to Certificate Owners pursuant to
- ------------------------
Section 7.10:
(i) the provisions of this Section 7.08 shall be in full force and
effect;
(ii) the Seller, the Servicer, the Certificate Registrar and the
Trustee may deal with the Clearing Agency for all purposes (including the
making of distributions on the Class A Certificates) as the authorized
representative of the Certificate Owners;
(iii) to the extent that the provisions of this Section 7.08 conflict
with any other provisions of this Agreement, the provisions of this Section
7.08 shall control;
(iv) the rights of Certificate Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Certificate Owners and the Clearing Agency and/or
the Clearing Agency Participants. Pursuant to the Depository Agreement,
unless and until Definitive Certificates are issued pursuant to Section
7.10, the initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit distributions of
principal and interest on the Class A Certificates to such Clearing Agency
Participants; and
(v) whenever this Agreement requires or permits actions to be taken
based upon instructions or directions of Holders of Class A Certificates
evidencing a specified percentage of the Class A Certificate Balance, the
Clearing Agency shall be deemed to represent such percentage only to the
extent that it has received instructions to such effect from Certificate
Owners and/or Clearing Agency Participants
50
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owning or representing, respectively, such required percentage of the
beneficial interest in Class A Certificates and has delivered such
instructions to the Trustee. The Trustee shall have no obligation to
ascertain whether the Clearing Agency has in fact received any such
instructions.
SECTION 7.09. NOTICES TO CLEARING AGENCY. Whenever notice or other
--------------------------
communication to the Class A Certificateholders is required under this
Agreement, other than to the Holder of the Residual Certificate, unless and
until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 7.10, the Trustee and the Servicer shall give all such
notices and communications specified herein to be given to Holders of the Class
A Certificates to the Clearing Agency.
SECTION 7.10. DEFINITIVE CERTIFICATES. If (i)(A) the Seller advises
-----------------------
the Trustee in writing that the Clearing Agency is no longer willing or able
properly to discharge its responsibilities under the Depository Agreement, and
(B) the Trustee or the Seller is unable to locate a qualified successor, (ii)
the Seller, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency, or (iii) after the
occurrence of an Event of Default, Certificate Owners representing beneficial
interests aggregating not less than 51% of the Class A Certificate Balance
advise the Trustee and the Clearing Agency through the Clearing Agency
Participants in writing that the continuation of a book-entry system through the
Clearing Agency is no longer in the best interests of the Certificate Owners,
then the Trustee shall notify the Clearing Agency and request that the Clearing
Agency notify all Certificate Owners of the occurrence of any such event and of
the availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Trustee of the Class A Certificates by the Clearing
Agency, accompanied by registration instructions from the Clearing Agency for
registration, the Trustee shall issue the Definitive Certificates and deliver
such Definitive Certificates in accordance with the instructions of the Clearing
Agency. Neither the Seller, the Certificate Registrar nor the Trustee shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance
of Definitive Certificates, the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder. The Trustee shall not
be liable if the Trustee or the Seller is unable to locate a qualified successor
Clearing Agency.
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ARTICLE VIII.
THE SELLER
SECTION 8.01. REPRESENTATIONS OF SELLER. The Seller makes the
-------------------------
following representations on which the Trustee relies in accepting the
Receivables in trust and executing and authenticating the Certificates. The
representations speak as of the execution and delivery of the Agreement and
shall survive the sale of the Receivables to the Trustee:
(i) 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 are currently
owned and such business is presently conducted, and had at all relevant
times, and has, power, authority and legal right to acquire and own the
Receivables.
(ii) 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.
(iii) Power and Authority. The Seller has the power and authority to
-------------------
execute and deliver the Agreement and to carry out its terms. The Seller
has full power and authority to sell and assign the property to be sold and
assigned to and deposited with the Trustee as part of the Trust and has
duly authorized such sale and assignment to the Trustee by all necessary
corporate action; and the execution, delivery and performance of the
Agreement has been duly authorized by the Seller by all necessary corporate
action.
(iv) Valid Sale; Binding Obligations. The Agreement evidences a valid
-------------------------------
sale, transfer and assignment of the Receivables, enforceable against
creditors of and purchasers from the Seller (other than a good faith
purchaser for value in the ordinary course of business who takes actual
possession of one or more Receivables); and the Agreement is a legal, valid
and binding obligation of the Seller enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy or similar
laws.
52
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(v) No Violation. The consummation of the transactions contemplated
------------
by the Agreement and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under, the
articles of incorporation or by-laws of the Seller, or any indenture,
agreement or other instrument to which the Seller is a party or by which it
shall be bound; nor result in the creation or imposition of any Lien upon
any of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than the Agreement); nor violate any
law or, to the best of the Seller's knowledge, any order, rule or
regulation applicable to the Seller of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties.
(vi) No Proceedings. There are no proceedings or investigations
--------------
pending, or (to the best of the Seller's knowledge) threatened, before any
court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties: A)
asserting the invalidity of the Agreement or the Certificates; B) seeking
to prevent the issuance of the Certificates or the consummation of any of
the transactions contemplated by the Agreement; C) 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, the Agreement or the Certificates; or D) relating to the
Seller and which might adversely affect the federal or any state income tax
attributes of the Certificates.
SECTION 8.02. 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 the Agreement.
(i) The Seller shall indemnify, defend and hold harmless the Trustee
and the Trust from and against any taxes that may at any time be asserted
against the Trustee or the Trust with respect to, and as of the date of,
the sale of the Receivables to the Trust or the issuance and original sale
of the Certificates, including any sales, gross receipts, general
corporation, tangible personal property, privilege or license taxes (but,
in the case of the Trust, not including any taxes asserted with respect to
ownership of the Receivables or federal or other income taxes
53
<PAGE>
arising out of the transactions contemplated by the Agreement) and costs
and expenses in defending against the same.
(ii) The Seller shall indemnify, defend and hold harmless the Trustee
from and against any loss, liability or expense incurred by reason of (a)
the Seller's willful misfeasance, bad faith or negligence (other than
errors in judgment) in the performance of its duties under the Agreement,
or by reason of reckless disregard of its obligations and duties under the
Agreement and (b) the Seller's violation of federal or state securities
laws in connection with the registration or the sale of the Certificates.
Indemnification under this Section 8.02 shall survive the termination of the
Agreement and shall include reasonable fees and expenses of counsel and expenses
of litigation. If the Seller shall have made any indemnity payment to the
Trustee pursuant to this Section 8.02 and the Trustee thereafter shall collect
any of such amounts from others, the Trustee shall repay such amounts to the
Seller, without interest (except to the extent the recipient collects interest
from others).
SECTION 8.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
------------------------------------------------
OBLIGATIONS OF, SELLER. Subject to Section 8.06, any Person (i) into which the
- ----------------------
Seller may be merged or consolidated, (ii) resulting from any merger, conversion
or consolidation to which the Seller shall be a party, (iii) succeeding to the
business of the Seller or (iv) that is a corporation more than 50% of the voting
stock of which is owned directly or indirectly by Nissan Motor Co., Ltd., which
Person in any of the foregoing cases executes an agreement of assumption to
perform every obligation of the Seller under this Agreement, will be the
successor to the Seller under this Agreement without the execution or filing of
any document or any further act on the part of any of the parties to this
Agreement; provided, however, that (x) immediately after giving effect to such
-------- -------
transaction, no representation or warranty made pursuant to Section 3.01 shall
have been breached and no Event of Default, and no event that, after notice or
lapse of time, or both, would become an Event of Default, shall have happened
and be continuing, (y) the Seller shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement or assumption comply with
this Section 8.03 and that all conditions precedent, if any, provided for in the
Agreement relating to such transaction have been complied with and (z) the
Seller shall have delivered to the Trustee an Opinion of Counsel either
54
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(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 fully to preserve and protect the interest of the Trustee 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 preserve and
protect such interest. The Seller shall provide notice of any merger,
consolidation or succession pursuant to this Section 8.03 to each rating agency
then providing a rating for the Certificates. Notwithstanding anything herein
to the contrary, the execution of the foregoing agreement of assumption and
compliance with clauses (x), (y) and (z) above shall be conditions to the
consummation of the transactions referred to in clauses (i), (ii), (iii) or (iv)
above.
SECTION 8.04. LIMITATION ON LIABILITY OF SELLER AND OTHERS. The
--------------------------------------------
Seller and any director or officer or employee or agent of the Seller may rely
in good faith on the advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Seller shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be incidental to its
obligations under the Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 8.05. SELLER MAY OWN CERTIFICATES. The Seller and any Person
---------------------------
controlling, controlled by or under common control with the Seller may in its
individual or any other capacity become the owner or pledgee of Certificates
with the same rights as it would have if it were not the Seller or an affiliate
thereof, except as otherwise provided in the definition of "Certificateholder"
specified in Section 2.01 and except as otherwise specifically provided herein.
Certificates so owned by or pledged to the Seller or such controlling or
commonly controlled Person shall have an equal and proportionate benefit under
the provisions of the Agreement, without preference, priority or distinction as
among all of the Certificates, except as otherwise expressly provided in the
Agreement.
SECTION 8.06. ADDITIONAL COVENANTS. (a) The Seller agrees with the
--------------------
Certificate Owners and each nationally recognized rating agency which has been
requested by the Seller or an affiliate to rate the Certificates issued pursuant
to this Agreement and which is then rating such Certificates that it shall not
issue any additional securities that could reasonably be expected to affect
materially and adversely the rating of such Certificates issued pursuant to this
Agreement unless it shall have first
55
<PAGE>
obtained the written consent of each such rating agency to the effect that such
issuance will not adversely affect such rating. The Seller shall provide a copy
of any such consent to the Trustee.
(b) The Seller shall not do any of the following (without the prior
written consent of each nationally recognized rating agency which has been
requested by the Seller or an affiliate to rate the Certificates and which is
then rating such Certificates (which consent shall be to the effect that the
acts set forth below shall not affect adversely such rating) and, upon the
Seller's receipt of such written consent from each such rating agency, the
Trustee shall, without any exercise of its own discretion, also provide its
written consent to the Seller):
(i) engage in any business or activity other than those set
forth in Article Three of the Seller's Certificate of Incorporation,
as amended;
(ii) incur any indebtedness, or assume or guaranty any
indebtedness of any other entity, other than (A) any indebtedness
incurred in con nection with any Certificates or Notes (as defined in
the Seller's Certificate of Incorporation), provided that any such
future indebtedness incurred in connection with any Certificates or
Notes must be rated at least with the same ratings given the
outstanding Certificates or Notes by each nationally recognized rating
agency that has rated the outstanding Certificates or Notes or, prior
to the issuing of such future indebtedness incurred in connection with
any Certificates or Notes, the Seller shall have received confirmation
from each nationally recognized rating agency that has rated the
outstanding Certificates or Notes that the ratings of the outstanding
Certificates or Notes will not be adversely affected by the issuing of
such future indebtedness and (B) any indebtedness to Nissan Motor
Acceptance Corporation or any affiliate thereof incurred in connection
with the acquisition of receivables, which indebtedness shall be
subordinated to all other obligations of the Seller and shall be
nonrecourse debt of the Seller, except with respect to proceeds of the
receivables in excess of such proceeds necessary to pay all
obligations in relation to the Certificates or the Notes ("Excess
Proceeds"), and shall not constitute a claim against the Seller to the
extent that Excess Proceeds are insufficient to pay such indebtedness;
56
<PAGE>
(iii) dissolve or liquidate, in whole or in part; consolidate or
merge with or into any other entity or convey or transfer its
properties and assets substantially as an entirety to any entity,
unless:
(A) the entity (if other than the Seller) formed or
surviving the consolidation or merger or which acquires the properties
and assets of the Seller is organized and existing under the laws of
the State of Delaware, expressly assumes the due and punctual payment
of, and all obliga tions of the Seller, including those obligations of
the Seller under this Agreement, and has a Certificate of
Incorporation containing provisions identical to the provisions of
Article Three, Article Four and Article Fifteen of the Seller's
Certificate of Incorporation, as amended; and
(B) immediately after giving effect to the transaction, no
default or event of default has occurred and is continuing under any
indebt edness of the Seller or any agreements relating to such
indebtedness; and
(C) the entity (if other than the Seller) formed or
surviving the consolidation or merger or which acquires the properties
and assets of the Seller agrees that (i) it shall maintain its funds
or assets as identifiable and not commingle its funds or assets with
those of any direct or ultimate parent of such entity and pay from its
assets all obligations and indebtedness of any kind incurred by it,
(ii) it shall maintain bank accounts, corporate records and books of
account separate from those of any direct or ultimate parent of such
entity and (iii) the business affairs of such entity will be managed
by or under the direction of its Board of Directors and it will
conduct its business from an office separate from any direct or
ultimate parent of such entity; and
(D) each nationally recognized rating agency which has
rated any issue of certificates pursuant to any agreement or any
series or class of certificates shall confirm in writing that the
rating of such certificates shall not be adversely affected by such
consolidation or merger; or
(iv) Without the affirmative vote of 100% of the members of the
Board of Directors of the
57
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Seller, the Seller shall not institute proceedings to be adjudicated
bankrupt or insolvent, or consent to the institution of bankruptcy or
insolvency proceedings against it, or file a petition seeking or
consent to reorganization or relief under any applicable federal or
state law relating to bankruptcy, or consent to the appoint ment of a
receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the corporation or a substantial part of its
property, or make any assignment for the benefit of credi tors, or
admit in writing its inability to pay its debts generally as they
become due, or take cor porate action in furtherance of any such
action.
ARTICLE IX.
THE SERVICER
SECTION 9.01. REPRESENTATIONS OF SERVICER. The Servicer makes the
---------------------------
following representations on which the Trustee relies in accepting the
Receivables in trust and executing and authenticating the Certificates. The
representations speak as of the execution and delivery of the Agreement and
shall survive the sale of the Receivables to the Trust:
(i) Organization and Good Standing. The Servicer is 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 are currently
owned and such business is presently conducted, and had at all relevant
times, and has, power, authority and legal right to acquire, own, sell and
service the Receivables and to hold the Receivable Files as custodian on
behalf of the Trustee;
(ii) Due Qualification. The Servicer shall be duly qualified to do
-----------------
business as a foreign corporation in good standing, and shall have obtained
all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business relating to
the servicing of the Receivables as required by the Agreement shall require
such qualifications;
(iii) Power and Authority. The Servicer has the power and authority to
-------------------
execute and deliver the Agreement and to carry out its terms; and the
execution, delivery and performance of the Agreement
58
<PAGE>
have been duly authorized by the Servicer by all necessary corporate
action;
(iv) Binding Obligation. The Agreement constitutes a legal, valid and
------------------
binding obligation of the Servicer enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy or similar
laws;
(v) No Violation. The consummation of the transactions contemplated
------------
by the Agreement and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under, the
articles of incorporation or by-laws of the Servicer, or any indenture,
agreement or other instrument to which the Servicer is a party or by which
it shall be bound; nor result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than the Agreement); nor violate any
law or any order, rule or regulation applicable to the Servicer of any
court or of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Servicer or
its properties; and
(vi) No Proceedings. There are no proceedings or investigations
--------------
pending, or, to the Servicer's best knowledge, threatened, before any
court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its properties:
A) asserting the invalidity of the Agreement or the Certificates; B)
seeking to prevent the issuance of the Certificates or the consummation of
any of the transactions contemplated by the Agreement; C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Servicer of its obligations under, or the validity or
enforceability of, the Agreement or the Certificates; or D) relating to the
Servicer and which might adversely affect the federal or any state income
tax attributes of the Certificates.
SECTION 9.02. INDEMNITIES OF SERVICER. The Servicer shall be liable
-----------------------
in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under the Agreement.
(i) The Servicer shall defend, indemnify and hold harmless the
Trustee, the Trust and the Certificateholders from and against any and all
costs,
59
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expenses, losses, damages, claims and liabilities (collectively, "Damages")
arising out of or resulting from the use, ownership or operation by the
Servicer or any affiliate thereof of a Financed Vehicle.
(ii) The Servicer shall indemnify, defend and hold harmless the
Trustee, the Trust and the Certificateholders from and against any and all
Damages to the extent that such Damage arose out of, or was imposed upon
the Trustee, the Trust or the Certificateholders through the negligence,
willful misfeasance or bad faith of the Servicer in the performance of its
duties under the Agreement or by reason of reckless disregard of its
obligations and duties under the Agreement.
(iii) The Servicer shall indemnify, defend and hold harmless the
Trustee from and against all Damages arising out of or incurred in
connection with the acceptance or performance of the trusts and duties
herein contained, except to the extent that such Damage: (a) shall be due
to the willful misfeasance, bad faith, or negligence (except for errors in
judgment) of the Trustee; (b) relates to any tax other than the taxes with
respect to which the Seller shall be required to indemnify the Trustee; (c)
shall arise from the Trustee's breach of any of its representations or
warranties set forth in Section 11.14; (d) shall be one as to which the
Seller is required to indemnify the Trustee and as to which the Trustee has
received payment of indemnity from the Seller; or (e) shall arise out of or
be incurred in connection with the performance by the Trustee of the duties
of successor Servicer hereunder.
In addition to the foregoing indemnities, if the Trustee is entitled to
indemnification by the Seller pursuant to Section 8.02 and the Seller is unable
for any reason to provide such indemnification to the Trustee, then the Servicer
shall be liable for any indemnification that the Trustee is entitled to under
Section 8.02.
Indemnification under this Section 9.02 by Nissan Motor Acceptance Corporation
(or any successor thereto pursuant to Section 9.03) as Servicer, with respect to
the period such Person was 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 the Agreement 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
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others, the recipient shall promptly repay such amounts to the Servicer, without
interest (except to the extent the recipient collects interest from others).
SECTION 9.03. 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, (iii) succeeding to the business of the
Servicer, or (iv) so long as Nissan Motor Acceptance Corporation acts as
Servicer, that is a corporation more than 50% of the voting stock of which is
owned directly or indirectly by Nissan Motor Co., Ltd., which Person in any of
the foregoing cases executes an agreement of assumption to perform every
obligation of the Servicer under this Agreement, will be the successor to the
Servicer under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties to this Agreement; provided,
--------
however, that (x) immediately after giving effect to such transaction, no Event
- -------
of Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have happened and be continuing, (y) the
Servicer shall have delivered to the Trustee an Officer's Certificate and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section 9.03 and that all
conditions precedent provided for in the Agreement relating to such transaction
have been complied with and (z) the Servicer shall have delivered to the 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 fully to preserve and protect the
interest of the Trustee 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 preserve and protect such interest. The Servicer shall
provide notice of any merger, consolidation or succession pursuant to this
Section 9.03 to each rating agency then providing a rating for the Certificates.
Notwithstanding anything herein to the contrary, the execution of the foregoing
agreement of assumption and compliance with clauses (x), (y) and (z) above shall
be conditions to the consummation of the transactions referred to in clauses
(i), (ii), (iii) or (iv) above.
SECTION 9.04. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. (a)
----------------------------------------------
Neither the Servicer nor any of the directors or officers or employees or agents
of the Servicer shall be under any liability to the Trust or the
Certificateholders, except as provided under the Agreement,
61
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for any action taken or for refraining from the taking of any action pursuant to
the 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, bad faith or
negligence (except for errors in judgment) in the performance of duties or by
reason of reckless disregard of obligations and duties under the Agreement. The
Servicer and any director, officer or employee or agent of the Servicer may rely
in good faith on any Opinion of Counsel or on any Officer's Certificate or
certificate of auditors believed to be genuine and to have been signed by the
proper party in respect of any matters arising under the Agreement.
(b) Except as provided in the 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 the Agreement, and that in its opinion may cause it to incur any expense or
liability; provided, however, that the Servicer may undertake any reasonable
-------- -------
action that it may deem necessary or desirable in respect of the Agreement and
the rights and duties of the parties to the Agreement and the interests of the
Certificateholders under the 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 and the Servicer will not be entitled to
be reimbursed therefor.
SECTION 9.05. DELEGATION OF DUTIES. So long as Nissan Motor
--------------------
Acceptance Corporation acts as Servicer, the Servicer may at any time without
notice or consent subcontract substantially all its duties under the Agreement
to any corporation more than 50% of the voting stock of which is owned, directly
or indirectly, by Nissan Motor Co., Ltd. The Servicer may at any time perform
specific duties as servicer under the Agreement through other subcontractors;
provided, however, that no such delegation or subcontracting shall relieve the
- -------- -------
Servicer of its responsibilities with respect to such duties as to which the
Servicer shall remain primarily responsible with respect thereto.
SECTION 9.06. NISSAN MOTOR ACCEPTANCE CORPORATION NOT TO RESIGN AS
----------------------------------------------------
SERVICER. Subject to Section 9.03 hereof, Nissan Motor Acceptance Corporation
- --------
shall not resign from the obligations and duties hereby imposed on it as
Servicer under this Agreement except upon determination that the performance of
its duties under this Agreement shall no longer be permissible under applicable
law. Notice of any such determination permitting the resignation of Nissan
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Motor Acceptance Corporation shall be communicated to the Trustee at the
earliest practicable time (and, if such communication is not in writing, shall
be confirmed in writ ing at the earliest practicable time) and any such determi
nation shall be evidenced by an Opinion of Counsel to such effect delivered to
the Trustee concurrently with or promptly after such notice. No such
resignation shall become effective until the Trustee or a successor Servicer
shall (i) have taken the actions required by Section 10.01(b) of the Agreement
to effect the termination of the responsibilities and rights of the predecessor
Servicer under the Agreement, including the transfer to the successor Servicer
for administration by it of all cash amounts that shall at the time be held by
the predecessor Servicer for deposit, or shall thereafter be received with
respect to a Receivable and the delivery of the Receivable Files, and the
related accounts and records maintained by the Servicer, and (ii) have assumed
the responsibilities and obligations of Nissan Motor Acceptance Corporation as
Servicer under the Agreement in accordance with Section 10.02 of the Agreement.
ARTICLE X.
DEFAULT
SECTION 10.01. EVENTS OF DEFAULT. (a) If any one of the following
-----------------
events ("Events of Default") shall occur and be continuing:
(i) Any failure (A) by the Servicer to deliver to the Trustee for
distribution to Certificateholders or (B) by the Seller to deliver, for so
long as the Custody and Pledge Agreement or similar agreement is in
existence, to the Custodian for deposit in the Subordination Spread
Accounts any proceeds or payment required to be so delivered under the
terms of the Certificates, the Agreement or the Custody and Pledge
Agreement, as the case may be, that shall continue unremedied for a period
of three Business Days after written notice of such failure is received by
the Servicer or the Seller, as the case may be, from the Trustee or
Custodian, as the case may be, or after discovery of such failure by an
officer of the Servicer or the Seller, as the case may be; or
(ii) Failure on the part of the Servicer or the Seller duly to observe
or to perform in any material respect any other covenant or agreement of
the Servicer or the Seller (as the case may be) set forth in the
Certificates or in the Agreement, which failure shall (a) materially and
adversely affect the rights of
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Certificateholders and (b) continue unremedied for a period of 90 days
after the date on which written notice of such failure, requiring the same
to be remedied, shall have been given (1) to the Servicer or the Seller (as
the case may be), by the Trustee, or (2) to the Servicer or the Seller (as
the case may be), and to the Trustee by the Holders of Class A Certificates
evidencing not less than 25% of the Class A Certificate Balance; or
(iii) The entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver or liquidator for the Servicer in
any insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings, or for the winding up or liquidation of its
respective affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 90 consecutive days; or
(iv) The consent by the Servicer to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating
to the Servicer or relating to substantially all of its property; or the
Servicer shall admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of
its creditors or voluntarily suspend payment of its obligations;
then, and in each and every case, so long as an Event of Default shall not have
been remedied, either the Trustee, or the Holders of the Class A Certificates
evidencing not less than 25% of the Class A Certificate Balance, by notice then
given in writing to the Servicer (and to the Trustee if given by the
Certificateholders) may terminate all of the rights and obligations of the
Servicer under the Agreement. On or after the receipt by the Servicer of such
written notice, all authority and power of the Servicer under the Agreement,
whether with respect to the Certificates or the Receivables or otherwise, shall,
without further action, pass to and be vested in the Trustee or such successor
Servicer as may be appointed under Section 10.02; and, without limitation, the
Trustee is hereby authorized and empowered to execute and deliver, on behalf of
the predecessor 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,
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whether to complete the transfer and endorsement of the Receivables and related
documents, or otherwise.
