<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 4, 1998
REGISTRATION NO. 333-64565
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
NISSAN AUTO RECEIVABLES
1998-A GRANTOR TRUST
(In which the Certificates represent undivided interests)
------------------------------
NISSAN AUTO RECEIVABLES CORPORATION
(Originator of the Trust described herein)
<TABLE>
<S> <C> <C>
DELAWARE 9999 33-047655
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer No.)
incorporation or organization) Classification Code Number)
</TABLE>
990 W. 190TH STREET
TORRANCE, CALIFORNIA 90502
(310) 719-8013
(Name, 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)
------------------------------
<TABLE>
<S> <C>
COPIES TO:
DAVID MERCADO, ESQ. DANIEL METTE, ESQ.
CRAVATH, SWAINE & MOORE WEIL, GOTSHAL & MANGES LLP
825 EIGHTH AVENUE 767 FIFTH AVENUE
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10153
(212-474-1000) (212-310-8000)
</TABLE>
------------------------------
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. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TITLE OF SECURITIES BEING REGISTERED REGISTERED PER UNIT PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Asset Backed Certificates, Class A.......... $889,550,535 100%(1) $889,550,535 $247,312.05(2)
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) $295.00 has been previously paid in connection with the initial filing of
the Registration Statement.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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 NOR 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 THESE SECURITIES NOR SHALL THERE BE 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
STATE.
<PAGE>
Subject to Completion, Dated December 4, 1998
Prospectus
$889,550,535
NISSAN AUTO RECEIVABLES 1998-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 89% 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 Norwest Bank Minnesota, National Association, as
Trustee (the "Trustee"). The Class B Certificates, which initially will be
retained by the Seller, will evidence in the aggregate an undivided ownership
interest of 11% 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 January 15,
1999 (the "Distribution Date"). The Final Scheduled Distribution Date on the
Certificates will be the April 2004 Distribution Date. The Trust property will
consist of a pool of retail installment sale contracts originated on or after
October 6, 1993, secured by new, near-new and used automobiles and light trucks
(the "Receivables"), certain monies due or paid thereunder on or after November
1, 1998, 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
11.
---------------------------------------------------------------
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.
-----------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT SELLER(1)(2)
PER CLASS A CERTIFICATE % % %
TOTAL $ $ $
</TABLE>
(1) Plus accrued interest at the Pass-Through Rate calculated from December 15,
1998.
(2) Before deducting expenses payable by the Seller estimated to be $693,312.
- --------------------------------------------------------------------------------
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 December , 1998.
JOINT BOOKRUNNERS
CHASE SECURITIES INC. J.P. MORGAN & CO.
CO-MANAGERS
MERRILL LYNCH & CO. SALOMON SMITH BARNEY
The date of this Prospectus is December , 1998.
<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 OVERALLOTMENTS, THE
PURCHASE OF THE CLASS A CERTIFICATES TO COVER SYNDICATE SHORT POSITIONS AND TO
STABLIZE THE CLASS A CERTIFICATES AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
FORWARD-LOOKING STATEMENTS
IF AND WHEN INCLUDED IN THIS PROSPECTUS THE WORDS "EXPECTS," "INTENDS,"
"ANTICIPATES," "ESTIMATES" AND ANALOGOUS EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. ANY SUCH STATEMENTS, WHICH MAY INCLUDE STATEMENTS
CONTAINED IN "RISK FACTORS", ARE INHERENTLY SUBJECT TO A VARIETY OF RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
PROJECTED. SUCH RISKS AND UNCERTAINTIES INCLUDE, AMONG OTHERS, GENERAL ECONOMIC
AND BUSINESS CONDITIONS, COMPETITION, CHANGES IN POLITICAL, SOCIAL AND ECONOMIC
CONDITIONS, REGULATORY INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL REGULATIONS,
CUSTOMER PREFERENCES AND VARIOUS OTHER MATTERS, MANY OF WHICH ARE BEYOND THE
SELLER'S AND SERVICER'S CONTROL. THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS
OF THE DATE OF THIS PROSPECTUS. THE SELLER EXPRESSLY DISCLAIMS ANY OBLIGATION OR
UNDERTAKING TO RELEASE PUBLICLY ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING
STATEMENT CONTAINED HEREIN TO REFLECT ANY CHANGE IN THE SELLER'S OR THE
SERVICER'S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGE IN EVENTS, CONDITIONS
OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENT IS BASED.
AVAILABLE INFORMATION
Nissan Auto Receivables Corporation (the "Seller"), as originator and on
behalf 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
Certificates offered pursuant to this Prospectus. For further information,
reference is made to the Registration Statement and amendments thereof and to
the exhibits 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
Norwest Bank Minnesota, National Association, as Trustee (the "Trustee") for
the Class A Certificateholders and Class B Certificateholders (collectively, the
"Certificateholders") under the Pooling and Servicing Agreement to be dated as
of December 1, 1998, by and among the Seller, the Servicer, Nissan Motor
Acceptance Corporation and the Trustee, will provide to Class A
Certificateholders (which shall be Cede & Co. as the nominee of DTC unless
Definitive Certificates (as defined herein) are issued under the limited
circumstances described herein) monthly and annual reports concerning the
Receivables. Copies of such reports may be obtained by beneficial owners of
Class A Certificates by delivering a request in writing to the Trustee at
Norwest Bank Minnesota, National Association, Norwest Center, Sixth and
Marquette, Mail Station 0070, Minneapolis, Minnesota 55479-0070, Attention:
Corporate Trust. See "The Certificates--Statements to Class A
Certificateholders," "--General," and "--Book-Entry Registration." The Seller,
as originator of the Trust, will be subject to the informational 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 Commission identified above in
"Available Information". The Seller intends to discontinue 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
information 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."
<TABLE>
<S> <C>
ISSUER................... Nissan Auto Receivables 1998-A Grantor Trust (the
"Trust"), to be formed by the Seller pursuant to a
Pooling and Servicing Agreement to be dated as of
December 1, 1998 (the "Agreement"), among the
Seller, Nissan Motor Acceptance Corporation
("NMAC"), as Servicer (in such capacity, the
"Servicer") and in its individual capacity, and
Norwest Bank Minnesota, National Association, as
trustee (the "Trustee").
SELLER................... Nissan Auto Receivables Corporation, a Delaware
corporation and a wholly-owned subsidiary of NMAC.
SERVICER................. NMAC, a wholly-owned subsidiary of Nissan Motor
Corporation in the U.S.A. ("NMC"). NMC, the
primary distributor of Nissan and Infiniti
vehicles in the continental 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 Certifi-
cates," and collectively with the Class A
Certificates, the "Certificates"). Only the Class
A Certificates are being offered hereby. Each
Certificate will represent a fractional undivided
interest in the Trust. The Trust property will
consist of a pool of retail installment sale
contracts originated on or after October 6, 1993,
secured by new, near- new and used automobiles and
light trucks (the "Receivables"), certain monies
paid thereunder on or after November 1, 1998 (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 Agreement, 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 premiums and other
amounts relating to insurance policies 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
integral 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.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
The Class A Certificates will evidence in the
aggregate an undivided ownership interest of 89%
(the "Class A Percentage") of the Trust (initially
representing $889,550,535) and the Class B
Certificates will evidence in the aggregate an
undivided ownership interest of 11% (the "Class B
Percentage") of the Trust (initially representing
$109,944,448.89). 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 accordance with the terms of
the Agreement.
REGISTRATION OF THE CLASS
A CERTIFICATES......... The Class A Certificates initially will be
represented by one or more Class A Certificates
registered 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 Certificates (a "Class A Certificate
Owner") will be entitled to receive a definitive
certificate representing such person's interest,
except in the event that Definitive Certificates
(as defined herein) are issued under the limited
circumstances described herein. All references
herein to Class A Certificateholders shall reflect
the rights of Class A Certificate Owners, as such
rights may be exercised 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
Certificates are issued, the last day of the
related Collection 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 defined herein) as of the
last day of the related Collection Period (as
defined herein) generally to the extent of funds
available from (i) Available Interest (as
Available Interest has been reduced by reimbursing
the Servicer for any outstanding Advances, paying
the Servicing Fee and, to the extent not paid by
the Servicer, paying any accrued and unpaid fees
and expenses (not to exceed $10,000 in the
aggregate amount) due to the Trustee, the
Custodian and the Class A Agent); (ii) the Subor-
dination Spread Account; and (iii) the Class B
Percentage of Available Principal. The "Class A
Certificate Balance" shall equal, initially, the
Class A Percentage of the Pool Balance as of the
Cutoff Date and thereafter shall equal the initial
Class A Certificate Balance reduced by all
principal distributions 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
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Receivables allocable to principal. Such
principal, generally 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 outstanding
Advances, paying the Servicing Fee and, to the
extent not paid by the Servicer, paying any
accrued and unpaid fees and expenses (not to
exceed $10,000 in the aggregate amount) due to the
Trustee, the Custodian and the Class A Agent 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 during the related Collection
Period, including prepayments 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 Receivable
liquidated by the Servicer during the related
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 Distribution 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.
SUBORDINATION............ The rights of the holders of record of the Class B
Certificates (the "Class B Certificateholders"
and, together with the Class A Certifi-
cateholders, 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--Subordination of the Class B
Certificates; Subordination Spread Account." The
Class B Certificateholders will not receive any
distributions of interest or principal 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 likelihood 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 limited protection against
losses in respect of the Receivables.
The protection afforded to the Class A
Certificateholders by the subordination feature
described above will be effected by the pref-
erential 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.
</TABLE>
5
<PAGE>
SUBORDINATION SPREAD
ACCOUNT................ The Subordination Spread Account will be created
pursuant to a Custody and Pledge Agreement dated
as of December 1, 1998 (the "Custody and Pledge
Agreement") between the Seller and Norwest Bank
Minnesota, National Association, as custodian for
the benefit of the Class A Certificateholders, and
will be funded with an initial deposit by the
Seller of cash or Eligible Investments maturing on
or prior to the initial Distribution Date and
having a value of $9,994,949.84 (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 otherwise 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 Distribution Date
will be all interest collections on or in respect
of the Receivables on deposit in the Certificate
Account in respect of such Distribution Date,
after the Servicer has been reimbursed for any
outstanding Advances and has been paid the
Servicing Fee (including any unpaid Servicing Fees
with respect to one or more prior Collection
Periods) and, if applicable, after each of the
Trustee, the Custodian and the Class A Agent have
been reimbursed for any fees and expenses not paid
by the Servicer (including any such fees unpaid
with respect to one or more prior Collection
Periods), but not to exceed $10,000 in the
aggregate amount, 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
deposited in the Subordination Spread Account to
the extent necessary to maintain the amount in the
Subordination 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 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 $14,992,424.76
except that in the event that on any Distribution
Date (i) the annualized average for the preceding
three Collection Periods of the percentage
equivalents of the ratios of net losses (i.e., the
net balances of all Receivables which are
determined to be uncollectible in the Collection
Period, less any Liquidation Proceeds with respect
to such net balances from that or prior Collec-
tion Periods) to the Pool Balance as of the first
day of each such Collection Period exceeds 3.5% 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 exceeds 2.0%, then the
Specified Subordination Spread Account Balance for
such Distribution Date (and for each succeeding
Distribution Date until
6
<PAGE>
<TABLE>
<S> <C>
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) 21% 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 first day of such Collection Period, but
in no event shall the Specified Subordination
Spread Account Balance be more than
$99,949,498.39, or less than $14,992,424.76. On
any Distribution Date on which the aggregate
balance of the Class A Certificates is
$133,432,580.25 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 $24,987,374.60. The Subordination Spread
Account will be maintained as a segregated account
with Norwest Bank Minnesota, National Association
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 AGREE-
MENT................... 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
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
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
(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
agreement (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 Sup-
plement 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 interest actually received on the
Receivable with respect 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 recover the Advance from subsequent collections
or recoveries. No advances of principal will be
made with respect to the Receivables. See "The
Certificates--Advances." The Servicer will be
reimbursed for Advances from collections of
interest on the Receivables prior to distribution
of any Available Interest to Certificateholders.
Any successor servicer would not be required to
make any Advances of interest or principal. See
"The Certificates--Distributions on Certificates."
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
REPURCHASES OF CERTAIN
RECEIVABLES............ The Seller will be obligated to repurchase any
Receivable if the interest of the Trust therein is
materially adversely affected by a breach of any
representation 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
following 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 Purchase 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
servicing 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 related Collection Period. The Servicer shall
also receive 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 Servicing 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
(after giving effect to the current calendar
month's collections) declines below 10% of the
aggregate face amount of the original Pool
Balance. The purchase price will be equal to the
aggregate Purchase Amounts, and will be
distributed to Certificateholders on the next
following Distribution Date. See "The Certifi-
cates--Termination."
TRUSTEE.................. Norwest Bank Minnesota, National Association
CLASS A AGENT............ Norwest Bank Minnesota, National Association
TAX STATUS............... The Seller and the Trust intend to treat the Trust
as a grantor trust for federal income tax purposes
that is not subject to federal income tax. Class A
Certificate Owners must report their respective
allocable shares of all income earned on the Trust
assets, and, corporations, as well as, 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 advisors to determine the federal, state,
local and other tax consequences of the purchase,
ownership and disposition of the Class A
Certificates. Prospective 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."
