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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 13, 1999
REGISTRATION NO. 333-82763
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NISSAN AUTO RECEIVABLES CORPORATION
(Exact name of Registrant as specified in its charter)
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DELAWARE 6189 33-0479655
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification Number)
incorporation or
organization)
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990 W. 190TH STREET
TORRANCE, CALIFORNIA 90502
(310) 719-8013
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
JOY MURAKAMI 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 with respect to the Registrant)
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COPY TO:
WARREN R. LOUI, ESQ.
O'MELVENY & MYERS LLP
400 SOUTH HOPE STREET
LOS ANGELES, CALIFORNIA 90071-2899
(213) 430-6000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
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If the only securities being registered on this form are being offered
pursuant to a dividend or interest reinvestment plan, please check the following
box. / /
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, check the following box. /X/
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 number of the earlier effective registration statement for the same
offering. / /
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM AMOUNT OF MAXIMUM
PROPOSED TITLE OF SECURITIES AMOUNT TO BE PROPOSED OFFERING AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PRICE PER UNIT(1) PRICE(1) REGISTRATION FEE
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Asset Backed Securities................. $3,000,000,000.00 100% $3,000,000,000.00 $834,000.00(2)
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(1) Estimated solely for the purpose of calculating the registration fee on the
basis of the proposed maximum offering price per unit.
(2) $278.00 of which has already been paid.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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SUBJECT TO COMPLETION, DATED AUGUST 13, 1999
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.
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PROSPECTUS
NISSAN AUTO RECEIVABLES TRUSTS
ASSET BACKED NOTES
ASSET BACKED CERTIFICATES
NISSAN AUTO RECEIVABLES CORPORATION,
SELLER
NISSAN MOTOR ACCEPTANCE CORPORATION,
SERVICER
THE TRUSTS:
1. A new trust will be formed to issue each series of securities.
2. Each trust will consist of:
- a pool of retail installment sales contracts secured by new, near-new or
used automobiles and light-duty trucks; and
- other assets specified in the applicable prospectus supplement.
THE SECURITIES:
1. will be asset-backed securities sold periodically in one or more series;
2. will be paid only from the assets of the related trust;
3. will be issued as part of a designated series that may include one or more
classes; and
4. will consist of:
- notes (which will be treated as indebtedness of the trust) and/or
- certificates (which will represent an undivided ownership interest in the
trust).
YOU SHOULD REVIEW CAREFULLY THE FACTORS SET FORTH UNDER "RISK FACTORS" BEGINNING
ON PAGE 11 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE SECURITIES OR DETERMINED THAT THIS
PROSPECTUS OR THE APPLICABLE PROSPECTUS SUPPLEMENT IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The amounts, prices and terms of each offering of securities will be determined
at the time of sale and will be described in a prospectus supplement that will
be attached to this prospectus.
This prospectus may be used to offer and sell any series of securities only if
accompanied by the prospectus supplement for that series.
The date of this prospectus is , .
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IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the securities in two separate documents
that progressively provide varying levels of detail: this prospectus, which
provides general information, some of which may not apply to a particular series
of securities including your series, and the accompanying prospectus supplement,
which will describe the specific terms of the offered securities.
We have started with several introductory sections describing the trust and
the securities in abbreviated form, followed by a more complete description of
the terms. The introductory sections are:
* Summary of Terms--gives a brief introduction to the securities to be
offered; and
* Risk Factors--describes briefly some of the risks to investors of a
purchase of the securities.
You can find a listing of the pages where capitalized terms used in this
prospectus are defined under the caption "Index of Terms" beginning on page 80
in this prospectus.
Whenever we use words like "intends," anticipates" or "expects" or similar
words in this prospectus, we are making a forward-looking statement, or a
projection of what we think will happen in the future. Forward-looking
statements are inherently subject to a variety of circumstances, many of which
are beyond our control and could cause actual results to differ materially from
what we anticipate. Any forward-looking statements in this prospectus speak only
as of the date of this prospectus. We do not assume any responsibility to update
or review any forward-looking statement contained in this prospectus to reflect
any change in our expectation about the subject of that forward-looking
statement or to reflect any change in events, conditions or circumstances on
which we have based any forward-looking statement.
The securities are not a suitable investment for any investor that requires
a regular or predictable schedule of payments or payment on specific dates. The
securities are complex investments. We suggest that only investors who, either
alone or with their financial, tax and legal advisors, have the expertise to
analyze the prepayment, reinvestment and default risks, the tax consequences of
the investment and the interaction of these factors should consider purchasing
the securities.
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TABLE OF CONTENTS
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IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS AND THE ACCOMPANYING
PROSPECTUS SUPPLEMENT................................................................ 2
SUMMARY OF TERMS....................................................................... 6
Issuer............................................................................... 6
Seller............................................................................... 6
Servicer............................................................................. 6
Securities Offered................................................................... 6
The Receivables...................................................................... 7
The Trust Property................................................................... 7
Credit And Cash Flow Enhancement..................................................... 7
Servicing Fee........................................................................ 8
Advances............................................................................. 8
Trustee.............................................................................. 9
Indenture Trustee.................................................................... 9
Optional Purchase.................................................................... 9
Tax Status........................................................................... 9
ERISA Considerations................................................................. 10
RISK FACTORS........................................................................... 11
You must rely for repayment only upon payments from the trust's assets which may not
be sufficient to make full payments on your securities............................. 11
You may experience reduced returns on your investment resulting from prepayments,
repurchases or early termination of the trust...................................... 11
Interests of other persons in the receivables and financed vehicles could be superior
to the trust's interest, which may result in reduced payments on your securities... 12
Receivables that fail to comply with consumer protection laws may be unenforceable,
which may result in losses on your investment...................................... 13
Bankruptcy of Nissan Motor Acceptance Corporation (servicer) or Nissan Auto
Receivables Corporation (seller) could result in losses or delays in payments on
your securities.................................................................... 13
Proceeds of the sale of receivables may not be sufficient to pay your securities in
full; failure to pay principal on your notes will not constitute an event of
default until maturity............................................................. 14
FORMATION OF THE TRUSTS................................................................ 15
PROPERTY OF THE TRUSTS................................................................. 15
THE RECEIVABLES........................................................................ 16
Underwriting of Motor Vehicle Loans.................................................. 16
Servicing of the Receivables......................................................... 17
USE OF PROCEEDS........................................................................ 17
THE TRUSTEE............................................................................ 17
THE SELLER............................................................................. 18
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THE SERVICER........................................................................... 18
WHERE YOU CAN FIND MORE INFORMATION ABOUT YOUR SECURITIES.............................. 18
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES............................................ 19
WEIGHTED AVERAGE LIFE OF THE SECURITIES................................................ 19
POOL FACTORS AND TRADING INFORMATION................................................... 20
THE NOTES.............................................................................. 21
General.............................................................................. 21
Principal and Interest on the Notes.................................................. 21
The Indenture........................................................................ 22
THE CERTIFICATES....................................................................... 26
General.............................................................................. 26
Payments of Principal and Interest................................................... 26
MATERIAL INFORMATION REGARDING THE SECURITIES.......................................... 27
Fixed Rate Securities................................................................ 27
Floating Rate Securities............................................................. 27
Indexed Securities................................................................... 33
Issues Related to Year 2000 Date Conversion.......................................... 34
Book-Entry Registration.............................................................. 35
Definitive Securities................................................................ 38
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS................................... 39
Sale and Assignment of Receivables................................................... 39
Accounts............................................................................. 41
Servicing Procedures................................................................. 42
Insurance on Financed Vehicles....................................................... 43
Collections.......................................................................... 43
Advances............................................................................. 44
Servicing Compensation............................................................... 44
Yield Supplement Account; Yield Supplement Agreement................................. 45
Distributions on the Securities...................................................... 46
Credit and Cash Flow Enhancement..................................................... 46
Net Deposits......................................................................... 47
Statements to Trustees and Trust..................................................... 47
Statements to Securityholders........................................................ 48
Evidence as to Compliance............................................................ 49
Material Matters Regarding the Servicer.............................................. 49
Servicer Default..................................................................... 50
Rights Upon Servicer Default......................................................... 51
Waiver of Past Defaults.............................................................. 51
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Amendment............................................................................ 52
List of Securityholders.............................................................. 53
Insolvency Event..................................................................... 53
Payment of Notes..................................................................... 53
Seller Liability..................................................................... 53
Termination.......................................................................... 54
Administration Agreement............................................................. 54
MATERIAL LEGAL ASPECTS OF THE RECEIVABLES.............................................. 55
General.............................................................................. 55
Security Interests................................................................... 55
Repossession......................................................................... 57
Notice of Sale; Redemption Rights.................................................... 57
Deficiency Judgments and Excess Proceeds............................................. 57
Material Bankruptcy Considerations................................................... 58
Consumer Protection Laws............................................................. 59
Other Limitations.................................................................... 60
MATERIAL INCOME TAX CONSEQUENCES....................................................... 61
Tax Treatment of Owner Trusts........................................................ 61
Tax Treatment of Grantor Trusts...................................................... 69
Material State Tax Consequences With Respect To Owner Trusts......................... 76
Material State Tax Consequences With Respect To Grantor Trusts....................... 77
ERISA CONSIDERATIONS................................................................... 78
UNDERWRITING........................................................................... 79
LEGAL OPINIONS......................................................................... 79
INDEX OF TERMS......................................................................... 80
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SUMMARY OF TERMS
THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS
AND PROVIDES A GENERAL OVERVIEW OF RELEVANT TERMS OF THE SECURITIES. YOU SHOULD
READ CAREFULLY THIS ENTIRE DOCUMENT AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
TO UNDERSTAND ALL OF THE TERMS OF THE OFFERING.
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ISSUER The trust to be formed for each series of securities. If
the trust issues notes and certificates, it will be
formed by a trust agreement between the seller and the
trustee of the trust. If the trust issues only
certificates, it will be formed by a pooling and
servicing agreement among the seller, the servicer and
the trustee of the trust.
SELLER Nissan Auto Receivables Corporation.
SERVICER Nissan Motor Acceptance Corporation.
SECURITIES OFFERED NOTES--A series of securities may include one or more
classes of notes. Notes of a series will be issued
pursuant to an indenture.
CERTIFICATES--Each series of securities will include one
or more classes of certificates, whether or not a class
of notes is issued as part of the series. The applicable
prospectus supplement will describe the following:
1. if any notes are issued, the priority of payments (a)
between the notes and certificates and (b) among
different classes of notes; and
2. the priority of payments among different classes of
certificates.
TERMS--The terms of each class of notes and certificates
in a series described in the applicable prospectus
supplement will include the following:
1. the stated principal amount of each class of notes
and the stated certificate balance of each class of
certificates; and
2. the interest rate (which may be fixed, variable,
adjustable or some combination of these rates) or method
of determining the interest rate.
A class of notes may differ from other classes of notes
and a class of certificates may differ from other
classes of certificates in one or more aspects,
including:
1. timing and priority of payments;
2. seniority;
3. allocations of losses;
4. interest rate or formula;
5. amount of interest or principal payments;
6. whether interest or principal will be payable to
holders of the class if specified events occur; and
7. the right to receive collections from designated
portions of the receivables owned by the trust.
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THE RECEIVABLES Purchasers of Nissan and Infiniti cars and light-duty
trucks often finance their purchases by entering into
retail installment sales contracts with Nissan and
Infiniti dealers who then resell the contracts to Nissan
Motor Acceptance Corporation, including its Infiniti
Financial Services division. These contracts are
referred to as "receivables," and the underlying
vehicles are referred to as the "financed vehicles." The
purchasers of the financed vehicles are referred to as
the "obligors." The terms of the contracts must meet
specified Nissan Motor Acceptance Corporation
requirements.
On or before the date the securities of a series are
issued, Nissan Motor Acceptance Corporation will sell a
specified amount of receivables to Nissan Auto
Receivables Corporation, the seller. The seller will
then sell those receivables to the trust. The sale by
the seller to the trust will be documented under:
1. a pooling and servicing agreement among the seller,
the servicer and the trustee (if the trust will be
treated as a grantor trust for federal income tax
purposes); or
2. a sale and servicing agreement among the seller, the
servicer and the trust (if the trust will be treated
other than as a grantor trust for federal income tax
purposes).
The receivables to be sold by Nissan Motor Acceptance
Corporation to the seller and resold to the trust will
be selected based on criteria specified in the pooling
and servicing agreement or the sale and servicing
agreement, whichever is applicable. These criteria will
be described in the applicable prospectus supplement.
THE TRUST PROPERTY The property of each trust:
1. will be described in the prospectus supplement;
2. will primarily be a pool of receivables secured by
new, near- new and used financed vehicles and amounts
due or collected under the receivables on or after a
specified cutoff date; and
3. will include related assets such as:
- security interests in the financed vehicles;
- proceeds from claims on related insurance policies;
- the rights of the seller in rebates of premiums and
other amounts relating to insurance policies and other
items financed under the receivables;
- the rights of the seller in the agreements identified
in the prospectus supplement; and
- amounts deposited in specified bank accounts.
CREDIT AND CASH FLOW ENHANCEMENT The trusts may include features designed to provide
protection to one or more classes of securities. These
features are
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referred to as "credit enhancement." Credit enhancement
may include any one or more of the following:
1. subordination of one or more other classes of
securities;
2. one or more reserve accounts;
3. over-collateralization;
4. letters of credit or other credit facilities;
5. surety bonds;
6. guaranteed investment contracts;
7. repurchase obligations;
8. cash deposits; or
9. other agreements or arrangements providing for other
third party payments or other support.
In addition, the trusts may include features designed to
ensure the timely payment of amounts owed to
securityholders. These features may include any one or
more of the following:
1. yield supplement agreements;
2. liquidity facilities;
3. cash deposits; or
4. other agreements or arrangements providing for other
third party payments or other support.
The specific terms of any enhancement applicable to a
trust or to the securities issued by a trust will be
described in detail in the applicable prospectus
supplement.
SERVICING FEE Nissan Motor Acceptance Corporation will service the
receivables. In that capacity, the servicer will handle
all collections, administer defaults and delinquencies
and otherwise service the receivables. The trust will
pay the servicer a monthly fee equal to a percentage of
the total principal balance of the receivables at the
beginning of the preceding month specified in the
applicable prospectus supplement. The servicer will also
receive additional servicing compensation in the form of
investment earnings, late fees, prepayment fees and
other administrative fees and expenses or similar
charges received by the servicer during that month.
ADVANCES The servicer will be obligated to advance to the trust
interest on the receivables that is due but unpaid by
the obligor. The servicer will not be required to make
any advance (other than the advance of an interest
shortfall arising from a prepaid receivable) if it
determines that it will not be able to recover an
advance from an obligor. The trust will reimburse the
servicer for those advances from excess interest
collections on the related receivables. In addition, if
a receivable is liquidated or if a receivable becomes a
"defaulted receivable," the servicer will be reimbursed
for all outstanding advances from general collections on
the receivables.
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YOU SHOULD REFER TO "DESCRIPTION OF THE TRANSFER AND
SERVICING AGREEMENTS--ADVANCES" IN THIS PROSPECTUS FOR
MORE DETAILED INFORMATION ON ADVANCES AND REIMBURSEMENT
OF ADVANCES.
TRUSTEE The trustee for each series of securities will be named
in the prospectus supplement for that series.
INDENTURE TRUSTEE If the trust issues notes, the trustee for the indenture
pursuant to which the notes will be issued will be named
in the prospectus supplement for that series.
OPTIONAL PURCHASE The servicer may redeem any outstanding securities when
the outstanding aggregate principal balance of the
receivables declines to 10% or below of the original
total principal balance of the receivables as of the
cutoff date.
YOU SHOULD REFER TO "DESCRIPTION OF THE TRANSFER AND
SERVICING AGREEMENTS--TERMINATION" IN THIS PROSPECTUS
FOR MORE DETAILED INFORMATION ON THE OPTIONAL PURCHASE
OF SECURITIES.
TAX STATUS GRANTOR TRUSTS--The applicable prospectus supplement
will specify whether a trust will be treated as a
grantor trust for federal income tax purposes. If a
trust is nominally referred to as a "grantor trust" in
the applicable prospectus supplement, special tax
counsel to the trust will be required to deliver an
opinion that:
1. the trust will be treated as a grantor trust for
federal income and California franchise and income tax
purposes; and
2. the trust will not be subject to federal income tax
or California franchise and income tax.
OWNER TRUSTS--If the trust is nominally referred to as
an "owner trust" in the applicable prospectus
supplement, special tax counsel to the trust will be
required to deliver an opinion for federal income tax
purposes and California income and franchise tax
purposes:
1. as to the characterization as debt of the notes
issued by the trust; and
2. that the trust will not be characterized as an
association (or a publicly traded partnership) taxable
as a corporation.
If a trust is nominally referred to as an "owner trust"
in the applicable prospectus supplement:
1. by purchasing a note, you will be agreeing to treat
the note as indebtedness for tax purposes; and
2. by purchasing a certificate, you will be agreeing to
treat the trust as a partnership in which you are a
partner for federal income tax purposes and
California income and franchise tax purposes.
Applicable taxing authorities could impose alternative
tax characterizations of the trust and the certificates.
However,
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these characterizations generally will not result in
material adverse tax consequences to securityholders.
YOU SHOULD REFER TO "MATERIAL INCOME TAX CONSEQUENCES"
IN THIS PROSPECTUS AND THE APPLICABLE PROSPECTUS
SUPPLEMENT FOR MORE DETAILED INFORMATION ON THE
APPLICATION OF FEDERAL AND CALIFORNIA TAX LAWS.
ERISA CONSIDERATIONS NOTES--Notes will generally be eligible for purchase by
employee benefit plans.
UNSUBORDINATED GRANTOR TRUST CERTIFICATES--Certificates
of a class issued by a grantor trust that are not
subordinated to any other class will generally be
eligible for purchase by employee benefit plans.
OTHER CERTIFICATES--Subordinated classes of certificates
issued by a grantor trust and certificates issued by
owner trusts will not be eligible for purchase by an
employee benefit plan or individual retirement account.
YOU SHOULD REFER TO "ERISA CONSIDERATIONS" IN THIS
PROSPECTUS AND THE APPLICABLE PROSPECTUS SUPPLEMENT FOR
MORE DETAILED INFORMATION REGARDING THE ERISA
ELIGIBILITY OF ANY CLASS OF SECURITIES.
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RISK FACTORS
YOU SHOULD CONSIDER THE FOLLOWING RISK FACTORS AND THE RISKS DESCRIBED IN
THE SECTION CAPTIONED "RISK FACTORS" IN THE APPLICABLE PROSPECTUS SUPPLEMENT IN
DECIDING WHETHER TO PURCHASE SECURITIES OF ANY CLASS.
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YOU MUST RELY FOR The securities represent interests solely in the trust or indebtedness of the
REPAYMENT ONLY UPON trust and will not be insured or guaranteed by Nissan Motor Acceptance
PAYMENTS FROM THE Corporation (the servicer), Nissan Auto Receivables Corporation (the seller), or
TRUST'S ASSETS WHICH MAY any of their respective affiliates, or the related trustee or any other person
NOT BE SUFFICIENT TO or entity other than the trust. The only source of payment on your securities
MAKE FULL PAYMENTS ON are payments received on the receivables and, if and to the extent available,
YOUR SECURITIES. any credit enhancement for the trust, including amounts on deposit in the
reserve account or subordination spread account established for that trust.
However, although funds in the reserve account or subordination spread account
will be available to cover shortfalls in distributions of interest on and
principal of your securities, funds to be deposited in this account are limited.
If the funds in this account are exhausted, your securities will be paid solely
from current distributions on the receivables. SEE "SUBORDINATION; RESERVE
ACCOUNT" OR "SUBORDINATION; SUBORDINATION SPREAD ACCOUNT" IN THE APPLICABLE
PROSPECTUS SUPPLEMENT. In limited circumstances, the trust will also have access
to the funds in the yield supplement account. SEE "DESCRIPTION OF THE TRANSFER
AND SERVICING AGREEMENTS--YIELD SUPPLEMENT ACCOUNT; YIELD SUPPLEMENT AGREEMENT"
IN THIS PROSPECTUS.
The indenture authorizes the indenture trustee to sell the receivables following
an acceleration of the maturity dates of the notes if the sale meets
requirements set forth in the indenture. However, the amount received by the
indenture trustee upon selling the receivables may be less than the aggregate
principal amount of the outstanding notes and certificates. In that
circumstance, the principal amount of the notes and the balance of the
certificates will not be paid in full.
YOU MAY EXPERIENCE You may receive payment of principal on your securities earlier than you
REDUCED RETURNS ON YOUR expected for the reasons set forth below. You may not be able to reinvest the
INVESTMENT RESULTING principal paid to you earlier than you expected at a rate of return that is
FROM PREPAYMENTS, equal to or greater than the rate of return on your securities.
REPURCHASES OR EARLY Prepayments on the receivables by the related obligors and purchases of the
TERMINATION OF THE receivables by the seller and the servicer will shorten the life of the
TRUST. securities to an extent that cannot be fully predicted.
The seller will be required to repurchase receivables from the trust if there is
a breach of the representations and warranties relating to those receivables
that materially adversely affects those receivables. Nissan Motor Acceptance
Corporation, as servicer, will also be required to purchase receivables from the
trust if it breaches its servicing obligations with respect to those
receivables. The servicer also will be entitled to purchase all remaining
receivables from the trust once the aggregate principal balance of the
receivables is 10% or less of the initial aggregate principal balance of the
receivables on the related cutoff date.
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Further, the receivables included in the trust may be prepaid, in full or in
part, voluntarily or as a result of defaults, theft of or damage to the related
vehicles or for other reasons. The rate of prepayments on the receivables may be
influenced by a variety of economic, social and other factors in addition to
those described above. The servicer has limited historical experience with
respect to prepayments on receivables. In addition, the servicer is not aware of
publicly available industry statistics that detail the prepayment experience for
contracts similar to the receivables. For these reasons, the servicer cannot
predict the actual prepayment rates for the receivables. You will bear all
reinvestment risk resulting from prepayments on the receivables and the
corresponding acceleration of payments on the securities.
The final payment of each class of securities is expected to occur prior to its
scheduled final payment date because of the prepayment and purchase
considerations described above. If sufficient funds are not available to pay any
class of notes in full on its scheduled final payment date, an event of default
will occur and final payment of that class of notes may occur later than that
date.
INTERESTS OF OTHER Another person could acquire an interest in a receivable that is superior to the
PERSONS IN THE trust's interest in that receivable because the receivables will not be
RECEIVABLES AND FINANCED segregated or marked as belonging to the trust. The seller will cause financing
VEHICLES COULD BE statements to be filed with the appropriate governmental authorities to perfect
SUPERIOR TO THE TRUST'S the trust's interest in the receivables. However, the servicer will continue to
INTEREST, WHICH MAY hold the receivables. If another party purchases (or takes a security interest
RESULT IN REDUCED in) one or more receivables for new value in the ordinary course of business and
PAYMENTS ON YOUR obtains possession of those receivables without actual knowledge of the trust's
SECURITIES. interest because of the failure to segregate or mark those receivables, the new
purchaser (or secured party) will acquire an interest in those receivables
superior to the interest of the trust.
Another person could acquire an interest in a vehicle financed by a receivable
that is superior to the trust's interest in the vehicle because of the failure
to identify the trust as the secured party on the related certificate of title.
While Nissan Motor Acceptance Corporation, as originator, will assign its
security interest in the financed vehicles to the seller, and the seller will
assign to the trust its security interests in the financed vehicles, the
servicer will continue to hold the certificates of title or ownership for the
vehicles. However, for administrative reasons, the servicer will not endorse or
otherwise amend the certificates of title or ownership to identify the trust as
the new secured party. Because the trust will not be identified as the secured
party on any certificates of title or ownership, the security interest of the
trust in the vehicles may be defeated through fraud, forgery, negligence or
error and as a result the trust may not have a perfected security interest in
the financed vehicles in every state.
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The possibility that the trust may not have a perfected security interest in the
financed vehicles may affect the trust's ability to repossess and sell the
financed vehicles or may limit the amount realized to less than the amount due
by the related obligors. Therefore, you may be subject to delays in payment and
may incur losses on your investment in the securities as a result of defaults or
delinquencies by obligors and because of depreciation in the value of the
related financed vehicles. SEE "MATERIAL LEGAL ASPECTS OF THE
RECEIVABLES--SECURITY INTERESTS" IN THIS PROSPECTUS.
RECEIVABLES THAT FAIL TO Many federal and state consumer protection laws regulate consumer contracts such
COMPLY WITH CONSUMER as the receivables. If any of the receivables do not comply with one or more of
PROTECTION LAWS MAY BE these laws, the servicer may be prevented from or delayed in collecting amounts
UNENFORCEABLE, WHICH MAY due on the receivables. If that happens, payments on the securities could be
RESULT IN LOSSES ON YOUR delayed or reduced. Each of Nissan Auto Receivables Corporation and Nissan Motor
INVESTMENT. Acceptance Corporation will make representations and warranties relating to the
receivables' compliance with law and the trust's ability to enforce the
contracts. If Nissan Auto Receivables Corporation or Nissan Motor Acceptance
Corporation breaches any of these representations or warranties, the trust's
sole remedy will be to require Nissan Auto Receivables Corporation to repurchase
the affected receivables. SEE "MATERIAL LEGAL ASPECTS OF THE
RECEIVABLES--CONSUMER PROTECTION LAWS" IN THIS PROSPECTUS.
BANKRUPTCY OF NISSAN If Nissan Motor Acceptance Corporation, the servicer, or Nissan Auto Receivables
MOTOR ACCEPTANCE Corporation, the seller, becomes subject to bankruptcy proceedings, you could
CORPORATION (SERVICER) experience losses or delays in the payments on your securities. Nissan Motor
OR NISSAN AUTO Acceptance Corporation will sell the receivables to Nissan Auto Receivables
RECEIVABLES CORPORATION Corporation, and Nissan Auto Receivables Corporation will in turn transfer the
(SELLER) COULD RESULT IN receivables to the trust. However, if Nissan Motor Acceptance Corporation or
LOSSES OR DELAYS IN Nissan Auto Receivables Corporation becomes subject to a bankruptcy proceeding,
PAYMENTS ON YOUR the court in the bankruptcy proceeding could conclude that Nissan Motor
SECURITIES. Acceptance Corporation or Nissan Auto Receivables Corporation still owns the
receivables by concluding that the sale to the seller or the trust was not a
"true sale" or, in the case of a bankruptcy of Nissan Motor Acceptance
Corporation, that the seller should be consolidated with Nissan Motor Acceptance
Corporation for bankruptcy purposes. If a court were to reach this conclusion,
you could experience losses or delays in payments on the securities as a result
of, among other things:
1. the "automatic stay," which prevents secured creditors from exercising
remedies against a debtor in bankruptcy without permission from the court
and provisions of the U.S. Bankruptcy Code that permit substitution for
collateral in limited circumstances;
2. tax or government liens on Nissan Motor Acceptance Corporation's or Nissan
Auto Receivables Corporation's property (that arose prior to the transfer of
a receivable to the trust) having a prior claim on collections before the
collections are used to make payments on your securities; and
</TABLE>
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<TABLE>
<S> <C>
3. the trust not having a perfected security interest in (a) one or more of the
financed vehicles securing the receivables or (b) any cash collections held
by Nissan Motor Acceptance Corporation at the time Nissan Motor Acceptance
Corporation becomes the subject of a bankruptcy proceeding.
The seller will take steps in structuring each transaction described in this
prospectus and the applicable prospectus supplement to minimize the risk that a
court would consolidate the seller with Nissan Motor Acceptance Corporation for
bankruptcy purposes or conclude that the sale of receivables to the seller or
the trust was not a "true sale. "SEE "MATERIAL LEGAL ASPECTS OF THE
RECEIVABLES--MATERIAL BANKRUPTCY CONSIDERATIONS" IN THIS PROSPECTUS.
PROCEEDS OF THE SALE OF If so directed by the holders of the requisite percentage of outstanding notes
RECEIVABLES MAY NOT BE of a series, following an acceleration of the notes upon an event of default,
SUFFICIENT TO PAY YOUR the indenture trustee will sell the receivables owned by the trust only in
SECURITIES IN FULL; limited circumstances. However, there is no assurance that the market value of
FAILURE TO PAY PRINCIPAL those receivables will at any time be equal to or greater than the aggregate
ON YOUR NOTES WILL NOT principal amount of the notes or the sum of the aggregate principal amount of
CONSTITUTE AN EVENT OF the notes and the aggregate principal balance of the certificates. Therefore,
DEFAULT UNTIL MATURITY. upon an event of default, there can be no assurance that sufficient funds will
be available to repay you in full. In addition, the amount of principal required
to be paid to the noteholders will generally be limited to amounts available in
the collection account (and the reserve account or subordination spread account,
if any). Therefore, the failure to pay principal of your notes generally will
not result in the occurrence of an event of default until the final scheduled
distribution date for your notes. SEE "THE NOTES--THE INDENTURE--EVENTS OF
DEFAULT; RIGHTS UPON EVENT OF DEFAULT" IN THIS PROSPECTUS.
</TABLE>
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FORMATION OF THE TRUSTS
Nissan Auto Receivables Corporation (the "Seller") will establish each trust
(each, a "Trust") pursuant to a Trust Agreement (as amended and supplemented
from time to time, the "Trust Agreement") or a Pooling and Servicing Agreement
(as amended from time to time, the "Pooling and Servicing Agreement"), as
applicable.
The terms of each series of notes (the "Notes") or certificates (the
"Certificates" and, together with the Notes, the "Securities") issued by each
Trust (the "Issuer"), and additional information concerning the assets of each
issuer and any applicable credit enhancement will be set forth in a supplement
to this Prospectus (a "Prospectus Supplement").
PROPERTY OF THE TRUSTS
The property of each Trust will consist of a pool (each, a "Receivables
Pool") of retail installment sale contracts originated on or after [__________],
between Nissan and Infiniti dealers (the "Dealers") and retail purchasers (the
"Obligors"). These contracts are referred to as the "Receivables" and evidence
the indirect financing made available by Nissan Motor Acceptance Corporation
("NMAC") to the Obligors. The Receivables are secured by new, near-new and used
Nissan and Infiniti automobiles and light-duty trucks (the "Financed Vehicles")
and all principal and interest payments made on or after the applicable cutoff
date (each, a "Cutoff Date") and other property, all as specified in the
applicable Prospectus Supplement. "Near-new" automobiles and light-duty trucks
are pre-owned Nissan and Infiniti vehicles that are not greater than three
model-years old as of the contract origination year. "New" vehicles may include
"demonstration" vehicles, which are not titled in some states and may be
classified as new vehicles in those states.
The Receivables were originated by Dealers in accordance with NMAC's
requirements under agreements with Dealers governing the assignment of the
Receivables to NMAC, including its Infiniti Financial Services division (the
"Dealer Agreements"). NMAC will purchase the Receivables of each Receivables
Pool in the ordinary course of business pursuant to the Dealer Agreements.
On or before the date of the initial issuance of any series of Securities
(each, a "Closing Date"),
NMAC will sell the Receivables comprising the related Receivables Pool to
the Seller, and the Seller will sell those Receivables to the Trust pursuant to,
if the trust is to be treated other than as a grantor trust for federal income
tax purposes, the related Sale and Servicing Agreement among the Seller, the
Servicer and the Trust (as amended and supplemented from time to time, the "Sale
and Servicing Agreement") or, if the Trust is to be treated as a grantor trust
for federal income tax purposes, the related Pooling and Servicing Agreement.
NMAC will continue to service the Receivables.
In addition to the Receivables, the property of each Trust will also include
the following:
1. amounts that may be held in separate trust accounts established and
maintained by the Servicer with the Trustee pursuant to the related Sale
and Servicing Agreement or Pooling and Servicing Agreement;
2. security interests in the Financed Vehicles and any related property;
3. the rights to proceeds from claims on physical damage, credit life and
disability insurance policies covering the Financed Vehicles or the
Obligors;
4. NMAC's right to receive payments from Dealers pursuant to repurchase by
the Dealers of Receivables which do not meet specified representations
made by the Dealers ("Dealer Recourse");
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5. the Seller's right under, as applicable, the Sale and Servicing
Agreement, the Pooling and Servicing Agreement, the Purchase Agreement
and the Yield Supplement Agreement, if any;
6. the Seller's right to realize upon any property (including the right to
receive future net liquidation proceeds) that secured a Receivable;
7. the Seller's right in rebates of premiums and other amounts relating to
insurance policies and other items financed under the Receivables in
effect as of the related Cutoff Date; and
8. all proceeds of the foregoing.
Various forms of credit enhancement may be used to benefit holders of the
related Securities, including a Reserve Account. In limited circumstances, a
Trust will also have access to the funds in the Yield Supplement Account. The
property of each Trust will not include amounts on deposit from time to time in
any Yield Supplement Account or Reserve Account.
THE RECEIVABLES
NMAC purchased the Receivables from the Dealers in the ordinary course of
business in accordance with NMAC's underwriting standards. The Receivables to be
held by each Trust will be randomly selected from those automobile and/or
light-duty truck retail installment sales contracts in NMAC's portfolio that
meet several criteria. The Seller will not use selection procedures adverse to
Securityholders when selecting the Receivables from qualifying retail
installment sale contracts. These criteria provide that each Receivable:
1. was originated in the United States;
2. provides for level monthly payments which provide interest at the annual
percentage rate ("APR") and fully amortize the amount financed over an
original term to maturity no greater than [__] months;
3. is attributable to the purchase of a new, near-new or used automobile or
light-duty truck and is secured by that vehicle; and
4. satisfies the other criteria, if any, set forth in the applicable
Prospectus Supplement.
All of the Receivables are simple interest contracts. In general, under a
simple interest contract, as payments are received they are applied first to pay
accrued interest, second, to pay principal until the principal balance is
brought current, and third, to reduce any unpaid late charges or associated fees
as provided in the Receivable. Any remaining amounts are then applied to reduce
the remaining principal balance of the Receivable.
Because interest accrues daily throughout each payment period, if an Obligor
pays the fixed monthly installment in advance of the due date, the portion of
the payment allocable to interest for that payment period will be less than it
would be if the payment were made on the due date. Similarly, the portion of
that monthly payment allocable to principal 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 that payment period
will be greater than it would be if the payment were made on the due date, and
the portion of the payment allocable to principal will be correspondingly
smaller. Accordingly, the timing and amount of prior payments will determine the
amount of the scheduled final monthly payment.
UNDERWRITING OF MOTOR VEHICLE LOANS
NMAC purchases automobile and light-duty truck retail installment sales
contracts from approximately 1,240 Dealers located throughout the United States,
including the District of Columbia, and in Guam. These contracts are
underwritten using NMAC's standard underwriting procedures. The
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Receivables are originated by Dealers in accordance with NMAC's requirements
under existing Dealer Agreements 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.
The Seller requires that applications received from Dealers be signed by the
applicant and 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.
NMAC's credit decision is influenced by, among other things, the applicant's
credit score as obtained from a statistically derived empirical credit scoring
process. The credit scoring process considers credit bureau, application and
contract information. The credit scoring process also takes into account debt
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. NMAC makes its final credit decision 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. If NMAC considers an Obligor to be
relatively less credit worthy (and, as a result, a greater risk), NMAC will
assign the Obligor a higher interest rate and a lower permissible loan-to-value
ratio.
NMAC's retail contract requires that Obligors maintain specific levels and
types of insurance coverage to protect the Financed Vehicle against loss. NMAC
requires Obligors to provide evidence of insurance at the time of purchase, but
performs no subsequent verification of continued coverage. NMAC will not be
obligated to make payments to a Trust for any loss when third party insurance
has not been maintained.
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. If a
payment is delinquent, NMAC will soon thereafter mail notices and initiate
telephone contacts requesting payment. If the delinquent receivable cannot be
brought current or completely collected within 60 to 90 days, NMAC generally
attempts to repossess the vehicle. NMAC holds repossessed vehicles in inventory
to comply with any applicable statutory requirements for reinstatement and then
sells those vehicles. 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 "Material
Legal Aspects of the Receivables-- Deficiency Judgments and Excess Proceeds."
NMAC attempts to contact Obligors and establish and monitor repayment schedules
until the deficiencies are either paid in full or become impractical to pursue.
USE OF PROCEEDS
Each Trust will use the net proceeds from the sale of the Securities of a
given series to purchase Receivables from the Seller. The Seller will use the
net proceeds it receives from any Trust to purchase Receivables from NMAC.
THE TRUSTEE
The trustee for each Trust (the "Trustee") or the trustee under any
Indenture pursuant to which Notes are issued (the "Indenture Trustee") will be
specified in the applicable Prospectus Supplement.
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The Trustee's or the Indenture Trustee's liability in connection with the
issuance and sale of the related Securities is limited solely to the express
obligations of that Trustee or Indenture Trustee set forth in the related Trust
Agreement, Pooling and Servicing Agreement, Sale and Servicing Agreement or
Indenture, as applicable. A Trustee or Indenture Trustee may resign at any time,
in which event the Servicer, or its successor, will be obligated to appoint a
successor thereto. The Administrator of a Trust that is not a grantor trust may
also remove a Trustee or Indenture Trustee that becomes insolvent or otherwise
ceases to be eligible to continue in that capacity under the related Trust
Agreement, Sale and Servicing Agreement or Indenture, as applicable. The
Servicer for a Trust that is a grantor trust may remove a Trustee that becomes
insolvent or otherwise ceases to be eligible to continue in that capacity under
the related Pooling and Servicing Agreement. In those circumstances, the
Servicer or, in the case of a series that includes Notes, the Administrator, as
the case may be, will be obligated to appoint a successor thereto. Any
resignation or removal of a Trustee or Indenture Trustee and appointment of a
successor trustee will not become effective until acceptance of the appointment
by the successor.
THE SELLER
The Seller is a wholly owned subsidiary of NMAC and 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 those
receivables to third parties. 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 those activities. The principal
executive offices of the Seller are located at 990 W. 190th Street, Torrance,
California 90502 and its telephone number is (310) 719-8013.
THE SERVICER
Nissan Motor Acceptance Corporation ("NMAC" or the "Servicer") was
incorporated in California in November of 1981 and began operations in February
of 1982. NMAC is a wholly owned subsidiary of Nissan North America, Inc.
("NNA"), the primary distributor of Nissan vehicles in the continental United
States. NNA is a direct wholly owned subsidiary of Nissan Motor Co., Ltd., a
Japanese corporation ("Nissan"), which is a worldwide manufacturer and
distributor of motor vehicles, industrial equipment and aerospace products.
NMAC provides indirect automotive consumer loan and lease financing and
direct dealer financing, through (and to) approximately 1,090 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 principal executive offices of the Servicer are located at 990 W. 190th
Street, Torrance, California 90502 and its telephone number is (310) 719-8000.
WHERE YOU CAN FIND MORE INFORMATION ABOUT YOUR SECURITIES
THE TRUST--The Trustee will provide to securityholders ("Securityholders")
(which shall be Cede & Co. ("Cede") as the nominee of DTC unless definitive
Securities are issued under the limited circumstances described in this
Prospectus) unaudited monthly and annual reports concerning the Receivables and
other specified matters. See "Description of the Transfer and Servicing
Agreements-- Statements to Securityholders" and "--Evidence as to Compliance" in
this Prospectus. Copies of these reports may be obtained at no charge at the
offices specified in the applicable Prospectus Supplement.
THE SELLER--Nissan Auto Receivables Corporation, as Seller of the
Receivables, has filed with the Securities and Exchange Commission (the "SEC") a
registration statement on Form S-3 (the "Registration Statement") under the
Securities Act of 1933 (the "Securities Act") of which this Prospectus forms a
part. The Registration Statement is available for inspection without charge at
the public reference facilities maintained at the principal office of the SEC at
Judiciary Plaza, 450 Fifth
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Street, N.W., Washington, D.C. 20549, and at the regional offices of the SEC at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and Seven World Trade Center, Suite 1300, New York, New York 10048. You may
obtain information on the operation of the SEC's reference room by calling the
SEC at (800) SEC-0330. You may obtain copies of those materials at prescribed
rates by writing to the Public Reference Section of the SEC at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549. The SEC also maintains a website
(http://www.sec.gov) that contains reports, registration statements, proxy and
information statements, and other information regarding issuers that file
electronically with the SEC.
Copies of the operative agreements relating to the Securities will also be
filed with the SEC.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Information concerning NMAC's experience pertaining to delinquencies,
repossessions and net losses on its portfolio of new, near-new and used retail
automobile and light-duty truck receivables (including receivables previously
sold that NMAC continues to service) will be set forth in each Prospectus
Supplement. There can be no assurance that the delinquency, repossession and net
loss experience on any Receivables Pool will be comparable to prior experience
or to the information in any Prospectus Supplement.
WEIGHTED AVERAGE LIFE OF THE SECURITIES
The weighted average life of the Securities of any series will generally be
influenced by the rate at which the principal balances of the related
Receivables are paid, which payment may be in the form of scheduled amortization
or prepayments. For this purpose, the term "prepayments" includes prepayments in
full, partial prepayments (including those related to rebates of extended
warranty contract costs and insurance premiums), liquidations due to default as
well as receipts of proceeds from physical damage, credit life and disability
insurance policies. The rate of principal payment of the Securities may also be
affected by (1) repurchase by the Servicer or the Seller for Receivables as to
which an uncured breach of specified representations and warranties or specified
servicing covenants has occurred and (2) exercise by the Servicer or the Seller
of its right to purchase all of the assets of the Trust at its option under the
circumstances described in this Prospectus, thereby triggering a redemption of
the Securities. The term "weighted average life" means the average amount of
time during which each dollar of principal of a Receivable is outstanding. All
of the Receivables will be prepayable at any time without penalty to the
Obligor. The rate of prepayment of automotive receivables is influenced by a
variety of economic, social and other factors, including that an Obligor
generally may not sell or transfer the Financed Vehicle securing the related
Receivable without the consent of the Servicer.
In light of the above considerations, there can be no assurance as to the
amount of principal payments to be made on the Securities of a given series on
each Distribution Date, since the amount of principal payments will depend, in
part, on the amount of principal collected on the related Receivables Pool
during the applicable Collection Period. No prediction can be made as to the
actual prepayment experience on the Receivables, and any reinvestment risks
resulting from a faster or slower rate of prepayment of Receivables will be
borne entirely by the Securityholders of a given series. See "Risk Factors--You
may experience reduced returns on your investment resulting from prepayments,
repurchases or early termination of the trust" in this Prospectus.
The applicable Prospectus Supplement may set forth additional information
regarding the maturity and prepayment considerations applicable to the
particular Receivables Pool and the related series of Securities.
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POOL FACTORS AND TRADING INFORMATION
The "Note Factor" for each class of Notes will be a seven-digit decimal
which the Servicer will compute prior to each payment with respect to that class
of Notes. The Note Factor represents the remaining outstanding principal amount
of that class of Notes, as of the close of business on the last day of the
applicable Collection Period, as a fraction of the initial outstanding principal
amount of that class of Notes. The "Certificate Factor" for each class of
Certificates will be a seven-digit decimal which the Servicer will compute prior
to each payment with respect to that class of Certificates indicating the
remaining Certificate Balance of that class of Certificates, as of the close of
business on the last day of the applicable Collection Period, as a fraction of
the Original Certificate Balance of that class of Certificates. The "Certificate
Balance" for any class of Certificates as of any Distribution Date will equal
the Original Certificate Balance of that class, as reduced by all amounts
distributed on or prior to that Distribution Date on that class of Certificates
and allocable to principal. The "Original Certificate Balance" for each class of
Certificates will be stated in the applicable Prospectus Supplement.
Each Note Factor and each Certificate Factor will initially be 1.0000000 and
thereafter will decline to reflect reductions in the outstanding principal
amount of the applicable class of Notes, or the reduction of the Certificate
Balance of the applicable class of Certificates, as the case may be. A
Noteholder's portion of the aggregate outstanding principal amount of the
related class of Notes is the product of (1) the original denomination of that
Noteholder's Note and (2) the applicable Note Factor. A Certificateholder's
portion of the aggregate outstanding Certificate Balance for the related class
of Certificates is the product of (1) the original denomination of that
Certificateholder's Certificate and (2) the applicable Certificate Factor.
The "Note Pool Factor" for each class of Notes will be a seven-digit decimal
figure which the Servicer will compute prior to each payment with respect to
that class of Notes indicating the remaining outstanding principal amount of
that class of Notes, as of the close of business on the last day of the
applicable Collection Period, as a fraction of the Pool Balance as of the
related Cutoff Date. The "Certificate Pool Factor" for each class of
Certificates will be a seven-digit decimal figure which the Servicer will
compute prior to each payment with respect to that class of Notes indicating the
remaining Certificate Balance of that class of Certificates, as of the close of
business on the last day of the applicable Collection Period, as a fraction of
the Pool Balance as of the related Cutoff Date.
The Securityholders will receive monthly reports concerning payments
received on the Receivables, the Pool Balance, each Certificate Factor or Note
Factor, as applicable, each Certificate Pool Factor or Note Factor, as
applicable, and various other items of information.
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THE NOTES
GENERAL
With respect to each Trust that issues Notes, one or more classes (each, a
"class") of Notes of the related series will be issued pursuant to the terms of
an indenture (the "Indenture"). A form of the Indenture has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part. The
following summary does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Notes and
the Indenture.
Each class of Notes will initially be represented by one or more Notes, in
each case registered in the name of the nominee of DTC, except as set forth
below. Notes will be available for purchase in the denominations specified in
the applicable Prospectus Supplement in book-entry form only. The Seller has
been informed by DTC that DTC's nominee will be Cede, unless another nominee is
specified in the applicable Prospectus Supplement. Accordingly, that nominee is
expected to be the holder of record of the Notes (a "Noteholder") of each class.
No Noteholder will be entitled to receive a physical certificate representing a
Note until Definitive Notes are issued under the limited circumstances described
in this Prospectus or in the applicable Prospectus Supplement. All references in
this Prospectus and in the applicable Prospectus Supplement to actions by
Noteholders refer to actions taken by DTC upon instructions from its
participating organizations (the "DTC Participants") and all references in this
Prospectus and in the applicable Prospectus Supplement to payments, notices,
reports and statements to Noteholders refer to payments, notices, reports and
statements to DTC or its nominee, as the registered holder of the Notes, for
distribution to Noteholders in accordance with DTC's procedures. See "Material
Information Regarding the Securities--Book-Entry Registration" and "--Definitive
Securities."
PRINCIPAL AND INTEREST ON THE NOTES
The applicable Prospectus Supplement will describe the timing and priority
of payment, seniority, allocations of losses, interest rate (the "Interest
Rate") and amount of or method of determining payments of principal and interest
on each class of Notes of a given series. The rights of holders of any class of
Notes to receive payments of principal and interest may be senior or subordinate
to the rights of holders of any other class or classes of Notes of that series.
Payments of interest on the Notes will generally be made prior to payments of
principal. A series may include one or more classes of Notes (the "Strip Notes")
entitled to (1) principal payments with disproportionate, nominal or no interest
payments or (2) interest payments with disproportionate, nominal or no principal
payments. Each class of Notes may have a different Interest Rate, which may be a
fixed, variable or adjustable Interest Rate (and which may be zero for some
classes of Strip Notes), or any combination of the foregoing. The applicable
Prospectus Supplement will specify the Interest Rate for each class of Notes of
a given series or the method for determining the Interest Rate. See also
"Material Information Regarding the Securities--Fixed Rate Securities" and
"--Floating Rate Securities." One or more classes of Notes of a series may be
redeemable in whole or in part, including as a result of the Servicer or the
Seller exercising its option to purchase the related Receivables Pool or other
early termination of the related trust.
One or more classes of Notes of a given series may have fixed principal
payment schedules, in the manner and to the extent set forth in the applicable
Prospectus Supplement. Noteholders of those Notes would be entitled to receive
as payments of principal on any given Distribution Date the amounts set forth on
that schedule with respect to those Notes.
Payments of interest to Noteholders of all classes within a series will have
the same priority. Under some circumstances, on any Distribution Date the amount
available for those payments could be less than the amount of interest payable
on the Notes. If this is the case, each class of Noteholders will receive its
ratable share (based upon the aggregate amount of interest due to that class of
Noteholders)
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of the aggregate amount of interest available for payment on the Notes. See
"Description of the Transfer and Servicing Agreements--Distributions on the
Securities" and "--Credit and Cash Flow Enhancement."
If a series of Notes includes two or more classes of Notes, the sequential
order and priority of payment in respect of principal and interest, and any
schedule or formula or other provisions applicable to the determination thereof,
of each of those classes will be set forth in the applicable Prospectus
Supplement. Payments of principal and interest of any class of Notes will be
made on a pro rata basis among all the Noteholders of that class.
THE INDENTURE
MODIFICATION OF INDENTURE. If a Trust has issued Notes pursuant to an
Indenture, the Trust and the Indenture Trustee may, with the consent of the
holders of a majority of the outstanding Notes of the related series (or
relevant class or classes of Notes of such series), execute a supplemental
indenture to add provisions to, change in any manner or eliminate any provisions
of, the related Indenture, or modify (except as provided below) in any manner
the rights of the related Noteholders.
Without the consent of the holder of each outstanding affected Note, no
supplemental indenture will:
1. change the due date of any installment of principal of or interest on
that Note or reduce the principal amount of that Note, the Interest Rate
for that Note or the redemption price for that Note or change any place
of payment where or the coin or currency in which that Note or any
interest on that Note is payable;
2. impair the right to institute suit for the enforcement of specified
provisions of the related Indenture regarding payment;
3. reduce the percentage of the aggregate amount of the outstanding Notes
of that series, the consent of the holders of which is required for any
supplemental indenture or the consent of the holders of which is required
for any waiver of compliance with specified provisions of the related
Indenture or of specified defaults and their consequences as provided for
in that Indenture;
4. modify or alter the provisions of the related Indenture regarding the
voting of Notes held by the applicable Trust, any other obligor on those
Notes, the Seller or an affiliate of any of them;
5. reduce the percentage of the aggregate outstanding amount of those
Notes, the consent of the holders of which is required to direct the
related Indenture Trustee to sell or liquidate the Receivables if the
proceeds of that sale would be insufficient to pay the principal amount
of and accrued but unpaid interest on the outstanding Notes of that
series;
6. reduce the percentage of the aggregate principal amount of Notes
required to amend the sections of the related Indenture that specify the
applicable percentage of aggregate principal amount of the Notes of that
series necessary to amend that Indenture or other specified agreements;
or
7. permit the creation of any lien ranking prior to or on a parity with the
lien of the related Indenture with respect to any of the collateral for
those Notes or, except as otherwise permitted or contemplated in that
Indenture, terminate the lien of that Indenture on any of the collateral
or deprive the holder of any Note of the security afforded by the lien of
that Indenture.
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The Trust and the applicable Indenture Trustee may also enter into
supplemental indentures, without obtaining the consent of the Noteholders of the
related series, for the purpose of, among other things, adding any provisions to
or changing in any manner or eliminating any of the provisions of the related
Indenture or of modifying in any manner the rights of those Noteholders;
provided that that action will not materially and adversely affect the interest
of any of those Noteholders.
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT. With respect to the Notes
of a given series, "Events of Default" under the related Indenture will consist
of:
1. a default for five days or more in the payment of any interest on any of
those Notes when the same becomes due and payable;
2. a default in the payment of the principal of or any installment of the
principal of any of those Notes when the same becomes due and payable;
3. a default in the observance or performance of any covenant or agreement
of the applicable Trust made in the related Indenture and the
continuation of the default for a period of 90 days after notice thereof
is given to that Trust by the applicable Indenture Trustee or to that
Trust and that Indenture Trustee by the holders of at least 25% in
principal amount of those Notes then outstanding acting together as a
single class;
4. any representation or warranty made by that Trust in the related
Indenture or in any certificate delivered pursuant thereto or in
connection therewith having been incorrect in a material respect as of
the time made, and the breach not having been cured within 30 days after
notice thereof is given to that Trust by the applicable Indenture Trustee
or to that Trust and that Indenture Trustee by the holders of at least
25% in principal amount of the Notes then outstanding acting together as
a single class; or
5. events of bankruptcy, insolvency, receivership or liquidation of the
applicable Trust.
However, the amount of principal required to be paid to Noteholders of that
series under the related Indenture will generally be limited to amounts
available to be deposited in the Collection Account. Therefore, the failure to
pay any principal on any class of Notes generally will not result in the
occurrence of an Event of Default until the final scheduled Distribution Date
for that class of Notes. In addition, as described below, following the
occurrence of an Event of Default (other than the events of default described in
(1) and (2) above) and acceleration of the maturity of the Notes, the Indenture
Trustee is not required to sell the assets of the Trust, and the Indenture
Trustee may sell the assets of the Trust only after meeting requirements
specified in the Indenture. In that case, even if the maturity of the Notes has
been accelerated, there may not be any funds to pay principal of the Notes.
If an Event of Default should occur and be continuing with respect to the
Notes of any series, the related Indenture Trustee or holders of a majority in
principal amount of the Notes then outstanding (or relevant class or classes of
Notes) may declare the principal of the Notes to be immediately due and payable.
This declaration may, under some circumstances, be rescinded by the holders of a
majority in principal amount of the Notes then outstanding (or relevant class or
classes of Notes).
If the Notes of any series are due and payable following an Event of Default
with respect thereto, the related Indenture Trustee may institute proceedings to
collect amounts due or foreclose on Trust property, exercise remedies as a
secured party, sell the related Receivables or elect to have the applicable
Trust maintain possession of those Receivables and continue to apply collections
on those Receivables as if there had been no declaration of acceleration.
However, the Indenture Trustee is prohibited from selling the related
Receivables following an Event of Default (other than the events of default
described in (1) and (2) above), unless:
1. the holders of all outstanding Notes (or relevant class or classes of
Notes) consent to the sale;
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2. the proceeds of the sale are sufficient to pay in full the principal of
and the accrued interest on all outstanding Notes at the date of the
sale; or
3. the Indenture Trustee determines that the proceeds of the Receivables
may not be sufficient on an ongoing basis to make all payments on the
outstanding Notes as those payments would have become due if the
obligations had not been declared due and payable, and the Indenture
Trustee obtains the consent of the holders of 66 2/3% of the aggregate
outstanding amount of all Notes (or relevant class or classes of Notes).