(b) The predecessor Servicer shall cooperate with the successor
Servicer and the Trustee in effecting the termination of the responsibilities
and rights of the predecessor Servicer under the Agreement, including the
transfer to the successor Servicer for administration by it of all cash amounts
that shall at the time be held by the predecessor Servicer for deposit, or shall
thereafter be received with respect to a Receivable and the delivery of the
Receivable Files, and the related accounts and records maintained by the
Servicer. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with transferring the Receivable Files to the successor
Servicer and amending the Agreement to reflect such succession as Servicer
pursuant to this Section 10.01 shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs and expenses. Upon
receipt of notice of an Event of Default, the Trustee shall give notice thereof
to each of the rating agencies then rating the Certificates.
SECTION 10.02. APPOINTMENT OF SUCCESSOR. (a) Upon the Servicer's
------------------------
receipt of notice of termination pursuant to Section 10.01 or the Servicer's
resignation in accordance with the terms of the Agreement, the predecessor
Servicer shall continue to perform its functions as Servicer under the
Agreement, in the case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice of termination,
until receipt of such notice and, in the case of resignation, until the later of
(x) the date 45 days from the delivery to the Trustee of written notice of such
resignation (or written confirmation of such notice) in accordance with the
terms of the Agreement and (y) the date upon which the predecessor Servicer
shall become unable to act as Servicer, as specified in the notice of
resignation and accompanying Opinion of Counsel. In the event of the Servicer's
resignation or termination hereunder, the Trustee shall appoint a successor
Servicer, and the successor Servicer shall accept its appointment by a written
assumption in form acceptable to the Trustee. In the event that a successor
Servicer has not been appointed at the time when the predecessor Servicer has
ceased to act as Servicer in accordance with this Section 10.02, the Trustee
without further action shall automatically be appointed the successor Servicer.
Notwithstanding the above, the Trustee shall, if it shall be unwilling or
legally unable so to act, appoint, or petition a court of competent jurisdiction
to appoint, any established institution, having a net worth of not less than
$100,000,000 and whose regular business shall
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include the servicing of automotive receivables, as the successor to the
Servicer under the Agreement.
(b) Upon appointment, the successor Servicer shall be the successor
in all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled, subject to the
arrangements referred to in paragraph (c) below, to the Servicer Fees and all of
the rights granted to the predecessor Servicer, by the terms and provisions of
the Agreement.
(c) In connection with such appointment, the Trustee may make such
arrangements for the compensation of such successor Servicer out of payments on
Receivables as it and such successor Servicer shall agree; provided, however,
-------- -------
that no such compensation shall be in excess of that permitted the predecessor
Servicer under the Agreement. The Trustee and such successor Servicer shall
take such action, consistent with the Agreement, as shall be necessary to
effectuate any such succession.
SECTION 10.03. REPAYMENT OF ADVANCES. If the identity of the
---------------------
Servicer shall change, the predecessor Servicer shall be entitled to receive, to
the extent of available funds, reimbursement for Outstanding Advances pursuant
to Section 5.04 and 5.05, in the manner specified in Section 5.06, with respect
to all Advances made by the predecessor Servicer.
SECTION 10.04. NOTIFICATION TO CERTIFICATE-HOLDERS. Upon any
-----------------------------------
termination of, or appointment of a successor to, the Servicer pursuant to this
Article X, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register and to each of the rating agencies then rating the Certificates.
SECTION 10.05. WAIVER OF PAST DEFAULTS. The Holders of Class A
-----------------------
Certificates evidencing not less than 51% of the Class A Certificate Balance
may, on behalf of all Holders of Certificates, waive any default by the Servicer
in the performance of its obligations hereunder and its consequences, except a
default in making any required deposits to or payments from the Collection
Account or the Certificate Account in accordance with the Agreement. Upon any
such waiver of a past default, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been remedied for every
purpose of the Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
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ARTICLE XI.
THE TRUSTEE
SECTION 11.01. DUTIES OF TRUSTEE. The Trustee, both prior to the
-----------------
occurrence of an Event of Default and after an Event of Default shall have been
cured or waived, shall undertake to perform such duties as are specifically set
forth in the Agreement. If an Event of Default shall have occurred and shall
not have been cured or waived and, in the case of an Event of Default described
in clause (i) of Section 10.01(a), the Trustee has received notice of such Event
of Default pursuant to Section 4.10(b), the Trustee shall exercise such of the
rights and powers vested in it by the Agreement, and shall use the same degree
of care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his own affairs; provided, however,
-------- -------
that if the Trustee shall assume the duties of the Servicer pursuant to Section
10.02, the Trustee in performing such duties shall use the degree of skill and
attention customarily exercised by a servicer with respect to automobile
receivables that it services for itself or others.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that shall be specifically required to be furnished pursuant to any
provision of the Agreement, shall examine them to determine whether they conform
to the requirements of the Agreement.
The Trustee shall take and maintain custody of the List of Receivables included
as a Schedule to the Agreement and shall retain all Servicer's Certificates
identifying Receivables that become Repurchased Receivables.
No provision of the Agreement shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act (other
than errors in judgment) or its own bad faith; provided, however, that:
-------- -------
(i) Prior to the occurrence of an Event of Default (or, in the case
of an Event of Default described in clause (i) of Section 10.01(a), before
the Trustee has received notice thereof pursuant to Section 4.10(b)), and
after the curing or waiving of all such Events of Default that may have
occurred, (A) the duties and obligations of the Trustee shall be determined
solely by the express provisions of the Agreement, (B) the Trustee shall
not be liable except for the performance of such duties and obligations as
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shall be specifically set forth in the Agreement, (C) no implied covenants
or obligations shall be read into the Agreement against the Trustee and (D)
in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely on the truth of the statements and the correctness of the
opinions expressed upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of the Agreement;
(ii) The Trustee shall not be liable for an error of judgment made in
good faith by a Trustee Officer, unless it shall be proved that the Trustee
shall have been negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be liable with respect to any action taken,
suffered or omitted to be taken in good faith in accordance with the
Agreement or at the direction of the Holders of Class A Certificates
evidencing not less than 25% of the Class A Certificate Balance relating to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under the Agreement;
(iv) The Trustee shall not be charged with knowledge of any failure by
the Servicer to comply with the obligations of the Servicer referred to in
Section 10.01, or of any failure by the Seller to comply with the
obligations of the Seller referred to in Section 10.01, unless a Trustee
Officer assigned to the Trustee's Trust Administration Department obtains
actual knowledge of such failure (it being understood that knowledge of the
Servicer or the Servicer as custodian, in its capacity as agent for the
Trustee, is not attributable to the Trustee) or the Trustee receives
written notice of such failure from the Servicer or the Seller, as the case
may be, or the Holders of Class A Certificates evidencing not less than 25%
of the Class A Certificate Balance; and
(v) Without limiting the generality of this Section 11.01 or Section
11.04, the Trustee shall have no duty (i) to see to any recording, filing
or depositing of the Agreement, any agreement referred to therein, or any
financing statement or continuation statement evidencing a security
interest in the Receivables or the Financed Vehicles, or to see to the
maintenance of any such recording, filing or depositing or to any
rerecording, refiling or redepositing of any thereof, (ii) to see to any
insurance of the Financed Vehicles or Obligors or to effect or maintain any
such
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insurance, (iii) to see to the payment or discharge of any tax, assessment
or other governmental charge or any Lien or encumbrance of any kind owing
with respect to, assessed or levied against, any part of the Trust, (iv) to
confirm or verify the contents of any reports or certificates of the
Servicer delivered to the Trustee pursuant to the Agreement believed by the
Trustee to be genuine and to have been signed or presented by the proper
party or parties or (v) to inspect the Financed Vehicles at any time or
ascertain or inquire as to the performance or observance of any of the
Seller's or the Servicer's representations, warranties or covenants or the
Servicer's duties and obligations as Servicer and as custodian of the
Receivable Files under the Agreement.
The Trustee shall not be required to expend or risk its own funds or otherwise
incur financial liability in the performance of any of its duties hereunder, or
in the exercise of any of its rights or powers, if there shall be reasonable
ground for believing that the repayment of such funds or adequate indemnity
against such risk or liability shall not be reasonably assured to it, and none
of the provisions contained in the Agreement shall in any event require the
Trustee to perform, or be responsible for the manner of performance of, any of
the obligations of the Servicer under the Agreement except during such time, if
any, as the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, the Servicer in accordance with the terms of
the Agreement.
SECTION 11.02. TRUSTEE'S CERTIFICATE. Upon request of the Seller or
---------------------
Servicer, on or as soon as practicable after each Distribution Date on which
Receivables shall be assigned to the Seller or the Servicer, as applicable,
pursuant to Section 11.03, the Trustee shall execute a Trustee's Certificate
based on (i) the information contained in the Servicer's Certificate for the
related Collection Period, (ii) amounts deposited to the Certificate Account and
(iii) notices received pursuant to the Agreement, identifying the Receivables
repurchased by the Seller pursuant to Section 3.02 or purchased by the Servicer
pursuant to Sections 4.07 or 12.02 during such Collection Period, and shall
deliver such Trustee's Certificate, accompanied by a copy of the Servicer's
Certificate for such Collection Period, to the Seller or the Servicer, as the
case may be. The Trustee's Certificate submitted with respect to such
Distribution Date shall operate, as of such Distribution Date, as an assignment,
without recourse, representation or warranty, to the Seller or the Servicer, as
the case may be, of all the Trustee's right, title and interest in and to such
repurchased Receivable, and all
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security and documents relating thereto, such assignment being an assignment
outright and not for security.
SECTION 11.03. TRUSTEE'S ASSIGNMENT OF REPURCHASED RECEIVABLES. With
-----------------------------------------------
respect to all Receivables repurchased by the Seller pursuant to Section 3.02 or
purchased by the Servicer pursuant to Sections 4.07 or 12.02, the Trustee shall
by a Trustee's Certificate assign, without recourse, representation or warranty,
to the Seller or the Servicer (as the case may be) all the Trustee's right,
title and interest in and to such Receivables, and all security and documents
relating thereto. 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 Trustee shall, at the Servicer's expense, take such steps as the Trustee
deems necessary to enforce the Receivable, including bringing suit in its name
or in the name of the Certificateholders.
SECTION 11.04. CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as
-------------------------------------
otherwise provided in Section 11.01:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
Servicer's Certificate, certificate of auditors, or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it under the Agreement in good faith
and in accordance with such Opinion of Counsel;
(iii) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by the Agreement, or to institute, conduct or
defend any litigation under the Agreement or in relation to the Agreement,
at the request, order or direction of any of the Certificateholders
pursuant to the provisions of the Agreement, unless such Certificateholders
shall have offered to the Trustee reasonable security or indemnity against
the costs, expenses and liabilities that may be incurred therein or
thereby; provided, however, that nothing contained in the Agreement shall
-------- -------
relieve the Trustee of the obligations, upon the
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occurrence of an Event of Default (that shall not have been cured or
waived), to exercise such of the rights and powers vested in it by the
Agreement, and to use the same degree of care and skill in its exercise as
a prudent man would exercise or use under the circumstances in the conduct
of his own affairs.
(iv) The Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and reasonably believed by it to be authorized
or within the discretion or rights or powers conferred upon it by the
Agreement.
(v) Prior to the occurrence of an Event of Default (or in the case of
an Event of Default described in clause (i) of Section 10.01(a), before the
Trustee has received notice of such Event of Default pursuant to Section
4.10(b)) and after the curing or waiving of all Events of Default that may
have occurred, the Trustee shall not be bound to make any investigation
into the facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so by
Holders of Class A Certificates evidencing not less than 25% of the Class A
Certificate Balance; provided, however, that if the payment within a
-------- -------
reasonable time to the Trustee of the costs, expenses or liabilities likely
to be incurred by it in the making of such investigation shall be, in the
opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of the Agreement, the Trustee may
require reasonable indemnity against such cost, expense or liability as a
condition to so proceeding. The reasonable expense of every such
examination shall be paid by the Servicer or, if paid by the Trustee, shall
be reimbursed by the Servicer upon demand. Nothing in this clause (v)
shall affect the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors.
(vi) The Trustee may execute any of the trusts or powers hereunder or
perform any duties under the Agreement either directly or by or through
agents or attorneys or a custodian. The Trustee shall not be responsible
for any misconduct or negligence of any such agent or custodian appointed
with due care by it hereunder or of the Servicer in its capacity as
Servicer or custodian.
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(vii) Subsequent to the sale of the Receivables by the Seller to the
Trustee, the Trustee shall have no duty of independent inquiry, except as
may be required by Section 11.01, and the Trustee may rely upon the
representations and warranties and covenants of the Seller and the Servicer
contained in the Agreement with respect to the Receivables and the
Receivable Files.
SECTION 11.05. TRUSTEE NOT LIABLE FOR CERTIFICATES OR RECEIVABLES.
--------------------------------------------------
The recitals contained herein and in the Certificates (other than the
certificate of authentication on the Certificates) shall be taken as the
statements of the Seller or the Servicer, as the case may be, and the Trustee
assumes no responsibility for the correctness thereof. The Trustee shall make
no representations as to the validity or sufficiency of the Agreement or of the
Certificates (other than the certificate of authentication on the Certificates),
or of any Receivable or related document. The Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any security interest in any Financed Vehicle or any
Receivable, or the perfection and priority of such a security interest or the
maintenance of any such perfection and priority, or for or with respect to the
efficacy of the Trust or its ability to generate the payments to be distributed
to Certificateholders under the Agreement, including (i) the existence,
condition, location and ownership of any Financed Vehicle; (ii) the review of
any Receivable File therefor; (iii) the existence and enforceability of any
physical damage insurance thereon; (iv) the existence and contents of any
Receivable or any Receivable File or any computer or other record thereof; (v)
the validity of the assignment of any Receivable to the Trust or of any
intervening assignment; (vi) the completeness of any Receivable or any
Receivable File; (vii) the performance or enforcement of any Receivable; (viii)
the compliance by the Seller or the Servicer with any warranty or representation
made under the Agreement or in any related document and the accuracy of any such
warranty or representation prior to the Trustee's receipt of notice or other
discovery of any noncompliance therewith or any breach thereof; (ix) any
investment of monies by the Servicer or any loss resulting therefrom (it being
understood that the Trustee shall remain responsible for any Trust property that
it may hold); (x) the acts or omissions of the Seller, the Servicer or any
Obligor; (xi) any action of the Servicer taken in the name of the Trustee; or
(xii) any action by the Trustee taken at the instruction of the Servicer;
provided, however, that the foregoing shall not relieve the Trustee of its
- -------- -------
obligation to perform its duties under the Agreement. Except with respect to a
claim based on the failure of the Trustee to perform its duties
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under the Agreement or based on the Trustee's negligence or willful misconduct,
no recourse shall be had for any claim based on any provision of the Agreement,
the Certificates or any Receivable or assignment thereof against the Trustee in
its individual capacity and the Trustee shall not have any personal obligation,
liability or duty whatsoever to any Certificateholder or any other Person with
respect to any such claim, and any such claim shall be asserted solely against
the Trust or any indemnitor who shall furnish indemnity as provided in the
Agreement. The Trustee shall not be accountable for the use or application by
the Seller of any of the Certificates or of the proceeds of such Certificates,
or for the use or application of any funds paid to the Servicer in respect of
the Receivables. Any obligation of the Trustee to give any notice or statement
to any rating agency hereunder shall constitute only a best efforts obligation
and such notice or statement shall be so provided only as a matter of courtesy
and accommodation, the Trustee having no liability to any rating agency or any
other Person for any failure to so provide such notice or statement.
SECTION 11.06. TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
----------------------------
individual or any other capacity may become the owner or pledgee of Certificates
and may deal with the Seller and the Servicer in banking transactions with the
same rights as it would have if it were not Trustee.
SECTION 11.07. TRUSTEE'S FEES AND EXPENSES. The Servicer shall pay
---------------------------
to the Trustee, and the Trustee shall be entitled to, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by it
in the execution of the trusts created by the Agreement and in the exercise and
performance of any of the Trustee's powers and duties under the Agreement, and
the Servicer shall pay or reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances (including the reasonable
compensation and the expenses and disbursements of its counsel and of all
persons not regularly in its employ) incurred or made by the Trustee in
accordance with any provisions of the Agreement, except any such expense,
disbursement or advance as may be attributable to the Trustee's willful
misfeasance, negligence, or bad faith, and the Servicer shall indemnify the
Trustee for, and hold it harmless against any loss, liability or expense
incurred without willful misfeasance, negligence or bad faith on the Trustee's
part, arising out of or in connection with the acceptance or administration of
the Trust, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of
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any of its powers or duties under the Agreement. Additionally, the Seller,
pursuant to Section 8.02, and the Servicer, pursuant to Section 9.02,
respectively, shall indemnify the Trustee with respect to certain matters, and
the Certificateholders, pursuant to Section 11.04, shall, upon the circumstances
therein set forth, indemnify the Trustee under certain circumstances. The
provisions of this Section 11.07 shall survive the termination of the Agreement.
SECTION 11.08. INDEMNITY OF TRUSTEE. The Trustee shall be
--------------------
indemnified by the Servicer and held harmless against any loss, liability, fee,
disbursement or expense (including any compensation or expense referred to in
Section 11.07) arising out of or incurred in connection with the acceptance or
performance of the trusts and duties contained in the Agreement to the extent
that (i) the Trustee shall not be entitled to indemnity for such loss,
liability, fee, disbursement or expense by the Seller pursuant to Section 8.02,
the Servicer pursuant to Section 9.02, or the Certificateholders pursuant to
Section 11.04; (ii) such loss, liability, fee, disbursement or expense shall not
have been incurred by reason of the Trustee's willful misfeasance, bad faith or
negligence; and (iii) such loss, liability, fee, disbursement or expense shall
not have been incurred by reason of the Trustee's breach of its representations
and warranties pursuant to Section 11.14.
SECTION 11.09. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee
------------------------------------
under the Agreement shall at all times be a corporation having an office in the
same state as the location of the Corporate Trust Office as specified in the
Agreement, organized and doing business under the laws of such state or the
United States of America, authorized under such laws to exercise corporate trust
powers and having a combined capital and surplus of at least $50,000,000 and a
long-term rating from Moody's Investors Service, Inc. of at least Baa3 (or
having a corporate parent with at least such rating) and subject to supervision
or examination by federal or state authorities. If such corporation shall
publish reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purpose of this Section 11.09, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section 11.09, the Trustee shall resign immediately in the manner and with the
effect specified in Section 11.10.
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SECTION 11.10. RESIGNATION OR REMOVAL OF TRUSTEE. The Trustee may at
---------------------------------
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Servicer. Upon receiving such notice of
resignation, the Servicer shall promptly appoint a successor Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor Trustee. If no successor
Trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If at any time the Trustee shall cease to be eligible in accordance with the
provisions of Section 11.09 and shall fail to resign after written request
therefor by the Servicer, or if at any time the Trustee shall be legally unable
to act, or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee
or of its property shall be appointed, or any public officer shall take charge
or control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation, or liquidation, then the Servicer may remove the
Trustee. If it shall remove the Trustee under the authority of the immediately
preceding sentence, the Servicer shall promptly appoint a successor Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor Trustee and
shall promptly pay all fees owed to the outgoing Trustee.
Any resignation or removal of the Trustee and appointment of a successor Trustee
pursuant to any of the provisions of this Section 11.10 shall not become
effective until acceptance of appointment by the successor Trustee pursuant to
Section 11.11 and payment of all fees and expenses owed and any other amounts
due hereunder to the outgoing Trustee. The Servicer shall provide notice of
such resignation or removal of the Trustee to each of the rating agencies then
rating the Certificates.
SECTION 11.11. SUCCESSOR TRUSTEE. Any successor Trustee appointed
-----------------
pursuant to Section 11.10 shall execute, acknowledge and deliver to the Servicer
and to its predecessor Trustee an instrument accepting such appointment under
the Agreement, and thereupon the resignation or removal of the predecessor
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor under the Agreement, with like effect
as if originally named as Trustee. The predecessor Trustee shall upon payment
of its
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fees and expenses and any other amounts due it hereunder deliver to the
successor Trustee all documents and statements and monies held by it under the
Agreement; and the Servicer and the predecessor Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor Trustee all such
rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this Section 11.11
unless at the time of such acceptance such successor Trustee shall be eligible
pursuant to Section 11.09.
Upon acceptance of appointment by a successor Trustee pursuant to this Section
11.11, the Servicer shall mail notice of such successor Trustee to all
Certificateholders at their addresses as shown in the Certificate Register and
to the rating agencies then rating the Certificates. If the Servicer shall fail
to mail such notice within 10 days after acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be mailed at
the expense of the Servicer.
SECTION 11.12. MERGER OR CONSOLIDATION OF TRUSTEE. Any corporation
----------------------------------
into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible pursuant to Section 11.09, without the execution
or filing of any instrument or any further act on the part of any of the parties
hereto; anything herein to the contrary notwithstanding.
SECTION 11.13. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
---------------------------------------------
Notwithstanding any other provisions of the Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Financed Vehicle may at the time be located, the Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee, jointly with the Trustee, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such Person, in such
capacity and for the benefit of the Certificateholders, such title to the Trust,
or any part thereof, and, subject to the other provisions of this Section 11.13,
such powers, duties, obligations, rights and trusts as the Servicer and the
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Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
to do so, or in the case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee under the Agreement shall be required to meet the
terms of eligibility as a successor trustee pursuant to Section 11.09 and no
notice of a successor trustee shall be required pursuant to Section 11.11.
Each separate trustee and co-trustee shall, to the extent permitted by law, be
appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to
act separately without the Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee under the Agreement or as
successor to the Servicer under the Agreement), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to
the Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Trustee;
(ii) No trustee under the Agreement shall be personally liable by
reason of any act or omission of any other trustee under the Agreement;
(iii) The Servicer and the Trustee acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee; and
(iv) All duties owed hereunder to the Trustee by the Servicer shall be
deemed to be owed to each separate trustee and co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed to
have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to the Agreement and the conditions
of this Article XI. Each separate
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trustee and co-trustee, upon its acceptance of the trusts conferred, shall be
vested with the estates or property specified in its instrument of appointment,
either jointly with the Trustee or separately, as may be provided therein,
subject to all the provisions of the Agreement, specifically including every
provision of the Agreement relating to the conduct of, affecting the liability
of, or affording protection to, the Trustee. Each such instrument shall be
filed with the Trustee and a copy thereof given to the Servicer.
Any separate trustee or co-trustee may at any time appoint the Trustee, its
agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of the Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee. Notwithstanding anything to the contrary in the Agreement,
the appointment of any separate trustee or co-trustee shall not relieve the
Trustee of its obligations and duties thereunder.
SECTION 11.14. REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The
-----------------------------------------
Trustee shall make the following representations and warranties on which the
Seller and Certificateholders shall rely:
(i) The Trustee is a banking corporation duly organized, and validly
existing, under the laws of the State of New York and authorized to conduct
and engage in a banking and trust business under such laws;
(ii) The Trustee has full corporate power, authority and legal right
to execute, deliver and perform the Agreement, and has taken all necessary
action to authorize the execution, delivery and performance by it of the
Agreement; and
(iii) The Agreement has been duly executed and delivered by the
Trustee.
SECTION 11.15. TAX RETURNS. The Servicer shall prepare or shall
-----------
cause to be prepared any tax or information returns required to be filed by the
Trust and shall remit or cause to be remitted such returns to the Trustee for
signature at least five days before such returns are due to be filed. The
Trustee, upon request, will furnish the Servicer with all such information known
to the Trustee as may be reasonably required in connection with the
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preparation of all tax or information returns of the Trust, and shall, upon
request, execute such returns.
SECTION 11.16. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
------------------------------------------------
CERTIFICATES. All rights of action and claims under this Agreement or the
- ------------
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
SECTION 11.17. SUITS FOR ENFORCEMENT. If an Event of Default shall
---------------------
occur and be continuing, the Trustee, in its discretion may, subject to the
provisions of Section 11.01, proceed to protect and enforce its rights and the
rights of the Certificateholders under this Agreement by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy as the Trustee, being advised by
counsel, shall deem most effectual to protect and enforce any of the rights of
the Trustee or the Certificateholders.