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
The exact characterization for federal income tax
purposes of the payments received with respect to
the Yield Supplement Agreement is not clear.
Arguably, the arrangement set forth in the Yield
Supplement 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 Owners for the amount of the discount.
Alternatively, 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
Supplement Amounts, possibly on a straight-line
basis over the term of the Class A Certificates.
See "Federal Income Tax Consequences-Payments
Under the Yield Supplement Agreement." In such
latter case, such payments may not constitute
"portfolio interest." 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
Security 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 assurance that a rating will
not be lowered or withdrawn by a Rating Agency
based on a change in circumstances deemed by such
Rating Agency to adversely affect the Class A
Certificates. See "Rating of the Class A
Certificates."
</TABLE>
10
<PAGE>
RISK FACTORS
Prospective investors in the Class A Certificates should consider the
following 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
significant assets or sources of funds other than the Receivables and the
Subordination 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, NMAC, 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 available,
amounts on deposit in the Subordination Spread Account. Similarly, although
funds in the Subordination Spread Account will be available on each Distribution
Date to cover shortfalls in distributions of interest and principal 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 Receivables to make
payments on the Certificates. On any Distribution Date when the amount on
deposit in the Subordination Spread Account exceeds the Specified 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; Subordination Spread
Account." In limited circumstances, the Trust will also have access to funds in
the Yield Supplement Reserve Account. See "The Certificates--Yield Supplement
Reserve Account and Yield Supplement Agreement."
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 warranties
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 Prepayment
Considerations." Prepayments can also result from the liquidation of vehicles
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 was 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. NMAC's
management reacted to this negative trend by initiating changes to its credit
policy that tightened the range of available credit in order to originate an
improved mix of business. If the Trust experiences high levels of losses on the
Receivables, correspondingly 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, believes 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
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.
11
<PAGE>
SECURITY INTEREST IN FINANCED VEHICLES
Because of the administrative burden and expense that would be entailed in
doing 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 assignment
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 related
obligor, such assignment is an effective conveyance of such security interest.
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 possession of the
certificates of title (for purposes of servicing the Receivables) should be
sufficient to protect the Trust against the rights of subsequent purchasers of
the related Financed Vehicles 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 certificates 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 Interests in
the 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,
enforcement 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
collect 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
representations 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
noncompliance 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
Subordination Spread Account. These funds consist of the amounts (both principal
and interest) otherwise distributable to holders of the Class B Certificates
that are required under the Agreement to be deposited in the Subordination
Spread Account. The amount available for distribution to the Certificateholders
on any Distribution Date and the time necessary for the Subordination 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, cannot 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
Distribution Date.
CERTAIN LEGAL ASPECTS--BANKRUPTCY CONSIDERATIONS
The Seller will warrant to the Trust in the Agreement that the sale of the
Receivables by the Seller to the Trust is a valid sale of the Receivables to the
Trust. Notwithstanding the foregoing, if the Seller were to
12
<PAGE>
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 payments 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 priority over the Trust's interest in such
Receivable. If the transactions contemplated 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 creditors. See "Certain Legal Aspects of the
Receivables--Certain Bankruptcy Considerations."
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
Receivables 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) an
Event of Default exists and is continuing or (ii) the Servicer's short-term
unsecured debt 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 (ii). 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 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 unable 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
Underwriters 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
Under the Yield Supplement Agreement."
YEAR 2000
Many existing computer programs use two digits rather than four to define
the applicable year. These programs could fail or produce erroneous results
during the transition into the Year 2000.
NMAC has developed a comprehensive plan to address issues relating to Year
2000. However, due to the general uncertainty inherent with respect to Year 2000
issues, there can be no assurance that no material disruption to NMAC's business
operations will occur.
Despite NMAC's significant efforts to make its software applications and
systems Year 2000 compliant, the ability of third parties, including utility
companies, to be Year 2000 compliant is beyond NMAC's control. Thus, there can
be no assurances that the software applications and systems of other companies
on which NMAC relies will be timely converted or compatible with NMAC's systems.
The failure of these entities to comply on a timely basis could have a material
adverse effect on NMAC and the Trust.
13
<PAGE>
TRUST'S RELATIONSHIP TO THE SELLER AND NMAC; FINANCIAL CONDITION OF NISSAN MOTOR
CO., LTD.
Neither the Seller nor NMAC, as Servicer, is generally obligated to make any
payments in respect of the Certificates or the Receivables. The Servicer,
however, will service and administer the Receivables pursuant to the Agreement,
which includes the collection of payments due with respect to the Receivables
and the repossession and disposition of Financed Vehicles. See "The
Certificates--Sale and Assignment of Receivables", "--Servicing Procedures",
"--Collections" and "--Advances."
In addition, in connection with the transfer of Receivables by NMAC to the
Seller and the transfer of the Receivables by the Seller to the Trust, each of
NMAC and the Seller make representations and warranties with respect to the
characteristics of such Receivables. NMAC and the Seller are required to
determine the accuracy of such representations and warranties and, in certain
circumstances, they are required to purchase Receivables with respect to which
such representations and warranties have been breached. See "The
Certificates--Sale and Assignment of Receivables."
If NMAC were to cease acting as Servicer, delays in processing payments on
the Receivables and information in respect thereof could occur and result in
delays in payments to Certificateholders. In addition, the ability of NMAC to
perform in the event of a breach of the representations and warranties discussed
above may be adversely affected by a deterioration of the financial condition of
the Nissan group of companies.
NMAC is an indirect wholly-owned subsidiary of Nissan Motor Co., Ltd.
("Nissan"). Nissan's non-consolidated net sales for the first half of the fiscal
year ending March 31, 1999 were 1,638.5 billion yen, down from 1,776.1 billion
yen for the first half of the previous fiscal year and Nissan's non-consolidated
operating income was 20.6 billion yen for the first half of the fiscal year
ending March 31, 1999, compared to 50.5 billion yen in the same period the
previous fiscal year. The declines in non-consolidated net sales and operating
income reflect decreases in Japanese domestic vehicle demand and exports to the
United States. Nissan reported a non-consolidated net loss of 32.5 billion yen
for the first half of the fiscal year ending March 31, 1999, compared to net
income of 38.5 billion yen for the same period the previous fiscal year. The
decline in net income reflected an evaluation loss of 76.0 billion yen on
securities and other investments held by Nissan.
For the fiscal year ended March 31, 1998, Nissan's consolidated net sales
were 6,564.6 billion yen, compared to 6,658.9 billion yen for the previous
fiscal year. Nissan's consolidated operating income declined to 86.4 billion yen
in the fiscal year ended March 31, 1998 from 199.9 billion yen in the fiscal
year ended March 31, 1997. For the fiscal year ended March 31, 1998, Nissan
reported a consolidated net loss of 14.0 billion yen compared to net income of
77.7 billion yen for the previous fiscal year. The decline in net sales and
operating income reflected reduced unit vehicle sales on a consolidated basis,
while net income was additionally affected by losses related to the lease
vehicle portfolio in the United States.
On September 29, 1998, Standard & Poor's, citing pressures building in the
Japanese economy and financial system, placed the ratings of 22 Japanese
corporations, including Nissan's BBB- long term rating and A-3 short term
rating, on Credit Watch with negative implications. On November 16, 1998,
Moody's Investors Service ("Moody's") placed Nissan's Baa3 long term and P-3
short term ratings on review for a possible downgrade. Moody's cited the
potential impact from the continued deterioration of economic conditions in
Asia, particularly in Japan, on Nissan's operating position and financial
strength as well as Nissan's high financial leverage.
In May 1998, Nissan announced a "Global Business Reform Plan." The plan
includes strengthening Nissan's financial position by reducing the manufacturing
and sales portion of interest bearing debt (which excludes financial services
debt) by approximately one trillion yen by March, 2001. Other measures of the
plan include selling assets, reducing inventory, reducing production costs and
reducing the costs of sales and distribution.
14
<PAGE>
FORMATION OF THE TRUST
The Seller will establish the Trust by selling and assigning the Trust
property, 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
Compensation." 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
administrative 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
subordination of the Class B Certificates and by the Subordination Spread
Account is insufficient, the Class A Certificateholders would have to look
solely to the Obligors (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, certain 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 repossess and sell the collateral securing the Receivables, and thus may
reduce the proceeds to be distributed to Certificateholders. See "The
Certificates--Subordination of the Class B Certificates; Subordination Spread
Account" and "Certain 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
contracts originated on or after October 6, 1993, between Nissan and Infiniti
dealers (the "Dealers") and retail purchasers (the "Obligors") secured by new,
near-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.
"Near-new" automobiles and light trucks are pre-owned Nissan and Infiniti
vehicles which are not greater than three model-years old as of the contract
origination year. 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 Receivables 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."
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<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 3.0%, (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 59 months, (v) had an original balance of not more than $49,977.65 and a
remaining principal balance as of the Cutoff Date of not less than $258.66 nor
more than $49,299.21, (vi) is not more than 29 days past due as of the Cutoff
Date, (vii) is attributable to the purchase of a new, near-new or used
automobile or light truck and is secured thereby, (viii) was originated on or
after October 6, 1993, (ix) has been entered into by an Obligor that was not in
bankruptcy proceedings (according to the records of NMAC) as of the Cutoff Date,
(x) is secured by a Financed 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 utilized in selecting the Receivables from qualifying
retail installment sale contracts. Except as described in item (ii) above, the
Receivables were not selected on the basis of their APRs.
The composition, geographical distribution and distribution by annual
percentage rate of the Receivables as of the Cutoff Date are as set forth in the
following tables.
COMPOSITION OF THE RECEIVABLES
<TABLE>
<S> <C>
Aggregate Principal Balance................................. $999,494,983.89
Number of Receivables....................................... 93,300
Average Principal Balance................................... $10,712.70
Average Original Amount Financed............................ $15,140.43
(Range)................................................... $1,164.42 to 49,977.65
Weighted Average APR........................................ 8.49%
(Range)................................................... 3.0% to 21.0%
Approximate Weighted Average Original Term to Maturity...... 56.65 months
(Range)................................................... 12 to 60 months
Weighted Average Remaining Term to Maturity................. 42.58 months
(Range)................................................... 3 to 59 months
Percentage by Principal Balance of Receivables of New,
Near-New and Used Vehicles................................ 42.51%(New), 42.92%(Near-New)
and 14.57%(Used)
Percentage by Principal Balance of Receivables Financed
Through Nissan and Infiniti Dealers....................... 77.76%(Nissan) and 22.24%
(Infiniti)
</TABLE>
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<PAGE>
GEOGRAPHIC DISTRIBUTION OF THE
RECEIVABLES
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE PRINCIPAL
STATE(1)(2) BALANCE
- ---------------------------------------------------------------------------------------------- -------------------
<S> <C>
Alaska........................................................................................ 0.06%
Arizona....................................................................................... 3.59
Arkansas...................................................................................... 1.29
California.................................................................................... 15.84
Colorado...................................................................................... 1.36
Connecticut................................................................................... 1.89
Delaware...................................................................................... 0.29
Florida....................................................................................... 6.33
Georgia....................................................................................... 4.22
Idaho......................................................................................... 0.05
Illinois...................................................................................... 4.66
Indiana....................................................................................... 0.75
Iowa.......................................................................................... 0.41
Kansas........................................................................................ 1.08
Kentucky...................................................................................... 0.00
Louisiana..................................................................................... 2.27
Maine......................................................................................... 0.11
Maryland...................................................................................... 1.79
Massachusetts................................................................................. 2.41
Michigan...................................................................................... 0.81
Minnesota..................................................................................... 0.81
Mississippi................................................................................... 1.44
Missouri...................................................................................... 1.62
Montana....................................................................................... 0.05
Nebraska...................................................................................... 0.24
Nevada........................................................................................ 0.93
New Hampshire................................................................................. 0.59
New Jersey.................................................................................... 3.54
New Mexico.................................................................................... 0.57
New York...................................................................................... 6.20
North Carolina................................................................................ 3.93
North Dakota.................................................................................. 0.05
Ohio.......................................................................................... 1.67
Oklahoma...................................................................................... 1.18
Oregon........................................................................................ 0.70
Pennsylvania.................................................................................. 4.46
Rhode Island.................................................................................. 0.59
South Carolina................................................................................ 2.12
South Dakota.................................................................................. 0.04
Tennessee..................................................................................... 3.27
Texas......................................................................................... 10.51
Utah.......................................................................................... 0.41
Vermont....................................................................................... 0.24
Virginia...................................................................................... 2.63
Washington.................................................................................... 1.64
West Virginia................................................................................. 0.22
Wisconsin..................................................................................... 1.11
Wyoming....................................................................................... 0.02
------
Total(3)................................................................................ 100.00%
------
------
</TABLE>
- ------------------------
(1) Based on the addresses of the originating Dealers.