Subject to the provisions of the applicable Indenture relating to the duties
of the related Indenture Trustee, if an Event of Default occurs and is
continuing with respect to a series of Notes, the Indenture Trustee will be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the holders of those Notes, if the
Indenture Trustee reasonably believes it will not be adequately indemnified
against the costs, expenses and liabilities that might be incurred by it in
complying with the request. Subject to the provisions for indemnification and
other limitations contained in the related Indenture, the holders of a majority
of the principal amount of the outstanding Notes of a given series (or relevant
class or classes of Notes of such series) will have the right to direct the
time, method and place of conducting any proceeding or any remedy available to
the applicable Indenture Trustee, and the holders of a majority of the principal
amount of those Notes then outstanding (or relevant class or classes of Notes)
may, in some cases, waive any default with respect thereto, except a default in
the deposit of collections or other required amounts, any required payment from
amounts held in any trust account in respect of amounts due on the Notes,
payment of principal or interest or a default in respect of a covenant or
provision of the Indenture that cannot be modified without the waiver or consent
of all the holders of the outstanding Notes.
No holder of a Note of any series will have the right to institute any
proceeding with respect to the related Indenture, unless:
1. that holder of a Note or Notes previously has given to the applicable
Indenture Trustee written notice of a continuing Event of Default;
2. the holders of not less than 25% in principal amount of the outstanding
Notes of that series (or relevant class or classes of Notes) have
requested in writing the Indenture Trustee to institute the proceeding in
its own name as Indenture Trustee;
3. that holder or holders of Notes have offered the Indenture Trustee
reasonable indemnity;
4. the Indenture Trustee has for 60 days failed to institute the
proceeding; and
5. no direction inconsistent with that written request has been given to
the Indenture Trustee during the 60-day period by the holders of a
majority in principal amount of those outstanding Notes (or relevant
class or classes of Notes).
In addition, each Indenture Trustee and the related Noteholders, by
accepting the related Notes, will covenant that they will not at any time
institute against the applicable Trust any bankruptcy, reorganization or other
proceeding under any federal or state bankruptcy or similar law.
With respect to any Trust, neither the related Indenture Trustee nor the
related Trustee in its individual capacity, nor any holder of a Certificate
representing an ownership interest in that Trust nor any of their respective
owners, beneficiaries, agents, officers, directors, employees, affiliates,
successors or assigns will, in the absence of an express agreement to the
contrary, be personally liable for the payment of the principal of or interest
on the related Notes or for the agreements of that Trust contained in the
applicable Indenture.
MATERIAL COVENANTS. Each Indenture will provide that the related Trust may
not consolidate with or merge into any other entity, unless, among other things,
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1. the entity formed by or surviving the consolidation or merger is
organized under the laws of the United States, any state or the District
of Columbia;
2. that entity expressly assumes that Trust's obligation to make due and
punctual payments upon the Notes of the related series and the
performance or observance of every agreement and covenant of that Trust
under the Indenture;
3. no Event of Default shall have occurred and be continuing immediately
after the merger or consolidation;
4. that Trust has been advised that the rating of the Securities of that
series then in effect would not be reduced or withdrawn by the rating
agencies then rating the Notes as a result of the merger or
consolidation; and
5. that Trust has received an opinion of counsel to the effect that the
consolidation or merger would have no material adverse tax consequence to
the Trust or to any related Noteholder or Certificateholder.
Each Trust will not, among other things,
1. except as expressly permitted by the applicable Indenture, the
applicable Transfer and Servicing Agreements or other specified documents
with respect to that Trust (collectively, the "Related Documents"), sell,
transfer, exchange or otherwise dispose of any of the assets of that
Trust;
2. claim any credit on or make any deduction from the principal of and
interest payable on the Notes of the related series (other than amounts
withheld under the Code or applicable state law) or assert any claim
against any present or former holder of those Notes because of the
payment of taxes levied or assessed upon that Trust;
3. except as expressly permitted by the Related Documents, dissolve or
liquidate in whole or in part;
4. permit the validity or effectiveness of the related Indenture to be
impaired or permit any person to be released from any covenants or
obligations with respect to those Notes under that Indenture except as
may be expressly permitted by that Indenture; or
5. permit any lien or other encumbrance to be created on or extend to or
otherwise arise upon or burden the assets of that Trust or any part
thereof, or any interest in the assets of that Trust or the proceeds of
those assets.
No Trust may engage in any activity other than as specified in this
Prospectus or in the applicable Prospectus Supplement. No Trust will incur,
assume or guarantee any indebtedness other than indebtedness incurred pursuant
to the related Notes and the related Indenture, pursuant to any Advances made to
it by the Servicer or otherwise in accordance with the Related Documents.
ANNUAL COMPLIANCE STATEMENT. Each Trust will be required to file annually
with the related Indenture Trustee a written statement as to the fulfillment of
its obligations under the Indenture.
INDENTURE TRUSTEE'S ANNUAL REPORT. The Indenture Trustee for each Trust
will be required to mail each year to all related Noteholders a brief report
relating to its eligibility and qualification to continue as Indenture Trustee
under the related Indenture, any amounts advanced by it under the Indenture, the
amount, interest rate and maturity date of specified indebtedness owing by that
Trust to the applicable Indenture Trustee in its individual capacity, the
property and funds physically held by that Indenture Trustee and any action
taken by it that materially affects the related Notes and that has not been
previously reported.
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<PAGE>
SATISFACTION AND DISCHARGE OF INDENTURE. An Indenture will be discharged
with respect to the collateral securing the related Notes upon the delivery to
the related Indenture Trustee for cancellation of all of those Notes or, with
specified limitations, upon deposit with that Indenture Trustee of funds
sufficient for the payment in full of all the Notes.
THE CERTIFICATES
GENERAL
With respect to each Trust that issues Certificates, one or more classes
(each, a "class") of Certificates of the related series will be issued pursuant
to the terms of a Trust Agreement or a Pooling and Servicing Agreement, a form
of each of which has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part. The following summary does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Certificates and the Trust Agreement or Pooling and
Servicing Agreement, as applicable.
Except for the Certificates, if any, of a given series purchased by the
Seller, each class of Certificates will initially be represented by one or more
Certificates registered in the name of the nominee for DTC, except as set forth
below. Except for the Certificates, if any, of a given series purchased by the
Seller, the Certificates will be available for purchase in the denominations
specified in the applicable Prospectus Supplement in book-entry form only. The
Seller has been informed by DTC that DTC's nominee will be Cede, unless another
nominee is specified in the applicable Prospectus Supplement. Accordingly, that
nominee is expected to be the holder of record of the Certificates (a
"Certificateholder") of any series that are not purchased by the Seller. No
Certificateholder (other than the Issuer) will be entitled to receive a physical
certificate representing a Certificate until Definitive Certificates are issued
under the limited circumstances described in this Prospectus or in the
applicable Prospectus Supplement. All references in this Prospectus and in the
applicable Prospectus Supplement to actions by Certificateholders refer to
actions taken by DTC upon instructions from the DTC Participants and all
references in this Prospectus and in the applicable Prospectus Supplement to
distributions, notices, reports and statements to Certificateholders refer to
distributions, notices, reports and statements given, made or sent to DTC or its
nominee, as the case may be, as the registered holder of the Certificates, for
distribution to Certificateholders in accordance with DTC's procedures with
respect thereto. See "Material Information Regarding the Securities--Book-Entry
Registration" and "--Definitive Securities." Any Certificates of a given series
owned by the Seller or its affiliates will be entitled to equal and
proportionate benefits under the applicable Trust Agreement, except that those
Certificates will be deemed not to be outstanding for the purpose of determining
whether the requisite percentage of Certificateholders have given any request,
demand, authorization, direction, notice, consent or other action under the
Related Documents (other than the commencement by the related Trust of a
voluntary proceeding in bankruptcy as described under "Description of the
Transfer and Servicing Agreements--Insolvency Event").
PAYMENTS OF PRINCIPAL AND INTEREST
The timing and priority of payments, seniority, allocations of losses, pass
through rate (the "Pass Through Rate") and amount of or method of determining
payments with respect to principal and interest of each class of Certificates
will be described in the applicable Prospectus Supplement. Payments of interest
on those Certificates will be made on the dates specified in the applicable
Prospectus Supplement (each, a "Distribution Date"). To the extent provided in
the applicable Prospectus Supplement, a series may include one or more classes
of Certificates (the "Strip Certificates") entitled to (1) payments in respect
of principal with disproportionate, nominal or no interest payments or (2)
interest payments with disproportionate, nominal or no payments in respect of
principal. Each class of Certificates may have a different Pass Through Rate,
which may be a fixed, variable or adjustable Pass Through Rate (and which may be
zero for some classes of Strip Certificates)
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<PAGE>
or any combination of the foregoing. The applicable Prospectus Supplement will
specify the Pass Through Rate for each class of Certificates of a given series
or the method for determining the Pass Through Rate. See also "Material
Information Regarding the Securities--Fixed Rate Securities" and "--Floating
Rate Securities." Payments in respect of the Certificates of a given series that
includes Notes may be subordinate to payments in respect of the Notes of that
series as more fully described in the applicable Prospectus Supplement. The
rights of holders of any class of Certificates to receive payments of principal
and interest may also be senior or subordinate to the rights of holders of any
other class or classes of Certificates of that series as more fully described in
the applicable Prospectus Supplement. Payments in respect of principal of and
interest on any class of Certificates will be made on a pro rata basis among all
the Certificateholders of that class.
In the case of a series of Certificates that includes two or more classes of
Certificates, the timing, sequential order, priority of payment or amount of
payments in respect of interest and principal, and any schedule or formula or
other provisions applicable to the determination thereof, of each class shall be
as set forth in the applicable Prospectus Supplement.
If and as provided in the applicable Prospectus Supplement, amounts
remaining on deposit in the Collection Account after all required payments to
the related Securityholders have been made may be released to the Seller, NMAC
or one or more third party credit or liquidity enhancement providers.
MATERIAL INFORMATION REGARDING THE SECURITIES
FIXED RATE SECURITIES
Any class of Securities (other than some classes of Strip Notes or Strip
Certificates) may bear interest at a fixed rate per annum ("Fixed Rate
Securities") or at a variable or adjustable rate per annum ("Floating Rate
Securities"), as more fully described below and in the applicable Prospectus
Supplement. Each class of Fixed Rate Securities will bear interest at the
applicable per annum Interest Rate or Pass Through Rate, as the case may be,
specified in the applicable Prospectus Supplement. Interest on each class of
Fixed Rate Securities will be computed on the basis of a 360-day year consisting
of twelve 30-day months. See "The Notes--Principal and Interest on the Notes"
and "The Certificates--Payments of Principal and Interest."
FLOATING RATE SECURITIES
Each class of Floating Rate Securities will bear interest during each
applicable Interest Period at a rate per annum determined by reference to an
interest rate basis (the "Base Rate"), plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any, in each case as specified in the
applicable Prospectus Supplement.
The "Spread" is the number of basis points to be added to or subtracted from
the related Base Rate applicable to the Floating Rate Securities. The "Spread
Multiplier" is the percentage of the related Base Rate applicable to the
Floating Rate Securities by which that Base Rate will be multiplied to determine
the applicable interest rate on those Floating Rate Securities. The applicable
Prospectus Supplement will designate one of the following Base Rates as
applicable to a given Floating Rate Security:
1. LIBOR (a "LIBOR Security");
2. the Commercial Paper Rate (a "Commercial Paper Rate Security");
3. the Treasury Rate (a "Treasury Rate Security");
4. the Federal Funds Rate (a "Federal Funds Rate Security");
5. the CD Rate (a "CD Rate Security"); or
6. any other Base Rate that is set forth in the applicable Prospectus
Supplement.
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Each applicable Prospectus Supplement will specify whether the rate of
interest on the related Floating Rate Securities will be reset daily, weekly,
monthly, quarterly, semiannually, annually or some other specified period (each,
an "Interest Reset Period") and the dates on which that Interest Rate will be
reset (each, an "Interest Reset Date"). The Interest Reset Date will be, in the
case of Floating Rate Securities which reset:
1. daily, each Business Day;
2. weekly, the Wednesday of each week (with the exception of weekly reset
Treasury Rate Securities which will reset the Tuesday of each week);
3. monthly, the third Wednesday of each month;
4. quarterly, the third Wednesday of March, June, September and December of
each year;
5. semiannually, the third Wednesday of the two months specified in the
applicable Prospectus Supplement; and
6. annually, the third Wednesday of the month specified in the applicable
Prospectus Supplement.
If any Interest Reset Date for any Floating Rate Security would otherwise be
a day that is not a Business Day, that Interest Reset Date will be postponed to
the next succeeding day that is a Business Day, except that in the case of a
Floating Rate Security as to which LIBOR is an applicable Base Rate, if that
Business Day falls in the next succeeding calendar month, that Interest Reset
Date will be the immediately preceding Business Day. Unless specified otherwise
in the applicable Prospectus Supplement, "Business Day" means a day other than a
Saturday, a Sunday or a day on which banking institutions in New York, New York,
Minneapolis, Minnesota, Wilmington, Delaware, or Los Angeles, California are
authorized or obligated by law, regulation, executive order or decree to be
closed. With respect to Notes as to which LIBOR is an applicable Base Rate, a
Business Day must also be a day that is a London Business Day. "London Business
Day" means any day (a) if the Index Currency is other than the Euro, on which
dealings in deposits in that Index Currency are transacted in the London
interbank market or (b) if the Index Currency is the Euro, a day on which the
Trans-European Automated Real-time Gross Settlement Express Transfer System
("TARGET system") is open and on which commercial banks and foreign exchange
markets settle payments in London and New York.
If any Distribution Date for any Floating Rate Security (other than the
final Distribution Date) would otherwise be a day that is not a Business Day,
that Distribution Date will be the next succeeding day that is a Business Day
except that in the case of a Floating Rate Security as to which LIBOR is the
applicable Base Rate, if that Business Day falls in the next succeeding calendar
month, that Distribution Date will be the immediately preceding Business Day. If
the final Distribution Date of a Floating Rate Security falls on a day that is
not a Business Day, the payment of principal, premium, if any, and interest will
be made on the next succeeding Business Day, and no interest on that payment
shall accrue for the period from and after that final Distribution Date.
Each Floating Rate Security will accrue interest on an "Actual/360" basis,
an "Actual/Actual" basis, or a "30/360" basis, in each case as specified in the
applicable Prospectus Supplement. For Floating Rate Securities calculated on an
Actual/360 basis and Actual/Actual basis, accrued interest for each Interest
Period will be calculated by multiplying:
1. the face amount of that Floating Rate Security;
2. the applicable interest rate; and
3. the actual number of days in the related Interest Period, and dividing
the resulting product by 360 or 365, as applicable (or, with respect to
an Actual/Actual basis Floating Rate Security, if any portion of the
related Interest Period falls in a leap year, the product of (1) and (2)
above
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will be multiplied by the sum of (x) the actual number of days in that
portion of that Interest Period falling in a leap year divided by 366 and
(y) the actual number of days in that portion of that Interest Period
falling in a non-leap year divided by 365).
For Floating Rate Securities calculated on a 30/360 basis, accrued interest
for an Interest Period will be computed on the basis of a 360-day year
consisting of twelve 30-day months, irrespective of how many days are actually
in that Interest Period. With respect to any Floating Rate Security that accrues
interest on a 30/360 basis, if any Distribution Date, including the related
final Distribution Date, falls on a day that is not a Business Day, the related
payment of principal or interest will be made on the next succeeding Business
Day as if made on the date that payment was due, and no interest will accrue on
the amount so payable for the period from and after that Distribution Date. The
"Interest Period" with respect to any class of Floating Rate Securities will be
set forth in the applicable Prospectus Supplement.
As specified in the applicable Prospectus Supplement, Floating Rate
Securities of a given class may also have either or both of the following (in
each case expressed as a rate per annum): (1) a maximum limitation, or ceiling,
on the rate at which interest may accrue during any Interest Period and (2) a
minimum limitation, or floor, on the rate at which interest may accrue during
any Interest Period. In addition to any maximum interest rate that may be
applicable to any class of Floating Rate Securities, the interest rate
applicable to any class of Floating Rate Securities will in no event be higher
than the maximum rate permitted by applicable law, as the same may be modified
by United States law of general application.
Each Trust with respect to which a class of Floating Rate Securities will be
issued will appoint, and enter into agreements with, a calculation agent (each,
a "Calculation Agent") to calculate Interest Rates on each class of Floating
Rate Securities issued with respect thereto. The applicable Prospectus
Supplement will set forth the identity of the Calculation Agent for each class
of Floating Rate Securities of a given series, which may be the related Trustee
or Indenture Trustee with respect to that series. All determinations of interest
by the Calculation Agent shall, in the absence of manifest error, be conclusive
for all purposes and binding on the holders of Floating Rate Securities of a
given class. All percentages resulting from any calculation on Floating Rate
Securities will be rounded to the nearest one hundred-thousandth of a percentage
point, with five one millionths of a percentage point rounded upwards (e.g.,
9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655)), and all
dollar amounts used in or resulting from that calculation on Floating Rate
Securities will be rounded to the nearest cent (with one-half cent being rounded
upwards).
CD RATE SECURITIES. Each CD Rate Security will bear interest for each
Interest Reset Period at an interest rate calculated with reference to the CD
Rate and the Spread or Spread Multiplier, if any, specified in that Security and
in the applicable Prospectus Supplement.
The "CD Rate" for each Interest Reset Period shall be the rate as of the
second business day prior to the Interest Reset Date for that Interest Reset
Period (a "CD Rate Determination Date") for negotiable certificates of deposit
having the Index Maturity designated in the applicable Prospectus Supplement as
published in H.15(519) under the heading "CDs (Secondary Market)." If that rate
is not published prior to 3:00 p.m., New York City time, on the Calculation Date
pertaining to that CD Rate Determination Date, then the "CD Rate" for that
Interest Reset Period will be the rate on that CD Rate Determination Date for
negotiable certificates of deposit of the Index Maturity designated in the
applicable Prospectus Supplement as published in Composite Quotations under the
heading "Certificates of Deposit." If by 3:00 p.m., New York City time, on that
Calculation Date that rate is not yet published in either H.15(519) or Composite
Quotations, then the "CD Rate" for that Interest Reset Period will be calculated
by the Calculation Agent for that CD Rate Security and will be the arithmetic
mean of the secondary market offered rates as of 10:00 a.m., New York City time,
on that CD Rate Determination Date, of three leading nonbank dealers in
negotiable U.S. dollar certificates of deposit
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<PAGE>
in The City of New York selected by the Calculation Agent for that CD Rate
Security for negotiable certificates of deposit of major United States money
market banks with a remaining maturity closest to the Index Maturity designated
in the applicable Prospectus Supplement in an amount that is representative for
a single transaction in that market at that time; provided, however, that if the
dealers selected as aforesaid by the Calculation Agent are not quoting offered
rates as mentioned in this sentence, the "CD Rate" for that Interest Reset
Period will be the same as the CD Rate for the immediately preceding Interest
Reset Period.
"H.15(519)" means the publication entitled "Statistical Release H.15(519),
Selected Interest Rates," or any successor publication, published by the Board
of Governors of the Federal Reserve System. "Composite Quotations" means the
daily statistical release entitled "Composite 3:30 p.m. Quotations for U.S.
Government Securities" published by the Federal Reserve Bank of New York.
The "Calculation Date" pertaining to any CD Rate Determination Date shall be
the first to occur of (a) the tenth calendar day after that CD Rate
Determination Date or, if that day is not a Business Day, the next succeeding
Business Day or (b) the Business Day preceding the applicable Distribution Date.
The "Index Maturity" is the period to maturity of the instrument or
obligation with respect to which the Base Rate will be calculated.
COMMERCIAL PAPER RATE SECURITIES. Each Commercial Paper Rate Security will
bear interest for each Interest Reset Period at an interest rate calculated with
reference to the Commercial Paper Rate and the Spread or Spread Multiplier, if
any, specified in that Security and in the applicable Prospectus Supplement.
The "Commercial Paper Rate" for each Interest Reset Period will be
determined by the Calculation Agent for that Commercial Paper Rate Security as
of the second Business Day prior to the Interest Reset Date for that Interest
Reset Period (a "Commercial Paper Rate Determination Date") and shall be the
Money Market Yield on that Commercial Paper Rate Determination Date of the rate
for commercial paper having the Index Maturity specified in the applicable
Prospectus Supplement, as published by the Board of Governors of the Federal
Reserve System in H.15(519) under the heading "Commercial Paper--Nonfinancial"
(with an Index Maturity of one month or three months being deemed to be
equivalent to an Index Maturity of 30 days or 90 days, respectively). If that
rate is not published prior to 3:00 p.m., New York City time, on the Calculation
Date pertaining to that Commercial Paper Rate Determination Date, then the
"Commercial Paper Rate" for that Interest Reset Period shall be the Money Market
Yield on that Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in Composite
Quotations under the heading "Commercial Paper--Nonfinancial." If by 3:00 p.m.,
New York City time, on that Calculation Date that rate is not yet published in
either H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for
that Interest Reset Period shall be the Money Market Yield of the arithmetic
mean of the offered rates, as of 11:00 a.m., New York City time, on that
Commercial Paper Rate Determination Date of three leading dealers of commercial
paper in The City of New York selected by the Calculation Agent for that
Commercial Paper Rate Security for commercial paper of the specified Index
Maturity placed for an industrial issuer whose bonds are rated "AA" or the
equivalent by a nationally recognized rating agency; provided, however, that if
the dealers selected as aforesaid by the Calculation Agent are not quoting
offered rates as mentioned in this sentence, the "Commercial Paper Rate" for
that Interest Reset Period will be the same as the Commercial Paper Rate for the
immediately preceding Interest Reset Period.
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"Money Market Yield" means a yield (expressed as a percentage rounded
upwards to the nearest one hundredthousandth of a percentage point) calculated
in accordance with the following formula:
<TABLE>
<S> <C> <C>
D x 360
Money Market Yield = x 100
360 - (D x M)
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the Interest Period for which interest is being calculated.
The "Calculation Date" pertaining to any Commercial Paper Rate Determination
Date shall be the first to occur of (a) the tenth calendar day after that
Commercial Paper Rate Determination Date or, if that day is not a Business Day,
the next succeeding Business Day or (b) the second Business Day preceding the
related Distribution Date.
FEDERAL FUNDS RATE SECURITIES. Each Federal Funds Rate Security will bear
interest for each Interest Reset Period at an interest rate calculated with
reference to the Federal Funds Rate and the Spread or Spread Multiplier, if any,
specified in that Security and in the applicable Prospectus Supplement.
The "Federal Funds Rate" for each Interest Reset Period shall be the
effective rate on the Interest Reset Date for that Interest Reset Period (a
"Federal Funds Rate Determination Date") for Federal Funds as published in
H.15(519) under the heading "Federal Funds (Effective)." If that rate is not
published prior to 3:00 p.m., New York City time, on the Calculation Date
pertaining to that Federal Funds Rate Determination Date, the "Federal Funds
Rate" for that Interest Reset Period shall be the rate on that Federal Funds
Rate Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate." If by 3:00 p.m., New York City time, on that
Calculation Date that rate is not yet published in either H.15(519) or Composite
Quotations, then the "Federal Funds Rate" for that Interest Reset Period shall
be calculated by the Calculation Agent for that Federal Funds Rate Security and
will be the arithmetic mean of the rates for the last transaction in overnight
United States dollar federal funds arranged by three leading brokers of federal
funds transactions in The City of New York selected by the Calculation Agent
prior to 9:00 A.M., New York City time, on that Federal Funds Rate Interest
Determination Date; provided, however that if the brokers so selected by the
Calculation Agent are not quoting rates as mentioned in this sentence, the
Federal Funds Rate with respect to that Federal Funds Rate Interest
Determination Date will be the Federal Funds Rate in effect for the preceding
Interest Reset Period.
The "Calculation Date" pertaining to any Federal Funds Rate Determination
Date shall be the next succeeding Business Day.
LIBOR SECURITIES. Each LIBOR Security will bear interest for each Interest
Reset Period at an interest rate calculated with reference to LIBOR and the
Spread or Spread Multiplier, if any, specified in that Security and in the
applicable Prospectus Supplement.
With respect to LIBOR indexed to the offered rates for U.S. dollar deposits,
"LIBOR" for each Interest Reset Period will be determined by the Calculation
Agent for that LIBOR Security as follows:
1. On the second London Business Day prior to the Interest Reset Date for
that Interest Reset Period (a "LIBOR Determination Date"), the
Calculation Agent will determine the arithmetic mean of the offered rates
for deposits in U.S. dollars for the period of the Index Maturity
specified in the applicable Prospectus Supplement, as either (a) if
"LIBOR Bloomberg" is specified in the applicable Prospectus Supplement,
the arithmetic mean of the offered rates (unless the specified Designated
LIBOR Page by its terms provides only for a single rate, in which case
that single rate shall be used) for deposits in the Index Currency having
the Index Maturity designated in the applicable Prospectus Supplement,
commencing on the second London Business Day immediately following that
LIBOR Determination Date, that appear on
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the Designated LIBOR Page specified in the applicable Prospectus
Supplement as of 11:00 A.M. London time, on that LIBOR Determination
Date, if at least two offered rates appear (unless, described above, only
a single rate is required) on that Designated LIBOR Page, or (b) if
"LIBOR Telerate" is specified in the applicable Prospectus Supplement,
the rate for deposits in the Index Currency having the Index Maturity
designated in the applicable Prospectus Supplement, commencing on the
second London Business Day immediately following that LIBOR Determination
Date that appears on the Designated LIBOR Page specified in the
applicable Prospectus Supplement as of 11:00 A.M. London time, on that
LIBOR Determination Date. If fewer than two offered rates appear, LIBOR
in respect of the related LIBOR Determination Date will be determined as
if the parties had specified the rate described in clause (2) below.
2. With respect to a LIBOR Determination Date on which fewer than two
offered rates appear, on the applicable Designated LIBOR Page as
specified in clause (1) above, the Calculation Agent will request the
principal London offices of each of four major reference banks in the
London interbank market, as selected by the Calculation Agent, to provide
the Calculation Agent with their offered quotations for deposits in the
Index Currency for the period of the Index Maturity designated in the
applicable Prospectus Supplement, commencing on the second London
Business Day immediately following that LIBOR Determination Date, to
prime banks in the London interbank market at approximately 11:00 A.M.,
London time, on that LIBOR Determination Date and in a principal amount
that is representative for a single transaction in that Index Currency in
that market at that time. If at least two of those quotations are
provided, LIBOR determined on that LIBOR Determination Date will be the
arithmetic mean of those quotations. If fewer than two quotations are
provided, LIBOR determined on that LIBOR Determination Date will be the
arithmetic mean of the rates quoted at approximately 11:00 A.M. (or
another time specified in the applicable Prospectus Supplement), in the
applicable Principal Financial Center, on that LIBOR Determination Date
by three major banks in that Principal Financial Center selected by the
Calculation Agent for loans in the Index Currency to leading European
banks, having the Index Maturity designated in the applicable Prospectus
Supplement and in a principal amount that is representative for a single
transaction in that Index Currency in that market at that time; provided,
however, that if the banks so selected by the Calculation Agent are not
quoting offered rates as mentioned in this sentence, LIBOR determined on
that LIBOR Determination Date will be LIBOR in effect for the preceding
Interest Reset Period.
"Index Currency" means the currency (including composite currencies)
specified in the applicable Prospectus Supplement as the currency for which
LIBOR shall be calculated. If no currency is specified in the applicable
Prospectus Supplement, the Index Currency shall be U.S. dollars.
"Designated LIBOR Page" means either (1) if "LIBOR Bloomberg" is designated
in the applicable Prospectus Supplement, the display on Bloomberg on the page
designated in the applicable Prospectus Supplement (or another page that may
replace that designated page on that service for the purpose of displaying
London interbank rates of major banks) for the applicable Index Currency, or (2)
if "LIBOR Telerate" is designated in the applicable Prospectus Supplement, the
display on the Dow Jones Telerate Service on the page designated in the
applicable Prospectus Supplement (or another page that may replace that
designated page on that service or another service or services as may be
nominated by the British Bankers' Association for the purpose of displaying
London interbank offered rates for the related Index Currency) for the purpose
of displaying the London interbank rates of major banks for the applicable Index
Currency. If neither LIBOR Bloomberg nor LIBOR Telerate is specified in the
applicable Prospectus Supplement, LIBOR for the applicable Index Currency will
be determined as if LIBOR Telerate (and, if the U.S. dollar is the Index
Currency, page 3750) had been specified.
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"Principal Financial Center" will generally be the capital city of the
country of the specified Index Currency, except that with respect to U.S.
dollars, Deutsche marks, Canadian dollars, Australian dollars, Italian lira,
Swiss francs, Dutch guilders and Euros, the Principal Financial Center shall be
The City of New York, Frankfurt, Toronto, Sydney, Rome, Zurich, Amsterdam and
London, respectively.
TREASURY RATE SECURITIES. Each Treasury Rate Security will bear interest
for each Interest Reset Period at an interest rate calculated with reference to
the Treasury Rate and the Spread or Spread Multiplier, if any, specified in that
Security and in the applicable Prospectus Supplement determined on the "Treasury
Rate Determination Date" specified in that Prospectus Supplement.
The "Treasury Rate" for each Interest Period will be the rate for the most
recent auction of direct obligations of the United States ("Treasury bills")
having the Index Maturity specified in the applicable Prospectus Supplement, as
that rate shall be published in H.15(519) under the heading "U.S. Government
Securities--Treasury bills--auction average (investment)" or, if that rate is
not published prior to 3:00 p.m., New York City time, on the Calculation Date
pertaining to that Treasury Rate Determination Date, the auction average rate
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) as otherwise announced by the United
States Department of the Treasury. In the event that the results of the auction
of Treasury bills having the specified Index Maturity are not published or
reported as provided above by 3:00 p.m., New York City time, on that Calculation
Date, or if that auction is not held in a particular week, then the "Treasury
Rate" for that Interest Reset Period will be the rate published in H.15(510)
under the heading "U.S. Government Securities--Treasury Bills--Secondary Market"
(expressed as a bond equivalent yield on the basis of a 365 or 366 day year, as
applicable, on a daily basis), or if not published by 3:00 P.M. New York City
time, on the related Calculation Date, the Treasury Rate will be calculated by
the Calculation Agent for that Treasury Rate Security and shall be the yield to
maturity (expressed as a bond equivalent on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 p.m., New York City time,
on that Treasury Rate Determination Date, of three leading primary United States
government securities dealers selected by the Calculation Agent for the issue of
Treasury bills with a remaining maturity closest to the specified Index
Maturity; provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting bid rates as mentioned in this sentence, then
the "Treasury Rate" for that Interest Reset Period will be the same as the
Treasury Rate for the immediately preceding Interest Reset Period.
The "Calculation Date" pertaining to any Treasury Rate Determination Date
shall be the first to occur of (a) the tenth calendar day after that Treasury
Rate Determination Date or, if that a day is not a Business Day, the next
succeeding business day or (b) the second Business Day preceding the date any
payment is required to be made for any period following the applicable Interest
Reset Date.
INDEXED SECURITIES
To the extent specified in any Prospectus Supplement, any class of
Securities of a given series may consist of Securities ("Indexed Securities") in
which the principal amount payable on the final Distribution Date for that class
(the "Indexed Principal Amount") and/or the interest payable on any Distribution
Date is determined by reference to a measure (the "Index") which will be related
to the exchange rates of one or more currencies or composite currencies (the
"Index Currencies"); the price or prices of specified commodities; or specified
stocks, which may be based on U.S. or foreign stocks, on specified dates
specified in the applicable Prospectus Supplement, or another price, interest
rate, exchange rate or other financial index or indices as are described in the
applicable Prospectus Supplement. Holders of Indexed Securities may receive a
principal amount on the related final Distribution Date that is greater than or
less than the face amount of the Indexed Securities depending upon the relative
value on the related final Distribution Date of the specified indexed item. The
applicable Prospectus Supplement will also contain information as to the method
for determining the principal amount payable on the related final Distribution
Date, if any, and, where applicable, historical
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information with respect to the specific indexed item or items and special tax
considerations associated with investment in Indexed Securities. Notwithstanding
anything to the contrary in this Prospectus, for purposes of determining the
rights of a holder of a Security indexed as to principal in respect of voting
for or against amendments to the related Trust Agreement, Indenture, or other
related agreements, as the case may be, and modifications and the waiver of
rights under those agreements, the principal amount of that Indexed Security
shall be deemed to be the face amount thereof upon issuance less any payments
allocated to principal of that Indexed Security.
If the determination of the Indexed Principal Amount of an Indexed Security
is based on an Index calculated or announced by a third party and that third
party either suspends the calculation or announcement of that Index or changes
the basis upon which that Index is calculated (other than changes consistent
with policies in effect at the time that Indexed Security was issued and
permitted changes described in the applicable Prospectus Supplement), then that
Index shall be calculated for purposes of that Indexed Security by an
independent calculation agent named in the applicable Prospectus Supplement on
the same basis, and subject to the same conditions and controls, as applied to
the original third party. If for any reason that Index cannot be calculated on
the same basis and subject to the same conditions and controls as applied to the
original third party, then the Indexed Principal Amount of that Indexed Security
shall be calculated in the manner set forth in the applicable Prospectus
Supplement. Any determination of that independent calculation agent shall, in
the absence of manifest error, be binding on all parties.
The applicable Prospectus Supplement will describe whether the principal
amount of the related Indexed Security, if any, that would be payable upon
redemption or repayment prior to the applicable final scheduled Distribution
Date will be the face amount of that Indexed Security, the Indexed Principal
Amount of that Indexed Security at the time of redemption or repayment or
another amount described in that Prospectus Supplement.
ISSUES RELATED TO YEAR 2000 DATE CONVERSION
DTC management has advised that DTC 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 DTC Participants
and other members of the financial community (the "Industry") that it has
developed and is implementing a program so that its Systems, as they relate to
timely payments (including principal and 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 its services properly is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as DTC's direct and indirect participants and 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: (1) impress upon them the importance
of those services being Year 2000 compliant; and (2) determine the extent of
their efforts for Year 2000 remediation (and, as appropriate, testing) of their
services. In addition, DTC is in the process of developing those 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.
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BOOK-ENTRY REGISTRATION
Each class of Securities offered by this Prospectus will be represented by
one or more certificates registered in the name of Cede, as nominee of the
Depository Trust Company ("DTC"). Securityholders may hold beneficial interests
in Securities through the DTC (in the United States) or Cedelbank ("Cedelbank")
or the Euroclear System ("Euroclear") (in Europe or Asia) directly if they are
participants of those systems, or indirectly through organizations which are
participants in those systems.
No Securityholder will be entitled to receive a certificate representing
that person's interest in the Securities, except as set forth below. Unless and
until Securities of a class are issued in fully registered certificated form
("Definitive Securities") under the limited circumstances described below, all
references in this Prospectus to actions by Noteholders, Certificateholders or
Securityholders shall refer to actions taken by DTC upon instructions from DTC
Participants, and all references in this Prospectus to distributions, notices,
reports and statements to Noteholders, Certificateholders or Securityholders
shall refer to distributions, notices, reports and statements to Cede, as the
registered holder of the Securities, for distribution to Securityholders in
accordance with DTC procedures. Therefore, it is anticipated that the only
Noteholder, Certificateholder or Securityholder will be Cede, as nominee of DTC.
Securityholders will not be recognized by the related Trustee as Noteholders,
Certificateholders or Securityholders as those terms will be used in the
relevant agreements, and Securityholders will only be permitted to exercise the
rights of holders of Securities of the related class indirectly through DTC and
DTC Participants, as further described below.
Cedelbank and Euroclear will hold omnibus positions on behalf of their
participants through customers' securities accounts in their respective names on
the books of their respective depositaries (collectively, the "Depositaries")
which in turn will hold those positions in customers' securities accounts in the
Depositaries' names on the books of DTC.
Transfers between DTC Participants will occur in accordance with DTC rules.
Transfers between Cedelbank Participants and Euroclear Participants will occur
in accordance with their applicable rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedelbank or
Euroclear participants, on the other, will be effected in DTC in accordance with
DTC rules on behalf of the relevant European international clearing system by
its Depositary. However, each of these cross-market transactions will require
delivery of instructions to the relevant European international clearing system
by the counterparty in that system in accordance with its rules and procedures
and within its established deadlines. The relevant European international
clearing system will, if the transaction meets its settlement requirements,
deliver instructions to its Depositary to take action to effect final settlement
on its behalf by delivering or receiving securities in DTC, and making or
receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Cedelbank Participants and Euroclear Participants
may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities received in
Cedelbank or Euroclear as a result of a transaction with a DTC Participant will
be made during subsequent securities settlement processing and dated the
business day following the DTC settlement date. Those credits or any
transactions in those securities settled during that processing will be reported
to the relevant Euroclear or Cedelbank participant on that business day. Cash
received in Cedelbank or Euroclear as a result of sales of Securities by or
through a Cedelbank Participant or a Euroclear Participant to a DTC Participant
will be received with value on the DTC settlement date but will be available in
the relevant Cedelbank or Euroclear cash account only as of the business day
following settlement in DTC.
DTC is a limited purpose trust company organized under the laws of the State
of New York, 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
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Code and a "clearing agency" registered pursuant to Section 17A of the Exchange
Act. DTC was created to hold securities for its participating members ("DTC
Participants") and to facilitate the clearance and settlement of securities
transactions between DTC Participants through electronic book-entries, thereby
eliminating the need for physical movement of certificates. DTC Participants
include securities brokers and dealers, banks, trust companies and clearing
corporations which may include underwriters, agents or dealers with respect to
the Securities of any class or series. 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 DTC Participant,
either directly or indirectly (the "Indirect DTC Participants"). The rules
applicable to DTC and DTC Participants are on file with the SEC.
Securityholders that are not DTC Participants or Indirect DTC Participants
but desire to purchase, sell or otherwise transfer ownership of, or other
interests in, Securities may do so only through DTC Participants and Indirect
DTC Participants. DTC Participants will receive a credit for the Securities on
DTC's records. The ownership interest of each Securityholder will in turn be
recorded on respective records of the DTC Participants and Indirect DTC
Participants. Securityholders will not receive written confirmation from DTC of
their purchase, but Securityholders are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the DTC Participant or Indirect DTC
Participant through which the Securityholder entered into the transaction.
Transfers of ownership interests in the Securities of any class will be
accomplished by entries made on the books of DTC Participants acting on behalf
of Securityholders.
To facilitate subsequent transfers, all Securities deposited by DTC
Participants with DTC will be registered in the name of Cede, a nominee of DTC.
The deposit of Securities with DTC and their registration in the name of Cede
will effect no change in beneficial ownership. DTC will have no knowledge of the
actual Securityholders and its records will reflect only the identity of the DTC
Participants to whose accounts those Securities are credited, which may or may
not be the Securityholders. DTC Participants and Indirect DTC Participants will
remain responsible for keeping account of their holdings on behalf of their
customers. While the Securities of a series are held in book-entry form,
Securityholders will not have access to the list of Securityholders of that
series, which may impede the ability of Securityholders to communicate with each
other.
Conveyance of notices and other communications by DTC to DTC Participants,
by DTC Participants to Indirect DTC Participants and by DTC Participants and
Indirect DTC Participants to Securityholders will be governed by arrangements
among them, subject to any statutory or regulatory requirements that may be in
effect from time to time.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among DTC
Participants on whose behalf it acts with respect to the Securities and is
required to receive and transmit payments of principal of and interest on the
Securities. DTC Participants and Indirect DTC Participants with which
Securityholders have accounts with respect to the Securities similarly are
required to make book-entry transfers and receive and transmit those payments on
behalf of their respective Securityholders.
DTC's practice is to credit DTC Participants' accounts on each Distribution
Date in accordance with their respective holdings shown on its records, unless
DTC has reason to believe that it will not receive payment on that Distribution
Date. Payments by DTC Participants and Indirect DTC Participants to
Securityholders 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
that DTC Participant and not of DTC, the related Indenture Trustee or Trustee
(or any paying agent appointed by the Indenture Trustee or Trustee), the Seller
or the Servicer, subject to any statutory or regulatory requirements that may be
in effect from time to time. Payment of principal of and interest on each class
of Securities to DTC will be the responsibility of the related Indenture Trustee
or Trustee (or any paying agent), disbursement of those payments to
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DTC Participants will be the responsibility of DTC and disbursement of those
payments to the related Securityholders will be the responsibility of DTC
Participants and Indirect DTC Participants. DTC will forward those payments to
its DTC Participants which thereafter will forward them to Indirect DTC
Participants or Securityholders.
Because DTC can only act on behalf of DTC Participants, who in turn act on
behalf of Indirect DTC Participants and some other banks, a Securityholder may
be limited in its ability to pledge Securities to persons or entities that do
not participate in the DTC system, or otherwise take actions with respect to
those Securities due to the lack of a physical certificate for those Securities.
DTC has advised the Seller that it will take any action permitted to be
taken by a Securityholder only at the direction of one or more DTC Participants
to whose account with DTC the Securities are credited. Additionally, DTC has
advised the Seller that it will take those actions with respect to specified
percentages of the Securityholders' interest only at the direction of and on
behalf of DTC Participants whose holdings include undivided interests that
satisfy those specified percentages. DTC may take conflicting actions with
respect to other undivided interests to the extent that those actions are taken
on behalf of DTC Participants whose holdings include those undivided interests.
Neither DTC nor Cede will consent or vote with respect to the Securities.
Under its usual procedures, DTC will mail an "Omnibus Proxy" to the related
Indenture Trustee or Trustee as soon as possible after any applicable record
date for that consent or vote. The Omnibus Proxy will assign Cede's consenting
or voting rights to those DTC Participants to whose accounts the related
Securities are credited on that record date (which record date will be
identified in a listing attached to the Omnibus Proxy).
Cedelbank is incorporated under the laws of Luxembourg as a professional
depository. Cedelbank holds securities for its participating organizations
("Cedelbank Participants") and facilitates the clearance and settlement of
securities transactions between Cedelbank Participants through electronic book
entry changes in accounts of Cedelbank Participants, thereby eliminating the
need for physical movement of certificates. Transactions may be settled in
Cedelbank in any of 28 currencies, including United States dollars. Cedelbank
provides to Cedelbank Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedelbank interfaces with
domestic markets in several countries. As a professional depository, Cedelbank
is subject to regulation by the Luxembourg Monetary Institute. Cedelbank
Participants are recognized financial institutions around the world, including
underwriters, securities brokers and dealers, banks, trust companies, clearing
corporations and other organizations and may include any underwriters, agents or
dealers with respect to any class or series of Securities offered by this
Prospectus. Indirect access to Cedelbank is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Cedelbank Participant, either directly or
indirectly.
Euroclear was created in 1968 to hold securities for participants of the
Euroclear System ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 27 currencies, including United
States dollars. The Euroclear System includes various other services, including
securities lending and borrowing, and interfaces with domestic markets in
several countries generally similar to the arrangements for cross-market
transfers with DTC described above. The Euroclear System is operated by Morgan
Guaranty Trust Company of New York, Brussels, Belgium office (the "Euroclear
Operator" or "Euroclear"), under contract with Euroclear Clearance System S.C.,
a Belgian cooperative corporation (the "Cooperative"). All operations are
conducted by the Euroclear Operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the Cooperative. The Cooperative establishes policy for the Euroclear System
on behalf of Euroclear Participants. Euroclear
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Participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include any
underwriters, agents or dealers with respect to any class or series of
Securities offered by this Prospectus. Indirect access to the Euroclear System
is also available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. Therefore, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawals of
securities and cash from the Euroclear System and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants, and has no record
of or relationship with persons holding through Euroclear Participants.
Payments with respect to Securities held through Cedelbank or Euroclear will
be credited to the cash accounts of Cedelbank Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures, to
the extent received by its Depositary. Those payments will be subject to tax
withholding in accordance with relevant United States tax laws and regulations.
See "Material Income Tax Consequences." Cedelbank or the Euroclear Operator, as
the case may be, will take any other action permitted to be taken by a
Securityholder on behalf of a Cedelbank Participant or Euroclear Participant
only in accordance with its relevant rules and procedures and subject to its
Depositary's ability to effect those actions on its behalf through DTC.
Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Securities among participants of
DTC, Cedelbank and Euroclear, they are under no obligation to perform or
continue to perform those procedures and those procedures may be discontinued at
any time.
DEFINITIVE SECURITIES
The Notes, if any, and the Certificates of a given series will be issued in
fully registered, certificated form ("Definitive Notes" and "Definitive
Certificates", respectively, and collectively referred to in this Prospectus as
"Definitive Securities") to Noteholders or Certificateholders or their
respective nominees, rather than to DTC or its nominee, only if:
1. DTC is no longer willing or able to discharge properly its
responsibilities as depository with respect to those Securities and the
Seller, the Administrator or the Trustee is unable to locate a qualified
successor (and if it is the Seller or the Administrator that has made
that determination, the Seller or that Administrator so notifies the
applicable Trustee in writing);
2. the Seller or the Administrator or the Trustee, as applicable, at its
option, elects to terminate the book-entry system through DTC; or
3. after the occurrence of an Event of Default or a Servicer Default with
respect to those Securities, holders representing at least a majority of
the outstanding principal amount of the Notes or the Certificates, as the
case may be, of that series, acting together as a single class, advise
the applicable Trustee through DTC in writing that the continuation of a
book-entry system through DTC (or a successor thereto) with respect to
those Notes or Certificates is no longer in the best interests of the
holders of those Securities.
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Upon the occurrence of any event described in the immediately preceding
paragraph, the applicable Trustee or Indenture Trustee will be required to
notify all applicable Securityholders of a given series through DTC Participants
of the availability of Definitive Securities. Upon surrender by DTC of the
definitive certificates representing the corresponding Securities and receipt of
instructions for re-registration, the applicable Trustee or Indenture Trustee
will reissue those Securities as Definitive Securities to those Securityholders.
Payments of principal of, and interest on, the Definitive Securities will
thereafter be made by the applicable Trustee or Indenture Trustee in accordance
with the procedures set forth in the related Indenture or the related Trust
Agreement or Pooling and Servicing Agreement, as applicable, directly to holders
of Definitive Securities in whose names the Definitive Securities were
registered at the close of business on the applicable record date specified for
those Securities in the applicable Prospectus Supplement. Those payments will be
made by check mailed to the address of that holder as it appears on the register
maintained by the applicable Trustee or Indenture Trustee. The final payment on
any Definitive Security, however, will be made only upon presentation and
surrender of that Definitive Security at the office or agency specified in the
notice of final payment to the applicable Securityholders. The applicable
Trustee or the Indenture Trustee will provide that notice to the applicable
Securityholders not less than 15 nor more than 30 days prior to the date on
which the final payment is expected to occur.
Definitive Securities will be transferable and exchangeable at the offices
of the applicable Trustee or of a registrar named in a notice delivered to
holders of Definitive Securities. No service charge will be imposed for any
registration of transfer or exchange, but the applicable Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
imposed in connection therewith.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes material terms of each Sale and Servicing
Agreement or Pooling and Servicing Agreement pursuant to which a Trust will
purchase Receivables from the Seller and the Servicer will agree to service
those Receivables, each Trust Agreement (or in the case of a grantor trust, the
Pooling and Servicing Agreement) pursuant to which a Trust will be created and
Certificates will be issued and each Administration Agreement pursuant to which
NMAC will undertake specified administrative duties with respect to a Trust that
issues Notes (collectively, the "Transfer and Servicing Agreements"). Forms of
the Transfer and Servicing Agreements have been filed as exhibits to the
Registration Statement of which this Prospectus forms a part. The provisions of
any of the Transfer and Servicing Agreements may differ from those described in
this Prospectus and, if so, will be described in the applicable Prospectus
Supplement. This summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of the Transfer
and Servicing Agreements.
SALE AND ASSIGNMENT OF RECEIVABLES
On or prior to the Closing Date specified with respect to any given Trust in
the applicable Prospectus Supplement (the "Closing Date"), NMAC will sell and
assign to the Seller, without recourse, pursuant to a Purchase Agreement (the
"Purchase Agreement"), its entire interest in the Receivables comprising the
related Receivables Pool, including the security interests in the Financed
Vehicles. On the Closing Date, the Seller will transfer and assign to the
applicable Trustee on behalf of the Trust, without recourse, pursuant to a Sale
and Servicing Agreement or a Pooling and Servicing Agreement, as applicable, its
entire interest in the Receivables comprising the related Receivables Pool,
including its security interests in the related Financed Vehicles. Each
Receivable will be identified in a schedule appearing as an exhibit to the
related Sale and Servicing Agreement or Pooling and Servicing Agreement (a
"Schedule of Receivables"), but the existence and characteristics of the related
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Receivables will not be verified by the related Trustee. The applicable Trustee
will, concurrently with the transfer and assignment, on behalf of the Trust,
execute and deliver the related Notes and/or Certificates. The net proceeds
received from the sale of the Certificates and the Notes of a given series will
be applied to the purchase of the related Receivables from the Seller and, to
the extent specified in the applicable Prospectus Supplement, to make any
required initial deposit into the Reserve Account and the Yield Supplement
Account, if any. The Seller will initially retain the most subordinated class of
Security of the related series.
NMAC, pursuant to a Purchase Agreement, and the Seller, pursuant to a Sale
and Servicing Agreement or a Pooling and Servicing Agreement, will represent and
warrant, among other things, that:
1. the information provided in the related Schedule of Receivables is true
and correct in all material respects;
2. the related Obligor on each Receivable is required to maintain physical
damage insurance covering the Financed Vehicle in accordance with NMAC's
normal requirements;
3. as of the Closing Date, each of those Receivables is or will be secured
by a first priority perfected security interest in favor of NMAC in the
Financed Vehicle;
4. as of the Closing Date, the related Receivables are free and clear of
all security interests, liens, charges and encumbrances and no offsets,
defenses or counterclaims have been asserted or threatened;
5. each related Receivable, at the time it was originated, complied and, as
of the Closing Date, complies in all material respects with applicable
federal and state laws, including, consumer credit, truth- in-lending,
equal credit opportunity and disclosure laws; and
6. any other representations and warranties that may be set forth in the
applicable Prospectus Supplement.
As of the last day of the second (or, if the Seller so elects, the first)
Collection Period following the discovery by or notice to the Seller of a breach
of any representation or warranty of the Seller that materially and adversely
affects the interests of the related Securityholders in any Receivable (the
initial determination of a material adverse effect generally being made by the
Servicer), the Seller, unless the breach is cured, will repurchase that
Receivable (a "Warranty Receivable") from that Trust and, pursuant to the
related Purchase Agreement, NMAC will purchase that Warranty Receivable from the
Seller, at a price equal to the Warranty Purchase Payment for that Receivable.
The "Warranty Purchase Payment" will be equal to the amount required to be paid
by the related Obligor to prepay the Receivable (including interest accrued on
that Receivable through the due date for the Obligor's payment in the related
Collection Period at the applicable APR), after giving effect to the receipt of
any monies collected (from whatever source) on that Receivable, if any. This
repurchase obligation will constitute the sole remedy available to the
Securityholders or the Trust for any uncured breach by the Seller of those
representations and warranties (other than remedies that may be available under
federal securities laws or other laws). The obligation of the Seller to
repurchase a Receivable will not be conditioned on performance by NMAC of its
obligation to purchase that Receivable from the Seller pursuant to the related
Purchase Agreement.
Pursuant to each Sale and Servicing Agreement or Pooling and Servicing
Agreement, the Seller and each Trust will designate the Servicer as custodian to
maintain possession as that Trust's agent of the related installment sale
contracts and any other documents relating to the Receivables. To assure uniform
quality in servicing both the Receivables and the Servicer's own portfolio of
automobile and light-duty truck installment sales contracts, as well as to
facilitate servicing and reduce administrative costs, the documents evidencing
the Receivables will not be physically segregated from other automobile and
light-duty truck installment sales contracts of the Servicer, or those which the
Servicer services for others, or marked to reflect the transfer to the related
Trust as long as NMAC is servicing
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the Receivables. However, Uniform Commercial Code ("UCC") financing statements
reflecting the sale and assignment of the Receivables by NMAC to the Seller and
by the Seller to the applicable Trust will be filed, and the respective
accounting records and computer files of NMAC and the Seller will reflect that
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 Trust's interest in
the Receivables could be defeated. In addition, in some cases, the Trustee's
security interest in collections that have been received by the Servicer but not
yet remitted to the related Collection Account could be defeated. See "Material
Legal Aspects of the Receivables--Security Interests" in this Prospectus.
ACCOUNTS
With respect to each Trust that issues Notes, the Servicer will establish
and maintain with the related Indenture Trustee one or more accounts (each, a
"Collection Account"), in the name of the Indenture Trustee on behalf of the
related Securityholders, into which payments made on or with respect to the
related Receivables and amounts released from any Yield Supplement Account,
Reserve Account or other form of credit enhancement will be deposited for
payment to the related Securityholders. With respect to each Trust that does not
issue Notes, the Servicer will also establish and maintain a Collection Account
and any other Account in the name of the related Trustee on behalf of the
related Certificateholders.
Any other accounts to be established with respect to a Trust, including any
Yield Supplement Account or any Reserve Account, will be described in the
applicable Prospectus Supplement.
For any series of Securities, funds in the related Collection Account, any
Yield Supplement Account, the Reserve Account and other accounts that may be
identified in the applicable Prospectus Supplement (collectively, the
"Accounts") will be invested as provided in the related Sale and Servicing
Agreement or Pooling and Servicing Agreement in Eligible Investments. "Eligible
Investments" are generally limited to investments acceptable to the rating
agencies rating those Securities as being consistent with the rating of those
Securities (including obligations of the Servicer and its affiliates, to the
extent consistent with that rating). Except as described below, Eligible
Investments are limited to obligations or securities that mature on or before
the next Distribution Date for that series. However, to the extent permitted by
the rating agencies, funds in any Account (other than the Collection Account)
may be invested in obligations or securities that will not mature prior to the
date of the next payment with respect to those Certificates or Notes and will
not be sold to meet any shortfalls. Thus, the amount of cash in any Reserve
Account or the Yield Supplement Account at any time may be less than the balance
of the Reserve Account or the Yield Supplement Account, as the case may be. If
the amount required to be withdrawn from any Reserve Account or the Yield
Supplement Account to cover shortfalls in collections on the related Receivables
(as provided in the applicable Prospectus Supplement) exceeds the amount of cash
in the Reserve Account or the Yield Supplement Account, as the case may be, a
temporary shortfall in the amounts paid to the related Noteholders or
Certificateholders could result, which could, in turn, increase the average life
of the Notes or the Certificates of that series. Investment earnings on funds
deposited in the Accounts, net of losses and investment expenses, shall be
released to the Servicer or the Seller on each Distribution Date and shall be
the property of the Servicer or the Seller, as the case may be.
For each Trust, the Accounts will be maintained with the related Indenture
Trustee or the Trustee so long as:
1. the Indenture Trustee's or 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, a division of
The McGraw Hill Companies, Inc. (the "Required Deposit Rating"); or
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2. each of those accounts is maintained in a segregated trust account in
the trust department of the Indenture Trustee or the Trustee, as the case
may be.