SECTION 11.18. RIGHTS OF CERTIFICATEHOLDERS TO DIRECT TRUSTEE.
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Holders of Class A Certificates evidencing not less than 51% of the Class A
Certificate Balance shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee; provided, however, that, subject to
-------- -------
Section 11.01, the Trustee shall have the right to decline to follow any such
direction if the Trustee being advised by counsel determines that the action so
directed may not lawfully be taken, or if the Trustee in good faith shall, by a
Trustee Officer, determine that the proceedings so directed would be illegal or
subject it to personal liability or be unduly prejudicial to the rights of
Certificateholders not parties to such direction; and provided further that
-------- -------
nothing in this Agreement shall impair the right of the Trustee to take any
action deemed proper by the Trustee and which is not inconsistent with such
direction by the Certificateholders.
SECTION 11.19. APPOINTMENT OF CUSTODIAN. For so long as the Custody
------------------------
and Pledge Agreement or any similar agreement is in existence, the Trustee shall
appoint the
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Custodian in accordance with the terms hereof including satisfying the
requirements for eligibility of the Trustee pursuant to Section 11.09 hereof.
The Custodian may, but is not required to, be the Trustee. In the event that
the Trustee is not the Custodian, the Trustee shall pay any Custodian fees out
of the Trustee's fees and not out of assets of the Trust.
ARTICLE XII.
TERMINATION
SECTION 12.01. TERMINATION OF THE TRUST. The respective obligations
------------------------
and responsibilities of the Seller, the Servicer and the Trustee (except for the
obligations contained in Sections 5.09(d) and 11.15) created hereby and the
Trust created by the Agreement shall terminate upon (i) the purchase as of the
last day of any Collection Period by the Servicer at its option, pursuant to
Section 12.02, of the corpus of the Trust and the subsequent distribution to
Certificateholders pursuant to Section 5.06 of the amount required to be
deposited pursuant to Section 12.02, (ii) the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Agreement and the
disposition of all property held as part of the Trust or (iii) the maturity or
other liquidation of the last Receivable and the disposition of any amounts
received upon liquidation of any remaining Receivables; provided, however, that
-------- -------
in no event shall the trust created by the Agreement continue beyond the
expiration of 21 years from the death of the last survivor of the descendants of
Rose Kennedy, formerly of Massachusetts, living on the date of the Agreement.
The Servicer shall promptly notify the Trustee of any prospective termination
pursuant to this Section 12.01.
Notice of any termination, specifying the Distribution Date upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee by letter to Certificateholders mailed not earlier than the 15th day
and not later than the 25th day of the month next preceding the specified
Distribution Date stating (A) the Distribution Date upon which final payment of
the Certificates shall be made upon presentation and surrender of the
Certificates at the office of the Trustee therein designated, (B) the amount of
any such final payment and (C) if applicable, that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office of the Trustee
therein specified. The Trustee shall give such notice to
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the Certificate Registrar (if other than the Trustee) at the time such notice is
given to Certificateholders. Upon presentation and surrender of the
Certificates, the Trustee shall cause to be distributed to Certificateholders
amounts distributable on such Distribution Date pursuant to Section 5.06.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to the Agreement. Subject to any applicable law, any funds remaining in
the Trust after exhaustion of such remedies shall be distributed by the Trustee
to the Childrens Hospital Los Angeles.
SECTION 12.02. OPTIONAL PURCHASE OF ALL RECEIVABLES. On the last day
------------------------------------
of any Collection Period as of which the Pool Factor shall be less than the
Optional Purchase Percentage (after giving effect to the then current Collection
Period's collections), the Servicer shall have the option to purchase the corpus
of the Trust. To exercise such option, the Servicer shall deposit pursuant to
Section 5.05 in the Collection Account an amount equal to the aggregate
Repurchase Amount for the Receivables, plus the appraised value of any other
property held by the Trust, such value to be determined by an appraiser mutually
agreed upon by the Servicer and the Trustee, and shall succeed to all interests
in and to the Trust; provided, however, that the Servicer shall not effect any
-------- -------
such purchase so long as the rating of Nissan Motor Acceptance Corporation, or
if such corporation shall then be unrated by such agency, then the rating of
Nissan Capital of America, Inc., is less than Baa3 by Moody's Investors Service,
Inc. unless the Trustee shall have received an Opinion of Counsel to the effect
that such purchase shall not constitute a fraudulent conveyance, subject to such
assumptions as to factual matters as may be contained therein.
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ARTICLE XIII.
MISCELLANEOUS PROVISIONS
SECTION 13.01. AMENDMENT. The Agreement may be amended from time to
---------
time by the Seller, the Servicer, NMAC (so long as NMAC has any rights or
obligations thereunder) and the Trustee, without the consent of any of the
Certificateholders, (i) to cure any ambiguity, to correct or supplement any
provision in the Agreement which may be inconsistent with any other provision
therein, or to add any other provisions with respect to matters or questions
arising under the Agreement that shall not be inconsistent with the provisions
of the Agreement; provided, however, that such action shall not, as evidenced by
-------- -------
an Opinion of Counsel, materially and adversely affect the interests of any
Certificateholder; (ii) to change the formula for determining the Class A
Specified Subordination Spread Account Balance, provided that each rating agency
then rating Class A Certificates delivers a letter to the Trustee to the effect
that the use of such new formulation will not result in a qualification,
reduction or withdrawal of its then-current rating of the Class A Certificates;
and (iii) upon approval of each rating agency then rating the Class B
Certificates, if any, to change the Class B Specified Subordination Spread
Account Balance.
The Agreement may also be amended from time to time by the Seller, the
Servicer, NMAC (so long as NMAC has any rights or obligations thereunder) and
the Trustee with the consent of the Holders of Class A Certificates and Class B
Certificates, each voting as a separate Class (which consent of any Holder of a
Certificate given pursuant to this Section or pursuant to any other provision of
this Agreement shall be conclusive and binding on such Holder and on all future
Holders of such Certificate and of any Certificate issued upon the transfer
thereof or in exchange thereof or in lieu thereof whether or not notation of
such consent is made upon the Certificate), evidencing not less than 51% of the
Class A Certificate Balance and Class B Certificate Balance, respectively, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Agreement, or of modifying in any manner the rights
of the Holders of Certificates; provided, however, that no such amendment shall
-------- -------
(a) increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Receivables or distributions that shall be
required to be made on any Certificate or change the Pass-Through Rate, the
Specified Subordinated Spread Account Balance or the Class B Specified
Subordination Spread Account Balance (except as described in
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clauses (ii) and (iii) above) without the consent of each adversely affected
Certificateholder or (b) reduce the aforesaid percentage of the Class A
Certificate Balance or Class B Certificate Balance which is required to consent
to any such amendment, without the consent of the Holders of all Certificates of
such Class then outstanding. Notwithstanding the foregoing, no amendment
referred to in clause (a) of the preceding proviso will be made unless each
rating agency then rating the Certificates confirms that such amendment will not
result in a reduction or withdrawal of its rating of the Certificates of such
class.
Prior to the execution of any such amendment or consent pursuant to
this Section 13.01, the Servicer will provide and the Trustee shall distribute
written notification of the substance of such amendment or consent to each of
the rating agencies then rating the Certificates at least ten Business Days
prior to the execution thereof.
Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder.
It shall not be necessary for the consent of Certificateholders
pursuant to this Section 13.01 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 Certificateholders provided for in this Agreement) and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe, including
the establishment of record dates pursuant to paragraph number 2 of the
Depository Agreement.
Prior to the execution of any amendment to the Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by the Agreement and
the Opinion of Counsel referred to in Section 13.02(i)(1). The Trustee may, but
shall not be obligated to, enter into any such amendment which affects the
Trustee's own rights, duties or immunities under the Agreement or otherwise.
SECTION 13.02. PROTECTION OF TITLE TO TRUST.
----------------------------
(a) The Seller 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
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and protect the interest of the Certificateholders and the Trustee in the
Receivables and in the proceeds thereof. The Seller shall deliver (or cause to
be delivered) to the Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed by the Seller in
accordance with paragraph (a) above seriously misleading within the meaning of
(S) 9-402(7) of the UCC, unless it shall have given the Trustee at least five
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 Trustee at least 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. 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 Certificate
Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from
and after the time of sale under the Agreement of the Receivables to the Trust,
the Servicer's master computer records (including any back-up archives) that
refer to a Receivable shall indicate clearly the interest of the particular
grantor trust in such Receivable and that such Receivable is owned by the Trust.
Indication of the Trust's ownership of a Receivable shall be deleted from or
modified on the Servicer's computer systems when, and only when, the Receivable
shall have been paid in full or repurchased.
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(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 automotive
receivables to any prospective purchaser, lender or other transferee, the
Servicer shall give to such prospective purchaser, lender or other transferee
computer tapes, records or print-outs (including any restored from back-up
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold and is owned by the
Trust.
(g) The Servicer shall permit the Trustee and its agents at any time
during normal business hours to inspect, audit and make copies of and abstracts
from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Trustee, within
20 Business Days, a list of all Receivables (by contract number and name of
Obligor) then held as part of the Trust, together with a reconciliation of the
List of Receivables attached hereto as Schedule A 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 Trustee:
(1) promptly after the execution and delivery of the Agreement
and of each amendment thereto, 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 Trustee in
the Receivables, and reciting the details of such filings or referring
to prior Opinions of Counsel in which such details are given, or (B)
stating that, in the opinion of such Counsel, no such action shall be
necessary to preserve and protect such interest; and
(2) within 90 days after the beginning of each calendar year
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
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the 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 Certificates to be registered with the Securities and Exchange Commission
pursuant to Section 12(b) or Section 12(g) of the Securities Exchange Act of
1934 within the time periods specified in such sections.
SECTION 13.03. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. The death
------------------------------------------
or incapacity of any Certificateholder shall not operate to terminate the
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties to
the Agreement or any of them.
No Certificateholder shall have any right to vote (except as
specifically provided herein) or in any manner otherwise control the operation
and management of the Trust, or the obligations of the parties to the Agreement,
nor shall anything in the Agreement set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken pursuant to any provision of the Agreement.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of the Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to the Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of default and of the continuance thereof, and unless also (i) the default
arises from the Seller's or the Servicer's failure to remit payments when due
hereunder, or (ii) the Holders of Class A Certificates evidencing not less than
25% of the Class A Certificate Balance shall have made written request upon the
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Trustee to institute such action, suit or proceeding in its own name as Trustee
under the Agreement and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 30 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding and during such 30-day period no
request or waiver inconsistent with such written request has been given to the
Trustee pursuant to this Section 13.03 or Section 10.05; no one or more Holders
of Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of the Agreement to affect,
disturb or prejudice the rights of the Holders of any other of the Certificates,
or to obtain or seek to obtain priority over or preference to any other such
Holder, or to enforce any right, under the Agreement except in the manner
provided in the Agreement and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of
this Section 13.03, each Certificateholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
SECTION 13.04. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
-------------
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL 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 13.05. NOTICES. All demands, notices, and communications
-------
upon or to the Seller, the Servicer, the Trustee or any rating agency under the
Agreement shall be (i) in writing, personally delivered or mailed by certified
mail, return receipt requested, or (ii) by facsimile, at its facsimile number,
and shall be deemed to have been duly given upon receipt (a) in the case of the
Seller or the Servicer, to Joy Crose, General Counsel, Nissan Motor Acceptance
Corporation, 990 West 190th Street, Torrance, CA 90502, telephone: (310) 719-
8024, facsimile: (310) 515-6750, (b) in the case of the Trustee, at the
Corporate Trust Office, (c) in the case of Moody's Investors Service, Inc., at
the following address: Moody's Investors Service, Inc., ABS Monitoring
Department, 99 Church Street, New York, New York 10007, and (d) in the case of
Standard & Poor's Ratings Services, at the following address: Standard & Poor's
Ratings Services, 25 Broadway, 20th Floor, New York, New York 10004, Attention:
Asset Backed Surveillance Department. Any notice required or permitted to be
mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Certificate Register.
Any notice so mailed within the
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time prescribed in the Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder shall receive such notice.
SECTION 13.06. SEVERABILITY OF PROVISIONS. If any one or more of the
--------------------------
covenants, agreements, provisions or terms of the 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 the Agreement and shall in no way affect the validity or
enforceability of the other provisions of the Agreement or of the Certificates
or the rights of the Holders thereof.
SECTION 13.07. ASSIGNMENT. Notwithstanding anything to the contrary
----------
contained herein, except as provided in Sections 8.03 and 9.03 and as provided
in the provisions of the Agreement concerning the resignation of the Servicer,
the Agreement may not be assigned by the Seller or the Servicer without the
prior written consent of the Trustee and the Holders of Class A Certificates
evidencing not less than 66-2/3% of the Class A Certificate Balance.
SECTION 13.08. CERTIFICATES NONASSESSABLE AND FULLY PAID.
-----------------------------------------
Certificateholders shall not be personally liable for obligations of the Trust.
The interests represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and, upon
authentication thereof by the Trustee pursuant to Section 7.02 or Section 7.03,
Certificates shall be deemed fully paid.
SECTION 13.09. 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 Trustee more
fully to effect the purposes of this Agreement, including the execution of any
financing statements or continuation statements relating to the Receivables for
filing under the provisions of the Uniform Commercial Code of any applicable
jurisdiction.
SECTION 13.10. NO WAIVER; CUMULATIVE REMEDIES. No failure to
------------------------------
exercise and no delay in exercising, on the part of the Trustee 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
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cumulative and not exhaustive of any rights, remedies, powers and privileges
provided by law.
SECTION 13.11. THIRD-PARTY BENEFICIARIES. This Agreement will inure
-------------------------
to the benefit of and be binding upon the parties hereto, the Certificateholders
and their respective successors and permitted assigns. Except as otherwise
provided in this Article XIII, no other person will have any right or obligation
hereunder.
SECTION 13.12. ACTIONS BY CERTIFICATEHOLDERS.
-----------------------------
(a) Wherever in this Agreement a provision is made that an action may
be taken or a notice, demand or instruction given by Certificateholders, such
action, notice or instruction may be taken or given by any Certificateholder,
unless such provision requires a specific percentage of Certificateholders.
(b) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder shall bind such Certificateholder and
every subsequent holder of such 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 Trustee or the Servicer in reliance
thereon, whether or not notation of such action is made upon such Certificate.
SECTION 13.13. QUALIFICATION AS GRANTOR TRUST; SEPARATE ASSETS.
-----------------------------------------------
The Trust created hereunder is intended to be a separate grantor trust within
the meaning of Subpart E of Part I of Subchapter J of the Internal Revenue Code
of 1986, as amended. Those assets held pursuant to the Custody and Pledge
Agreement and pursuant to the Yield Supplement Agreement shall not be considered
to be owned by such Trust but instead, (i) with respect to the Custody and
Pledge Agreement, shall be considered to be owned by the Seller and/or by the
holders of the Class B Certificates, as the case may be, as set forth in the
Custody and Pledge Agreement, and to be pledged to the Trust and (ii) with
respect to the Yield Supplement Agreement, shall be considered owned by the
Seller, as set forth in the Yield Supplement Agreement, and to be pledged to the
Trust. Each agreement should be interpreted accordingly.
SECTION 13.14. COUNTERPARTS. For the purpose of facilitating the
------------
execution of the Agreement and for other purposes, the Agreement may be executed
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and all of which counterparts shall constitute but one and the same
instrument.
89
<PAGE>
IN WITNESS WHEREOF, the Seller, Servicer, NMAC and the Trustee have
caused this Pooling and Servicing Agreement to be duly executed by their
respective officers as of the ___ day of __________ 1997.
NISSAN AUTO RECEIVABLES
CORPORATION, as Seller
By:________________________________
Name:
Title:
NISSAN MOTOR ACCEPTANCE
CORPORATION, as Servicer
By:________________________________
Name:
Title:
NISSAN MOTOR ACCEPTANCE
CORPORATION, in its individual
capacity
By:________________________________
Name:
Title:
THE FUJI BANK AND TRUST COMPANY, as
Trustee
By:________________________________
Name:
Title:
90
<PAGE>
SCHEDULE A
[LIST OF RECEIVABLES DELIVERED TO TRUSTEE AT CLOSING]
<PAGE>
SCHEDULE B
LOCATION OF RECEIVABLES
1. NISSAN MOTOR ACCEPTANCE CORPORATION
2901 Kinwest Parkway
Irving, Texas 75063
2. Nissan Motor Acceptance Corporation
Massachusetts Office
Four Cambridge Center
Cambridge, Massachusetts 02142
3. Kestrel Records Management
1235 N. Union Bower
Irving, Texas 75061
<PAGE>
EXHIBIT A: FORM OF CLASS A CERTIFICATE SEE REVERSE FOR
CERTAIN DEFINITIONS
[the following legend to be inserted if this Certificate is issued to CEDE &
Co.:]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
NISSAN AUTO RECEIVABLES 1997-A GRANTOR TRUST
[_]% ASSET BACKED CERTIFICATE
CLASS A
evidencing a fractional undivided interest in the Trust, as defined below,
the property of which includes a pool of retail installment sale contracts
secured by new and used automobiles and light trucks and sold to the Trust
by Nissan Auto Receivables Corporation.
(This Certificate does not represent an interest in or obligation of Nissan
Auto Receivables Corporation or Nissan Motor Acceptance Corporation or any
of their respective affiliates thereof, except to the extent described
below.)
NUMBER CUSIP ___________
R
$________________
THIS CERTIFIES THAT is the registered owner of
a dollars nonassessable, fully-paid, fractional undivided interest
in the Nissan Auto Receivables 1997-A Grantor Trust (the "Trust") formed by
Nissan Auto Receivables Corporation, a Delaware corporation (the "Seller"). The
Trust was created pursuant to a Pooling and Servicing Agreement dated as of
October 1, 1997 (the "Agreement"), among the Seller, Nissan Motor Acceptance
A-1
<PAGE>
Corporation, as Servicer (the "Servicer") and in its individual capacity, and
The Fuji Bank and Trust Company, as Trustee (the "Trustee"), a summary of
certain of the pertinent provisions of which is set forth below. To the extent
not otherwise defined herein, the capitalized terms used herein have the
meanings assigned to them in the Agreement. This Certificate is one of the duly
authorized Certificates designated as "[_]% Asset Backed Certificates, Class A"
(herein called the "Class A Certificates"). Also issued under the Agreement are
Certificates designated as "[_]% Asset Backed Certificates, Class B" (the "Class
B Certificates"). The Class B Certificates and the Class A Certificates are
hereinafter collectively called the "Certificates." The aggregate undivided
interest in the Trust evidenced by all Class A Certificates is [_]%. This Class
A Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the holder of this Class A
Certificate, by virtue of the acceptance hereof, assents and by which such
holder is bound. The property of the Trust includes (as more fully described in
the Agreement) a pool of retail installment sale contracts of new and used
automobiles and light trucks (the "Receivables"), certain monies paid thereon on
or after October 1, 1997, security interests in the vehicles financed thereby,
certain bank accounts and the proceeds thereof, property (including the right to
receive Liquidation Proceeds) securing the Receivables and held by the Trustee,
proceeds from claims on physical damage, credit life and disability insurance
policies covering vehicles financed thereby and the obligors thereunder, certain
interests of the Seller in Dealer Recourse, all right, title and interest of the
Seller in and to the Purchase Agreement, the Yield Supplement Agreement and the
Custody and Pledge Agreement and any and all proceeds of the foregoing.
Under the Agreement, there will be distributed on the 15th day of each
month or, if such 15th day is not a Business Day, the next Business Day (the
"Distribution Date"), commencing on November 17, 1997, to the person in whose
name this Class A Certificate is registered at the close of business on the
Record Date (as determined pursuant to the Agreement), such Class A
Certificateholder's fractional undivided interest of the amounts to be
distributed to the Class A Certificateholders as determined pursuant to the
Agreement.
Distributions on this Class A Certificate will be made by the Trustee
by check or money order mailed to the Class A Certificateholder of record in the
Certificate Register without the presentation or surrender of this Class
A-2
<PAGE>
A Certificate or the making of any notation hereon except that with respect to
Class A Certificates registered in the name of Cede & Co., the nominee for the
Clearing Agency, distributions will be made in the form of immediately available
funds. Except as otherwise provided in the Agreement and notwithstanding the
above, the final distribution on this Class A Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Class A Certificate at the office or agency
maintained for that purpose by the Trustee in the Borough of Manhattan, The City
of New York. The Record Date otherwise applicable to such distribution shall
not be applicable.
Reference is hereby made to the further provisions of this Class A
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual signature, this
Class A Certificate shall not entitle the holder hereof to any benefit under the
Agreement or be valid for any purpose.
A-3
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A Certificate to be duly executed.
NISSAN AUTO RECEIVABLES
1997-A
GRANTOR TRUST
BY THE FUJI BANK AND TRUST COMPANY,
as Trustee
By
-------------------------------------
DATED:
[SEAL]
ATTEST:
- ----------------------------
Trustee Officer
This is one of the Class A Certificates referred to
in the within-mentioned Agreement.
THE FUJI BANK AND TRUST COMPANY,
as Trustee
By
-----------------------------------
Authorized Officer
A-4
<PAGE>
[Reverse of Certificate]
The Certificates do not represent an obligation of, or an interest in,
the Seller, Nissan Motor Acceptance Corporation, the Trustee or any affiliate of
any of them. The Certificates are limited in right of payment to certain
collections and recoveries respecting the Receivables, all as more specifically
set forth in the Agreement. A copy of the Agreement may be examined during
normal business hours at the principal office of the Seller, and at such other
places, if any, designated by the Seller, by any Certificate Owner upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller and the rights of the Certificateholders under the Agreement at any time
by the Seller, the Servicer, NMAC and the Trustee with the consent of the
Holders of Class A Certificates and Class B Certificates, each voting as a
Class, evidencing not less than 51% of the Class A Certificate Balance and Class
B Certificate Balance, respectively. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and on all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by the Trustee in its capacity as
Certificate Registrar, or by any successor Certificate Registrar, in the Borough
of Manhattan, The City of New York, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder hereof or such holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee.
The Class A Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 and integral multiples thereof;
however, one
A-5
<PAGE>
Certificate may be issued in a denomination equal to the residual amount. As
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denomination
evidencing the same aggregate denomination, as requested by the holder
surrendering the same. No service charge will be made for any such registration
of transfer or exchange, but the Trustee may require payment of a sum sufficient
to cover any tax or governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar and any agent of the Trustee or
the Certificate Registrar shall treat the person in whose name this Class A
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Agreement and the
disposition of all property held as part of the Trust. The Servicer of the
Receivables may at its option purchase the corpus of the Trust at a price
specified in the Agreement, and such purchase of the Receivables and other
property of the Trust will effect early retirement of the Certificates; however,
such right of purchase is exercisable only as of a Record Date as of which the
Pool Balance is less than 10% of the original aggregate principal balance of the
Receivables.
The recitals contained herein (other than the certificate of
authentication herein) shall be taken as the statements of the Seller or the
Servicer, as the case may be, and the Trustee assumes no responsibility for the
correctness thereof. The Trustee makes no representations as to the validity or
sufficiency of this Certificate (other than the certificate of authentication
herein), or of any Receivable or related document.
A-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code, of
assignee)
- --------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- --------------------------------------------------------------------------------
Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:
____________________________*
Signature Guaranteed:
____________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
A-7
<PAGE>
EXHIBIT B: FORM OF CLASS B CERTIFICATE SEE REVERSE FOR
CERTAIN DEFINITIONS
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED PURSUANT
TO THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE TRANSFERRED OR SOLD TO
A PERSON OTHER THAN A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE ACT) THAT CERTIFIES AS SUCH TO THE SATISFACTION OF THE SELLER, UNLESS
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF COUNSEL THAT
SUCH REGISTRATION IS NOT REQUIRED AND THE SATISFACTION OF CERTAIN OTHER
SIGNIFICANT REQUIREMENTS SPECIFIED IN THE AGREEMENT (AS DEFINED BELOW).