(2) Retail installment sale contracts originated in Alabama have been excluded
for administrative reasons.
(3) Percentages do not add to 100.00% due to rounding.
17
<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>
3.0 to 3.99.................................................... 7,545 $ 51,129,616.40 5.12%
4.0 to 4.99.................................................... 5,036 47,389,736.34 4.74%
5.0 to 5.99.................................................... 11,451 166,837,101.75 16.69%
6.0 to 6.99.................................................... 14,559 158,305,839.56 15.84%
7.0 to 7.99.................................................... 7,768 88,172,213.29 8.82%
8.0 to 8.99.................................................... 11,543 132,349,134.71 13.24%
9.0 to 9.99.................................................... 10,987 117,831,176.39 11.79%
10.0 to 10.99.................................................. 6,827 70,251,890.99 7.03%
11.0 to 11.99.................................................. 5,259 52,605,179.36 5.26%
12.0 to 12.99.................................................. 3,542 31,929,153.37 3.19%
13.0 to 13.99.................................................. 2,348 23,663,861.01 2.37%
14.0 to 14.99.................................................. 2,833 27,719,492.54 2.77%
15.0 to 15.99.................................................. 1,052 8,467,953.73 0.85%
16.0 to 16.99.................................................. 987 9,028,698.54 0.90%
17.0 to 17.99.................................................. 887 8,869,829.45 0.89%
18.0 to 18.99.................................................. 410 2,859,323.84 0.29%
19.0 and above................................................. 266 2,084,782.62 0.20%
----------- ----------------- ------
Totals(1)...................................................... 93,300 $ 999,494,983.89 100.00%
----------- ----------------- ------
----------- ----------------- ------
</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
"prepayments" 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 generally
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 absence 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 Certificates.
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 related
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 and, if applicable, to reimburse the Trustee, the
Custodian or the Class A Agent for any of their fees and expenses
18
<PAGE>
not paid by the Servicer, not to exceed $10,000 in the aggregate amount). 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, including 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 to the
extent not paid by the Servicer, after payment of any outstanding fees and
expenses (not to exceed $10,000 in the aggregate amount) of the Trustee, the
Custodian and the Class A Agent), 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
Percentage 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 prepayments
between Receivables with APRs greater than or less than a rate equal to the sum
of the Pass-Through Rate and the Servicing Rate will generally not affect the
yield to Class A Certificateholders because the Seller has assigned to the Trust
the Seller's rights under the Yield Supplement Agreement and rights to receive
payments from the Yield Supplement Reserve Account. However, higher rates of
prepayments of Receivables with higher APRs will decrease the amount available
to cover delinquencies and defaults on the Receivables and may decrease the
amount available to be deposited in the Subordination 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
retail installment sale contracts now included in its portfolio is insufficient
to draw any specific conclusions with respect to the expected rates of
prepayments 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
respect to its total portfolio of U.S. retail installment sale contracts for
new, near-new and used automobiles and light trucks. The portfolio consists of
retail installment 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, near-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
comparable to NMAC's experience shown in the following tables.
DELINQUENCY EXPERIENCE(1)
<TABLE>
<CAPTION>
AT
SEPTEMBER 30, AT MARCH 31,
------------- ---------------------------------------------------------------
1998 1998 1997 1996 1995 1994
------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Number of Contracts Outstanding....... 328,989 330,662 317,238 274,807 226,684 239,592
Delinquencies as a Percent of
Contracts Outstanding (2)
30-59 Days.......................... 2.74% 2.55% 3.10% 2.40% 2.10% 2.50%
60-89 Days.......................... 0.51% 0.36% 0.49% 0.25% 0.15% 0.24%
90 Days or More..................... 0.09% 0.06% 0.17% 0.05% 0.02% 0.24%
</TABLE>
19
<PAGE>
NET CREDIT LOSS AND REPOSSESSION EXPERIENCE(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AT OR FOR SIX
MONTHS ENDED
SEPTEMBER 30, AT OR FOR TWELVE MONTHS ENDED MARCH 31,
------------- -----------------------------------------------------
1998 1998 1997 1996 1995 1994
------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Principal Amount Outstanding................ $ 3,474,037 $3,497,123 $3,276,423 $2,659,232 $1,921,100 $1,794,943
Average Principal Amount Outstanding........ $ 3,600,971 $3,248,193 $3,181,569 $2,308,058 $1,822,669 $2,029,439
Number of Contracts Outstanding............. 328,989 330,662 317,238 274,807 226,684 239,592
Average Number of Contracts Outstanding..... 335,864 316,769 309,257 250,040 229,248 266,020
Charge-offs(3).............................. $ 43,662 $ 134,671 $ 158,969 $ 72,838 $ 46,201 $ 55,051
Recoveries(4)............................... $ 21,864 $ 39,997 $ 31,874 $ 20,489 $ 16,465 $ 21,785
Net Losses.................................. $ 21,798 $ 94,674 $ 127,095 $ 52,349 $ 29,736 $ 33,266
Net Losses as a Percent of Principal Amount
Outstanding............................... 1.25%(6) 2.71% 3.88% 1.97% 1.55% 1.85%
Number of Repossessions(5).................. 4,965 14,164 17,569 9,841 8,530 12,834
Number of Repossessions as a Percent of the
Average Number of Contracts Outstanding... 2.96%(6) 4.47% 5.68% 3.94% 3.72% 4.82%
</TABLE>
- ------------------------------
(1) The information in the Delinquency Experience and Net Credit Loss and
Repossession Experience tables includes retail installment sale contracts
for new, near-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 64 months
or less. The Trust does not include Receivables with original maturities in
excess of 60 months. 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 including unearned interest. 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 are net of 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, 1998 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 were 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. NMAC's management reacted
to this negative trend by initiating changes to its credit policy that tightened
the range of available credit in order to originate an improved mix of business.
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
applied to reduce any unpaid late charges or associated fees as provided in the
Receivable and any excess then remaining will further reduce remaining
principal. 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 period since the preceding payment will be less than it would be if the
payment were made on the due date, and the
20
<PAGE>
portion of the payment allocable to reduce the principal balance will be
correspondingly greater. Conversely, if the Obligor 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 correspondingly 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 1,230 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 Dealers
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 security
number, residential status, source and amount of monthly income and amount of
monthly rent or mortgage payment. Upon receipt of the above information, 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
considerations. The credit scoring process considers credit bureau, application
and contract information. Other considerations include ratios such as car
payment to income and total debt payments to total income, residential status,
monthly mortgage or rent payment, bank accounts and other personal information.
The final credit decision is made based upon the degree of credit risk perceived
and the amount of credit requested.
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
degree 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
thereafter. 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 completely
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 Aspects of the
Receivables--Deficiency Judgments and Excess Proceeds." Obligors are contacted
and repayment schedules are established and monitored until the deficiencies are
either paid in full or become impractical to pursue.
21
<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 Certificate 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 business 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
Certificate 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
reports concerning the payments received on the Receivables, the Class A
Certificate Balance, the Class A Certificate Factor, the Class A Pool Factor and
various 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
Certificates (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 receivables
to third parties and any activities incidental to and necessary or convenient
for the accomplishment of such purposes. The Seller's certificate of
incorporation 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
offices 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. See "Risk Factors--Trust's Relationship to the
Seller and NMAC; Financial Condition of Nissan Motor Co., Ltd."
NMAC offers indirect automotive consumer loan and lease financing and direct
dealer financing, through (and to) approximately 1,080 Nissan and 150 Infiniti
dealers in the United States. NMAC's underwriting, servicing and collection
activities 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.
22
<PAGE>
YEAR 2000
Many existing computer programs use only two digits to define a year in the
date field. These programs may recognize a date using "00" as the Year 1900
rather than the Year 2000, which could result in the program shutting down,
performing incorrect computations or performing inconsistently. In response to
this issue, NMAC has developed a comprehensive plan to ensure that its software
applications and systems are Year 2000 compliant. The plan includes the
assessment of "at risk" applications and systems, an assessment of the
interdependencies of various systems and the relative importance of each system
to NMAC's business to verify Year 2000 compliance. In addition, the plan
requires testing with all of NMAC's outside vendors and banking institutions.
NMAC expects to complete substantially all Year 2000 system upgrades and testing
by August 1999.
Costs associated with the Year 2000 systems and software modification are
expensed as incurred. NMAC has budgeted a total of $3.0 million to complete the
necessary upgrades. The total estimated costs are not expected to have a
material impact on NMAC's operations, liquidity or capital reserves. The Trust
will not bear any of the expenses incurred in connection with NMAC's plan.
Despite NMAC's significant efforts to make its systems Year 2000 compliant,
the ability of third parties, including utility companies, to be Year 2000
compliant is beyond NMAC's control. Accordingly, there can be no assurances that
the systems of other companies on which NMAC relies will be timely converted or
compatible with NMAC's systems. The failure of these entities to comply on a
timely basis could have a material adverse effect on NMAC and the Trust.
The foregoing statements relating to NMAC's expectations as to its Year 2000
efforts are based on its best estimates which may be updated as additional
information becomes available. NMAC's forward looking statements are based on
assumptions about many important factors, including the technical skills of
employees and independent contractors, representations and preparedness of third
parties and the effects of the Year 2000 issues on business partners and
customers. While NMAC believes its assumptions are reasonable, it cautions that
it is impossible to predict the impact of certain factors that could cause
actual timetables to differ materially from the expected results. See "Risk
Factors--Year 2000."
23
<PAGE>
THE CERTIFICATES
The Class A Certificates offered hereby will be issued pursuant to the
Agreement. 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 (except that one Certificate may be issued
in an amount not an integral multiple of $1,000) and will be represented
initially by physical certificates registered in the name of Cede as the nominee
of DTC, except that, as described below under "The Certificates--Book-Entry
Registration," 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 certificate representing such person's interest in the Class A Certificates,
except as set forth below under "The Certificates--Definitive Certificates."
Unless 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 distributions,
notices, reports and statements to Class A Certificateholders shall refer 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 distribution 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
or, in the case of the first Distribution Date, the preceding two calendar
months (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,
calculated 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
Receivable may be made by or on behalf of an Obligor, by application of certain
insurance 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
Financed 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 89% (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 11% (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
24
<PAGE>
UCC and a "clearing agency" registered pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. DTC was created to hold securities for its
participating organizations ("Participants") and to facilitate the clearance and
settlement of securities transactions 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 relationship with a Participant, either
directly or indirectly ("Indirect Participants").
Class A Certificate Owners that are not Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of, or
other interests in, Class A Certificates may do so only through Participants and
Indirect Participants. In addition, Class A Certificate Owners will receive all
distributions of principal and interest from the Trustee through DTC
Participants. 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
permitted 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 principal
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 transfers 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 interests.
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
Certificate 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
undivided interests that satisfy such specified percentages. DTC may take
conflicting 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.
DTC management has stated that it is aware that some computer applications,
systems, and the like for processing data ("Systems") that are dependent upon
calendar dates, including dates before, on, and after January 1, 2000, may
encounter "Year 2000 problems." DTC has informed its Participants and other
members of the financial community (the "Industry") that it has developed and is
implementing a program so that its Systems, as the same relate to the timely
payment of distributions (including principal and
25
<PAGE>
income payments) to securityholders, book-entry deliveries, and settlement of
trades within DTC ("DTC Services"), continue to function appropriately. This
program includes a technical assessment and a remediation plan, each of which is
complete. Additionally, DTC's plan includes a testing phase, which is expected
to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third-party vendors from whom DTC licenses software and hardware, and
third party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electrical utility service providers,
among others. DTC has informed the Industry that it is contacting (and will
continue to contact) third party vendors from whom DTC acquires services to: (i)
impress upon them the importance of such services being Year 2000 compliant, and
(ii) determine the extent of their efforts for Year 2000 remediation (and, as
appropriate, testing) of their servicers. In addition, DTC is in the process of
developing such contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the Industry for informational purposes only and is not intended to
serve as a representation, warranty, or contract modification of any kind.
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 responsibilities as depository with respect to the Class A Certificates and
the Seller is unable to locate a qualified successor, (ii) the Seller, at its
option, 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 advise
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 Certificate
Owners' best interest. (Section 7.10.)
Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee will be required to notify all Class A Certificate Owners
through Participants of the availability of Definitive Certificates. Upon
surrender by DTC of the definitive certificates representing the Class A
Certificates and receipt of instructions for re-registration, the Trustee will
reissue 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
Certificates 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.
The final payment on any Class A Certificate, however (whether Definitive
Certificates or the Class A Certificates registered in the name of Cede or
otherwise), will be made only upon presentation and surrender of such Class A
Certificate 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
connection therewith.
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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, including
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 identified
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 Certificates to the
Seller in exchange for the Receivables. (Section 7.02.) The Seller will sell the
Class A Certificates to the Underwriters and will initially 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
Receivables 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 security
interest in the Financed Vehicle in favor of NMAC; and (v) each Receivable, 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
opportunity 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
materially and adversely affects the interests of the Certificateholders 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
purchase 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 related 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
conditioned 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
remedies that may be available under federal securities laws or other laws).