If the short-term unsecured debt obligations of the related Indenture
Trustee or the Trustee, as the case may be, do not have the Required Deposit
Rating, then the Servicer shall, with the assistance of the Indenture Trustee or
the Trustee as may be necessary, cause each Account to be moved to (1) a bank
whose short-term unsecured debt obligations have the Required Deposit Rating or
(2) the trust department of the related Indenture Trustee or the Trustee.
SERVICING PROCEDURES
The Servicer will make reasonable efforts to collect all payments due with
respect to the Receivables held by any Trust and will, consistent with the
related Sale and Servicing Agreement or Pooling and Servicing Agreement, follow
the collection procedures it follows with respect to comparable retail
installment sale contracts it services for itself.
The Servicer shall not:
1. change the amount of a Receivable;
2. reschedule the due date of any scheduled payment of a Receivable;
3. change the APR of a Receivable;
4. extend the due date for any payment on a Receivable; or
5. change the material terms of a Receivable.
However, if a default, breach, violation, delinquency or event permitting
acceleration under the terms of any Receivable has occurred or, in the judgment
of the Servicer, is imminent, the Servicer may do the following:
1. extend the due date for any payment on that Receivable for credit
related reasons that would be acceptable to the Servicer for comparable
retail installment sale contracts that it services for itself, but only
if (a) the final scheduled distribution date of that Receivable, as
extended, would not be later than the Collection Period preceding the
final scheduled distribution date set forth in the applicable Prospectus
Supplement, and (b) the rescheduling or extension would not modify the
terms of that Receivable in a manner which would constitute a
cancellation of that Receivable and the creation of a new receivable for
federal income tax purposes; or
2. 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 for
that Receivable to the extent required by law.
In addition, the Servicer will covenant that, except as otherwise
contemplated in the related agreement (including the provisions in the
immediately two preceding paragraphs):
1. it will not release any Financed Vehicle from the security interest
granted in the related Receivable;
2. it will do nothing to impair the rights of the Securityholders in the
Receivables;
3. it will not alter the APR of any Receivable;
4. it will not modify the number of payments under a Receivable;
5. it will not increase the amount financed under a Receivable; and
6. it will not extend the due date for any payment on or forgive payments
on a Receivable.
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The Servicer or the Trustee shall inform the other party and the Indenture
Trustee promptly upon the discovery of any breach by the Servicer of the above
obligations that would materially and adversely affect any Receivable. Unless
the breach is cured by the last day of the second Collection Period following
the discovery (or, if the Servicer so elects, the last day of the first
Collection Period following the discovery), the Servicer is required to purchase
any Receivable materially and adversely affected by the breach (an
"Administrative Receivable") from the Trust at a price equal to the
Administrative Purchase Payment for that Receivable. The "Administrative
Purchase Payment" for a Receivable will be equal to its unpaid Principal Balance
as of the beginning of that Collection Period, plus interest accrued through the
due date for the Obligor's payment in that Collection Period at the related APR,
after giving effect to the receipt of monies collected (from whatever source
other than the Advances) on that Administrative Receivable, if any, in that
Collection Period. Upon the purchase of any Administrative Receivable, the
Servicer will for all purposes of the related Sale and Servicing Agreement or
the Pooling Agreement, as applicable, be deemed to have released all claims for
the reimbursement of outstanding Advances made in respect of that Administrative
Receivable. This purchase obligation will constitute the sole remedy available
to the Certificateholders or the Trustee for any uncured breach by the Servicer.
If the Servicer determines that eventual payment in full of a Receivable is
unlikely, the Servicer will follow its normal practices and procedures to
recover all amounts due upon that Receivable, including repossessing and
disposing of the related Financed Vehicle at a public or private sale, or taking
any other action permitted by applicable law. See "Material Legal Aspects of the
Receivables."
INSURANCE ON FINANCED VEHICLES
Each Receivable requires the related Obligor to maintain specific levels and
types of insurance coverage to protect the Financed Vehicle against loss. NMAC
requires evidence of insurance coverage by the Obligors at the time of
origination of the Receivables, but performs no verification of continued
coverage after origination. NMAC will not be obligated to make payments to the
Trust for any loss as to which third party insurance has not been maintained,
except to the extent of its obligations under the related Purchase Agreement.
COLLECTIONS
With respect to each Trust, the Servicer will deposit all payments on
Receivables received from Obligors and all proceeds of Receivables collected
during the collection period specified in the applicable Prospectus Supplement
(each, a "Collection Period") into the Collection Account not later than the
Business Day after receipt. However, so long as NMAC is the servicer, if each
condition to making monthly deposits as may be required by the related Sale and
Servicing Agreement or Pooling and Servicing Agreement (including, the
satisfaction of specified ratings criteria by NMAC and the absence of any
Servicer Default) is satisfied, the Servicer may retain such amounts until the
related 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 related Sale and Servicing Agreement or
Pooling and Servicing 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.
The Servicer or the Seller, as the case may be, will remit the aggregate
Warranty Purchase Payments and Administrative Purchase Payments of Receivables
to be purchased from the Trust to the Collection Account on the Business Day
immediately preceding the related Distribution Date.
If the Servicer were unable to remit the funds as described above,
Securityholders might incur a loss. To the extent set forth in the applicable
Prospectus Supplement, the Servicer may, in order to satisfy the requirements
described above, obtain a letter of credit or other security for the benefit of
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the related Trust to secure timely remittances of collections on the related
Receivables and payment of the aggregate Warranty Purchase Payments and
Administrative Purchase Payments with respect to Receivables required to be
repurchased by the Seller or the Servicer, as applicable.
For purposes of the related Sale and Servicing Agreement or Pooling and
Servicing Agreement, collections on a Receivable made during a Collection Period
(including Warranty Purchase Payments and Administrative Purchase Payments) will
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.
ADVANCES
If payment on a Receivable (other than an Administrative Receivable or a
Warranty Receivable) is not received in full by the end of the month in which it
is due, the Servicer shall, subject to the limitations set forth below, advance
to the Trust an amount with respect to that Receivable equal to the product of
the Principal Balance of that 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 that Receivable during the related Collection Period (each,
an "Advance"). If that calculation results in a negative number, an amount equal
to that negative amount shall be paid to the Servicer in reimbursement of
outstanding Advances. In addition, if a defaulted Receivable is liquidated (a
"Liquidated Receivable"), the amount of accrued and unpaid interest on that
Liquidated Receivable (but not including interest for the current Collection
Period) will, up to the amount of all outstanding Advances in respect thereof,
be withdrawn from the related Collection Account and paid to the Servicer in
reimbursement of the outstanding Advances. No advances of principal will be made
with respect to Receivables. The Servicer will not be obligated to make an
Advance (other than in respect of an interest shortfall arising from the
prepayment of a Receivable) to the extent that it determines, in its sole
discretion, that that Advance will not be recovered from subsequent collections
or recoveries.
The Servicer will make all Advances by depositing into the related
Collection Account an amount equal to the aggregate of the Advances due in
respect of a Collection Period on the Business Day immediately preceding the
related Distribution Date.
SERVICING COMPENSATION
The Servicer will be entitled to receive a basic servicing fee for each
Collection Period in an amount equal to a specified percent per annum (as set
forth in the applicable Prospectus Supplement, the "Servicing Rate") of the Pool
Balance as of the first day of the related Collection Period (the "Base
Servicing Fee"). The Base Servicing Fee (together with any portion of the Base
Servicing Fee that remains unpaid from prior Distribution Dates) will be paid
solely to the extent of amounts available for that purpose as set forth in the
applicable Prospectus Supplement. However, the Base Servicing Fee will be paid
prior to the payment of available amounts to the Noteholders or the
Certificateholders of the given series.
The Servicer will also be entitled to collect and retain any late fees,
prepayment charges and other administrative fees or similar charges allowed by
applicable law with respect to the related Receivables and any interest earned
during a Collection Period from the investment of monies in the Collection
Account as additional servicing compensation (the "Supplemental Servicing Fee"
and, together with the Base Servicing Fee, the "Total Servicing Fee"). Payments
by or on behalf of Obligors will be allocated to scheduled payments and late
fees and other charges in accordance with the Servicer's normal practices and
procedures. In addition, the Servicer will be entitled to reimbursement from any
given Trust for specified liabilities. The Servicer will be paid the Base
Servicing Fee for each Collection Period on the Distribution Date related to
that Collection Period prior to the payment of interest on any class of Notes or
Certificates. However, if each rating agency for a series of Notes or
Certificates confirms that it will not reduce the rating of any class of Notes
or Certificates in that series, as the case
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may be, the Base Servicing Fee in respect of a Collection Period (together with
any portion of the Base Servicing Fee that remains unpaid from the prior
Distribution Dates) will be paid at the beginning of that Collection Period out
of collections of interest on the related Receivables.
The Total Servicing Fee will compensate the Servicer for performing the
functions of a third party servicer of motor vehicle receivables as an agent for
the beneficial owner of those receivables, 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 Total
Servicing Fee also will compensate the Servicer for administering the particular
Receivables Pool, including making Advances, accounting for collections and
furnishing monthly statements to the related Trustee and Indenture Trustee with
respect to payments. The Total Servicing Fee also will reimburse the Servicer
for specified taxes, the fees of the related Trustee and Indenture Trustee, if
any, accounting fees, outside auditor fees, data processing costs and other
costs incurred in connection with administering the applicable Receivables Pool.
The "Pool Balance" will equal the aggregate Principal Balance of the
Receivables. The "Principal Balance" of a Receivable as of any date will equal
the original principal balance of that Receivable minus the sum of:
1. that portion of all payments actually received on or prior to that date
allocable to principal;
2. any Warranty Purchase Payment or Administrative Purchase Payment with
respect to that
Receivable allocable to principal (to the extent not included in clause
(1) above); and
3. any prepayments or other payments applied to reduce the unpaid principal
balance of that Receivable (to the extent not included in clauses (1) and
(2) above).
YIELD SUPPLEMENT ACCOUNT; YIELD SUPPLEMENT AGREEMENT
YIELD SUPPLEMENT ACCOUNT. A "Yield Supplement Account" may be established
with respect to any class or series of Securities. The terms relating to any of
Yield Supplement Account will be set forth in the applicable Prospectus
Supplement. Each Yield Supplement Account will be designed to hold funds to be
applied by the related Trustee or, if that Trust issues Notes, the related
Indenture Trustee, to provide payments to Securityholders in respect of
Receivables that have APRs less than the sum of the Pass Through Rate or
Interest Rate specified in the applicable Prospectus Supplement plus the
Servicing Rate specified in the applicable Prospectus Supplement (the "Required
Rate"). Each Yield Supplement Account will be maintained with the same entity
with which the related Collection Account is maintained and will be created on
the related Closing Date with an initial deposit in an amount and by the Seller
or other person specified in the applicable Prospectus Supplement.
On each Distribution Date, the related Trustee or Indenture Trustee will
transfer to the Collection Account from monies on deposit in the Yield
Supplement Account an amount specified in the applicable Prospectus Supplement
(the "Yield Supplement Deposit") in respect of the Receivables having APRs less
than the Required Rate for that Distribution Date. Amounts on deposit on any
Distribution Date in the Yield Supplement Account in excess of the "Required
Yield Supplement Amount" specified in the applicable Prospectus Supplement,
after giving effect to all payments to be made on that Distribution Date, will
be released to the Seller. The Seller or other person specified in the
applicable Prospectus Supplement will not have any obligation after the related
Closing Date to deposit any amounts into the Yield Supplement Account after the
related Closing Date even if the amount on deposit in that account is less than
the Required Yield Supplement Amount for any Distribution Date. Monies on
deposit in the Yield Supplement Account may be invested in Eligible Investments
under the circumstances and in the manner described in the related Pooling and
Servicing Agreement or Trust Agreement. Earnings on investment of funds in the
Yield Supplement Account in Eligible Investments will be paid to the Seller on
each Distribution Date. Any monies remaining on
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deposit in the Yield Supplement Account upon the termination of the Trust also
will be released to the Seller.
YIELD SUPPLEMENT AGREEMENT. If a Yield Supplement Account is to be
established with respect to a series of Securities, on or prior to the related
Closing Date, the Seller will enter into a "Yield Supplement Agreement" with the
Servicer and the entity with which the account is maintained. The Seller will
assign its rights under the Yield Supplement Agreement to the applicable Trustee
for the benefit of the applicable Securityholders.
DISTRIBUTIONS ON THE SECURITIES
With respect to each series of Securities, beginning on the Distribution
Date specified in the applicable Prospectus Supplement, payments of principal of
and interest (or, where applicable, of principal or interest only) on each class
of those Securities entitled thereto will be made by the applicable Indenture
Trustee to the Noteholders and by the applicable Trustee to the
Certificateholders of that series. The timing, calculation, allocation, order,
source, priorities of and requirements for all payments to each class of
Noteholders and all payments to each class of Certificateholders of that series
will be set forth in the applicable Prospectus Supplement.
With respect to each Trust, on each Distribution Date, collections on the
related Receivables will be withdrawn from the related Collection Account and
will be paid to the Noteholders and/or Certificateholders to the extent provided
in the applicable Prospectus Supplement. Credit enhancement, such as a Reserve
Account, will be available to cover any shortfalls in the amount available for
payment to the Securityholders on that date to the extent specified in the
applicable Prospectus Supplement. As more fully described in the applicable
Prospectus Supplement,
1. payments of principal of a class of Securities of a given series will be
subordinate to payments of interest on that class;
2. payments in respect of one or more classes of Certificates of that
series may be subordinate to payments in respect of Notes, if any, of
that series or other classes of Certificates of that series; and
3. payments in respect of one or more classes of Notes of that series may
be subordinated to payments in respect of other classes of Notes of that
series.
CREDIT AND CASH FLOW ENHANCEMENT
The amounts and types of credit and cash flow enhancement arrangements and
the provider thereof, if applicable, with respect to each class of Securities of
a given series, if any, will be set forth in the applicable Prospectus
Supplement. If and to the extent provided in the applicable Prospectus
Supplement, credit and cash flow enhancement may be in the form of subordination
of one or more classes of Securities, Reserve Accounts, over-collateralization,
letters of credit, credit or liquidity facilities, surety bonds, guaranteed
investment contracts or other interest rate protection agreements, repurchase
obligations, yield supplement agreements, other agreements with respect to third
party payments or other support, cash deposits or other arrangements that may be
described in the applicable Prospectus Supplement or any combination of the
foregoing. If specified in the applicable Prospectus Supplement, credit or cash
flow enhancement for a class of Securities may cover one or more other classes
of Securities of the same series, and credit or cash flow enhancement for a
series of Securities may cover one or more other series of Securities.
The presence of a Reserve Account and other forms of credit enhancement for
the benefit of any class or series of Securities is intended to enhance the
likelihood of receipt by the Securityholders of that class or series of the full
amount of principal and interest due on those Securities and to decrease the
likelihood that that Securityholders will experience losses. The credit
enhancement for a class or
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series of Securities will not provide protection against all risks of loss and
will not guarantee repayment of the entire principal of and interest on those
Securities. If losses occur which exceed the amount covered by any credit
enhancement or which are not covered by any credit enhancement, Securityholders
of any class or series will bear their allocable share of deficiencies, as
described in the applicable Prospectus Supplement. In addition, if a form of
credit enhancement covers more than one class or series of Securities,
Securityholders of any of that class or series will be subject to the risk that
that credit enhancement will be exhausted by the claims of Securityholders of
other classes or series.
RESERVE ACCOUNT. If provided in the applicable Prospectus Supplement,
pursuant to the related Sale and Servicing Agreement or Pooling and Servicing
Agreement, the Seller or a third party will establish for a series or class of
Securities an account, as specified in the applicable Prospectus Supplement,
which may be designated as a "Reserve Account" or a "Subordination Spread
Account" (for the purposes of this Prospectus, the "Reserve Account"), that will
be maintained with the related Trustee or Indenture Trustee, as applicable. The
Reserve Account will be funded by an initial deposit by the Seller or a third
party on the Closing Date in the amount set forth in the applicable Prospectus
Supplement (the "Reserve Account Initial Deposit"). To the extent provided in
the applicable Prospectus Supplement, the amount on deposit in the Reserve
Account will be increased on each Distribution Date thereafter up to the
Specified Reserve Account Balance (as defined in the applicable Prospectus
Supplement) by the deposit in the Reserve Account of the amount of collections
on the related Receivables remaining on each Distribution Date after all
specified payments on that date are made. The applicable Prospectus Supplement
will describe the circumstances and manner under which payments may be made out
of the Reserve Account, either to holders of the Securities covered by that
Prospectus Supplement or to the Seller or a third party. Monies on deposit in
the Reserve Account may be invested in Eligible Investments under the
circumstances and in the manner described in the related Sale and Servicing
Agreement or the Pooling and Servicing Agreement. Earnings on investment of
funds in the Reserve Account in Eligible Investments will be paid to the Seller
on each Distribution Date. Any monies remaining on deposit in the Reserve
Account upon the termination of the Trust also will be released to the Seller.
NET DEPOSITS
As an administrative convenience, as long as specified conditions are
satisfied, the Servicer will be permitted to make the deposit of collections,
aggregate Advances and Administrative Purchase Payments for any Trust for or
with respect to the related Collection Period net of payments to be made to the
Servicer with respect to that Collection Period. The Servicer may cause to be
made a single, net transfer from the Collection Account. The Servicer, however,
will account to the Trustee, any Indenture Trustee, the Noteholders, if any, and
the Certificateholders with respect to each Trust as if all deposits, payments
and transfers were made individually. With respect to any Trust that issues both
Certificates and Notes, if the related Distribution Dates are not the same for
all classes of Securities, all distributions, deposits or other remittances made
on a Distribution Date will be treated as having been distributed, deposited or
remitted on the same Distribution Date for the applicable Collection Period for
purposes of determining other amounts required to be distributed, deposited or
otherwise remitted on a Distribution Date.
STATEMENTS TO TRUSTEES AND TRUST
On a Business Day in each month that precedes each Distribution Date (each,
a "Determination Date" to be specified in the applicable Prospectus Supplement),
the Servicer will provide to the applicable Indenture Trustee, if any, and the
applicable Trustee a statement setting forth with respect to a series of
Securities substantially the same information that is required to be provided in
the periodic reports provided to Securityholders of that series described under
"--Statements to Securityholders" below.
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STATEMENTS TO SECURITYHOLDERS
With respect to each series of Securities that includes Notes, on or prior
to each Distribution Date, the Servicer will prepare and provide to the related
Indenture Trustee a statement to be delivered to the related Noteholders on that
Distribution Date. In addition, on or prior to each Distribution Date, the
Servicer will prepare and provide to the related Trustee of each Trust, a
statement to be delivered to the Certificateholders. Each statement to be
delivered to Securityholders will include (to the extent applicable) the
following information (and any other information so specified in the applicable
Prospectus Supplement) as to the Notes of that series and as to the Certificates
of that series with respect to that Distribution Date:
1. the amount of the payment allocable to the principal amount of each
class of those Notes and to the Certificate Balance of each class of
those Certificates;
2. the amount of the payment allocable to interest on each class of
Securities of that series;
3. the amount of the distribution allocable to the Yield Supplement
Deposit, if any;
4. the Pool Balance as of the close of business on the last day of the
related Collection Period;
5. the amount of the Base Servicing Fee paid to the Servicer with respect
to the related Collection Period, the amount of any unpaid Base Servicing
Fees and the change in that 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;
6. the Interest Rate or Pass Through Rate for the Interest Period relating
to the succeeding Distribution Date for any class of Notes or
Certificates of that series with variable or adjustable rates;
7. the Noteholders' Interest Carryover Shortfall, the Noteholders'
Principal Carryover Shortfall, the Certificateholders' Interest Carryover
Shortfall and the Certificateholders' Principal Carryover Shortfall (each
as defined in the applicable Prospectus Supplement), if any, in each case
as applicable to each class of Securities, and the change in those
amounts from the preceding statement;
8. the amount, if any, otherwise distributable to one or more subordinated
classes of Notes or Certificates that has instead been distributed to
more senior classes of Notes or Certificates on that Distribution Date;
9. the aggregate outstanding principal amount, the Note Factor and the Note
Pool Factor for each class of those Notes, and the Certificate Balance,
the Certificate Factor and the Certificate Pool Factor for each class of
those Certificates, each after giving effect to all payments reported
under clause (1) above on that date;
10. the amount of Advances made in respect of the related Receivables and
the related Collection Period and the amount of unreimbursed Advances on
that Distribution Date; and
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11. the balance of any related Reserve Account, Yield Supplement Account or
other credit or liquidity enhancement on that date, after giving effect
to changes thereto on that date and the amount of those changes.
Each amount set forth in subclauses (1), (2), (5) and (7) above will be
expressed in the aggregate and as a dollar amount per $1,000 of the original
principal amount of each class of Notes or the Original Certificate Balance of
each class of Certificates, as the case may be.
Copies of the statements may be obtained by the Securityholders by
delivering a request in writing addressed to the applicable Trustee at its
address set forth in the applicable Prospectus Supplement.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of each Trust, the applicable Trustee
will mail to each person who at any time during that calendar year has been a
Securityholder with respect to that Trust and received any payment a statement
containing information for the purposes of that Securityholder's preparation of
federal income tax returns. See "Material Income Tax Consequences."
EVIDENCE AS TO COMPLIANCE
Each Sale and Servicing Agreement and Pooling and Servicing Agreement will
provide that a firm of independent public accountants will furnish to the
related Trust and Indenture Trustee or Trustee, as applicable, annually a
statement as to compliance in all material respects by the Servicer during the
preceding twelve months (or, in the case of the first statement, from the
applicable Closing Date, which may be longer than twelve months) with specified
standards relating to the servicing of the applicable Receivables.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement will
also provide for delivery to the related Trust and Indenture Trustee or Trustee,
as applicable, substantially simultaneously with the delivery of those
accountants' statement referred to above, of a certificate signed by an officer
of the Servicer stating that the Servicer has fulfilled its obligations under
the Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, throughout the preceding twelve months (or, in the case of the first
certificate, from the Closing Date) in all material respects or, if there has
been a default in the fulfillment of any obligation, describing each default.
The Servicer has agreed to give each Indenture Trustee and each Trustee notice
of specified Servicer Defaults under the related Sale and Servicing Agreement or
Pooling and Servicing Agreement, as applicable.
Copies of the statements and certificates may be obtained by Securityholders
by a request in writing addressed to the applicable Trustee.
MATERIAL MATTERS REGARDING THE SERVICER
Each Sale and Servicing Agreement and Pooling and Servicing Agreement will
provide that NMAC may not resign from its obligations and duties as Servicer
under that document, except upon NMAC's determination that its performance of
those duties is no longer permissible under applicable law. No resignation will
become effective until the related Indenture Trustee or Trustee, as applicable,
or a successor servicer has assumed NMAC's servicing obligations and duties
under the related Sale and Servicing Agreement or Pooling and Servicing
Agreement.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement will
further provide that neither the Servicer nor any of its directors, officers,
employees or agents will be under any liability to the related Trust or the
related Noteholders or Certificateholders for taking any action or for
refraining from taking any action pursuant to the related Sale and Servicing
Agreement or Pooling and Servicing Agreement or for errors in judgment; except
that neither the Servicer nor any person will be protected against any liability
that would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of the Servicer's duties under that document or by
reason of reckless disregard of its obligations and duties under that document.
In addition, each Sale and Servicing Agreement and Pooling and Servicing
Agreement will provide that the Servicer is not obligated to
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appear in, prosecute or defend any legal action that is not incidental to the
Servicer's servicing responsibilities under the related Sale and Servicing
Agreement or Pooling and Servicing 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
related Sale and Servicing Agreement or Pooling and Servicing Agreement, the
rights and duties of the parties thereto and the interests of the
Securityholders under the applicable agreement. In that event, the legal
expenses and costs of that 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.
Any entity into which the Servicer or the Seller 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 each Sale and Servicing Agreement and Pooling
and Servicing Agreement. For as long as NMAC is the Servicer, it may at any time
subcontract substantially all of its duties as servicer under any Sale and
Servicing Agreement or Pooling and Servicing 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 specific duties as servicer
through other subcontractors.
SERVICER DEFAULT
"Servicer Default" under each Sale and Servicing Agreement and Pooling and
Servicing Agreement will consist of the following:
1. any failure by the Servicer (or the Seller, so long as NMAC is the
Servicer) to deliver to the applicable Trustee or Indenture Trustee for
deposit in any related Account any required payment or to direct the
applicable Trustee or Indenture Trustee to make any required
distributions from that Account, and that failure continues unremedied
for three Business Days after (a) receipt by the Servicer (or the Seller,
so long as NMAC is the Servicer) of written notice of the failure given
by the applicable Trustee or Indenture Trustee, (b) receipt by the
Servicer (or the Seller, so long as NMAC is the Servicer) and the
applicable Trustee or Indenture Trustee of written notice of the failure
given by the holders of Notes or Certificates evidencing not less than
25% in principal amount of those outstanding Notes and the Certificates,
acting together as a single class; or (b) discovery of that failure by
any officer of the Servicer;
2. any failure by the Servicer (or the Seller, as long as NMAC is the
Servicer) to duly observe or perform in any material respect any other
covenants or agreements of the Servicer (or the Seller, as long as NMAC
is the Servicer) set forth in the related Sale and Servicing Agreement or
Pooling and Servicing Agreement, and that failure materially and
adversely affects the rights of the Noteholders or the Certificateholders
of the related series, and that failure continues unremedied for 90 days
after the giving of written notice of the failure to (a) the Servicer (or
the Seller, so long as NMAC is the Servicer) by the applicable Trustee or
Indenture Trustee, or (b) the Servicer (or the Seller, so long as NMAC is
the Servicer) and the applicable Trustee and Indenture Trustee by the
holders of Notes or Certificates of the related series evidencing not
less than 25% in principal amount of those outstanding Notes or
Certificates, acting together as a single class; and
3. the occurrence of 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 (any of these
events with respect to any person being an "Insolvency Event").
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RIGHTS UPON SERVICER DEFAULT
In the case of any Trust that has issued Notes, as long as a Servicer
Default under a Sale and Servicing Agreement remains unremedied, the related
Indenture Trustee or holders of Notes of the related series evidencing a
majority of the principal amount of those Notes then outstanding (or relevant
class or classes of Notes of such series), acting together as a single class,
may terminate all the rights and obligations of the Servicer under that Sale and
Servicing Agreement. When this happens, the Indenture Trustee or a successor
servicer appointed by that Indenture Trustee will succeed to all the
responsibilities, duties and liabilities of the Servicer under that Sale and
Servicing Agreement and will be entitled to similar compensation arrangements.
In the case of any Trust that has not issued Notes, as long as a Servicer
Default under the related Pooling and Servicing Agreement remains unremedied,
the related Trustee or holders of Certificates of the related series evidencing
a majority of the aggregate Certificate Balance of those Certificates then
outstanding (or relevant class or classes of Certificates, but excluding for
purposes of the calculation and action all Certificates held by the Seller, the
Servicer or any of their affiliates), acting together as a single class, may
terminate all the rights and obligations of the Servicer under the related
Pooling and Servicing Agreement. When this happens, the Trustee or a successor
servicer appointed by that Trustee will succeed to all the responsibilities,
duties and liabilities of the Servicer under the related Pooling and Servicing
Agreement and will be entitled to similar compensation arrangements.
However, if a bankruptcy trustee or similar official has been appointed for
the Servicer, and no Servicer Default other than the appointment of a bankruptcy
trustee or similar official has occurred, that bankruptcy trustee or official
may have the power to prevent that Indenture Trustee, those Noteholders, that
Trustee or those Certificateholders, as applicable, from effecting a transfer of
servicing as described above. If that Indenture Trustee or Trustee is unwilling
or unable to so act, it may appoint, or petition a court of competent
jurisdiction for the appointment of, a successor servicer with a net worth of at
least $100,000,000 and whose regular business includes the servicing of
automobile receivables. The related Indenture Trustee or the Trustee, or any
person appointed as successor servicer, will be the successor in all respects to
the predecessor Servicer under the related Sale and Servicing Agreement or
Pooling and Servicing Agreement and all references in the related Sale and
Servicing Agreement or Pooling and Servicing Agreement to the Servicer shall
apply to that successor servicer. The related Indenture Trustee or Trustee may
make arrangements for compensation to be paid, but the compensation for the
successor servicer may not be greater than the Base Servicing Fee under the
related Sale and Servicing Agreement or Pooling and Servicing Agreement.
Notwithstanding termination, the Servicer will be entitled to payment of
specified amounts payable to it prior to the termination for services it
rendered prior to the termination.
WAIVER OF PAST DEFAULTS
With respect to each Trust that has issued Notes, (1) the holders of Notes
of the related series evidencing a majority of the principal amount of the then
outstanding Notes of the related series (or relevant class or classes of Notes
of such series) or (2) in the case of any Servicer Default that does not
adversely affect the related Indenture Trustee or the related Noteholders, the
holders of Certificates of that series (or relevant class or classes of
Certificates of such series) evidencing a majority of the aggregate Certificate
Balance of those Certificates then outstanding (but excluding for purposes of
calculation and action all Certificates held by the Seller, the Servicer or any
of their affiliates), may, on behalf of all those Noteholders or
Certificateholders, waive any default by the Servicer in the performance of its
obligations under the related Sale and Servicing Agreement and its consequences,
except a Servicer Default in making any required deposits to the related
Collection Account in accordance with that Sale and Servicing Agreement. With
respect to each Trust that has not issued Notes, holders of Certificates of that
series evidencing a majority of the aggregate Certificate Balance of those
Certificates then outstanding (or relevant class or classes of Certificates but
excluding for purposes of calculation and action all Certificates held by the
Seller, the Servicer or any of their
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affiliates), may, on behalf of all those Certificateholders, waive any default
by the Servicer in the performance of its obligations under the related Pooling
and Servicing Agreement, except a Servicer Default in making any required
deposits to the related Collection Account in accordance with the related
Pooling and Servicing Agreement. No waiver will impair those Noteholders' or
Certificateholders' rights with respect to subsequent defaults.
AMENDMENT
A Transfer and Servicing Agreement may be amended by the parties thereto,
without the consent of the related Noteholders or Certificateholders:
1. to cure any ambiguity, correct or supplement any provision in the
related Transfer and Servicing Agreement that may be inconsistent with
any other provision in that agreement, or make any other provisions with
respect to matters or questions arising under that agreement that are not
inconsistent with the provisions of that agreement; provided that the
amendment will not materially and adversely affect the interest of any
Noteholder or Certificateholder; and
2. to change the formula for determining the required amount for the
related Reserve Account, if any, upon confirmation from the rating
agencies rating the Securities as described in the applicable Prospectus
Supplement.
An amendment will be deemed not to materially and adversely affect the
interests of any Noteholder or Certificateholder of any class if (a) the
amendment does not adversely affect the Trust's status as a grantor trust or a
partnership, as applicable, for federal income tax purposes, (b) each rating
agency then rating the related Certificates or Notes confirms that that
amendment will not result in a reduction or withdrawal of its rating on the
Certificates or Notes of that class, and (c) the Servicer shall have delivered
an officer's certificate stating that such amendment will not materially and
adversely affect the interest of any Noteholder or Certificateholder.
A Transfer and Servicing Agreement may also be amended by the parties
thereto with the consent of:
1. the holders of Notes evidencing a majority of the principal amount of
the then outstanding Notes, if any, of the related series (or relevant
class or classes of Notes of such series); or
2. in the case of any amendment that does not adversely affect the related
Indenture Trustee or the related Noteholders, the holders of the
Certificates of that series evidencing a majority of the outstanding
Certificate Balance (or relevant class or classes of Certificates of such
series, but excluding for purposes of calculation and action all
Certificates held by the Seller, the Servicer or any of their
affiliates), for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of the Transfer and
Servicing Agreement or of modifying in any manner the rights of those
Noteholders or Certificateholders.
No amendment, however, shall:
(x) increase or reduce in any manner the amount of, or accelerate or
delay the timing of, collections of payments on the related Receivables or
distributions that are required to be made for the benefit of those
Noteholders or Certificateholders or change the Interest Rate or the Pass
Through Rate or the required amount in the related Reserve Account (except
as described above under clause (2) of the immediately preceding sentence)
without the consent of each of the "adversely affected" Noteholder or
Certificateholder; or
(y) reduce the aforesaid percentage of the principal amount of the then
outstanding Notes or Certificates of that series which is required to
consent to any amendment, without the consent of the holders of all the then
outstanding Notes or Certificates of each affected class.
An amendment referred to in clause (x) above will be deemed not to
"adversely affect" a Certificateholder or Noteholder of any class only if each
rating agency then rating the related
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Certificates or Notes confirms that that amendment will not result in a
reduction or withdrawal of its rating on the Certificates or Notes of that
class. In connection with any amendment referred to in clause (x) above, the
Servicer shall deliver an officer's certificate to the Indenture Trustee and the
Trustee stating that the Noteholders and the Certificateholders whose consents
were not obtained were not adversely affected by the amendment.
LIST OF SECURITYHOLDERS
Three or more holders of the Notes of any class in a series or one or more
holders of those Notes of that class evidencing not less than 25% of the
aggregate principal amount of those Notes then outstanding may, by written
request to the related Indenture Trustee, obtain access to the list of all
Noteholders maintained by that Indenture Trustee for the purpose of
communicating with other Noteholders with respect to their rights under the
related Indenture or under those Notes. If stated in the applicable Prospectus
Supplement, an Indenture Trustee may elect not to afford the requesting
Noteholders access to the list of Noteholders if it agrees to mail the desired
communication or proxy, on behalf of and at the expense of the requesting
Noteholders, to all Noteholders of that series.
Three or more holders of the Certificates of any class in a series or one or
more holders of those Certificates of that class evidencing not less than 25% of
the Certificate Balance of those Certificates may, by written request to the
related Trustee, obtain access to the list of all Certificateholders maintained
by that Trustee for the purpose of communicating with other Certificateholders
with respect to their rights under the related Trust Agreement or Pooling and
Servicing Agreement or under those Certificates.
The Indenture Trustee or the Trustee, as the case may be, will provide to
the Servicer within 15 days after receipt of a written request from the
Servicer, a list of the names of all Noteholders or Certificateholders, as the
case may be, of record as of the most recent applicable record date.
No Transfer and Servicing Agreement will provide for the holding of annual
or other meetings of Securityholders.
INSOLVENCY EVENT
Each Trust Agreement will provide that the related Trustee does not have the
power to commence a voluntary proceeding in bankruptcy with respect to the
related Trust without the unanimous prior approval of all Certificateholders
(including the Seller) of that Trust and the delivery to that Trustee by each
Certificateholder (including the Seller) of a certificate certifying that that
Certificateholder reasonably believes that that Trust is insolvent.
PAYMENT OF NOTES
Upon the payment in full of all outstanding Notes of a given series and the
satisfaction and discharge of the related Indenture, the related Trustee will
succeed to all the rights of the Indenture Trustee, and the Certificateholders
of that series will succeed to all the rights of the Noteholders of that series,
under the related Sale and Servicing Agreement, except as otherwise provided in
the Sale and Servicing Agreement.
SELLER LIABILITY
Under each Trust Agreement, the Seller will agree to be liable directly to
an injured party for the entire amount of any losses, claims, damages or
liabilities (other than those incurred by a Noteholder or a Certificateholder in
the capacity of an investor with respect to that Trust) arising out of or based
on the arrangement created by that Trust Agreement as though that arrangement
created a partnership under the Delaware Revised Uniform Limited Partnership Act
in which the Seller was a general partner.
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TERMINATION
The respective obligations of the Seller, the Servicer, NMAC (so long as
NMAC has rights or obligations under the related Transfer and Servicing
Agreement), the related Trustee and the related Indenture Trustee, as the case
may be, pursuant to a Transfer and Servicing Agreement will terminate upon:
1. the maturity or other liquidation of the last Receivable and the
disposition of any amounts received upon liquidation of any remaining
Receivables;
2. the payment to Securityholders of all amounts required to be paid to
them pursuant to the related agreement; or
3. the election by the Servicer or the Seller to purchase the corpus of the
Trust as described below.
The Trustee will give written notice of termination to each Securityholder
of record. The final distribution to any Securityholder will be made only upon
surrender and cancellation of that holder's Security 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 measures to locate a Securityholder set forth
in the related Transfer and Servicing Agreement and those measures have failed,
will be distributed, subject to applicable law, to the Children's Hospital Los
Angeles.
In order to avoid excessive administrative expense, the Servicer will have
the option to purchase from each Trust, as of the end of any applicable
Collection Period, if the then outstanding Pool Balance with respect to the
Receivables held by that Trust is 10% or less of the Pool Balance as of the
related Cutoff Date, the corpus of the Trust at a price equal to the aggregate
Administrative Purchase Payments for the Receivables (including Receivables that
became Defaulted Receivables in the Collection Period preceding the Distribution
Date on which that purchase is effected) plus the appraised value of any other
property held as part of the Trust (less liquidation expenses). The related
Trustee and related Indenture Trustee, if any, will give written notice of
termination to each Securityholder.
Upon termination of any Trust, the assets of that Trust will be liquidated
and the proceeds therefrom (and amounts held in related Accounts) will be
applied to pay the Notes and the Certificates of the related series in full, to
the extent of amounts available.
As more fully described in the applicable Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with any
of the events specified above and the subsequent payment to the related
Certificateholders of all amounts required to be paid to them pursuant to the
applicable Trust Agreement or Pooling and Servicing Agreement will effect early
retirement of the Certificates of that series.
ADMINISTRATION AGREEMENT
NMAC, in its capacity as administrator (the "Administrator"), will enter
into an agreement (as amended and supplemented from time to time, an
"Administration Agreement") with each Trust that issues Notes and the related
Indenture Trustee pursuant to which the Administrator will agree, to the extent
provided in that Administration Agreement, to provide the notices and to perform
other administrative obligations required by the related Indenture. As
compensation for the performance of the Administrator's obligations under the
applicable Administration Agreement and as reimbursement for its expenses
related thereto, the Administrator will be entitled to a monthly administration
fee in an amount that may be set forth in the applicable Prospectus Supplement
(the "Administration Fee"), which fee will be paid by the Servicer.
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MATERIAL LEGAL ASPECTS OF THE RECEIVABLES
GENERAL
The transfer of the Receivables to the applicable Trustee, the perfection of
the security interests in the Receivables and the enforcement of rights to
realize on the Financed Vehicles as collateral for the Receivables are subject
to a number of federal and state laws, including the UCC as in effect in various
states. The Servicer and the Seller will take the action described below to
perfect the rights of the applicable Trustee in the Receivables. If another
party purchases (including the taking of a security interest in) the Receivables
for new value in the ordinary course of its business, without actual knowledge
of the Trust's interest, and takes possession of the Receivables, that purchaser
would acquire an interest in the Receivables superior to the interest of the
Trust.
SECURITY INTERESTS
GENERAL. In states in which retail installment sale contracts such as the
Receivables evidence the credit sale of automobiles or light-duty trucks by
dealers to obligors, the contracts also constitute personal property security
agreements and include grants of security interests in the vehicles under the
applicable UCC. Perfection of security interests in financed automobiles and/or
light-duty trucks is generally governed by the motor vehicle registration laws
of the state in which the vehicle is located. In most states, a security
interest in an automobile or light-duty truck is perfected by obtaining
possession of the certificate of title to the vehicle or notation of the secured
party's lien on the vehicle's certificate of title.
All retail installment sales contracts acquired by NMAC from Dealers name
NMAC as obligee or assignee and as the secured party. NMAC also takes all
actions necessary under the laws of the state in which the related Financed
Vehicle is located to perfect its security interest in that Financed Vehicle,
including, where applicable, having a notation of its lien recorded on the
related certificate of title and obtaining possession of that certificate of
title. Because NMAC continues to service the contracts as Servicer under the
Sale and Servicing Agreement or the Pooling and Servicing Agreement, as
applicable, the Obligors on the contracts will not be notified of the sale from
NMAC to the Seller or the sale from the Seller to the related Trust.
PERFECTION. Pursuant to the related Purchase Agreement, NMAC will sell and
assign its security interest in the Financed Vehicles to the Seller and, with
respect to each Trust, pursuant to the related Sale and Servicing Agreement or
Pooling and Servicing Agreement, as applicable, the Seller will assign its
security interest in the Financed Vehicles to that Trust. However, because of
the administrative burden and expense, none of NMAC, the Seller or the related
Trustee will amend any certificate of title to identify that Trust as the new
secured party on that certificate of title relating to a Financed Vehicle.
However, UCC financing statements with respect to the transfer to the Seller of
NMAC's security interest in the Financed Vehicles and the transfer to the
Trustee of the Seller's security interest in the Financed Vehicles will be
filed. In addition, the Servicer will continue to hold any certificates of title
relating to the Financed Vehicles in its possession as custodian for that Trust
pursuant to the related Sale and Servicing Agreement or Pooling and Servicing
Agreement. See "Description of the Transfer and Servicing Agreements--Sale and
Assignment of Receivables."
In most states, an assignment such as that under each Purchase Agreement or
each Sale and Servicing Agreement or Pooling and Servicing Agreement is an
effective conveyance of a security interest without amendment of any lien noted
on a vehicle's certificate of title, and the assignee succeeds to the assignor's
rights as secured party. Although re-registration of the vehicle is not
necessary to convey a perfected security interest in the Financed Vehicles to
the Trust, because the Trust will not be listed as lienholder on the
certificates of title, the security interest of that Trust in the vehicle could
be defeated through fraud or negligence. In those states, in the absence of
fraud or forgery by the vehicle owner or the Servicer or administrative error by
state or local agencies, the
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notation of NMAC's lien on the certificates of title will be sufficient to
protect that Trust against the rights of subsequent purchasers of a Financed
Vehicle or subsequent lenders who take a security interest in a Financed
Vehicle. In each Purchase Agreement, NMAC will represent and warrant, and in
each Sale and Servicing Agreement or Pooling and Servicing Agreement, the Seller
will represent and warrant, that it has taken all action necessary to obtain a
perfected security interest in each Financed Vehicle. If there are any Financed
Vehicles as to which NMAC failed to obtain and assign to the Seller a perfected
security interest, the security interest of the Seller would be subordinate to,
among others, subsequent purchasers of the Financed Vehicles and holders of
perfected security interests in the Financed Vehicles. To the extent that
failure has a material and adverse effect on the Trust's interest in the related
Receivables, however, it would constitute a breach of the warranties of NMAC
under the related Purchase Agreement or the Seller under the related Sale and
Servicing Agreement or Pooling and Servicing Agreement. Accordingly, pursuant to
the related Sale and Servicing Agreement or Pooling and Servicing Agreement, the
Seller would be required to repurchase the related Receivable from the Trust
and, pursuant to the related Purchase Agreement, NMAC would be required to
purchase that Receivable from the Seller, in each case unless the breach was
cured. Pursuant to each Sale and Servicing Agreement and Pooling and Servicing
Agreement, the Seller will assign to the related Trust its rights to cause NMAC
to purchase that Receivable under the related Purchase Agreement. See
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables" and "Risk Factors--Interests of other persons in the receivables
and financed vehicles could be superior to the trust's interest, which may
result in reduced payments on your securities."
CONTINUITY OF PERFECTION. Under the laws of most states, the perfected
security interest in a vehicle would continue for four months after the vehicle
is moved to a state that is different from the one in which it is initially
registered and thereafter until the owner thereof re-registers the vehicle in
the new state. A majority of states generally require surrender of a certificate
of title to re-register a vehicle. In those states (such as California) that
require a secured party to hold possession of the certificate of title to
maintain perfection of the security interest, the secured party would learn of
the re-registration through the request from the obligor under the related
installment sales contract to surrender possession of the certificate of title.
In the case of vehicles registered in states providing for the notation of a
lien on the certificate of title but not possession by the secured party (such
as Texas), the secured party would receive notice of surrender from the state of
re-registration 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. However, these procedural
safeguards will not protect the secured party if through fraud, forgery or
administrative error, the debtor somehow procures a new certificate of title
that does not list the secured party's lien. Additionally, 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 the
Receivables, NMAC will take 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 Financed Vehicle, NMAC must surrender possession of the
certificate of title or will receive notice as a result of its lien noted on the
certificate of title and accordingly will have an opportunity to require
satisfaction of the related Receivable before release of the lien. Under each
Sale and Servicing Agreement and Pooling and Servicing Agreement, the Servicer
will be obligated to take appropriate steps, at the Servicer's expense, to
maintain perfection of security interests in the Financed Vehicles and will be
obligated to purchase the related Receivable if it fails to do so and that
failure has a material and adverse effect on the Trust's interest in the
Receivable.
PRIORITY OF LIENS ARISING BY OPERATION OF LAW. Under the laws of most
states (including California), liens for repairs performed on a motor vehicle
and liens for unpaid taxes take priority over even a perfected security interest
in a financed vehicle. The Code also grants priority to specified federal tax
liens over the lien of a secured party. The laws of some states and federal law
permit the confiscation of vehicles by governmental authorities under some
circumstances if used in unlawful activities, which may result in the loss of a
secured party's perfected security interest in the confiscated vehicle. NMAC
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will represent and warrant to the Seller in each Purchase Agreement, and the
Seller will represent and warrant to the Trust in each Sale and Servicing
Agreement and Pooling and Servicing Agreement, that, as of the related Closing
Date, each security interest in a Financed Vehicle is prior to all other present
liens (other than tax liens and other liens that arise by operation of law) upon
and security interests in that Financed Vehicle. However, liens for repairs or
taxes could arise, or the confiscation of a Financed Vehicle could occur, at any
time during the term of a Receivable. No notice will be given to the Trustee,
any Indenture Trustee, any Noteholders or any Certificateholders in respect of a
given Trust if a lien arises or confiscation occurs that would not give rise to
the Seller's repurchase obligation under the related Sale and Servicing
Agreement or Pooling and Servicing Agreement or NMAC's repurchase obligation
under the related Purchase Agreement.
REPOSSESSION
In the event of default by an obligor, the holder of the related retail
installment sale contract has all the remedies of a secured party under the UCC,
except where specifically limited by other state laws. Among the UCC remedies,
the secured party has the right to perform repossession by self-help means,
unless it would constitute a breach of the peace or is otherwise limited by
applicable state law. Unless a vehicle financed by NMAC is voluntarily
surrendered, self-help repossession is the method employed by NMAC in most
states and is accomplished simply by retaking possession of the financed
vehicle. In cases where an 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 that vehicle must then be recovered in
accordance with that order. In some jurisdictions, the secured party is required
to notify that obligor of the default and the intent to repossess the collateral
and to give that obligor a time period within which to cure the default prior to
repossession. In some states, an obligor has the right to reinstate its contract
and recover the collateral by paying the delinquent installments and other
amounts due.
NOTICE OF SALE; REDEMPTION RIGHTS
In the event of default by an obligor under a retail installment sales
contract, some jurisdictions require that the obligor be notified of the default
and be given a time period within which to cure the default prior to
repossession. Generally, this right of cure may only be exercised on a limited
number of occasions during the term of the related contract.
The UCC and other state laws require the secured party to provide an 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. In most states,
an obligor has the right to redeem the collateral prior to actual sale by paying
the secured party the unpaid principal balance of the obligation, accrued
interest on the obligation plus reasonable expenses for repossessing, holding
and preparing the collateral for disposition and arranging for its sale, plus,
in some jurisdictions, reasonable attorneys' fees. In some states, an obligor
has the right to redeem the collateral prior to actual sale by payment of
delinquent installments or the unpaid balance.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the vehicles generally will be applied first to
the expenses of resale and repossession and then to the satisfaction of the
indebtedness. While some states impose prohibitions or limitations on deficiency
judgments if the net proceeds from resale do not cover the full amount of the
indebtedness, a deficiency judgment can be sought in those states that do not
prohibit or limit those judgments. In addition to the notice requirement
described above, the UCC requires that every aspect of the sale or other
disposition, including the method, manner, time, place and terms, be
"commercially reasonable." Generally, courts have held that when a sale is not
"commercially reasonable," the secured party loses its right to a deficiency
judgment. However, the deficiency judgment would be a
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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 or be uncollectible. In addition, the UCC permits the
obligor or other interested party to recover for any loss caused by
noncompliance with the provisions of the UCC. Also, prior to a sale, the UCC
permits the obligor or other interested person to prohibit the secured party
from disposing of the collateral if it is established that the secured party is
not proceeding in accordance with the "default" provisions under the UCC.
Occasionally, after resale of a repossessed vehicle and payment of all
expenses and indebtedness, there is a surplus of funds. In that case, the UCC
requires the creditor to remit the surplus to any holder of a subordinate lien
with respect to that vehicle or if no lienholder exists, the UCC requires the
creditor to remit the surplus to the obligor.
MATERIAL BANKRUPTCY CONSIDERATIONS
In structuring the transactions contemplated by this Prospectus, the Seller
has taken steps that are intended to make it unlikely that the voluntary or
involuntary application for relief by NMAC or its parent, NNA, under the United
States Bankruptcy Code or similar applicable state laws (collectively,
"Insolvency Laws") will result in consolidation of the assets and liabilities of
the Seller with those of NMAC or NNA. These steps include the creation of the
Seller as a wholly-owned, limited purpose subsidiary pursuant to articles of
incorporation and bylaws containing limitations (including restrictions on the
nature of the Seller's business and on its ability to commence a voluntary case
or proceeding under any Insolvency Law without the unanimous affirmative vote of
all of its directors).
However, delays in payments on the Securities and possible reductions in the
amount of those payments could occur if:
1. a court were to conclude that the assets and liabilities of the Seller
should be consolidated with those of NMAC or NNA in the event of the
application of applicable Insolvency Laws to NMAC or NNA, as the case may
be;
2. a filing were made under any Insolvency Law by or against the Seller; or
3. an attempt were to be made to litigate any of the foregoing issues.
On the Closing Date, O'Melveny & Myers LLP will give an opinion to the
effect that, based on a reasoned analysis of analogous case law (although there
is no precedent based on directly similar facts), and, subject to facts,
assumptions and qualifications specified in the opinion and applying the
principles set forth in the opinion, in the event of a voluntary or involuntary
bankruptcy case in respect of NMAC under Title 11 of the United States
Bankruptcy Code at a time when NMAC was insolvent, the property of the Seller
would not properly be substantively consolidated with the property of the estate
of NMAC. Among other things, that opinion will assume that each of the Seller
and NMAC will follow specified procedures in the conduct of its affairs,
including maintaining records and books of account separate from those of the
other, refraining from commingling its assets with those of the other, and
refraining from holding itself out as having agreed to pay, or being liable for,
the debts of the other. The Seller and NMAC intend to follow these and other
procedures related to maintaining their separate corporate identities. However,
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.
NMAC will warrant in each Purchase Agreement that the sale of the related
Receivables by it to the Seller is a valid sale. Notwithstanding the foregoing,
if NMAC were to become a debtor in a bankruptcy case, a court could take the
position that the sale of Receivables to the Seller should instead be treated as
a pledge of those Receivables to secure a borrowing of NMAC. In addition, if the
transfer of Receivables to the Seller is treated as a pledge instead of a sale,
a tax or government lien
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on the property of NMAC arising before the transfer of a Receivable to the
Seller may have priority over the Seller's interest in that Receivable. In
addition, while NMAC is the Servicer, cash collections on the Receivables may be
commingled with the funds of NMAC and, in the event of that bankruptcy of NMAC,
the Trust may not have a perfected interest in those collections.
NMAC and the Seller will treat the transactions described in this Prospectus
as a sale of the Receivables to the Seller, so that the automatic stay
provisions of the United States Bankruptcy Code should not apply to the
Receivables if NMAC were to become a debtor in a bankruptcy case.
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 Billing Act,
the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B and Z, the
Soldiers' and Sailors' Civil Relief Act of 1940, the Texas Consumer Credit Code,
state adoptions of the National Consumer Act and of the Uniform Consumer Credit
Code and state motor vehicle 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 affect an assignee's ability to enforce consumer
finance contracts such as the Receivables.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade Commission
(the "FTC Rule"), the provisions of which are generally duplicated by the
Uniform Consumer Credit Code, other statutes or the common law in some states,
has the effect of subjecting a seller (and specified creditors and their
assignees) in a consumer credit transaction to all claims and defenses that 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 under that contract from the obligor.
Most of the Receivables will be subject to the requirements of the FTC Rule.
Accordingly, each Trust, as holder of the related Receivables, will be subject
to any claims or defenses that the purchaser of the applicable Financed Vehicle
may assert against the seller of the related Financed Vehicle. As to each
Obligor, these claims are limited to a maximum liability equal to the amounts
paid by the Obligor on the related 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 and used vehicles furnish a written statement signed by
the seller certifying the accuracy of the odometer reading. If the seller is not
properly licensed or if a written odometer disclosure statement was not provided
to the purchaser of the related Financed Vehicle, an obligor may be able to
assert a defense against the seller of the vehicle. If an Obligor were
successful in asserting any of those claims or defenses, that claim or defense
would constitute a breach of the Seller's representations and warranties under
the related Sale and Servicing Agreement or Pooling and Servicing Agreement and
a breach of NMAC's warranties under the related Purchase Agreement and would, if
the breach materially and adversely affects the Receivable or the interests of
the Securityholders, create an obligation of the Seller and NMAC, respectively,
to repurchase the Receivable unless the breach is cured. See "Description of the
Transfer and Servicing Agreements--Sale and Assignment of Receivables."
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Courts have applied general equitable principles to secured parties pursuing
repossession and 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.
In several cases, consumers have asserted that the self-help remedies of
secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the United
States. Courts have generally upheld the notice provisions of the UCC and
related laws as reasonable or have found that the repossession and resale by the
creditor do not involve sufficient state action to afford constitutional
protection to borrowers.
NMAC and the Seller will represent and warrant under each Purchase Agreement
and each Sale and Servicing Agreement and Pooling and Servicing Agreement, as
applicable, that each Receivable complies with all requirements of law in all
material respects. Accordingly, if an Obligor has a claim against a Trust for
violation of any law and that claim materially and adversely affects that
Trust's interest in a Receivable, that violation would constitute a breach of
the representations and warranties of NMAC under the Purchase Agreement and the
Seller under the related Sale and Servicing Agreement or Pooling and Servicing
Agreement and would create an obligation of NMAC and the Seller to repurchase
the Receivable unless the breach is cured. See "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables."
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 secured party
to realize upon collateral or to enforce a deficiency judgment. For example, in
a Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
creditor from repossessing a vehicle and, as part of the rehabilitation plan,
reduce the amount of the secured indebtedness to the market value of the vehicle
at the time of bankruptcy (as determined by the court), leaving the creditor 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.