Nissan Auto Receivables 1997-A Grantor Trust
[_]% ASSET BACKED CERTIFICATE
CLASS B
evidencing a fractional undivided interest in the Trust, as defined below,
the property of which includes a pool of retail installment sale contracts
secured by new and used automobiles and light trucks and sold to the Trust
by Nissan Auto Receivables Corporation.
(This Certificate does not represent an interest in or obligation of Nissan
Auto Receivables Corporation or Nissan Motor Acceptance Corporation or any
of their respective affiliates thereof, except to the extent described
below.)
NUMBER
US$____________
THIS CERTIFIES THAT is the registered owner of
a dollars nonassessable, fully-paid, fractional
undivided interest in the Nissan Auto Receivables 1997-A Grantor Trust (the
"Trust") formed by Nissan Auto Receivables Corporation, a Delaware corporation
(the "Seller"). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of October 1, 1997 (the "Agreement"), among the Seller,
Nissan Motor Acceptance Corporation, as Servicer (the "Servicer") and in its
individual capacity, and The Fuji Bank and Trust Company, as Trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth below. To
B-1
<PAGE>
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement. This Certificate is one of the
duly authorized Certificates designated as "[_]% Asset Backed Certificates,
Class B" (herein called the "Class B Certificates"). Also issued under the
Agreement are Certificates designated as "[_]% Asset Backed Certificates, Class
A" (the "Class A Certificates"). The Class B Certificates and the Class A
Certificates are hereinafter collectively called the "Certificates." The
aggregate undivided interest in the Trust evidenced by all Class B Certificates
is [_]%. This Class B Certificate is issued under and is subject to the terms,
provisions, and conditions of the Agreement, to which Agreement the holder of
this Class B Certificate, by virtue of the acceptance hereof, assents and by
which such holder is bound. The property of the Trust includes (as more fully
described in the Agreement) a pool of retail installment sale contracts for new
and used automobiles and light trucks (the "Receivables"), certain monies paid
thereon on or after October 1, 1997, security interests in the vehicles financed
thereby, certain bank accounts and the proceeds thereof, property (including the
right to receive Liquidation Proceeds) securing the Receivables, proceeds from
claims on physical damage, credit life and disability insurance policies
covering vehicles financed thereby and the obligors thereunder, certain
interests of the Seller in Dealer Recourse, all right, title and interest of the
Seller in and to the Purchase Agreement, the Yield Supplement Agreement and the
Custody and Pledge Agreement and any and all proceeds of the foregoing. The
rights of the holders of the Class B Certificates are subordinated to the rights
of the holders of the Class A Certificates, as set forth in the Agreement.
Under the Agreement, there will be distributed on the 15th day of each
or, if such 15th day is not a Business Day, the next Business Day (the
"Distribution Date"), commencing on November 17, 1997, to the person in whose
name this Class B Certificate is registered at the close of business on the
Record Date (as determined pursuant to the Agreement), such Class B
Certificateholder's fractional undivided interest in the amounts to be
distributed to the Class B Certificateholders as determined pursuant to the
Agreement; provided, however, that under certain circumstances specified in the
-------- -------
Agreement, amounts otherwise distributable to the Class B Certificateholders
will be deposited in the Class A Subordination Spread Account.
B-2
<PAGE>
Distributions on this Class B Certificate will be made by the Trustee
by wire transfer, check or money order mailed to the Class B Certificateholder
of record in the Certificate Register without the presentation or surrender of
this Class B Certificate or the making of any notation hereon. Except as
otherwise provided in the Agreement and notwithstanding the above, the final
distribution on this Class B Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Class B Certificate at the office or agency maintained for
that purpose by the Trustee in the Borough of Manhattan, The City of New York.
Reference is hereby made to the further provisions of this Class B
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual signature, this
Class B Certificate shall not entitle the holder hereof to any benefit under the
Agreement or be valid for any purpose.
B-3
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class B Certificate to be duly executed.
NISSAN AUTO RECEIVABLES 1997-A GRANTOR TRUST
THE FUJI BANK AND TRUST COMPANY,
as Trustee
DATED: __________ By ________________________________
[SEAL]
ATTEST:
______________________
Trustee Officer
This is one of the Class B Certificates referred
to in the within-mentioned Agreement.
THE FUJI BANK AND TRUST COMPANY,
as Trustee
By ________________________________
Authorized Officer
B-4
<PAGE>
[Reverse of Certificate]
The Certificates do not represent an obligation of, or an interest in,
the Seller, Nissan Motor Acceptance Corporation, the Trustee or any affiliate of
any of them. The Certificates are limited in right of payment to certain
collections and recoveries respecting the Receivables, all as more specifically
set forth in the Agreement. A copy of the Agreement may be examined during
normal business hours at the principal office of the Seller, and at such other
places, if any, designated by the Seller, by any Certificate Owner upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller and the rights of the Certificateholders under the Agreement at any time
by the Seller, the Servicer, NMAC and the Trustee with the consent of the
Holders of Class A Certificates and Class B Certificates, each voting as a
Class, evidencing not less than 51% of the Class A Certificate Balance and Class
B Certificate Balance, respectively. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and on all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
As provided in the Agreement and subject to certain significant
limitations on transfer therein set forth, the transfer of this Certificate is
registrable in the Certificate Register upon surrender of this Certificate for
registration of transfer at the offices or agencies maintained by the Trustee in
its capacity as Certificate Registrar, or by any successor Certificate
Registrar, in the Borough of Manhattan, The City of New York, accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same aggregate interest in the Trust
will be issued to the designated transferee.
The Class B Certificates are issuable only as registered Certificates
without coupons in denominations of
B-5
<PAGE>
$100,000 or in any amount in excess thereof; however, one Certificate may be
issued in a denomination representing or including any residual amount. As
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same aggregate denomination, as requested by the holder
surrendering the same. No service charge will be made for any such registration
of transfer or exchange, but the Trustee may require payment of a sum sufficient
to cover any tax or governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar and any agent of the Trustee or
the Certificate Registrar shall treat the person in whose name this Class B
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Agreement and the
disposition of all property held as part of the Trust. The Servicer of the
Receivables may at its option purchase the corpus of the Trust at a price
specified in the Agreement, and such purchase of the Receivables and other
property of the Trust will effect early retirement of the Certificates; however,
such right of purchase is exercisable only as of a Record Date as of which the
Pool Balance is less than 10% of the original aggregate principal balance of the
Receivables.
The recitals contained herein (other than the certificate of
authentication herein) shall be taken as the statements of the Seller or the
Servicer, as the case may be, and the Trustee assumes no responsibility for the
correctness thereof. The Trustee makes no representations as to the validity or
sufficiency of this Certificate (other than the certificate of authentication
herein), or of any Receivable or related document.
B-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code, of
assignee)
- --------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- --------------------------------------------------------------------------------
Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:
__________________________________*
Signature Guaranteed:
__________________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
B-7
<PAGE>
EXHIBIT C
[LOGO]
-----------------------------------------------------------
BOOK-ENTRY-ONLY COLLATERALIZED MORTGAGE OBLIGATIONS (CMOs)
(WITHOUT OWNER OPTION TO REDEEM)/
OTHER ASSET-BACKED SECURITIES/AND PASS-THROUGH CERTIFICATES
-----------------------------------------------------------
Letter of Representations
(To be Completed by Issuer and Trustee)
------------------------------------
(Name of Issuer)
------------------------------------
(Name of Trustee)
-------------
(Date)
Attention: General Counsel's Office
THE DEPOSITORY TRUST COMPANY
55 Water Street; 49th Floor
New York, NY 10041-0099
Re: ____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
(Issue Description)
Ladies and Gentlemen:
This letter sets forth our understanding with respect to certain matters
relating to the above-referenced issue (the "Securities"). Trustee will act as
trustee with respect to the Securities pursuant to a trust indenture dated ____
__________________, 199_ (the "Document"). _______________________________ is
("Underwriter")
distributing the Securities through The Depository Trust Company ("DTC").
To induce DTC to accept the Securities as eligible for deposit at DTC, and
to act in accordance with its Rules with respect to the Securities, Issuer and
Trustee make the following representations to DTC:
1. Prior to closing on the Securities on ______________, 199_, there shall
be deposited with DTC one Security certificate registered in the name of DTC's
nominee, Cede & Co., for each stated maturity of the Securities in the face
amounts set forth on Schedule A hereto, the total of
<PAGE>
which represents 100% of the principal amount of such Securities. If, however,
the aggregate principal amount of any maturity exceeds $200 million, one
certificate will be issued with respect to each $200 million of principal amount
and an additional certificate will be issued with respect to any remaining
principal amount. Each Security certificate shall bear the following legend:
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
2. In the event of any solicitation of consents from or voting by holders of
the Securities, Issuer or Trustee shall establish a record date for such
purposes (with no provision for revocation of consents or votes by subsequent
holders) and shall send notice of such record date to DTC not less than 15
calendar days in advance of such record date. Notices to DTC pursuant to this
Paragraph by telecopy shall be sent to DTC's Reorganization Department at (212)
709-6896 or (212) 709-6897, and receipt of such notices shall be confirmed by
telephoning (212) 709-6870. Notices to DTC pursuant to this Paragraph by mail or
by any other means shall be sent to DTC's Reorganization Department as indicated
in Paragraph 4.
3. In the event of a full or partial redemption, Issuer or Trustee shall
send a notice to DTC specifying: (a) the amount of the redemption or refunding;
(b) in the case of a refunding, the maturity date(s) established under the
refunding; and (c) the date such notice is to be mailed to Security holders or
published (the "Publication Date"). Such notice shall be sent to DTC by a secure
means (e.g., legible telecopy, registered or certified mail, overnight delivery)
in a timely manner designed to assure that such notice is in DTC's possession no
later than the close of business on the business day before or, if possible, two
business days before the Publication Date. Issuer or Trustee shall forward such
notice either in a separate secure transmission for each CUSIP number or in a
secure transmission for multiple CUSIP numbers (if applicable) which includes a
manifest or list of each CUSIP number submitted in that transmission. (The party
sending such notice shall have a method to verify subsequently the use of such
means and the timeliness of such notice.) The Publication Date shall be not less
than 30 days nor more than 60 days prior to the redemption date or, in the case
of an advance refunding, the date that the proceeds are deposited in escrow.
Notices to DTC pursuant to this Paragraph by telecopy shall be sent to DTC's
Call Notification Department at (516) 227-4039 or (516) 227-4190. If the party
sending the notice does not receive a telecopy receipt from DTC confirming that
the notice has been received, such party shall telephone (516) 227-4070. Notices
to DTC pursuant to this Paragraph by mail or by any other means shall be sent
to:
Manager: Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, NY 11530-4719
4. In the event of an invitation to tender the Securities (including
mandatory tenders, exchanges, and capital changes), notice by Issuer or Trustee
to Security holders specifying the terms of the tender and the Publication Date
of such notice shall be sent to DTC by a secure means in the manner set forth in
the preceding Paragraph. Notices to DTC pursuant to this Paragraph and notices
of other corporate actions by telecopy shall be sent to DTC's Reorganization
Department at (212) 709-1093
-2-
<PAGE>
or (212) 709-1094, and receipt of such notices shall be confirmed by telephoning
(212) 709-6884. Notices to DTC pursuant to the above by mail or by any other
means shall be sent to:
Manager; Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, NY 10004-2695
5. All notices and payment advices sent to DTC shall contain the CUSIP
number of the Securities.
6. Trustee shall send DTC written notice with respect to the dollar amount
per $1,000 original face value (or other minimum authorized denomination if less
than $1,000 face value) payable on each payment date allocated as to the
interest and principal portions thereof preferably 5, but not less than 2,
business days prior to such payment date. Such notices, which shall also contain
the current pool factor, any special adjustments to principal/interest rates
(e.g., adjustments due to deferred interest or shortfall), and Trustee contact's
name and telephone number, shall be sent by telecopy to DTC's Dividend
Department at (212) 709-1723, or if by mail or by any other means to:
Manager; Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 22nd Floor
New York, NY 10004-2695
7. [NOTE: ISSUER, MUST REPRESENT ONE OF THE FOLLOWING, AND CROSS OUT THE
OTHER:] [The interest accrual period is record date to record date.][The
interest accrual period is payment date to payment date.]
8. Trustee must provide DTC, no later than noon (Eastern Time) on the
payment date, CUSIP numbers for each issue for which payment is being sent, as
well as the dollar amount of the payment for each issue. Notification of payment
details should be sent using automated communications.
9. Interest payments and principal payments that are part of periodic
principal-and-interest payments shall be received by Cede & Co., as nominee of
DTC, or its registered assigns in sameday funds, no later than 2:30 p.m.
(Eastern Time) on each payment date (in accordance with existing arrangements
between Issuer or Trustee and DTC). Absent any other arrangements between Issuer
or Trustee and DTC, such funds shall be wired as follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C The Depository Trust Company
Dividend Deposit Account 066-026776
Issuer or Trustee shall provide interest payment information to a standard
announcement service subscribed to by DTC. In the unlikely event that no such
service exists, Issuer or Trustee shall provide interest payment information
directly to DTC in advance of the interest payment date as soon as the
information is available. This information should be conveyed directly to DTC
electronically. If electronic transmission is not available, absent any other
arrangements between Trustee and DTC, such information should be sent by
telecopy to DTC's Dividend Department at (212) 709-1723 or
-3-
<PAGE>
(212) 709-1686, and receipt of such notices shall be confirmed by telephoning
(212) 709-1270. Notices to DTC pursuant to the above by mail or by any other
means shall be sent to:
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square; 22nd Floor
New York, NY 10004-2695
10. DTC shall receive maturity and redemption payments allocated with
respect to each CUSIP number on the payable date in same-day funds by 2:30 p.m.
(Eastern Time). Absent any other arrangements between Trustee and DTC, such
payments shall be wired as follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C The Depository Trust Company
Redemption Account 066-027306
in accordance with existing SDFS payment procedures in the manner set forth in
DTC's SDFS Paying Agent Operating Procedures, a copy of which has previously
been furnished to Trustee.
11. DTC shall receive all reorganization payments and CUSIP-level detail
resulting from corporate actions (such as tender offers, remarketings, or
mergers) on the first payable date in same-day funds by 2:30 p.m. (Eastern
Time). Absent any other arrangements between Trustee and DTC, such payments
shall be wired as follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C The Depository Trust Company
Redemption Account 066-027608
12. DTC may direct Issuer or Trustee to use any other number or address as
the number or address to which notices or payments of interest or principal may
be sent.
13. In the event of a redemption, acceleration, or any other similar
transaction (e.g., tender made and accepted in response to Issuer's or Trustee's
invitation) necessitating a reduction in the aggregate principal amount of
Securities outstanding or an advance refunding of part of the Securities
outstanding, DTC, in its discretion: (a) may request Issuer or Trustee to issue
and authenticate a new Security certificate; or (b) may make an appropriate
notation on the Security certificate indicating the date and amount of such
reduction in principal except in the case of final maturity, in which case the
certificate will be presented to Issuer or Trustee prior to payment, if
required.
14. In the event that Issuer determines that beneficial owners of Securities
shall be able to obtain certificated Securities, Issuer or Trustee shall notify
DTC of the availability of certificates. In such event, Issuer or Trustee shall
issue, transfer, and exchange certificates in appropriate amounts, as required
by DTC and others.
15. DTC may discontinue providing its services as securities depository with
respect to the Securities at any time by giving reasonable notice to Issuer or
Trustee (at which time DTC will confirm with Issuer or Trustee the aggregate
principal amount of Securities outstanding). Under such circumstances, at DTC's
request Issuer and Trustee shall cooperate fully with DTC by taking
-4-
<PAGE>
appropriate action to make available one or more separate certificates
evidencing Securities to any DTC Particpant having Securities credited to its
DTC accounts.
16. Issuer: (a) understands that DTC has no obligation to, and will not,
communicate to its Participants or to any person having an interest in the
Securities any information contained in the Security certificate(s); and (b)
acknowledges that neither DTC's Participants nor any person having an interest
in the Securities shall be deemed to have notice of the provisions of the
Security certificates by virtue of submission of such certificate(s) to DTC.
17. Nothing herein shall be deemed to require Trustee to advance funds on
behalf of Issuer.
NOTES: Very truly yours,
- ------
A. If there is a Trustee (as
defined in this Letter of
Representions). Trustee as
well as Issuer must sign this
Letter. If there is no Trustee,
in signing this Letter Issuer
itself undertakes to perform ------------------------------------
all of the obligations set (Issuer)
forth herein.
B. Schedule B contains state- By:
ments that DTC believes ---------------------------------
accurately describe DTC, the (Authorized Officer's Signature)
method of effecting book-
entry transfers of securities
distributed through DTC, and
certain related matters. ------------------------------------
(Trustee)
By:
--------------------------------
Received and Accepted: (Authorized Officer's Signature)
THE DEPOSITORY TRUST COMPANY
By:
-----------------------------
cc: Underwriter
Underwriter's Counsel
-5-
<PAGE>
SCHEDULE A
----------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Describe Issue)
CUSIP Number Principal Amount Maturity Date Interest Rate
- ------------ ---------------- ------------- -------------
<PAGE>
SCHEDULE B
----------
SAMPLE OFFICIAL STATEMENT LANGUAGE
DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
-----------------------------------
(Prepared by DTC--bracketed material may be applicable only to certain issues)
1. The Depository Trust Company ("DTC"), New York, NY, will act as
securities depository for the securities (the "Securities"). The Securities
will be issued as fully-registered securities registered in the name of Cede &
Co. (DTC's partnership nominee). One fully-registered Security certificate will
be issued for [each issue of] the Securities, [each] in the aggregate principal
amount of such issue, and will be deposited with DTC. [If, however, the
aggregate principal amount of [any] issue exceeds $200 million, one certificate
will be issued with respect to each $200 million of principal amount and an
additional certificate will be issued with respect to any remaining principal
amount of such issue.]
2. DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants ("Participants")
deposit with DTC. DTC also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
Direct Participants include securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. DTC is owned
by a number of its Direct Participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks, and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The Rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
3. Purchases of Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Securities on
DTC's records. The ownership interest of each actual purchaser of each Security
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Securities are to be accomplished by entries made on the books
of Participants acting on behalf of Beneficial Owners. Beneficial Owners will
not receive certificates representing their ownership interests in Securities,
except in the event that use of the book-entry system for the Securities is
discontinued.
4. To facilitate subsequent transfers, all Securities deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Securities with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Securities; DTC's records
reflect only the identity of the Direct Participants to whose accounts such
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
[6. Redemption notices shall be sent to Cede & Co. If less than all of
the Securities within an issue are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in such
issued to be redeemed.]
<PAGE>
7. Neither DTC nor Cede & Co. will consent or vote with respect to
Securities. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as
soon as possible after the record date. The Omnibus Proxy assigns Cede
& Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Securities are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
8. Principal and interest payments on the Securities will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on payable date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payment on payable date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in " street name," and
will be the responsibility of such Participant and not of DTC, Trustee, or
Issuer, subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of principal and interest to DTC is the
responsibility of Issuer or Trustee, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
[9. A Beneficial Owner shall give notice to elect to have its
Securities purchased or tendered, through its Participant, to Trustee [or
Tender/Remarketing Agent], and shall effect delivery of such Securities by
causing the Direct Participant to transfer the Participant's interest in the
Securities, on DTC's records, to Trustee [or Tender/Remarketing Agent]. The
requirement for physical delivery of Securities in connection with an optional
tender or a mandatory purchase will be deemed satisfied when the ownership
rights in the Securities are transferred by Direct participants on DTC's records
and followed by a book-entry credit of tendered Securities to Trustee [or
Tender/Remarketing Agent's] DTC account.]
10. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to Issuer
or Agent. Under such circumstances, in the event that a successor securities
depository is not obtained, Security certificates are required to be printed and
delivered.
11. Issuer may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Security certificates will be printed and delivered.
12. The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that Issuer believes to be reliable, but
Issuer takes no responsibility for the accuracy thereof.
<PAGE>
LOGO
REPRESENTATIONS FOR ERISA-RESTRICTED SECURITIES --
to be included in DTC Letter of Representations
-----------------------------------------------
Issuer and Trustee recognize that DTC does not in any way undertake to,
and shall not have any responsibility to, monitor or ascertain whether a
transfer of Securities could give rise to a transaction prohibited or not
otherwise permissible under the Employee Retirement Income Security Act of 1974
or under Section 4975 of the Internal REvenue Code of 1986. Issuer and Trustee
acknowledge that: a) so long as Cede & Co. is the sole record owner of the
Securities, it shall be entitled to all voting rights in respect thereof and to
receive the full amount of all principal, premium, if any, and interest payable
with respect thereto; and b) DTC shall treat any DTC Participant having
Securities credited to its DTC accounts as entitled to the full benefits of
ownership of such Securities even if the crediting of such Securities to the DTC
accounts of such Participant results from transfers or failures to transfer in
violation of such laws. (The treatment by DTC of the effects of the crediting by
it of Securities to the accounts of DTC Participants shall not affect the rights
of Issuer or purchasers, sellers, or holders of Securities against any DTC
Participant.)
<PAGE>
Exhibit D-1
Trustee's Certificate
pursuant to Section 11.03
of the Pooling and Servicing
Agreement
The Fuji Bank and Trust Company, as trustee (the "Trustee") of the
Nissan Auto Receivables 1997-A Grantor Trust created pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") dated as of October
1, 1997, among Nissan Auto Receivables Corporation, as Seller (the "Seller"),
Nissan Motor Acceptance Corporation, as Servicer and in its individual capacity,
and the Trustee, does hereby sell, transfer, assign and otherwise convey to the
Seller, without recourse, representation or warranty, all of the Trustee's
right, title and interest in and to all of the Receivables (as defined in the
Pooling and Servicing Agreement) identified in the attached Servicer's
Certificate as "Repurchased Receivables," which are to be repurchased by the
Seller pursuant to Section 3.02, and all security and documents relating
thereto.
IN WITNESS WHEREOF I have hereunto set my hand this ____ day of
__________ , 1997.
______________________________
<PAGE>
Exhibit D-2
Trustee's Certificate
pursuant to Section 11.03
of the Pooling and Servicing
Agreement
The Fuji Bank and Trust Company, as trustee (the "Trustee") of the
Nissan Auto Receivables 1997-A Grantor Trust created pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") dated as of October
1, 1997, among Nissan Auto Receivables Corporation, as Seller, Nissan Motor
Acceptance Corporation, as Servicer (the "Servicer") and in its individual
capacity and the Trustee, does hereby sell, transfer, assign and otherwise
convey to the Servicer, without recourse, representation or warranty, all of the
Trustee's right, title and interest in and to all of the Receivables (as defined
in the Pooling and Servicing Agreement) identified in the attached Servicer's
Certificate as "Repurchased Receivables," which are to be purchased by the
Servicer pursuant to Section 4.07 or 12.02, and all security and documents
relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this ___ day of
_________ , 19__.
______________________________
<PAGE>
EXHIBIT E
[Draft - 10/17/97]
FORM OF CUSTODY AND PLEDGE AGREEMENT
CUSTODY AND PLEDGE AGREEMENT, dated as of October 1, 1997 entered into
among Nissan Auto Receivables Corporation, a Delaware corporation (the
"Seller"), The Fuji Bank and Trust Company, as custodian (the "Custodian"), and
The Fuji Bank and Trust Company, as trustee (the "Trustee").
W I T N E S S E T H
-------------------
WHEREAS, the Seller is a party to that certain Pooling and Servicing
Agreement dated as of the date hereof, (the "Pooling and Servicing Agreement,"
and capitalized terms used herein not otherwise defined shall have the meanings
assigned to them in the Pooling and Servicing Agreement), among the Seller,
Nissan Motor Acceptance Corporation, as Servicer and in its individual capacity,
and the Trustee, pursuant to which, among other things, the Certificates
representing ownership interests in the Trust were issued;
WHEREAS, pursuant to the Pooling and Servicing Agreement, the Seller
is required to establish a Class A Subordination Spread Account and a Class B
Subordination Spread Account or otherwise make funds available to make payments
to the holders of the Class A Certificates and Class B Certificates,
respectively;
WHEREAS, the parties hereto desire to establish two separate trust
accounts in order to effectuate and secure the obligations of the Seller as
described in the Pooling and Servicing Agreement and as provided herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. OBLIGATION SECURED. In consideration of the purchase of the
------------------
Certificates, the Seller agrees to cause payment of the Certificates from funds
available in the Subordination Spread Accounts (as hereinafter defined) and from
receipt of Excess Amounts and Recapture Amounts (as hereinafter defined), as and
to the extent set forth herein. Such obligation is non-recourse in respect of
the Seller, and recourse may only be had to the Subordination Spread Accounts,
the Excess Amounts and the Recapture Amounts.