Pursuant to the Agreement, the Servicer will service and administer the
Receivables. The Agreement will also designate the Servicer as custodian to
maintain possession as the Trustee's agent of the retail installment sale
contracts 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
administrative 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 reflecting
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 records 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 adversely affected. In
addition, under certain circumstances the Trustee's security interest in
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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
payments made on or with respect to the Receivables will be deposited (the
"Collection 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 obligations 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 department 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
Certificate 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 Collection 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
(collectively with the Collection Account and the Certificate Account, the
"Accounts") will be invested in Eligible Investments at the direction of NMAC,
each as provided in the Agreement. "Eligible Investments" are limited to
investments acceptable 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 principal 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 provided 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
respect 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 payments in
the event of a prepayment resulting from refunds of credit life and disability
insurance premiums and service contracts and make similar adjustments to payment
terms to the extent required by law). If the Servicer determines 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
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the taking of any other action permitted 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, and
provided that (i) there exists no Event of Default and (ii) the rating of the
Servicer's short-term unsecured debt obligations is at least P-1 by Moody's
Investor's Service, Inc. and the rating of the Servicer's (or, if NMAC is the
Servicer and the Servicer then has no short-term rating from Standard & Poor's
Ratings Services, Nissan Capital of America's, Inc.'s) short-term unsecured debt
obligations is at least A-1 by Standard & Poor's Rating Services, the Servicer
may retain such amounts until the related Distribution Date. Notwithstanding the
foregoing, if clause (i) or (ii) above is not satisfied, the Servicer may
utilize an alternative remittance schedule if the Servicer provides to the
Trustee written confirmation from each rating agency which has an outstanding
rating on the Class A Certificates that such alternative remittance schedule
will not result in a qualification, reduction or withdrawal of each such rating
agency's then current rating of the Certificates. 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 preceding the Distribution Date. The Servicer will be entitled to
withhold, or to be reimbursed from amounts otherwise payable into or on deposit
in the Collection Account, amounts previously 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 employed 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
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 as provided in the Receivable and finally to prepay
principal 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 Collection 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 Advances on
such Distribution Date will be reflected on the Trustee's report to the Class A
Certificateholders. See "Statements 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 recover the Advance from subsequent collections or recoveries.
Notwithstanding the foregoing, any person appointed successor servicer
(including the Trustee) will not be required to make any Advance. No advances of
principal will be made with respect to the Receivables.
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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%
multiplied 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
"Supplemental Servicing Fee") for each Collection Period equal to any late,
prepayment and other administrative fees and expenses collected during the
Collection Period, plus any interest earned during the Collection Period on
deposits made in the Collection Account and the Certificate Account and earned
on funds held by the Servicer pending deposit into such accounts with respect to
the Receivables. The Servicer is not entitled to any other compensation for
servicing the Receivables. The Servicer will be paid the Servicing Fee and the
Supplemental Servicing Fee (collectively, the "Servicer Fee") for each
Collection Period on the following Distribution Date. However, if it is
acceptable to each Rating Agency without a reduction 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 Distribution Dates) will be paid at the
beginning of such Collection Period out of collections of interest on the
Receivables for such Collection Period. The Servicing Fee (and to the extent not
paid by the Servicer, any accrued and unpaid fees and expenses (not to exceed
$10,000 in the aggregate amount) due to the Trustee, the Custodian and the Class
A Agent) 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, sending
payment statements to Obligors, reporting tax information to Obligors, paying
costs of collections and policing the collateral. The Servicer Fee will also
compensate the Servicer for administering the Receivables, including making
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. (Sections 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 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 under 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.
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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, unless the Trustee
requests otherwise, in which case the preceding business day), the Servicer will
inform 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
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, 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
Distribution 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
following amounts with respect to the related Collection Period: (i) that
portion of all collections on the Receivables allocable to interest; (ii) all
proceeds, 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
Receivables, received in connection with such liquidation ("Liquidation
Proceeds"), 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:
(i) all payments of principal received during the related Collection
Period, 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
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(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 Period.
The "Class A Certificate Balance" shall equal, initially, the Class A
Percentage of the Pool Balance as of the Cutoff Date and, thereafter shall equal
the initial Class A Certificate Balance, reduced by all amounts previously
distributed 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 Period.
The "Class B Certificate Balance" shall equal, initially, the Class B
Percentage 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
Period 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 priority,
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
Interest Distributable Amount and any unpaid Class A Interest Carryover
Shortfall, such amount to be paid from Available Interest (as Available
Interest has been reduced by reimbursing the Servicer for any
outstanding Advances, paying the Servicer the Servicing Fee (including
any unpaid Servicing Fees with respect to one or more prior Collection
Periods) and, to the extent not paid by the Servicer, paying any accrued
and unpaid fees and expenses (not to exceed $10,000 in the aggregate
amount) due to the Trustee, the Custodian or the Class A Agent); 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 Subordination Spread Account and second, if
such amounts are insufficient, from Available Interest (as Available
Interest has been reduced as described in clause (i) above);
(iii) to the Class B Certificateholders, an amount equal to the Class B
Interest Distributable Amount and any unpaid Class B Interest Carryover
Shortfall, such amount to be paid from Available Interest (after giving
effect to the reduction in Available Interest described in clauses (i)
and (ii) above);
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(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 Available 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);
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. Any outstanding Trustee, Custodian and Class A Agent fees and expenses
in excess of $10,000, to the extent not paid by the Servicer, will be paid from
collections after the distribution of amounts in item (iv) above and prior to
distribution of amounts in item (v) above.
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,
except that if the Yield Supplement Amounts exceed funds available in the Yield
Supplement Reserve Account, such excess shall be withdrawn from the
Subordination 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
Distribution 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 Distribution
Dates over the amount of principal that the holders of the Class A Certificates
actually received on such Distribution Date. The "Class B Interest Carryover
Shortfall" and the "Class B Principal Carryover Shortfall" with respect 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
distributed to the Seller, except in the case of deficits in the Subordination
Spread Account, in which case such amounts will be distributed in the following
amounts and in the following order of priority: (i) to the Subordination Spread
Account until the amount on deposit therein equals the Specified Subordination
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
respect to the Receivables will be subordinated to the rights of the Class A
Certificateholders in the event of defaults or delinquencies on the Receivables
as provided in the Agreement. The Class B Certificateholders will not receive
any distributions of interest or principal with respect to a Distribution Date
until the full amount of interest and principal relating to such Distribution
Date has been distributed to the Class A Certificateholders.
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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
protection 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
Receivables 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 Subordination 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 extent 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
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,
therefore, cannot be accurately predicted.
If on any Distribution Date the holders of the Class A Certificates do not
receive the sum of the Class A Distributable Amount, the Class A Interest
Carryover Shortfall and the Class A Principal Carryover Shortfall for such
Distribution 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 Certificates
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
likelihood of receipt by Class A Certificateholders of the full amount of
principal and interest on the Receivables due them and to decrease the
likelihood that the Class A Certificateholders will experience losses. However,
in certain 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 accordingly 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
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into the Subordination Spread Account until the amount on deposit therein equals
the Specified Subordination Spread Account Balance, prior to remitting such
amounts to the Seller. If the amount on deposit in the Subordination Spread
Account on such Distribution 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 Principal Carryover Shortfall and, to the extent available, any excess
shall be distributed to the Seller. Upon any such release of amounts from the
Subordination 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 Collection
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. (Section 5.08.)
The following chart sets forth an example of the application of the
foregoing provisions to the first monthly distribution:
<TABLE>
<S> <C>
November 1 Cutoff Date. The original Pool Balance equals the aggregate principal
balance of the Receivables.
November 1- Collection Period. The Servicer receives monthly payments, prepayments and
December 31 other proceeds in respect of the Receivables.
January 11 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,
unless the Trustee requests otherwise, in which case the preceding business
day). On this date the Servicer notifies the Trustee of, among other things,
the amounts to be distributed on the Distribution Date.
January 14 Record Date. Distributions on the Distribution Date are made to
Certificateholders of record at the close of business on this date.
January 15 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 to the extent not paid by the Servicer, pays any Trustee,
Custodian or Class A Agent fees and expenses, not to exceed $10,000 in the
aggregate amount) 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
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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 information with respect to the related Collection
Period as to each Class of Certificates, to the extent applicable:
(i) the amount of the distribution allocable to principal on the
Certificates;
(ii) the amount of the distribution allocable to interest on the
Certificates;
(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
related 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 or
deposited in the Subordination Spread Account 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;
(xi) the amount of Advances made in respect of the related Collection Period
and the amount of unreimbursed Advances on such Distribution Date; and
(xii) if applicable, any fees and expenses paid to the Trustee, the Custodian
or the Class A Agent with respect to the related Collection Period, to
the extent such fees and expenses have not been paid by the Servicer.
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.
Copies of such statements may be obtained by Class A Certificate Owners by
delivering 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
containing 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 income tax returns. (Section 5.09.) See "Federal Income Tax
Consequences."
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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, 1999, 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
matters. (Section 4.11.)
The Agreement will also provide for delivery to the Trustee, on or before
June 30th of each year, commencing June 30, 1999, of a certificate signed by an
officer 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 performance
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 (other than
NMAC's obligation to make Advances). (Section 9.06.) See "Risk Factors--Trust's
Relationship to the Seller and NMAC; Financial Condition of Nissan Motor Co.,
Ltd."
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;
provided, however, that neither the Servicer nor any such person will be
protected 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 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
necessary 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.)
The Agreement will provide that the Seller shall not consolidate or merge
with any other entity unless certain conditions and covenants set forth in the
Agreement are satisfied. (Section 8.06.) The Agreement will further provide that
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
consolidation 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, directly 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 subcontract 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 specific duties as servicer through
other subcontractors. (Section 9.05.)
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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
distribution 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 applicable, 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 proceedings with respect to the Servicer indicating its insolvency,
reorganization 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 servicing of automotive receivables. The
Trustee, or any person appointed as successor servicer, shall be the successor
in all respects to the predecessor servicer under the Agreement (other than the
Servicer's obligation to make Advances) and all references therein to the
Servicer shall apply to such successor servicer. The Trustee may make
arrangements for compensation 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
default by the Servicer in the performance of its obligations under the
Agreement 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
respect 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 consent
of the Certificateholders, (i) to cure any ambiguity, correct or supplement 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 materially and adversely affect the interest
of any Certificateholder not consenting thereto, 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." An amendment shall be deemed to not materially
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<PAGE>
and adversely affect the interests of the Class A Certificateholders if (i) such
amendment does not adversely affect the Trust's status as a grantor trust for
federal income tax purposes and (ii) each rating agency then rating the Class A
Certificates confirms in writing that such amendment will not result in a
qualification, reduction or withdrawal of each such rating agency's then current
rating of the Certificates. 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, 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 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) 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. (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
provisions 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
Receivable and the disposition of any amounts received upon liquidation of any
remaining Receivables and (ii) the payment to Certificateholders of all amounts
required to be paid to them pursuant to the Agreement. In order to avoid
excessive 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
remaining 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 retirement
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 Hospital, Los Angeles.
(Sections 12.01 and 12.02.)
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<PAGE>
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
Certificates), 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 Certificate 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 requirements 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.)
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
proceeding 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 refused to
institute any such proceeding. (Section 13.03.)
THE TRUSTEE
Norwest Bank Minnesota, National Association is the Trustee under the
Agreement. The Trustee, 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 requirements 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 conferred or imposed upon the Trustee by the Agreement shall be
conferred or imposed 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
obligated 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. (Section 11.10.)
The Agreement will provide that the Servicer will pay the Trustee's fees.
(Section 11.07.) The Agreement will further provide that the Trustee will be
entitled 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
Agency. The rating is not a recommendation to purchase, hold or sell Class A
Certificates, inasmuch as such rating does not comment as to market price or
suitability 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 Installment Sales Acts (the "MVRISA") and applicable Retail Installment
Sales Acts (the "RISA") or the Consumer Credit Codes (generally pursuant to the
Uniform 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
certificate 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
administrative 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
Financed 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 succeeds 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 administrative error by state or local agencies, the notation of NMAC's lien
on the certificates 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 interest would be subordinate to, among others, subsequent purchasers
of the Financed 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 negligence. 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
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registered 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
title. Thus, the secured party would have the opportunity to re-perfect its
security 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-registration could defeat perfection. In the ordinary course of servicing
receivables, NMAC takes steps to effect re-perfection upon receipt of notice of
re-registration or 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 security 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
security 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 Financed
Vehicle, could arise or occur at any time during the term of a Receivable. No
notice will be given to the Trustee or Certificateholders in the event such a
lien arises or confiscation occurs.