Under the terms of the Soldiers' and Sailors' Relief Act of 1940 (the
"Relief Act"), an Obligor who enters the military service after the origination
of that Obligor's Receivable (including an Obligor who is a member of the
National Guard or is in reserve status at the time of the origination of the
Obligor's Receivable and is later called to active duty) may not be charged
interest above an annual rate of 6% during the period of that Obligor's active
duty status, unless a court orders otherwise upon application of the lender. It
is possible that the foregoing could have an effect on the ability of the
Servicer to collect the full amount of interest owing on some of the
Receivables. In addition, the Relief Act imposes limitations that would impair
the ability of the Servicer to repossess the released Financed Vehicle during
the Obligor's period of active duty status. Thus, if that that Receivable goes
into default, there may be delays and losses occasioned by the inability to
exercise the Trust's rights with respect to the Receivable and the related
Financed Vehicle in a timely fashion.
Any shortfall pursuant to either of the two preceding paragraphs, to the
extent not covered by amounts payable to the Securityholders from amounts on
deposit in the related Reserve Account or from coverage provided under any other
credit enhancement mechanism, could result in losses to the Securityholders.
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MATERIAL INCOME TAX CONSEQUENCES
The following general discussion of the anticipated material federal income
and California income and franchise tax consequences of the purchase, ownership
and disposition of the Notes and the Certificates of any series, to the extent
it relates to matters of law or legal conclusions with respect thereto,
represents the opinion of tax counsel to each Trust with respect to the related
series on the material matters associated with those consequences, subject to
the qualifications set forth in this Prospectus. "Tax Counsel" with respect to
each Trust will be O'Melveny & Myers LLP. The summary does not purport to deal
with federal income tax consequences applicable to all categories of investors,
some of which may be subject to special rules. For example, it does not discuss
the tax treatment of Noteholders or Certificateholders that are insurance
companies, regulated investment companies or dealers in securities. Moreover,
there are no cases or Internal Revenue Service ("IRS") rulings on similar
transactions involving both debt and equity interests issued by a trust with
terms similar to those of the Notes and the Certificates. As a result, the IRS
may disagree with all or a part of the discussion below. It is suggested that
prospective investors consult their own tax advisors in determining the federal,
state, local, foreign and any other tax consequences to them of the purchase,
ownership and disposition of the Notes and the Certificates.
The following summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated under the Code and judicial or ruling authority, all of which are
subject to change, which change may be retroactive. Each Trust will be provided
with an opinion of Tax Counsel regarding the federal income tax matters
discussed below. An opinion of Tax Counsel, however, is not binding on the IRS
or the courts. No ruling on any of the issues discussed below will be sought
from the IRS. For purposes of the following summary, references to the Trust,
the Notes, the Certificates and related terms, parties and documents shall be
deemed to refer to each Trust and the Notes, Certificates and related terms,
parties and documents applicable to that Trust. The federal income tax
consequences to Certificateholders will vary depending on whether an election is
made to treat the Trust as a partnership under the Code or whether the Trust
will be treated as a grantor trust. The Prospectus Supplement for each Series of
Certificates will specify whether a partnership election will be made or the
Trust will be treated as a grantor trust.
TAX TREATMENT OF OWNER TRUSTS
TAX CHARACTERIZATION OF THE TRUST. The following general discussion of the
anticipated federal income tax consequences of the purchase, ownership and
disposition of the Notes and the Certificates of a Trust nominally referred to
as an "owner trust" in the applicable prospectus supplement (an "Owner Trust"),
to the extent it relates to matters of law or legal conclusions with respect
thereto, represents the opinion of Tax Counsel to each Owner Trust with respect
to the related series on the material matters associated with those
consequences, subject to the qualifications set forth in this Prospectus. In
addition, Tax Counsel has prepared or reviewed the statements in this Prospectus
under the heading "Material Income Tax Consequences - Tax Treatment of Owner
Trusts," and is of the opinion that those statements are correct in all material
respects. Those statements are intended as an explanatory discussion of the
related tax matters affecting investors generally, but do not purport to furnish
information in the level of detail or with the attention to an investor's
specific tax circumstances that would be provided by an investor's own tax
advisor. Accordingly, it is suggested that each investor consult its own tax
advisors with regard to the tax consequences to it of investing in Notes or
Certificates.
Tax Counsel will deliver its opinion that an Owner Trust for which no
election to be treated as a corporation is made will not be an association or
publicly traded partnership taxable as a corporation for federal income tax
purposes. This opinion will be based on the assumption that the terms of the
Related Documents will be complied with, and on Tax Counsel's conclusion that
the nature of the
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income of the Trust will exempt it from the rule that some publicly traded
partnerships are taxable as corporations.
If the Trust were taxable as a corporation for federal income tax purposes,
the Trust would be subject to corporate income tax on its taxable income. The
Trust's taxable income would include all its income on the Receivables, possibly
reduced by its interest expense on the Notes. Any corporate income tax could
materially reduce cash available to make payments on the Notes and the
Certificates, and Certificateholders could be liable for any tax of this type
that is not paid by the Trust.
TAX CONSEQUENCES TO OWNERS OF THE NOTES
TREATMENT OF THE NOTES AS INDEBTEDNESS. The Seller and any Noteholders will
agree, and the beneficial owners of the Notes (the "Note Owners") will agree by
their purchase of Notes, to treat the Notes as debt for federal income tax
purposes. Tax Counsel will advise the Trust that the Notes will be classified as
debt for federal income tax purposes to the extent set forth in the applicable
prospectus supplement. The discussion below assumes this characterization of the
Notes is correct.
OID, INDEXED SECURITIES, ETC. The discussion below assumes that all
payments on the Notes are denominated in U.S. dollars, and that the Notes are
not Indexed Securities or Strip Notes. Moreover, the discussion assumes that the
interest formula for the Notes meets the requirements for "qualified stated
interest" under Treasury regulations (the "OID regulations") relating to
original issue discount ("OID"), and that any OID on the Notes (i.e., any excess
of the principal amount of the Notes over their issue price) does not exceed a
de minimis amount (i.e., 1/4% of their principal amount multiplied by the number
of full years included in determining their weighted average maturity), all
within the meaning of the OID regulations. In determining whether any OID on the
Notes is de minimis, the Seller expects to use a reasonable assumption regarding
prepayments (a "Prepayment Assumption") to determine the weighted average
maturity of the Notes. If these conditions are not satisfied with respect to any
given series of Notes, additional tax considerations with respect to those Notes
will be disclosed in the applicable Prospectus Supplement.
INTEREST INCOME ON THE NOTES. Based on the above assumptions, except as
discussed in the following paragraph, the Notes will not be considered issued
with OID. The stated interest on the Notes will be taxable to a Note Owner as
ordinary interest income when received or accrued in accordance with that Note
Owner's method of tax accounting. Under the OID regulations, a holder of a Note
issued with a de minimis amount of OID must include that OID in income, on a pro
rata basis, as principal payments are made on the Note. A purchaser who buys a
Note for more or less than its principal amount will generally be subject,
respectively, to the premium amortization or market discount rules of the Code.
A holder of a Note that has a fixed maturity date of not more than one year
from the issue date of that Note (a "Short-Term Note") may be subject to special
rules. An accrual basis holder of a Short-Term Note (and some cash method
holders, including regulated investment companies, as set forth in Section 1281
of the Code) generally would be required to report interest income as interest
accrues on a straight-line basis or under a constant yield method over the term
of each interest period. Other cash basis holders of a Short-Term Note would, in
general, be required to report interest income as interest is paid (or, if
earlier, upon the taxable disposition of the Short-Term Note). However, a cash
basis holder of a Short-Term Note reporting interest income as it is paid may be
required to defer a portion of any interest expense otherwise deductible on
indebtedness incurred to purchase or carry the Short-Term Note until the taxable
disposition of the Short-Term Note. A cash basis taxpayer that is not required
to report interest income as it accrues under Section 1281 may elect to accrue
interest income on all nongovernment debt obligations with a term of one year or
less, in which case the taxpayer would not be subject to the interest expense
deferral rule referred to in the preceding sentence. Special rules apply if a
Short-Term Note is purchased for more or less than its principal amount.
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SALE OR OTHER DISPOSITION. If a Note Owner sells a Note, the Note Owner
will recognize gain or loss in an amount equal to the difference between the
amount realized on the sale and the holder's adjusted tax basis in the Note. The
adjusted tax basis of a Note to a particular Note Owner will equal the Note
Owner's cost for the Note, increased by any market discount, acquisition
discount, OID and gain previously included in income by that Note Owner with
respect to the Note and decreased by the amount of bond premium, if any,
previously amortized and by the amount of payments of principal and OID
previously received by that Note Owner with respect to that Note. Any gain or
loss, and any gain or loss recognized on a prepayment of the Notes, will be
capital gain or loss if the Note was held as a capital asset, except for gain
representing accrued interest and accrued market discount not previously
included in income. Capital losses generally may be used only to offset capital
gains.
FOREIGN OWNERS. Interest paid (or accrued) to a Note Owner who is not a
U.S. Person (a "Foreign Owner") generally will be considered "portfolio
interest," and generally will not be subject to United States federal income tax
and withholding tax if the interest is not effectively connected with the
conduct of a trade or business within the United States by the Foreign Owner and
1. the Foreign Owner is not actually or constructively a "10 percent
shareholder" of the Trust or the Seller (including a holder of 10% of the
outstanding Certificates) or a "controlled foreign corporation" with
respect to which the Trust or the Seller is a "related person" within the
meaning of the Code;
2. the Foreign Owner is not a bank receiving interest described in Section
881(c)(3)(A) of the Code;
3. the interest is not contingent interest described in Section 871(h)(4)
of the Code; and
4. the Foreign Owner does not bear specified relationships to any
Certificateholder.
To qualify for the exemption from taxation, the Foreign Owner must provide
the applicable Trustee or other person who is otherwise required to withhold
U.S. tax with respect to the Notes with an appropriate statement (on Form W-8 or
a similar form), signed under penalties of perjury, certifying that the Note
Owner is a Foreign Owner and providing the Foreign Owner's name and address. If
a Note is held through a securities clearing organization or other financial
institution, the organization or institution may provide the relevant signed
statement to the withholding agent; in that case, however, the signed statement
must be accompanied by a Form W-8 or substitute form provided by the Foreign
Owner and the Foreign Owner must notify the financial institution acting on its
behalf of any changes to the information on the Form W-8 (or substitute form)
within 30 days of any that change. If interest paid to a Foreign Owner is not
considered portfolio interest, then it will be subject to United States federal
income and withholding tax at a rate of 30 percent, unless reduced or eliminated
pursuant to an applicable tax treaty. In order to claim the benefit of any
applicable tax treaty, the Foreign Owner must provide the applicable Trustee or
other person who is required to withhold U.S. tax with respect to the Notes with
an appropriate statement (on Form 1001 or a similar form), signed under
penalties of perjury, certifying that the Foreign Owner is entitled to benefits
under the treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a Foreign Owner will be exempt from United
States federal income and withholding tax, provided that (1) that gain is not
effectively connected with the conduct of a trade or business in the United
States by the Foreign Owner and (2) in the case of an individual Foreign Owner,
the Foreign Owner is not present in the United States for 183 days or more
during the taxable year of disposition.
As used in this Prospectus, a "U.S. Person" means:
1. a citizen or resident of the United States;
2. a corporation or a partnership organized in or under the laws of the
United States or any political subdivision thereof;
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3. an estate, the income of which from sources outside the United States is
includible in gross income for federal income tax purposes regardless of
its connection with the conduct of a trade or business within the United
States; or
4. a trust if (a) a court within the U.S. is able to exercise primary
supervision over the administration of the trust and one or more United
States fiduciaries have authority to control all substantial decisions of
the trust or (b) such trust has elected to be treated as a domestic trust
pursuant to the Code.
BACKUP WITHHOLDING. Each Note Owner (other than an exempt Note Owner such
as a corporation, tax-exempt organization, qualified pension and profit- sharing
trust, individual retirement account or nonresident alien who provides
certification as to status as a nonresident) will be required to provide, under
penalties of perjury, a certificate (on Form W-9) providing the Note Owner's
name, address, correct federal taxpayer identification number and a statement
that the Note Owner is not subject to backup withholding. Should a nonexempt
Note Owner fail to provide the required certification, the Trust will be
required to withhold 31 percent of the amount otherwise payable to the Note
Owner, and remit the withheld amount to the IRS as a credit against the Note
Owner's federal income tax liability.
NEW WITHHOLDING REGULATIONS. Recently, the Treasury Department issued new
regulations (the "New Regulations") which make certain modifications to the
withholding, backup withholding and information reporting rules described above.
The New Regulations attempt to unify certification requirements and modify
reliance standards. The New Regulations will generally be effective for payments
made after December 31, 2000, subject to certain transition rules. It is
suggested that prospective investors consult their own tax advisors regarding
the New Regulations.
POSSIBLE ALTERNATIVE TREATMENTS OF THE NOTES. If, contrary to the opinion
of Tax Counsel, the IRS successfully asserted that one or more of the Notes did
not represent debt for federal income tax purposes, the Notes might be treated
as equity interests in the Trust. If so treated, the Trust might be taxable as a
corporation with the adverse consequences described above (and the taxable
corporation would not be able to reduce its taxable income by deductions for
interest expense on Notes recharacterized as equity). Alternatively, and most
likely in the view of Tax Counsel, the Trust might be treated as a publicly
traded partnership that would not be taxable as a corporation because it would
meet specified qualifying income tests. Nonetheless, treatment of the Notes as
equity interests in a publicly traded partnership could have adverse tax
consequences to some holders. For example, income to some tax-exempt entities
(including pension funds) may be "unrelated business taxable income," income to
Foreign Owners may be subject to U.S. tax and U.S. tax return filing and
withholding requirements, and individual Note Owners might be subject to some
limitations on their ability to deduct their share of trust expenses.
TAX CONSEQUENCES TO OWNERS OF THE CERTIFICATES
TREATMENT OF THE TRUST AS A PARTNERSHIP. The Seller, the Servicer will
agree, and the owners of the Certificates (the "Certificate Owners") will agree
by their purchase of Certificates, to treat the Trust as a partnership for
purposes of federal and state income tax, franchise tax and any other tax
measured in whole or in part by income, with the assets of the partnership being
the assets held by the Trust, the partners of the partnership being the
Certificate Owners (including the Seller in its capacity as recipient of
payments from the Reserve Account), and the Notes being debt of the partnership.
However, the proper characterization of the arrangement involving the Trust, the
Certificates, the Notes, the Seller and the Servicer is not clear because there
is no authority on transactions closely comparable to that contemplated in this
Prospectus.
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A variety of alternative characterizations are possible. For example,
because the Certificates have features characteristic of debt, the Certificates
might be considered debt of the Seller or the Trust. Any characterization of
this type generally would not result in materially adverse tax consequences to
Certificate Owners as compared to the consequences from treatment of the
Certificates as equity in a partnership, described below. The following
discussion assumes that the Certificates represent equity interests in a
partnership.
INDEXED SECURITIES, ETC. The following discussion assumes that all payments
on the Certificates are denominated in U.S. dollars, none of the Certificates
are Indexed Securities or Strip Certificates, and that a series of Securities
includes a single class of Certificates. If these conditions are not satisfied
with respect to any given series of Certificates, additional tax considerations
with respect to those Certificates will be disclosed in the applicable
Prospectus Supplement.
PARTNERSHIP TAXATION. As a partnership, the Trust will not be subject to
federal income tax. Rather, each Certificate Owner will be required to
separately take into account that holder's allocated share of income, gains,
losses, deductions and credits of the Trust. The Trust's income will consist
primarily of interest and finance charges earned on the Receivables (including
appropriate adjustments for market discount, OID and bond premium) and any gain
upon collection or disposition of Receivables. The Trust's deductions will
consist primarily of interest accruing with respect to the Notes, servicing and
other fees, and losses or deductions upon collection or disposition of
Receivables.
The tax items of a partnership are allocable to the partners in accordance
with the Code, Treasury regulations and the partnership agreement (here, the
Trust Agreement and related documents). In the Trust Agreement, the Certificate
Owners will agree that the yield on a Certificate is intended to qualify as a
"guaranteed payment" and not as a distributive share of partnership income. A
guaranteed payment would be treated by a Certificate Owner as ordinary income,
but may well not be treated as interest income. The Trust Agreement will provide
that, to the extent that the treatment of the yield on a Certificate as a
guaranteed payment is not respected, the Certificate Owners of each class of
Certificates will be allocated taxable income of the Trust for each month equal
to the sum of:
1. the interest that accrues on the Certificates in accordance with their
terms for that month, including interest accruing at the Pass Through
Rate for that month and interest on amounts previously due on the
Certificates but not yet paid;
2. any Trust income attributable to discount on the Receivables that
corresponds to any excess of the principal amount of the Certificates
over their initial issue price;
3. prepayment premium payable to the Certificate Owners for that month; and
4. any other amounts of income payable to the Certificate Owners for that
month.
That allocation will be reduced by any amortization by the Trust of premium
on Receivables that corresponds to any excess of the issue price of Certificates
over their principal amount. All remaining taxable income of the Trust will be
allocated to the Seller. Except as provided below, losses and deductions
generally will be allocated to the Certificate Owners only to the extent the
Certificate Owners are reasonably expected to bear the economic burden of those
losses or deductions. Any losses allocated to Certificate Owners could be
characterized as capital losses, and the Certificate Owners generally would only
be able to deduct those losses against capital gain income, and deductions would
be subject to the limitations set forth below. Accordingly, a Certificate
Owner's taxable income from the Trust could exceed the cash it is entitled to
receive from the Trust.
Based on the economic arrangement of the parties, this approach for
allocating Trust income and loss should be permissible under applicable Treasury
regulations, although no assurance can be given that the IRS would not require a
greater amount of income to be allocated to Certificate Owners. Moreover, even
under the foregoing method of allocation, Certificate Owners may be allocated
income
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equal to the entire Pass Through Rate plus the other items described above even
though the Trust might not have sufficient cash to make current cash payments of
that amount. Thus, cash basis Certificate Owners will in effect be required to
report income from the Certificates on the accrual basis and Certificate Owners
may become liable for taxes on Trust income even if they have not received cash
from the Trust to pay those taxes. In addition, because tax allocations and tax
reporting will be done on a uniform basis for all Certificate Owners but
Certificate Owners may be purchasing Certificates at different times and at
different prices, Certificate Owners may be required to report on their tax
returns taxable income that is greater or less than the amount reported to them
by the Trust.
For each taxable year of the Certificate Owner, the Certificate Owner will
be required to report items of income, loss and deduction allocated to them by
the Trust for the Trust's taxable year that ends on or before the last day of
that taxable year of the Certificate Owner. The Code prescribes rules for
determining the taxable year of the Trust. It is likely that, under these rules,
the taxable year of the Trust will be the calendar year. However, in the event
that all of the Certificate Owners possessing a 5 percent or greater interest in
the equity or profits of the Trust share a taxable year that is other than the
calendar year, the Trust could be required to use that year as its taxable year.
A significant portion of the taxable income allocated to a Certificate Owner
that is a pension, profit sharing or employee benefit plan or other tax-exempt
entity (including an individual retirement account) generally will constitute
"unrelated business taxable income" taxable to that Certificate Owner under the
Code.
An individual taxpayer's share of expenses of the Trust (including fees to
the Servicer but not interest expense) would be miscellaneous itemized
deductions. Those deductions might be disallowed to the individual in whole or
in part and might result in that Certificate Owner being taxed on an amount of
income that exceeds the amount of cash actually paid to that Certificate Owner
over the life of the Trust.
The Trust intends to make all tax calculations relating to income and
allocations to Certificate Owners on an aggregate basis. If the IRS were to
require that those calculations be made separately for each Receivable, the
Trust might be required to incur additional expense but it is believed that
there would not be a material adverse effect on Certificate Owners.
DISCOUNT AND PREMIUM. It is believed that the Receivables were not issued
with OID, and, therefore, the Trust should not have OID income. However, the
purchase price paid by the Trust for the Receivables may be greater or less than
the remaining principal balance of the Receivables at the time of purchase. If
so, the Receivables will have been acquired at a premium or discount, as the
case may be. (As indicated above, the Trust will make this calculation on an
aggregate basis, but might be required to recompute it on a
Receivable-by-Receivable basis.)
If the Trust acquires the Receivables at a market discount or premium, the
Trust will elect to include that discount in income currently as it accrues over
the life of the Receivables or to offset any that premium against interest
income on the Receivables. As indicated above, a portion of the market discount
income or premium deduction may be allocated to Certificate Owners.
SECTION 708 TERMINATION. Under Section 708 of the Code, the Trust will be
deemed to terminate for federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a
12-month period. If that termination occurs, the Trust will be considered to
transfer all of it assets and liabilities to a new partnership in exchange for
an interest in the new partnership, after which the Trust would be deemed to
distribute interests in the new partnership to Certificate Owners (including the
purchasing partner who caused the termination) in liquidation of the terminated
partnership. The Trust will not comply with technical requirements that might
apply when a constructive termination occurs. As a result, the Trust may be
subject to tax penalties and may incur
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additional expenses if it is required to comply with those requirements.
Furthermore, the Trust might not be able to comply due to lack of data.
DISPOSITION OF CERTIFICATES. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates sold.
A Certificate Owner's tax basis in a Certificate will generally equal the
Certificate Owner's cost increased by the Certificate Owner's share of Trust
income (includible in income) and decreased by any payments received with
respect to that Certificate. In addition, both the tax basis in the Certificates
and the amount realized on a sale of a Certificate would include the Certificate
Owner's share of the Notes and other liabilities of the Trust. A Certificate
Owner acquiring Certificates at different prices may be required to maintain a
single aggregate adjusted tax basis in those Certificates, and, upon sale or
other disposition of some of the Certificates, allocate a portion of that
aggregate tax basis to the Certificates sold (rather than maintaining a separate
tax basis in each Certificate for purposes of computing gain or loss on a sale
of that Certificate).
Any gain on the sale of a Certificate attributable to the holder's share of
unrecognized accrued market discount on the Receivables would generally be
treated as ordinary income to the holder and would give rise to special tax
reporting requirements. The Trust does not expect to have any other assets that
would give rise to those special reporting requirements. Thus, to avoid those
special reporting requirements, the Trust will elect to include market discount
in income as it accrues.
If a Certificate Owner is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash payments with respect thereto, the excess will generally give rise to a
capital loss upon the retirement of the Certificates.
ALLOCATIONS BETWEEN TRANSFERORS AND TRANSFEREES. In general, the Trust's
taxable income and losses will be determined monthly and the tax items for a
particular calendar month will be apportioned among the Certificate Owners in
proportion to the principal amount of Certificates owned by them as of the close
of the last day of that month. As a result, a Certificate Owner purchasing
Certificates may be allocated tax items (which will affect its tax liability and
tax basis) attributable to periods before the Certificate Owner actually owned
the Certificates.
The use of a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or losses
of the Trust might be reallocated among the Certificate Owners. The Seller is
authorized to revise the Trust's method of allocation between transferors and
transferees to conform to a method permitted by future regulations.
SECTION 754 ELECTION. In the event that a Certificate Owner sells its
Certificates at a profit (loss), the purchasing Certificate Owner will have a
higher (or lower) basis in the Certificates than the selling Certificate Owner
had. The tax basis of the Trust's assets will not be adjusted to reflect that
higher (or lower) basis unless the Trust were to file an election under Section
754 of the Code. In order to avoid the administrative complexities that would be
involved in keeping accurate accounting records, as well as potentially onerous
information reporting requirements, the Trust will not make that election. As a
result, Certificate Owners might be allocated a greater or lesser amount of
Trust income than would be appropriate based on their own purchase price for
Certificates.
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ADMINISTRATIVE MATTERS. The Trustee is required to keep or have kept
complete and accurate books of the Trust. These books will be maintained for
financial reporting and tax purposes on an accrual basis and the fiscal year of
the Trust will be set forth in the applicable Prospectus Supplement. The Trustee
will file a partnership information return (IRS Form 1065) with the IRS for each
taxable year of the Trust and will report each Certificate Owner's allocable
share of items of Trust income and expense to holders and the IRS on Schedule
K-1. The Trust will provide the Schedule K-1 information to nominees that fail
to provide the Trust with the information statement described below and those
nominees will be required to forward that information to the beneficial owners
of the Certificates. Generally, Certificate Owners must file tax returns that
are consistent with the information return filed by the Trust or be subject to
penalties unless the holder notifies the IRS of all those inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as a
nominee at any time during a calendar year is required to furnish the Trust with
a statement containing specified information on the nominee, the Certificate
Owners and the Certificates so held. The information includes (1) the name,
address and taxpayer identification number of the nominee and (2) as to each
Certificate Owner (x) the name, address and identification number of that
person, (y) whether that person is a United States person, a tax-exempt entity
or a foreign government, an international organization, or any wholly-owned
agency or instrumentality of either of the foregoing, and (z) specified
information on Certificates that were held, bought or sold on behalf of that
person throughout the year. In addition, brokers and financial institutions that
hold Certificates through a nominee are required to furnish directly to the
Trust information as to themselves and their ownership of Certificates. A
clearing agency registered under Section 17A of the Exchange Act is not required
to furnish any information statement of this type to the Trust. The information
referred to above for any calendar year must be furnished to the Trust on or
before the following January 31. Nominees, brokers and financial institutions
that fail to provide the Trust with the information described above may be
subject to penalties.
The Seller will be designated as the tax matters partner in the related
Trust Agreement, and as such is designated to receive notice on behalf of, and
to provide notice to those Certificate Owners not receiving notice from, the
IRS, and to represent the Certificate Owners in any dispute with the IRS. The
Code provides for administrative examination of a partnership as if the
partnership were a separate and distinct taxpayer. Generally, the statute of
limitations for partnership items does not expire before three years after the
date on which the partnership information return is filed. Any adverse
determination following an audit of the return of the Trust by the appropriate
taxing authorities could result in an adjustment of the returns of the
Certificate Owners, and, under some circumstances, a Certificate Owner may be
precluded from separately litigating a proposed adjustment to the items of the
Trust. As the tax matters partner, the Seller may enter into a binding
settlement on behalf of all Certificate Owners with a less than 1 percent
interest in the Trust (except for any group of those Certificate Owners with an
aggregate interest of 5 percent or more in Trust profits that elects to form a
notice group or Certificate Owners who otherwise notify the IRS that the Seller
is not authorized to settle on their behalf). In the absence of a proceeding at
the Trust level, a Certificate Owner under some circumstances may pursue a claim
for credit or refund on his own behalf by filing a request for administrative
adjustment of a Trust item. It is suggested that each Certificate Owner consult
its own tax advisor with respect to the impact of these procedures on its
particular case. An adjustment could also result in an audit of a Certificate
Owner's returns and adjustments of items not related to the income and losses of
the Trust.
TAX CONSEQUENCES TO FOREIGN CERTIFICATE OWNERS. It is not clear whether the
Trust would be considered to be engaged in a trade or business in the United
States for purposes of federal withholding taxes with respect to a Certificate
Owner who is not a U.S. Person (a "Foreign Certificate Owner") because there is
no clear authority dealing with that issue under facts substantially similar to
those described in this Prospectus. Although it is not expected that the Trust
would be engaged in a
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trade or business in the United States for those purposes, the Trust will
withhold as if it were so engaged in order to protect the Trust from possible
adverse consequences of a failure to withhold. The Trust expects to withhold on
the portion of its taxable income that is allocable to Foreign Certificate
Owners pursuant to Section 1446 of the Code, as if that income were effectively
connected to a U.S. trade or business, at a rate of 35% for Foreign Certificate
Owners that are taxable as corporations and 39.6% for all other Foreign
Certificate Owners. Subsequent adoption of Treasury regulations or the issuance
of other administrative pronouncements may require the Trust to change its
withholding procedures. In determining a holder's withholding status, the Trust
may rely on IRS Form W-8, IRS Form W-9 or the holder's certification of
nonforeign status signed under penalties of perjury.
Each Foreign Certificate Owner might be required to file a U.S. individual
or corporate income tax return (including, in the case of a corporation, the
branch profits tax) on its share of the Trust's income. Each Foreign Certificate
Owner must obtain a taxpayer identification number from the IRS
and submit that number to the Trust on Form W-8 in order to assure appropriate
crediting of the taxes withheld. A Foreign Certificate Owner generally would be
entitled to file with the IRS a claim for refund with respect to taxes withheld
by the Trust, taking the position that no taxes were due because the Trust was
not engaged in a U.S. trade or business. However, interest payments made (or
accrued) to a Foreign Certificate Owner generally will be considered guaranteed
payments to the extent those payments are determined without regard to the
income of the Trust. If these interest payments are properly characterized as
guaranteed payments, then the interest will not be considered "portfolio
interest," in which case Certificate Owners would be subject to United States
federal income tax and withholding tax at a rate of 30 percent, unless reduced
or eliminated pursuant to an applicable treaty. In that case, a Foreign
Certificate Owner would only be entitled to claim a refund for that portion of
the taxes in excess of the taxes that should be withheld with respect to the
guaranteed payments.
BACKUP WITHHOLDING. Payments made on the Certificates and proceeds from the
sale of the Certificates will be subject to a "backup" withholding tax of 31%
if, in general, the Certificate Owner fails to comply with specified
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code. See "--Tax Consequences to Owners of the
Notes--Backup Withholding."
TAX TREATMENT OF GRANTOR TRUSTS
TAX CHARACTERIZATION OF THE TRUST AS A GRANTOR TRUST. The following general
discussion of the anticipated federal income tax consequences of the purchase,
ownership and disposition of the Certificates of a Trust nominally referred to
as a "grantor trust" in the applicable prospectus supplement (a "Grantor
Trust"), to the extent it relates to matters of law or legal conclusions with
respect thereto, represents the opinion of Tax Counsel to each Grantor Trust
with respect to the related series on the material matters associated with those
consequences, subject to the qualifications set forth in this Prospectus. In
addition, Tax Counsel has prepared or reviewed the statements in this Prospectus
under the heading "Material Income Tax Consequences--Tax Treatment of Grantor
Trusts," and is of the opinion that those statements are correct in all material
respects. Those statements are intended as an explanatory discussion of the
possible effects of the classification of any Trust as a grantor trust for
federal income tax purposes on investors generally and of related tax matters
affecting investors generally, but do not purport to furnish information in the
level of detail or with the attention to an investor's specific tax
circumstances that would be provided by an investor's own tax advisor.
Accordingly, it is suggested that each investor consult its own tax advisors
with regard to the tax consequences to it of investing in Certificates.
If a partnership election is not made, Tax Counsel will deliver its opinion
that the Trust will not be classified as an association taxable as a corporation
and that that Trust will be classified as a grantor trust under subpart E, Part
I of subchapter J of Chapter 1 of Subtitle A of the Code and the applicable
provisions of the California Revenue and Taxation Code. In this case, owners of
Certificates (referred
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to as "Grantor Trust Certificateholders") could be considered to own either (1)
an undivided interest in a single debt obligation held by the Trust and having a
principal amount equal to the total stated principal amount of the Receivables
and an interest rate equal to the relevant Pass Through Rate or (2) an interest
in each of the Receivables and any other Trust property. The Certificates issued
by a Trust that is treated as a grantor trust are referred to as "Grantor Trust
Certificates."
The determination of whether the economic substance of a property transfer
is a sale or a loan secured by the transferred property has been made by the IRS
and the courts on the basis of numerous factors designed to determine whether
the transferor has relinquished (and the transferee has obtained) substantial
incidents of ownership in the property. Among those factors, the primary factors
examined are whether the transferee has the opportunity to gain if the property
increases in value, and has the risk of loss if the property decreases in value.
The relevant pooling and servicing agreement will express the intent of the
Seller to sell, and the Grantor Trust Certificateholders to purchase, the
Receivables, and the Seller and each Grantor Trust Certificateholder, by
accepting a beneficial interest in a Certificate, will agree to treat the
Certificates as ownership interests in the Receivables and any other Trust
property.
TREATMENT AS DEBT OBLIGATION. If a Grantor Trust Certificateholder was
considered to own an undivided interest in a single debt obligation, the
principles described under "--Tax Treatment of Owner Trusts--Tax Consequences to
Owners of the Notes" would apply. Each Grantor Trust Certificateholder, rather
than reporting its share of the interest accrued on each Receivable, would, in
general, be required to include in income interest accrued or received on the
principal amount of the Certificates at the relevant Pass Through Rate in
accordance with its usual method of accounting.
The Certificates would be subject to the original issue discount ("OID")
rules, described below under "--Stripped Bonds and Stripped Coupons" and "--
Original Issue Discount." In determining whether any OID on the Certificates is
de minimis, the Seller expects to use a reasonable Prepayment Assumption to
determine the weighted average life of the Certificates. OID includible in
income for any accrual period (generally, the period between payment dates)
would generally be calculated using a Prepayment Assumption and an anticipated
yield established as of the date of initial sale of the Certificates, and would
increase or decrease to reflect prepayments at a faster or slower rate than
anticipated. The Certificates would also be subject to the market discount
provisions of the Code to the extent that a Grantor Trust Certificateholder
purchased those Certificates at a discount from the initial issue price (as
adjusted to reflect prior accruals of OID).
The remainder of the discussion in this Prospectus assumes that a Grantor
Trust Certificateholder will be treated as owning an interest in each Receivable
(and the proceeds therefrom), any right to receive Yield Supplement Deposits and
any other Trust property, although for administrative convenience, the Servicer
will report information on an aggregate basis (as though all of the Receivables
and the Yield Supplement Agreement were a simple obligation). The amount and, in
some instances, character, of the income reported to a Grantor Trust
Certificateholder may differ under this method for a particular period from that
which would be reported if income were reported on a precise asset-by-asset
basis.
CHARACTERIZATION. Each Grantor Trust Certificateholder will be treated as
the owner of a pro rata undivided interest in the interest and principal
portions of the Trust represented by the Grantor Trust Certificates and will be
considered the equitable owner of a pro rata undivided interest in each of the
Receivables in the Trust, any right to receive Yield Supplement Deposits, and
any other Trust property. Any amounts received by a Grantor Trust
Certificateholder in lieu of amounts due with respect to any Receivable because
of a default or delinquency in payment will be treated for federal income tax
purposes as having the same character as the payments they replace.
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For federal income tax purposes, the Seller will be treated as having
retained a fixed portion of the interest due on each Receivable having an annual
percentage rate in excess of the sum of the applicable Pass Through Rate and the
Servicing Rate (each, a "High Yield Receivable") equal to the difference between
(1) the annual percentage rate of the Receivable and (2) the sum of the
applicable Pass Through Rate and the Servicing Rate (the "Retained Yield"). The
Retained Yield will be treated as "stripped coupons" within the meaning of
Section 1286 of the Code, and the Stripped Receivables will be treated as
"stripped bonds." See "--Stripped Bonds and Stripped Coupons." Accordingly, each
Grantor Trust Certificateholder will be treated as owning its pro rata
percentage interest in (1) payments received under any Yield Supplement
Agreement, and (2) the principal of, and interest payable on, each Receivable
(minus the Retained Yield on the High Yield Receivables).
Those Receivables that bear interest at a rate which is less than or equal
to the sum of the applicable Pass Through Rate and the Servicing Rate (the "Low
Yield Receivables") will not be treated as stripped bonds. Instead, Yield
Supplement Deposits will be payable to eliminate the difference between the
actual yield on each Low Yield Receivable and the yield such Receivable would
have had if its interest rate had equaled the sum of the applicable Pass Through
Rate and the Servicing Rate. See "--Yield Supplement Deposits."
Each Grantor Trust Certificateholder will be required to report on its
federal income tax return in accordance with that Grantor Trust
Certificateholder's method of accounting its pro rata share of the entire income
from the Receivables in the Trust represented by Grantor Trust Certificates,
including interest, OID, if any, prepayment fees, assumption fees, any gain
recognized upon an assumption, late payment charges received by the Servicer and
any gain reorganized upon collection or disposition of the Receivables (but not
including any portion of the Retained Yield). A Grantor Trust Certificateholder
will also be required to report under its usual method of accounting any
payments received under any Yield Supplement Agreement to the extent that these
payments are treated as income. Under Sections 162 or 212, each Grantor Trust
Certificateholder will be entitled to deduct its pro rata share of Base
Servicing Fees, prepayment fees, assumption fees, any loss recognized upon an
assumption and late payment charges retained by the Servicer, provided that
those amounts are reasonable compensation for services rendered to the Trust.
Grantor Trust Certificateholders that are individuals, estates or trusts will be
entitled to deduct their share of expenses only to the extent those expenses
plus all other Section 212 expenses exceed two percent of its adjusted gross
income. In addition, Grantor Trust Certificateholders who are individuals may be
subject to additional deduction limitations based on adjusted gross income.
A Grantor Trust Certificateholder using the cash method of accounting must
take into account its pro rata share of income and deductions as and when
collected by or paid to the Servicer. A Grantor Trust Certificateholder using an
accrual method of accounting must take into account its pro rata share of income
and deductions as they become due or are paid to the Servicer, whichever is
earlier. Because (1) interest accrues on the Receivables over differing monthly
periods and is paid in arrears and (2) interest collected on a Receivable
generally is paid to Certificateholders in the following month, the amount of
interest accruing to a Grantor Trust Certificateholder during any calendar month
will not equal the interest distributed in that month. The actual amount of
discount on a Receivable will be includible in income as principal payments are
received on the Receivables. If the Base Servicing Fees paid to the Servicer are
deemed to exceed reasonable servicing compensation, the amount of that excess
could be considered as an ownership interest retained by the Servicer (or any
person to whom the Servicer assigned for value all or a portion of the Base
Servicing Fees) in a portion of the interest payments on the Receivables. The
Receivables would then be subject to the "stripped bond" and "stripped coupons"
rules of the Code discussed below.
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DISCOUNT AND PREMIUM. In determining whether a Grantor Trust
Certificateholder has purchased its interest in the Receivables (or any
Receivable) held by the related Trust at a discount or premium and whether such
Receivables (or any Receivable) have OID, market discount, or amortizable
premium, a portion of the purchase price of a Certificate should be allocated to
the Grantor Trust Certificateholder's undivided interest in accrued but unpaid
interest, amounts collected at the time of purchase but not distributed, and
rights to receive Yield Supplement Deposits. As a result, the portion of the
purchase price allocable to a Grantor Trust Certificateholder's undivided
interest in the Receivables (or any Receivable) will be increased or decreased,
as applicable, and the potential OID, market discount, or amortizable premium on
the Receivables (or any Receivable) could be increased or decreased accordingly.
PREMIUM. A Grantor Trust Certificateholder that acquires an interest in
Receivables at a premium over the "stated redemption price at maturity" of the
Receivables may elect to amortize that premium under a constant interest method.
Amortizable bond premium will be treated as an offset to interest income on that
Grantor Trust Certificate. The basis for that Grantor Trust Certificate will be
reduced to the extent that amortizable premium is applied to offset interest
payments. It is not clear whether a reasonable prepayment assumption should be
used in computing amortization of premium allowable under Section 171. With some
exceptions, a Grantor Trust Certificateholder that makes this election for a
Grantor Trust Certificate that is acquired at a premium will be deemed to have
made an election to amortize bond premium with respect to all debt instruments
having amortizable bond premium that that Grantor Trust Certificateholder holds
during the year of the election or thereafter. Absent on election to amortize
bond premium, the premium will be deductible as an ordinary loss upon
disposition of the Certificate or pro rata as principal is paid on the
Receivables.
If a premium is not subject to amortization using a reasonable prepayment
assumption, the holder of a Grantor Trust Certificate acquired at a premium
should recognize a loss if a Receivable prepays in full, equal to the difference
between the portion of the prepaid principal amount of that Receivable that is
allocable to the Grantor Trust Certificate and the portion of the adjusted basis
of the Grantor Trust Certificate that is allocable to that Receivable. If a
reasonable prepayment assumption is used to amortize that premium, it appears
that that loss would be available, if at all, only if prepayments have occurred
at a rate faster than the reasonable assumed prepayment rate. It is not clear
whether any other adjustments would be required to reflect differences between
an assumed prepayment rate and the actual rate of prepayments.
STRIPPED BONDS AND STRIPPED COUPONS. Although the tax treatment of stripped
bonds is not entirely clear, based on recent guidance from the IRS, each
purchaser of a Grantor Trust Certificate will be treated as the purchaser of a
stripped bond (to the extent that the Receivables consist of High Yield
Receivables) which generally should be treated as a single debt instrument
issued on the day it is purchased for purposes of calculating any original issue
discount. Generally, under applicable Treasury regulations (the "Section 1286
Treasury Regulations"), if the discount on a stripped bond is larger than a de
minimis amount (as calculated for purposes of the OID rules of the Code), that
stripped bond will be considered to have been issued with OID. See "--Original
Issue Discount." Based on the preamble to the Section 1286 Treasury Regulations,
Tax Counsel is of the opinion that, although the matter is not entirely clear,
the interest income on the Certificates at the sum of the Pass Through Rate and
the portion of the Servicing Rate that does not constitute excess servicing will
be treated as "qualified stated interest" within the meaning of the Section 1286
Treasury Regulations, and that income will be so treated in the Trustee's tax
information reporting. In this case, the amount of OID on a High Yield
Receivable will equal the amount by which the purchase price of a High Yield
Receivable is less than the portion of the remaining principal balance of the
Receivable allocable to the interest acquired.
ORIGINAL ISSUE DISCOUNT. The IRS has stated in published rulings that, in
circumstances similar to those described in this Prospectus, the special rules
of the Code relating to OID will be applicable to a
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Grantor Trust Certificateholder's interest in those Receivables meeting the
conditions necessary for these rules to apply. Generally, a Grantor Trust
Certificateholder that acquires an undivided interest in a Receivable issued or
acquired with OID must include in gross income the sum of the "daily portions,"
as defined below, of the OID on that Receivable for each day on which it owns a
Certificate, including the date of purchase but excluding the date of
disposition. In the case of an original Grantor Trust Certificateholder, the
daily portions of OID with respect to a Receivable generally would be determined
as follows. A calculation will be made of the portion of OID that accrues on the
Receivable during each successive monthly accrual period (or shorter period in
respect of the date of original issue or the final Distribution Date). This will
be done, in the case of each full monthly accrual period, by adding (1) the
present value of all remaining payments to be received on the Receivable under
the Prepayment Assumption used in respect of the Receivables and (2) any
payments received during that accrual period, and subtracting from that total
the "adjusted issue price" of the Receivable at the beginning of that accrual
period. No representation is made that the Receivables will prepay at any
prepayment assumption. The "adjusted issue price" of a Receivable at the
beginning of the first accrual period is the amount of the purchase price paid
by the Grantor Trust Certificateholder for the Certificate that is allocable to
the Receivable, and the "adjusted issue price" of a Receivable at the beginning
of a subsequent accrual period is the "adjusted issue price" at the beginning of
the immediately preceding accrual period plus the amount of OID allocable to
that accrual period and reduced by the amount of any payment on the Receivable
(other than "qualified stated interest") made at the end of or during that
accrual period. The OID accruing during that accrual period will then be divided
by the number of days in the period to determine the daily portion of OID for
each day in the period. With respect to an initial accrual period shorter than a
full monthly accrual period, the daily portions of OID must be determined
according to a reasonable method, provided that that method is consistent with
the method used to determine the yield to maturity of the Receivables.
If the amount of OID is de minimis under the rule set forth above, a High
Yield Receivable would not be treated as having OID. The actual amount of
discount on a High Yield Receivable would be includible in income as principal
payments are received on the Receivable, in the proportion that each principal
payment bears to the total principal amount of the Receivable.
With respect to the Receivables, the method of calculating OID as described
above will cause the accrual of OID to either increase or decrease (but never
below zero) in any given accrual period to reflect the fact that prepayments are
occurring at a faster or slower rate than the prepayment assumption used in
respect of the Receivables. Subsequent purchasers that purchase Receivables at
more than a de minimis discount should consult their tax advisors with respect
to the proper method to accrue that OID.
YIELD SUPPLEMENT DEPOSITS. The proper Federal income tax characterization
of the Yield Supplement Deposits is not clear. Moreover, the sum of the income
and deductions properly reportable by a Grantor Trust Certificateholder in any
taxable year may not equal the amounts that would be reportable if a Grantor
Trust Certificateholder held instead of an interest in the Receivables and in
the Yield Supplement Agreement either (1) a debt instrument bearing interest at
the applicable Pass Through Rate or (2) an interest in a trust holding
Receivables each of which bears interest at a rate at least equal to the sum of
the Pass Through Rate plus the Servicing Rate. It is likely that the right to
receive Yield Supplement Deposits will be treated as a separate asset purchased
by each Grantor Trust Certificateholder, in which case a portion of each Grantor
Trust Certificateholder's purchase price or other tax basis in the Certificate
equal to the fair market value of the right to receive such Yield Supplement
Deposits should be allocated to the right to receive payments of Yield
Supplement Deposits. The right to receive Yield Supplement Deposits may be
treated as a loan made by a Grantor Trust Certificateholder to the Seller in an
amount equal to the present value, discounted at a rate equal to the sum of the
applicable Pass Through Rate and the Servicing Rate, of the projected Yield
Supplement Deposits. In that event, a portion of the Yield Supplement Deposits
generally representing
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a yield equal to the applicable Pass Through Rate plus the Servicing Rate on
such discounted value should be treated as interest includible in income as
accrued or received, and the remainder should be treated as a return of the
principal amount of the deemed loan. Alternatively, it is possible that the
entire amount of each Yield Supplement Deposit should be included in income as
accrued or received, in which event a Grantor Trust Certificateholder should
also be entitled to amortize the portion of its purchase price allocable to its
right to receive Yield Supplement Deposits. The method of calculating such
amortization is unclear, and could result in the inclusion of greater amounts of
income than a Grantor Trust Certificateholder's actual yield on a Receivable.
Alternatively, it is possible that the Yield Supplement Deposits could be
treated as payments adjusting the purchase price of the Low Yield Receivables,
rather than as a separate asset. In that event, a Grantor Trust
Certificateholder could be treated as having purchased each Low Yield Receivable
at a discount (which may consist of imputed interest, market discount, or both)
that, combined with the actual coupon rate of such Receivable, produces a yield
equal to the sum of the applicable Pass Through Rate and the Servicing Rate. It
is not clear whether, and to what extent, the amounts includible in income or
amortizable under any of these methods would be adjusted to take account of
prepayments on the Receivables. Moreover, it is possible that the IRS might
contend that none of the above methods is appropriate, and that income with
respect to the Yield Supplement Agreement should be reported by a Grantor Trust
Certificateholder in some other manner. In addition, to the extent that the
amounts payable pursuant to Yield Supplement Agreement decline during any period
by reason of prepayments on the Receivables, it is possible that a portion of
the amount amortizable by the Grantor Trust Certificateholder during such period
would be treated as a capital loss (which would not offset ordinary income),
rather than as an ordinary deduction. It is suggested that Grantor Trust
Certificateholder consult their tax advisors regarding the appropriate method of
accounting for income attributable to the Yield Supplement Agreement.
MARKET DISCOUNT. A Grantor Trust Certificateholder that acquires an
undivided interest in Receivables may be subject to the market discount rules of
Sections 1276 through 1278 to the extent an undivided interest in a Receivable
is considered to have been purchased at a "market discount." Generally, the
amount of market discount is equal to the excess of the portion of the principal
amount of that Receivable allocable to that holder's undivided interest in the
Receivable over that holder's tax basis in that interest. Market discount with
respect to a Receivable will be considered to be zero if the amount allocable to
the Receivable is less than 0.25% of the Receivable's stated redemption price at
maturity multiplied by the weighted average maturity remaining after the date of
purchase. Treasury regulations implementing the market discount rules have not
yet been issued; therefore, it is suggested that investors consult their own tax
advisors regarding the application of these rules and the advisability of making
any of the elections allowed under Code Sections 1276 through 1278.
The Code provides that any principal payment (whether a scheduled payment or
a prepayment) or any gain on disposition of a market discount bond shall be
treated as ordinary income to the extent that it does not exceed the accrued
market discount at the time of that payment. The amount of accrued market
discount for purposes of determining the tax treatment of subsequent principal
payments or dispositions of the market discount bond is to be reduced by the
amount so treated as ordinary income.
The Code also grants the Treasury Department authority to issue regulations
providing for the computation of accrued market discount on debt instruments,
the principal of which is payable in more than one installment. While the
Treasury Department has not yet issued regulations, rules described in the
relevant legislative history will apply. Under those rules, the holder of a
market discount bond may elect to accrue market discount either on the basis of
a constant interest rate or according to one of the following methods. If a
Grantor Trust Certificate is issued with respect to which there is OID, the
amount of market discount that accrues during any accrual period would be equal
to the product of (1) the total remaining market discount and (2) a fraction,
the numerator of which is the OID accruing during the period and the denominator
of which is the total remaining OID at the beginning of the
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<PAGE>
accrual period. If a Grantor Trust Certificate is issued with respect to which
there is no OID, the amount of market discount that accrues during a period is
equal to the product of (1) the total remaining market discount and (2) a
fraction, the numerator of which is the amount of stated interest paid during
the accrual period and the denominator of which is the total amount of stated
interest remaining to be paid at the beginning of the accrual period. For
purposes of calculating market discount under any of the above methods in the
case of instruments (such as the Grantor Trust Certificates) that provide for
payments that may be accelerated by reason of prepayments of other obligations
securing those instruments, the same prepayment assumption applicable to
calculating the accrual of OID will apply. Because the regulations described
above have not been issued, it is impossible to predict what effect those
regulations might have on the tax treatment of a Grantor Trust Certificate
purchased at a discount or premium in the secondary market.
A holder who acquired a Grantor Trust Certificate at a market discount also
may be required to defer a portion of its interest deductions for the taxable
year attributable to any indebtedness incurred or continued to purchase or carry
that Grantor Trust Certificate purchased with market discount. For these
purposes, the DE MINIMIS rule referred to above applies. Any deferred interest
expense would not exceed the market discount that accrues during that taxable
year and is, in general, allowed as a deduction not later than the year in which
the market discount is includible in income. If that holder elects to include
market discount in income currently as it accrues on all market discount
instruments acquired by such holder in that taxable year or thereafter, the
interest deferral rule described above will not apply.
ELECTION TO TREAT ALL INTEREST AS OID. The OID regulations permit a Grantor
Trust Certificateholder to elect to accrue all interest, discount (including de
minimis market or original issue discount) and premium in income as interest,
based on a constant yield method. If that election were to be made with respect
to a Grantor Trust Certificate with market discount, the Grantor Trust
Certificateholder would be deemed to have made an election to include in income
currently market discount with respect to all other debt instruments having
market discount that that Grantor Trust Certificateholder acquires during the
year of the election or thereafter. Similarly, a Grantor Trust Certificateholder
that makes this election for a Grantor Trust Certificate that is acquired at a
premium will be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium that that
Grantor Trust Certificateholder owns or acquires. See "--Premium" in this
Prospectus. The election to accrue interest, discount and premium on a constant
yield method with respect to a Grantor Trust Certificate is irrevocable except
with the approval of the IRS.
SALE OR EXCHANGE OF A GRANTOR TRUST CERTIFICATE. Sale or exchange of a
Grantor Trust Certificate prior to its maturity will result in gain or loss
equal to the difference, if any, between the amount received and the owner's
adjusted basis in the Grantor Trust Certificate. The adjusted basis generally
will equal the seller's purchase price for the Grantor Trust Certificate,
increased by any market discount, OID and gain previously included in the
seller's gross income with respect to the Grantor Trust Certificate, and reduced
by the amount of any premium, if any, previously amortized and by the amount of
any payments of principal and OID on the Grantor Trust Certificate previously
received by the seller. That gain or loss will be capital gain or loss to an
owner for which a Grantor Trust Certificate is a "capital asset" within the
meaning of Section 1221, and will be long-term or short-term depending on
whether the Grantor Trust Certificate has been owned for the long-term capital
gain holding period (currently more than one year).
A Grantor Trust Certificate will be an "evidence of indebtedness" within the
meaning of Section 582(c)(1), so that gain or loss recognized from the sale of a
Grantor Trust Certificate by a bank or a thrift institution to which that
section applies will be treated as ordinary income or loss.
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FOREIGN PERSONS. Generally, interest or OID paid by the person required to
withhold tax under Section 1441 or 1442 to (1) a Grantor Trust Certificateholder
that is not a U.S. Person (as defined under "--Tax Treatment of Owner
Trusts--Tax Consequences to Owners of the Notes-Foreign Owners") (a "Foreign
Grantor Trust Certificateholder") or (2) a person holding on behalf of a Foreign
Grantor Trust Certificateholder, as well as accrued OID recognized by the
Foreign Grantor Trust Certificateholder on the sale or exchange of that Grantor
Trust Certificate, will not be subject to withholding to the extent that a
Grantor Trust Certificate evidences ownership in Receivables issued after July
18, 1984 by natural persons if that Foreign Grantor Trust Certificateholder
complies with specified identification requirements (including delivery of a
statement, signed by the Foreign Grantor Trust Certificateholder under penalties
of perjury, certifying that that Foreign Grantor Trust Certificateholder is not
a U.S. Person and providing the name and address of that Foreign Grantor Trust
Certificateholder). Additional restrictions apply to Receivables where the
obligor is not a natural person in order to qualify for the exemption from
withholding.
Although it is not entirely clear, it is likely that amounts received by a
Foreign Grantor Trust Certificateholder that are attributable to payments of
Yield Supplement Deposits received pursuant to any Yield Supplement Agreement
generally would not be subject to withholding tax. Although the Trust does not
intend to withhold on such amounts, no assurance can be given that the IRS will
not require the Trust to withhold on such amounts. It is suggested that Foreign
Grantor Trust Certificateholders consult their tax advisors regarding the
withholding tax consequences of amounts received on the Grantor Trust
Certificates that are attributable to payments of Yield Supplement Deposits
received pursuant to any Yield Supplement Agreement.
INFORMATION REPORTING AND BACKUP WITHHOLDING. The Servicer will furnish or
make available, within a reasonable time after the end of each calendar year, to
each person who was a Grantor Trust Certificateholder at any time during that
year, that information as may be deemed necessary or desirable to assist Grantor
Trust Certificateholders in preparing their federal income tax returns, or to
enable holders to make that information available to beneficial owners or
financial intermediaries that hold Grantor Trust Certificates as nominees on
behalf of beneficial owners. If a holder, beneficial owner, financial
intermediary or other recipient of a payment on behalf of a beneficial owner
fails to supply a certified taxpayer identification number or if the Secretary
of the Treasury determines that that person has not reported all interest and
dividend income required to be shown on its federal income tax return, 31%
backup withholding may be required with respect to any payments. Any amounts
deducted and withheld from a payment to a recipient would be allowed as a credit
against that recipient's federal income tax liability.