<PAGE>
Neither the Subordination Spread Accounts, the Excess Amounts nor the Recapture
Amounts shall be part of the Trust.
SECTION 2. PLEDGE. In order to validly perfect its pledge, Seller hereby
------
conveys and transfers all of its right, title and interest in the Excess Amounts
and in the distributions to which it is entitled to under Section 5.06 of the
Pooling and Servicing Agreement as initial holder of the Class B Certificates
(the "Recapture Amounts") to the Custodian for the benefit of the
Certificateholders to have and to hold all such property in trust for the uses
and purposes, and subject to the terms and provisions, set forth in Section 5,
and grants to the Custodian for the benefit of the Certificateholders a first
priority security interest in the Excess Amounts, the Recapture Amounts and any
and all proceeds thereof. The Custodian hereby acknowledges such transfer and
accepts the trust hereunder and shall hold and distribute the Excess Amounts,
the Recapture Amounts and the proceeds thereof in accordance with the terms and
provisions of Section 5. The Custodian shall possess all right, title and
interest in and to all of the items from time that comprise the Excess Amounts
and the Recapture Amounts and their proceeds. The Excess Amounts and the
Recapture Amounts shall be under the sole dominion and control of the Custodian.
Neither the Seller nor any Person or entity claiming by, through or under the
Seller shall have any right, title or interest in, any control over the use of,
or any right to withdraw from amounts from, the Excess Amounts or the Recapture
Amounts. All Excess Amounts and Recapture Amounts shall be applied by the
Custodian as specified in Section 5.
SECTION 3. APPOINTMENT OF CUSTODIAN. The Trustee, with the consent of the
------------------------
Seller, hereby appoints the Custodian as custodian for, and agent of, the
Certificateholders to hold the property pledged and assigned hereunder and to
maintain the Subordination Spread Accounts and the Custodian hereby accepts such
appointment.
SECTION 4. THE SUBORDINATION SPREAD ACCOUNTS. Upon the execution of this
---------------------------------
Agreement by the parties hereto, there is hereby created (i) a trust account for
the benefit of the Class A Certificateholders (the "Class A Subordination Spread
Account") to include the money and other property deposited and held therein and
(ii) a trust account for the benefit of the Class B Certificateholders (the
"Class B Subordination Spread Account," and collectively with the
2
<PAGE>
Class A Subordination Spread Account, the "Subordination Spread Accounts") to
include the money and other property deposited and held therein, each as
described herein. On the date hereof, the Seller shall deposit the
Subordination Initial Deposit into the Class A Subordination Spread Account and
the Class B Specified Subordination Spread Account Balance into the Class B
Subordination Spread Account.
SECTION 5. ADDITIONAL PLEDGE OF DISTRIBUTIONS; ETC.
---------------------------------------
(a) In order to provide for prompt payment to the Certificateholders
and the Servicer, in accordance with Section 5.06(c) of the Pooling and
Servicing Agreement, and to assure availability of the amounts maintained in the
Subordination Spread Accounts, subject to the limitations set forth below, and
solely for the purpose of providing for payment of the Class A Distributable
Amount and the Class B Distributable Amount provided for in Section 5.06 of the
Pooling and Servicing Agreement and this Section 5, the Seller, on behalf of
itself and its successors and assigns, hereby conveys and transfers to the
Custodian and its successors and assigns (A) for the benefit of the Class A
Certificateholders, (x) all of its right, title and interest in and to the Class
A Subordination Spread Account, and all proceeds of the foregoing, including,
without limitation, all amounts and investments held from time to time in the
Class A Subordination Spread Account (whether in the form of deposit accounts,
physical property, book-entry securities, uncertificated securities or
otherwise); and (y) the Subordination Initial Deposit and all proceeds thereof
and (B) for the benefit of the Class B Certificateholders, (x) all of its right,
title and interest in and to the Class B Subordination Spread Account and all
proceeds of the foregoing, including, without limitation, all amounts and
investments held from time to time in the Class B Subordination Spread Account
(whether in the form of deposit accounts, physical property, book-entry
securities, uncertificated securities or otherwise); and (y) the Class B
Specified Subordination Spread Account Balance, as the same may be adjusted from
time to time in accordance with the terms of the Pooling and Servicing
Agreement, and all proceeds, thereof (all of the foregoing described in clauses
(A) and (B), subject to the limitations set forth below, the "Subordination
Spread Account Property"), to have and to hold all the aforesaid property,
rights and privileges in trust for the uses and purposes, and subject to the
terms and provisions, set forth in this Section 5, and grants to
3
<PAGE>
the Custodian for the benefit of the Certificateholders a first priority
security interest in the Subordination Spread Account Property and any and all
proceeds thereof. The Custodian hereby acknowledges such transfer and accepts
the trust hereunder and shall hold and distribute the Subordination Spread
Account Property in accordance with the terms and provisions of this Section 5.
(b) The Custodian shall release to the Trustee by 5:00 p.m. on the
day preceding each Distribution Date (for deposit in the Certificate Account on
such Distribution Date), from funds available in the Subordination Spread
Accounts, if any, the amount required to be paid from the Class A Subordination
Spread Account and the Class B Subordination Spread Account pursuant to Section
5.06 of the Pooling and Servicing Agreement.
(c) On each Distribution Date, if the amount of the respective
Subordination Spread Accounts (after giving effect to all payments to be made
from the Subordination Spread Accounts, in accordance with the Pooling and
Servicing Agreement on such Distribution Date) is less than the Class A
Specified Subordination Spread Account Balance or the Class B Specified
Subordination Spread Account Balance, as the case may be, for such Distribution
Date, the Trustee, after payment of any amounts required to be distributed to
the Class A Certificateholders and the Servicer, shall withhold the Excess
Amounts and the Recapture Amounts otherwise distributable to the Seller (in its
individual capacity and as initial holder of the Class B Certificates), and not
otherwise distributed to the Class A Certificateholders or the Servicer and
shall deposit the Excess Amounts and the Recapture Amounts in the following
order of priority: first, to the Class A Subordination Spread Account, until
the amount on deposit therein equals the Class A Specified Subordination Spread
Account Balance; second, from the Excess Amounts only, to the Class B
Subordination Spread Account, until the amount on deposit therein equals the
Class B Specified Subordination Spread Account Balance; and finally, to the
Seller. If the amount of the Class A Subordination Spread Account (after taking
into account any deposits and withdrawals therefrom on such Distribution Date in
accordance with the Pooling and Servicing Agreement) is greater than the Class A
Specified Subordination Spread Account Balance for such Distribution Date, the
Custodian shall release and distribute the amount of such excess first, to the
extent of any previously contributed and not yet recovered Recapture Amounts, to
the
4
<PAGE>
holders of Class B Certificates, second to the Class B Subordination Spread
Account until the amount on deposit therein equals the Class B Specified
Subordination Spread Account Balance, and finally, to the Seller. Amounts
properly distributed to the Seller or the Class B Certificateholders pursuant to
this Section 5(c) shall be deemed released from the trust and security interest
established by this Agreement, and the Seller and the Class B Certificateholders
shall in no event thereafter be required to refund any such distributed amounts.
(d) (i) Amounts held in the Class A Subordination Spread Account
shall be invested in the manner specified in Section 5.01 of the Pooling and
Servicing Agreement in the same manner as amounts in the Collection Account and
Certificate Account are invested; provided however, that (A) if permitted by the
-------- -------
rating agencies then rating the Certificates, monies on deposit in the Class A
Subordination Spread Account may be invested in obligations or securities that
mature later than the Business Day immediately preceding the next Distribution
Date, and (B) such investments shall be made in accordance with written
instructions from the Seller rather than the Servicer. Prior to the rating, if
any, of the Class B Certificates by the rating agencies, amounts held in the
Class B Subordination Spread Account shall be invested in the discretion of the
Seller upon its written instructions. From and after the time, if any, that the
Class B Certificates are rated, amounts held in the Class B Subordination Spread
Account shall be invested in obligations or securities permitted by the rating
agencies then rating such Class B Certificates, in accordance with the written
instructions of the Seller. Such investments shall not be sold or disposed of
prior to their respective maturities. All investments in the Subordination
Spread Accounts shall be made in the name of the Custodian or its nominee and
all income and gain realized thereon shall be solely for the benefit of the
Seller and shall be payable by the Custodian to the Seller in accordance with
subparagraph (iv) below.
(ii) With respect to the Class A Subordination Spread Account
Property, the Seller, on behalf of itself and its successors and assigns, and
the Custodian agree that:
(A) Any Subordination Spread Account Property that is held in
deposit accounts shall be held
5
<PAGE>
solely in the name of the Custodian at one or more depository institutions.
Each such deposit account shall be subject to the exclusive custody and
control of the Custodian, and the Custodian shall have sole signature
authority with respect thereto;
(B) Any Subordination Spread Account Property that constitutes
physical property shall be delivered to the Custodian in accordance with
paragraph (a) of the definition of "Delivery" contained in the Pooling and
Servicing Agreement and shall be held, pending maturity or disposition,
solely by the Custodian or a financial intermediary (as such term is
defined in Section [8-313(4)] of the UCC) acting solely for the Custodian;
(C) Any Subordination Spread Account Property that is a book-
entry security held through the Federal Reserve System pursuant to federal
book-entry regulations shall be delivered in accordance with paragraph (b)
of the definition of "Delivery" contained in the Pooling and Servicing
Agreement and shall be maintained by the Custodian, pending maturity or
disposition, through continued book-entry registration of such
Subordination Spread Account Property as described in such paragraph; and
(D) Any Subordination Spread Account Property that is an
"uncertificated security" under Article VIII of the UCC and that is not
governed by clause (C) above shall be delivered to the Custodian in
accordance with paragraph (c) of the definition of "Delivery" contained in
the Pooling and Servicing Agreement and shall be maintained by the
Custodian, pending maturity or disposition, through continued registration
of the Custodian's (or its nominee's) ownership of such security.
Effective upon Delivery of any Subordination Spread Account Property
in the form of physical property, book-entry securities or uncertificated
securities, the Custodian shall be deemed to have purchased such Subordination
Spread Account Property for value, in good faith, and without notice of any
adverse claim thereto.
(iii) Each of the Seller and the Servicer agrees to take or cause to
be taken such further action, to execute, deliver and file or cause to be
executed, delivered
6
<PAGE>
and filed such further documents and instruments (including, without limitation,
any UCC financing statements) as may be determined to be necessary in order to
perfect the interests created by this Section 5 and otherwise fully to
effectuate the purposes, terms and conditions of this Agreement. The Seller
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
Custodian's security interest; and
(B) make the necessary filings of financing statements or
amendments thereto within five (5) days after the occurrence of any of the
following: (1) any change in its corporate name or any trade name; (2) any
change in the location of its chief executive office or principal place of
business; or (3) any merger or consolidation or other change in its
identity or corporate structure and promptly notify the Custodian of any
such filings.
(iv) Investment earnings attributable to the Subordination Spread
Account Property and proceeds therefrom shall be held by the Custodian for the
benefit of the Seller with respect to the Subordination Initial Deposit and the
Excess Amounts and the Class B Certificateholders with respect to Recapture
Amounts, and shall be allocated monthly on a pro rata basis. Subject to the
immediately preceding sentence, investment earnings attributable to the
Subordination Spread Account Property shall not be subject to any claims or
rights of the Certificateholders or the Servicer. The Custodian shall cause all
investment earnings attributable to the Subordination Spread Accounts to be
distributed on each Distribution Date to the Seller or the Class B
Certificateholders, as the case may be. Realized losses, if any, on investment
of the Subordination Spread Account Property shall be charged first against
undistributed investment earnings attributable to the Subordination Spread
Account Property and then against the Subordination Spread Account Property.
(v) The Custodian shall not enter into any subordination or
intercreditor agreement with respect to the Subordination Spread Account
Property.
7
<PAGE>
(e) If the Servicer pursuant to Section 5.04 of the Pooling and
Servicing Agreement is required to make an Advance with respect to any
Distribution Date and does not do so from its own funds, the Custodian shall
withdraw funds from the Class A Subordination Spread Account and remit them to
the Trustee to cover any shortfall. Such payment shall be deemed to have been
made by the Servicer pursuant to Section 5.04 of the Pooling and Servicing
Agreement for purposes of making distributions pursuant to this Agreement, but
shall not otherwise satisfy the Servicer's obligation to deliver the amount of
the Advances to the Custodian, and the Servicer shall within two Business Days
replace any funds in the Class A Subordination Spread Account so used.
SECTION 6. INDEMNITY; SUCCESSOR CUSTODIAN; ETC. The Custodian shall be
------------------------------------
entitled to, and is hereby granted, immunities, indemnities, exculpations and
protections of the same scope and extent as those provided to the Trustee
pursuant to the Pooling and Servicing Agreement as if no Event of Default has
occurred and is continuing. If the Trustee shall resign or be removed pursuant
to Section 11.10 of the Pooling and Servicing Agreement, the Custodian shall be
released from its duties hereunder and the successor Trustee shall appoint a new
Custodian or assume the duties and the responsibilities of the Custodian
hereunder. The Custodian shall not otherwise resign without the consent of the
Trustee and the Servicer.
SECTION 7. TERMINATION. This Agreement shall terminate concurrently upon
-----------
the earlier of payment in full of the Certificates and the termination of the
Pooling and Servicing Agreement pursuant to Article XII of the Pooling and
Servicing Agreement. Upon such termination, all Excess Amounts and Recapture
Amounts in the Subordination Spread Accounts and the Certificate Account shall
be distributed first, to the extent of any previously contributed and not yet
recovered Recapture Amounts, to the holders of Class B Certificates, and any
remaining amounts to the Seller, and all such distributed amounts shall be
released from the liens of this Agreement and the trusts created hereunder.
SECTION 8. ASSIGNMENT. Notwithstanding anything to the contrary contained
----------
herein, except as provided in Section 6 hereof and in the Pooling and Servicing
Agreement, neither this Agreement nor any of the rights or obligations hereunder
may be assigned.
8
<PAGE>
SECTION 9. SUBSTITUTION OF COLLATERAL. The Custodian shall release and
--------------------------
deliver to the Seller or the Class B Certificateholders, as the case may be, the
Subordination Initial Deposit, the Excess Amounts or the Recapture Amounts upon
delivery to the Custodian of substitute collateral, provided that the Seller or
the Class B Certificateholders, as the case may be, at such party's own expense,
shall have provided the Custodian with a letter (in form and substance
reasonably acceptable to the Trustee) from each rating agency which has an
outstanding rating on the Certificates and which was requested by the Seller or
an affiliate to rate such Certificates to the effect that the substitution of
the substitute collateral for the Subordination Initial Deposit, the Excess
Amounts or the Recapture Amounts, as the case may be, will not cause such rating
agency to downgrade or withdraw the rating then assigned to such Certificates.
SECTION 10. FEES. Other than the fees that the Custodian, in its capacity
----
as Trustee, will receive pursuant to the Pooling and Servicing Agreement, the
Custodian will not be paid any additional fees for its duties hereunder;
provided that, if at any time the Custodian is a different corporate entity than
the Trustee, the Trustee shall pay to the Custodian such custodial fee as to
which the Trustee and the Custodian shall separately agree. In no event shall
such fee be paid from the Subordination Spread Accounts.
SECTION 11. TAXES. It is the intent of the parties that the
-----
Subordination Spread Account Property be treated as property of the Seller or,
if the Class B Certificates are transferred by the Seller, by the Seller and the
transferee thereof in direct proportion to their respective contributions of
such property, for all federal, state and local income and franchise tax
purposes. The provisions of this Agreement should be interpreted accordingly.
Further, the Seller (and any such transferee) shall include all income earned on
the Subordination Spread Accounts and from any and all Subordination Spread
Account Property in its (or their) gross income, pro rata, for all such tax
purposes.
SECTION 12. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
------------------------------
delay in exercising, on the part of the Custodian 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,
9
<PAGE>
remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privileges provided by law.
SECTION 13. THIRD-PARTY BENEFICIARIES. This Agreement will inure to the
-------------------------
benefit of and be binding upon the parties hereto, the Certificateholders, the
Trustee, the Servicer and their respective successors and permitted assigns.
Except as otherwise provided in this Section, no other Person will have any
right or obligation hereunder.
SECTION 14. AMENDMENTS, ETC. No amendment or waiver of any provision of
---------------
this Agreement, and no consent to any departure by the Seller herefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Seller, the Custodian and the Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. This Agreement may be amended from time to time by the Seller, the
Trustee and the Custodian, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provision in the Agreement
which may be inconsistent with any other provision therein, including making
such amendments as may be necessary in the event the Seller transfers any amount
of Class B Certificates, or to add 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, materially and adversely affect the
interests of any Certificateholder.
This Agreement may also be amended from time to time by the Seller,
the Trustee and the Custodian with the consent of the Holders of Class A
Certificates (which consent of any Holder of a Class A Certificate given
pursuant to this Section or pursuant to any other provision of this Agreement
shall be conclusive and binding on such Holder and on all future Holders of such
Certificate and of any Certificate issued upon the transfer thereof or in
exchange thereof or in lieu thereof whether or not notation of such consent is
made upon such Certificate), evidencing not less than 51% of the Class A
Certificate Balance for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement, or of
modifying in any manner the rights of the Holders of Certificates; provided,
--------
however, that no such amendment shall (a) increase or reduce in any manner the
- -------
10
<PAGE>
amount of the Class A Specified Subordination Spread Account Balance or the
Class B Specified Subordination Spread Account Balance (unless such changes are
made in accordance with the terms of the Pooling and Servicing Agreement), or
accelerate or delay the timing of payments from the Subordination Spread
Accounts, without the consent of each adversely affected Certificateholder, or
(b) reduce the aforesaid percentage of the Class A Certificate Balance which is
required to consent to any such amendment, without the consent of the Holders of
all Class A Certificates then outstanding. Notwithstanding the foregoing, no
such amendment pursuant to clause (a) of the preceding proviso shall be made
unless the rating agencies then rating the Certificates confirm that such
amendment will not result in a reduction on or withdrawal of its rating of the
Certificates of such class.
Prior to the execution of any such amendment or consent, the Seller
shall provide, and the Trustee shall distribute, written notification of the
substance of such amendment or consent to each of the rating agencies then
rating the Certificates at least ten Business Days prior to the execution
thereof.
Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder.
It shall not be necessary for the consent of Certificateholders
pursuant to this Section 14 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 Certificateholders provided for in this Agreement) and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Custodian may prescribe,
including the establishment of record dates pursuant to paragraph number 2 of
the Depository Agreement.
Prior to the execution of any amendment to this Agreement, the
Custodian shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement and the Opinion of Counsel referred to in Section 13.02(i)(1) of the
Pooling and Servicing Agreement. The Custodian may, but shall not be obligated
to, enter into any
11
<PAGE>
such amendment which affects the Custodian's own rights, duties or immunities
under this Agreement or otherwise.
SECTION 15. ADDRESSES FOR NOTICES. All notices and other communications
---------------------
hereunder shall be made at the addresses, in the manner and with the effect
provided in Section 13.05 of the Pooling and Servicing Agreement; provided,
--------
however, for purposes of giving notice pursuant to this Agreement, notices to
- -------
the Custodian may be addressed to the Corporate Trust Office specified in the
Pooling and Servicing Agreement.
SECTION 16. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY,
--------------------
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL 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 17. COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts and
may be delivered by facsimile signatures or by hand, each of which when executed
and delivered shall be an original, but all of which together shall constitute
one and the same instrument.
12
<PAGE>
IN WITNESS WHEREOF, the Seller, the Trustee and the Custodian have
caused this Agreement to be duly executed and delivered by their duly elected
officers as of the ___ day of __________ 1997.
NISSAN AUTO RECEIVABLES CORPORATION,
as Seller and as initial holder of the
Class B Certificates
By:
-----------------------------------
Name:
Title:
THE FUJI BANK AND TRUST COMPANY,
as Custodian
By:
-----------------------------------
Name:
Title:
THE FUJI BANK AND TRUST COMPANY,
as Trustee
By:
-----------------------------------
Name:
Title:
Acknowledged and Agreed:
- -----------------------
NISSAN MOTOR ACCEPTANCE CORPORATION,
as Servicer
By:
----------------------------------
Name:
Title:
13
<PAGE>
EXHIBIT F
[Draft - 10/17/97]
FORM OF YIELD SUPPLEMENT AGREEMENT
Nissan Auto Receivables Corporation
990 West 190th Street
Torrance, California 90502
Dated as of
October 1, 1997
YIELD SUPPLEMENT AGREEMENT
The Fuji Bank and Trust Company
Two World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Nissan Auto Receivables Corporation (the "Company") hereby confirms
arrangements made as of the date hereof with you, as Class A Agent for the
benefit of the Class A Certificateholders ("Class A Agent"), to be effective
upon (i) receipt by the Company of the enclosed copy of this letter agreement
(the "Yield Supplement Agreement"), executed by Class A Agent, (ii) execution of
the Purchase Agreement dated as of the date hereof (the "Purchase Agreement")
between the Company and Nissan Motor Acceptance Corporation ("NMAC"), (iii)
receipt by NMAC of the payment by the Company of the purchase price under the
Purchase Agreement and (iv) the receipt by the Company of the capital
contribution of NMAC in connection with the payment of the purchase price under
the Purchase Agreement. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings given to them in the Pooling and
Servicing Agreement, dated as of the date hereof, among NMAC, in its individual
capacity and as Servicer, the Company and The Fuji Bank and Trust Company, in
its capacity as Trustee (the "Pooling and Servicing Agreement").
1. On or prior to the fifth calendar day before each Distribution Date,
the Servicer shall notify the Company of the "Yield Supplement Amount" for such
Distribution Date and the amount on deposit in the Yield Supplement Reserve
Account (as defined below). The "Yield Supplement Amount" means, with respect
to any Distribution
<PAGE>
Date, the sum of all Receivable Yield Supplement Amounts for all Receivables.
"Receivable Yield Supplement Amount" means, with respect to any Receivable
(other than a Liquidated Receivable, after the Collection Period in which such
Receivable became a Liquidated Receivable) for any Collection Period, the amount
(only if positive) calculated by the Servicer equal to one-twelfth times (i)
interest at a rate equal to the sum of (a) the Pass-Through Rate and (b) the
Servicing Rate minus (ii) interest on such Receivable at its Annual Percentage
Rate on such Receivable's Principal Balance as of the first day of such
Collection Period.
2. On or before the Closing Date (as defined in the Purchase Agreement),
the Company shall establish and maintain with the Class A Agent for the benefit
of the Class A Certificateholders a separate trust account in the name of the
Class A Agent (the "Yield Supplement Reserve Account"), or such other account as
may be acceptable to the rating agencies then rating the Class A Certificates,
and the Company hereby grants to the Class A Agent for the benefit of the
Certificateholders a first priority security interest in the monies on deposit
and the other property that from time to time comprise the Yield Supplement
Reserve Account, and any and all proceeds thereof (collectively, the "Yield
Supplement Property"). The Class A Agent shall possess all right, title and
interest in the Yield Supplement Property and its proceeds. The Yield
Supplement Property and the Yield Supplement Reserve Account shall be under the
sole dominion and control of the Class A Agent. Neither the Seller nor any
Person claiming by, through or under the Seller shall have any right, title or
interest in, any control over the use of, or any right to withdraw from amounts
from, the Yield Supplement Property or the Yield Supplement Reserve Account.