SECURITY INTERESTS IN THE RECEIVABLES
The Receivables are "chattel paper" as defined in the Uniform Commercial
Code in effect in the State of California (the "UCC"). In order to protect the
Trust's ownership or security interest in the Receivables, the Seller will file
UCC-1 financing statements with the appropriate governmental authorities in the
State of California to give notice of the Trust's ownership of and security
interest in the Receivables and their proceeds. Under the Pooling and Servicing
Agreement, the Servicer will be obligated to maintain the perfection of the
Trust's interest in the Receivables. It should be noted, however, that a
purchaser of chattel paper who gives new value and takes possession of it in the
ordinary course of such purchaser's business has priority over a security
interest or ownership interest in the chattel paper that is perfected by filing
UCC-1 financing statements, and not by possession of such chattel paper. Any
such purchaser would not be deemed to have such knowledge because there are UCC
filings and would not learn of the sale of or security interest in the
Receivables from a review of the Receivables since they would not be marked to
show such sale, although the Servicer's computer records will indicate such
sale.
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.
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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
obligor 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, reasonable
attorneys' fees, or, in some states, by payment of delinquent installments 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
prohibitions 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
deficiency 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 expected
to have very little capital or sources of income available following
repossession. Therefore, in many cases, it may not be useful to seek a
deficiency 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
indebtedness, 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
vehicle 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.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related regulations
impose substantial requirements upon lenders and servicers involved in consumer
finance. These laws include the Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Federal Trade Commission Act, the Fair Credit Reporting
Act, the Fair Debt Collection Practices 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 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 installment 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 requirements 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
Consumer's Claims and Defenses (the "FTC Rule"), the provisions of which are
generally 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 defenses that the purchaser of the Financed Vehicle
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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 licensed 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,
near-new and used vehicles furnish a written statement 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 Receivables."
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
Agreement, 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
constitute 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
consolidation 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 limitations (including restrictions 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 Insolvency 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
reasoned analysis of analogous case law (although there is no precedent based on
directly similar facts), that, subject to certain facts, assumptions and
qualifications 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
application 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
assurance 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 conclude
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
Receivables. 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
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made to litigate 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 collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
lender from repossessing 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 providing financing as a general unsecured creditor for the remainder
of the indebtedness. 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
indebtedness.
TRANSFERS OF VEHICLES
The Receivables prohibit the sale or transfer of the vehicle securing a
Receivable 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
consents to such a sale or transfer, the Servicer may enter into a transfer of
equity 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 ("Tax Counsel"), 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 applicable to every prospective investor. The following discussion
does not consider 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 federal 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, except to the limited
extent below, foreign investors, financial institutions, insurance companies or
persons that either hold the Class A Certificates 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
thereunder, 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
Revenue Service (the "Service") with respect to any of the federal tax
consequences discussed below, and no assurance can be given that the Service
will not take contrary positions. PERSONS CONSIDERING THE PURCHASE OF CLASS A
CERTIFICATES 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 SPECIFIC SITUATIONS. IN PARTICULAR, SUCH PERSONS
SHOULD CONSULT THEIR TAX ADVISORS AS TO WHETHER STATE OR LOCAL TAXING
JURISDICTIONS 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
CERTIFICATE 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
The proper tax characterization of the Trust, the Certificates and the
relationship created under the Agreement, the Custody and Pledge Agreement and
the Yield Supplement Agreement (the "Operating Agreements") is unclear. The
Seller and the Trust intend to take what they believe to be the most appropriate
position, and the following discussion is based thereon, namely that, assuming
execution of, and compliance with, the Operating Agreements, the Trust will be
classified for federal income tax purposes as a grantor trust and not as an
association taxable as a corporation. Alternative characterizations are
possible. In any event, however, the Trust will not be treated as an association
taxable as a corporation, and such characterizations should not materially
affect the federal income tax consequences to a holder described herein.
For federal income tax purposes, each holder will be considered to own an
undivided 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 generally
applicable to such holder) its share of the expenses of the Trust allocable to
it.
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Although each Class A Certificate holder will be considered, for federal
income tax purposes, to own its pro rata share of the principal of the
Receivables 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
particular 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
allocable 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
Certificate on an aggregate basis as though such Class A Certificate holder's
investment in the Receivables and other assets were equal to such Class A
Certificate 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 reportable
for a period could differ from the amount reportable on an aggregate basis. In
particular, as described more fully below, High Yield Receivables (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
Supplement Amounts, if any, which are expected to be received, resulting in OID
to the Class A Certificate holders 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 expected
yield to maturity. Alternatively, 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 holder should also be
entitled to amortize the portion of its purchase price allocable 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 investor. 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 accepted 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 interest
in each of the Trust's assets, a portion of the Class A Certificate holder'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
interest
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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 provide 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 instruments.
Instead, yield supplement amounts will be paid to eliminate the difference
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
Certificate holder will accrue income in respect of its interest in such
Receivables under the rules relating to OID 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.
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
market 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 interest 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 imputed 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
payments 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 Certificate 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 apply 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.
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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 receipt,
will constitute a return of basis and not interest income), amounts collected as
of the time of purchase but not yet distributed, rights to receive Yield
Supplement Amounts pursuant to the Yield Supplement Agreement and, possibly, 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 portion 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,
persons, including estates and trusts, that compute taxable income in the same
manner as an individual and certain "pass-through entities". If required to
report income in respect of the Class A Certificates to the Service and Class A
Certificate holders, however, the Servicer and Trustee currently intend to
accrue 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
permitted. Furthermore, subsequent purchasers of Class A Certificates will have
to adjust the amounts reported to them based upon their basis in the Class A
Certificates.
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 accelerate 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
Receivables, 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 additional
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
Certificate 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 undivided interest in a Trust asset is equal to the difference between the
allocable portion of the amount realized and the Class A Certificate holder's
adjusted basis in such asset. A Class A Certificate holder's initial basis in
each Receivable (see "Original Issue Discount, Imputed Interest and Market
Discount--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
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to such Receivable and taken into account in determining the Class A Certificate
holder's taxable income and any distributions (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 disposition
of another asset at a loss (e.g., an interest in other Receivables). Although
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 realized on an
interest in Receivables acquired with market discount may yield ordinary 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 character 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
Certificate would be capital gain or loss. However, it is possible that the
Service 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,
consistent 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 position
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 retained
interest in the Receivables. Except to the extent described in the following
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
miscellaneous itemized deductions exceed two percent of the holder's adjusted
gross income. (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
purposes.
FOREIGN CLASS A CERTIFICATE OWNERS
Interest attributable to Receivables which is received by a Class A
Certificate 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 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.
50
<PAGE>
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 certain
reporting procedures and is not an exempt recipient under applicable provisions
of the Code.
51
<PAGE>
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes 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
permitted 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")
involving an ERISA Plan or other plan subject to Code Section 4975
(collectively, "Plans") include sales, exchanges, loans, extensions of credit,
leases and certain other transactions. A party in interest or disqualified
person is hereinafter 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
interest may be treated as if they were "plan assets" of such Plan. The
Certificates may be treated as equity interests under the Plan Asset
Regulations, and the assets of the Trust may constitute "plan assets" of Plans
owning Certificates 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, prospective 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, and to Chase Securities Inc., Prohibited Transaction Exemption 90-33
(together, the "Exemptions"). The Exemptions apply to certain prohibited
transaction 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
requirements of the Exemptions, 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 Department of Labor has clarified in Prohibited Transaction Exemption
97-34 that the rights of a trustee under a yield supplement arrangement of the
type described under "Description of the Certificates--Yield Supplement Reserve
Account and Yield Supplement Agreement" above may be held as assets of a trust
without jeopardizing the availability of the Exemption.
The Exemptions do 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 "Restricted Group").
Among the conditions that must be satisfied for the Exemptions 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;
52
<PAGE>
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 Exemptions);
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
Restricted Group;
5. the sum of all payments made to and retained by the Underwriter in
connection 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 reasonable 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 Exemptions provide 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 obligations 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 invested 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
independent 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
after 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 serviced 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 Exemptions could apply to the acquisition and
holding 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 Exemptions with its counsel prior
to acquiring Class A Certificates. Class B Certificates should not be acquired
by a Plan in the absence of a determination that another exemption applies.
53
<PAGE>
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
Exemptions, and the potential consequences of their specific circumstances,
prior to making an investment in the Class A Certificates.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
between the Seller, Chase Securities Inc. and J.P. Morgan Securities Inc.,
acting for themselves and as representatives of the other Underwriters named
below (the "Underwriting Agreement"), 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 Certificates set forth opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF
CLASS A
UNDERWRITERS CERTIFICATES
- -------------------------------------------------------------------------- ------------------
<S> <C>
Chase Securities Inc...................................................... $
J.P. Morgan Securities Inc................................................ $
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................................ $
Salomon Smith Barney 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
Certificates offered hereby if any of the Class A Certificates are purchased.
The Seller has been advised by the Underwriters that they propose initially to
offer 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 offering
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 in connection with the offering, creating a syndicate short position.
In addition, the Underwriters may bid for and purchase Class A Certificates in
the open market to cover syndicate short positions or to stabilize the price of
the Class A Certificates. Finally, the underwriting syndicate may impose
"penalty bids" by reclaiming selling concessions allowed for distributing the
Class A Certificates in the offering of the Class A Certificates if the
syndicate repurchases previously distributed Class A Certificates in syndicate
covering transactions, stabilization transactions or otherwise. Any of these
activities may stabilize the price of the Class A Certificates or cause the
price of the Class A Certificates to be higher than it otherwise would be in the
absence of such transactions. The Underwriters are not required to engage in
these activities, and may discontinue any of them 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
contribute to payments which the Underwriters may be required to make in respect
thereof. In the opinion of the Commission, certain indemnification provisions
54
<PAGE>
for liability arising under the federal securities law are contrary to public
policy and therefore unenforceable.
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.
Certain federal income tax and other matters will be passed upon for the
Seller by Weil, Gotshal & Manges LLP.
55
<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............................................................................ 28
Advance............................................................................. 8, 29
Agreement........................................................................... 3
APR................................................................................. 16
Available Interest.................................................................. 31
Available Principal................................................................. 31
Cede................................................................................ 4
Certificate Account................................................................. 15, 28
Certificateholders.................................................................. 2, 5
Certificates........................................................................ 1, 3
Class A Agent....................................................................... 9
Class A Certificate Balance......................................................... 4, 32
Class A Certificateholders.......................................................... 4, 38
Class A Certificate holder.......................................................... 46
Class A Certificate Factor.......................................................... 22
Class A Certificate Owner........................................................... 4
Class A Certificates................................................................ 3
Class A Distributable Amount........................................................ 31
Class A Interest Carryover Shortfall................................................ 32, 33
Class A Interest Distributable Amount............................................... 29
Class A Percentage.................................................................. 3, 24
Class A Pool Factor................................................................. 22
Class A Principal Carryover Shortfall............................................... 32
Class A Principal Distributable Amount.............................................. 31
Class B Certificate Balance......................................................... 32
Class B Certificateholders.......................................................... 5
Class B Certificates................................................................ 3
Class B Distributable Amount........................................................ 32
Class B Interest Carryover Shortfall................................................ 32
Class B Interest Distributable Amount............................................... 33
Class B Percentage.................................................................. 4, 24
Class B Principal Carryover Shortfall............................................... 32
Class B Principal Distributable Amount.............................................. 32
Code................................................................................ 46
Collection Account.................................................................. 15, 28
Collection Period................................................................... 6, 24
Commission.......................................................................... 2
Custody and Pledge Agreement........................................................ 6
Cutoff Date......................................................................... 3
D&P................................................................................. 53
Dealer Recourse..................................................................... 15
Dealers............................................................................. 15
Definitive Certificates............................................................. 26
Determination Date.................................................................. 35
Distribution Date................................................................... 1, 8
DTC................................................................................. 4
</TABLE>
56
<PAGE>
<TABLE>
<S> <C>
DTC Services........................................................................ 25
Eligible Investments................................................................ 28
ERISA............................................................................... 10, 50
ERISA Plans......................................................................... 52
Events of Default................................................................... 38
Excess Amounts...................................................................... 6, 33
Exchange Act........................................................................ 2
Exemption........................................................................... 52
Final Scheduled Distribution Date................................................... 1
Financed Vehicles................................................................... 3
FTC Rule............................................................................ 43
High Yield Receivables.............................................................. 47
holder.............................................................................. 38
Indirect Participants............................................................... 25
Industry............................................................................ 25
Initial Yield Supplement Reserve Amount............................................. 7, 30
Insolvency Laws..................................................................... 42
Liquidated Receivables.............................................................. 31
Liquidation Proceeds................................................................ 31
Low Yield Receivables............................................................... 46
Moody's............................................................................. 14
MVRISA.............................................................................. 42
Nissan.............................................................................. 14, 22
NMAC................................................................................ 3
NMC................................................................................. 3
Obligors............................................................................ 15
OID................................................................................. 47
Operating Agreements................................................................ 46
Participants........................................................................ 25
party in interest................................................................... 52
Pass-Through Rate................................................................... 4
Plan Asset Regulations.............................................................. 52
Plans............................................................................... 52
Pool Balance........................................................................ 18
Prepaid Receivable.................................................................. 8
prohibited transactions............................................................. 52
Purchase Agreement.................................................................. 3, 27
Purchase Amount..................................................................... 27
Rating Agency....................................................................... 10
Receivables......................................................................... 1, 3
Record Date......................................................................... 4
Required Deposit Rating............................................................. 28
Required Yield Supplement Reserve Amount............................................ 8, 30
Restricted Group.................................................................... 52
RISA................................................................................ 41
Rules............................................................................... 25
S&P................................................................................. 53
Securities Act...................................................................... 2
Seller.............................................................................. 1, 2, 3
Service............................................................................. 9, 44
Servicer............................................................................ 1, 3
</TABLE>
57
<PAGE>
<TABLE>
<S> <C>
Servicer Fee........................................................................ 8, 30
Servicing Fee....................................................................... 9, 30
Servicing Rate...................................................................... 7
Specified Subordination Spread Account Balance...................................... 6
Subordination Initial Deposit....................................................... 6
Subordination Spread Account........................................................ 5
Supplemental Servicing Fee.......................................................... 9, 30
Systems............................................................................. 25
Tax Counsel......................................................................... 46
Total Available Amount.............................................................. 31
Trust............................................................................... 1, 3
Trustee............................................................................. 2, 3
UCC................................................................................. 42
UCCC................................................................................ 42
Underwriters........................................................................ 54
Underwriting Agreement.............................................................. 54
United States person................................................................ 50
Yield Supplement Agreement.......................................................... 8
Yield Supplement Amount............................................................. 7
Yield Supplement Reserve Account.................................................... 7, 30
</TABLE>
58
<PAGE>
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS 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
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION 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
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION 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 11
Formation of the Trust 15
Property of the Trust 15
The Receivables 16
Class A Certificate and Pool Factors 22
Use of Proceeds 22
The Seller 22
The Servicer 22
The Certificates 24
Rating of the Class A Certificates 41
Certain Legal Aspects of the Receivables 41
Federal Income Tax Consequences 46
ERISA Considerations 52
Underwriting 54
Legal Opinions 55
Index of Terms 56
</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.