MATERIAL STATE TAX CONSEQUENCES WITH RESPECT TO OWNER TRUSTS
The activities to be undertaken by the Servicer in servicing and collecting
the Receivables will take place in California. The State of California imposes a
state individual income tax and a corporate franchise tax on corporations,
partnerships and other entities doing business in the State of California. This
discussion relates only to Trusts for which a partnership election is made, and
is based upon present provisions of California statutes and the regulations
promulgated under those statutes, and applicable judicial or ruling authority,
all of which are subject to change, which change may be retroactive.
Because of the variation in each state's tax laws based in whole or in part
upon income, it is impossible to predict tax consequences to holders of Notes
and Certificates in all of the state taxing jurisdictions in which they are
already subject to tax. It is suggested that Note Owners and Certificate Owners
consult their own tax advisors with respect to state tax consequences arising
out of the purchase, ownership and disposition of Notes and Certificates.
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For purposes of the following summary, references to the Trust, the Notes,
the Certificates and related terms, parties and documents shall be deemed to
refer to each Owner Trust and the Notes, Certificates and related terms, parties
and documents applicable to that Trust.
TAX CONSEQUENCES WITH RESPECT TO THE NOTES. It is expected that Tax Counsel
will advise each Owner Trust that issues Notes that, assuming the Notes will be
treated as debt for federal income tax purposes, the Notes will be treated as
debt for California income and franchise tax purposes. Accordingly, Note Owners
not otherwise subject to taxation in California would not become subject to
taxation in California solely because of a holder's ownership of Notes. However,
a Note Owner already subject to California's income tax or franchise tax could
be required to pay additional California tax as a result of the Note Owner's
ownership or disposition of Notes.
TAX CONSEQUENCES WITH RESPECT TO THE CERTIFICATES ISSUED BY AN OWNER
TRUST. Based on regulations issued by the Franchise Tax Board with respect to
the California tax characterization of an owner trust as a partnership and not
as an association taxable as a corporation or other taxable entity, Tax Counsel
will opine that an Owner Trust for which no election to be treated as a
corporation is made will not be an association (or publicly traded partnership)
treated as a corporation for California tax purposes. In that case, the
resulting constructive partnership should not be treated as doing business in
California but rather should be viewed as a passive holder of investments and,
as a result, should not be subject to the California franchise tax (which, if
applicable, could possibly result in reduced payments to Certificate Owners).
Under current law, Certificate Owners that are nonresidents of California
and are not otherwise subject to California income tax may be subject to
California income tax on the income from the constructive partnership. In any
event, classification of the arrangement as a "partnership" would not cause a
Certificate Owner not otherwise subject to taxation in California to pay
California tax on income beyond that derived from the Certificates.
It is not clear whether the Trust would be considered to be engaged in a
trade or business in the United States for purposes of California withholding
taxes with respect to Foreign Owners because there is no clear authority dealing
with that issue under facts substantially similar to those described in this
Prospectus. Although it is not expected that the Trust would be engaged in a
trade or business in the United States for those purposes, the Trust will
withhold on amounts paid to Certificate Owners who are Foreign Owners as if it
were so engaged in order to protect the Trust from possible adverse consequences
of a failure to withhold. The Trust expects to withhold on the portion of its
taxable income from California sources that is allocable to Certificate Owners
who are Foreign Owners pursuant to Section 18666 of California's Revenue and
Taxation Code, as if that income were effectively connected to a U.S. trade or
business, at the maximum appropriate rate.
If the Certificates are instead treated as ownership interests in an
association taxable as a corporation or a "publicly traded partnership" taxable
as a corporation, then the hypothetical entity should not be subject to the
California franchise tax (which, if applicable, could result in reduced payments
to Certificate Owners). A Certificate Owner not otherwise subject to tax in
California would not become subject to California tax as a result of its mere
ownership of that interest.
MATERIAL STATE TAX CONSEQUENCES WITH RESPECT TO GRANTOR TRUSTS
It is expected that Tax Counsel will advise each Grantor Trust that the
Trust will be treated as a grantor trust for California tax purposes, and that,
for California tax purposes, Grantor Trust Certificateholders could be
considered to own either (1) an undivided interest in a single debt obligation
held by the Trust and having a principal amount equal to the total stated
principal amount of the Receivables and an interest rate equal to the related
Pass Through Rate or (2) an interest in each of the Receivables and any other
Trust assets.
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It is suggested that Grantor Trust Certificateholders consult their tax
advisors regarding the state tax consequences associated with the purchase,
ownership and disposition of the Grantor Trust Certificates.
THE FEDERAL AND STATE TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON YOUR
PARTICULAR TAX SITUATION. IT IS SUGGESTED THAT YOU CONSULT YOUR TAX ADVISOR WITH
RESPECT TO THE TAX CONSEQUENCES TO YOU OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF NOTES AND CERTIFICATES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN
FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan, as well as individual retirement
accounts and some types of Keogh Plans (each a "Benefit Plan"), from engaging in
transactions involving "plan assets" with persons that are "parties in interest"
under ERISA or "disqualified persons" under the Code with respect to that
Benefit Plan. ERISA also imposes duties on persons who are fiduciaries of
Benefit Plans subject to ERISA and prohibits specified transactions between a
Benefit Plan and parties in interest with respect to those Benefit Plans. Under
ERISA, any person who exercises any authority or control with respect to the
management or disposition of the assets of a Benefit Plan is considered to be a
fiduciary of that Benefit Plan (subject to exceptions not here relevant). A
violation of these "prohibited transaction" rules may result in an excise tax or
other penalties and liabilities under ERISA and the Code for those persons.
Certain exemptions from the prohibited transaction rules could be applicable to
the purchase and holding of Securities by a Benefit Plan depending on the type
and circumstances of the plan fiduciary making the decision to acquire such
Securities. Potentially available exemption would include, without limitation,
Prohibited Transaction Class Exemption ("PTCE") 90-1, which exempts certain
transactions involving insurance company pooled separate accounts; PTCE 95-60,
which exempts certain transactions involving insurance company general accounts;
PTCE 91-38, which exempts certain transactions involving bank collective
investment funds; PTCE 84-14, which exempts certain transactions effected on
behalf of a plan by a "qualified professional asset manager"; and PTCE 96-23,
which exempts certain transactions effected on behalf of a plan by an "in-house
asset manager." Insurance company general accounts should also discuss with
their legal counsel the availability of exemptive relief under Section 401(c) of
ERISA. A purchaser of Securities should be aware, however, that even if the
conditions specified in one or more exemptions are met, the scope of the relief
provided by the applicable exemption or exemptions might not cover all acts that
might be construed as prohibited transactions.
Some transactions involving a Trust might be deemed to constitute prohibited
transactions under ERISA and the Code with respect to a Benefit Plan that
purchased Notes or Certificates if assets of the Trust were deemed to be assets
of the Benefit Plan. Under a regulation issued by the United States Department
of Labor (the "Plan Assets Regulation"), the assets of a Trust would be treated
as plan assets of a Benefit Plan for the purposes of ERISA and the Code only if
the Benefit Plan acquired an "equity interest" in the Trust and none of the
exceptions contained in the Plan Assets Regulation was applicable. An equity
interest is defined under the Plan Assets Regulation as an interest other than
an instrument which is treated as indebtedness under applicable local law and
which has no substantial equity features. The likely treatment in this context
of Notes and Certificates of a given series will be discussed in the applicable
Prospectus Supplement.
Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA) and some church plans (as defined in Section 3(33) of ERISA) are
not subject to ERISA requirements nor to Section 4975 of the Code. However,
governmental plans may be subject to state or local laws that impose similar
requirements. In addition, governmental plans and church plans that are
"qualified"
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under Section 401(a) of the Code are subject to restrictions with respect to
prohibited transactions under Section 503(a)(1)(B) of the Code, the sanction for
violation being loss of "qualified" status.
Due to the complexities of the "prohibited transaction" rules and the
penalties imposed upon persons involved in prohibited transactions, it is
important that the fiduciary of any Benefit Plan considering the purchase of
Securities consult with its tax and/or legal advisors regarding whether the
assets of the related Trust would be considered plan assets, the possibility of
exemptive relief from the prohibited transaction rules and other issues and
their potential consequences.
UNDERWRITING
On the terms and conditions set forth in an underwriting agreement with
respect to the Notes, if any, of a given series and an underwriting agreement
with respect to the Certificates of that series (collectively, the "Underwriting
Agreements"), the Seller will agree to cause the related Trust to sell to the
underwriters named in the Underwriting Agreements and in the applicable
Prospectus Supplement, and each of those underwriters will severally agree to
purchase, the principal amount of each class of Notes and Certificates, as the
case may be, of the related series set forth in the Underwriting Agreements and
in the applicable Prospectus Supplement.
In each of the Underwriting Agreements with respect to any given series of
Securities, the several underwriters will agree, subject to the terms and
conditions set forth in the Underwriting Agreements, to purchase all the Notes
and Certificates, as the case may be, described in the Underwriting Agreements
which are offered by this Prospectus and by the applicable Prospectus Supplement
if any of those Notes and Certificates, as the case may be, are purchased.
Each Prospectus Supplement will either (1) set forth the price at which each
class of Notes and Certificates, as the case may be, being offered by that
Prospectus Supplement will be offered to the public and any concessions that may
be offered to some dealers participating in the offering of those Notes and
Certificates or (2) specify that the related Notes and Certificates, as the case
may be, are to be resold by the underwriters in negotiated transactions at
varying prices to be determined at the time of that sale. After the initial
public offering of those Notes and Certificates, those public offering prices
and those concessions may be changed.
Each Underwriting Agreement will provide that NMAC and the Seller will
indemnify the underwriters against specified civil liabilities, including
liabilities under the Securities Act, or contribute to payments the several
underwriters may be required to make in respect thereof.
Each Trust may, from time to time, invest the funds in its Accounts in
Eligible Investments acquired from the underwriters or from the Seller. Pursuant
to each Underwriting Agreement with respect to a given series of Securities, the
closing of the sale of any class of Securities subject to that Underwriting
Agreement will be conditioned on the closing of the sale of all other classes of
Securities of that series.
The place and time of delivery for the Securities in respect of which this
Prospectus is delivered will be set forth in the applicable Prospectus
Supplement.
LEGAL OPINIONS
Certain legal matters relating to the Securities of any series will be
passed upon for the related Trust, the Seller and the Servicer by Joy Crose,
Esq. and O'Melveny & Myers LLP. In addition, certain United States federal and
California state tax and other matters will be passed upon for the related Trust
by O'Melveny & Myers LLP.
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INDEX OF TERMS
<TABLE>
<S> <C>
10 percent shareholder.................... 63
30/360.................................... 28
Accounts.................................. 41
Actual/360................................ 28
Actual/Actual............................. 28
adjusted issue price...................... 73
Administration Agreement.................. 54
Administration Fee........................ 54
Administrative Purchase Payment........... 43
Administrative Receivable................. 43
Administrator............................. 54
Advance................................... 44
adversely affected........................ 52
APR....................................... 16
backup.................................... 69
banking organization...................... 35
Base Rate................................. 27
Base Servicing Fee........................ 44
Benefit Plan.............................. 78
Business Day.............................. 28
Calculation Agent......................... 29
Calculation Date.......................... 30, 31,
33
capital asset............................. 75
CD Rate................................... 29
CD Rate Determination Date................ 29
CD Rate Security.......................... 27
CDs (Secondary Market).................... 29
Cede...................................... 18
Cedelbank................................. 35
Cedelbank Participants.................... 37
Certificate Balance....................... 20
Certificate Factor........................ 20
Certificate Owners........................ 64
Certificate Pool Factor................... 20
Certificateholder......................... 26
Certificates.............................. 15
Certificates of Deposit................... 29
class..................................... 21, 26
clearing agency........................... 36
clearing corporation...................... 35
Closing Date.............................. 15, 39
Code...................................... 61
Collection Account........................ 41
Collection Period......................... 43
Commercial Paper-- Nonfinancial........... 30
Commercial Paper Rate..................... 30
Commercial Paper Rate Determination 30
Date....................................
Commercial Paper Rate Security............ 27
commercially reasonable................... 57
Composite Quotations...................... 30
controlled foreign corporation............ 63
Cooperative............................... 37
Cutoff Date............................... 15
daily portions............................ 73
Dealer Agreements......................... 15
Dealer Recourse........................... 15
Dealers................................... 15
default................................... 58
Definitive Certificates................... 38
Definitive Notes.......................... 38
Definitive Securities..................... 35, 38
demonstration............................. 15
Depositaries.............................. 35
Designated LIBOR Page..................... 32
Determination Date........................ 47
disqualified persons...................... 78
Distribution Date......................... 26
DTC....................................... 35
DTC Participants.......................... 21, 36
DTC Services.............................. 34
Eligible Investments...................... 41
equity interest........................... 78
ERISA..................................... 78
Euroclear................................. 35, 37
Euroclear Operator........................ 37
Euroclear Participants.................... 37
Events of Default......................... 23
evidence of indebtedness.................. 75
Federal Funds (Effective)................. 31
Federal Funds Rate........................ 31
Federal Funds Rate Determination Date..... 31
Federal Funds Rate Security............... 27
Federal Funds/Effective Rate.............. 31
Financed Vehicles......................... 15
Fixed Rate Securities..................... 27
Floating Rate Securities.................. 27
Foreign Certificate Owner................. 68
Foreign Grantor Trust Certificateholder... 76
Foreign Owner............................. 63
FTC Rule.................................. 59
Grantor Trust............................. 69
Grantor Trust Certificateholders.......... 70
Grantor Trust Certificates................ 70
guaranteed payment........................ 65
H.15(519)................................. 30
High Yield Receivable..................... 71
Holder-in-Due-Course...................... 59
Indenture................................. 21
Indenture Trustee......................... 17
Index..................................... 33
Index Currencies.......................... 33
Index Currency............................ 32
Index Maturity............................ 30
Indexed Principal Amount.................. 33
Indexed Securities........................ 33
Indirect DTC Participants................. 36
Industry.................................. 34
in-house asset manager.................... 78
Insolvency Event.......................... 50
Insolvency Laws........................... 58
Interest Period........................... 29
Interest Rate............................. 21
Interest Reset Date....................... 28
Interest Reset Period..................... 28
IRS....................................... 61
Issuer.................................... 15
LIBOR..................................... 31
LIBOR Bloomberg........................... 31
</TABLE>
80
<PAGE>
<TABLE>
<S> <C>
LIBOR Determination Date.................. 31
LIBOR Security............................ 27
LIBOR Telerate............................ 32
Liquidated Receivable..................... 44
London Business Day....................... 28
Low Yield Receivables..................... 71
market discount........................... 74
Money Market Yield........................ 31
Near-new.................................. 15
New....................................... 15
New Regulations........................... 64
Nissan.................................... 18
NMAC...................................... 15, 18
NNA....................................... 18
Note Factor............................... 20
Note Owners............................... 62
Note Pool Factor.......................... 20
Noteholder................................ 21
Notes..................................... 15
Obligors.................................. 15
OID....................................... 62, 70
OID regulations........................... 62
Omnibus Proxy............................. 37
Original Certificate Balance.............. 20
Owner Trust............................... 61
parties in interest....................... 78
partnership............................... 77
Pass Through Rate......................... 26
plan assets............................... 78
Plan Assets Regulation.................... 78
Pool Balance.............................. 45
Pooling and Servicing Agreement........... 15
portfolio interest........................ 63, 69
Prepayment Assumption..................... 62
prepayments............................... 19
Principal Balance......................... 45
Principal Financial Center................ 33
prohibited transaction.................... 78, 79
Prospectus Supplement..................... 15
PTCE...................................... 78
publicly traded partnership............... 77
Purchase Agreement........................ 39
qualified................................. 78
qualified professional asset manager...... 78
qualified stated interest................. 62, 72
Receivables............................... 15
Receivables Pool.......................... 15
Registration Statement.................... 18
Related Documents......................... 25
related person............................ 63
Relief Act................................ 60
Required Deposit Rating................... 41
Required Rate............................. 45
Required Yield Supplement Amount.......... 45
Reserve Account........................... 47
Reserve Account Initial Deposit........... 47
Retained Yield............................ 71
Sale and Servicing Agreement.............. 15
Schedule of Receivables................... 39
SEC....................................... 18
Section 1286 Treasury Regulations......... 72
Securities................................ 15
Securities Act............................ 18
Securityholders........................... 18
Seller.................................... 15
Servicer.................................. 18
Servicer Default.......................... 50
Servicing Rate............................ 44
Short-Term Note........................... 62
Spread.................................... 27
Spread Multiplier......................... 27
stated redemption price at maturity....... 72
street name............................... 36
Strip Certificates........................ 26
Strip Notes............................... 21
stripped bonds............................ 71
stripped coupons.......................... 71
Subordination Spread Account.............. 47
Supplemental Servicing Fee................ 44
Systems................................... 34
TARGET system............................. 28
Tax Counsel............................... 61
Terms and Conditions...................... 38
Total Servicing Fee....................... 44
Transfer and Servicing Agreements......... 39
Treasury bills............................ 33
Treasury Rate............................. 33
Treasury Rate Determination Date.......... 33
Treasury Rate Security.................... 27
Trust..................................... 15
Trust Agreement........................... 15
Trustee................................... 17
U.S. Person............................... 63
UCC....................................... 41
Underwriting Agreements................... 79
unrelated business taxable income......... 64, 66
Warranty Purchase Payment................. 40
Warranty Receivable....................... 40
weighted average life..................... 19
Year 2000 problems........................ 34
Yield Supplement Account.................. 45
Yield Supplement Agreement................ 46
Yield Supplement Deposit.................. 45
</TABLE>
81
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 13, 1999.
THE INFORMATION CONTAINED IN THIS SUPPLEMENT IS NOT COMPLETE AND MAY BE CHANGED.
THIS PROSPECTUS SUPPLEMENT IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
<PAGE>
Prospectus Supplement
(To Prospectus dated ____________)
NISSAN AUTO RECEIVABLES ____-__ GRANTOR TRUST
NISSAN AUTO RECEIVABLES CORPORATION,
SELLER
NISSAN MOTOR ACCEPTANCE CORPORATION,
SERVICER
$__________________ ASSET BACKED CERTIFICATES
YOU SHOULD REVIEW CAREFULLY THE FACTORS SET FORTH UNDER "RISK FACTORS"
BEGINNING ON PAGE S-13 OF THIS PROSPECTUS SUPPLEMENT AND PAGE 11 IN THE
ACCOMPANYING PROSPECTUS.
The securities are asset backed securities issued by the trust. The securities
are not obligations of Nissan Motor Acceptance Corporation, Nissan Auto
Receivables Corporation, Nissan North America, Inc. or any of their respective
affiliates. Neither the securities nor the receivables are insured or
guaranteed by any governmental agency.
This prospectus supplement may be used to offer and sell the securities only
if it is accompanied by the prospectus dated ___, 1999.
- - The trust will issue three classes of certificates.
- - Only the certificates described on the following table are being offered by
this Prospectus Supplement and the Prospectus.
- - The certificates accrue interest from _________, __.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
<S> <C> <C>
CLASS A CLASS B
CERTIFICATES CERTIFICATES
------------ ------------
Principal Amount........................ $ _________ $ _________
Pass Through Rate....................... _____% _____%
Final Scheduled Distribution
Date.................................. _______, __ _______, __
Price to Public......................... _____% _____%
Underwriting Discount................... _____% _____%
Proceeds to Seller...................... $ _________ $ _________
- --------------------------------------------------------------------
</TABLE>
Credit Enhancement
- - Subordination Spread Account, with an initial deposit of
[$______________________].
- - The Class B Certificates are subordinated to the Class A Certificates, and
the Class C Certificates (not offered hereby) are subordinated to the Class A
Certificates and the Class B Certificates.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED THE CERTIFICATES OR DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[UNDERWRITERS]
The date of this Prospectus Supplement is ___________.
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
Information about the certificates is provided in two separate documents
that progressively provide varying levels of detail: (1) the accompanying
prospectus, which provides general information, some of which may not apply to a
particular class of certificates, including your class; and (2) this prospectus
supplement, which describes the specific terms of your class of certificates.
IF THE DESCRIPTION OF THE TERMS OF YOUR CERTIFICATES VARIES BETWEEN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON THE
INFORMATION IN THIS PROSPECTUS SUPPLEMENT.
Cross-references are included in this prospectus supplement and in the
accompanying prospectus which direct you to more detailed descriptions of a
particular topic. You can also find references to key topics in the Table of
Contents on page S-3 in this prospectus supplement and the Table of Contents on
page 3 in the accompanying prospectus.
You can find a listing of the pages where capitalized terms used in this
prospectus supplement are defined under the caption "Index of Terms" beginning
on page S-45 in this prospectus supplement and under the caption "Index of
Terms" beginning on page 80 in the accompanying prospectus.
S-2
<PAGE>
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<S> <C>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS............................................................. S-2
SUMMARY OF TRANSACTION PARTIES........................................................ S-6
SUMMARY OF MONTHLY DEPOSITS TO AND WITHDRAWALS FROM ACCOUNTS.......................... S-7
SUMMARY............................................................................... S-8
Issuer.............................................................................. S-8
Seller.............................................................................. S-8
Servicer............................................................................ S-8
Trustee............................................................................. S-8
Offered Certificates................................................................ S-8
Receivables......................................................................... S-8
Closing Date........................................................................ S-8
Terms of the Certificates........................................................... S-8
Optional Purchase................................................................... S-10
Credit Enhancement.................................................................. S-10
Subordination Spread Account........................................................ S-10
Yield Supplement Account............................................................ S-11
Tax Status.......................................................................... S-11
ERISA Considerations................................................................ S-11
Rating of the Offered Certificates.................................................. S-12
RISK FACTORS.......................................................................... S-13
You may have difficulty selling your certificates and/or obtaining your desired
price due to the absence of a secondary market.................................... S-13
Geographic concentration of the states of origination of the receivables may
increase the risk of loss on your investment...................................... S-13
Because of the uncertainty of federal income tax consequences of the yield
supplement agreement, you may experience unexpected tax consequences.............. S-13
Complications associated with year 2000 date conversion could affect the servicer's
operations, impairing its ability to collect receivables, which may result in loss
on your investments............................................................... S-14
THE TRUST............................................................................. S-14
General............................................................................. S-14
THE TRUSTEE........................................................................... S-15
THE RECEIVABLES....................................................................... S-15
MATURITY AND PREPAYMENT CONSIDERATIONS................................................ S-19
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES........................................... S-19
CERTIFICATE AND POOL FACTORS.......................................................... S-21
USE OF PROCEEDS....................................................................... S-21
</TABLE>
S-3
<PAGE>
<TABLE>
<S> <C>
THE SELLER AND THE SERVICER........................................................... S-22
Financial Condition of Nissan Motor Co., Ltd........................................ S-22
Year 2000........................................................................... S-22
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995.......................................... S-23
THE CERTIFICATES...................................................................... S-23
General............................................................................. S-23
Sale and Assignment of Receivables.................................................. S-24
Accounts............................................................................ S-24
Collections......................................................................... S-24
Advances............................................................................ S-24
Servicing Compensation.............................................................. S-25
Yield Supplement Account and Yield Supplement Agreement............................. S-25
Net Deposits........................................................................ S-26
Optional Purchase................................................................... S-26
Removal of Servicer................................................................. S-26
Duties of the Trustee............................................................... S-27
The Trustee......................................................................... S-28
Notices............................................................................. S-28
Governing Law....................................................................... S-28
DISTRIBUTIONS ON THE CERTIFICATES..................................................... S-28
General............................................................................. S-28
Calculation of Available Amounts.................................................... S-29
Calculation of Distributable Amounts................................................ S-30
Payments of Interest................................................................ S-31
Payments of Principal............................................................... S-31
Payment of Distributable Amounts.................................................... S-31
Payments Under the Yield Supplement Agreement....................................... S-33
SUBORDINATION; SUBORDINATION SPREAD ACCOUNT........................................... S-34
Subordination....................................................................... S-34
Subordination Spread Account........................................................ S-34
MATERIAL INCOME TAX CONSEQUENCES...................................................... S-36
Classification of the Trust......................................................... S-36
Payments Under the Yield Supplement Agreement....................................... S-36
Original Issue Discount, Imputed Interest and Market Discount....................... S-37
Sale or Prepayment.................................................................. S-38
Foreign Certificateholders.......................................................... S-39
Material State Tax Consequences..................................................... S-39
</TABLE>
S-4
<PAGE>
<TABLE>
<S> <C>
ERISA CONSIDERATIONS.................................................................. S-39
Class A Certificates................................................................ S-39
Class B and Class C Certificates.................................................... S-41
All Certificates.................................................................... S-42
UNDERWRITING.......................................................................... S-43
LEGAL OPINIONS........................................................................ S-44
INDEX OF TERMS........................................................................ S-45
ANNEX A: GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES................ S-47
Initial Settlement.................................................................. S-47
Secondary Market Trading............................................................ S-47
Material U.S. Federal Income Tax Documentation Requirements......................... S-49
</TABLE>
S-5
<PAGE>
[CHART OF SUMMARY OF TRANSACTION PARTIES]
S-6
<PAGE>
[CHART OF SUMMARY OF MONTHLY DEPOSITS TO AND WITHDRAWALS FROM ACCOUNTS]
S-7
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY CONTAINS A BRIEF DESCRIPTION OF THE CERTIFICATES. YOU
WILL FIND A DETAILED DESCRIPTION OF THE TERMS OF THE OFFERING OF THE
CERTIFICATES FOLLOWING THIS SUMMARY. YOU SHOULD READ CAREFULLY THIS ENTIRE
DOCUMENT AND THE ACCOMPANYING PROSPECTUS TO UNDERSTAND ALL OF THE TERMS OF THE
OFFERING OF THE CERTIFICATES. YOU SHOULD CONSIDER BOTH DOCUMENTS WHEN MAKING
YOUR INVESTMENT DECISION.
<TABLE>
<S> <C>
ISSUER Nissan Auto Receivables Grantor Trust [____-__]. The
trust will be established by a pooling and servicing
agreement.
SELLER Nissan Auto Receivables Corporation.
SERVICER Nissan Motor Acceptance Corporation.
TRUSTEE [________________________].
OFFERED CERTIFICATES The offered certificates consist of the Class A
Certificates and the Class B Certificates as described
on the cover page. The trust will also issue
[$______________] initial principal balance of Class C
Certificates, which are not being offered pursuant to
this prospectus supplement.
The Class A Certificates will evidence in the aggregate
an undivided ownership interest of [__%] of the trust
(initially representing [$________]) and the Class B
Certificates will evidence in the aggregate an undivided
ownership interest of [__%] of the trust (initially
representing [$___________]).
RECEIVABLES The trust's main source of funds for making payments on
the certificates will be collections on its motor
vehicle retail installment sale contracts, otherwise
referred to as the receivables.
The principal balance of the receivables on
[_____________], referred to as the "cut-off date," was
$[________________]. As of [_____________], the
receivables had the following characteristics:
Number of Receivables
Average Principal Balance
Weighted average annual percentage rate
Weighted average remaining term to maturity
Approximate weighted average original term to maturity
You should refer to "The Receivables" in this prospectus
supplement for more information on the receivables.
CLOSING DATE On or about [______________].
TERMS OF THE CERTIFICATES PAYMENT DATE:
Interest and principal will generally be payable on the
15th day of each month, unless the 15th day is not a
business day, in which case the payment will be made on
the following business day. The first payment will be on
[____________].
</TABLE>
S-8
<PAGE>
<TABLE>
<S> <C>
PER ANNUM PASS THROUGH RATES:
The certificates will have [fixed] rates of interest as
follows:
</TABLE>
<TABLE>
<CAPTION>
CLASS PASS THROUGH RATE
----- -------------------
<S> <C> <C> <C>
A [__%]
B [__%]
C [__%]
</TABLE>
INTEREST ACCRUAL PERIODS:
<TABLE>
<CAPTION>
SUBSEQUENT INTEREST
ACCRUAL PERIODS
INITIAL --------------------------------
ACCRUAL FROM TO DAY COUNT
CLASS PERIOD (INCLUDING) (EXCLUDING) CONVENTION
------------ ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
A,B and C [ ] 30/360
</TABLE>
PRINCIPAL:
- Legal Finals: The trust must pay the
outstanding principal balance of each class
of certificates by its final scheduled
distribution date as follows:
<TABLE>
<CAPTION>
CLASS LEGAL FINAL
----- ------------------
<S> <C> <C> <C>
A [_____________]
B [_____________]
C [_____________]
</TABLE>
<TABLE>
<S> <C>
- Amount Of Principal Payable On Each Distribution Date: The trust will make
principal payments on each class of certificates on each distribution date in
an amount equal to the applicable class percentage of the following amounts:
1. principal collections on the receivables during the prior collection period;
2. prepayments on the receivables allocable to principal received during the
prior collection period;
3. the principal balance of each receivable which the seller or the servicer
became obligated to purchase; and
4. the principal balance of liquidated receivables.
The class percentage for each class of certificates is detailed in "The
Certificates--General" in this prospectus supplement.
</TABLE>
S-9
<PAGE>
<TABLE>
<S> <C>
YOU SHOULD REFER TO "DISTRIBUTIONS ON THE CERTIFICATES-- CALCULATION OF
DISTRIBUTABLE AMOUNTS" AND "--PAYMENTS OF PRINCIPAL" IN THIS PROSPECTUS
SUPPLEMENT FOR MORE DETAILED INFORMATION REGARDING PAYMENTS OF PRINCIPAL.
OPTIONAL PURCHASE The servicer may redeem all outstanding certificates when the outstanding
aggregate principal balance of the receivables declines to 10% or less of the
original aggregate principal balance of the receivables on the cut-off date.
CREDIT ENHANCEMENT The credit enhancement of the offered certificates will be the following:
1. CLASS A CERTIFICATES: the subordination of the Class B Certificates and the
Class C Certificates;
2. CLASS B CERTIFICATES: the subordination of the Class C Certificates; and
3. CLASS A CERTIFICATES AND CLASS B CERTIFICATES: the subordination spread
account.
SUBORDINATION OF INTEREST AND PRINCIPAL:
1. CLASS B CERTIFICATES: Interest and principal payments on the Class B
Certificates will be subordinated to interest and principal payments on the
Class A Certificates.
1. CLASS C CERTIFICATES: Interest and principal payments on the Class C
Certificates will be subordinated to interest and principal payments on the
Class A Certificates and the Class B Certificates.
The credit enhancement is intended to protect you against losses and delays in
payments on your certificates by absorbing losses on the receivables and other
shortfalls in cash flows.
SUBORDINATION SPREAD ACCOUNT On each distribution date, the trust will use funds in the subordination spread
account to pay the following amounts in the following order if collections on
the receivables are insufficient to pay those amounts:
1. amounts due to the servicer; and
2. interest and principal due on the certificates in the order of priority
detailed in "Distributions on the Certificates-- Payment of Distributable
Amounts."
The pooling and servicing agreement specifies the amount that is required to be
on deposit in the subordination spread account. On the closing date, the seller
will deposit [$____________] into the subordination spread account, which is
[__%] of the initial principal balance of the offered certificates and which is
less than the amount required to be maintained in the subordination spread
account called the "specified subordination spread account balance." On each
distribution date, after making payments to the servicer and to
</TABLE>
S-10
<PAGE>
<TABLE>
<S> <C>
the holders of the Class A and Class B Certificates, the trust will make a
deposit into the subordination spread account to fund and maintain the specified
subordination spread account balance.
YIELD SUPPLEMENT ACCOUNT On each distribution date, the trust will withdraw from funds on deposit in the
yield supplement account the aggregate amount by which (1) one month's interest
on the principal balance of each receivable at a rate equal to the weighted
average interest rate on the Class A Certificates and the Class B Certificates
plus 1.00% (servicing rate) exceeds (2) one month's interest on such principal
balance at the annual percentage rate of that receivable.
On the closing date, the seller will deposit [$_________] into the yield
supplement account. Neither the seller nor the servicer will make any additional
deposits to the yield supplement account after the closing date.
TAX STATUS In the opinion of O'Melveny & Myers LLP:
1. the trust will be treated as a grantor trust for United States federal income
and California franchise and income tax purposes; and
2. will not be subject to federal income tax or California franchise or income
tax.
If you purchase the certificates, you will be required to report your pro rata
share of all income earned on the receivables (other than amounts, if any,
treated as "stripped coupons"). In addition if you are an individual, trust or
estate, you may deduct your pro rata share of reasonable servicing and other
fees, subject to limitations.
The exact characterization for federal income tax purposes of the payments
received with respect to the yield supplement agreement is not clear. YOU SHOULD
REFER TO "MATERIAL INCOME TAX CONSEQUENCES--PAYMENTS UNDER THE YIELD SUPPLEMENT
AGREEMENT" IN THIS PROSPECTUS SUPPLEMENT.
YOU SHOULD REFER TO "MATERIAL INCOME TAX CONSEQUENCES--TAX TREATMENT OF GRANTOR
TRUSTS" IN THE ACCOMPANYING PROSPECTUS FOR ADDITIONAL INFORMATION CONCERNING THE
APPLICATION OF UNITED STATES FEDERAL INCOME TAX LAWS TO THE TRUST AND THE
CERTIFICATES.
ERISA CONSIDERATIONS The Class A Certificates are generally eligible for purchase by employee benefit
plans and individual retirement accounts, subject to considerations discussed
under "ERISA Considerations" in this prospectus supplement and in the
accompanying prospectus.
</TABLE>
S-11
<PAGE>
<TABLE>
<S> <C>
The Class B Certificates, however, may not be acquired by any employee benefit
plan or any individual retirement account. However, under limited circumstances,
Class B Certificates may be purchased as limited investments by persons using
insurance company general accounts.
YOU SHOULD REFER TO "ERISA CONSIDERATIONS" IN THIS PROSPECTUS SUPPLEMENT AND IN
THE ACCOMPANYING PROSPECTUS. IF YOU ARE A BENEFIT PLAN FIDUCIARY CONSIDERING
PURCHASE OF THE CERTIFICATES OF ANY CLASS YOU SHOULD, AMONG OTHER THINGS,
CONSULT WITH YOUR COUNSEL TO DETERMINE WHETHER ALL REQUIRED CONDITIONS HAVE BEEN
SATISFIED.
RATING OF THE OFFERED On the closing date, each class of offered certificates will receive the
CERTIFICATES following ratings from Standard & Poor's Ratings Group and Moody's Investors
Service, Inc.:
</TABLE>
<TABLE>
<CAPTION>
STANDARD &
CLASS POOR'S MOODY'S
----- ------------- -----------
<S> <C> <C> <C> <C>
A [___] [___]
B [___] [___]
</TABLE>
S-12
<PAGE>
RISK FACTORS
You should consider the following risk factors (and the factors set forth
under "Risk Factors" in the accompanying prospectus) in deciding whether to
purchase the certificates of any class.
<TABLE>
<S> <C>
YOU MAY HAVE DIFFICULTY The trust will not list the certificates on any securities
SELLING YOUR exchange. Therefore, in order to sell your certificates, you must
CERTIFICATES first locate a willing purchaser. In addition, currently, no
AND/OR OBTAINING YOUR secondary market exists for the certificates. We cannot assure
DESIRED PRICE DUE TO THE you that a secondary market will develop. The underwriter intends
ABSENCE OF A SECONDARY to make a secondary market for the certificates by offering to
MARKET. buy the certificates from investors that wish to sell. However,
the underwriter is not obligated to offer to buy the certificates
and it may stop making offers at any time.
GEOGRAPHIC CONCENTRATION As of [__________________], Nissan Motor Acceptance Corporation's
OF THE STATES OF records indicate that the billing addresses of the obligors of
ORIGINATION OF THE the receivables were in the following states:
RECEIVABLES MAY INCREASE
THE RISK OF LOSS ON YOUR
INVESTMENT.
PERCENTAGE OF TOTAL
PRINCIPAL BALANCE
[__________________________________] [_____%]
[__________________________________] [_____%]
[__________________________________] [_____%]
[__________________________________] [_____%]
[__________________________________] [_____%]
No other state, by billing addresses, constituted more than 5% of
the balance of the receivables as of [____________________].
Economic conditions or other factors affecting these states in
particular could adversely affect the delinquency, credit loss or
repossession experience of the trust.
BECAUSE OF THE Tax counsel is unable to opine as to the federal income tax
UNCERTAINTY OF FEDERAL consequences of the Yield Supplement Agreement. You should review
INCOME TAX CONSEQUENCES "Material Income Tax consequences --Payments Under the Yield
OF THE YIELD SUPPLEMENT Supplement agreement" in this prospectus supplement.
AGREEMENT, YOU MAY
EXPERIENCE UNEXPECTED
TAX CONSEQUENCES.
</TABLE>
S-13
<PAGE>
<TABLE>
<S> <C>
COMPLICATIONS ASSOCIATED Many computers and computer chips do not recognize more than two
WITH YEAR 2000 DATE digits of a date field in a year of a date. As a result, in the
CONVERSION COULD AFFECT year 2000, those computers will not know whether the "00" refers
THE SERVICER'S to the year 1900 or the year 2000. Nissan Motor Acceptance
OPERATIONS, IMPAIRING Corporation will have significant obligations to the trust in its
ITS ABILITY TO COLLECT role as servicer. It is therefore important that Nissan Motor
RECEIVABLES, WHICH MAY Acceptance Corporation resolve any year 2000 issues that will
RESULT IN LOSS ON YOUR affect its ability to fulfill these obligations. A description of
INVESTMENTS. Nissan Motor Acceptance Corporation's year 2000 compliance
efforts is contained under "The Seller and the Servicer-- Year
2000" in this prospectus supplement.
The inability of Nissan Motor Acceptance Corporation or of third
parties who deal with Nissan Motor Acceptance Corporation to make
the necessary year 2000 modifications of their systems could have
a significant adverse effect on Nissan Motor Acceptance
Corporation's operations and financial results. Possible adverse
consequences include the inability to:
1. collect and otherwise service the receivables;
2. provide information and technology necessary to pay
certificateholders and provide reports;
3. pay obligations;
4. process new business; and
5. occupy facilities.
These consequences could have a material adverse effect on the
value of your securities.
</TABLE>
THE TRUST
GENERAL
The Nissan Auto Receivables [____]-[__] Grantor Trust (the "Trust") will be
formed by Nissan Auto Receivables Corporation (the "Seller") pursuant to the
Pooling and Servicing Agreement (the "Agreement") dated as of [_____________],
among the Seller, Nissan Motor Acceptance Corporation ("NMAC"), as servicer (in
that capacity, the "Servicer") and [______________], as trustee (the "Trustee").
The Seller will establish the Trust by selling and assigning the assets of the
Trust to the Trustee in exchange for the Certificates to be issued by the Trust.
The Servicer will service the Receivables pursuant to the Agreement and will be
compensated for acting as the Servicer. See "The Certificates--Servicing
Compensation" in this Prospectus Supplement.
Pursuant to agreements between NMAC and the Dealers, each Dealer will
repurchase from NMAC those retail installment sales contracts that do not meet
specified representations and warranties made by that Dealer. These Dealers'
repurchase obligations are referred to in this Prospectus Supplement as "Dealer
Recourse." Those representations and warranties relate primarily to the
origination of the contracts and the perfection of the security interests in the
related financed vehicles, and do not relate to the creditworthiness of the
related Obligors or the collectability of those contracts. Although the Dealer
Agreements with respect to the Receivables will not be assigned to the Trustee,
any recovery by NMAC pursuant to any Dealer Recourse will be deposited in the
Collection Account to satisfy NMAC's repurchase obligations under the Agreement.
The sales by the Dealers of installment sales contracts to NMAC do not generally
provide for recourse against the Dealers for
S-14
<PAGE>
unpaid amounts in the event of a default by an Obligor, other than in connection
with the breach of the foregoing representations and warranties.
Each Certificate represents a fractional undivided ownership interest in the
Trust. The Trust property includes the Receivables and monies due or received
under the Receivables on or after the Cutoff Date. The Subordination Spread
Account and the Yield Supplement Account will be maintained by the trustee for
the benefit of the Class A Certificateholders and the Class B
Certificateholders, but will not be part of the Trust.
The Trust's principal offices are in [________], in care of [________], as
Trustee, at the address set forth below under "The Trustee."
THE TRUSTEE
[__________] is the Trustee under the Agreement. [__________________] is a
[_________________] and its principal offices are located at [__________]. The
Seller and its affiliates may maintain normal commercial banking relations with
the Trustee and its affiliates.
THE RECEIVABLES
The property of the Trust will consist of a pool of retail installment sale
contracts (the "Receivables") originated on or after [__________], between
Nissan and Infiniti dealers (the "Dealers") and retail purchasers (the
"Obligors"). 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 evidence the indirect financing made
available by NMAC to the Obligors. The Receivables are secured by new, near-new
and used Nissan and Infiniti automobiles and light-duty trucks (the "Financed
Vehicles") and all principal and interest payments made on or after [_______]
(the "Cutoff Date") and other property specified in the Receivables.
NMAC purchased the Receivables from the Dealers in the ordinary course of
business in accordance with NMAC's underwriting standards. On or before the date
of the initial issuance of the Certificates (the "Closing Date"), NMAC will sell
the Receivables to the Seller. The Seller will, in turn, sell the Receivables to
the Trust pursuant to the Agreement. NMAC will continue to service the
Receivables. The Receivables to be held by the Trust will be randomly selected
from those automobile and/or light-duty truck retail installment sales contracts
in NMAC's portfolio that meet several criteria. These criteria provide that each
Receivable:
1. was originated in the United States;
2. has a contractual Annual Percentage Rate ("APR") that equals or exceeds
[___%];
3. 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 [___] months;
4. has a remaining term to maturity, as of the Cutoff Date, of not less
than [___]months and not greater than [___] months;
5. had an original balance of not more than [$___________] and a remaining
principal balance as of the Cutoff Date of not less than [$__________]
nor more than [$___________];
6. is not more than 29 days past due as of the Cutoff Date;
7. is attributable to the purchase of a new, near-new or used automobile or
light-duty truck and is secured by that vehicle;
8. was originated on or after [__________];
S-15
<PAGE>
9. has been entered into by an Obligor that as of the Cutoff Date was not
in bankruptcy proceedings (according to the records of NMAC);
10. is secured by a Financed Vehicle that as of the Cutoff Date has not been
repossessed (according to the records of NMAC);
11. has not had forced-placed insurance premiums added to the amount
financed; and
12. has not been extended by more than two months.
No selection procedures believed to be adverse to the Certificateholders
will be utilized in selecting the Receivables from qualifying retail installment
sale contracts. Except as described in item (2) above, the Receivables were not
selected on the basis of their APRs.
The composition, distribution by APR and geographic distribution of the
Receivables as of the Cutoff Date are as set forth in the following tables. NMAC
will not sell to the Seller, and the Seller will not sell to the Trust, any
Receivables originated in the State of Alabama for administrative reasons.
COMPOSITION OF THE RECEIVABLES
<TABLE>
<S> <C>
Aggregate Principal Balance $_________________
Number of Receivables $_________________
Average Principal Balance $_________________
Average Original Amount Financed $_________________
Range of Original Amount Financed $_________________ to
$_________________
Weighted Average APR _________%
Range of APRs _________% to
_________%
Approximate Weighted Average Original Term to ______ months
Maturity
(Range) ______ to
______ months
Weighted Average Remaining Term to Maturity ______ months
(Range) ______ to
______ months
Percentage by Principal Balance of ______ (Near)
Receivables of New, Near-New and Used ______ (Near-New)
Vehicles ______ (Used)
Percentage by Principal Balance of ______ (Nissan)
Receivables Financed through Nissan and ______ (Infiniti)
Infiniti Dealers
</TABLE>
S-16
<PAGE>
DISTRIBUTION BY APR OF THE RECEIVABLES
(PERCENTAGES MAY NOT ADD TO 100.00% DUE TO ROUNDING)
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF CUTOFF DATE CUTOFF DATE
RANGE OF APRS (%) RECEIVABLES PRINCIPAL BALANCE POOL BALANCE
- -------------------------------------------------------------------- ------------- ------------------- ---------------
<S> <C> <C> <C>
3.0 to 3.99.........................................................
4.0 to 4.99.........................................................
5.0 to 5.99.........................................................
6.0 to 6.99.........................................................
7.0 to 7.99.........................................................
8.0 to 8.99.........................................................
9.0 to 9.99.........................................................
10.0 to 10.99.......................................................
11.0 to 11.99.......................................................
12.0 to 12.99.......................................................
13.0 to 13.99.......................................................
14.0 to 14.99.......................................................
15.0 to 15.99.......................................................
16.0 to 16.99.......................................................
17.0 to 17.99.......................................................
18.0 to 18.99.......................................................
19.0 and above......................................................
Totals..............................................................
</TABLE>
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES BASED ON THE
ADDRESSES OF THE ORIGINATING DEALERS
(PERCENTAGES MAY NOT ADD TO 100.00% DUE TO ROUNDING)
<TABLE>
<CAPTION>
PERCENTAGE OF
CUTOFF DATE
STATE POOL BALANCE
- ---------------------------------------------------------------------------------------------------- ---------------
<S> <C>
Alaska..............................................................................................
Arizona.............................................................................................
Arkansas............................................................................................
California..........................................................................................
Colorado............................................................................................
Connecticut.........................................................................................
Delaware............................................................................................
Florida.............................................................................................
Georgia.............................................................................................
Idaho...............................................................................................
Illinois............................................................................................
</TABLE>
S-17
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
CUTOFF DATE
STATE POOL BALANCE
- ---------------------------------------------------------------------------------------------------- ---------------
<S> <C>
Indiana.............................................................................................
Iowa................................................................................................
Kansas..............................................................................................
Kentucky............................................................................................
Louisiana...........................................................................................
Maine...............................................................................................
Maryland............................................................................................
Massachusetts.......................................................................................
Michigan............................................................................................
Minnesota...........................................................................................
Mississippi.........................................................................................
Missouri............................................................................................
Montana.............................................................................................
Nebraska............................................................................................
Nevada..............................................................................................
New Hampshire.......................................................................................
New Jersey..........................................................................................
New Mexico..........................................................................................
New York............................................................................................
North Carolina......................................................................................
North Dakota........................................................................................
Ohio................................................................................................
Oklahoma............................................................................................
Oregon..............................................................................................
Pennsylvania........................................................................................
Rhode Island........................................................................................
South Carolina......................................................................................
South Dakota........................................................................................
Tennessee...........................................................................................
Texas...............................................................................................
Utah................................................................................................
Vermont.............................................................................................
Virginia............................................................................................
Washington..........................................................................................
West Virginia.......................................................................................
Wisconsin...........................................................................................
Wyoming.............................................................................................
Total...............................................................................................
</TABLE>
S-18
<PAGE>
MATURITY AND PREPAYMENT CONSIDERATIONS
Information regarding maturity and prepayment considerations with respect to
the Certificates is set forth under "Weighted Average Life of the Securities" in
the accompanying Prospectus and "Risk Factors--You may experience reduced
returns on your investment resulting from prepayments, repurchases or early
termination of the trust" in the accompanying Prospectus. Because the rate of
payment of principal of each class of Certificates depends on the rate of
payment (including prepayments and liquidations due to default) of the principal
balance of the Receivables, the final payment in respect of the Certificates
could occur significantly earlier than their respective final scheduled
distribution date ("Final Scheduled Distribution Date") set forth in
"Summary--Terms of the Certificates--Principal--Legal Finals" in this Prospectus
Supplement. Certificateholders will bear the risk of being able to reinvest
principal payments on the Certificates at yields at least equal to the yield on
their respective Certificates. No prediction can be made as to the rate of
prepayments on the Receivables in either stable or changing interest rate
environments.
Although the Receivables have different APRs, disproportionate rates of
prepayments between Receivables with APRs greater than or less than the Required
Rate will generally not affect the yield to the Certificateholders. 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 amounts available to be deposited in the Subordination Spread
Account.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
The following tables set forth material 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-duty trucks. The
portfolio consists of retail installment sale contracts in all fifty states, the
District of Columbia and Guam. As of [_________], approximately eighty-nine
percent of NMAC's total portfolio of U.S. retail installment sales contracts
(excluding those with original maturities of 64 months or more) consisted of
new, near-new and used automobiles and light-duty trucks financed through Nissan
dealers, with the remaining approximate 11% financed through Infiniti dealers.
There can be no assurance that the behavior of the Receivables included in
the Trust will be comparable to NMAC's experience shown in the following tables.
DELINQUENCY EXPERIENCE(1)
<TABLE>
<CAPTION>
AT MARCH 31,
-----------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Number of Contracts Outstanding............................ 312,237 330,662 317,238 274,807 226,684
Delinquencies as a Percent of Contracts Outstanding(2)
30-59 Days............................................. 2.27% 2.55% 3.10% 2.40% 2.10%
60-89 Days............................................. 0.27% 0.36% 0.49% 0.25% 0.15%
90 Days or More........................................ 0.04% 0.06% 0.17% 0.05% 0.02%
</TABLE>
S-19
<PAGE>
NET CREDIT LOSS AND REPOSSESSION EXPERIENCE(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AT OR FOR TWELVE MONTHS ENDED MARCH 31
--------------------------------------------------------------------
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Principal Amount Outstanding............... $ 3,126,219 $ 3,497,123 $ 3,276,423 $ 2,659,232 $ 1,921,100
Average Principal Amount Outstanding....... $ 3,463,840 $ 3,248,193 $ 3,181,569 $ 2,308,058 $ 1,822,669
Number of Contracts Outstanding............ 312,237 330,662 317,238 274,807 226,684
Average Number of Contracts Outstanding.... 329,320 316,769 309,257 250,040 229,248
Charge-Offs(3)............................. $ 92,005 $ 134,671 $ 158,969 $ 72,838 $ 46,201
Recoveries(4).............................. $ 41,947 $ 39,997 $ 31,874 $ 20,489 $ 16,465
Net Losses................................. $ 50,059 $ 94,674 $ 127,095 $ 52,349 $ 29,736
Net Losses as a Percent of Principal Amount
Outstanding.............................. 1.60% 2.71% 3.88% 1.97% 1.55%
Number of Repossessions(5)................. 9,782 14,164 17,569 9,841 8,530
Number of Repossessions as a Percent of the
Average Number of Contracts
Outstanding.............................. 2.97% 4.47% 5.68% 3.94% 3.72%
</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-duty trucks and includes
contracts which NMAC has sold to third parties but continues to service. The
information 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.
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 or subsequent years due to NMAC's 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 the negative trend in losses by initiating changes to its
credit policy that tightened the range of available credit in order to originate
an improved mix of business. These changes involved discontinuing the
S-20
<PAGE>
origination of 72-month term contracts in June 1996 and installing a new
empirically derived credit score card in September 1996. In addition, NMAC
tightened its credit policy by reducing advance rates for lower credit scores
and implementing risked-based pricing. See "The Receivables--Underwriting of
Motor Vehicle Loans" in the accompanying Prospectus.
CERTIFICATE AND POOL FACTORS
The "Class A Certificate Factor" will be 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. Class A Certificate Factor will decline
thereafter to reflect reductions in the Class A Certificate Balance. Class A
Certificate Balance will be computed by allocating payments in respect of the
Receivables to principal and interest using the simple interest method. 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 B Certificate Factor" will be a seven-digit decimal which the
Servicer will compute each month indicating the Class B Certificate Balance as
of the close of business on the Distribution Date in that month as a fraction of
the Original Class B Certificate Balance. The Class B Certificate Factor will be
1.0000000 as of the Cutoff Date. Class B Certificate Factor will decline
thereafter to reflect reductions in the Class B Certificate Balance. The amount
of a Class B Certificateholder's pro rata share of the Class B Certificate
Balance can be determined by multiplying the original denomination of the
holder's Certificate by the Class B Certificate Factor as of the close of
business on the most recent Distribution Date. The Class B 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 last day of the related
Collection Period by the Pool Balance as of the Cutoff Date.
The "Class B Pool Factor" is a seven-digit decimal figure which the Servicer
will compute each month and will be calculated by dividing the Class B
Certificate Balance as of the close of business on the last day of the related
Collection Period 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,
the Class B Certificate Balance, the Class B Certificate Factor, the Class B
Pool Factor and various other items of information. Class A Certificateowners
and Class B Certificateowners may obtain copies of these monthly reports from
the Trustee upon delivery of a written request to the Trustee. Class A
Certificateowners and Class B Certificateowners 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 "Description of the Transfer and Servicing
Agreements--Statements to Securityholders" in the accompanying Prospectus.
USE OF PROCEEDS
The net proceeds to be received by the Seller from the sale of the Class A
Certificates, the Class B Certificates (together with the Class A Certificates,
"Offered Certificates") and the Class C Certificates (together with the Offered
Certificates, the "Certificates") will be applied to purchase the Receivables
from NMAC and to make the initial deposit into the Subordination Spread Account
and the Yield Supplement Account.
S-21
<PAGE>
THE SELLER AND THE SERVICER
Information regarding the Seller and the Servicer is set forth under the
captions "The Seller" and "The Servicer" in the accompanying Prospectus.
FINANCIAL CONDITION OF NISSAN MOTOR CO., LTD.
NMAC is an indirect wholly-owned subsidiary of Nissan Motor Co., Ltd.
("Nissan"). Although Nissan is not guaranteeing the Trust's obligations under
the Certificates, Nissan's financial condition may affect NMAC's ability to
service the Receivables. Nissan's consolidated net sales for the fiscal year
ended March 31, 1999 were 6,580.0 billion yen, up from 6,564.6 billion yen the
previous fiscal year. Nissan's consolidated operating income for the fiscal year
ended March 31, 1999 increased to 109.7 billion yen from 86.9 billion yen the
previous fiscal year. The increase in operating income was largely attributable
to depreciation of the yen against other currencies, which offset the effect of
a decline in sales volume in Japan.
Nissan reported a consolidated net loss of 27.7 billion yen for the fiscal
year ended March 31, 1999, compared to a consolidated net loss of 14.0 billion
yen the prior fiscal year. Factors contributing to the decline in net income
included the effect of the devaluation of the peso on Nissan's Mexican operation
and evaluation losses on Nissan's securities holdings.
At the end of May 1999, an increase in Nissan's capital of 585.7 billion yen
was effected through the sale of shares to Renault. The resulting 36.8%
ownership position in Nissan gives Renault significant representation on the
Board of Directors and in the senior management of Nissan. As of the date of
this Prospectus Supplement, there have been no significant developments
resulting from this alliance. Nissan's management expects that significant
developments will occur; however, there can be no assurance that such
developments will occur or that, should they occur, they will have a positive
impact on the financial condition of Nissan.
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 September 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.