All Yield Supplement Property in the Yield Supplement Reserve Account shall be
applied by the Class A Agent as specified in this Yield Supplement Agreement and
the Pooling and Servicing Agreement. The Class A Agent shall, not later than
12:00 noon on the Business Day preceding each Distribution Date, withdraw from
the Yield Supplement Reserve Account and deposit in the Certificate Account an
amount equal to the Yield Supplement Amount for such Distribution Date. On the
date of issuance of the Certificates, the Company shall deposit [$_________]
(the "Initial Yield Supplement Reserve Amount") into the Yield Supplement
Reserve Account. The amount required to be on deposit in the Yield Supplement
Reserve Account on the date of issuance of the Certificates and from time to
time thereafter (the "Required Yield Supplement Reserve Account
2
<PAGE>
Balance"), as determined by the Servicer and notified to the Class A Agent, will
be the lesser of, (i) the maximum Yield Supplement Amount that will become due
on all future Distribution Dates under this Yield Supplement Agreement, assuming
that payments on the Receivables are made on their scheduled due dates, that no
Receivable is prepaid in full or accelerated and that no related Financed
Vehicle underlying such Receivable is repossessed or becomes a total loss, and
(ii) the Initial Yield Supplement Reserve Amount. The Class A Agent shall have
no duty or liability to determine the Required Yield Supplement Reserve Account
Balance and may fully rely on the determination thereof by the Servicer. If, on
any Distribution Date, the funds in the Yield Supplement Reserve Account are in
excess of the Required Yield Supplement Reserve Account Balance for such
Distribution Date after giving effect to all distributions to be made on such
Distribution Date, the Class A Agent shall pay the Company the amount of such
excess. The Yield Supplement Reserve Account shall not be part of the Trust. It
is the intent of the parties that the Yield Supplement Property be treated as
property of the Company for all federal, state and local income and franchise
tax purposes. The provisions of this Yield Supplement Agreement should be
interpreted accordingly. Further, the Company shall include in its gross income
all income earned on the Yield Supplement Property and the Yield Supplement
Reserve Account.
3. All or a portion of the Yield Supplement Reserve Account may be
invested and reinvested in the manner specified in Section 5.01 of the Pooling
and Servicing Agreement with respect to monies in the Collection Account and
Certificate Account in accordance with written instructions from the Servicer;
provided that, if permitted by the rating agencies then rating the Class A
- --------
Certificates, monies on deposit therein may be invested in obligations or
securities specified in Section 5.01 that mature later than the Business Day
preceding the next Distribution Date. All such investments shall be made in the
name of the Class A Agent and all income and gain realized thereon shall be
solely for the benefit of the Company and shall be payable by the Class A Agent
to the Company on each Distribution Date from time to time upon the Company's
request to the Class A Agent. Upon termination of the Pooling and Servicing
Agreement, or in the event that the Company otherwise satisfies the requirements
established by the agencies initially rating the Class A Certificates, as
evidenced by the written reaffirmation by such agencies of
3
<PAGE>
the initial rating of the Class A Certificates, any amounts on deposit in the
Yield Supplement Reserve Account shall be paid to the Company.
4. All payments to the Company pursuant hereto shall be made by federal
wire transfer (same day funds) or immediately available funds, to such account
as the Company, or any assignee of the Company referred to in Section 6 hereof,
may designate in writing to the Class A Agent, prior to the relevant
Distribution Date.
5. Our agreements set forth in this Yield Supplement Agreement are our
primary obligations and such obligations are irrevocable, absolute and
unconditional, shall not be subject to any counterclaim, setoff or defense
(other than full and strict compliance by us with our obligations hereunder) and
shall remain in full force and effect without regard to, and shall not be
released, discharged or in any way affected by, any circumstances or condition
whatsoever.
6. In order to more fully protect the interests of the Certificateholders,
the Company will transfer, assign and convey its interest in this Yield
Supplement Agreement to the Nissan Auto Receivables 1997-A Grantor Trust
established under the Pooling and Servicing Agreement (the "Trust"). Following
such transfer, assignment and conveyance, this Yield Supplement Agreement shall
not be amended, modified or terminated without the consent of The Fuji Bank and
Trust Company, in its capacity as trustee for the Trust, except in accordance
with the provisions for amendments, modifications and terminations of the
Pooling and Servicing Agreement as set forth in Section 13.01 of the Pooling and
Servicing Agreement.
7. THIS YIELD SUPPLEMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL 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.
8. Except as otherwise provided herein, all notices pursuant to this Yield
Supplement Agreement shall be in writing, personally delivered, sent by
telecopier, sent by courier or mailed by certified mail, return receipt
requested, and shall be effective upon receipt thereof. All notices shall be
directed as set forth below, or to such other address or telecopy number or to
the attention of such
4
<PAGE>
other person as the relevant party shall have designated for such purpose in a
written notice.
The Company:
Nissan Auto Receivables Corporation
990 West 190th Street
Torrance, California 90502
Attention: Treasurer
Facsimile No.: [310-324-2542]
Class A Agent:
The Fuji Bank and Trust Company
Two World Trade Center
New York, New York 10048
Attention: Trust Administration Department
Facsimile No.: 212-321-2468
9. This Yield Supplement Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, all
of which shall be deemed to be one and the same document.
5
<PAGE>
If the foregoing satisfactorily sets forth the terms and conditions of our
agreement, please indicate your acceptance thereof by signing in the space
provided below and returning to us the enclosed duplicate original of this
letter.
Very truly yours,
NISSAN AUTO RECEIVABLES CORPORATION
By: __________________________
Name: ____________________
Title: ___________________
Agreed and accepted as of __________ ___, 1997
NISSAN MOTOR ACCEPTANCE CORPORATION
By:__________________________
Name:_____________________
Title:____________________
THE FUJI BANK AND TRUST COMPANY, AS TRUSTEE
AND CLASS A AGENT
By: _______________________________
Name:__________________________
Title:_________________________
6
<PAGE>
EXHIBIT 4.2
[Draft - 10/17/97]
FORM OF CUSTODY AND PLEDGE AGREEMENT
CUSTODY AND PLEDGE AGREEMENT, dated as of October 1, 1997 entered into
among Nissan Auto Receivables Corporation, a Delaware corporation (the
"Seller"), The Fuji Bank and Trust Company, as custodian (the "Custodian"), and
The Fuji Bank and Trust Company, as trustee (the "Trustee").
W I T N E S S E T H
-------------------
WHEREAS, the Seller is a party to that certain Pooling and Servicing
Agreement dated as of the date hereof, (the "Pooling and Servicing Agreement,"
and capitalized terms used herein not otherwise defined shall have the meanings
assigned to them in the Pooling and Servicing Agreement), among the Seller,
Nissan Motor Acceptance Corporation, as Servicer and in its individual capacity,
and the Trustee, pursuant to which, among other things, the Certificates
representing ownership interests in the Trust were issued;
WHEREAS, pursuant to the Pooling and Servicing Agreement, the Seller
is required to establish a Class A Subordination Spread Account and a Class B
Subordination Spread Account or otherwise make funds available to make payments
to the holders of the Class A Certificates and Class B Certificates,
respectively;
WHEREAS, the parties hereto desire to establish two separate trust
accounts in order to effectuate and secure the obligations of the Seller as
described in the Pooling and Servicing Agreement and as provided herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. OBLIGATION SECURED. In consideration of the purchase of the
------------------
Certificates, the Seller agrees to cause payment of the Certificates from funds
available in the Subordination Spread Accounts (as hereinafter defined) and from
receipt of Excess Amounts and Recapture Amounts (as hereinafter defined), as and
to the extent set forth herein. Such obligation is non-recourse in respect of
the Seller, and recourse may only be had to the Subordination Spread Accounts,
the Excess Amounts and the Recapture Amounts.
<PAGE>
Neither the Subordination Spread Accounts, the Excess Amounts nor the Recapture
Amounts shall be part of the Trust.
SECTION 2. PLEDGE. In order to validly perfect its pledge, Seller hereby
------
conveys and transfers all of its right, title and interest in the Excess Amounts
and in the distributions to which it is entitled to under Section 5.06 of the
Pooling and Servicing Agreement as initial holder of the Class B Certificates
(the "Recapture Amounts") to the Custodian for the benefit of the
Certificateholders to have and to hold all such property in trust for the uses
and purposes, and subject to the terms and provisions, set forth in Section 5,
and grants to the Custodian for the benefit of the Certificateholders a first
priority security interest in the Excess Amounts, the Recapture Amounts and any
and all proceeds thereof. The Custodian hereby acknowledges such transfer and
accepts the trust hereunder and shall hold and distribute the Excess Amounts,
the Recapture Amounts and the proceeds thereof in accordance with the terms and
provisions of Section 5. The Custodian shall possess all right, title and
interest in and to all of the items from time that comprise the Excess Amounts
and the Recapture Amounts and their proceeds. The Excess Amounts and the
Recapture Amounts shall be under the sole dominion and control of the Custodian.
Neither the Seller nor any Person or entity claiming by, through or under the
Seller shall have any right, title or interest in, any control over the use of,
or any right to withdraw from amounts from, the Excess Amounts or the Recapture
Amounts. All Excess Amounts and Recapture Amounts shall be applied by the
Custodian as specified in Section 5.
SECTION 3. APPOINTMENT OF CUSTODIAN. The Trustee, with the consent of the
------------------------
Seller, hereby appoints the Custodian as custodian for, and agent of, the
Certificateholders to hold the property pledged and assigned hereunder and to
maintain the Subordination Spread Accounts and the Custodian hereby accepts such
appointment.
SECTION 4. THE SUBORDINATION SPREAD ACCOUNTS. Upon the execution of this
---------------------------------
Agreement by the parties hereto, there is hereby created (i) a trust account for
the benefit of the Class A Certificateholders (the "Class A Subordination Spread
Account") to include the money and other property deposited and held therein and
(ii) a trust account for the benefit of the Class B Certificateholders (the
"Class B Subordination Spread Account," and collectively with the
2
<PAGE>
Class A Subordination Spread Account, the "Subordination Spread Accounts") to
include the money and other property deposited and held therein, each as
described herein. On the date hereof, the Seller shall deposit the
Subordination Initial Deposit into the Class A Subordination Spread Account and
the Class B Specified Subordination Spread Account Balance into the Class B
Subordination Spread Account.
SECTION 5. ADDITIONAL PLEDGE OF DISTRIBUTIONS; ETC.
---------------------------------------
(a) In order to provide for prompt payment to the Certificateholders
and the Servicer, in accordance with Section 5.06(c) of the Pooling and
Servicing Agreement, and to assure availability of the amounts maintained in the
Subordination Spread Accounts, subject to the limitations set forth below, and
solely for the purpose of providing for payment of the Class A Distributable
Amount and the Class B Distributable Amount provided for in Section 5.06 of the
Pooling and Servicing Agreement and this Section 5, the Seller, on behalf of
itself and its successors and assigns, hereby conveys and transfers to the
Custodian and its successors and assigns (A) for the benefit of the Class A
Certificateholders, (x) all of its right, title and interest in and to the Class
A Subordination Spread Account, and all proceeds of the foregoing, including,
without limitation, all amounts and investments held from time to time in the
Class A Subordination Spread Account (whether in the form of deposit accounts,
physical property, book-entry securities, uncertificated securities or
otherwise); and (y) the Subordination Initial Deposit and all proceeds thereof
and (B) for the benefit of the Class B Certificateholders, (x) all of its right,
title and interest in and to the Class B Subordination Spread Account and all
proceeds of the foregoing, including, without limitation, all amounts and
investments held from time to time in the Class B Subordination Spread Account
(whether in the form of deposit accounts, physical property, book-entry
securities, uncertificated securities or otherwise); and (y) the Class B
Specified Subordination Spread Account Balance, as the same may be adjusted from
time to time in accordance with the terms of the Pooling and Servicing
Agreement, and all proceeds, thereof (all of the foregoing described in clauses
(A) and (B), subject to the limitations set forth below, the "Subordination
Spread Account Property"), to have and to hold all the aforesaid property,
rights and privileges in trust for the uses and purposes, and subject to the
terms and provisions, set forth in this Section 5, and grants to
3
<PAGE>
the Custodian for the benefit of the Certificateholders a first priority
security interest in the Subordination Spread Account Property and any and all
proceeds thereof. The Custodian hereby acknowledges such transfer and accepts
the trust hereunder and shall hold and distribute the Subordination Spread
Account Property in accordance with the terms and provisions of this Section 5.
(b) The Custodian shall release to the Trustee by 5:00 p.m. on the
day preceding each Distribution Date (for deposit in the Certificate Account on
such Distribution Date), from funds available in the Subordination Spread
Accounts, if any, the amount required to be paid from the Class A Subordination
Spread Account and the Class B Subordination Spread Account pursuant to Section
5.06 of the Pooling and Servicing Agreement.
(c) On each Distribution Date, if the amount of the respective
Subordination Spread Accounts (after giving effect to all payments to be made
from the Subordination Spread Accounts, in accordance with the Pooling and
Servicing Agreement on such Distribution Date) is less than the Class A
Specified Subordination Spread Account Balance or the Class B Specified
Subordination Spread Account Balance, as the case may be, for such Distribution
Date, the Trustee, after payment of any amounts required to be distributed to
the Class A Certificateholders and the Servicer, shall withhold the Excess
Amounts and the Recapture Amounts otherwise distributable to the Seller (in its
individual capacity and as initial holder of the Class B Certificates), and not
otherwise distributed to the Class A Certificateholders or the Servicer and
shall deposit the Excess Amounts and the Recapture Amounts in the following
order of priority: first, to the Class A Subordination Spread Account, until
the amount on deposit therein equals the Class A Specified Subordination Spread
Account Balance; second, from the Excess Amounts only, to the Class B
Subordination Spread Account, until the amount on deposit therein equals the
Class B Specified Subordination Spread Account Balance; and finally, to the
Seller. If the amount of the Class A Subordination Spread Account (after taking
into account any deposits and withdrawals therefrom on such Distribution Date in
accordance with the Pooling and Servicing Agreement) is greater than the Class A
Specified Subordination Spread Account Balance for such Distribution Date, the
Custodian shall release and distribute the amount of such excess first, to the
extent of any previously contributed and not yet recovered Recapture Amounts, to
the
4
<PAGE>
holders of Class B Certificates, second to the Class B Subordination Spread
Account until the amount on deposit therein equals the Class B Specified
Subordination Spread Account Balance, and finally, to the Seller. Amounts
properly distributed to the Seller or the Class B Certificateholders pursuant to
this Section 5(c) shall be deemed released from the trust and security interest
established by this Agreement, and the Seller and the Class B Certificateholders
shall in no event thereafter be required to refund any such distributed amounts.
(d) (i) Amounts held in the Class A Subordination Spread Account
shall be invested in the manner specified in Section 5.01 of the Pooling and
Servicing Agreement in the same manner as amounts in the Collection Account and
Certificate Account are invested; provided however, that (A) if permitted by the
-------- -------
rating agencies then rating the Certificates, monies on deposit in the Class A
Subordination Spread Account may be invested in obligations or securities that
mature later than the Business Day immediately preceding the next Distribution
Date, and (B) such investments shall be made in accordance with written
instructions from the Seller rather than the Servicer. Prior to the rating, if
any, of the Class B Certificates by the rating agencies, amounts held in the
Class B Subordination Spread Account shall be invested in the discretion of the
Seller upon its written instructions. From and after the time, if any, that the
Class B Certificates are rated, amounts held in the Class B Subordination Spread
Account shall be invested in obligations or securities permitted by the rating
agencies then rating such Class B Certificates, in accordance with the written
instructions of the Seller. Such investments shall not be sold or disposed of
prior to their respective maturities. All investments in the Subordination
Spread Accounts shall be made in the name of the Custodian or its nominee and
all income and gain realized thereon shall be solely for the benefit of the
Seller and shall be payable by the Custodian to the Seller in accordance with
subparagraph (iv) below.
(ii) With respect to the Class A Subordination Spread Account
Property, the Seller, on behalf of itself and its successors and assigns, and
the Custodian agree that:
(A) Any Subordination Spread Account Property that is held in
deposit accounts shall be held
5
<PAGE>
solely in the name of the Custodian at one or more depository institutions.
Each such deposit account shall be subject to the exclusive custody and
control of the Custodian, and the Custodian shall have sole signature
authority with respect thereto;
(B) Any Subordination Spread Account Property that constitutes
physical property shall be delivered to the Custodian in accordance with
paragraph (a) of the definition of "Delivery" contained in the Pooling and
Servicing Agreement and shall be held, pending maturity or disposition,
solely by the Custodian or a financial intermediary (as such term is
defined in Section [8-313(4)] of the UCC) acting solely for the Custodian;
(C) Any Subordination Spread Account Property that is a book-
entry security held through the Federal Reserve System pursuant to federal
book-entry regulations shall be delivered in accordance with paragraph (b)
of the definition of "Delivery" contained in the Pooling and Servicing
Agreement and shall be maintained by the Custodian, pending maturity or
disposition, through continued book-entry registration of such
Subordination Spread Account Property as described in such paragraph; and
(D) Any Subordination Spread Account Property that is an
"uncertificated security" under Article VIII of the UCC and that is not
governed by clause (C) above shall be delivered to the Custodian in
accordance with paragraph (c) of the definition of "Delivery" contained in
the Pooling and Servicing Agreement and shall be maintained by the
Custodian, pending maturity or disposition, through continued registration
of the Custodian's (or its nominee's) ownership of such security.
Effective upon Delivery of any Subordination Spread Account Property
in the form of physical property, book-entry securities or uncertificated
securities, the Custodian shall be deemed to have purchased such Subordination
Spread Account Property for value, in good faith, and without notice of any
adverse claim thereto.
(iii) Each of the Seller and the Servicer agrees to take or cause to
be taken such further action, to execute, deliver and file or cause to be
executed, delivered
6
<PAGE>
and filed such further documents and instruments (including, without limitation,
any UCC financing statements) as may be determined to be necessary in order to
perfect the interests created by this Section 5 and otherwise fully to
effectuate the purposes, terms and conditions of this Agreement. The Seller
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
Custodian's security interest; and
(B) make the necessary filings of financing statements or
amendments thereto within five (5) days after the occurrence of any of the
following: (1) any change in its corporate name or any trade name; (2) any
change in the location of its chief executive office or principal place of
business; or (3) any merger or consolidation or other change in its
identity or corporate structure and promptly notify the Custodian of any
such filings.
(iv) Investment earnings attributable to the Subordination Spread
Account Property and proceeds therefrom shall be held by the Custodian for the
benefit of the Seller with respect to the Subordination Initial Deposit and the
Excess Amounts and the Class B Certificateholders with respect to Recapture
Amounts, and shall be allocated monthly on a pro rata basis. Subject to the
immediately preceding sentence, investment earnings attributable to the
Subordination Spread Account Property shall not be subject to any claims or
rights of the Certificateholders or the Servicer. The Custodian shall cause all
investment earnings attributable to the Subordination Spread Accounts to be
distributed on each Distribution Date to the Seller or the Class B
Certificateholders, as the case may be. Realized losses, if any, on investment
of the Subordination Spread Account Property shall be charged first against
undistributed investment earnings attributable to the Subordination Spread
Account Property and then against the Subordination Spread Account Property.
(v) The Custodian shall not enter into any subordination or
intercreditor agreement with respect to the Subordination Spread Account
Property.
7
<PAGE>
(e) If the Servicer pursuant to Section 5.04 of the Pooling and
Servicing Agreement is required to make an Advance with respect to any
Distribution Date and does not do so from its own funds, the Custodian shall
withdraw funds from the Class A Subordination Spread Account and remit them to
the Trustee to cover any shortfall. Such payment shall be deemed to have been
made by the Servicer pursuant to Section 5.04 of the Pooling and Servicing
Agreement for purposes of making distributions pursuant to this Agreement, but
shall not otherwise satisfy the Servicer's obligation to deliver the amount of
the Advances to the Custodian, and the Servicer shall within two Business Days
replace any funds in the Class A Subordination Spread Account so used.
SECTION 6. INDEMNITY; SUCCESSOR CUSTODIAN; ETC. The Custodian shall be
------------------------------------
entitled to, and is hereby granted, immunities, indemnities, exculpations and
protections of the same scope and extent as those provided to the Trustee
pursuant to the Pooling and Servicing Agreement as if no Event of Default has
occurred and is continuing. If the Trustee shall resign or be removed pursuant
to Section 11.10 of the Pooling and Servicing Agreement, the Custodian shall be
released from its duties hereunder and the successor Trustee shall appoint a new
Custodian or assume the duties and the responsibilities of the Custodian
hereunder. The Custodian shall not otherwise resign without the consent of the
Trustee and the Servicer.
SECTION 7. TERMINATION. This Agreement shall terminate concurrently upon
-----------
the earlier of payment in full of the Certificates and the termination of the
Pooling and Servicing Agreement pursuant to Article XII of the Pooling and
Servicing Agreement. Upon such termination, all Excess Amounts and Recapture
Amounts in the Subordination Spread Accounts and the Certificate Account shall
be distributed first, to the extent of any previously contributed and not yet
recovered Recapture Amounts, to the holders of Class B Certificates, and any
remaining amounts to the Seller, and all such distributed amounts shall be
released from the liens of this Agreement and the trusts created hereunder.
SECTION 8. ASSIGNMENT. Notwithstanding anything to the contrary contained
----------
herein, except as provided in Section 6 hereof and in the Pooling and Servicing
Agreement, neither this Agreement nor any of the rights or obligations hereunder
may be assigned.
8
<PAGE>
SECTION 9. SUBSTITUTION OF COLLATERAL. The Custodian shall release and
--------------------------
deliver to the Seller or the Class B Certificateholders, as the case may be, the
Subordination Initial Deposit, the Excess Amounts or the Recapture Amounts upon
delivery to the Custodian of substitute collateral, provided that the Seller or
the Class B Certificateholders, as the case may be, at such party's own expense,
shall have provided the Custodian with a letter (in form and substance
reasonably acceptable to the Trustee) from each rating agency which has an
outstanding rating on the Certificates and which was requested by the Seller or
an affiliate to rate such Certificates to the effect that the substitution of
the substitute collateral for the Subordination Initial Deposit, the Excess
Amounts or the Recapture Amounts, as the case may be, will not cause such rating
agency to downgrade or withdraw the rating then assigned to such Certificates.
SECTION 10. FEES. Other than the fees that the Custodian, in its capacity
----
as Trustee, will receive pursuant to the Pooling and Servicing Agreement, the
Custodian will not be paid any additional fees for its duties hereunder;
provided that, if at any time the Custodian is a different corporate entity than
the Trustee, the Trustee shall pay to the Custodian such custodial fee as to
which the Trustee and the Custodian shall separately agree. In no event shall
such fee be paid from the Subordination Spread Accounts.
SECTION 11. TAXES. It is the intent of the parties that the
-----
Subordination Spread Account Property be treated as property of the Seller or,
if the Class B Certificates are transferred by the Seller, by the Seller and the
transferee thereof in direct proportion to their respective contributions of
such property, for all federal, state and local income and franchise tax
purposes. The provisions of this Agreement should be interpreted accordingly.
Further, the Seller (and any such transferee) shall include all income earned on
the Subordination Spread Accounts and from any and all Subordination Spread
Account Property in its (or their) gross income, pro rata, for all such tax
purposes.
SECTION 12. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
------------------------------
delay in exercising, on the part of the Custodian 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,
9
<PAGE>
remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privileges provided by law.
SECTION 13. THIRD-PARTY BENEFICIARIES. This Agreement will inure to the
-------------------------
benefit of and be binding upon the parties hereto, the Certificateholders, the
Trustee, the Servicer and their respective successors and permitted assigns.
Except as otherwise provided in this Section, no other Person will have any
right or obligation hereunder.
SECTION 14. AMENDMENTS, ETC. No amendment or waiver of any provision of
---------------
this Agreement, and no consent to any departure by the Seller herefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Seller, the Custodian and the Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. This Agreement may be amended from time to time by the Seller, the
Trustee and the Custodian, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provision in the Agreement
which may be inconsistent with any other provision therein, including making
such amendments as may be necessary in the event the Seller transfers any amount
of Class B Certificates, or to add 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, materially and adversely affect the
interests of any Certificateholder.