$889,550,535
Nissan Auto Receivables
1998-A Grantor Trust
% ASSET BACKED
CERTIFICATES, CLASS A
Nissan Auto
Receivables Corporation
Seller
Nissan Motor
Acceptance Corporation
Servicer
- ---------------------
PROSPECTUS
- ---------------------
Chase Securities Inc.
J.P. Morgan & Co.
Merrill Lynch & Co.
Salomon Smith Barney
Dated December , 1998
<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............................................ $ 247,312
Rating agency fees................................................................ 170,000
Printing expenses................................................................. 50,000
Accountants' fees................................................................. 45,000
Fees and expenses of Trustee...................................................... 11,000
Blue Sky fees and expenses........................................................ 10,000
Legal fees and expenses........................................................... 150,000
Miscellaneous expenses............................................................ 10,000
---------
Total............................................................................. $ 693,312
---------
---------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Set forth below are certain provisions of law and of the Certificate of
Incorporation of Nissan Auto Receivables Corporation. The general effect of such
provisions is to provide indemnification to officers and directors of such
corporation 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
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that the person 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, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding if the person acted in good faith and in a
manner the person 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 the person's 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 presumption that the person did
not act in good faith and in a manner which the person 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 the person's 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 action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that the person 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, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by the
person in connection with the defense or settlement of such action or suit
if the person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the
II-1
<PAGE>
corporation and except that no indemnification 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 circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, such person
shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of
the present or former director, officer, employee or agent is proper in the
circumstances because the person has met the applicable standard of conduct
set forth in subsections (a) and (b) of this section. Such determination
shall be made, with respect to a person who is a director or officer at the
time of such determination, (1) by a majority vote of the directors who are
not parties to such action, suit or proceeding, even though less than a
quorum, or (2) by a committee of such directors designated by majority vote
of such directors, even though less than a quorum, or (3) if there are no
such directors, or if such directors so direct, by independent legal counsel
in a written opinion, or (4) by the stockholders.
(e) Expenses (including attorneys' 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
undertaking by or on behalf of such director or officer to repay such amount
if it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by former directors and officers or
other employees and agents may be so paid upon such terms and conditions, if
any, as the corporation deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in such person's 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, partnership,
joint venture, trust or other enterprise against any liability asserted
against such person and incurred by such person in any such capacity, or
arising out of such person's status as such, whether or not the corporation
would have the power to indemnify such person against such liability under
this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation 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 corporation, or is or was serving at
the request of such constituent corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same
II-2
<PAGE>
position under this section with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
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
excise 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
participants or beneficiaries; and a person who acted in good faith and in a
manner such person 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.
(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, officer, employee or agent and shall inure to the benefit of the
heirs, executors 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 fiduciary
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
intentional 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 liability
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
"proceeding"), 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 partnership, joint venture, trust or other enterprise, including service
with respect 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
exists 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
II-3
<PAGE>
(i) employee benefit plans, (ii) charitable organizations or (iii) similar
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
subparagraph (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 director 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
corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined 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
subparagraph (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 prosecuting 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 undertaking, if any is required, has been tendered to
the corporation) that the claimant has not met the standards of conduct
which make it permissible under 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 (including its Board of Directors, independent
legal counsel or its stockholders) 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 corporation (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 invalid or ineffective in any proceeding, the validity and
effect of the remaining 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 itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or
not the
II-4
<PAGE>
corporation would have the power to indemnify such person against such
expense, liability 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 advance 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 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 Chase
Securities Inc. and J.P. Morgan Securities Inc., as representatives of the
several Underwriters (the "Representatives"), 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 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 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 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 Representatives 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
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
II-5
<PAGE>
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 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
Representatives, 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 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 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 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
II-6
<PAGE>
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 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 Securities
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 subsection 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 Securities Act; and the
obligations 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 S1, No. 3347413).*
3.2 By Laws of the Seller (filed as Exhibit 3.2 to the Seller's Registration Statement on
Form S1, No. 3347413).*
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.
</TABLE>
II-7
<PAGE>
<TABLE>
<C> <S>
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 denominations 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 otherwise, 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 indemnification against such
liabilities (other than the payment by the registrant 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 or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
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 registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under 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, as amended, the
registrant has duly caused this Amendment No. 1 to 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 4th day of December, 1998.
<TABLE>
<S> <C> <C>
NISSAN AUTO RECEIVABLES CORPORATION
By: /s/ YOICHIRO NAGASHIMA
-----------------------------------------
(Yoichiro Nagashima, President and
Chairman of the Board of Directors)
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
President, Chairman of the
/s/ YOICHIRO NAGASHIMA Board of Directors and
- ------------------------------ Director (principal December 4, 1998
Yoichiro Nagashima executive officer)
<C> <S> <C>
Treasurer, Assistant
/s/ TOMOAKI SHIMAZU Secretary and Director
- ------------------------------ (principal financial December 4, 1998
Tomoaki Shimazu officer and principal
accounting officer)
/s/ JOY M. CROSE
- ------------------------------ Secretary and Director December 4, 1998
Joy M. Crose
</TABLE>
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 S1, No. 3347413).*
3.2 By Laws of the Seller (filed as Exhibit 3.2 to the Seller's Registration Statement on Form S1,
No. 3347413).*
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
NISSAN AUTO RECEIVABLES 1998-A GRANTOR TRUST
/ /% ASSET BACKED CERTIFICATES, CLASS A
-----
NISSAN AUTO RECEIVABLES CORPORATION
(SELLER)
/ /, 1998
-------
Form of Underwriting Agreement
Chase Securities Inc., and
J.P. Morgan Securities Inc.,
As Representatives 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 $/_____/ principal amount of /___/%
Asset Backed Certificates, Class A (the "Class A Certificates"), issued by the
Nissan Auto Receivables 1998-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 /____/, 1998
(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 $/_____/, which is equal to /__/% 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
/__/% in the Trust, payments in respect of which are, to the extent specified in
the Pooling and Servicing Agreement (as defined below), subordinated to the
<PAGE>
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 /_____/, 1998, among the Seller, Nissan Motor
Acceptance Corporation, in its individual capacity and as the Servicer, and
/_____/ (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-/___/), 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 Representatives 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 Representatives 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 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
2
<PAGE>
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 Representatives 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
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
3
<PAGE>
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 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
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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 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
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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 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) /_____/,
1998, 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 Representatives, for the account of the Underwriters, at the office of
Weil, Gotshal & Manges LLP, at 767 Fifth Avenue, New York, New York, on /____/,
1998, at 10:00 a.m., New York time, or at such other time not later than seven
full business days thereafter as the Representatives and the Seller determine,
such time being herein referred to as the "Closing Date". The Class A
Certificates to be so
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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 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 Representatives promptly of any such filing pursuant to Rule
424(b).
(b) The Seller will advise the Representatives 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 Representatives' consent;
and the Seller will also advise the Representatives 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 Representatives may reasonably
designate and to continue such qualifications in effect so
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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 Representatives 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 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
Representatives 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 Representatives copies of all reports or other
communications (financial or otherwise) furnished to Class A Certificateholders,
and deliver to the Representatives 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
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of the Seller as the Representatives 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 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
Representatives 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.
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(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
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 Representatives 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
Representatives 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 Representatives. 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
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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.
(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 Representatives, 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 Representatives,
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 Representatives in their reasonable judgment, shall
have furnished to the Representatives 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:
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(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 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 the
Representatives, 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
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the Seller or the Servicer, pursuant to the terms of the Certificate or
Articles of Incorporation or the 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 and other documents are inaccurate and do not fairly present
the information required to be shown therein.
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(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.
(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
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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 Representatives 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 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
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property or assets of the Seller or the Servicer, pursuant to any
statute, rule or regulation or any order known to such counsel 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 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
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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.
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 Representatives
and their counsel and in any event satisfactory in form and in substance to the
Representatives and their counsel.
(h) Weil, Gotshal & Manges LLP, special tax counsel to the
Seller, shall have furnished to the Representatives their written opinion, dated
the Closing
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Date, in form and substance satisfactory to the Representatives and their
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 Representatives shall 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 /_____/, counsel to the Trustee, dated the Closing
Date and satisfactory in form and substance to the Representatives and their
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,
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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 /_____/ 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 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 Representatives and
their counsel to the effect that for Texas franchise tax purposes, the Trust
will not be subject to Texas franchise taxes.
(l) The Representatives 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.
19
<PAGE>
(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 Representatives such further certificates and
documents as the Representatives 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 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
information furnished to the Seller by any Underwriter through the
Representatives 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.
20
<PAGE>
(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 was
made in reliance upon and in conformity with information furnished to the Seller
by such Underwriter through the Representatives 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
information furnished to the Seller by any Underwriter through the
Representatives 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
21
<PAGE>
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
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 Representatives, 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
22
<PAGE>
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
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 that 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
23
<PAGE>
(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
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
24
<PAGE>
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 Representatives 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 Representatives or the Underwriters will be mailed,
delivered or sent by facsimile transmission and confirmed to Chase Securities
Inc., 270 Park Avenue, New York, New York 10017, Attention: Global Securitized
Finance (facsimile number (212) 834-6562), and to J.P. Morgan Securities Inc.,
60 Wall Street, New York, New York 10260, Attention: Syndicate Desk (facsimile
number (212) 648-5909); and if sent to the Seller, will be
25
<PAGE>
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 Representatives will
act for the several Underwriters in connection with the transactions described
in this Agreement, and any action taken by the Representatives under this
Agreement will be binding upon all the Underwriters.
26
<PAGE>
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.
27
<PAGE>
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:
CHASE SECURITIES INC.,
by
---------------------------
Name:
Title:
J.P. MORGAN SECURITIES INC.,
by
---------------------------
Name:
Title:
Acting on behalf of themselves
and as the Representatives
of the several Underwriter
28
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
- -------------------------------------------------------------
Initial Principal
Amount of
Underwriter Class A Certificates
- -------------------------------------------------------------
<S> <C>
Chase Securities Inc. $/ /
- -------------------------------------------------------------
J.P. Morgan Securities Inc. / /
- -------------------------------------------------------------
/ / / /
- -------------------------------------------------------------
/ / / /
- -------------------------------------------------------------
/ / / /
- -------------------------------------------------------------
/ / / /
- -------------------------------------------------------------
Total $/ /
- -------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 4.1
NISSAN AUTO RECEIVABLES 1998-A GRANTOR TRUST
[___]% ASSET BACKED CERTIFICATES
- --------------------------------------------------------------------------------
NISSAN AUTO RECEIVABLES CORPORATION
Seller
NISSAN MOTOR ACCEPTANCE CORPORATION
Servicer and in its individual capacity
NORWEST BANK MINNESOTA, N.A.
Trustee
- --------------------------------------------------------------------------------
FORM OF POOLING AND SERVICING AGREEMENT
Dated as of [___________], 1998
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I.
INTRODUCTION................................................. 1
Section 1.01. Definitions............................................................................. 1
Section 1.02. Usage of Terms.......................................................................... 19
Section 1.03. Cutoff Date and Record Date............................................................. 19
Section 1.04. Section References...................................................................... 19
ARTICLE II.
THE TRUST.................................................. 19
Section 2.01. Creation of Trust....................................................................... 19
Section 2.02. Conveyance of Receivables............................................................... 20
Section 2.03. Acceptance by Trustee................................................................... 20
ARTICLE III.