S-22
<PAGE>
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
The foregoing description under "Year 2000" contains various "forward
looking statements" within the meaning of Section 27A of the Securities Act and
Section 21E of the Securities Exchange Act of 1934, as amended, which represent
NMAC's expectations or beliefs concerning future events, including the
following: that NMAC's action plan for year 2000 compliance efforts will be
carried out as described under "Year 2000"; that NMAC expects to complete its
year 2000 compliance efforts on its critical systems on a timely basis; that the
total estimated cost in connection with the year 2000 issue is not expected to
exceed $3.0 million, and is not expected to have a material adverse effect on
NMAC's results of operations, liquidity or capital resources; and that deferral
of some information technology projects is not expected to have a material
adverse effect on NMAC's results of operations, liquidity or capital resources.
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 those factors that could cause actual
timetables to differ materially from the expected results. See "Risk Factors--
Complications associated with year 2000 date conversion could affect the
servicer's operations, impairing its ability to collect receivables, which may
result in loss on your investments" in this Prospectus Supplement.
THE CERTIFICATES
The following summary describes specified terms of the Certificates and the
Agreement. The summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of the
Certificates and the Agreement. The following summary supplements, and to the
extent inconsistent therewith replaces, the description of the general terms and
provisions of the Certificates of any given series and the related Agreement set
forth in the accompanying Prospectus, to which description reference is hereby
made.
GENERAL
The Certificates will be issued pursuant to the terms of the Agreement, a
form of which has been filed as an exhibit to the Registration Statement. A copy
of the final signed Agreement will be filed with the SEC following the issuance
of the Certificates. The Certificates will evidence undivided ownership
interests in the Trust created pursuant to the Agreement. In general, and
subject to the prior rights of any senior classes of Certificates, holders of
record of the Class A Certificates (the "Class A Certificateholders") and the
Class B Certificates (the "Class B Certificateholders," and together with the
Class A Certificateholders, the "Certificateholders") will receive, on each
Distribution Date, the related class Principal Distributable Amount and interest
at the related pass through rate set forth in "Summary--Terms of the
Certificates--Per Annum Pass Through Rates" (each, a "Pass Through Rate") on the
Certificate Balance of that class as of the close of business on the last day of
the related Collection Period. The "Certificate Balance" for any class of
Certificates as of any day or Distribution Date will equal the original
certificate balance of that class, reduced by all amounts distributed on or
prior to that day or Distribution Date on that class of Certificates and
allocable to principal. The "Original Class A Certificate Balance" means
[$_____________], the "Original Class B Certificate Balance" means
[$_____________], and the "Original Class C Certificate Balance" means
[$_____________].
S-23
<PAGE>
The Class A Certificates will evidence in the aggregate an undivided
ownership interest of [__%] (the "Class A Percentage") of the Trust (initially
representing [$___________]), the Class B Certificates will evidence in the
aggregate an undivided ownership interest of [__%] (the 'Class B Percentage') of
the Trust (initially representing [$___________]), and the Class C Certificates
will evidence in the aggregate an undivided ownership interest of [__%] (the
"Class C Percentage" and each class percentage being "Class Percentage") of the
Trust (initially representing [$___________]).
SALE AND ASSIGNMENT OF RECEIVABLES
Information with respect to the conveyance of the Receivables from the
Seller to the Trust on the Closing Date pursuant to the Agreement is set forth
under "Description of the Transfer and Servicing Agreements--Sale and Assignment
of Receivables" in the accompanying Prospectus.
ACCOUNTS
In addition to the Accounts referred to under "Description of the Transfer
and Servicing Agreements--Accounts" in the accompanying Prospectus, the Seller
will establish and will maintain with the Trustee a Yield Supplement Account in
the name of the Trustee on behalf of the Certificateholders that will not be
part of the Trust.
COLLECTIONS
The Servicer will deposit all payments on Receivables received from Obligors
and all proceeds of Receivables collected during each Collection Period into the
Collection Account not later than the Business Day after receipt. However, so
long as NMAC is the servicer, if each condition to making monthly deposits as
may be required by the Pooling and Servicing Agreement (including the
satisfaction of specified ratings criteria by NMAC and the absence of any
Servicer Default) is satisfied, the Servicer may retain such amounts until the
related Distribution Date. The Servicer or the Seller, as the case may be, will
remit the aggregate Warranty Purchase Payments and Administrative Purchase
Payments 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. The Servicer, at its own risk and for its own
benefit, may instruct the Trustee to invest amounts held in the Collection
Account in Eligible Investments from the time deposited until the related
Distribution Date. See "Description of the Transfer and Servicing
Agreements--Collections" in the accompanying Prospectus.
"Eligible Investments" will be specified in the Agreement and will be
limited to investments which meet the criteria of each Rating Agency from time
to time as being consistent with its then-current ratings of each class of the
Certificates.
Collections on or in respect of a Receivable made during a Collection Period
(including Warranty Purchase Payments and Administrative Purchase Payments) will
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.
See "Description of the Transfer and Servicing Agreements--Collections" in the
accompanying Prospectus.
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
S-24
<PAGE>
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 (an "Advance"). If the calculation
results in a negative number, an amount equal to that negative amount will be
paid to the Servicer in reimbursement of outstanding Advances. In addition, if a
Receivable becomes a Liquidated Receivable, the amount of accrued and unpaid
interest on that Receivable (but not including interest for the current
Collection Period) will, up to the amount of outstanding Advances in respect
thereof, be withdrawn from the Collection Account and paid to the Servicer in
reimbursement of the outstanding Advances. The Servicer will not be required to
make any Advance (other than the Advance of an interest shortfall arising from a
prepaid Receivable) to the extent that it does not expect to recoup the Advance
from subsequent collections or recoveries. No advances of principal will be made
with respect to the Receivables. See "Description of the Transfer and Servicing
Agreements--Advances" in the accompanying Prospectus.
SERVICING COMPENSATION
The base servicing fee for the calendar month immediately preceding any
Distribution Date (a "Collection Period") will be one-twelfth of 1.00% (the
"Servicing Rate") of the Pool Balance as of the first day of that Collection
Period or, in the case of the first Distribution Date, the Initial Pool Balance
(the "Base Servicing Fee"). The Base Servicing Fee, together with any previously
unpaid Base Servicing Fee, will be paid on each Distribution Date solely to the
extent of Available Interest. The Servicer will be entitled to collect and
retain as additional servicing compensation in respect of each Collection Period
any late fees, prepayment charges and any other administrative fees and expenses
or similar charges collected during that Collection Period, plus any interest or
investment earnings earned during that Collection Period from the investment of
monies on deposit in the Collection Account (the "Supplemental Servicing Fee").
See "--Collections" above and "Description of the Transfer and Servicing
Agreements--Servicing Compensation" in the accompanying Prospectus. The Servicer
will be paid the Base Servicing Fee and the Supplemental Servicing Fee (the
"Total Servicing Fee") for each Collection Period on the following Distribution
Date related to that Collection Period. However, if it is acceptable to each
rating agency without a reduction in the rating of the Offered Certificates, the
Base Servicing Fee in respect of a Collection Period (together with any portion
of the Base Servicing Fee that remains unpaid from prior Distribution Dates)
will be paid at the beginning of that Collection Period out of collections of
interest on the Receivables for that Collection Period. The Base Servicing Fee
will be paid from Available Interest prior to the payment of the Class
Distributable Amount for any class of Certificates.
YIELD SUPPLEMENT 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 Trustee for the benefit of the holders of the Offered
Certificates (the "Yield Supplement Account"). The "Yield Supplement Amount" for
each Collection Period means an aggregate amount (if positive), calculated by
the Servicer, by which (1) one month's interest on the principal balance as of
the first day of that Collection Period of each Yield Supplemented Receivable
(other than a Liquidated Receivable, after the Collection Period in which that
Receivable became a Liquidated Receivable) at a rate equal to the Required Rate
exceeds (2) one month's interest on that principal balance at that Yield
Supplemented Receivable's APR. "Yield Supplemented Receivables" are Receivables
that have APRs which are less than the Required Rate. The "Required Rate" means,
with respect to any Distribution Date, the sum of the weighted average Pass
Through Rate for the Class A Certificates and the Class B Certificates and
1.00%. The initial amount of the Yield Supplement Account will be
$[_____________] (the "Initial Yield Supplement Amount").
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If the Yield Supplement Amounts for any Distribution Date exceed the amount
available for withdrawal from the Yield Supplement Account on that Distribution
Date, the Seller will not have any further obligation under the Yield Supplement
Agreement to deposit any further amounts into the Yield Supplement Account. The
amount required to be on deposit in the Yield Supplement Account (the "Required
Yield Supplement Amount") will be equal to the lesser of (1) 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 (2) the
Initial Yield Supplement 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 Account exceeds the Required Yield Supplement Amount on that
Distribution Date, the excess will be paid to the Seller. The Yield Supplement
Account will not be part of the Trust.
Simultaneously with the sale and assignment of the Receivables by NMAC to
the Seller, the Seller will enter into the Yield Supplement Agreement with the
Trustee and the Servicer. The Seller will assign the Yield Supplement Agreement
to the Trust.
NET DEPOSITS
As an administrative convenience and as long as specified conditions are
satisfied, the Servicer will be permitted to make the deposit of collections,
aggregate Advances and amounts deposited in respect of purchases of Receivables
by the Seller or the Servicer for or with respect to the related Collection
Period net of payments to be made to the Servicer with respect to that
Collection Period. The Servicer, however, will account to the Trustee and to the
Certificateholders as if all of the foregoing deposits and payments were made
individually. See "Description of the Transfer and Servicing Agreements--Net
Deposits" in the accompanying Prospectus.
OPTIONAL PURCHASE
The outstanding Certificates will be redeemed in whole, but not in part, on
any Distribution Date on which the Servicer or any successor to the Servicer
exercises its option to purchase the Receivables. The Servicer or any successor
to the Servicer may purchase the Receivables when the Pool Balance shall have
declined to 10% or less of the Initial Pool Balance, as described in the
accompanying Prospectus under "Description of the Transfer and Servicing
Agreements--Termination." The "Redemption Price" for the outstanding
Certificates will equal the Certificate Balance on the date of the optional
purchase plus accrued and unpaid interest on the Certificates.
REMOVAL OF SERVICER
The Trustee or Holders of Certificates evidencing a majority of the voting
interests of the Certificates (or relevant classes of Certificates), may
terminate the rights and obligations of the Servicer under the Agreement upon
the:
1. any failure by the Servicer (or the Seller, so long as NMAC is the
Servicer) to deliver to the Trustee for deposit in any Account any
required payment or to direct the Trustee to make any required
distributions from that Account, and that failure continues unremedied
for three Business Days after (a) receipt by the Servicer (or the Seller,
so long as NMAC is the Servicer) of written notice of the failure from
the Trustee, (b) receipt by the Servicer (or the Seller, so long as NMAC
is the Servicer) and the Trustee of written notice of the failure from
the holders of Certificates evidencing not less than 25% in principal
balance of those outstanding Certificates, acting together as the single
class; or (c) discovery of that failure by any officer of the Servicer;
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2. any failure by the Servicer (or the Seller, as long as NMAC is the
Servicer) to duly observe or perform in any material respect any other
covenants or agreements of the Servicer (or the Seller, as long as NMAC
is the Servicer) set forth in the Agreement, and that failure materially
and adversely affects the rights of the Certificateholders, and that
failure continues unremedied for 90 days after the giving of written
notice of the failure to (a) the Servicer (or the Seller, so long as NMAC
is the Servicer) by the Trustee, or (b) the Servicer (or the Seller, so
long as NMAC is the Servicer) and the Trustee by the holders of
Certificates evidencing not less than 25% in principal balance of those
Certificates, acting together as a single class; and
3. the occurrence of an Insolvency Event of the Servicer.
Under those circumstances, authority and power shall, without further
action, pass to and be vested in the Trustee or a successor Servicer appointed
under the Agreement. If, however, a bankruptcy trustee or similar official has
been appointed for the Servicer, and no Servicer Default other than the
appointment of a bankruptcy trustee or similar official has occurred, that
trustee or official may have the power to prevent the Trustee or the
Certificateholders from effecting a transfer of servicing. Upon receipt of
notice of the occurrence of a Servicer Default, the Trustee shall give notice
thereof to the rating agencies.
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 Seller or 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 those monies are deposited
into the Collection Account. The Trustee will not independently verify the
Receivables. If no Servicer 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 a Servicer Default unless the Trustee
obtains actual knowledge of that failure as specified in the Agreement.
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 under the Agreement or to institute, conduct or defend any litigation
under the Agreement or in relation thereto at the request, order or direction of
any of the Certificateholders, unless those Certificateholders have offered to
the Trustee reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred by the Trustee in connection with the exercise
of those rights. No 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 that Certificateholder has previously given to the Trustee written notice
of default and unless the holders of Certificates evidencing not less than 25%
of the voting interests of the Certificates have made written request upon the
Trustee to institute that proceeding in its own name as Trustee under the
Agreement and have offered to the Trustee reasonable indemnity and the Trustee
for 30 days has neglected or refused to institute that proceeding.
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THE TRUSTEE
[________________] is the Trustee under the Agreement. The Trustee, in its
individual capacity or otherwise, may hold Certificates in its own name or as
pledgee. For the purpose of meeting the legal requirements of some
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
appointment of co-trustees or separate trustees, all rights, powers, duties and
obligations conferred or imposed upon the Trustee by the Agreement shall be
conferred or imposed upon the Trustee and each separate trustee or co-trustee
jointly, or, in any jurisdiction in which the Trustee shall be incompetent or
unqualified to perform specified acts, singly upon that separate trustee or
co-trustee who shall exercise and perform those rights, powers, duties and
obligations solely at the direction of the Trustee.
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 trustee under the
Agreement, becomes legally unable to act, or becomes insolvent. In those
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.
The Agreement will provide that the Servicer will pay the Trustee's fees.
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 specified taxes that
may be asserted in connection with the transaction.
NOTICES
Certificateholders will be notified in writing by the Trustee of any
Servicer Default or termination of, or appointment of a successor to, the
Servicer promptly upon a Responsible Officer (as defined in the Agreement)
obtaining actual knowledge thereof. Except with respect to the monthly and
annual reports to Certificateholders described in this Prospectus Supplement,
the Trustee is not obligated under the Agreement to forward any other notices to
the Certificateholders. There are no provisions in the Agreement for the regular
or special meetings of Certificateholders.
GOVERNING LAW
The Agreement and the Certificates are governed by and shall be construed in
accordance with the laws of the State of New York applicable to agreements made
in and to be performed wholly within that jurisdiction.
DISTRIBUTIONS ON THE CERTIFICATES
GENERAL
The Trust will pay interest and principal on the Certificates on the
fifteenth day of each month. If the fifteenth day of the month is not a Business
Day, payments on the Certificates will be made on the next Business Day. The
date that any payment is made is called a "Distribution Date." The first
distribution date will be [__________]. A "Business Day" is any day except a
Saturday, Sunday, or a day on which banks in New York, New York, Minneapolis,
Minnesota, or Los Angeles, California are authorized or obligated by law,
regulation, executive order or decree to be closed.
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On or before the tenth calendar day of each month (or, if the tenth day is
not a Business Day, the next succeeding Business Day (each, a "Determination
Date")), the Servicer will inform the Trustee of, among other things, the amount
of funds collected on or in respect of the Receivables, the amount of Advances
to be made by and reimbursed to the Servicer and the aggregate Warranty Purchase
Payments and Administrative Purchase Payments of Receivables to be purchased by
the Seller or the Servicer, all with respect to the related Collection Period.
On or prior to each Distribution Date, the Servicer will also determine the
Total Available Amount, Available Interest, Available Principal, the Class A
Distributable Amount, the Class B Distributable Amount, the Class C
Distributable Amount and other distributions to be made on that Distribution
Date, and as described below, the amount to be paid to Certificateholders of
each class.
The Trustee will make payments to the Certificateholders out of the amounts
on deposit in the Collection Account. The amount to be paid to the
Certificateholders will be determined in the manner described below.
CALCULATION OF AVAILABLE AMOUNTS
"Total Available Amount" for a Distribution Date (being the funds available
for distribution to Certificateholders of each class with respect to that
Distribution Date in accordance with the priorities described below) shall be
the sum of Available Interest and Available Principal.
"Available Interest" for a Distribution Date shall be the sum of the
following amounts allocable to interest received or allocated by the Servicer on
or in respect of the Receivables during the related Collection Period:
1. all collections on or in respect of the Receivables other than Defaulted
Receivables;
2. all proceeds of the liquidation of Defaulted Receivables, net of
expenses incurred by the Servicer in accordance with its customary
servicing procedures in connection with the liquidation, including
amounts received in subsequent Collection Periods ("Net Liquidation
Proceeds");
3. all Advances made by the Servicer;
4. all Warranty Purchase Payments with respect to Warranty Receivables
repurchased by the Seller in respect of that Collection Period;
5. all Administrative Purchase Payments with respect to Administrative
Receivables purchased by the Servicer in respect of that Collection
Period; and
6. any Yield Supplement Amounts.
"Available Principal" for a Distribution Date shall be the sum of the
amounts described in clauses (1), (2), (4) and (5) above received or allocated
by the Servicer in respect of principal on or in respect of the Receivables
during the related Collection Period.
Available Interest and Available Principal on any Distribution Date will
exclude the following amounts:
1. amounts received on a particular Receivable (other than a Defaulted
Receivable) to the extent that the Servicer has previously made an
unreimbursed Advance in respect of that Receivable;
2. Net Liquidation Proceeds with respect to a particular Receivable to the
extent of unreimbursed Advances in respect of that Receivable; and
3. recoveries from collections with respect to Advances that the Servicer
has determined are unlikely to be repaid.
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A "Defaulted Receivable" will be a Receivable (other than an Administrative
Receivable or a Warranty Receivable) which, by its terms, is delinquent more
than 120 days or, with respect to a Receivable that is delinquent less than 120
days, the Servicer has (a) determined, in accordance with its customary
servicing procedures, that eventual payment in full is unlikely, or (b)
repossessed the Financed Vehicle.
CALCULATION OF DISTRIBUTABLE AMOUNTS
The "Class Distributable Amount" for each class of Certificates with respect
to a Distribution Date will equal the sum of (1) the Principal Distributable
Amount for that class (each amount, the "Class A Principal Distributable
Amount", "Class B Principal Distributable Amount" and "Class C Principal
Distributable Amount"), and (2) the Interest Distributable Amount for that class
(each amount the "Class A Interest Distributable Amount", the "Class B Interest
Distributable Amount" and "Class C Interest Distributable Amount").
The "Principal Distributable Amount" for a particular class consists of the
related Class Percentage of the following items:
1. the principal portion of all payments actually received on the
Receivables during that Collection Period;
2. the principal portion of all prepayments and partial prepayments,
received during that Collection Period (to the extent those amounts are
not included in clause (1) above); and
3. the Principal Balance of each Receivable that the Servicer became
obligated to purchase, the Seller became obligated to repurchase or that
became a Defaulted Receivable during that Collection Period (to the
extent those amounts are not included in clauses (1) or (2) above).
The "Interest Distributable Amount" for a particular class consists of 30
days' interest at the related Pass Through Rate on the related Certificate
Balance as of close of business on the last day of the related Collection Period
or, in the case of the first Distribution Date, the related Original Class
Certificate Balance (these amounts being the "Class A Interest Distributable
Amount," the "Class B Interest Distributable Amount" and the "Class C Interest
Distributable Amount").
The "Class A Certificate Balance" will initially equal the Original Class A
Certificate Balance and, on any Distribution Date, will equal the Original Class
A Certificate Balance reduced by all amounts allocable to principal paid on or
prior to that Distribution Date on the Class A Certificates. In addition, on
each Distribution Date from and including the Distribution Date on which the
Class B Certificate Balance and the Class C Certificate Balance have been
reduced to zero, the Class A Certificate Balance will be reduced by the amount,
if any, necessary to cause it to equal the Pool Balance as of the last day of
the related Collection Period after taking into account all payments, deposits
and withdrawals to be made on that Distribution Date.
The "Class B Certificate Balance" will initially equal the Original Class B
Certificate Balance and, on any Distribution Date, will equal the Original Class
B Certificate Balance reduced by all amounts allocable to principal paid on or
prior to that Distribution Date on the Class B Certificates. In addition, on
each Distribution Date from and including the Distribution Date on which the
Class C Certificate Balance has been reduced to zero, the Class B Certificate
Balance will be reduced by the amount, if any, necessary to cause it to equal to
the excess, if any, of the Pool Balance as of the last day of the related
Collection Period over the Class A Certificate Balance as of such date, after
taking into account all payments, deposits and withdrawals to be made on that
Distribution Date.
The "Class C Certificate Balance" will initially equal the Original Class C
Certificate Balance and, on any Distribution Date, will equal the amount by
which the Pool Balance on the last day of the related Collection Period exceeds
the sum of the Class A Certificate Balance and the Class B
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Certificate Balance on that date after taking into account all payments,
deposits and withdrawals to be made on that Distribution Date.
PAYMENTS OF INTEREST
On each Distribution Date, commencing [_________], the Certificateholders
will be entitled to interest payments in an amount up to the amount of interest
that accrued on the related Certificate Balance for the related Interest Period
at the related Pass Through Rate. The Certificates will constitute Fixed Rate
Securities, as that term is defined under "Material Information Regarding the
Securities-- Fixed Rate Securities" in the accompanying Prospectus. Interest on
any class of Certificates in respect of a Distribution Date will accrue during
the related Interest Period and will be calculated on the basis of a 360-day
year consisting of twelve 30-day months. Interest payments due on any class of
Certificates for any Distribution Date but not paid on that Distribution Date
will be due on the next Distribution Date increased by an amount equal to
interest on that amount at the related Pass Through Rate (to the extent lawful).
Under some circumstances, amounts otherwise allocable to pay interest on a class
of Certificates will be applied to cover shortfalls in amounts available to make
payments of principal or interest on a more senior class of Certificates. In
addition, interest amounts otherwise distributable to the Class C
Certificateholders will be deposited by the Trustee in the Subordination Spread
Account to cover any deficiency in that account before application of any Excess
Amounts are deposited in that account.
PAYMENTS OF PRINCIPAL
On each Distribution Date, commencing [_____________], each class of
Certificates will be entitled to principal payments in an amount generally equal
to the related Principal Distributable Amount for that class. Under some
circumstances, amounts otherwise allocable to pay principal on a class of
Certificates will be applied to cover shortfalls in amounts available to make
payments of interest on a more senior class of Certificates.
PAYMENT OF DISTRIBUTABLE AMOUNTS
Prior to each Distribution Date, the Servicer will calculate the amount to
be paid to the Certificateholders. On each Distribution Date, the Trustee will
pay the following amounts in the following order of priority, to the extent of
funds available for payment on that Distribution Date:
1. to the Servicer, the Total Servicing Fee, including any unpaid Total
Servicing Fees with respect to one or more prior Collection Periods, and
reimbursement for outstanding Advances, those amounts to be paid from
Available Interest;
2. to the Class A Certificateholders, an amount equal to the Class A
Interest Distributable Amount and any unpaid Class A Interest Carryover
Shortfall, that amount to be paid from Available Interest (after giving
effect to any reduction in Available Interest described in clause (1)
above); and if that Available Interest is insufficient, the Class A
Certificateholders will be entitled to receive that amount first, from
funds on deposit in the Subordination Spread Account, second, if those
amounts are insufficient, from the Class C Percentage of Available
Principal, and third, if those amounts are insufficient, from the Class B
Percentage of Available Principal;
3. to the Class A Certificateholders, an amount equal to the Class A
Principal Distributable Amount and any unpaid Class A Principal Carryover
Shortfall, that amount to be paid from Available Principal (after giving
effect to any reduction in Available Principal described in clause (2)
above); and if that Available Principal is insufficient, the Class A
Certificateholders will be entitled to receive that amount first, from
funds on deposit in the Subordination
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Spread Account and second, if those amounts are insufficient, from
Available Interest (after giving effect to any reduction in Available
Interest described in clauses (1) through (2) above);
4. to the Class B Certificateholders, an amount equal to the Class B
Interest Distributable Amount and any unpaid Class B Interest Carryover
Shortfall, that amount to be paid from Available Interest (after giving
effect to any reduction in Available Interest described in clauses (1)
through (3) above); and if that Available Interest is insufficient, the
Class B Certificateholders will be entitled to receive that amount first,
from funds on deposit in the Subordination Spread Account, and second, if
those amounts are insufficient, from the Class C Percentage of Available
Principal;
5. to the Class B Certificateholders, an amount equal to the Class B
Principal Distributable Amount and any unpaid Class B Principal Carryover
Shortfall, that amount to be paid from Available Principal (after giving
effect to any reduction in Available Principal described in clauses (2)
through (4) above); and if that Available Principal is insufficient, the
Class B Certificateholders will be entitled to receive that amount first,
from funds on deposit in the Subordination Spread Account and second, if
those amounts are insufficient, from Available Interest (after giving
effect to any reduction in Available Interest described in clauses (1)
through (4) above);
6. to the Class C Certificateholders, an amount equal to the Class C
Interest Distributable Amount and any unpaid Class C Interest Carryover
Shortfall, that amount to be paid from Available Interest (after giving
effect to any reduction in Available Interest described in clauses (1)
through (5) above);
7. to the Class C Certificateholders, an amount equal to the Class C
Principal Distributable Amount and any unpaid Class C Principal Carryover
Shortfall, that amount to be paid from Available Principal (after giving
effect to any reduction in Available Principal described in clauses (2)
through (5) above); and if that Available Principal is insufficient, the
Class C Certificateholders will be entitled to receive that amount from
Available Interest (after giving effect to any reduction in Available
Interest described in clauses (1) through (6) above); and
8. if necessary, to the Subordination Spread Account so that the funds on
deposit in that account will be equal to the Specified Subordination
Spread Account Balance; provided that if there is a deficiency in the
Subordination Spread Account, amounts otherwise distributable to the
Class C Certificateholders will first be deposited by the Trustee in the
Subordination Spread Account to cover the deficiency.
Notwithstanding the foregoing, no amount will be paid to the Class A
Certificateholders or the Class B Certificateholders in respect of any Yield
Supplement Amount with respect to a Receivable, except to the extent of amounts
withdrawn from the Yield Supplement Account, except that if the Yield Supplement
Amounts exceed funds available in the Yield Supplement Account, the excess shall
be withdrawn from the Subordination Spread Account.
An "Interest Carryover Shortfall" with respect to any class of Certificates
on any Distribution Date will equal the excess, if any, of (1) the related
Interest Distributable Amount for that class on that Distribution Date and any
outstanding related Interest Carryover Shortfall for that class from the
immediately preceding Distribution Date plus interest on the outstanding
Interest Carryover Shortfall, to the extent permitted by law, at the related
Pass Through Rate from that immediately preceding Distribution Date through the
current Distribution Date, over (2) the amount of interest paid to the related
Certificateholders on that Distribution Date (each shortfall, the "Class A
Interest Carryover Shortfall," "Class B Interest Carryover Shortfall" and "Class
C Interest Carryover Shortfall", as applicable).
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A "Principal Carryover Shortfall" with respect to any class of Certificates
on any Distribution Date will equal the excess, if any, of (1) the related
Principal Distributable Amount for that class on that Distribution Date and any
outstanding Principal Carryover Shortfall for that class from the immediately
preceding Distribution Date over (2) the amount of principal actually paid to
the related Certificateholders on that Distribution Date (each shortfall, the
"Class A Principal Carryover Shortfall," "Class B Principal Carryover Shortfall"
and "Class C Principal Carryover Shortfall", as applicable).
Any amounts remaining after giving effect to the distributions described in
clauses (1) through (8) of the fourth preceding paragraph on any Distribution
Date ("Excess Amounts") will be distributed to the Seller.
Notwithstanding the foregoing distribution priorities, if the Servicer fails
to make an Advance, the portion of any shortfall attributable thereto shall be
paid only from amounts available in the Subordination Spread Account.
Even if the Certificate Balance of any class of Certificates is reduced to
zero prior to the termination of the Trust and prior to the final payment in
respect of amounts payable on the Certificates of all classes, any Interest or
Principal Carryover Shortfalls with respect to that class will continue as
obligations of the Trust payable from amounts on deposit in the Collection
Account or Subordination Spread Account, including Excess Amounts, before any
further deposit of Excess Amounts into the Subordination Spread Account or
release of amounts in the Subordination Spread Account to the Seller.
PAYMENTS UNDER THE YIELD SUPPLEMENT AGREEMENT
Each Certificateholder of the Offered Certificates should allocate a portion
of its purchase price or other tax basis in the related Offered Certificates, as
the case may be, to its right to receive Yield Supplement Amounts. See "Material
Income Tax Consequences--Original Issue Discount, Imputed Interest and Market
Discount" in this Prospectus Supplement.
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 Certificateholder of the Offered
Certificates 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 that Certificateholder for the amount of the discount. In
that case, each Certificateholder of the Offered Certificates will accrue income
in respect of its interest in that 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 any Certificateholder
of the Offered Certificates 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 related Offered
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 IRS.
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SUBORDINATION; SUBORDINATION SPREAD ACCOUNT
SUBORDINATION
The rights of the Certificateholders to receive payments with respect to the
Receivables will be subordinated to the rights of the Servicer to receive the
Base Servicing Fee, any additional servicing compensation described under "The
Certificates--Servicing Compensation" in this Prospectus Supplement and the
reimbursement of unreimbursed Advances.
In addition, the rights of the Certificateholders of the Class B
Certificates and the Class C Certificates to receive payments with respect to
collections on the Receivables will be subordinated to the rights of the Class A
Certificateholders to the extent described in this Prospectus Supplement. This
subordination is intended to enhance the likelihood of timely receipt by the
Class A Certificateholders, and, to a lesser extent, the Class B
Certificateholders, of the full amount of interest and principal required to be
paid to them, and to afford those Certificateholders limited protection against
losses in respect of the Receivables.
The Certificateholders of the Class B Certificates and the Class C
Certificates 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 that Distribution Date has been distributed to the Class A
Certificateholders.
The Class C 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 that Distribution Date has been
distributed to the Class A Certificateholders and the Class B
Certificateholders.
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 that
Distribution Date (after giving effect to any amounts withdrawn from the
Subordination Spread Account, the Class B Distributable Amount and the Class C
Distributable Amount and applied to that deficiency, as described above), the
holders of the Class B Certificates and the Class C Certificates will not
receive any portion of the Total Available Amount.
If on any Distribution Date the holders of the Class B Certificates do not
receive the sum of the Class B Distributable Amount, the Class B Interest
Carryover Shortfall and the Class B Principal Carryover Shortfall for that
Distribution Date (after giving effect to any amounts withdrawn from the
Subordination Spread Account and the Class C Distributable Amount and applied to
that deficiency, as described above), the holders of the Class C Certificates
will not receive any portion of the Total Available Amount.
SUBORDINATION SPREAD ACCOUNT
The Class A Certificateholders and the Class B Certificateholders will also
have the benefit of the Subordination Spread Account. The Subordination Spread
Account will be a segregated trust account held by the Trustee and will not be
an asset of the Trust. Any amounts held on deposit in the Subordination Spread
Account are owned by the Seller and any investment earnings on the Subordination
Spread Account will be taxable to the Seller for federal income tax purposes.
The Subordination Spread Account will be created with an initial deposit by the
Seller of an amount equal to [$_______________] (the "Subordination Spread
Account Initial Deposit"). If on any subsequent Distribution Date the amount on
deposit in the Subordination Spread Account is less than the Specified
Subordination Spread Account Balance, first, the Class C Distributable Amount,
and if that amount is not sufficient, Excess Amounts will be deposited in the
Subordination Spread Account until the monies in the Subordination Spread
Account reach an amount equal to the Specified Subordination Spread Account
Balance.
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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. The "Specified Subordination Spread
Account Balance" with respect to any Distribution Date will be equal to
[$_______________], except that in the event that on any Distribution Date:
1. the annualized average for the preceding three Collection Periods of the
percentage equivalents of the ratios of net losses (i.e., the net
balances of all Receivables which are determined to be uncollectible in
the Collection Period, less any Net Liquidation Proceeds with respect to
those net balances from that or prior Collection Periods) to the Pool
Balance as of the first day of each that Collection Period exceeds
[___%], or
2. the average for the preceding three Collection Periods of the percentage
equivalents of the ratios of the number of Receivables that are
delinquent 60 days or more to the outstanding number of Receivables
exceeds [___%],
then the Specified Subordination Spread Account Balance for that Distribution
Date (and for each succeeding Distribution Date until the relevant averages have
not exceeded the specified percentages in clauses (1) and (2) above for three
successive Distribution Dates) shall be a dollar amount equal to (x) [___%] of
the Pool Balance as of the first day of the related Collection Period minus (y)
the excess of the Pool Balance over the sum of the Class A Certificate Balance
and the Class B Certificate Balance as of the first day of that Collection
Period, but in no event shall the Specified Subordination Spread Account Balance
be more than [$______________], or less than [$_____________].
On any Distribution Date on which the aggregate balance of the Offered
Certificates is [$_____________] or less, after giving effect to the
distributions on that Distribution Date, the Specified Subordination Spread
Account Balance shall be the greater of the balance described above or
[$_____________].
The Servicer may, from time to time after the date of this Prospectus
Supplement, request each rating agency then rating the Offered 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 the new formula or manner would not affect the then-
current rating of the Offered Certificates.
Amounts held from time to time in the Subordination Spread Account will
continue to be held for the benefit of the holders of the Offered Certificates.
Funds on deposit in the Subordination Spread Account may be invested in Eligible
Investments. Investment income on monies on deposit in the Subordination Spread
Account will not be available for payment to Certificateholders or otherwise
subject to any claims or rights of the Certificateholders and will be paid to
the Seller. Any loss on those investments will be charged to the Subordination
Spread Account.
If on any Distribution Date the Class C Certificate Balance equals zero and
amounts on deposit in the Subordination Spread Account have been depleted as a
result of losses in respect of the Receivables, the protection afforded to the
Class A Certificateholders and the Class B Certificateholders by the
subordination of the Class C Certificates and by the Subordination Spread
Account will be exhausted and the Class B Certificateholders will bear directly
the risks associated with ownership of the Receivables. From and after that
date, all those losses realized during a Collection Period will be allocated
first to the Class B Certificates, resulting in the reduction of the Class B
Certificate Balance on the related Distribution Date and second, if the Class B
Certificate Balance is reduced to zero, to the Class A Certificates.
If on any Distribution Date the Class B Certificate Balance equals zero and
amounts on deposit in the Subordination Spread Account have been depleted as a
result of losses in respect of the
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Receivables, the protection afforded to the Class A Certificateholders by the
subordination of the Class B Certificates, the Class C Certificates and by the
Subordination Spread Account will be exhausted and the Class A
Certificateholders will bear directly the risks associated with ownership of the
Receivables. From and after that date, all those losses realized during a
Collection Period will be allocated first to the Class A Certificates, resulting
in the reduction of the Class A Certificate Balance on the related Distribution
Date.
MATERIAL INCOME TAX CONSEQUENCES
CLASSIFICATION OF THE TRUST
Under current law and assuming execution of, and compliance with, the
Agreement, the Custody and Pledge Agreement and the Yield Supplement Agreement,
the Trust will be classified for federal income tax purposes and California
franchise and income tax purposes as a grantor trust and not as an association
taxable as a corporation.
For federal income tax purposes, each beneficial owner of the Offered
Certificates ("Grantor Trust Certificateholder") 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
specified fees paid by the Trust to the Servicer and to any limitations
generally applicable to that holder) its share of the expenses of the Trust
allocable to it.
Although each Grantor Trust Certificateholder 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 Grantor Trust
Certificateholder's share of the right to interest on the Receivables, however,
is not entirely certain. Each Grantor Trust Certificateholder's right to
interest with respect to a particular Receivable should be limited to its pro
rata share of the lesser of (1) 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 (2) the total interest payable on that Receivable.
For administrative convenience, however, the Trustee may report information
with respect to a Grantor Trust Certificateholder's investment in an Offered
Certificate on an aggregate basis as though that Grantor Trust
Certificateholder's investment in the Receivables and other assets were equal to
that Grantor Trust Certificateholder's share of the initial Class 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 IRS 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 in the accompanying Prospectus) are subject to the
"stripped bond" rules of the Code, which could result in those Receivables
having original issue discount ("OID"), and Low Yield Receivables (as defined in
the accompanying Prospectus) may be subject to the market discount or imputed
interest rules.
PAYMENTS UNDER THE YIELD SUPPLEMENT AGREEMENT
A Grantor Trust Certificateholder should allocate a portion of its purchase
price or other tax basis in that Certificate to its right to receive Yield
Supplement Amounts. It is expected that the value of the Grantor Trust
Certificateholder's right to receive Yield Supplement Amounts will be de
minimus, and the Trust does not intend to allocate any of the purchase price or
other tax basis of a Grantor Trust Certificate to the Grantor Trust
Certificateholder's right to receive Yield Supplement Amounts for tax reporting
purposes. See "--Original Issue Discount, Imputed Interest and Market
Discount--Original Issue Discount; General."
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Tax counsel is unable to opine as to the federal income tax characterization
of the right to receive Yield Supplement Amounts. The potential
characterizations of the right to receive Yield Supplement Amounts are described
in the accompanying Prospectus under "Material Income Tax Consequences--Tax
Treatment of Grantor Trusts--Yield Supplement Amounts."
ORIGINAL ISSUE DISCOUNT, IMPUTED INTEREST AND MARKET DISCOUNT
ORIGINAL ISSUE DISCOUNT; GENERAL. The Receivables bear interest at varying
rates. Because a Grantor Trust Certificateholder will be viewed as owning an
interest in each of the Trust's assets and the right to receive Yield Supplement
Amounts, a portion of the Grantor Trust Certificateholder's purchase price of an
Offered Certificate (whether on initial sale or in a subsequent transaction) may
be required to be allocated among each of the Trust's assets and the right to
receive Yield Supplement Amounts, based on their respective fair market values.
See discussion under "Material Income Tax Consequences--Tax Treatment of Grantor
Trusts--Discount and Premium" in the accompanying Prospectus.
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 an Offered Certificate will result
in the separation of ownership ("stripping") of a portion of the rights to
interest payments on High Yield Receivables. See discussion under "Material
Income Tax Consequences--Tax Treatment of Grantor Trusts--Characterization" in
the accompanying Prospectus.
PREMIUM. A Grantor Trust Certificateholder that purchases an Offered
Certificate for an amount greater than its outstanding principal balance may
elect under Section 171 of the Code to amortize premium in respect of the
Receivables in order to accrue income based on the Grantor Trust
Certificateholder's yield rather than at the Pass Through Rate. That 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 that election applies, and
may be revoked only with the consent of the IRS. See discussion under "Material
Income Tax Consequences--Tax Treatment of Grantor Trusts--Premium" in the
accompanying Prospectus.
IMPUTED INTEREST AND MARKET DISCOUNT. 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 that 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 that 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 Grantor Trust
Certificateholder'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 Grantor Trust Certificateholder. 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 an Offered Certificate by a Grantor Trust Certificateholder, will
be treated as ordinary income to the extent of accrued market discount. Any gain
recognized by a Grantor Trust Certificateholder upon a sale or other disposition
of an Offered Certificate will be treated as capital gain to the extent the gain
exceeds accrued market discount. The character of any gain from the sale of an
Offered 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 on an Offered Certificate attributable to any
indebtedness treated as incurred or continued to purchase or carry a Receivable
may have to be deferred, unless a Grantor Trust Certificateholder
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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 principal
payments are received or at the time of disposition). That election would apply
to all debt instruments acquired by the taxpayer on or after the first day of
the first taxable year to which that election applies, and may be revoked only
with consent of the IRS. Taxpayers may, in general, elect to accrue market
discount either (1) under a constant yield-to-maturity method or (2) in the
proportion that the stated interest paid on the obligation for the current
period bears to the total remaining interest on the obligation. See discussion
under "Material Income Tax Consequences--Tax Treatment of Grantor Trusts--Market
Discount" in the accompanying Prospectus.
ACCRUING INCOME ON A SEPARATE ASSET BASIS. 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 Offered 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 Offered Certificates, including
interest effectively paid over to the Servicer and the Trustee, 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 some "pass through entities." If required to report income in
respect of the Offered Certificates to the IRS and/or Grantor Trust
Certificateholders holding the Offered Certificates, however, the Servicer and
Trustee currently intend to accrue income on an aggregate basis, based on an
assumed initial offering price of the Offered Certificates and based on the net
amounts distributable on the Offered Certificates. This method of reporting on a
net basis may not be permitted. Furthermore, subsequent purchasers of the
Offered Certificates will have to adjust the amounts reported to them based upon
their basis in the Offered Certificates.
POSSIBLE ALTERNATIVE CHARACTERIZATION. Prospective investors should be
aware that the IRS 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 Offered Certificate at a yield higher than the Pass Through Rate on the
Offered Certificates (that is, for an amount less than the principal amount of
Receivables allocable to the Offered Certificate), that assumption could
accelerate income on the Offered Certificate.
Prospective investors should also be aware that, although the Seller
believes that none of:
1. the Class A Grantor Trust Certificateholders' right to be paid prior to
payment being made on the Class B Certificates and the Class C
Certificates;
2. the Class B Grantor Trust Certificateholders' right to be paid prior to
payment being made on the Class C Certificates; or
3. the Class A and Class B Grantor Trust Certificateholders' right to be
paid out of the Subordination Spread Account;
should be treated as an asset separate from the Class A and Class B Grantor
Trust Certificateholders' rights in the Receivables, the IRS could take a
contrary view. If any of those rights were characterized as a separate asset, a
portion of that holder's basis in its Certificate could be required to be
allocated to those rights or a Grantor Trust Certificateholder 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 an Offered Certificate, a Grantor
Trust Certificateholder will recognize taxable gain or loss in respect of its
undivided interest in each asset held by the Trust.
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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
Grantor Trust Certificateholder's adjusted basis in that asset. See discussion
under "Material Income Tax Consequences--Trusts Treated as Grantor Trusts--Sale
or Exchange of a Grantor Trust Certificate" in the accompanying Prospectus.
A disposition or retirement of an Offered 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 those 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 (1) for a corporate taxpayer could not be
offset by, and (2) 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-- Accruing Income on a Separate Asset Basis" above. The character of
any gain realized allocable to the Certificateholder'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 an Offered
Certificate would be capital gain or loss. However, it is possible that the
Servicer will take the position that, under the rules for accruing OID, gain on
any prepayment of the Receivables will be ordinary income.
FOREIGN CERTIFICATEHOLDERS
Interest attributable to Receivables which is received by a Grantor Trust
Certificateholder that is not a "U.S. person" (as defined in the accompanying
Prospectus under "Material Income Tax Consequences--Tax Treatment of Owner
Trusts--Foreign Owners," and has no connection with the United States other than
owning the Offered Certificate would generally constitute "portfolio interest"
and, accordingly, not be subject to the normal 30% withholding tax imposed with
respect to those payments, provided that that Grantor Trust Certificateholder
fulfills specified certification requirements.
Although it is not entirely clear, it is likely that payments received out
of the Yield Supplement Account or in respect of the Yield Supplement Agreement
generally would not be subject to withholding tax. See discussion under
"Material Income Tax Consequences--Trusts Treated as Grantor Trusts--Foreign
Persons" in the accompanying Prospectus.
MATERIAL STATE TAX CONSEQUENCES
For California tax purposes, Grantor Trust Certificateholders could be
considered to own either (1) an undivided interest in a single debt obligation
held by the Trust and having a principal amount equal to the total stated
principal amount of the Receivables and an interest rate equal to the related
Pass Through Rate or (2) an interest in each of the Receivables and any other
Trust assets.
It is suggested that Grantor Trust Certificateholders consult their tax
advisors regarding the state tax consequences associated with the purchase,
ownership and disposition of the Grantor Trust Certificates.
ERISA CONSIDERATIONS
CLASS A CERTIFICATES
Subject to the considerations set forth below and under "ERISA
Considerations" in the accompanying Prospectus, the Class A Certificates may be
purchased by an employee benefit plan or an individual retirement account (a
"Benefit Plan") subject to ERISA or Section 4975 of the United States Internal
Revenue Code of 1986, as amended (the "Code"). A fiduciary of a Benefit Plan
must
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determine that the purchase of an Class A Certificate is consistent with its
fiduciary duties under ERISA and does not result in a nonexempt prohibited
transaction as defined in Section 406 of ERISA or Section 4975 of the Code.
The United States Department of Labor (the "DOL") has granted to
[_________________] and [________________________] administrative exemptions
(Prohibited Transaction Exemptions [_____] and [_____], as amended by Prohibited
Transaction Exemption 97-34 (the "Exemptions")) from some of the prohibited
transaction rules of ERISA with respect to the initial purchase, the holding and
the subsequent resale by Benefit Plans of certificates representing interests in
asset backed pass through trusts that consist of receivables, loans and other
obligations that meet the conditions and requirements of the Exemptions. The
receivables covered by the Exemptions include motor vehicle installment
obligations such as the Receivables. The Exemptions also apply to transactions
in connection with the servicing, management and operation of the Trust which
might otherwise constitute prohibited transactions.
Among the conditions that must be satisfied for either of the Exemptions to
apply to the acquisition by a Benefit Plan of the Class A Certificates are the
following:
1. The acquisition of the Class A Certificates by a Benefit Plan is on
terms (including the price for that Class A Certificates) that are at
least as favorable to the Benefit Plan as they would be in an
arm's-length transaction with an unrelated party.
2. The rights and interests evidenced by the Class A Certificates acquired
by the Benefit Plan are not subordinated to the rights and interests
evidenced by other certificates of the Trust.
3. The Class A Certificates acquired by the Benefit Plan have received a
rating at the time of the acquisition that is in one of the three highest
generic rating categories from Standard & Poor's Structured Rating Group
("S&P"), Moody's Investors Service, Inc. ("Moody's"), Duff & Phelps
Credit Rating Co. or Fitch Investors Service, L.P. (together with S&P and
Moody's, the "Rating Services").
4. The Trustee is not an affiliate of any member of the Restricted Group
(as defined below).
5. The sum of all payments made to and retained by the Underwriters in
connection with the purchase of the Class A Certificates represents not
more than reasonable compensation for underwriting the Class A
Certificates. The sum of all payments made to and retained by the Seller
pursuant to the sale of the Receivables to the Trust represents not more
than the fair market value of those Receivables. The sum of all payments
made to and retained by the Servicer represents not more than reasonable
compensation for the Servicer's services under the Agreement and
reimbursement of the Servicer's reasonable expenses in connection
therewith.
6. The Benefit Plan investing in the Class A Certificates is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the Commission
under the Securities Act.
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 other investment pools must have been rated in one of
the three highest generic rating categories of any of the Rating Services
for at least one year prior to the Benefit Plan's acquisition of
certificates.
3. Certificates evidencing interests in other investment pools must have
been purchased by investors other than Benefit Plans for at least one
year prior to any Benefit Plan's acquisition of Class A Certificates.
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The Exemptions do not apply in all respects to Benefit Plans sponsored by
the Seller, the Underwriters, the Trustee, the Servicer, any Obligor with
respect to the Receivables included in the Trust constituting more than 5% of
the aggregate unamortized principal balance of the assets in the Trust or any
affiliate of those parties (the "Restricted Group"). As of the date hereof, no
Obligor with respect to the Receivables included in the Trust constitutes more
than 5% of the aggregate unamortized principal balance of the Trust (i.e., the
initial principal amount of the Certificates). Moreover, each Exemption provides
relief from specified self-dealing/conflict of interest prohibited transactions
only if, among other requirements,
1. in the case of the acquisition of Class A Certificates in connection
with the initial issuance, at least 50% of each class of Certificates in
which Benefit Plans have invested is acquired by persons independent of
the Restricted Group and at least 50% of the aggregate interest in the
Trust is acquired by persons independent of the Restricted Group;
2. a Benefit Plan's investment in the Class A Certificates does not exceed
25% of all of the Class A Certificates outstanding at the time of the
acquisition; and
3. immediately after the acquisition, no more than 25% of the assets of a
Benefit Plan with respect to which a person has discretionary authority
or renders investment advice are invested in certificates representing
interests in trusts containing assets sold or serviced by the same
entity.
The Seller believes that the Exemptions will apply to the acquisition,
holding and resale of the Class A Certificates by a Benefit Plan and that all
conditions of the Exemptions other than those within the control of investors
will be met. However, there can be no assurance that the DOL or the IRS will not
take a contrary position, nor that that position will be sustained. One or more
alternative exemptions may be available with respect to specified prohibited
transactions to which the Exemptions are not applicable, depending in part upon
the type of a Benefit Plan's fiduciary making the decision to acquire the Class
A Certificates and the circumstances under which that decision is made. See
"ERISA Considerations" in the accompanying Prospectus. Any Benefit Plan which
acquires a beneficial ownership interest in a Class A Certificates will be
deemed, by virtue of the acceptance and acquisition of that ownership interest,
to have represented to the Seller and the Trustee that that Benefit Plan is an
"accredited investor" for purposes of Rule 501(a)(1) of Regulation D under the
Securities Act.
CLASS B AND CLASS C CERTIFICATES
Class B Certificates and Class C Certificates may not be acquired by an
employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to
the provisions of Title I of ERISA or Section 4975(e)(1) of the Code or any
person acting on behalf of such a plan or using the assets of such a plan to
acquire the Class B Certificates or Class C Certificates or any entity whose
underlying assets include plan assets by reason of a plan's investment in the
entity, except as provided below with respect to insurance company general
accounts. By its acceptance of a Class B Certificate or Class C Certificate,
each holder thereof will be deemed to have represented and warranted that it is
not subject to the foregoing limitation.
In 1995, the DOL issued PTCE 95-60. Section III of PTCE 95-60 exempts from
the application of the prohibited transaction provisions of Sections 406(a),
406(b) and 407(a) of ERISA and Section 4975 of the Code transactions in
connection with the servicing, management and operation of a trust (such as the
Trust) in which an insurance company general account has an interest as a result
of its acquisition of certificates issued by the trust, provided that certain
conditions are satisfied. If these conditions are met, insurance company general
accounts would be allowed to purchase classes of Certificates (such as the Class
B Certificates or Class C Certificates) which do not meet the requirements of
the Exemptions solely because they (i) are subordinated to other classes of
Certificates in the Trust and/or (ii) have not received a rating at the time of
the acquisition in one of the three
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generic highest rating categories from any of the Rating Services. All other
conditions of the Exemptions would have to be satisfied in order for PTCE 95-60
to be available. Before purchasing Class B Certificates or Class C Certificates,
an insurance company general account seeking to rely on Section III of PTCE
95-60 should itself confirm that all applicable conditions and other
requirements have been satisfied.
ALL CERTIFICATES
A purchaser of the Certificates should be aware, however, that even if the
conditions specified in one or more exemptions are met, the scope of the relief
provided by the applicable exemption or exemptions might not cover all acts that
might be construed as prohibited transactions.
Prospective Benefit Plan investors should consult with their legal advisors
concerning the impact of ERISA and the Code, the applicability of the Exemptions
or any other exemptions, and the potential consequences of any purchase in their
specific circumstances, prior to making an investment in a Certificate.
A governmental plan as defined in Section 3(32) of ERISA is not subject to
ERISA or Code Section 4975. However, that governmental plan may be subject to
federal, state or local law which is to a material extent similar to the
provisions of ERISA or Code Section 4975 ("Similar Law"). A fiduciary of a
governmental plan should make its own determination as to the need for and
availability of any exemptive relief under Similar Law.
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UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement relating
to the Certificates (the "Underwriting Agreement"), the Seller has agreed to
sell to each of the Underwriters named below, and each of the Underwriters has
severally agreed to purchase, the principal amount of the Offered Certificates
set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
OF OF
CLASS A CLASS B
UNDERWRITER CERTIFICATES CERTIFICATES
- ------------------------------------------- ------------------ ------------------
<S> <C> <C>
Total..............................
------------------ ------------------
------------------ ------------------
------------------ ------------------
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth in the Underwriting Agreement, to purchase all of
the Offered Certificates if any of the Offered Certificates is purchased. That
obligation of the Underwriters is subject to specified conditions precedent set
forth in the Underwriting Agreement. The Seller has been advised by the
Underwriters that they propose to offer the Offered Certificates to the public
at varying prices to be determined at the time of sale and to specified dealers
at that price less a concession not in excess of [_____]% of the Class A
Certificate denominations and [_____]% of the Class B Certificate denominations
and that the Underwriters may allow and those dealers may reallow a discount not
in excess of [_____]% of the Class A Certificate denominations and [_____]% of
the Class B Certificate denominations to specified other dealers. After the
initial public offering, the public offering prices and those concessions and
discounts to dealers may be changed by the Underwriters.
The Seller and NMAC have agreed to indemnify the Underwriters against
specified liabilities, including liabilities under the Securities Act or to
contribute to payments which the Underwriters may be required to make in respect
thereof. However, in the opinion of the Securities and Exchange Commission (the
"Commission"), certain indemnification provisions 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.
The Certificates are new issues of securities with no established trading
markets. The Seller has been advised by the Underwriters that the Underwriters
intend to make a market in the Offered Certificates, as permitted by applicable
laws and regulations. The Underwriters are not obligated, however, to make a
market in the Offered Certificates and that market-making may be discontinued at
any time at the sole discretion of the Underwriters without notice. Accordingly,
no assurance can be given as to the liquidity of, or trading markets for, the
Offered Certificates.
The Trust may, from time to time, invest funds in the Accounts in Eligible
Investments acquired from the Underwriters.
The Underwriters have advised the Seller that, pursuant to Regulation M
under the Securities Act, specified persons participating in this offering may
engage in transactions, including stabilizing bids, syndicate covering
transactions or the imposition of penalty bids, which may have the effect of
stabilizing or maintaining the market price of the Offered Certificates at
levels above those that might otherwise prevail in the open market. A
"stabilizing bid" is a bid for or the purchase of the Offered Certificates on
behalf of the Underwriters for the purpose of fixing or maintaining the price of
those Offered Certificates. A "syndicate covering transaction" is the bid for or
the purchase of those Offered
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Certificates on behalf of the Underwriters to reduce a short position incurred
by the Underwriters in connection with this offering. A "penalty bid" is an
arrangement permitting one of the Underwriters to reclaim the selling concession
otherwise accruing to another Underwriter or syndicate member in connection with
this offering if the Offered Certificates originally sold by the other
Underwriter or syndicate member are purchased by the reclaiming Underwriter in a
syndicate covering transaction and has therefore not been effectively placed by
the other Underwriter or syndicate member.
Stabilizing bids and syndicate covering transactions may have the effect of
causing the price of the Offered Certificates to be higher than it might be in
the absence thereof, and the imposition of penalty bids might also have an
effect on the price of any Offered Certificate to the extent that it discourages
resale of that Offered Certificate. Neither the Seller nor the Underwriters
makes any representation or prediction as to the direction or magnitude of any
of that type of effect on the prices for the Offered Certificates. Neither the
Seller nor the Underwriters makes any representation that the Underwriters will
engage in any of those transactions or that, once commenced, any of those
transactions will not be discontinued without notice.