This Agreement may also be amended from time to time by the Seller,
the Trustee and the Custodian with the consent of the Holders of Class A
Certificates (which consent of any Holder of a Class A Certificate given
pursuant to this Section or pursuant to any other provision of this Agreement
shall be conclusive and binding on such Holder and on all future Holders of such
Certificate and of any Certificate issued upon the transfer thereof or in
exchange thereof or in lieu thereof whether or not notation of such consent is
made upon such Certificate), evidencing not less than 51% of the Class A
Certificate Balance for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement, or of
modifying in any manner the rights of the Holders of Certificates; provided,
--------
however, that no such amendment shall (a) increase or reduce in any manner the
- -------
10
<PAGE>
amount of the Class A Specified Subordination Spread Account Balance or the
Class B Specified Subordination Spread Account Balance (unless such changes are
made in accordance with the terms of the Pooling and Servicing Agreement), or
accelerate or delay the timing of payments from the Subordination Spread
Accounts, without the consent of each adversely affected Certificateholder, or
(b) reduce the aforesaid percentage of the Class A Certificate Balance which is
required to consent to any such amendment, without the consent of the Holders of
all Class A Certificates then outstanding. Notwithstanding the foregoing, no
such amendment pursuant to clause (a) of the preceding proviso shall be made
unless the rating agencies then rating the Certificates confirm that such
amendment will not result in a reduction on or withdrawal of its rating of the
Certificates of such class.
Prior to the execution of any such amendment or consent, the Seller
shall provide, and the Trustee shall distribute, written notification of the
substance of such amendment or consent to each of the rating agencies then
rating the Certificates at least ten Business Days prior to the execution
thereof.
Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder.
It shall not be necessary for the consent of Certificateholders
pursuant to this Section 14 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 Certificateholders provided for in this Agreement) and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Custodian may prescribe,
including the establishment of record dates pursuant to paragraph number 2 of
the Depository Agreement.
Prior to the execution of any amendment to this Agreement, the
Custodian shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement and the Opinion of Counsel referred to in Section 13.02(i)(1) of the
Pooling and Servicing Agreement. The Custodian may, but shall not be obligated
to, enter into any
11
<PAGE>
such amendment which affects the Custodian's own rights, duties or immunities
under this Agreement or otherwise.
SECTION 15. ADDRESSES FOR NOTICES. All notices and other communications
---------------------
hereunder shall be made at the addresses, in the manner and with the effect
provided in Section 13.05 of the Pooling and Servicing Agreement; provided,
--------
however, for purposes of giving notice pursuant to this Agreement, notices to
- -------
the Custodian may be addressed to the Corporate Trust Office specified in the
Pooling and Servicing Agreement.
SECTION 16. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY,
--------------------
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL 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 17. COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts and
may be delivered by facsimile signatures or by hand, each of which when executed
and delivered shall be an original, but all of which together shall constitute
one and the same instrument.
12
<PAGE>
IN WITNESS WHEREOF, the Seller, the Trustee and the Custodian have
caused this Agreement to be duly executed and delivered by their duly elected
officers as of the ___ day of __________ 1997.
NISSAN AUTO RECEIVABLES CORPORATION,
as Seller and as initial holder of the
Class B Certificates
By:
-------------------------------------
Name:
Title:
THE FUJI BANK AND TRUST COMPANY,
as Custodian
By:
-------------------------------------
Name:
Title:
THE FUJI BANK AND TRUST COMPANY,
as Trustee
By:
-------------------------------------
Name:
Title:
Acknowledged and Agreed:
- -----------------------
NISSAN MOTOR ACCEPTANCE CORPORATION,
as Servicer
By:
---------------------------------
Name:
Title:
13
<PAGE>
Exhibit 5.1
Weil, Gotshal & Manges LLP
A Limited Liability Partnership Including Professional
Corporations
767 Fifth Avenue . New York, NY 10153-0119
(212) 310-8000
FAX: (212) 310-8007
October 17, 1997
Nissan Auto Receivables Corporation
990 W. 190th Street
Torrance, California 90502
Ladies and Gentlemen:
We have acted as special counsel to Nissan Auto Receivables Corporation, a
Delaware corporation, as Seller (the "Company"), and Nissan Motor Acceptance
Corporation, a California corporation, as Servicer ("NMAC"), in connection with
the preparation and filing of the Registration Statement of the Company on Form
S-1 (File No. 333-1664) under the Securities Act of 1933, as amended (the
"Registration Statement"). Capitalized terms defined in the Registration
Statement and used but not otherwise defined herein are used herein as so
defined.
In so acting, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of such corporate records, agreements, documents
and other instruments, and such certificates or comparable documents of public
officials and of officers and representatives of the Company and NMAC, and have
made such inquiries of such officers and representatives as we have deemed
relevant and necessary as a basis for the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies and the authenticity of the
originals of such latter documents. As to all questions of fact material to
this opinion that have not been independently established, we have relied upon
certificates or comparable documents of officers and representatives of the
Company and NMAC.
<PAGE>
Nissan Auto Receivables Corporation
October 17, 1997
Page 2
Based on the foregoing, and subject to the qualifications stated herein, we
are of the opinion that:
The Certificates of the Trust to be issued and sold by the Company have
been duly authorized by the Company and, when issued and sold as contemplated by
the Pooling and Servicing Agreement to be entered into among the Company, NMAC
and the Trustee, will be validly issued, fully paid and nonassessable.
The opinions expressed herein are limited to the laws of the State of New
York, the corporate laws of the State of Delaware and the federal laws of the
United States, and we express no opinion as to the effect on the matters covered
by this letter of the laws of any other jurisdiction.
We hereby consent to be named in the Prospectus as the attorneys who have
passed upon the legality of the securities being offered thereby and to the
filing of this opinion as an exhibit to the Registration Statement.
Very truly yours,
/s/ Weil, Gotshal & Manges LLP
<PAGE>
EXHIBIT 8.1
Weil, Gotshal & Manges LLP
A Limited Liability Partnership Including Professional Corporations
767 Fifth Avenue
New York, NY 10153-0119
(212) 310-8000
(212) 310-8007
October 17, 1997
Nissan Auto Receivables Corporation
990 West 190th Street
Torrence, CA 90502
Re: Nissan Auto Receivables 1997-A Grantor Trust Asset Backed
---------------------------------------------------------
Certificates
------------
Ladies and Gentlemen:
We have acted as counsel to Nissan Auto Receivables Corporation (the
"Seller") in connection with the preparation of the Registration Statement
(Registration No. 333-1664) filed on Form S-1 with the Securities and Exchange
Commission on August 21, 1997, as amended to the date hereof (the "Prospectus").
All capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Prospectus.
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Prospectus, a draft of the
Agreement, a draft of the Purchase Agreement, a draft of the Custody and Pledge
Agreement, and a draft of the Yield Supplement Agreement, and such corporate
records, agreements, documents and other instruments (the aforementioned
documents together, the "Documents"), and have made such inquiries of such
officers and representatives of the Trust and such other persons, as we have
deemed relevant and necessary as a basis for the opinion hereinafter set forth.
In such examination, we have assumed the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies, the authenticity of the
originals of such latter documents, the genuineness of all signatures, and the
correctness of all representations made therein. (The terms of the Documents are
incorporated herein by reference.) We have further assumed that the final
<PAGE>
Nissan Auto Receivables Corporation
Page 2
executed Documents are substantially the same as those which we have reviewed
and that there are no agreements or understandings between or among the parties
to the Documents with respect to the transactions contemplated therein other
than those contained in the Documents.
Based on the foregoing, subject to the next succeeding paragraph, and
assuming full compliance with all the terms of the Documents, it is our opinion
that the statements contained in the Prospectus under the caption "Federal
Income Tax Consequences," insofar as such statements constitute matters of law
or legal conclusions and except to the extent qualified therein, are correct in
all material respects.
The foregoing opinion is based on current provisions of the Internal
Revenue Code of 1986, as amended, the Treasury Regulations promulgated
thereunder, published pronouncements of the Internal Revenue Service, and case
law, any of which may be changed at any time with retroactive effect. Further,
you should be aware that opinions of counsel are not binding on the Internal
Revenue Service or the courts. We express no opinion either as to any matters
not specifically covered by the foregoing opinion or as to the effect on the
matters covered by this opinion of the laws of any other jurisdictions.
Additionally, we undertake no obligation to update this opinion in the event
there is either a change in the legal authorities, in the facts, including the
taking of any action by any party to any of the transactions described in the
Documents pursuant to any opinion of counsel as required by any of the Documents
relating to such transactions, or in the Documents on which this opinion is
based, or an inaccuracy in any of the representations or warranties upon which
we have relied in rendering this opinion.
We consent to the references in the Prospectus under the caption
"Federal Income Tax Consequences" to our firm. This opinion may not be used for
any other purpose and may not otherwise be relied upon by, or disclosed, quoted
or referred to, any other person.
Very truly yours,
/s/ Weil, Gotshal & Manges LLP
<PAGE>
EXHIBIT 10.1
[Draft - 10/17/97]
FORM OF PURCHASE AGREEMENT
This PURCHASE AGREEMENT is made as of this 1st day of October, 1997,
by and between NISSAN MOTOR ACCEPTANCE CORPORATION, a California corporation
(the "Seller"), having its principal executive office at 990 W. 190th Street,
Torrance, California 90502 and NISSAN AUTO RECEIVABLES CORPORATION, a Delaware
corporation (the "Purchaser"), having its principal executive office at 990 W.
190th Street, Torrance, California 90502.
WHEREAS, in the regular course of its business, the Seller purchases
certain motor vehicle retail install ment sale contracts secured by new and used
automobiles and light duty trucks from motor vehicle dealers.
WHEREAS, the Seller and the Purchaser wish to set forth the terms
pursuant to which the Receivables (as hereinafter defined) are to be sold by the
Seller to the Purchaser, which Receivables will be transferred by the Purchaser,
pursuant to the Pooling and Servicing Agreement (as hereinafter defined), to the
NISSAN AUTO RECEIVABLES 1997-A GRANTOR TRUST to be created thereunder, which
Trust will issue certificates representing fractional undivided interests in
such Receivables and the other property of the Trust (the "Certificates").
NOW, THEREFORE, in consideration of the foregoing, other good and
valuable consideration, and the mutual terms and covenants contained herein, the
parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Terms not defined in this Agreement shall have the meaning set forth
in the Pooling and Servicing Agreement. As used in this Agreement, the
following terms shall, unless the context otherwise requires, have the following
meanings (such meanings to be equally applicable to the singular and plural
forms of the terms defined):
"Agreement" shall mean this Purchase Agreement and all amendments
hereof and supplements hereto.
"Assignment" shall mean the document of assignment attached to this
Agreement as Exhibit A.
<PAGE>
"Closing" shall have the meaning specified in Section 2.02.
"Closing Date" shall mean October [__], 1997.
"Collections" shall mean all amounts collected by the Servicer (from
whatever source) on or with respect to the Receivables.
"Damages" shall have the meaning specified in Section 5.04(a).
"Distribution Date" shall mean, for each Collection Period, the 15th
day of the following month or, if such 15th day is not a Business Day, the next
succeeding Business Day.
"Pooling and Servicing Agreement" shall mean the Pooling and Servicing
Agreement by and among the Seller, as servicer and in its individual capacity,
the Purchaser, and The Fuji Bank and Trust Company, as trustee, dated as of
October 1, 1997, as the same may be amended, amended and restated, supplemented
or modified.
"Prospectus" shall have the meaning assigned to such term in the
Underwriting Agreement.
"Purchaser" shall mean Nissan Auto Receivables Corporation, a Delaware
corporation, and its successors and assigns.
"Rating Agency" shall mean each of Moody's Investors Service, Inc. and
Standard & Poor's Ratings Services or any successors thereto.
"Receivable" shall mean any retail installment sale contract which
appears on Annex A to the Assignment.
"Receivables Purchase Price" shall mean $868,465,033.86.
"Repurchase Event" shall have the meaning specified in Section 6.02.
"Schedule of Receivables" shall mean the list of Receivables annexed
to the Assignment as Annex A thereto.
2
<PAGE>
"Seller" shall mean Nissan Motor Acceptance Corporation, a California
corporation, and its successors and assigns.
"Trust" shall mean the Nissan Auto Receivables 1997-A Grantor Trust.
"Underwriting Agreement" shall mean the Underwriting Agreement by and
between J.P. Morgan Securities Inc. and the Purchaser, dated October __, 1997.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.01. Purchase and Sale of Receivables
--------------------------------
On the Closing Date, subject to the terms and conditions of this
Agreement, the Seller agrees to sell to the Purchaser, and the Purchaser agrees
to purchase from the Seller, the Receivables and the other property relating
thereto (as defined below).
(a) Transfer of Receivables. On the Closing Date and simultaneously
-----------------------
with the transactions pursuant to the Pooling and Servicing Agreement, the
Seller shall sell, transfer, assign and otherwise convey to the Purchaser,
without recourse, (i) all right, title and interest of the Seller in and to the
Receivables, and all monies paid thereon, on or after the Cutoff Date; (ii) the
interest of the Seller in the security interests in the Financed Vehicles
granted by Obligors pursuant to the Receivables and any accessions thereto;
(iii) the interest of the Seller in any proceeds from claims on any physical
damage, credit life, credit disability or other insurance policies covering
Financed Vehicles or Obligors; (iv) the interest of the Seller in Dealer
Recourse; (v) the interest of the Seller in certain rebates of premiums and
other amounts relating to insurance policies and other items financed under the
Receivables in effect as of the Cutoff Date; and (vi) the proceeds of any and
all of the foregoing.
(b) Receivables Purchase Price. In con sideration for the
--------------------------
Receivables and other properties described in Section 2.01(a), the Purchaser
shall, on the Closing Date, pay to the Seller the Receivables Purchase
3
<PAGE>
Price. An amount equal to approximately [ ]% of the Receivables Purchase
Price shall be paid to the Seller in cash, net of any costs of the Purchaser
related to the establishment of the Trust and the offering of the Class A
Certificates, by federal wire transfer (same day) funds. The remaining
approximately [ ]% of the Receivables Purchase Price shall be deemed paid by
the Purchaser to the Seller and then immediately returned by the Seller to the
Purchaser as a contribution to capital.
2.02. The Closing. The sale and purchase of the Receivables shall
-----------
take place at a closing (the "Closing") at the offices of Weil, Gotshal & Manges
LLP, 767 Fifth Avenue, New York, New York 10153 on the Closing Date,
simultaneously with the closings under: (a) the Pooling and Servicing Agreement
pursuant to which (i) the Purchaser will assign all of its right, title and
interests in and to the Receivables and other property conveyed pursuant to
Section 2.01(a) hereof to the Trustee for the benefit of the Certificateholders;
and (ii) the Purchaser will deposit the foregoing into the Trust in exchange for
the Class A Certificates and Class B Certificates; and (b) the Underwriting
Agreement, pursuant to which the Purchaser will sell to the underwriters named
therein the Class A Certificates.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01. Warranties of the Purchaser. The Purchaser hereby represents
---------------------------
and warrants to the Seller as of the date hereof and as of the Closing Date:
(a) Organization, etc. The Purchaser has been duly incorporated and
------------------
is validly existing as a corpora tion in good standing under the laws of the
State of Delaware, and has full corporate power and authority to execute and
deliver this Agreement and to perform the terms and provisions hereof.
(b) Due Authorization and No Violation. This Agreement has been duly
----------------------------------
authorized, executed and delivered by the Purchaser, and is the valid, binding
and enforceable obligation of the Purchaser except as the same may be limited by
insolvency, bankruptcy, reorganization or other laws relating to or affecting
the enforcement of
4
<PAGE>
creditors' rights or by general equity principles. The consummation of the
transactions contemplated by this Agreement, and the fulfillment of the terms
thereof, will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under (in each case material to the
Purchaser), or result in the creation or imposition of any Lien material to the
Purchaser upon any of the property or assets of the Purchaser pursuant to the
terms of, any indenture, mortgage, deed of trust, loan agreement, guarantee,
lease financing agreement or similar agreement or instrument under which the
Purchaser is a debtor or guarantor, nor will such action result in any violation
of the provisions of the Certificate of Incorporation or the By-laws of the
Purchaser.
(c) No Litigation. No legal or governmental proceedings are pending
-------------
to which the Purchaser is a party or of which any property of the Purchaser is
the subject, and no such proceedings are threatened or contemplated by
governmental authorities or threatened by others; other than such proceedings
which will not have a material adverse effect upon the general affairs,
financial position, net worth or results of operations (on an annual basis) of
the Purchaser and will not materially and adversely affect the performance by
the Purchaser of its obligations under, or the validity and enforceability of,
this Agreement.
3.02. Representations and Warranties of the Seller. (a) The Seller
--------------------------------------------
hereby represents and warrants to the Purchaser as of the date hereof and as of
the Closing Date:
(i) Organization, etc. The Seller has been duly incorporated
------------------
and is validly existing as a corporation in good standing under the laws of
the State of California and is in good standing in each jurisdiction in the
United States of America in which the conduct of its business or the
ownership of its property requires such qualification.
(ii) Power and Authority. The Seller has full power and
-------------------
authority to sell and assign the property sold and assigned to the
Purchaser hereunder and has duly authorized such sale and assignment to the
Purchaser by all necessary corporate action. This Agreement has been duly
authorized, executed and delivered by
5
<PAGE>
the Seller and is the legal, valid and binding obligation of the Seller
except as the same may be limited by insolvency, bankruptcy, reorganization
or other laws relating to or affecting the enforcement of creditors' rights
or by general equity principles.
(iii) No Violation. The consummation of the transaction
------------
contemplated by this Agreement, and the fulfillment of the terms hereof,
will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under (in each case material to the
Seller and its subsidiaries considered as a whole), or result in the
creation or imposition of any Lien material to the Seller and its
subsidiaries considered as a whole upon any of the property or assets of
the Seller pursuant to the terms of, any indenture, mortgage, deed of
trust, loan agreement, guarantee, lease financing agreement or similar
agreement or instrument under which the Seller is a debtor or guarantor,
nor will such action result in any violation of the provisions of the
Articles of Incorporation or the By-Laws of the Seller.
(iv) No Proceedings. No legal or governmental proceedings are
--------------
pending to which the Seller is a party or of which any property of the
Seller is the subject, and no such proceedings are threatened or
contemplated by governmental authorities or threatened by others, other
than such proceedings which will not have a material adverse effect upon
the general affairs, financial position, net worth or results of operations
(on an annual basis) of the Seller and its subsidiaries considered as a
whole and will not materially and adversely affect the performance by the
Seller of its obligations under, or the validity and enforceability of,
this Agreement.
(b) The Seller makes the following representations and warranties as
to the Receivables on which the Purchaser 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
6
<PAGE>
Purchaser hereunder and the subsequent assignment and transfer pursuant to the
Pooling and Servicing Agreement:
(i) Characteristics of Receivables. Each Receivable (a) has
been originated in the United States of America by a Dealer for the retail
sale of a Financed Vehicle in the ordinary course of such Dealer's
business, has been fully and properly executed by the parties thereto, has
been purchased by the Seller from such Dealer under an existing dealer
agreement with the Seller, and has been validly assigned by such Dealer to
the Seller, (b) created a valid, subsisting and enforceable first priority
security interest in favor of the Seller in the Financed Vehicle, (c)
contains customary and enforceable provisions such that the rights and
remedies of the holder thereof are adequate for realization against the
collateral of the benefits of the security, and (d) provides for level
monthly payments (provided that the payment in the first or last month in
the life of the Receivable may be minimally different from the level
payment) that fully amortize the Amount Financed over an original term of
no greater that 60 months and yield interest at the Annual Percentage Rate.
(ii) Schedule of Receivables. The information set forth in
Annex A to the Assignment was true and correct in all material respects as
of the opening of business on the Cutoff Date; the Receivables were
selected at random from the Seller's retail installment sale contracts
meeting the criteria of the Trust; and no selection procedures believed to
be adverse to the Certificateholders were utilized in selecting the
Receivables.
(iii) Compliance with Law. Each Receivable and the sale of the
Financed Vehicle complied at the time it was originated or made and at the
execution of this Agreement complies 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
7
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Collection Practices Act, the Federal Trade Commission Act, the Magnuson-
Moss Warranty Act, the Soldiers and Sailors Civil Relief Act of 1940, the
Federal Reserve Board's Regulations B and Z, State "Lemon Laws" designed to
prevent fraud in the sale of automobiles and State adaptations of the
National Consumer Credit Protection Act and of the Uniform Consumer Credit
Code, and other consumer credit laws and equal credit opportunity and
disclosure laws.
(iv) Binding Obligation. Each Receivable represents the
genuine, legal, valid and binding payment obligation in writing of the
Obligor, enforceable by the holder thereof in accordance with its terms
subject to the effect of bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally.
(v) Security Interest in Financed Vehicle. (a) Immediately
prior to the sale, assignment and transfer thereof to the Purchaser, each
Receivable was secured by a validly perfected first priority security
interest in the Financed Vehicle in favor of the Seller as secured party or
all necessary and appropriate actions shall have been commenced that would
result in the valid perfection of a first priority security interest in the
Financed Vehicle in favor of the Seller as secured party, and (b) as of the
Cutoff Date, according to the records of the Seller, no Financed Vehicle
has been repossessed and not reinstated.
(vi) Receivables in Force. No Receivable has been satisfied,
subordinated or rescinded, nor has any Financed Vehicle been released from
the Lien granted by the related Receivable in whole or in part.
(vii) No Waiver. No provision of a Receivable has been waived.
(viii) No Defenses. No Receivable is subject to any right of
rescission, setoff, counterclaim or defense, including the defense of
usury, and the operation of any of the terms of
8
<PAGE>
any Receivable, or the exercise of any right thereunder, will not render
such Receivable unenforceable in whole or in part or subject such
Receivable to any right of rescission, setoff, counterclaim or defense,
including the defense of usury, and no such right of rescission, setoff,
counterclaim or defense has been asserted with respect thereto.
(ix) No Liens. To the best of the Seller's knowledge, no Liens
have been filed for work, labor or materials relating to a Financed Vehicle
that shall be Liens prior to, or equal or coordinate with, the security
interest in the Financed Vehicle granted by the Receivable.
(x) No Default. Except for pay ment defaults continuing for a
period of not more than 29 days as of the Cutoff Date, no default, breach,
violation or event permitting acceleration under the terms of any
Receivable has occurred; and no continuing condition that with notice or
the lapse of time would constitute a default, breach, violation or event
permitting acceleration under the terms of any Receivable has arisen; and
the Seller shall not waive any of the foregoing except as otherwise
permitted hereunder.
(xi) Insurance. The Seller, in accordance with its customary
procedures, has determined that the Obligor has obtained or agreed to
obtain physical damage insurance covering the Financed Vehicle and the
Obligor is required under the terms of its Receivable to maintain such
insurance.
(xii) Title. It is the intention of the Seller that the
transfer and assignment herein contemplated constitute a sale of the
Receivables from the Seller to the Purchaser and that the beneficial
interest in and title to the Receivables not be part of the Seller's estate
in the event of the filing of a bankruptcy petition by or against the
Seller under any bankruptcy law. No Receivable has been sold, transferred,
assigned or pledged by the Seller to any Person other than the Purchaser.
Immediately prior to the transfer and assignment herein contemplated, the
Seller had
9
<PAGE>
good and marketable title to each Receivable free and clear of all Liens
and rights of others (including, without limitation, Liens or other rights
of any creditor of any Dealer) and no offsets, defenses or counterclaims
against it had been asserted or threatened and, immediately upon the
transfer thereof, the Purchaser shall have good and marketable title to
each Receivable, free and clear of all Liens and rights of others and no
offsets, defenses or counterclaims against it have been asserted or
threatened. Such transfer has been perfected under the UCC.
(xiii) Lawful Assignment. No Receivable has been originated in,
or shall be subject to the laws of, any jurisdiction under which the sale,
transfer and assignment of such Receivable under this Agreement or pursuant
to transfers of the Certificates are unlawful, void or voidable.
(xiv) All Filings Made. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the
Purchaser a first priority perfected ownership interest in the Receivables
have been made.
(xv) Chattel Paper. Each Receivable constitutes "chattel paper"
as defined in the UCC.
(xvi) Simple Interest Receivables. All of the Receivables are
Simple Interest Receivables.
(xvii) One Original. There is only one original executed copy
of each Receivable.
(xviii) No Amendments. No Receivable has been amended such that
the amount of the Obligor's Scheduled Payments shall has been increased.