THE RECEIVABLES............................................... 21
Section 3.01. Representations and Warranties of Seller................................................ 21
Section 3.02. Repurchase Upon Breach.................................................................. 25
Section 3.03. Custody of Receivable Files............................................................. 25
Section 3.04. Duties of Servicer as Custodian......................................................... 26
Section 3.05. Instructions; Authority to Act.......................................................... 27
Section 3.06. Custodian's Indemnification............................................................. 27
Section 3.07. Effective Period and Termination........................................................ 27
ARTICLE IV.
ADMINISTRATION AND SERVICING OF RECEIVABLES................................. 27
Section 4.01. Duties of Servicer...................................................................... 27
Section 4.02. Collection of Receivable Payments....................................................... 28
Section 4.03. Realization Upon Receivables............................................................ 29
Section 4.04. Physical Damage Insurance............................................................... 29
Section 4.05. Maintenance of Security Interests in Financed Vehicles.................................. 29
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Section 4.06. Covenants of Servicer................................................................... 29
Section 4.07. Repurchase of Receivables Upon Breach................................................... 30
Section 4.08. Servicer Fee............................................................................ 30
Section 4.09. Servicer's Certificate.................................................................. 30
Section 4.10. Annual Statement as to Compliance; Notice of Default.................................... 31
Section 4.11. Annual Independent Certified Public Accountant's Report................................. 32
Section 4.12. Access to Certain Documentation and Information
Regarding Receivables............................................................... 33
Section 4.13. Servicer Expenses....................................................................... 33
ARTICLE V.
DISTRIBUTIONS; SUBORDINATION SPREAD ACCOUNTS;
STATEMENTS TO CERTIFICATEHOLDERS....................................... 33
Section 5.01. Accounts................................................................................ 33
Section 5.02. Collections............................................................................. 34
Section 5.03. Application of Collections.............................................................. 35
Section 5.04. Advances................................................................................ 35
Section 5.05. Additional Deposits..................................................................... 36
Section 5.06. Distributions........................................................................... 36
Section 5.07. [Reserved] ............................................................................. 39
Section 5.08. Net Deposits............................................................................ 39
Section 5.09. Statements to Certificateholders........................................................ 39
Section 5.10. No Petition............................................................................. 41
ARTICLE VI.
ADDITIONAL AGREEMENTS............................................ 42
Section 6.01. Yield Supplement Reserve Account........................................................ 42
Section 6.02. Custody and Pledge Agreement. .......................................................... 42
Section 6.03. Limitations on the Trust................................................................ 42
ARTICLE VII.
THE CERTIFICATES............................................... 42
Section 7.01. The Certificates........................................................................ 42
Section 7.02. Authentication of Certificates.......................................................... 43
Section 7.03. Registration of Transfer and Exchange of Certificates................................... 43
Section 7.04. Mutilated, Destroyed, Lost, or Stolen Certificates...................................... 44
Section 7.05. Persons Deemed Owners................................................................... 45
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 7.06. Access to List of Certificateholders' Names and Addresses............................... 45
Section 7.07. Maintenance of Office or Agency......................................................... 45
Section 7.08. Book-Entry Certificates................................................................. 46
Section 7.09. Notices to Clearing Agency.............................................................. 47
Section 7.10. Definitive Certificates................................................................. 47
ARTICLE VIII.
THE SELLER.................................................. 47
Section 8.01. Representations of Seller............................................................... 47
Section 8.02. Liability of Seller; Indemnities........................................................ 49
Section 8.03. Merger or Consolidation of, or Assumption of the
Obligations of, Seller.............................................................. 49
Section 8.04. Limitation on Liability of Seller and Others............................................ 50
Section 8.05. Seller May Own Certificates............................................................. 50
Section 8.06. Additional Covenants.................................................................... 51
ARTICLE IX.
THE SERVICER................................................. 53
Section 9.01. Representations of Servicer............................................................. 53
Section 9.02. Indemnities of Servicer................................................................. 54
Section 9.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer............................................................ 55
Section 9.04. Limitation on Liability of Servicer and Others.......................................... 56
Section 9.05. Delegation of Duties.................................................................... 57
Section 9.06. Nissan Motor Acceptance Corporation Not to
Resign as Servicer.................................................................. 57
ARTICLE X.
DEFAULT................................................... 57
Section 10.01. Events of Default...................................................................... 57
Section 10.02. Appointment of Successor............................................................... 59
Section 10.03. Repayment of Advances.................................................................. 60
Section 10.04. Notification to Certificate-holders.................................................... 60
Section 10.05. Waiver of Past Defaults................................................................ 60
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE XI.
THE TRUSTEE................................................. 61
Section 11.01. Duties of Trustee...................................................................... 61
Section 11.02. Trustee's Certificate.................................................................. 63
Section 11.03. Trustee's Assignment of Repurchased Receivables........................................ 63
Section 11.04. Certain Matters Affecting the Trustee.................................................. 64
Section 11.05. Trustee Not Liable for Certificates or Receivables..................................... 65
Section 11.06. Trustee May Own Certificates........................................................... 66
Section 11.07. Trustee's Fees and Expenses............................................................ 66
Section 11.08. Indemnity of Trustee................................................................... 67
Section 11.09. Eligibility Requirements for Trustee................................................... 67
Section 11.10. Resignation or Removal of Trustee...................................................... 67
Section 11.11. Successor Trustee...................................................................... 68
Section 11.12. Merger or Consolidation of Trustee..................................................... 69
Section 11.13. Appointment of Co-Trustee or Separate Trustee.......................................... 69
Section 11.14. Representations and Warranties of Trustee.............................................. 70
Section 11.15. Tax Returns............................................................................ 71
Section 11.16. Trustee May Enforce Claims Without Possession
of Certificates.................................................................... 71
Section 11.17. Suits for Enforcement.................................................................. 71
Section 11.18. Rights of Certificateholders to Direct Trustee......................................... 71
Section 11.19. Appointment of Custodian............................................................... 72
ARTICLE XII.
TERMINATION................................................. 72
Section 12.01. Termination of the Trust............................................................... 72
Section 12.02. Optional Purchase of All Receivables................................................... 73
ARTICLE XIII.
MISCELLANEOUS PROVISIONS........................................... 74
Section 13.01. Amendment.............................................................................. 74
Section 13.02. Protection of Title to Trust........................................................... 75
Section 13.03. Limitation on Rights of Certificateholders............................................. 77
Section 13.04. GOVERNING LAW.......................................................................... 78
Section 13.05. Notices................................................................................ 78
Section 13.06. Severability of Provisions............................................................. 79
Section 13.07. Assignment............................................................................. 79
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 13.08. Certificates Nonassessable and Fully Paid.............................................. 79
Section 13.09. Further Assurances..................................................................... 79
Section 13.10. No Waiver; Cumulative Remedies......................................................... 80
Section 13.11. Third-Party Beneficiaries.............................................................. 80
Section 13.12. Actions by Certificateholders.......................................................... 80
Section 13.13. Qualification as Grantor Trust; Separate Assets........................................ 80
Section 13.14. Counterparts........................................................................... 81
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
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
SCHEDULES
Schedule A List of Receivables
Schedule B Location of Receivables
</TABLE>
vi
<PAGE>
This Pooling and Servicing Agreement, dated as of [_______],
1998, is made with respect to the formation of the Nissan Auto
Receivables 1998-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 Norwest Bank Minnesota, N.A., a bank
organized under the laws of [__________________] (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:
"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 Pooling and Servicing 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.
"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
<PAGE>
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 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
2
<PAGE>
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 Norwest Bank Minnesota, N.A., 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.
"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
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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 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 60 days or
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more to the outstanding number of Receivables exceeds [__]%, then the Class A
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) an (ii) above for three
successive Distribution Dates) 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.
"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
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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 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.
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"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 [____________________].
"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 November 1, 1998.
"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:
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(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 securities intermediary (as defined in Section 8-102(a)(14) of the
UCC) indorsed to, or registered in the name of, the Custodian or indorsed in
blank (as defined in Section 8-304 of the UCC) and the making by such securities
intermediary of entries on its books and records identifying such certificated
securities as belonging to the Custodian and the sending by such securities
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(a)(5) 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 securities intermediary by the amount of such certificated
security, the identification by the clearing corporation of the certificated
securities for the sole and exclusive account of the securities intermediary,
the maintenance of such certificated securities by such clearing corporation or
its nominee subject to the clearing corporation's exclusive control, the sending
of a confirmation by the securities intermediary of the purchase by the
Custodian of such securities and the making by such securities 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 securities intermediary which is also a
"depositary" pursuant to applicable federal regulations and issuance by such
securities 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 securities
intermediary of entries in its books and records identifying such book-entry
security held through the Federal
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<PAGE>
Reserve System pursuant to Federal book-entry regulations as belonging to the
Custodian and indicating that such securities 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
the issuer thereof in the name of the securities intermediary, the sending of a
confirmation by the securities intermediary of the purchase by the Custodian of
such uncertificated security and the making by such securities 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 December 15, 1999.
"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
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<PAGE>
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 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
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<PAGE>
unrated subsidiary (a "Guaranteed Counterparty"), acting as
principal, that is a wholly-owned subsidiary of 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 behalf of the Trustee, the
Custodian or the Class A Agent, as applicable;
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(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 make the payment
due under such guarantee;
(iv) the guarantee of the Rated
Holding Company shall be irrevocable with
respect to such
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<PAGE>
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
distributions to the Servicer and the Certificateholders pursuant to Section
5.06(c).
"Excess Proceeds" has the meaning assigned to such term in
Section 8.06(b)(ii) hereof.
"Final Scheduled Distribution Date" shall be September 30,
2003.
"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.
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"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.
"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
$[________________________].
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<PAGE>
"Original Pool Balance" is $999,494,983.89.
"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 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
[______________], 1998, relating to the purchase by the Seller from Nissan
Motor Acceptance Corporation of the Receivables.
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<PAGE>
"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.
"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.
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"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 $[____________________].
"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.
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"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 1998-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 Norwest Bank Minnesota, N.A.), 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 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.
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"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.
"USAP" has the meaning assigned to such term in Section 4.11
hereof.
"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 herein 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.
ARTICLE II.
THE TRUST
Section 2.01. Creation of Trust. Upon the execution of this
Agreement by the parties hereto, there is hereby created the Trust.
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Section 2.02. Conveyance of Receivables. In consideration 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 Certificateholders, 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.
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.
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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.
(ii) Schedule of Receivables. The information set forth in
Schedule A to this 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
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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 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.
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(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
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.
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(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 3.0%.
(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 59 months.
(xxi) Balance. Each Receivable had an original Principal
Balance of not more than $49,977.65 and, as of the Cutoff Date, had a
principal balance of not less than $258.66 and not more than
$49,299.21.
(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 origination date on
or after October 6, 1993.
(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.
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(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 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:
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(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
(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
this 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
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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 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
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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 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.
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
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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 commercially 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 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
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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 purchased 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.
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 and 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
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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 this 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.
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, 1999, an Officer's Certificate, dated
as of March 31 of such calendar year (or with respect to the initial
Certificates, from the initial issuance of Certificates hereunder to March 31,
1999, 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
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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, 1999 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, 1999) 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.
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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;
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 (such direction to be in a format
reasonably acceptable to the Trustee), 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. The 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
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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 the Custodian 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 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. 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) 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 Nissan Motor Acceptance Corporation is the Servicer and
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 (ii) no
Event of Default shall have occurred (each a "Monthly Remittance Condition");
except that the requirement in clause 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
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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 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 City 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. To the extent that the amount set forth in clause (y) above with
respect to a Receivable is greater than the
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amount set forth in clause (x) above with respect thereto, such amount
shall be 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
into 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 City 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.
(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
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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 (as such Available
Principal has been reduced as described in clause (ii) above), an
amount equal to the sum of the Class A Principal Distributable
Amount and any outstanding Class A Principal Carryover Shortfall 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);
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(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 (as such Available Principal has been reduced as described in
clauses (ii) and (iii) above), an amount equal to the sum of the Class
B Principal Distributable Amount and any outstanding Class B Principal
Carryover Shortfall 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 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.
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(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 (or the rating agency confirmation described
in the seventh sentence of Section 5.02 has been obtained), the Servicer (in
whatever capacity) may make the remittances pursuant to Sections 5.02 and 5.05
above, net of amounts to be distributed to the Servicer (in whatever capacity)
pursuant to Section 5.06(c) or Section 5.06(a)(ii). In addition, the Seller
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 the Servicer 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
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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;
(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) 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
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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 (vii) of Section 5.09(a) above 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.
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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 initial 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 initial 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.
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
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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 or facsimile
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
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
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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 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
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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.
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 Certificateholders' 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.
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 (or a custodian therefor), 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
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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
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.
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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.
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.
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(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.