LEGAL OPINIONS
In addition to the legal opinions described in the accompanying Prospectus,
legal matters relating to the Certificates and federal income tax and other
matters will be passed upon for the Trust by O'Melveny & Myers LLP.
S-44
<PAGE>
INDEX OF TERMS
<TABLE>
<S> <C>
accredited investor................. S-40
adequate stated interest............ S-37
Advance............................. S-25
affected investors.................. S-38
Agreement........................... S-14
APR................................. S-15
Available Interest.................. S-29
Available Principal................. S-29
Base Servicing Fee.................. S-25
Benefit Plan........................ S-39
Business Day........................ S-28
Certificate Balance................. S-23
Certificateholders.................. S-23
Certificates........................ S-21
Class A Certificate Balance......... S-30
Class A Certificate Factor.......... S-21
Class A Certificateholders.......... S-23
Class A Interest Carryover
Shortfall......................... S-32
Class A Interest Distributable
Amount............................ S-30
Class A Percentage.................. S-24
Class A Pool Factor................. S-21
Class A Principal Carryover
Shortfall......................... S-33
Class A Principal Distributable
Amount............................ S-30
Class B Certificate Balance......... S-30
Class B Certificate Factor.......... S-21
Class B Certificateholders.......... S-23
Class B Interest Carryover
Shortfall......................... S-32
Class B Interest Distributable
Amount............................ S-30
Class B Percentage.................. S-24
Class B Pool Factor................. S-21
Class B Principal Carryover
Shortfall......................... S-33
Class B Principal Distributable
Amount............................ S-30
Class C Certificate Balance......... S-30
Class C Interest Carryover
Shortfall......................... S-32
Class C Interest Distributable
Amount............................ S-30
Class C Percentage.................. S-24
Class C Principal Carryover
Shortfall......................... S-33
Class C Principal Distributable
Amount............................ S-30
Class Distributable Amount.......... S-30
Class Percentage.................... S-24
Closing Date........................ S-15
Code................................ S-39
Collection Period................... S-25
Commission.......................... S-43
Cutoff Date......................... S-15
Dealer Recourse..................... S-14
Dealers............................. S-15
Defaulted Receivable................ S-30
Determination Date.................. S-29
Distribution Date................... S-28
DOL................................. S-40
Eligible Investments................ S-24
Excess Amounts...................... S-33
Exemptions.......................... S-40
Final Scheduled Distribution Date... S-19
Financed Vehicles................... S-15
forward looking statements.......... S-23
Global Securities................... S-47
Grantor Trust Certificateholder..... S-36
imputed interest.................... S-37
Initial Yield Supplement Amount..... S-25
Interest Carryover Shortfall........ S-32
Interest Distributable Amount....... S-30
Moody's............................. S-40
Net Liquidation Proceeds............ S-29
NMAC................................ S-14
Non-U.S. Person..................... S-50
Obligors............................ S-15
Offered Certificates................ S-21
OID................................. S-36
Original Class A Certificate
Balance........................... S-23
Original Class B Certificate
Balance........................... S-23
</TABLE>
S-45
<PAGE>
<TABLE>
<S> <C>
Original Class C Certificate
Balance........................... S-23
Pass Through Rate................... S-23
penalty bid......................... S-44
portfolio interest.................. S-39
Principal Carryover Shortfall....... S-33
Principal Distributable Amount...... S-30
Rating Services..................... S-40
Receivables......................... S-15
Redemption Price.................... S-26
Required Rate....................... S-25
Required Yield Supplement Amount.... S-26
Restricted Group.................... S-41
S&P................................. S-40
Seller.............................. S-14
Servicer............................ S-14
Servicing Rate...................... S-25
Similar Law......................... S-42
Specified Subordination Spread
Account Balance................... S-35
stabilizing bid..................... S-43
stripping........................... S-37
Subordination Spread Account Initial
Deposit........................... S-34
Supplemental Servicing Fee.......... S-25
syndicate covering transaction...... S-43
Total Available Amount.............. S-29
Total Servicing Fee................. S-25
Trust............................... S-14
Trustee............................. S-14
U.S. person......................... S-39
Underwriting Agreement.............. S-43
Yield Supplement Account............ S-25
Yield Supplement Amount............. S-25
Yield Supplemented Receivables...... S-25
</TABLE>
S-46
<PAGE>
ANNEX A
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in limited circumstances, the globally offered Class A Certificates
(the "Global Securities") will be available only in book-entry form. Investors
in the Global Securities may hold those Global Securities through DTC, Cedelbank
or Euroclear. The Global Securities will be tradable as home market instruments
in both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities through
Cedelbank and Euroclear will be conducted in the ordinary way in accordance with
their normal rules and operating procedures and in accordance with conventional
eurobond practice (i.e., three calendar day settlement). Secondary market
trading between investors holding Global Securities through DTC will be
conducted according to the rules and procedure applicable to U.S. corporate debt
obligations and prior asset-backed securities issues. Secondary cross-market
trading between Cedelbank or Euroclear and DTC Participants holding securities
will be effected on a delivery-against-payment basis through the depositaries of
Cedelbank and Euroclear (in that capacity) and as DTC Participants. Non-U.S.
holders (as described below) of Global Securities will be subject to U.S.
withholding taxes unless those holders meet the requirements and deliver
appropriate U.S. tax documents to the securities clearing organizations or their
participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will
be represented through financial institutions acting on their behalf as direct
and indirect Participants in DTC. As a result, Cedelbank and Euroclear will hold
positions on behalf of their participants through their depositaries, which in
turn will hold those positions in accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will follow
DTC settlement practice. Investor securities custody accounts will be credited
with their holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedelbank or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to
securities custody accounts on the settlement date against payment in same-day
funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to prior
asset-backed securities issues in same-day funds.
Trading between Cedelbank and/or Euroclear Participants. Secondary market
trading between Cedelbank Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
TRADING BETWEEN DTC SELLER AND CEDELBANK OR EUROCLEAR PARTICIPANTS. When
Global Securities are to be transferred from the account of a DTC Participant to
the account of a Cedelbank Participant or a Euroclear Participant, the purchaser
will send instructions to Cedelbank or Euroclear through a
S-47
<PAGE>
Cedelbank Participant or Euroclear Participant at least one business day prior
to settlement. Cedelbank or Euroclear will instruct the respective Depositary,
as the case may be, to receive the Global Securities against payment. Payment
will include interest accrued on the Global Securities from and including the
last coupon payment date to and excluding the settlement date, on the basis of
the actual number of days in that accrual period and a year assumed to consist
of 360 days. For transactions settling on the 31st of the month, payment will
include interest accrued to and excluding the first day of the following month.
Payment will then be made by the respective Depositary to the DTC Participant's
account against delivery of the Global Securities. After settlement has been
completed, the Global Securities will be credited to the respective clearing
system and by the clearing system, in accordance with its usual procedures, to
the Cedelbank Participant's or Euroclear Participant's account. The securities
credit will appear the next day (European time) and the cash debt will be
back-valued to, and the interest on the Global Securities will accrue from, the
value date (which would be the preceding day when settlement occurred in New
York). If settlement is not completed on the intended value date (i.e., the
trade fails), the Cedelbank or Euroclear cash debt will be valued instead as of
the actual settlement date.
Cedelbank Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Cedelbank or Euroclear. Under
this approach, they may take on credit exposure to Cedelbank or Euroclear until
the Global Securities are credited to their accounts one day later.
As an alternative, if Cedelbank or Euroclear has extended a line of credit
to them, Cedelbank Participants or Euroclear Participants can elect not to
preposition funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, Cedelbank Participants or Euroclear
Participants purchasing Global Securities would incur overdraft charges for one
day, assuming they clear the overdraft when the Global Securities are credited
to their accounts. However, interest on the Global Securities would accrue from
the value date. Therefore, in many cases the investment income on the Global
Securities earned during that one-day period may substantially reduce or offset
the amount of those overdraft charges, although this result will depend on each
Cedelbank Participant's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective European Depositary for the benefit of Cedelbank Participants or
Euroclear Participants. The sale proceeds will be available to the DTC seller on
the settlement date. Thus, to the DTC Participants a cross-market transaction
will settle no differently than a trade between two DTC Participants.
TRADING BETWEEN CEDELBANK OR EUROCLEAR SELLER AND DTC PURCHASER. Due to
time zone differences in their favor, Cedelbank Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depositary, to a DTC Participant. The seller will send
instructions to Cedelbank or Euroclear through a Cedelbank Participant or
Euroclear Participant at least one business day prior to settlement. In these
cases, Cedelbank or Euroclear will instruct the Relevant Depositary, as
appropriate, to deliver the Global Securities to the DTC Participant's account
against payment. Payment will include interest accrued on the Global Securities
from and including the last coupon payment to and excluding the settlement date
on the basis of the actual number of days in that accrual period and a year
assumed to consist of 360 days. For transactions settling on the 31st of the
month, payment will include interest accrued to and excluding the first day of
the following month. The payment will then be reflected in the account of the
Cedelbank Participant or Euroclear Participant the following day, and receipt of
the cash proceeds in the Cedelbank Participant's or Euroclear Participant's
account would be back-valued to the value date (which would be the preceding
day, when
S-48
<PAGE>
settlement occurred in New York). Should the Cedelbank Participant or Euroclear
Participant have a line of credit with its respective clearing system and elect
to be in debt in anticipation of receipt of the sale proceeds in its account,
the back valuation will extinguish any overdraft incurred over that one-day
period. If settlement is not completed on the intended value date (i.e., the
trade fails), receipt of the cash proceeds in the Cedelbank Participant's or
Euroclear Participant's account would instead be valued as of the actual
settlement date.
Finally, day traders that use Cedelbank or Euroclear and that purchase
Global Securities from DTC Participants for delivery to Cedelbank Participants
or Euroclear Participants should note that these trades would automatically fail
on the sale side unless affirmative action were taken. At least three techniques
should be readily available to eliminate this potential problem:
1. borrowing through Cedelbank or Euroclear for one day (until the purchase
side of the day trade is reflected in their Cedelbank or Euroclear
accounts) in accordance with the clearing system's customary procedures;
2. borrowing the Global Securities in the U.S. from a DTC Participant no
later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedelbank or
Euroclear account in order to settle the sale side of the trade; or
3. staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase from the DTC Participant is at least
one day prior to the value date for the sale to the Cedelbank Participant
or Euroclear Participant.
MATERIAL U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through Cedelbank
or Euroclear (or through DTC if the holder has an address outside the U.S.) will
be subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by U.S.
Persons, unless (1) each clearing system, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or business
in the chain of intermediaries between that beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(2) that beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
EXEMPTION FOR NON-U.S. PERSONS (FORM W-8). Beneficial owners of Global
Securities that are Non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the information shown on Form W-8 changes, a new Form W-8 must be filed within
30 days of that change.
EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM
4224). A Non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY COUNTRIES
(FORM 1001). Non-U.S. Persons residing in a country that has a tax treaty with
the United States can obtain an exemption or reduced tax rate depending on the
treaty terms) by filing Form 1001 (Ownership, Exemption or Reduced Rate
Certificate). If the treaty provides only for a reduced rate, withholding tax
will be imposed at that rate unless the filer alternatively files Form W-8. Form
1001 may be filed by the Certificate Owners or their agents.
S-49
<PAGE>
EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. The Certificate Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person though whom it holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar years,
and Form 4224 is effective for one calendar year.
The term "Non-U.S. Person" means any person who is not a U.S. Person (as
defined in the accompanying Prospectus).
Recently, the Treasury Department issued new regulations (the "New
Regulations") which make certain modifications to the withholding rules
described above, and pursuant to which the certification procedures discussed
above will be modified. It is suggested that prospective investors consult their
own tax advisers regarding the New Regulations.
This summary does not deal with all aspects of U.S. federal income tax
withholding that may be relevant to foreign holders of Global Securities. It is
suggested that investors consult their tax advisors for specific tax advice
concerning their holding and disposing of Global Securities.
S-50
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 13, 1999.
THE INFORMATION CONTAINED IN THIS SUPPLEMENT IS NOT COMPLETE AND MAY BE CHANGED.
THIS PROSPECTUS SUPPLEMENT IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
<PAGE>
Prospectus Supplement
(To Prospectus Dated __________)
NISSAN AUTO RECEIVABLES ____-__ OWNER TRUST
NISSAN AUTO RECEIVABLES CORPORATION,
SELLER
NISSAN MOTOR ACCEPTANCE CORPORATION,
SERVICER
$____________________ ASSET BACKED NOTES
$____________________ ASSET BACKED CERTIFICATES
YOU SHOULD REVIEW CAREFULLY THE FACTORS SET FORTH UNDER "RISK FACTORS"
BEGINNING ON PAGE S-14 OF THIS PROSPECTUS SUPPLEMENT AND PAGE 11 IN THE
ACCOMPANYING PROSPECTUS.
The securities are asset backed securities issued by the trust. The securities
are not obligations of Nissan Motor Acceptance Corporation, Nissan Auto
Receivables Corporation, Nissan North America, Inc. or any of their respective
affiliates. Neither the securities nor the receivables are insured or
guaranteed by any government agency.
This prospectus supplement may be used to offer and sell the securities only
if it is accompanied by the prospectus dated ___, 1999.
- - The trust will issue six classes of securities.
- - Only the securities described on the following table are being offered by
this prospectus supplement and the prospectus.
- - The securities accrue interest from ___________, ____.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A NOTES
---------------------------------
A-1 NOTES A-2 NOTES A-3 NOTES CLASS B NOTES CLASS C CERTIFICATES
--------- --------- --------- ------------- --------------------
Principal Amount...................... $ ______ $ ______ $ ______ $ ______ $ ______
Interest Rate......................... ____% ____% ____% ____% ____%
Final Scheduled Distribution Date..... _____,__ _____,__ _____,__ _____,__ _____,__
Price to Public....................... ____% ____% ____% ____% ____%
Underwriting Discount................. ____% ____% ____% ____% ____%
Proceeds to Seller.................... $ ______ $ ______ $ ______ $ ______ $ ______
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
CREDIT ENHANCEMENT
- - Reserve account, with an initial deposit of [$_____________].
- - The Class B Notes are subordinated to the Class A-1 Notes, the Class A-2
Notes and the Class A-3 Notes, and the certificates are subordinated to the
notes to the extent described herein.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED THE SECURITIES OR DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[UNDERWRITERS]
The date of this prospectus supplement is _________.
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
Information about the securities is provided in two separate documents that
progressively provide varying levels of detail: (1) the accompanying prospectus,
which provides general information, some of which may not apply to a particular
class of securities, including your class; and (2) this prospectus supplement,
which describes the specific terms of your class of securities.
IF THE DESCRIPTION OF THE TERMS OF YOUR SECURITIES VARIES BETWEEN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON THE
INFORMATION IN THIS PROSPECTUS SUPPLEMENT.
Cross-references are included in this prospectus supplement and in the
accompanying prospectus which direct you to more detailed descriptions of a
particular topic. You can also find references to key topics in the Table of
Contents on page S-3 in this prospectus supplement and the Table of Contents on
page 3 in the accompanying prospectus.
You can find a listing of the pages where capitalized terms used in this
prospectus supplement are defined under the caption "Index of Terms" beginning
on page S-47 in this prospectus supplement and under the caption "Index of
Terms" beginning on page 80 in the accompanying prospectus.
S-2
<PAGE>
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<S> <C>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS............................................................. S-2
SUMMARY OF TRANSACTION PARTIES...................................................... S-6
SUMMARY OF MONTHLY DEPOSITS TO AND WITHDRAWALS FROM ACCOUNTS S-7
SUMMARY............................................................................... S-8
Issuer.............................................................................. S-8
Seller.............................................................................. S-8
Servicer............................................................................ S-8
Owner Of The Certificates/Equity.................................................... S-8
Indenture Trustee................................................................... S-8
Owner Trustee....................................................................... S-8
Offered Notes....................................................................... S-8
Offered Certificates................................................................ S-8
Receivables......................................................................... S-8
Closing Date........................................................................ S-8
Terms of the Notes.................................................................. S-9
Terms of the Certificates........................................................... S-10
Optional Redemption................................................................. S-11
Credit Enhancement.................................................................. S-11
Reserve Account..................................................................... S-12
Yield Supplement Account............................................................ S-12
Tax Status.......................................................................... S-12
ERISA Considerations................................................................ S-13
Ratings............................................................................. S-13
RISK FACTORS.......................................................................... S-14
You may have difficulty selling your securities and/or obtaining your desired price
due to the absence of a secondary market.......................................... S-14
The Class B Notes and the Class C Certificates are subject to greater credit risk
because the Class B Notes are subordinate to the Class A-1 Notes, the Class A-2
Notes and the Class A-3 Notes and the Class C Certificates are subordinate to the
Notes............................................................................. S-14
Geographic concentration of the states of origination of the receivables may
increase the risk of loss on your investment...................................... S-15
Occurrence of events of default under the indenture may result in insufficient funds
to make payments on your certificates............................................. S-15
Certificateholders may not exercise any rights with respect to the collateral or the
servicer until the notes are paid in full......................................... S-16
Complications associated with year 2000 date conversion could affect the servicer's
operations, impairing its ability to collect receivables, which may result in loss
on your investments............................................................... S-16
</TABLE>
S-3
<PAGE>
<TABLE>
<S> <C>
THE TRUST............................................................................. S-17
General............................................................................. S-17
CAPITALIZATION OF THE TRUST........................................................... S-18
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE........................................... S-18
THE RECEIVABLES....................................................................... S-18
MATURITY AND PREPAYMENT CONSIDERATIONS................................................ S-22
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES........................................... S-22
NOTE FACTORS, CERTIFICATE FACTORS AND POOL FACTORS.................................... S-24
USE OF PROCEEDS....................................................................... S-25
THE SELLER AND THE SERVICER........................................................... S-25
Financial Condition of Nissan Motor Co., Ltd........................................ S-25
Year 2000........................................................................... S-25
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995.......................................... S-26
THE NOTES............................................................................. S-26
General............................................................................. S-26
Payments of Interest................................................................ S-26
Payments of Principal............................................................... S-27
Indenture........................................................................... S-28
Notices............................................................................. S-29
Governing Law....................................................................... S-29
THE CERTIFICATES...................................................................... S-30
General............................................................................. S-30
Payments of Interest................................................................ S-30
Payments of Principal............................................................... S-30
Notices............................................................................. S-31
Governing Law....................................................................... S-31
DISTRIBUTIONS ON THE NOTES AND THE CERTIFICATES....................................... S-31
Calculation of Available Amounts.................................................... S-32
Payment of Distributable Amounts.................................................... S-32
SUBORDINATION; RESERVE ACCOUNT........................................................ S-36
Subordination....................................................................... S-36
Reserve Account..................................................................... S-36
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS.................................. S-38
The Transfer and Servicing Agreements............................................... S-38
Sale and Assignment of Receivables.................................................. S-38
Accounts............................................................................ S-38
Collections......................................................................... S-38
</TABLE>
S-4
<PAGE>
<TABLE>
<S> <C>
Advances............................................................................ S-39
Servicing Compensation.............................................................. S-39
Yield Supplement Account and Yield Supplement Agreement............................. S-39
Net Deposits........................................................................ S-40
Optional Purchase................................................................... S-40
Removal of Servicer................................................................. S-40
Duties of the Owner Trustee and the Indenture Trustee............................... S-41
The Owner Trustee and the Indenture Trustee......................................... S-42
MATERIAL INCOME TAX CONSEQUENCES...................................................... S-43
ERISA CONSIDERATIONS.................................................................. S-44
The Notes........................................................................... S-44
The Certificates.................................................................... S-44
UNDERWRITING.......................................................................... S-44
LEGAL OPINIONS........................................................................ S-46
INDEX OF TERMS........................................................................ S-47
ANNEX A: GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES................ S-49
Initial Settlement.................................................................. S-49
Secondary Market Trading............................................................ S-49
Material U.S. Federal Income Tax Documentation Requirements......................... S-51
</TABLE>
S-5
<PAGE>
[CHART OF SUMMARY OF TRANSACTIONAL PARTIES]
S-6
<PAGE>
[CHART OF SUMMARY OF MONTHLY DEPOSITS TO AND WITHDRAWALS FROM ACCOUNTS]
S-7
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY CONTAINS A BRIEF DESCRIPTION OF THE NOTES AND THE
CERTIFICATES. YOU WILL FIND A DETAILED DESCRIPTION OF THE TERMS OF THE OFFERING
OF THE NOTES AND THE CERTIFICATES FOLLOWING THIS SUMMARY. YOU SHOULD READ
CAREFULLY THIS ENTIRE DOCUMENT AND THE ACCOMPANYING PROSPECTUS TO UNDERSTAND ALL
OF THE TERMS OF THE OFFERING OF THE NOTES AND THE CERTIFICATES. YOU SHOULD
CONSIDER BOTH DOCUMENTS WHEN MAKING YOUR INVESTMENT DECISION.
<TABLE>
<S> <C>
ISSUER Nissan Auto Receivables Owner Trust [____-__]. The trust
will be established by a trust agreement.
SELLER Nissan Auto Receivables Corporation.
SERVICER Nissan Motor Acceptance Corporation.
OWNER OF THE CERTIFICATES/EQUITY [____________________].
INDENTURE TRUSTEE [____________________].
OWNER TRUSTEE [____________________].
OFFERED NOTES The offered notes consist of the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes and the Class B
Notes, as described on the cover page.
OFFERED CERTIFICATES The offered certificates consist of the Class C
Certificates, as described on the cover page.
The trust will also issue [$________________] initial
principal amount of the Class D Certificates. The trust
is not offering the Class D Certificates.
The certificates will represent fractional undivided
interests in the trust. Payments of interest on and
principal of the certificates are subordinated to the
payments of interest on and principal of the notes as
described herein.
RECEIVABLES The trust's main source of funds for making payments on
the notes and the certificates will be collections on
its motor vehicle retail installment sale contracts,
otherwise known as the receivables.
The principal balance of the receivables on
[_____________], referred to as the "cut-off date," was
$[_________________]. As of [_____________], the
receivables had the following characteristics:
Number of Receivables...................................
Average Principal Balance...............................
Weighted average annual percentage rate.................
Weighted average remaining term to maturity.............
Approximate weighted average
original term to maturity...............................
YOU SHOULD REFER TO "THE RECEIVABLES" IN THIS PROSPECTUS
SUPPLEMENT FOR MORE INFORMATION ON THE RECEIVABLES.
CLOSING DATE On or about [__________].
</TABLE>
S-8
<PAGE>
<TABLE>
<S> <C>
TERMS OF THE NOTES DISTRIBUTION DATES:
Interest and principal will generally be payable on the
15th day of each month, unless the 15th day is not a
business day, in which case the payment will be made on
the following business day. The first payment will be on
[_____________].
PER ANNUM INTEREST RATES:
The notes will have fixed rates of interest as follows:
</TABLE>
<TABLE>
<CAPTION>
CLASS INTEREST RATE
----- -------------
<S> <C> <C> <C>
A-1 [__%]
A-2 [__%]
A-3 [__%]
B [__%]
</TABLE>
INTEREST PERIODS:
Interest on the notes will accrue in the
following manner:
<TABLE>
<CAPTION>
SUBSEQUENT
INTEREST PERIODS
INITIAL ------------------------
ACCRUAL FROM TO DAY COUNT
CLASS PERIOD (INCLUDING) (EXCLUDING) CONVENTION
----- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
A-1 [____] actual/360
A-2 [____] 30/360
A-3 [____] 30/360
B [____] 30/360
</TABLE>
PRINCIPAL:
- AMOUNTS ALLOCATED TO THE NOTES: Principal
of the notes will be payable generally in
an amount equal to the noteholders'
percentage of the following amounts
referred to as the "principal distributable
amount":
1. principal collections on the
receivables during the prior
collection period;
2. prepayments on the receivables
allocable to principal received during
the prior collection period;
3. the principal balance of each
receivable which the seller or the
servicer became obligated to purchase;
and
4. the principal balance of liquidated
receivables.
Principal payments on the notes as described
above will be made from all available amounts
after the servicing fee and non-recoverable
advances have been paid and after payment of
interest on the notes.
- ORDER OF PAYMENT AMONG CLASSES: No
principal payments will be made (1) on the
Class A-2 Notes until the Class A-1 Notes
have been paid in full; (2) on the Class
A-3 Notes until the Class A-2 Notes have
been paid
S-9
<PAGE>
in full; and (3) on the Class B Notes until
the Class A-1 Notes, the Class A-2 Notes
and the Class A-3 Notes have been paid in
full.
However, upon the acceleration of the notes
following an event of default, principal payments
will be made first to the holders of the Class
A-1 Notes, the Class A-2 Notes and the Class A-3
Notes on a pro rata basis based on the
outstanding principal balance of those classes of
notes. After the Class A-1 Notes, the Class A-2
Notes and the Class A-3 Notes have been paid in
full, 100% of the principal distributable amount
will be applied to make principal payments on the
Class B Notes until the Class B Notes have been
paid in full.
- LEGAL FINALS: The trust must pay the
outstanding principal balance of each class
of notes by its final scheduled
distribution date as follows:
<TABLE>
<CAPTION>
CLASS LEGAL FINAL
----- ------------------
<S> <C> <C> <C>
A-1 [_____________]
A-2 [_____________]
A-3 [_____________]
B [_____________]
</TABLE>
<TABLE>
<S> <C>
YOU SHOULD REFER TO "DISTRIBUTIONS ON THE NOTES AND THE
CERTIFICATES--CALCULATION OF AVAILABLE AMOUNTS" IN THIS
PROSPECTUS SUPPLEMENT FOR MORE DETAILED INFORMATION
REGARDING PAYMENTS OF PRINCIPAL.
TERMS OF THE CERTIFICATES DISTRIBUTION DATES:
Interest and principal will generally be payable on the
15th day of each month, unless the 15th day is not a
business day, in which case the payment will be made on
the following business day. The first payment will be on
[_____________].
PER ANNUM PASS THROUGH RATES:
The certificates will have the following pass through
rates:
</TABLE>
<TABLE>
<CAPTION>
PASS THROUGH
CLASS RATE
----- -------------
<S> <C> <C> <C>
C [__%]
D [__%]
</TABLE>
INTEREST PERIODS:
<TABLE>
<CAPTION>
SUBSEQUENT
INTEREST PERIODS
INITIAL ------------------------
ACCRUAL FROM TO DAY COUNT
CLASS PERIOD (INCLUDING) (EXCLUDING) CONVENTION
----- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
C [____] 30/360
D [____] 30/360
</TABLE>
S-10
<PAGE>
PRINCIPAL:
- AMOUNTS ALLOCATED TO THE CERTIFICATES:
Principal of the certificates will be
payable generally in an amount equal to the
certificateholders' percentage of the
principal distributable amount.
Principal payments on the certificates as
described above will be made from all available
amounts after the following amounts have been
distributed:
1. the servicing fee and non-recoverable
advances;
2. interest and principal on the notes;
and
3. interest on the certificates.
- ORDER OF PAYMENT AMONG CLASSES: No
principal payments will be made on the
Class D Certificates until the Class C
Certificates have been paid in full.
- Legal finals: The trust must pay the
outstanding principal balance of each class
of certificates by its final scheduled
distribution date as follows:
<TABLE>
<CAPTION>
CLASS LEGAL FINAL
----- ------------------
<S> <C> <C> <C>
C [_____________]
D [_____________]
</TABLE>
<TABLE>
<S> <C>
YOU SHOULD REFER TO "DISTRIBUTIONS ON THE NOTES AND THE
CERTIFICATES--CALCULATION OF AVAILABLE AMOUNTS" IN THIS PROSPECTUS SUPPLEMENT
FOR MORE DETAILED INFORMATION REGARDING PAYMENTS OF PRINCIPAL.
OPTIONAL REDEMPTION The servicer may redeem all outstanding notes and certificates when the
outstanding aggregate principal balance of the receivables declines to 10% or
less of the original aggregate principal balance of the receivables on the
cut-off date.
CREDIT ENHANCEMENT The credit enhancement of the offered notes and the offered certificates will be
the following:
1. CLASS A-1 NOTES, CLASS A-2 NOTES AND CLASS A-3 NOTES: the subordination of
the Class B Notes and the certificates;
2. CLASS B NOTES: the subordination of the certificates;
3. CLASS C CERTIFICATES: the subordination of the Class D Certificates; and
4. ALL CLASSES OF NOTES AND THE CLASS C CERTIFICATES: the reserve account.
The credit enhancement is intended to protect you against losses and delays in
payments on your securities by absorbing losses on the receivables and other
shortfalls in cash flows. The Class B Notes, which have an initial principal
balance of [$____________] which represents [__%] of the initial principal
balance of all the notes, will not receive any principal
</TABLE>
S-11
<PAGE>
<TABLE>
<S> <C>
distributions until the Class A-1 Notes, the Class A-2 Notes and the Class A-3
Notes have been paid or any interest distributions until all interest owing to
the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes have been paid.
The certificates have an initial principal balance of [$________] and represent
[__%] of the initial principal balance of all the notes and the certificates.
The certificates will not receive any principal distributions until all of the
notes have been paid in full. The certificates will not receive any interest
payments until all required principal and interest payments have been made on
the notes.
RESERVE ACCOUNT On each distribution date, the trust will use funds in the reserve account for
distribution to the noteholders and the holders of the Class C Certificates to
cover any shortfalls in interest and principal required to be paid on the notes
and the Class C Certificates.
The sale and servicing agreement sets forth the specified reserve account
balance, which is the amount that is required to be on deposit in the reserve
account. On the closing date, the seller will deposit [$____________] into the
reserve account, which is [__%] of the initial aggregate principal balance of
the notes and the Class C Certificates, and which is less than the specified
reserve account balance. On each distribution date, after making required
payments to the servicer and to the holders of the Class A-1 Notes, the Class
A-2 Notes, the Class A-3 Notes, the Class B Notes and the Class C Certificates,
the trust will make a deposit into the reserve account to fund and maintain the
specified reserve account balance.
YIELD SUPPLEMENT ACCOUNT On each distribution date, the trust will withdraw from funds on deposit in the
yield supplement account the aggregate amount by which (1) one month's interest
on the principal balance of each receivable at a rate equal to the weighted
average interest rate on the notes and the Class C Certificates plus 1.00%
(servicing rate) exceeds (2) one month's interest on that principal balance at
the annual percentage rate of that receivable.
On the closing date, the seller will deposit [$_________] into the yield
supplement account. Neither the seller nor the servicer will make any additional
deposits to the yield supplement account after the closing date.
TAX STATUS In the opinion of O'Melveny & Myers LLP:
1. the Class A Notes will be characterized as debt;
2. the Class B Notes should be treated as debt; and
3. the trust will not be characterized as an association or a publicly traded
partnership taxable as a corporation for federal income and California income
and franchise tax purposes.
</TABLE>
S-12
<PAGE>
<TABLE>
<S> <C>
If you purchase the notes, you will agree to treat the notes as debt. If you
purchase the certificates, you will agree to treat the trust as a partnership in
which the owners of the certificates are partners for federal income and
California income and franchise tax purposes.
YOU SHOULD REFER TO "MATERIAL INCOME TAX CONSEQUENCES" IN THIS PROSPECTUS
SUPPLEMENT AND "MATERIAL INCOME TAX CONSEQUENCES--TAX TREATMENT OF OWNER TRUSTS"
IN THE ACCOMPANYING PROSPECTUS.
ERISA CONSIDERATIONS The notes are generally eligible for purchase by employee benefit plans and
individual retirement accounts, subject to those considerations discussed under
"ERISA Considerations" in this prospectus supplement and in the accompanying
prospectus. The certificates may not be acquired by an employee benefit plan or
by an individual retirement account.
YOU SHOULD REFER TO "ERISA CONSIDERATIONS" IN THIS PROSPECTUS SUPPLEMENT AND IN
THE ACCOMPANYING PROSPECTUS. IF YOU ARE A BENEFIT PLAN FIDUCIARY CONSIDERING
PURCHASE OF THE SECURITIES YOU SHOULD, AMONG OTHER THINGS, CONSULT WITH YOUR
COUNSEL IN DETERMINING WHETHER ALL REQUIRED CONDITIONS HAVE BEEN SATISFIED.
RATINGS On the closing date, each class of offered securities will receive the following
ratings from Standard & Poor's Ratings Group and Moody's Investors Service, Inc.
</TABLE>
<TABLE>
<CAPTION>
STANDARD &
CLASS POOR'S MOODY'S
----- ------------- -----------
<S> <C> <C> <C> <C>
A-1 [___] [___]
A-2 [___] [___]
A-3 [___] [___]
B [___] [___]
C [___] [___]
</TABLE>
S-13
<PAGE>
RISK FACTORS
YOU SHOULD CONSIDER THE FOLLOWING RISK FACTORS (AND THE FACTORS SET FORTH
UNDER "RISK FACTORS" IN THE ACCOMPANYING PROSPECTUS) IN DECIDING WHETHER TO
PURCHASE THE SECURITIES OF ANY CLASS.
<TABLE>
<S> <C>
YOU MAY HAVE DIFFICULTY The trust will not list the certificates on any securities
SELLING YOUR SECURITIES exchange. Therefore, in order to sell your securities, you must
AND/OR OBTAINING YOUR first locate a willing purchaser. In addition, currently, no
DESIRED PRICE DUE TO THE secondary market exists for the securities. We cannot assure you
ABSENCE OF A SECONDARY that a secondary market will develop. The underwriter intends to
MARKET. make a secondary market for the securities by offering to buy the
certificates from investors that wish to sell. However, the
underwriter is not obligated to offer to buy the securities and
it may stop making offers at any time.
THE CLASS B NOTES AND If you buy the Class B Notes, you will bear a greater risk than
THE CLASS C CERTIFICATES the holders of the Class A-1 Notes, the Class A-2 Notes and the
ARE SUBJECT TO GREATER Class A-3 Notes because payments of interest and principal on
CREDIT RISK BECAUSE THE your notes are subordinated to payments of interest and principal
CLASS B NOTES ARE on the Class A-1 Notes, the Class A-2 Notes and the Class A-3
SUBORDINATE TO THE CLASS Notes to the extent described below.
A-1 NOTES, THE CLASS A-2 Interest payments on the Class B Notes on each distribution date
NOTES AND THE CLASS A-3 will be subordinated to servicing fees and interest payments on
NOTES AND THE CLASS C the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes.
CERTIFICATES ARE Principal payments on the Class B Notes will be subordinated to
SUBORDINATE TO THE principal payments on the Class A-1 Notes, the Class A-2 Notes
NOTES. and the Class A-3 Notes. In other words, no interest will be paid
on the Class B Notes unless interest owing to the Class A-1
Notes, the Class A-2 Notes and the Class A-3 Notes has been paid
in full, and no principal will be paid on the Class B Notes until
principal of the Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes has been paid in full.
If you buy the Class C Certificates, you will bear a greater
credit risk than the notes because payments of interest on and
principal of your certificates are subordinated to payments of
interest and principal on the notes.
Interest payments on your certificates on each distribution date
will be subordinated to servicing fees and interest and principal
payments on the notes. In other words, no interest will be paid
on your certificates on any distribution date until all required
interest and principal payments on the notes on that date have
been made.
In addition, principal payments on your certificates will be
subordinated to principal payments on the notes since no
principal will be paid on your certificates until after all
principal on the notes due has been paid in full. In addition,
you will not receive any principal payments on any distribution
date until all principal and interest on each class of notes on
that date have been paid.
</TABLE>
S-14
<PAGE>
<TABLE>
<S> <C>
GEOGRAPHIC CONCENTRATION As of ________________ , Nissan Motor Acceptance Corporation's
OF THE STATES OF records indicate that the billing addresses of the obligors of
ORIGINATION OF THE the receivables were in the following states:
RECEIVABLES MAY INCREASE
THE RISK OF LOSS ON YOUR
INVESTMENT.
PERCENTAGE OF TOTAL
PRINCIPAL BALANCE
________________________________ %
________________________________ %
________________________________ %
________________________________ %
________________________________ %
No other state, by billing addresses, constituted more than 5% of
the balance of the receivables as of [____________________].
Economic conditions or other factors affecting these states in
particular could adversely affect the delinquency, credit loss or
repossession experience of the trust.
OCCURRENCE OF EVENTS OF Payment defaults or the insolvency or dissolution of the seller
DEFAULT UNDER THE may result in prepayment of the notes and the certificates, which
INDENTURE MAY RESULT IN may result in losses under the securities. If the trust fails to
INSUFFICIENT FUNDS TO pay principal of the notes when due, or fails to pay interest on
MAKE PAYMENTS ON YOUR the notes within five days of the due date, the indenture trustee
CERTIFICATES. or the noteholders may declare the entire amount of the notes to
be due immediately. If this happens, the holders of a majority in
outstanding principal amount of the notes (or relevant classes of
notes) may direct the indenture trustee to sell the receivables
and prepay the notes. After the trust pays the notes in full with
the proceeds of the sale of the receivables, the trust will
distribute any remaining trust assets to pay the certificates.
There may not be sufficient funds to pay the certificates in full
under these circumstances.
The certificateholders will not have any right to direct the
indenture trustee or to consent to any action until the notes are
paid in full. See "The Notes--The Indenture--Events of Default;
Rights Upon Event of Default" in the accompanying prospectus. A
similar result will occur if the seller becomes insolvent or is
dissolved.
</TABLE>
S-15
<PAGE>
<TABLE>
<S> <C>
CERTIFICATE-HOLDERS MAY The trust will pledge the property of the trust to the indenture
NOT EXERCISE ANY RIGHTS trustee as collateral for the payment of the notes. As a result,
WITH RESPECT TO THE the indenture trustee, acting at the direction of the holders of
COLLATERAL OR THE a majority in outstanding principal amount of the notes (or
SERVICER UNTIL THE NOTES relevant classes of notes), has the power to direct the trust to
ARE PAID IN FULL. take specified actions in connection with the property of the
trust. The holders of a majority of the notes (or relevant
classes of notes), or the indenture trustee acting on behalf of
the holders of notes, will also have the right under limited
circumstances to terminate the servicer without considering how
this will affect the certificateholders. If you buy the
certificates, you will not be able to remove the servicer until
the notes have been paid in full. In addition, the holders of at
least a majority in outstanding principal amount of the notes (or
relevant classes of notes) will have the right to waive specified
events of default involving the servicer, without considering how
this will affect you as a certificateholder. See "Description of
the Transfer and Servicing Agreements--Rights Upon Servicer
Default" and "--Waiver of Past Defaults" in the accompanying
prospectus.
COMPLICATIONS ASSOCIATED Many computers and computer chips do not recognize more than two
WITH YEAR 2000 DATE CON- digits of a date field in a year of a date. As a result, in the
VERSION COULD AFFECT THE year 2000, those computers will not know whether the "00" refers
SERVICER'S OPERATIONS, to the year 1900 or the year 2000. Nissan Motor Acceptance
IMPAIRING ITS ABILITY TO Corporation will have significant obligations to the trust in its
COLLECT RECEIVABLES, role as servicer. It is therefore important that Nissan Motor
WHICH MAY RESULT IN LOSS Acceptance Corporation resolve any year 2000 issues that will
ON YOUR INVESTMENTS. affect its ability to fulfill these obligations. A description of
Nissan Motor Acceptance Corporation's year 2000 compliance
efforts is contained under "The Seller and the Servicer-- Year
2000" in this prospectus supplement.
The inability of Nissan Motor Acceptance Corporation or of third
parties who deal with Nissan Motor Acceptance Corporation to make
the necessary year 2000 modifications of their systems could have
a significant adverse effect on Nissan Motor Acceptance
Corporation's operations and financial results. Possible adverse
consequences include the inability to:
1. collect and otherwise service the receivables;
2. provide the information and technology necessary to pay
securityholders and provide reports;
3. pay obligations;
4. process new business; and
5. occupy facilities.
These consequences could have a material adverse effect on the
value of your securities.
</TABLE>
S-16
<PAGE>
THE TRUST
GENERAL
The Nissan Auto Receivables [____-__] Owner Trust (the "Trust") is a
Delaware business trust to be formed pursuant to the trust agreement (the "Trust
Agreement") between Nissan Auto Receivables Corporation, as seller (the
"Seller"), and [________________], as owner trustee (the "Owner Trustee"). After
its formation, the Trust will not engage in any activity other than:
1. acquiring, holding and managing the Receivables and the other assets of
the Trust and proceeds therefrom;
2. issuing the Notes and the Certificates;
3. making payments on the Notes and the Certificates; and
4. engaging in other activities that are necessary, suitable or convenient
to accomplish the foregoing or are incidental to or connected with those
activities.
The Trust will initially be capitalized with an amount equal to the
Certificate Balance of [$_____________], excluding amounts deposited in the
Reserve Account. Class D Certificates with an original principal balance of
[$______________] will be sold to the Seller and the Class C Certificates will
be sold to third party investors that are expected to be unaffiliated with the
Seller, the Servicer or their affiliates or the Trust. The equity of the Trust,
together with the net proceeds from the sale of the Notes, will be used by the
Trust to purchase the Receivables from the Seller pursuant to the sale and
servicing agreement between the Servicer and the Seller (the "Sale and Servicing
Agreement") and to fund the Reserve Account.
Nissan Motor Acceptance Corporation ("NMAC") will be appointed to act as the
servicer of the Receivables (in that capacity, the "Servicer"). The Servicer
will service the Receivables pursuant to the Sale and Servicing Agreement, the
Administration Agreement and the Trust Agreement and will be compensated for
those services as described under "Description of the Transfer and Servicing
Agreements--Servicing Compensation" in this Prospectus Supplement and
"Description of the Transfer and Servicing Agreements--Servicing Compensation"
in the accompanying Prospectus.
Pursuant to agreements between NMAC and the Dealers, each Dealer will
repurchase from NMAC those contracts that do not meet specified representations
and warranties made by the Dealer. These Dealer repurchase obligations are
referred to this Prospectus Supplement as "Dealer Recourse." Those
representations and warranties relate primarily to the origination of the
contracts and the perfection of the security interests in the related financed
vehicles, and do not relate to the creditworthiness of the related Obligors or
the collectability of those contracts. Although the Dealer Agreements with
respect to the Receivables will not be assigned to the Owner Trustee, the Sale
and Servicing Agreement will require that any recovery by NMAC in respect of any
Receivable pursuant to any Dealer Recourse be deposited in the Collection
Account to satisfy NMAC's repurchase obligations under the Sale and Servicing
Agreement. The sales by the Dealers of installment sales contracts to NMAC do
not generally provide for recourse against the Dealers for unpaid amounts in the
event of a default by an Obligor, other than in connection with the breach of
the foregoing representations and warranties.
Each Certificate represents a fractional undivided ownership interest in the
Trust. The Trust property includes the Receivables and monies due or received
under the Receivables on or after the Cutoff Date. The Reserve Account and the
Yield Supplement Account will be maintained by the Indenture Trustee for the
benefit of the Noteholders and the Class C Certificateholders, but will not be
part of the Trust.
S-17
<PAGE>
The Trust's principal offices are in [_______________], in care of
[______________], as Owner Trustee, at the address set forth below under "The
Owner Trustee and the Indenture Trustee."
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of the
Closing Date, as if the issuance and sale of the Notes and the Certificates had
taken place on that date:
[TABLE]
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
[___________________] is the Owner Trustee under the Trust Agreement.
[_________________] is a [_____________] and its principal executive offices are
located at ______________________________. The Seller and its affiliates may
maintain normal commercial banking relations with the Owner Trustee and its
affiliates.
[___________________] is the trustee under the Indenture (the "Indenture
Trustee"). [_________________] is a [_____________] and its principal executive
offices are located at [______________________________]. The Seller and its
affiliates may maintain normal commercial banking relations with the Indenture
Trustee and its affiliates.
THE RECEIVABLES
The property of the Trust will consist of a pool of retail installment sale
contracts (the "Receivables") originated on or after [__________], between
Nissan and Infiniti dealers (the "Dealers") and retail purchasers (the
"Obligors"). 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 evidence the indirect financing made
available by NMAC to the Obligors. The Receivables are secured by new, near-new
and used Nissan and Infiniti automobiles and light-duty trucks (the "Financed
Vehicles") and all principal and interest payments made on or after [_______]
(the "Cutoff Date") and other property specified in the Receivables.
NMAC purchased the Receivables from the Dealers in the ordinary course of
business in accordance with NMAC's underwriting standards. On or before the date
of the initial issuance of the Certificates (the "Closing Date"), NMAC will sell
the Receivables to the Seller. The Seller will, in turn, sell the Receivables to
the Trust on the Closing Date pursuant to the Sale and Servicing Agreement. NMAC
will continue to service the Receivables. The Receivables to be held by the
Trust will be randomly selected from those automobile and/or light-duty truck
retail installment sales contracts in NMAC's portfolio that meet several
criteria. These criteria provide that each Receivable:
1. was originated in the United States;
2. has a contractual Annual Percentage Rate ("APR") that equals or exceeds
[___]%;
3. 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 [___] months;
4. has a remaining term to maturity, as of the Cutoff Date, of not less
than [___] months and not greater than [___] months;
S-18
<PAGE>
5. had an original principal balance of not more than [$__________] and a
remaining principal balance as of the Cutoff Date of not less than
[$__________]nor more than [$__________];
6. is not more than 29 days past due as of the Cutoff Date;
7. is attributable to the purchase of a new, near-new or used automobile or
light-duty truck and is secured by that vehicle;
8. was originated on or after [__________];
9. has been entered into by an Obligor that as of the Cutoff Date was not
in bankruptcy proceedings (according to the records of NMAC);
10. is secured by a Financed Vehicle that as of the Cutoff Date has not been
repossessed (according to the records of NMAC);
11. has not had forced-placed insurance premiums added to the amount
financed; and
12. has not been extended by more than two months.
No selection procedures believed to be adverse to the Securityholders will
be utilized in selecting the Receivables from qualifying retail installment sale
contracts. Except as described in item (2) above, the Receivables were not
selected on the basis of their APRs.
The composition, distribution by APR and geographic distribution of the
Receivables as of the Cutoff Date are as set forth in the following tables. NMAC
will not sell to the Seller, and the Seller will not sell to the Trust, any
Receivables originated in the State of Alabama for administrative reasons.
COMPOSITION OF THE RECEIVABLES
<TABLE>
<S> <C>
Aggregate Principal Balance $__________________
Number of Receivables ___________________
Average Principal Balance $__________________
Average Original Amount Financed $__________________
Range of Original Amount Financed $__________________ to
$__________________
Weighted Average APR __________%
Range of APRs __________% to
__________%
Approximate Weighted Average Original Term to
Maturity ______ months
(Range) _____ to
______ months
Weighted Average Remaining Term to Maturity ______ months
(Range) _____ to
______ months
</TABLE>
S-19
<PAGE>
<TABLE>
<S> <C>
Percentage by Principal Balance of Receivables of ______% (New)
New, Near-New and Used Vehicles ______% (Near-New)
______% (Used)
Percentage by Principal Balance of Receivables ______% (Nissan)
Financed through Nissan and Infiniti Dealers ______% (Infiniti)
</TABLE>
DISTRIBUTION BY APR OF THE RECEIVABLES
(PERCENTAGES MAY NOT ADD TO 100.00% DUE TO ROUNDING)
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF CUTOFF DATE CUTOFF DATE POOL
RANGE OF APRS (%) RECEIVABLES PRINCIPAL BALANCE BALANCE
- ------------------------------------------------ ----------------- ----------------------- -------------------
<S> <C> <C> <C>
3.0 to 3.99.....................................
4.0 to 4.99.....................................
5.0 to 5.99.....................................
6.0 to 6.99.....................................
7.0 to 7.99.....................................
8.0 to 8.99.....................................
9.0 to 9.99.....................................
10.0 to 10.99...................................
11.0 to 11.99...................................
12.0 to 12.99...................................
13.0 to 13.99...................................
14.0 to 14.99...................................
15.0 to 15.99...................................
16.0 to 16.99...................................
17.0 to 17.99...................................
18.0 to 18.99...................................
19.0 and above..................................
Totals......................................
</TABLE>
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES
BASED ON THE ADDRESSES OF THE ORIGINATING DEALERS
(PERCENTAGES MAY NOT ADD TO 100.00% DUE TO ROUNDING)
<TABLE>
<CAPTION>
PERCENTAGE OF
CUTOFF DATE
STATE POOL BALANCE
- ---------------------------------------------------------------------------- -------------------
<S> <C>
Alaska......................................................................
Arizona.....................................................................
Arkansas....................................................................
California..................................................................
</TABLE>
S-20
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
CUTOFF DATE
STATE POOL BALANCE
- ---------------------------------------------------------------------------- -------------------
<S> <C>
Colorado....................................................................
Connecticut.................................................................
Delaware....................................................................
Florida.....................................................................
Georgia.....................................................................
Idaho.......................................................................
Illinois....................................................................
Indiana.....................................................................
Iowa........................................................................
Kansas......................................................................
Kentucky....................................................................
Louisiana...................................................................
Maine.......................................................................
Maryland....................................................................
Massachusetts...............................................................
Michigan....................................................................
Minnesota...................................................................
Mississippi.................................................................
Missouri....................................................................
Montana.....................................................................
Nebraska....................................................................
Nevada......................................................................
New Hampshire...............................................................
New Jersey..................................................................
New Mexico..................................................................
New York....................................................................
North Carolina..............................................................
North Dakota................................................................
Ohio........................................................................
Oklahoma....................................................................
Oregon......................................................................
Pennsylvania................................................................
Rhode Island................................................................
South Carolina..............................................................
South Dakota................................................................
Tennessee...................................................................
Texas.......................................................................
Utah........................................................................
Vermont.....................................................................
Virginia....................................................................
Washington..................................................................
West Virginia...............................................................
Wisconsin...................................................................
Wyoming.....................................................................
Total...................................................................
</TABLE>
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<PAGE>
MATURITY AND PREPAYMENT CONSIDERATIONS
Information regarding maturity and prepayment considerations with respect to
the Securities is set forth under "Weighted Average Life of the Securities" in
the accompanying Prospectus and "Risk Factors--You may experience reduced
returns on your investment resulting from prepayments, repurchases or early
termination of the trust" in the accompanying Prospectus. Except as otherwise
provided in this Prospectus Supplement, no principal payments will be made on
the Class A-2 Notes until the Class A-1 Notes have been paid in full; no
principal payments will be made on the Class A-3 Notes until the Class A-2 Notes
have been paid in full; and no principal payments will be made on the Class B
Notes until the Class A-3 Notes have been paid in full. In addition, no
principal payments will be made on the Class C Certificates until all of the
Notes have been paid in full. See "The Notes-- Payments of Principal" and "The
Certificates--Payments of Principal" in this Prospectus Supplement.
Because the rate of payment of principal of each class of Notes and the
Certificates depends primarily on the rate of payment (including prepayments) of
the principal balance of the Receivables, final payment of any class of Notes
and the final payment in respect of the Certificates could occur significantly
earlier or later than their respective final scheduled Distribution Dates set
forth in "Summary--Terms of the Notes--Legal Finals" and "Summary--Terms of the
Certificates--Principal-- Legal Finals" (each, a "Final Scheduled Distribution
Date") in this Prospectus Supplement. Securityholders will bear the risk of
being able to reinvest principal payments on the Securities at yields at least
equal to the yield on their respective Securities. No prediction can be made as
to the rate of prepayments on the Receivables in either stable or changing
interest rate environments.
The Certificates will provide limited protection against losses on the
Receivables. Accordingly, the yield on the Certificates will be extremely
sensitive to the loss experience of the Receivables and the timing of any of
those losses. If the actual rate and amount of losses experienced by the
Receivables exceed the rate and amount of those losses assumed by an investor,
the yield to maturity on the Certificates may be lower than anticipated.
Although the Receivables have different APRs, disproportionate rates of
prepayments between Receivables with APRs greater than or less than the Required
Rate will generally not affect the yield to the Securityholders. 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 amounts available to be deposited in the Reserve Account.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
The following tables set forth 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-duty trucks. The portfolio consists
of retail installment sale contracts in all fifty states, the District of
Columbia and Guam. As of [_________], approximately eighty-nine percent of
NMAC's total portfolio of U.S. retail installment sales contracts (excluding
those with original maturities of 64 months or more) consisted of new, near-new
and used automobiles and light-duty trucks financed through Nissan dealers, with
the remaining approximate 11% financed through Infiniti dealers.
S-22
<PAGE>
There can be no assurance that the behavior of the Receivables included in
the Trust will be comparable to NMAC's experience shown in the following tables.
DELINQUENCY EXPERIENCE(1)
<TABLE>
<CAPTION>
AT MARCH 31,
-----------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Number of Contracts Outstanding............................ 312,237 330,662 317,238 274,807 226,684
Delinquencies as Percent of Contracts Outstanding(2).......
30-59 Days............................................. 2.27% 2.55% 3.10% 2.40% 2.10%
60-89 Days............................................. 0.27% 0.36% 0.49% 0.25% 0.15%
90 Days or More........................................ 0.04% 0.06% 0.17% 0.05% 0.02%
</TABLE>
NET CREDIT LOSS AND REPOSSESSION EXPERIENCE(1)
(dollars in thousands)
<TABLE>
<CAPTION>
AT OR FOR TWELVE MONTHS ENDED MARCH 31
--------------------------------------------------------------------
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Principal Amount Outstanding............... $ 3,126,219 $ 3,497,123 $ 3,276,423 $ 2,659,232 $ 1,921,100
Average Principal Amount Outstanding....... $ 3,463,840 $ 3,248,193 $ 3,181,569 $ 2,308,058 $ 1,822,669
Number of Contracts Outstanding............ 312,237 330,662 317,238 274,807 226,684
Average Number of Contracts Outstanding.... 329,320 316,769 309,257 250,040 229,248
Charge-Offs(3)............................. $ 92,005 $ 134,671 $ 158,969 $ 72,838 $ 46,201
Recoveries(4).............................. $ 41,947 $ 39,997 $ 31,874 $ 20,489 $ 16,465
Net Losses................................. $ 50,059 $ 94,674 $ 127,095 $ 52,349 $ 29,736
Net Losses as a Percent of Principal Amount
Outstanding.............................. 1.60% 2.71% 3.88% 1.97% 1.55%
Number of Repossessions(5)................. 9,782 14,164 17,569 9,841 8,530
Number of Repossessions as a Percent of the
Average Number of Contracts
Outstanding.............................. 2.97% 4.47% 5.68% 3.94% 3.72%
</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-duty trucks and includes
contracts which NMAC has sold to third parties but continues to service. The
information 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.