(xix) APR. The Annual Percentage Rate of each Receivable equals
or exceeds 5.0%.
(xx) Maturity. As of the Cutoff Date, each Receivable has a
remaining maturity of not less than three months and not greater than 57
months.
10
<PAGE>
(xxi) Balance. Each Receivable had an original principal
balance of not more than $50,000.00 and, as of the Cutoff Date, has a
principal balance of not less than $298.74 and not more than $47,421.00.
(xxii) Delinquency. No Receivable is more than 29 days past due
as of the Cutoff Date and no Receivable has been extended by more than 2
months.
(xxiii) Bankruptcy. No Obligor was the subject of a bankruptcy
proceeding (according to the records of the Seller) as of the Cutoff Date.
(xxiv) Transfer. Each Receivable prohibits the sale or transfer
of the Financed Vehicle without the consent of the Seller.
(xxv) New and Used Vehicles. Each Financed Vehicle was a new or
used automobile or light truck at the time the related Obligor executed the
retail installment sale contract.
(xxvi) Origination. Each Receivable has an origination date on
or after September 12, 1992.
(xxvii) Maturity of Receivables. Each Receivable provides for
level monthly payments which provide interest at the APR and fully amortize
the amount financed over an original term no greater than 60 months.
(xxviii) Forced-Placed Insurance Premiums. No contract relating
to any Receivable has had forced-placed insurance premiums added to the
amount financed.]
(xxix) No Fraud or Misrepresentation. To the best knowledge of
the Seller, no Receivable was originated by a Dealer and sold by such
Dealer to the Seller with any conduct constituting fraud or
misrepresentation on the part of such Dealer.
ARTICLE IV
CONDITIONS
11
<PAGE>
4.03. Conditions to Obligation of the Purchaser. The obligation of
-----------------------------------------
the Purchaser to purchase the Receivables is subject to the satisfaction of the
following conditions:
(a) Representations and Warranties True. The representations and
-----------------------------------
warranties of the Seller hereunder shall be true and correct on the Closing Date
with the same effect as if then made, and the Seller shall have performed all
obligations to be performed by it hereunder on or prior to the Closing Date.
(b) Computer Files Marked. The Seller shall, at its own expense, on
---------------------
or prior to the Closing Date, indicate in its computer files that the
Receivables have been sold to the Purchaser pursuant to this Agreement and shall
deliver to the Purchaser the Schedule of Receivables certified by an officer of
the Seller to be true, correct and complete.
(c) Documents to be delivered by the Seller at the Closing.
------------------------------------------------------
(i) The Assignment. At the Closing, the Seller will execute and
--------------
deliver the Assignment.
(ii) Evidence of UCC Filing. On or prior to the Closing Date,
----------------------
the Seller shall record and file, at its own expense, a UCC-1 financing
statement in each jurisdiction in which required by applicable law,
executed by the Seller, as seller or debtor, and naming the Purchaser, as
purchaser or secured party, the Trustee, as assignee of the Purchaser,
naming the Receivables and the other property conveyed hereunder as
collateral, meeting the requirements of the laws of each such jurisdiction
and in such manner as is necessary to perfect the sale, transfer,
assignment and conveyance of such Receivables to the Purchaser. The Seller
shall deliver a file-stamped copy, or other evidence satisfactory to the
Purchaser of such filing, to the Purchaser on or prior to the Closing Date.
(iii) Other Documents. At the Closing, the Seller shall deliver
---------------
such other documents as the Purchaser may reasonably request.
(d) Other Transactions. The transactions contemplated by the Pooling
------------------
and Servicing Agreement shall be consummated on the Closing Date.
12
<PAGE>
4.04. Conditions to Obligation of the Seller. The obligation of the
--------------------------------------
Seller to sell the Receivables to the Purchaser is subject to the satisfaction
of the following conditions:
(a) Representations and Warranties True. The representations and
-----------------------------------
warranties of the Purchaser hereunder shall be true and correct on the Closing
Date with the same effect as if then made, and the Seller shall have performed
all obligations to be performed by it hereunder on or prior to the Closing Date.
(b) Receivables Purchase Price. On the Closing Date, the Purchaser
--------------------------
will deliver to the Seller the Receivables Purchase Price, as provided in
Section 2.01(b).
13
<PAGE>
ARTICLE V
COVENANTS OF THE SELLER
The Seller agrees with the Purchaser as follows; provided, however,
-------- -------
that, to the extent that any provision of this ARTICLE V conflicts with any
provision of the Pooling and Servicing Agreement, the Pooling and Servicing
Agreement shall govern:
5.01. Protection of Right, Title and Interest.
---------------------------------------
(a) The Seller 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 Purchaser in the Receivables and in the proceeds
thereof. The Seller shall deliver (or cause to be delivered) to the Purchaser
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) The Seller shall not 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 in accordance with paragraph (a)
above seriously misleading within the meaning of (S) 9-402(7) of the UCC, unless
it shall have given the Purchaser at least five days' prior written notice
thereof and shall have promptly filed appropriate amendments to all previously
filed financing statements or continuation statements.
(c) The Seller shall give the Purchaser at least 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. The Seller 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 Seller shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit the reader thereof to
know at any time the
14
<PAGE>
status of such Receivable, including payments and recoveries made and payments
owing (and the nature of each).
(e) The Seller shall maintain its computer systems so that, from and
after the time of sale hereunder of the Receivables to the Purchaser, the
Seller's master computer records (including any back-up archives) that refer to
a Receivable shall indicate clearly the interest of the Purchaser in such
Receivable and that such Receivable is owned by the Purchaser. Indication of
the Purchaser's ownership of a Receivable shall be deleted from or modified on
the Seller's computer systems when, and only when, the Receivable shall have
been paid in full or repurchased.
(f) If at any time the Seller shall propose to sell, grant a security
interest in, or otherwise transfer any interest in automotive receivables to any
prospective purchaser, lender or other transferee, the Seller shall give to such
prospective purchaser, lender or other transferee computer tapes, records or
print-outs (including any restored from back-up archives) that, if they shall
refer in any manner whatsoever to any Receivable, shall indicate clearly that
such Receivable has been sold and is owned by the Purchaser.
(g) The Seller shall permit the Purchaser and its agents at any time
during normal business hours to inspect, audit and make copies of and abstracts
from the Seller's records regarding any Receivable.
(h) Upon request, the Seller shall furnish to the Purchaser, within
20 Business Days, a list of all Receivables (by contract number and name of
Obligor) then owned by the Purchaser, together with a reconciliation of such
list to the Schedule of Receivables.
5.02. Other Liens or Interests. Except for the conveyances hereunder
------------------------
and contemplated pursuant to the Pooling and Servicing Agreement, the Seller
will not sell, pledge, assign or transfer to any other Person, or grant, create,
incur, assume or suffer to exist any Lien on any interest therein, and the
Seller shall defend the right, title and interest of the Purchaser in, to and
under such Receivables against all claims of third parties claiming through or
under the Seller; provided, however, that the Seller's obligations under this
-------- -------
Section 5.02 shall terminate upon the termination of the Trust pursuant to the
Pooling and Servicing Agreement.
15
<PAGE>
5.03 Costs and Expenses. The Seller agrees to pay all reasonable
------------------
costs and disbursements in connection with the perfection, as against all third
parties, of the Purchaser's right, title and interest in and to the Receivables.
5.04 Indemnification.
---------------
(a) The Seller shall defend, indemnify and hold harmless the
Purchaser from and against any and all costs, expenses, losses, damages, claims
and liabilities (collectively, "Damages"), arising out of or resulting from the
failure of a Receivable to be originated in compliance with all requirements of
law and for any breach of any of the Seller's representations and warranties
contained herein.
(b) The Seller shall defend, indemnify and hold harmless the
Purchaser from and against any and all Damages arising out of or resulting from
the use, ownership or operation by the Seller or any affiliate thereof of a
Financed Vehicle.
(c) The Seller shall defend, indemnify and hold harmless the
Purchaser from and against any and all taxes that may at any time be asserted
against the Purchaser with respect to the transactions contemplated herein,
including, without limitation, any sales, gross receipts, general corporation,
tangible personal property, privilege, or license taxes and costs and expenses
in defending against the same.
(d) The Seller shall defend, indemnify and hold harmless the
Purchaser from and against any and all Damages to the extent that such Damage
arose out of, or was imposed upon the Purchaser through, the negligence, willful
misfeasance or bad faith of the Seller in the performance of its duties under
the Agreement or by reason of reckless disregard of the Seller's obligations and
duties under this Agreement.
(e) The Seller shall defend, indemnify and hold harmless the
Purchaser from and against all Damages arising out of or incurred in connection
with the acceptance or performance of the Seller's trusts and duties as Servicer
under the Pooling and Servicing Agreement, except to the extent that such
Damages shall be due to the willful
16
<PAGE>
misfeasance, bad faith or negligence (except for errors in judgment) of the
Purchaser.
These indemnity obligations shall be in addition to any obligation
that the Seller may otherwise have.
5.05 Sale. The Seller agrees to treat the conveyance under this
----
Agreement for all purposes (including, without limitation, tax and financial
accounting purposes) as a sale of the Receivables on all relevant books,
records, tax returns, financial statements and other applicable documents.
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.01 Obligations of Seller. The obligations of the Seller under this
---------------------
Agreement shall not be affected by reason of any invalidity, illegality or
irregularity of any Receivable.
6.02 Repurchase Events. The Seller hereby cove nants and agrees with
-----------------
the Purchaser for the benefit of the Purchaser, the Trustee and the
Certificateholders, that the occurrence of a breach of any of the Seller's
representa tions and warranties contained in Section 3.02(b) hereof shall
constitute events obligating the Seller to repurchase Receivables hereunder
("Repurchase Events"), at the Repurchase Amount from the Purchaser or, as
described in Section 6.04 below, from the Trust. The repurchase obligation of
the Seller shall constitute the sole remedy of the Certificateholders, the
Trustee and the Purchaser against the Seller with respect to any Repurchase
Event.
6.03 Seller's Assignment of Purchased Receivables. With respect to
---------------------------------------------
all Receivables repurchased by the Seller pursuant to this Agreement, the
Purchaser (without the need of any further written assignment) shall assign
hereby, without recourse, representation or warranty, to the Seller all the
Purchaser's right, title and interest in and to such Receivables, and all
security and documents relating thereto.
6.04 Trust. The Seller acknowledges that the Purchaser will,
-----
pursuant to the Pooling and Servicing Agreement, sell the Receivables to the
Trust and assign its
17
<PAGE>
rights under this Agreement to the Trustee for the benefit of the
Certificateholders, and that the representations and warranties contained in
this Agreement and the rights of the Purchaser under Section 6.02 and the
obligations under 6.03 hereof are intended to benefit the Trust and the
Certificateholders. The Seller hereby consents to such sales and assignments.
6.05 Amendment. This Agreement may be amended from time to time by a
---------
written amendment duly executed and delivered by the Seller and the Purchaser;
provided, however, that any such amendment must be consented to by the Holders
- -------- -------
of 51% of the Class A Certificate Balance and 51% of the Class B Certificate
Balance.
6.06 Accountants' Letters. (a) Deloitte & Touche LLP will review
--------------------
the characteristics of the Receivables described in the Schedule of Receivables
and will compare those characteristics to the information with respect to the
Receivables contained in the Prospectus.
(b) The Seller will cooperate with the Purchaser and Deloitte &
Touche LLP in making available all information and taking all steps reasonably
necessary to permit such accountants to complete the review set forth in Section
6.06(a) above and to deliver the letters required of them under the Underwriting
Agreement.
6.07 Waivers. No failure or delay on the part of the Purchaser in
-------
exercising any power, right or remedy under this Agreement or the Assignment
shall operate as a waiver hereof or thereof, nor shall any single or partial
exercise of any such power, right or remedy preclude any other or further
exercise hereof or thereof or the exercise of any other power, right or remedy.
6.08 Notices. All communications and notices pursuant hereto to
-------
either party shall be in writing (including via telecopy) and addressed or
delivered to it at its address (or in the case of telecopy, at its telecopy
number at such address) shown in the opening portion of this Agreement or at
such other address as may be designated by it by notice to the other party and,
if mailed or delivered shall be deemed given when mailed or delivered, or
transmitted by telecopy.
6.09 Costs and Expenses. The Seller will pay all expenses incident
------------------
to the performance of its obligations
18
<PAGE>
under this Agreement and the Seller agrees to pay all reasonable out-of-pocket
costs and expenses of the Purchaser, excluding fees and expenses of counsel, in
connection with the perfection as against third parties of the Purchaser's
right, title and interest in and to the Receivables and the enforcement of any
obligation of the Seller hereunder.
6.10 Representations to the Seller. The respective agreements,
-----------------------------
representations, warranties and other statements by the Seller and the Purchaser
set forth in or made pursuant to this Agreement shall remain in full force and
effect and will survive the Closing.
6.11 Headings and Cross-References. The various headings in this
-----------------------------
Agreement are included for convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement. References in this Agreement
to Section names or numbers are to such Sections of this Agreement.
6.12 Governing Law. THIS AGREEMENT AND THE ASSIGNMENT SHALL BE
-------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL 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.
6.13 Counterparts. This Agreement may be executed in two
------------
counterparts and by different parties on separate counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
6.14 Sale. The Purchaser agrees to treat the conveyance under this
----
Agreement for all purposes (including, without limitation, tax and financial
accounting purposes) as a sale of the Receivables on all relevant books,
records, tax returns, financial statements and other applicable documents.
19
<PAGE>
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the ___
day of ___________ 1997.
NISSAN MOTOR ACCEPTANCE CORPORATION
By:
---------------------------------
Name:
Title:
NISSAN AUTO RECEIVABLES CORPORATION
By:
---------------------------------
Name:
Title:
20
<PAGE>
Exhibit A
---------
ASSIGNMENT
----------
For value received, in accordance with the Purchase Agreement dated as
of October 1, 1997, between the undersigned and Nissan Auto Receivables
Corporation (the "Purchaser") (the "Purchase Agreement"), the undersigned does
hereby sell, assign, transfer and otherwise convey unto the Purchaser, without
recourse, (i) all right, title and interest of the undersigned in and to the
Receivables listed on Annex A hereto, and all monies paid thereon, and due
thereon, on or after the Cutoff Date; (ii) the interest of the undersigned in
the security interests in the Financed Vehicles granted by Obligors pursuant to
the Receivables and any accessions thereto; (iii) the interest of the
undersigned in any proceeds from claims on any physical damage, credit life,
credit disability or other insurance policies covering Financed Vehicles or
Obligors; (iv) the interest of the undersigned in Dealer Recourse; (v) the
interest of the undersigned in certain rebates of premiums and other amounts
relating to insurance policies and other items financed under the Receivables in
effect as of the Cutoff Date; and (vi) the proceeds of any and all of the
foregoing. The foregoing sale does not constitute and is not intended to result
in any assumption by the Purchaser of any obligation of the undersigned to the
Obligors, insurers or any other person in connection with the Receivables,
Receivables Files, any insurance policies or any agreement or instrument
relating to any of them.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the
Purchase Agreement and is to be governed by the Purchase Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in the Purchase Agreement.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of the ___ day of _______ 1997.
NISSAN MOTOR ACCEPTANCE CORPORATION
By:
-----------------------------
Name:
Title:
<PAGE>
Annex A
Schedule of Receivables
[Delivered to the Purchaser at Closing]
<PAGE>
EXHIBIT 10.2
[Draft - 10/17/97]
FORM OF YIELD SUPPLEMENT AGREEMENT
Nissan Auto Receivables Corporation
990 West 190th Street
Torrance, California 90502
Dated as of
October 1, 1997
YIELD SUPPLEMENT AGREEMENT
The Fuji Bank and Trust Company
Two World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Nissan Auto Receivables Corporation (the "Company") hereby confirms
arrangements made as of the date hereof with you, as Class A Agent for the
benefit of the Class A Certificateholders ("Class A Agent"), to be effective
upon (i) receipt by the Company of the enclosed copy of this letter agreement
(the "Yield Supplement Agreement"), executed by Class A Agent, (ii) execution of
the Purchase Agreement dated as of the date hereof (the "Purchase Agreement")
between the Company and Nissan Motor Acceptance Corporation ("NMAC"), (iii)
receipt by NMAC of the payment by the Company of the purchase price under the
Purchase Agreement and (iv) the receipt by the Company of the capital
contribution of NMAC in connection with the payment of the purchase price under
the Purchase Agreement. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings given to them in the Pooling and
Servicing Agreement, dated as of the date hereof, among NMAC, in its individual
capacity and as Servicer, the Company and The Fuji Bank and Trust Company, in
its capacity as Trustee (the "Pooling and Servicing Agreement").
1. On or prior to the fifth calendar day before each Distribution Date,
the Servicer shall notify the Company of the "Yield Supplement Amount" for such
Distribution Date and the amount on deposit in the Yield Supplement Reserve
Account (as defined below). The "Yield Supplement Amount" means, with respect
to any Distribution
<PAGE>
Date, the sum of all Receivable Yield Supplement Amounts for all Receivables.
"Receivable Yield Supplement Amount" means, with respect to any Receivable
(other than a Liquidated Receivable, after the Collection Period in which such
Receivable became a Liquidated Receivable) for any
Collection Period, the amount (only if positive) calculated by the Servicer
equal to one-twelfth times (i) interest at a rate equal to the sum of (a) the
Pass-Through Rate and (b) the Servicing Rate minus (ii) interest on such
Receivable at its Annual Percentage Rate on such Receivable's Principal Balance
as of the first day of such Collection Period.
2. On or before the Closing Date (as defined in the Purchase Agreement),
the Company shall establish and maintain with the Class A Agent for the benefit
of the Class A Certificateholders a separate trust account in the name of the
Class A Agent (the "Yield Supplement Reserve Account"), or such other account as
may be acceptable to the rating agencies then rating the Class A Certificates,
and the Company hereby grants to the Class A Agent for the benefit of the
Certificateholders a first priority security interest in the monies on deposit
and the other property that from time to time comprise the Yield Supplement
Reserve Account, and any and all proceeds thereof (collectively, the "Yield
Supplement Property"). The Class A Agent shall possess all right, title and
interest in the Yield Supplement Property and its proceeds. The Yield
Supplement Property and the Yield Supplement Reserve Account shall be under the
sole dominion and control of the Class A Agent. Neither the Seller nor any
Person claiming by, through or under the Seller shall have any right, title or
interest in, any control over the use of, or any right to withdraw from amounts
from, the Yield Supplement Property or the Yield Supplement Reserve Account.
All Yield Supplement Property in the Yield Supplement Reserve Account shall be
applied by the Class A Agent as specified in this Yield Supplement Agreement and
the Pooling and Servicing Agreement. The Class A Agent shall, not later than
12:00 noon on the Business Day preceding each Distribution Date, withdraw from
the Yield Supplement Reserve Account and deposit in the Certificate Account an
amount equal to the Yield Supplement Amount for such Distribution Date. On the
date of issuance of the Certificates, the Company shall deposit [$_________]
(the "Initial Yield Supplement Reserve Amount") into the Yield Supplement
Reserve Account. The amount required to be on deposit in the Yield Supplement
Reserve Account on the date of issuance of the Certificates and from time to
time thereafter (the "Required Yield Supplement Reserve Account
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<PAGE>
Balance"), as determined by the Servicer and notified to the Class A Agent, will
be the lesser of, (i) the maximum Yield Supplement Amount that will become due
on all future Distribution Dates under this Yield Supplement Agreement, assuming
that payments on the Receivables are made on their scheduled due dates, that no
Receivable is prepaid in full or accelerated and that no related Financed
Vehicle underlying such Receivable is repossessed or becomes a total loss, and
(ii) the Initial Yield Supplement Reserve Amount. The Class A Agent shall have
no duty or liability to determine the Required Yield Supplement Reserve Account
Balance and may fully rely on the determination thereof by the Servicer. If, on
any Distribution Date, the funds in the Yield Supplement Reserve Account are in
excess of the Required Yield Supplement Reserve Account Balance for such
Distribution Date after giving effect to all distributions to be made on such
Distribution Date, the Class A Agent shall pay the Company the amount of such
excess. The Yield Supplement Reserve Account shall not be part of the Trust. It
is the intent of the parties that the Yield Supplement Property be treated as
property of the Company for all federal, state and local income and franchise
tax purposes. The provisions of this Yield Supplement Agreement should be
interpreted accordingly. Further, the Company shall include in its gross income
all income earned on the Yield Supplement Property and the Yield Supplement
Reserve Account.
3. All or a portion of the Yield Supplement Reserve Account may be
invested and reinvested in the manner specified in Section 5.01 of the Pooling
and Servicing Agreement with respect to monies in the Collection Account and
Certificate Account in accordance with written instructions from the Servicer;
provided that, if permitted by the rating agencies then rating the Class A
- --------
Certificates, monies on deposit therein may be invested in obligations or
securities specified in Section 5.01 that mature later than the Business Day
preceding the next Distribution Date. All such investments shall be made in the
name of the Class A Agent and all income and gain realized thereon shall be
solely for the benefit of the Company and shall be payable by the Class A Agent
to the Company on each Distribution Date from time to time upon the Company's
request to the Class A Agent. Upon termination of the Pooling and Servicing
Agreement, or in the event that the Company otherwise satisfies the requirements
established by the agencies initially rating the Class A Certificates, as
evidenced by the written reaffirmation by such agencies of
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<PAGE>
the initial rating of the Class A Certificates, any amounts on deposit in the
Yield Supplement Reserve Account shall be paid to the Company.
4. All payments to the Company pursuant hereto shall be made by federal
wire transfer (same day funds) or immediately available funds, to such account
as the Company, or any assignee of the Company referred to in Section 6 hereof,
may designate in writing to the Class A Agent, prior to the relevant
Distribution Date.
5. Our agreements set forth in this Yield Supplement Agreement are our
primary obligations and such obligations are irrevocable, absolute and
unconditional, shall not be subject to any counterclaim, setoff or defense
(other than full and strict compliance by us with our obligations hereunder) and
shall remain in full force and effect without regard to, and shall not be
released, discharged or in any way affected by, any circumstances or condition
whatsoever.
6. In order to more fully protect the interests of the Certificateholders,
the Company will transfer, assign and convey its interest in this Yield
Supplement Agreement to the Nissan Auto Receivables 1997-A Grantor Trust
established under the Pooling and Servicing Agreement (the "Trust"). Following
such transfer, assignment and conveyance, this Yield Supplement Agreement shall
not be amended, modified or terminated without the consent of The Fuji Bank and
Trust Company, in its capacity as trustee for the Trust, except in accordance
with the provisions for amendments, modifications and terminations of the
Pooling and Servicing Agreement as set forth in Section 13.01 of the Pooling and
Servicing Agreement.
7. THIS YIELD SUPPLEMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL 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.
8. Except as otherwise provided herein, all notices pursuant to this Yield
Supplement Agreement shall be in writing, personally delivered, sent by
telecopier, sent by courier or mailed by certified mail, return receipt
requested, and shall be effective upon receipt thereof. All notices shall be
directed as set forth below, or to such other address or telecopy number or to
the attention of such
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<PAGE>
other person as the relevant party shall have designated for such purpose in a
written notice.
The Company:
Nissan Auto Receivables Corporation
990 West 190th Street
Torrance, California 90502
Attention: Treasurer
Facsimile No.: [310-324-2542]
Class A Agent:
The Fuji Bank and Trust Company
Two World Trade Center
New York, New York 10048
Attention: Trust Administration Department
Facsimile No.: 212-321-2468
9. This Yield Supplement Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, all
of which shall be deemed to be one and the same document.
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<PAGE>
If the foregoing satisfactorily sets forth the terms and conditions of our
agreement, please indicate your acceptance thereof by signing in the space
provided below and returning to us the enclosed duplicate original of this
letter.
Very truly yours,
NISSAN AUTO RECEIVABLES CORPORATION
By: __________________________
Name: ____________________
Title: ___________________
Agreed and accepted as of __________ ___, 1997
NISSAN MOTOR ACCEPTANCE CORPORATION
By:__________________________
Name:_____________________
Title:____________________
THE FUJI BANK AND TRUST COMPANY, AS TRUSTEE
AND CLASS A AGENT
By: _______________________________
Name:__________________________
Title:_________________________
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