(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
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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 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
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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 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 (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 1.01 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 the
Seller shall not issue any additional securities that could reasonably be
expected to affect materially and
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adversely the rating of such Certificates issued pursuant to this Agreement
unless it shall have first obtained the written consent of each such rating
agency to the effect that such issuance will not adversely affect such rating;
provided that, the issuance of another series of certificates pursuant to an
agreement with terms substantially similar to the terms of this Agreement shall
not be deemed to materially and adversely affect the ratings on the
Certificates. 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 connection 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;
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(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
obligations 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 indebtedness 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 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
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appointment 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 creditors, or admit in writing its inability to
pay its debts generally as they become due, or take corporate
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
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
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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, 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
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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 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 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
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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
rve 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, 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
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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 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 writing at the earliest practicable time) and any
such determination 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
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(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 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, whether to complete the transfer and endorsement of the Receivables
and related documents, or otherwise.
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(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 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.
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(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 its 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 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
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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 Corporate 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 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
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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 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.
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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 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
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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.
(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
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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 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
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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 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.
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
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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 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.
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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
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
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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 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:
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(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 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.
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
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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 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
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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 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 Ba1 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
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 materially and
adversely affect the interests of any Certificateholder not consenting thereto.
An amendment shall be deemed to not materially and adversely affect the
interests of the Class A Certificateholders if each rating agency then rating
the Class A Certificates confirms in writing that such amendment will not result
in a qualification, reduction or withdrawal of each such rating agency's then
current rating of the Certificates; (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 Class A Specified
Subordinated Spread Account Balance or the Class B Specified Subordination
Spread Account Balance (except as described in clauses (ii) and (iii) above)
without the consent of each adversely affected Certificateholder or (b) reduce
the aforesaid percentage of the Class A Certificate
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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 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.
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(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 Section 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.
(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.
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(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) upon 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) if requested by the Trustee, not more frequently
than annually, an Opinion of Counsel, dated as of a date
during such 90-day period, either (A) stating that, in the
opinion of such Counsel, all financing statements and
continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the
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.
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
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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 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:
78
<PAGE>
(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 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 UCC 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
79
<PAGE>
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges therein provided are cumulative and not
exhaustive of any rights, remedies, powers and privileges provided by law.
Section 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. No party to this
Agreement shall take any action to cause the Trust to be treated as other than a
grantor trust for federal income tax and state tax purposes.
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
80
<PAGE>
original, and all of which counterparts shall constitute but one and the same
instrument.
81
<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 __________ 1998.
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:
NORWEST BANK MINNESOTA, N.A.,
as Trustee
By:
---------------------------------
Name:
Title:
82
<PAGE>
SCHEDULE A
<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 1998-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
<PAGE>
Nissan Auto Receivables 1998-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
[_____________], 1998 (the "Agreement"), among the Seller, Nissan Motor
Acceptance Corporation, as Servicer (the "Servicer") and in its individual
capacity, and Norwest Bank Minnesota, N.A., 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 November 1, 1998, 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 December 15, 1998, 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 Certificate or the making of any notation hereon except that with
respect to Class A Certificates
A-2
<PAGE>
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
1998-A
GRANTOR TRUST
NORWEST BANK MINNESOTA, N.A.,
as Trustee
By
-----------------------------
DATED:
[SEAL]
ATTEST:
- ----------------------
Authorized Officer
This is one of the Class A Certificates referred to
in the within-mentioned Agreement.
NORWEST BANK MINNESOTA, N.A.,
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 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
A-5
<PAGE>
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
A-7
<PAGE>
member firm of the New York Stock Exchange or a commercial bank or trust
company.
A-8
<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 1998-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 1998-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
B-1
<PAGE>
[__________], 1998 (the "Agreement"), among the Seller, Nissan Motor
Acceptance Corporation, as Servicer (the "Servicer") and in its individual
capacity, and Norwest Bank Minnesota, N.A., 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 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 November
1, 1998, 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 December 15, 1998, 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.
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
B-2
<PAGE>
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 1998-A
GRANTOR TRUST
NORWEST BANK MINNESOTA, N.A.,
as Trustee
DATED: BY
------------------------ --------------------------------
[SEAL]
ATTEST:
- ----------------------
Authorized Officer
This is one of the Class B Certificates referred
to in the within-mentioned Agreement.
NORWEST BANK MINNESOTA, N.A.,
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 $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
B-5
<PAGE>
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
[DTC Symbol]
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]
Nissan Auto Receivables Corporation
[Name of Issuer]
[_____________________________]
[Name of Trustee]
[__________], 1998
[Date]
Attention: General Counsel's Office
The Depository Trust Company
55 Water Street; 49th Floor
New York, NY 10041-0099
Re: Nissan Auto Receivables 1998 - A Grantor Trust [____] %
Asset Backed Certificates, Class A; Nissan Auto
Receivables Corporation - Originator of the Trust,
Registrant under the Securities Act of 1933.
[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").____________________
["Underwriter"] is 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:
<PAGE>
1. Prior to closing on the Securities on [_________], 1998, 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 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
2
<PAGE>
of other corporate actions by telecopy shall be sent to DTC's Reorganization
Department at (212) 709-1093 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 same-day 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 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
Reorganization 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 Participant 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:
A. If there is a Trustee (as defined in this Letter of Representations), 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 forth
herein.
B. Schedule B contains statements that DTC believes accurately describe DTC, the
method of effecting book-entry transfers of securities distributed through DTC,
and certain related matters.
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
By:
cc: Underwriter
Underwriter's Counsel
Very truly yours,
Nissan Auto Receivables Corporation
(Issuer)
By:
---------------------------------------
(Authorized Officer's Signature)
[_________________________________________]
(Trustee)
By:
---------------------------------------
(Authorized Officer's Signature)
5
<PAGE>
SCHEDULE A
Nissan Auto Receivables 1998 - A Grantor Trust [___]%
Asset Backed Certificates, Class A
(Describe Issue)
<TABLE>
<CAPTION>
CUSIP Number Principal Amount Maturity Date Interest Rate
- ------------ ---------------- ------------- -------------
<S> <C> <C> <C>
</TABLE>
<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 issue to be redeemed.]
i
<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.
ii
<PAGE>
[DTC Symbol]
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
Norwest Bank Minnesota, N.A., as trustee (the "Trustee") of
the Nissan Auto Receivables 1998-A Grantor Trust created pursuant to the
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement") dated
as of [________________], 1998, 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 __________ , 1998.
------------------------------
<PAGE>
Exhibit D-2
Trustee's Certificate
pursuant to Section 11.03
of the Pooling and Servicing
Agreement
Norwest Bank Minnesota, N.A., as trustee (the "Trustee") of
the Nissan Auto Receivables 1998-A Grantor Trust created pursuant to the Pooling
and Servicing Agreement (the "Pooling and Servicing Agreement") dated as of
[__________], 1998, 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
_________ , 1998.
------------------------------
<PAGE>
Exhibit 4.2
FORM OF CUSTODY AND PLEDGE AGREEMENT
CUSTODY AND PLEDGE AGREEMENT, dated as of [___________], 1998 entered
into among Nissan Auto Receivables Corporation, a Delaware corporation (the
"Seller"), Norwest Bank Minnesota, N.A., as custodian (the "Custodian"), and
Norwest Bank Minnesota, N.A., 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. Neither the Subordination Spread
Accounts, the Excess Amounts nor the Recapture Amounts shall be part of the
Trust.
<PAGE>
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
hereof, 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 hereof. 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 hereof.
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 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.
2
<PAGE>
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 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.
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<PAGE>
(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 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
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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 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
securities intermediary (as such term is defined in Section
8-102(a)(14) 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
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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 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
6
<PAGE>
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.
(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
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<PAGE>
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.
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.
8
<PAGE>
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, 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
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<PAGE>
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 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 such amendment which affects the Custodian's own rights,
duties or immunities under this Agreement or otherwise.
10
<PAGE>
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.
11
<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 __________ 1998.
NISSAN AUTO RECEIVABLES CORPORATION,
as Seller and as initial holder of the
Class B Certificates
By:
-----------------------------------------
Name:
Title:
NORWEST BANK MINNESOTA, N.A.
as Custodian
By:
-----------------------------------------
Name:
Title:
NORWEST BANK MINNESOTA, N.A.
as Trustee
By:
-----------------------------------------
Name:
Title:
Acknowledged and Agreed:
- ------------------------
NISSAN MOTOR ACCEPTANCE CORPORATION,
as Servicer
12
<PAGE>
By:
--------------------------------------
Name:
Title:
13
<PAGE>
Exhibit 5.1
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, N.Y. 10153-0119
(212) 310-8000
Fax: (212) 310-8007
December 4, 1998
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. 333-64565) 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 have made such inquiries of officers and representatives of the
Company and NMAC 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, conformed or photostatic copies and the
authenticity of the originals of such latter documents. We have also assumed (i)
the due incorporation and valid existence of the Company and NMAC, (ii) that the
Company and NMAC have the requisite corporate power and authority to file the
Registration Statement and to enter into and perform the Pooling and Servicing
Agreement, and (iii) the due authorization, execution and delivery of the
Pooling and Servicing Agreement by the Company, NMAC and the Trustee.
<PAGE>
Nissan Auto Receivables Corporation
December 4, 1998
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
767 Fifth Avenue
New York, N.Y. 10153-0119
(212) 310-8000
Fax: (212) 310-8007
December 4, 1998
Nissan Auto Receivables Corporation
990 West 190th Street
Torrence, CA 90502
Re: Nissan Auto Receivables 1998-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. 333-64565) filed on Form S-1 with the Securities and Exchange
Commission on September 29, 1998, 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, 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
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
<PAGE>
Nissan Auto Receivables Corporation
Page 2
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
FORM OF PURCHASE AGREEMENT
This PURCHASE AGREEMENT is made as of this [____] day of
[ ], 1998, 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 1998-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.
<PAGE>
"Assignment" shall mean the document of assignment attached to
this Agreement as Exhibit A.
"Certificates" shall have the meaning specified in
the introductory paragraphs of this Agreement.
"Closing" shall have the meaning specified in
Section 2.02.
"Closing Date" shall mean December [__], 1998.
"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 Norwest Bank Minnesota, N.A., as trustee, dated as
of [_______], 1998, 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
2
<PAGE>
$999,494,983.89.
"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.
"Seller" shall mean Nissan Motor Acceptance Corporation, a
California corporation, and its successors and assigns.
"Trust" shall mean the Nissan Auto Receivables
1998-A Grantor Trust.
"Underwriting Agreement" shall mean the
Underwriting Agreement by and among Chase Securities Inc.,
J.P. Morgan Securities Inc. and the Purchaser, dated
[_______], 1998.
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
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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 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,
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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 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 the Seller and is the legal, valid and binding obligation of the
Seller except as the same may be limited by insolvency, bankruptcy,
reorganization
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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 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
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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
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,
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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 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.
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(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 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.
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(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 has been increased.
(xix) APR. The Annual Percentage Rate
of each Receivable equals or exceeds 3.0%.
(xx) Maturity. As of the Cutoff Date,
each Receivable has a remaining maturity of not less than three months
and not greater than 59 months.
(xxi) Balance. Each Receivable had an
original principal balance of not more than $49,977.65 and, as of the
Cutoff Date, has a principal balance of not less than $258.66 and not
more than $49,299.21.
(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 two 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.
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(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 October 6, 1993.
(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
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
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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.
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
Purchaser 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 shall deliver to the Seller the Receivables Purchase
Price, as provided in Section 2.01(b).
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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
ss. 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
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any time the 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.
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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 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.
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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 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.
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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 (includ ing 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 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
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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.
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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 ___________ 1998.
NISSAN MOTOR ACCEPTANCE CORPORATION
By:
---------------------------------
Name:
Title:
NISSAN AUTO RECEIVABLES CORPORATION
By:
---------------------------------
Name:
Title:
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Exhibit A
ASSIGNMENT
For value received, in accordance with the Purchase Agreement
dated as of [_________], 1998, 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 _______ 1998.
NISSAN MOTOR ACCEPTANCE CORPORATION
By:
---------------------------------
Name:
Title:
<PAGE>
Annex A
Schedule of Receivables
<PAGE>
Exhibit 10.2
Nissan Auto Receivables Corporation
990 West 190th Street
Torrance, California 90502
Dated as of
[____________], 1998
FORM OF YIELD SUPPLEMENT AGREEMENT
Norwest Bank Minnesota, N.A.
[Address]
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 Norwest Bank Minnesota, N.A., 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" (as
defined below) 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 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
<PAGE>
times (i) interest on such Receivable 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 Class A 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 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
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<PAGE>
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 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
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<PAGE>
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 1998-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
Norwest Bank Minnesota, N.A., 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 other person as the relevant party shall have designated
for such purpose in a written notice.
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<PAGE>
The Company:
Nissan Auto Receivables Corporation
990 West 190th Street
Torrance, California 90502
Attention: Treasurer
Facsimile No.: 310-324-2542
Class A Agent:
Norwest Bank Minnesota, N.A.
[Address]
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 __________ ___, 1998
NISSAN MOTOR ACCEPTANCE CORPORATION
By:
--------------------------
Name:
---------------------
Title:
--------------------
NORWEST BANK MINNESOTA, N.A., AS TRUSTEE
AND CLASS A AGENT
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
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