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<PAGE>
(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.
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 or subsequent years due to NMAC's 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 the negative trend in losses by initiating changes to its
credit policy that tightened the range of available credit in order to originate
an improved mix of business. These changes involved discontinuing the
origination of 72-month term contracts in June 1996 and installing a new
empirically derived credit score card in September 1996. In addition, NMAC
tightened its credit policy by reducing advance rates for lower credit scores
and implementing risked-based pricing. See "The Receivables--Underwriting of
Motor Vehicle Loans" in the accompanying Prospectus.
NOTE FACTORS, CERTIFICATE FACTORS AND POOL FACTORS
The "Note Factor" with respect to any class of Notes will be a seven-digit
decimal indicating the principal amount of that class of Notes as of the close
of business on the Distribution Date in that month as a fraction of the
respective principal amount thereof as of the Closing Date. The Servicer will
compute the Note Factor each month for each class of Notes. Each Note Factor
will initially be 1.0000000 and thereafter will decline to reflect reductions in
the principal amount of each class of Notes. Each principal amount will be
computed by allocating payments in respect of the Receivables to principal and
interest using the simple interest method. The portion of the principal amount
of any class of Notes for a given month allocable to a Noteholder can be
determined by multiplying the original denomination of the holder's Note by the
related Note Factor for that month.
The "Certificate Factor" with respect to any class of Certificates will be a
seven-digit decimal indicating the Certificate Balance of that class of
Certificates as of the close of business on the Distribution Date in that month
as a fraction of the Initial Certificate Balance of that class. The Servicer
will compute the Certificate Factor each month for each class of Certificates.
Each Certificate Factor will initially be 1.0000000 and thereafter will decline
to reflect reductions in the Certificate Balance. Each Certificate Balance will
be computed by allocating payments in respect of the Receivables to principal
and interest using the simple interest method. The portion of the Certificate
Balance for any class of Certificates for a given month allocable to a
Certificateholder can be determined by multiplying the original denomination of
the holder's Certificate by the related Certificate Factor for that month.
The "Pool Factor" for a particular class of Notes or the Certificates will
be a seven-digit decimal indicating the principal amount of that class of Notes
or the Certificate Balance as of the close of business on the last day of the
related Collection Period as a fraction of the Pool Balance as of the Cutoff
Date. The Servicer will compute the Pool Factor for each month for each class of
Notes and Certificates.
Pursuant to the Transfer and Servicing Agreements, the Securityholders will
receive monthly reports concerning the payments received on the Receivables, the
Pool Balance, the related Note Factors, Certificate Factors, Pool Factors and
various other items of information pertaining to the Trust. Securityholders of
record during each calendar year will be furnished information by the Indenture
Trustee or the Owner Trustee, as appropriate, for tax reporting purposes not
later than the latest date permitted by law. See "Description of the Transfer
and Servicing Agreements--Statements to Securityholders" in the accompanying
Prospectus.
S-24
<PAGE>
USE OF PROCEEDS
The Seller will use the net proceeds from the sale of the Securities
(approximately $____________) to purchase the Receivables from NMAC pursuant to
the Purchase Agreement and to fund the Reserve Account.
THE SELLER AND THE SERVICER
Information regarding the Seller and the Servicer is set forth under the
captions "The Seller" and "The Servicer" in the accompanying Prospectus.
FINANCIAL CONDITION OF NISSAN MOTOR CO., LTD.
NMAC is an indirect wholly-owned subsidiary of Nissan Motor Co., Ltd.
("Nissan"). Although Nissan is not guaranteeing the Trust's obligations under
the Securities, Nissan's financial condition may affect NMAC's ability to
service the Receivables. Nissan's consolidated net sales for the fiscal year
ended March 31, 1999 were 6,580.0 billion yen, up from 6,564.6 billion yen the
previous fiscal year. Nissan's consolidated operating income for the fiscal year
ended March 31, 1999 increased to 109.7 billion yen from 86.9 billion yen the
previous fiscal year. The increase in operating income was largely attributable
to depreciation of the yen against other currencies, which offset the effect of
a decline in sales volume in Japan.
Nissan reported a consolidated net loss of 27.7 billion yen for the fiscal
year ended March 31, 1999, compared to a consolidated net loss of 14.0 billion
yen the prior fiscal year. Factors contributing to the decline in net income
included the effect of the devaluation of the peso on Nissan's Mexican operation
and evaluation losses on Nissan's securities holdings.
At the end of May 1999, an increase in Nissan's capital of 585.7 billion yen
was effected through the sale of shares to Renault. The resulting 36.8%
ownership position in Nissan gives Renault significant representation on the
Board of Directors and in the senior management of Nissan. As of the date of
this Prospectus Supplement, there have been no significant developments
resulting from this alliance. Nissan's management expects that significant
developments will occur; however, there can be no assurance that such
developments will occur or that, should they occur, they will have a positive
impact on the financial condition of Nissan.
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 September 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
S-25
<PAGE>
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.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
The foregoing description under "Year 2000" contains various "forward
looking statements" within the meaning of Section 27A of the Securities Act and
Section 21E of the Securities Exchange Act of 1934, as amended, which represent
NMAC's expectations or beliefs concerning future events, including the
following: that NMAC's action plan for year 2000 compliance efforts will be
carried out as described under "Year 2000"; that NMAC expects to complete its
year 2000 compliance efforts on its critical systems on a timely basis; that the
total estimated cost in connection with the year 2000 issue is not expected to
exceed $3.0 million, and is not expected to have a material adverse effect on
NMAC's results of operations, liquidity or capital resources; and that deferral
of some information technology projects is not expected to have a material
adverse effect on NMAC's results of operations, liquidity or capital resources.
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 those factors that could cause actual
timetables to differ materially from the expected results. See "Risk Factors--
Complications associated with year 2000 date conversion could affect the
servicer's operations, impairing its ability to collect receivables, which may
result in loss on your investments" in this Prospectus Supplement.
THE NOTES
GENERAL
The notes (the "Notes") will be issued pursuant to the terms of the
Indenture, a form of which has been filed as an exhibit to the Registration
Statement. A copy of the final signed Indenture will be filed with the SEC
following the issuance of the Securities. The following summary describes
material terms of the Notes and the Indenture. The summary does not purport to
be complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Notes and the Indenture. Where particular provisions
or terms used in the Indenture are referred to, the actual provisions (including
definitions of terms) are incorporated by reference as part of the summary. The
following summary supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of the Notes of
any given series and the related Indenture set forth in the accompanying
Prospectus, to which description reference is hereby made.
PAYMENTS OF INTEREST
Each class of Notes will constitute Fixed Rate Securities, as that term is
defined under "Material Information Regarding the Securities--Fixed Rate
Securities" in the accompanying Prospectus. Interest on the principal balances
of the classes of the Notes will accrue at the respective per annum interest
rates set forth in "Summary--Terms of the Notes--Per Annum Interest Rates" in
this Prospectus Supplement (each, an "Interest Rate") and will be payable to the
Noteholders monthly on the fifteenth of each month (or, if that date is not a
Business Day, on the next succeeding Business Day) (a "Distribution Date")
commencing [___________]. A "Business Day" is any day except a Saturday, Sunday
or a day on which banks in New York, New York, Minneapolis, Minnesota,
Wilmington,
S-26
<PAGE>
Delaware or Los Angeles, California are authorized or obligated by law,
regulation, executive order or decree to be closed.
Interest on the outstanding principal amount of each class of Notes will
accrue at the related Interest Rate from and including the most recent
Distribution Date on which interest has been paid (or from and including the
Closing Date with respect to the first Distribution Date) to but excluding the
current Distribution Date (each, an "Interest Period").
Interest on the Class A-1 Notes will be calculated on the basis of the
actual number of days in the related Interest Period divided by 360, and
interest on the Class A-2 Notes, the Class A-3 Notes and the Class B Notes will
be calculated on the basis of a 360-day year consisting of twelve 30-day months.
Interest accrued but not paid on any Distribution Date will be due on the next
Distribution Date, together with interest on that amount at the applicable
Interest Rate (to the extent lawful). Interest payments on the Notes will
generally be made from Available Amounts and from amounts on deposit in the
Reserve Account, after the Total Servicing Fee and non-recoverable Advances have
been paid. See "Subordination; Reserve Account--Reserve Account" and
"Distributions on the Notes and the Certificates" in this Prospectus Supplement.
Interest payments to holders of the Class A-1 Notes, the Class A-2 Notes and
the Class A-3 Notes (collectively, the "Class A Notes") will have the same
priority. Under specified circumstances, the amount available for interest
payments could be less than the amount of interest payable on the Notes on any
Distribution Date, in which case the holders of the Class A-1 Notes, the Class
A-2 Notes and the Class A-3 Notes will receive their ratable share (based upon
the aggregate amount of interest due to that class) of the aggregate amount
available to be distributed in respect of interest on the Notes.
Interest payments to the Class B Noteholders will be subordinated to the
interest payments on the Class A Notes. Interest on the Class B Notes will not
be paid until all accrued and unpaid interest on the Class A Notes have been
paid in full.
PAYMENTS OF PRINCIPAL
Until the Notes have been paid in full, principal payments to Noteholders
will be made on each Distribution Date in the amount and order of priority
described under "Distributions on the Notes and the Certificates--Payment of
Distributable Amounts." On each Distribution Date, principal of the Notes will
be payable generally in an amount equal to the Noteholders' Percentage of the
Principal Distributable Amount. Principal payments on the Notes will be made
from Available Amounts after the Total Servicing Fee and non-recoverable
Advances have been paid and after the Noteholders' Interest Distributable Amount
has been distributed. Principal payments will be allocated among the Notes so
that no principal payments will be made on:
1. the Class A-2 Notes until the Class A-1 Notes have been paid in full;
2. the Class A-3 Notes until the Class A-1 Notes and Class A-2 Notes have
been paid in full; and
3. the Class B Notes until the Class A Notes have been paid in full.
Notwithstanding the foregoing, on each Distribution Date after the
acceleration of the Notes following an Event of Default, the Notes will receive
100% of the Principal Distributable Amount until the Notes are paid in full.
That Principal Distributable Amount will be paid first to holders of record of
each of the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes on a
pro rata basis based on the principal balance of that class of outstanding
Notes. Beginning on the Distribution Date on which the Class A Notes have been
paid in full, the remainder of the Principal Distributable Amount, if any, and
on each subsequent Distribution Date, 100% of the Principal Distributable
Amount, will be paid to the holders of record of each of the Class B Notes (the
"Class B Noteholders") together with the
S-27
<PAGE>
holders of record of the Class A Notes (the "Class A Noteholders", the
"Noteholders") until the Class B Notes have been paid in full.
The actual Distribution Date on which the outstanding principal amount of
any class of Notes is paid may be significantly earlier than its Final Scheduled
Distribution Date based on a variety of factors, including the factors described
under "Weighted Average Life of the Securities" in the accompanying Prospectus.
If the principal amount of a class of Notes has not been paid in full on or
prior to its Final Scheduled Distribution Date, the Noteholders' Principal
Distributable Amount for that Distribution Date will, to the extent the
remaining Available Amounts are sufficient, include an amount sufficient to
reduce the unpaid principal amount of that class of Notes to zero on that
Distribution Date. See "Distribution on the Notes and the Certificates--Payment
of Distributable Amounts."
INDENTURE
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT. Subject to the following
paragraph, upon an Event of Default, the Noteholders will have the rights set
forth in the Prospectus under "The Notes-- The Indenture--Events of Default;
Rights Upon Event of Default." The Indenture Trustee may sell the Receivables
subject to certain conditions set forth in the Indenture following an Event of
Default, including a default in the payment of any principal of or a default for
five days or more in the payment of any interest on any Note (to the extent
described in the following paragraph). In the case of an Event of Default not
involving any such default in payment, the Indenture Trustee is prohibited from
selling the Receivables unless one of the conditions set forth in the Prospectus
under "The Notes--The Indenture--Events of Default; Rights Upon Event of
Default" has been satisfied.
Notwithstanding the description of Events of Default and resulting rights of
Noteholders in the Prospectus under the caption "The Notes--The
Indenture--Events of Default; Rights Upon Event of Default," until the Class A
Notes have been paid in full, the failure to pay interest due on the Class B
Notes will not be an Event of Default. Pursuant to the Trust Indenture Act of
1939, as amended, the Indenture Trustee may be deemed to have a conflict of
interest and be required to resign as trustee for the Class A Notes or the Class
B Notes if a default occurs under the Indenture. In these circumstances, the
Indenture will provide for one or more successor indenture trustees to be
appointed for the Class A Notes and the Class B Notes in order that there be
separate indenture trustees for each of class of Notes. So long as any amounts
remain unpaid with respect to the Class A Notes, only the indenture trustee for
the Class A Noteholders will have the right to exercise remedies under the
Indenture (but the Class B Noteholders will be entitled to their respective
shares of any proceeds of enforcement, subject to the subordination of the Class
B Notes to the Class A Notes as described herein), and only the Class A
Noteholders will have the right to waive the Events of Default or Servicer
Defaults or direct or consent to any action to be taken, including sale of the
Receivables, until the Class A Notes are paid in full. Upon repayment of the
Class A Notes in full, all rights to exercise remedies under the Indenture will
transfer to the indenture trustee for the Class B Notes. Any resignation of the
original Indenture Trustee as described above with respect to any class of Notes
will become effective only upon the appointment of a successor indenture trustee
for such class of Notes and such successor's acceptance of such appointment.
Each Class B Noteholder, by accepting its interest in a Class B Note, will
be deemed to have consented to any such delay in payment of interest on such
class of Notes and to have waived its right to institute suit for enforcement of
any such payment, in each case in the circumstances and to the extent described
above.
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<PAGE>
NOTICES
Noteholders will be notified in writing by the Indenture Trustee of any
Event of Default, Servicer Default or termination of, or appointment of a
successor to, the Servicer promptly upon a Responsible Officer (as defined in
the Transfer and Servicing Agreements) obtaining actual knowledge thereof.
If Notes are issued other than in book-entry form, those notices will be
mailed to the addresses of Noteholders as they appear in the register maintained
by the Indenture Trustee prior to mailing. Those notices will be deemed to have
been given on the date of that publication or mailing.
GOVERNING LAW
The Indenture and the Notes are governed by and shall be construed in
accordance with the laws of the State of New York applicable to agreements made
in and to be performed wholly within that jurisdiction.
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<PAGE>
THE CERTIFICATES
GENERAL
The certificates (the "Certificates") will be issued pursuant to the terms
of the Trust Agreement, a form of which has been filed as an exhibit to the
Registration Statement. A copy of the final signed Trust Agreement will be filed
with the SEC following the issuance of the Securities. The Certificates will
evidence undivided ownership interests in the Trust created pursuant to the
Trust Agreement.
The following summary describes material terms of the Certificates and the
Trust Agreement. The summary does not purport to be complete and is subject to,
and qualified in its entirety by reference to, all the provisions of the
Certificates and the Trust Agreement. The following summary supplements, and to
the extent inconsistent therewith replaces, the description of the general terms
and provisions of the Certificates of any given series and the related Trust
Agreement set forth in the accompanying Prospectus, to which description
reference is hereby made.
PAYMENTS OF INTEREST
Interest on the Certificate Balance will accrue during each Interest Period
at the per annum pass through rate set forth in "Summary--Terms of the
Certificates--Per Annum Pass Through Rates" in this Prospectus Supplement (the
"Pass Through Rate") and will be payable to the holders of record of the
Certificates (the "Certificateholders") on the related Distribution Date. The
Certificates will constitute Fixed Rate Securities, as that term is defined
under "Material Information Regarding the Securities--Fixed Rate Securities" in
the accompanying Prospectus. Interest due on a Distribution Date will accrue
during the related Interest Period and will be calculated on the basis of a
360-day year consisting of twelve 30-day months. Interest distributions with
respect to the Class C Certificates generally will be made from Available
Amounts after:
1. payment of the Total Servicing Fee;
2. payment of non-recoverable Advances to the Servicer; and
3. distribution of the Noteholders' Distributable Amounts to the
Noteholders.
Interest distributions with respect to the Class D Certificates generally
will be made from Available Amounts after payment of all of the foregoing and
also after (1) distribution of interest and principal due and payable in respect
of the Class C Certificates and (2) depositing of funds in the Reserve Account
so that the amount on deposit in that account equals the Specified Reserve
Account Balance. See "Distributions on the Notes and the Certificates--Payment
of Distributable Amounts" in this Prospectus Supplement.
Interest payments due for any Distribution Date but not paid on that
Distribution Date will be due on the next Distribution Date increased by an
amount equal to interest on that amount at the Pass Through Rate (to the extent
lawful).
PAYMENTS OF PRINCIPAL
No principal will be paid on the Certificates until the Distribution Date on
which all of the Notes have been paid in full. On that Distribution Date and
each Distribution Date thereafter, principal payments of the Certificates will
be payable in an amount equal to the Certificateholders' Percentage of the
Principal Distributable Amount. Principal payments on the Class C Certificates
will be made from Available Amounts after:
1. payment of the Total Servicing Fee;
2. payment of non-recoverable Advances; and
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<PAGE>
3. distribution of the Noteholders' Distributable Amounts to the
Noteholders. Principal payments will be allocated among the Certificates
so that no principal payments will be made on the Class D Certificates
until the Class C Certificates have been paid in full.
Principal payments of the Class D Certificates will be made from Available
Amounts after all payment of the foregoing and also after (1) distribution of
interest and principal due and payable in respect of the Class C Certificates
and (2) depositing of funds in the Reserve Account so that the amount on deposit
in that account equals the Specified Reserve Account Balance.
Notwithstanding the foregoing, on each Distribution Date after the
acceleration of the Notes following an Event of Default, the Certificates will
not receive any of the Principal Distributable Amount until the Notes have been
paid in full.
NOTICES
Certificateholders will be notified in writing by the Owner Trustee of any
Event of Default, Servicer Default or termination of, or appointment of a
successor to, the Servicer promptly upon a Responsible Officer obtaining actual
knowledge thereof. Except for the monthly and annual reports to
Certificateholders described this Prospectus Supplement, the Owner Trustee is
not obligated under the Trust Agreement to forward any other notices to the
Certificateholders. There are no provisions in the Trust Agreement for the
regular or special meetings of Certificateholders.
GOVERNING LAW
The Trust Agreement and the Certificates are governed by and shall be
construed in accordance with the laws of the State of New York applicable to
agreements made in and to be performed wholly within that jurisdiction.
DISTRIBUTIONS ON THE NOTES AND THE CERTIFICATES
On or before the tenth calendar day of each month (or, if the tenth day is
not a Business Day, the next succeeding Business Day (each a "Determination
Date"), the Servicer will inform the Owner Trustee and the Indenture Trustee of,
among other things, the amount of funds collected on or in respect of the
Receivables, the amount of Advances to be made by and reimbursed to the Servicer
and the Total Servicing Fee and other servicing compensation payable to the
Servicer, in each case with respect to the immediately preceding Collection
Period. On or prior to each Distribution Date, the Servicer will also determine
the following:
1. Available Amounts;
2. Noteholders' Distributable Amount;
3. Certificateholders' Distributable Amount;
4. Principal Distributable Amount;
5. Yield Supplement Amount, if any; and
6. based on the available funds and other amounts available for payment on
the related Distribution Date as described below, the amount to be
distributed to the Noteholders and Certificateholders.
The Indenture Trustee or the Owner Trustee, as the case may be, will make
payments to the Noteholders and Certificateholders out of the amounts on deposit
in the Collection Account. The amounts to be distributed to the Noteholders and
Certificateholders will be determined in the manner described below.
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CALCULATION OF AVAILABLE AMOUNTS
The amount of funds available for distribution on a Distribution Date will
generally equal the sum of Available Interest and Available Principal
(collectively, "Available Amounts").
"Available Interest" for a Distribution Date will equal the sum of the
following amounts allocable to interest received or allocated by the Servicer on
or in respect of the Receivables during the related Collection Period:
1. all collections on or in respect of the Receivables other than Defaulted
Receivables;
2. all proceeds of the liquidation of Defaulted Receivables, net of
expenses incurred by the Servicer in accordance with its customary
servicing procedures in connection with the liquidation, including
amounts received in subsequent Collection Periods ("Net Liquidation
Proceeds");
3. all Advances made by the Servicer;
4. all Warranty Purchase Payments with respect to Warranty Receivables
repurchased by the Seller in respect of that Collection Period;
5. all Administrative Purchase Payments with respect to Administrative
Receivables purchased by the Servicer in respect of that Collection
Period; and
6. any Yield Supplement Amounts.
"Available Principal" for a Distribution Date will equal the sum of the
amounts described in clauses (1), (2), (4) and (5) above received or allocated
by the Servicer in respect of principal on or in respect of the Receivables
during the related Collection Period.
Available Interest and Available Principal on any Distribution Date will
exclude the following amounts:
1. amounts received on a particular Receivable (other than a Defaulted
Receivable) to the extent that the Servicer has previously made an
unreimbursed Advance in respect of that Receivable;
2. Net Liquidation Proceeds with respect to a particular Receivable to the
extent of unreimbursed Advances in respect of that Receivable; and
3. recoveries from collections with respect to Advances that the Servicer
has determined are unlikely to be repaid.
A "Defaulted Receivable" will be a Receivable (other than an Administrative
Receivable or a Warranty Receivable) which, by its terms, is delinquent more
than 120 days or, with respect to a Receivable that is delinquent less than 120
days, the Servicer has (a) determined, in accordance with its customary
servicing procedures, that eventual payment in full is unlikely, or (b)
repossessed the Financed Vehicle.
PAYMENT OF DISTRIBUTABLE AMOUNTS
Prior to each Distribution Date, the Servicer will calculate the amount to
be distributed to the Noteholders and Certificateholders. On each Distribution
Date, the Servicer will allocate amounts on deposit in the Collection Account
with respect to the related Collection Period as described below and will
instruct the Indenture Trustee to make the following payments and distributions
in the following amounts and order of priority:
1. to the Servicer, the Total Servicing Fee, including any unpaid Total
Servicing Fees with respect to one or more prior Collection Periods, and
non-recoverable Advances;
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2. to the Noteholders, the Noteholders' Interest Distributable Amount, from
Available Amounts (after giving effect to the reduction in Available
Amounts described in clause (1) above);
3. to the Noteholders, the Noteholders' Principal Distributable Amount,
from Available Amounts (after giving effect to the reduction in Available
Amounts described in clauses (1) through (2) above);
4. to the holders of record of the Class C Certificates (the "Class C
Certificateholders"), the Certificateholders' Interest Distributable
Amount for the Class C Certificates, from Available Amounts (after giving
effect to the reduction in Available Amounts described in clauses (1)
through (3) above);
5. to the Class C Certificateholders, the Certificateholders' Principal
Distributable Amount for the Class C Certificates, from Available Amounts
(after giving effect to the reduction in Available Amounts described in
clauses (1) through (4) above);
6. to the Reserve Account, from Available Amounts (after giving effect to
the reduction in Available Amounts described in clauses (1) through (5)
above and that amount being the "Excess Amount"), that amount until the
amount on deposit in that account equals the Specified Reserve Account
Balance;
7. to the holders of record of the Class D Certificates (the "Class D
Certificateholders"), the Certificateholders' Interest Distributable
Amount for the Class D Certificates, from Available Amounts (after giving
effect to the reduction in Available Amounts described in clauses (1)
through (6) above);
8. after the Class C Certificateholders have been paid in full, to the
Class D Certificateholders, the Certificateholders' Principal
Distributable Amount for the Class D Certificates, from Available Amounts
(after giving effect to the reduction in Available Amounts described in
clauses (1) through (7) above); and
9. any Available Amounts remaining after giving effect to the reduction in
Available Amounts described in clauses (1) through (8) above, to the
Seller.
Noteholders' Principal Distributable Amount will be allocated among the
Notes so that no principal payments will be made on:
1. the Class A-2 Notes until the Class A-1 Notes have been paid in full;
2. the Class A-3 Notes until the Class A-1 Notes and the Class A-2 Notes
have been paid in full; or
3. the Class B Notes until the Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes have been paid in full.
Notwithstanding the foregoing, if amounts actually allocated to the
Noteholders on any Distribution Date is less than the Noteholders' Distributable
Amount, funds will be withdrawn from the Reserve Account so that an amount equal
to the Noteholders' Distributable Amount may be allocated to the Noteholders.
No principal payments on the Certificates will be made until all of the
Notes have been paid in full. Thereafter, Certificateholders' Principal
Distributable Amount will be allocated among the Certificates so that no
principal payments will be made on the Class D Certificates until the Class C
Certificates have been paid in full. Notwithstanding the foregoing, if amounts
actually allocated to the Class C Certificateholders on any Distribution Date is
less than the Certificateholders' Distributable Amount, funds will be withdrawn
from the Reserve Account (after funds have been withdrawn for the
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benefit of the Noteholders) so that an amount equal to the Certificateholders'
Distributable Amount may be allocated to the Class C Certificateholders.
For the purposes of this Prospectus Supplement, the following terms will
have the following meanings:
The "Certificateholders' Distributable Amount" will mean, with respect to
any Distribution Date, the sum of the Certificateholders' Interest Distributable
Amount for all classes of Certificates plus the Certificateholders' Principal
Distributable Amount for that Distribution Date for the most senior class of
Certificates.
The "Certificateholders' Interest Distributable Amount" will mean, with
respect to any Distribution Date and a class of Certificates, the sum of the
Certificateholders' Monthly Interest Distributable Amount for that class and the
Certificateholders' Interest Carryover Shortfall for that class for one or more
prior Distribution Dates.
The "Certificateholders' Interest Carryover Shortfall" will mean, with
respect to any Distribution Date and a class of Certificates, the excess, if
any, of the sum of the Certificateholders' Monthly Interest Distributable Amount
for that class for the preceding Distribution Date plus any outstanding
Certificateholders' Interest Carryover Shortfall for that class on that
preceding Distribution Date, over the amount of interest that is actually paid
on the Certificates on that preceding Distribution Date, plus, to the extent
permitted by applicable law, interest on the Certificateholders' Interest
Carryover Shortfall at the related Pass Through Rate for the related Interest
Period.
The "Certificateholders' Monthly Interest Distributable Amount" will mean,
with respect to any Distribution Date and a class of Certificates, interest
accrued for the related Interest Period at the related Pass Through Rate for
that class of Certificates on the Certificate Balance of that class on the
immediately preceding Distribution Date, after giving effect to all payments of
principal to Certificateholders of that class on or prior to that Distribution
Date (or, in the case of the first Distribution Date, on the Initial Certificate
Balance of that class of Certificates). The "Initial Certificate Balance" will
equal $______________ for the Class C Certificates and $____________ for the
Class D Certificates, and the "Certificate Balance," for any Distribution Date
and a class of Certificates, will equal the Initial Certificate Balance of that
class, reduced by all amounts distributed on or prior to that Distribution Date
on the Certificates of that class and allocable to principal.
The "Certificateholders' Monthly Principal Distributable Amount" will mean,
with respect to any Distribution Date, the Certificateholders' Percentage of the
Principal Distributable Amount for that Distribution Date.
The "Certificateholders' Percentage" will mean the following:
1. for each Distribution Date until all of the Notes have been paid in
full, 0%; and
2. thereafter, 100%.
The "Certificateholders' Principal Carryover Shortfall" will mean, with
respect to any Distribution Date and a class of Certificates, the excess of the
Certificateholders' Monthly Principal Distributable Amount for that class plus
any outstanding Certificateholders' Principal Carryover Shortfall of that class
for the preceding Distribution Date, over the amount in respect of principal
that is actually distributed to the Certificateholders of that class on that
Distribution Date.
The "Certificateholders' Principal Distributable Amount" will mean, with
respect to any Distribution Date and a class of Certificates, the sum of:
1. the Certificateholders' Monthly Principal Distributable Amount for that
Distribution Date;
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2. any outstanding Certificateholders' Principal Carryover Shortfall of
that class as of the close of the immediately preceding Distribution
Date; and
3. on the Final Scheduled Distribution Date for that class of Certificates,
the amount necessary to reduce the outstanding principal amount of that
class of Certificates to zero; provided, however, that the
Certificateholders' Principal Distributable Amount with respect to a
class of Certificates shall not exceed the Certificate Balance of that
class of Certificates.
The "Noteholders' Distributable Amount" will mean, with respect to any
Distribution Date, the sum of the Noteholders' Interest Distributable Amount for
all classes of Notes plus the Noteholders' Principal Distributable Amount for
that Distribution Date for the most senior class of Notes.
The "Noteholders' Interest Carryover Shortfall" will mean, with respect to
any Distribution Date and a class of Notes, the excess, if any, of the sum of
the Noteholders' Monthly Interest Distributable Amount for that class for the
preceding Distribution Date plus any outstanding Noteholders' Interest Carryover
Shortfall for that class on that preceding Distribution Date, over the amount in
respect of interest that is actually paid on the Notes of that class on that
preceding Distribution Date, plus, to the extent permitted by applicable law,
interest on the Noteholders' Interest Carryover Shortfall at the related
Interest Rate for the related Interest Period.
The "Noteholders' Interest Distributable Amount" will mean, with respect to
any Distribution Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for all classes of Notes and the Noteholders' Interest
Carryover Shortfall for all classes of Notes for one or more prior Distribution
Dates.
The "Noteholders' Monthly Interest Distributable Amount" will mean, with
respect to any Distribution Date and a class of Notes, interest accrued for the
related Interest Period at the related Interest Rate for that class on the
outstanding principal amount of that class on the immediately preceding
Distribution Date, after giving effect to all payments of principal to
Noteholders of that class on or prior to that Distribution Date (or, in the case
of the first Distribution Date, on the original principal amount of that class).
The "Noteholders' Monthly Principal Distributable Amount" will mean, with
respect to any Distribution Date, the Noteholders' Percentage of the Principal
Distributable Amount for that Distribution Date.
The "Noteholders' Percentage" will mean:
1. for each Distribution Date until the principal amounts of all of the
Notes have been paid in full, 100%; and
2. thereafter, 0%.
The "Noteholders' Principal Carryover Shortfall" will mean, with respect to
any Distribution Date and a class of Notes, the excess, if any, of the
Noteholders' Monthly Principal Distributable Amount plus any outstanding
Noteholders' Principal Carryover Shortfall for that class for the preceding
Distribution Date over the amount in respect of principal that is actually paid
as principal on that class on that Distribution Date.
The "Noteholders' Principal Distributable Amount" will mean, with respect to
any Distribution Date and a class of Notes, the sum of:
1. the Noteholders' Monthly Principal Distributable Amount;
2. any outstanding Noteholders' Principal Carryover Shortfall of that class
as of the close of the immediately preceding Distribution Date; and
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3. on the Final Scheduled Distribution Date for that class of Notes, the
amount necessary to reduce the outstanding principal amount of that class
of Notes to zero; provided, however, that the Noteholders' Principal
Distributable Amount with respect to a class of Notes shall not exceed
the outstanding principal amount of that class.
The "Principal Distributable Amount" will mean, with respect to any
Distribution Date and the related Collection Period, the sum of the following
amounts:
1. the principal portion of all payments actually received on the
Receivables during that Collection Period;
2. the principal portion of all prepayments and partial prepayments
received during that Collection Period (to the extent those amounts are
not included in clause (1) above); and
3. the Principal Balance of each Receivable that the Servicer became
obligated to purchase, the Seller became obligated to repurchase or that
became a Defaulted Receivable during that Collection Period (to the
extent those amounts are not included in clauses (1) or (2) above).
SUBORDINATION; RESERVE ACCOUNT
The rights of the Noteholders and the Certificateholders to receive payments
with respect to the Receivables will be subordinated to the rights of the
Servicer to receive the Total Servicing Fee, any additional servicing
compensation described under "Description of the Transfer and Servicing
Agreements--Servicing Compensation" in this Prospectus Supplement and the
reimbursement of outstanding Advances.
SUBORDINATION
In addition, the rights of the Noteholders to receive distributions on the
Receivables will be subject to the priorities set forth under "Summary--Terms of
the Notes" and "Distributions on the Notes and the Certificates--Payment of
Distributable Amounts" in this Prospectus Supplement. The rights of the
Certificateholders to receive payments on the Receivables will be subordinated
to the rights of the Noteholders to the extent described herein. The rights of
the Class D Certificateholders to receive payments on the Receivables will be
further subordinated to the rights of the Class C Certificateholders and the
maintenance of amounts on deposit in the Reserve Account at the Specified
Reserve Account Balance, in each case to the extent described herein.
RESERVE ACCOUNT
The protection afforded to the Noteholders through subordination will be
effected both by the preferential right of the Noteholders to receive, to the
extent described in this Prospectus Supplement, current distributions on the
Receivables and the establishment of the Reserve Account. Although the Class C
Certificates are subordinated to the rights of the Noteholders, the Class C
Certificateholders have a preferential right to receive current distributions on
the Receivables before the Class D Certificateholders to the extent described in
this Prospectus Supplement and the establishment of the Reserve Account. The
Reserve Account will be a segregated account in the name of the Indenture
Trustee. The Reserve Account will be created with an initial deposit by the
Seller on the Closing Date of an amount equal to $____________ (the "Reserve
Account Initial Deposit") which is less than the Specified Reserve Account
Balance. The Reserve Account will thereafter be funded by the deposit therein of
all Excess Amounts, if any, for each Distribution Date to the extent necessary
to restore or bring the amounts on deposit in the Reserve Account to the
Specified Reserve Account Balance.
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Amounts held from time to time in the Reserve Account will continue to be
held for the benefit of holders of the Notes and the Class C Certificateholders
and may be invested in Eligible Investments. Investment income on those
investments (net of losses and expenses) will be paid to the Seller, upon the
direction of the Servicer, to the extent that funds on deposit in the Reserve
Account exceed the Specified Reserve Account Balance. If the amount on deposit
in the Reserve Account on any Distribution Date (after giving effect to all
deposits to and withdrawals from the Reserve Account on that Distribution Date)
is greater than the Specified Reserve Account Balance for that Distribution
Date, subject to limitations set forth in the Transfer and Servicing Agreement,
the Indenture Trustee will include the amount of the excess in the amounts to be
distributed to Class D Certificateholders pursuant to clauses (7) and (10) in
the first paragraph under "Distributions on the Notes and the
Certificates--Payment of Distributable Amounts" in this Prospectus Supplement.
Upon any distribution to the Class D Certificateholders of amounts in excess of
the Specified Reserve Account Balance, the Noteholders will not have any rights
in, or claims to, those amounts. Any excess amounts remaining thereafter will be
paid to the Seller.
The "Specified Reserve Account Balance" will initially be [____________].
However, on any Distribution Date, the Specified Reserve Account Balance will be
an amount equal to [_____________].
The Servicer may, from time to time after the date of this Prospectus
Supplement, request each rating agency to approve a formula for determining the
Specified Reserve Account Balance that is different from those described above
or change the manner by which the Reserve Account is funded. If each rating
agency delivers a letter to the Owner Trustee to the effect that the use of any
new formula will not result in a qualification, reduction or withdrawal of its
then-current rating of any class of the Notes or the Class C Certificates, then
the Specified Reserve Account Balance will be determined in accordance with the
new formula. The Sale and Servicing Agreement will accordingly be amended,
without the consent of any Noteholder or Certificateholder, to reflect the new
calculation.
None of the Securityholders, the Indenture Trustee, the Owner Trustee or the
Seller 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 Securityholders.
The Reserve Account and the subordination of the Certificates are intended
to enhance the likelihood of receipt by Noteholders of the full amount of
principal and interest due them and to decrease the likelihood that the
Noteholders will experience losses. However, the Reserve Account could be
depleted. If the amount required to be deposited into or required to be
withdrawn from the Reserve Account to cover shortfalls in collections on the
Receivables exceeds the amount of available cash in the Reserve Account,
Noteholders could incur losses or suffer a temporary shortfall in the amounts
distributed to the Noteholders. In that event, the Class C Certificateholders
will first incur the losses, but the Class B Noteholders will be the second to
incur those losses because payments of principal of and interest on the Class B
Notes are subordinated to payments of principal of and interest on the Class A
Notes.
To a lesser extent, the Reserve Account and the subordination of the Class D
Certificates are intended to enhance the likelihood of receipt by the Class C
Certificateholders of the full amount of principal and interest due them and to
decrease the likelihood that the Class C Certificateholders will experience
losses. However, the right of the Class C Certificateholders to the amounts on
deposit in the Reserve Account is subordinated to the similar right of the
Noteholders and, in any event, the Reserve Account could be depleted. If the
amount required to be deposited into or required to be withdrawn from the
Reserve Account to cover shortfalls in collections on the Receivables exceeds
the amount of available cash in the Reserve Account, the Class C
Certificateholders could incur losses or suffer a temporary shortfall in the
amounts distributed to the Certificateholders.
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DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
THE TRANSFER AND SERVICING AGREEMENTS
The description of the terms of the Indenture, the Sale and Servicing
Agreement, the Administration Agreement and the Trust Agreement (collectively,
the "Transfer and Servicing Agreements") in this Prospectus Supplement does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all the provisions of the Transfer and Servicing Agreements. Forms
of the Transfer and Servicing Agreements have been filed as exhibits to the
Registration Statement. Copies of the final signed Transfer and Servicing
Agreements will be filed with the SEC following the issuance of the Securities.
Any description of the Transfer and Servicing Agreements in this Prospectus
Supplement supplements, and to the extent inconsistent replaces, the description
of the general terms and provisions of the Transfer and Servicing Agreements set
forth in the accompanying Prospectus, to which description reference is hereby
made.
SALE AND ASSIGNMENT OF RECEIVABLES
Information with respect to the conveyance of the Receivables from the
Seller to the Trust on the Closing Date pursuant to the Sale and Servicing
Agreement is set forth under "Description of the Transfer and Servicing
Agreements--Sale and Assignment of Receivables" in the accompanying Prospectus.
ACCOUNTS
In addition to the accounts referred to under "Description of the Transfer
and Servicing Agreements--Accounts" in the accompanying Prospectus, the Servicer
will also establish and will maintain with the Indenture Trustee the Reserve
Account in the name of the Owner Trustee on behalf of the Noteholders and the
Certificateholders.
COLLECTIONS
The Servicer will deposit all payments on Receivables received from Obligors
and all proceeds of Receivables collected during each Collection Period into the
Collection Account not later than the Business Day after receipt. However, so
long as NMAC is the servicer, if each condition to making monthly deposits as
may be required by the Sale and Servicing Agreement (including the satisfaction
of specified ratings criteria by NMAC and the absence of any Servicer Default)
is satisfied, the Servicer may retain such amounts until the related
Distribution Date. The Servicer or the Seller, as the case may be, will remit
the aggregate Warranty Purchase Payments and Administrative Purchase Payments 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 Sale and Servicing
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. The Servicer, at its own risk and for its own
benefit, may instruct the Owner Trustee to invest amounts held in the Collection
Account in Eligible Investments from the time deposited until the related
Distribution Date. See "Description of the Transfer and Servicing
Agreements--Collections" in the accompanying Prospectus.
"Eligible Investments" will be specified in the Indenture and will be
limited to investments which meet the criteria of each rating agency from time
to time as being consistent with its then-current ratings of the Securities.
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Collections on or in respect of a Receivable made during a Collection Period
(including Warranty Purchase Payments and Administrative Purchase Payments) will
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 of the Receivable.
See "Description of the Transfer and Servicing Agreements--Collections" in the
accompanying Prospectus.
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 (an
"Advance"). If the calculation results in a negative number, an amount equal to
the negative amount will be paid to the Servicer in reimbursement of outstanding
Advances. In addition, if a Receivable becomes a Liquidated Receivable, the
amount of accrued and unpaid interest on that Receivable (but not including
interest for the current Collection Period) will, up to the amount of
outstanding Advances in respect thereof, be withdrawn from the Collection
Account and paid to the Servicer in reimbursement of the outstanding Advances.
The Servicer will not be required to make any Advances (other than the Advance
of an interest shortfall arising from a prepaid Receivable) to the extent that
it does not expect to recoup the Advance from subsequent collections or
recoveries. No advances of principal will be made with respect to the
Receivables. See "Description of the Transfer and Servicing
Agreements--Advances" in the accompanying Prospectus.
SERVICING COMPENSATION
The base servicing fee for the calendar month immediately preceding any
Distribution Date (a "Collection Period") will be one-twelfth of 1.00% (the
"Servicing Rate") of the Pool Balance as of the first day of the related
Collection Period or, in the case of the first Distribution Date, the Initial
Pool Balance (the "Base Servicing Fee"). The Base Servicing Fee, together with
any previously unpaid Base Servicing Fee, will be paid on each Distribution Date
solely to the extent of Available Interest. The Servicer will be entitled to
collect and retain as additional servicing compensation in respect of each
Collection Period any late fees, prepayment charges and any other administrative
fees and expenses or similar charges collected during that Collection Period,
plus any investment earnings or interest earned during that Collection Period
from the investment of monies on deposit in the Collection Account (the
"Supplemental Servicing Fee"). See "Description of the Transfer and Servicing
Agreements-- Collections" in this Prospectus Supplement and "Description of the
Transfer and Servicing Agreements--Servicing Compensation" in the accompanying
Prospectus. The Servicer will be paid the Base Servicing Fee and the
Supplemental Servicing Fee (collectively the "Total Servicing Fee") for each
Collection Period on the following Distribution Date related to that Collection
Period. However, if it is acceptable to each rating agency without a reduction
in the rating of each class of Notes and the Class C Certificates, the Base
Servicing Fee in respect of a Collection Period (together with any portion of
the Base Servicing Fee that remains unpaid from prior Distribution Dates) will
be paid at the beginning of that Collection Period out of collections of
interest on the Receivables for that Collection Period. The Base Servicing Fee
will be paid from Available Interest prior to the payment of the Noteholders'
Distributable Amounts or Certificateholders' Distributable Amounts.
YIELD SUPPLEMENT 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 Indenture Trustee for the benefit of the holders of the
Notes and the Class C Certificateholders (the "Yield Supplement Account"). The
"Yield Supplement Amount" for each Collection Period means an aggregate amount
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(if positive), calculated by the Servicer, by which (1) one month's interest on
the principal balance as of the first day of that Collection Period of each
Yield Supplemented Receivable (other than a Liquidated Receivable, after the
Collection Period in which that Receivable became a Liquidated Receivable) at a
rate equal to the Required Rate exceeds (2) one month's interest on that
principal balance at that Yield Supplemented Receivable's APR. "Yield
Supplemented Receivables" are Receivables that have APRs which are less than the
Required Rate. The "Required Rate" means, with respect to any Distribution Date,
the sum of the weighted average Interest Rate for the Notes and the Pass Through
Rate for the Class C Certificates and 1.00%.
If the Yield Supplement Amounts for any Distribution Date exceed the amount
available for withdrawal from the Yield Supplement Account on that Distribution
Date, the Seller will not have any further obligation under the Yield Supplement
Agreement to deposit any further amounts into the Yield Supplement Account. The
amount required to be on deposit in the Yield Supplement Account (the "Required
Yield Supplement Amount") will be equal to the lesser of (1) 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 (2) the
Initial Yield Supplement 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 Account exceeds the Required Yield Supplement Amount on that
Distribution Date, the excess will be paid to the Seller. The Yield Supplement
Account will not be part of the Trust.
Simultaneously with the sale and assignment of the Receivables by NMAC to
the Seller, the Seller will enter into the Yield Supplement Agreement with the
Indenture Trustee and the Servicer. The Seller will assign the Yield Supplement
Agreement to the Trust.
NET DEPOSITS
As an administrative convenience and as long as specified conditions are
satisfied, the Servicer will be permitted to make the deposit of collections,
aggregate Advances and amounts deposited in respect of purchases of Receivables
by the Seller or the Servicer for or with respect to the related Collection
Period net of payments to be made to the Servicer with respect to that
Collection Period. The Servicer, however, will account to the Owner Trustee and
to the Certificateholders as if all of the foregoing deposits and payments were
made individually. See "Description of the Transfer and Servicing
Agreements--Net Deposits" in the accompanying Prospectus.
OPTIONAL PURCHASE
The outstanding Notes and the Certificates will be redeemed in whole, but
not in part, on any Distribution Date on which the Servicer or any successor to
the Servicer exercises its option to purchase the Receivables. The Servicer or
any successor to the Servicer may purchase the Receivables when the Pool Balance
shall have declined to 10% or less of the Initial Pool Balance, as described in
the accompanying Prospectus under "Description of the Transfer and Servicing
Agreements-- Termination." The "Redemption Price" for the outstanding Notes will
be equal to the unpaid principal amount of the outstanding Notes plus accrued
and unpaid interest on those Notes and for the Certificates will equal the
Certificate Balance of the Class C Certificates and Class D Certificates on the
date of the optional purchase plus accrued and unpaid interest on the
Certificates.
REMOVAL OF SERVICER
The Indenture Trustee or Noteholders evidencing a majority of the voting
interests of Notes (or relevant classes of Notes) may terminate the rights and
obligations of the Servicer under the Sale and Servicing Agreement upon:
S-40
<PAGE>
1. any failure by the Servicer (or the Seller, so long as NMAC is the
Servicer) to deliver to the Owner Trustee or the Indenture Trustee, as
applicable, for deposit in any Account any required payment or to direct
the Owner Trustee or the Indenture Trustee, as applicable, to make any
required distributions from that Account, and that failure continues
unremedied for three Business Days after (a) receipt by the Servicer (or
the Seller, so long as NMAC is the Servicer) of written notice of the
failure from the Owner Trustee or the Indenture Trustee, as applicable,
(b) receipt by the Servicer (or the Seller, so long as NMAC is the
Servicer) and the Owner Trustee or the Indenture Trustee, as applicable,
of written notice of the failure from the holders of Notes or
Certificates evidencing not less than 25% in principal amount of those
outstanding Notes and the Certificates, acting together as the single
class; or (b) discovery of that failure by any officer of the Servicer;
2. any failure by the Servicer (or the Seller, as long as NMAC is the
Servicer) to duly observe or perform in any material respect any other
covenants or agreements of the Servicer (or the Seller, as long as NMAC
is the Servicer) set forth in the Sale and Servicing Agreement, and that
failure materially and adversely affects the rights of the Noteholders or
the Certificateholders, and that failure continues unremedied for 90 days
after the giving of written notice of the failure to (a) the Servicer (or
the Seller, so long as NMAC is the Servicer) by the Owner Trustee or the
Indenture Trustee, or (b) the Servicer (or the Seller, so long as NMAC is
the Servicer) and the Owner Trustee or the Indenture Trustee, as
applicable, by the holders of Notes or Certificates evidencing not less
than 25% in principal amount of those outstanding Notes or Certificates,
acting together as a single class; and
3. the occurrence of an Insolvency Event of the Servicer.
Under those circumstances, authority and power shall, without further
action, pass to and be vested in the Indenture Trustee or a successor Servicer
appointed under the Sale and Servicing Agreement. If, however, a bankruptcy
trustee or similar official has been appointed for the Servicer, and no Servicer
Default other than the appointment of a bankruptcy trustee or similar official
has occurred, that trustee or official may have the power to prevent the
Indenture Trustee or the Noteholders from effecting a transfer of servicing.
Upon receipt of notice of the occurrence of a Servicer Default, the Indenture
Trustee shall give notice thereof to the rating agencies. Upon payment in full
of the principal and interest on the Notes, the Certificateholders will succeed
to the rights of the Noteholders with respect to removal of the Servicer.
DUTIES OF THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
The Owner Trustee will make no representations as to the validity or
sufficiency of the Trust Agreement, the Certificates (other than the
authentication of the Certificates), the Notes or of any Receivables or related
documents and is not accountable for the use or application by the Seller or the
Servicer of any funds paid to the Seller or the Servicer in respect of the
Notes, the Certificates or the Receivables, or the investment of any monies by
the Servicer before those monies are deposited into the Collection Account. The
Owner Trustee will not independently verify the Receivables. If no Servicer
Default has occurred, the Owner Trustee is required to perform only those duties
specifically required of it under the Trust 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 Owner Trustee under the Trust Agreement, in which case it
will only be required to examine them to determine whether they conform to the
requirements of the Trust Agreement. The Owner Trustee shall not be charged with
knowledge of a failure by the Servicer to perform its duties under the Trust
Agreement or the Sale and Servicing Agreement which failure constitutes a
Servicer Default unless the Owner Trustee obtains actual knowledge of the
failure as specified in the Trust Agreement.
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<PAGE>
The Owner Trustee will be under no obligation to exercise any of the rights
or powers vested in it by the Trust Agreement or to make any investigation of
matters arising under the Trust Agreement or to institute, conduct or defend any
litigation under the Trust Agreement or in relation thereto at the request,
order or direction of any of the Certificateholders, unless those
Certificateholders have offered to the Owner Trustee reasonable security or
indemnity against the costs, expenses and liabilities that may be incurred by
the Owner Trustee in connection with the exercise of those rights. No
Certificateholder will have any right under the Trust Agreement to institute any
proceeding with respect to the Trust Agreement, other than with respect to the
failure by the Seller or the Servicer, as applicable, to remit payment, unless
that Certificateholder has previously given to the Owner Trustee written notice
of default and unless the holders of Certificates evidencing not less than 25%
of the voting interests of the Certificates, acting together as a single class,
have made written request upon the Owner Trustee to institute that proceeding in
its own name as the Owner Trustee under the Trust Agreement and have offered to
the Owner Trustee reasonable indemnity and the Owner Trustee for 30 days has
neglected or refused to institute that proceeding.
The Indenture Trustee will make no representations as to the validity or
sufficiency of the Indenture, the Certificates, the Notes (other than
authentication of the Notes) or of any Receivables or related documents, and is
not accountable for the use or application by the Seller or the Servicer of any
funds paid to the Seller or the Servicer in respect of the Notes, the
Certificates or the Receivables, or the investment of any monies by the Servicer
before those monies are deposited into the Collection Account. The Indenture
Trustee will not independently verify the Receivables. If no Event of Default or
Servicer Default has occurred, the Indenture Trustee is required to perform only
those duties specifically required of it under the Indenture. In addition to
making distributions to the Noteholders, those duties generally are limited to
the receipt of the various certificates, reports or other instruments required
to be furnished to the Indenture Trustee under the Indenture, in which case it
will only be required to examine them to determine whether they conform to the
requirements of the Indenture. The Indenture Trustee shall not be charged with
knowledge of a failure by the Servicer to perform its duties under the Trust
Agreement, the Sale and Servicing Agreement or the Administration Agreement
which failure constitutes an Event of Default or Servicer Default unless the
Indenture Trustee obtains actual knowledge of the failure as specified in the
Indenture.
The Indenture Trustee will be under no obligation to exercise any of the
rights or powers vested in it by the Indenture or to make any investigation of
matters arising under the Indenture or to institute, conduct or defend any
litigation under the Indenture or in relation thereto at the request, order or
direction of any of the Noteholders, unless those Noteholders have offered to
the Indenture Trustee reasonable security or indemnity against the costs,
expenses and liabilities that may be incurred by the Indenture Trustee in
connection with the exercise of those rights. No Noteholder will have any right
under the Indenture to institute any proceeding with respect to the Indenture,
other than with respect to the failure by the Seller or the Servicer, as
applicable, to remit payment, unless that Noteholder previously has given to the
Indenture Trustee written notice of the Event of Default and (1) the Event of
Default arises from the Servicer's failure to remit payments when due or (2) the
holders of the Notes evidencing not less than 25% of the voting interests of the
Notes, acting together as a single class, have made written request upon the
Indenture Trustee to institute that proceeding in its own name as the Indenture
Trustee under the Indenture and have offered to the Indenture Trustee reasonable
indemnity and the Indenture Trustee for 30 days has neglected or refused to
institute that proceeding.
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
[________________] will be the Owner Trustee under the Trust Agreement. As a
matter of [New York] law, the Trust will be viewed as a separate legal entity,
distinct from the Owner Trustee, and the Trust will be viewed as the issuer of
the Certificates. [______________] will be the Indenture Trustee
S-42
<PAGE>
under the Indenture. The Owner Trustee, the Indenture Trustee and any of their
respective affiliates may hold Certificates in their own names or as pledgees.
For the purpose of meeting the legal requirements of some jurisdictions, the
Servicer and the Owner Trustee or the Servicer and the Indenture Trustee, in
each case acting jointly (or in some instances, the Owner Trustee or the
Indenture Trustee acting alone), will have the power to appoint co-trustees or
separate trustees of all or any part of the Trust. In the event of an
appointment of co-trustees or separate trustees, all rights, powers, duties and
obligations conferred or imposed upon the Owner Trustee by the Sale and
Servicing Agreement and the Trust Agreement or the Indenture Trustee by the
Indenture will be conferred or imposed upon the Owner Trustee or the Indenture
Trustee and each of their respective separate trustees or co-trustees jointly,
or, in any jurisdiction in which the Owner Trustee or the Indenture Trustee will
be incompetent or unqualified to perform specified acts, singly upon that
separate trustee or co-trustee who will exercise and perform those rights,
powers, duties and obligations solely at the direction of the Owner Trustee or
the Indenture Trustee.
The Owner Trustee and the Indenture Trustee may resign at any time, in which
event the Servicer will be obligated to appoint a successor thereto. The
Servicer may also remove the Owner Trustee or the Indenture Trustee if either
ceases to be eligible to continue as trustee under the Trust Agreement or the
Indenture, as the case may be, becomes legally unable to act or becomes
insolvent. In those circumstances, the Servicer will be obligated to appoint a
successor Owner Trustee or Indenture Trustee, as applicable. Any resignation or
removal of the Owner Trustee or the Indenture Trustee and appointment of a
successor thereto will not become effective until acceptance of the appointment
by the successor.
The Trust Agreement will provide that the Servicer will pay the fees of the
Owner Trustee and the Indenture Trustee in connection with their duties under
the Trust Agreement and Indenture, respectively. The Trust Agreement and
Indenture will further provide that the Owner Trustee and the Indenture Trustee
will be entitled to indemnification by NMAC and the Seller for, and will be held
harmless against, any loss, liability, fee, disbursement or expense incurred by
the Owner Trustee or the Indenture Trustee not resulting from its 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 Trust Agreement or the
Indenture, as the case may be). The Trust Agreement and the Indenture will
further provide that the Seller and the Servicer will indemnify the Owner
Trustee and the Indenture Trustee for specified taxes that may be asserted in
connection with the transaction.
MATERIAL INCOME TAX CONSEQUENCES
In the opinion of O'Melveny & Myers LLP, tax counsel to the Trust, for
federal income tax purposes, the Notes will be characterized as debt, and the
Trust will not be characterized as an association (or a publicly traded
partnership) taxable as a corporation.
The Seller, the Certificateholders and the owners of the Certificates (the
"Certificate Owners") will agree, and the owners of the Notes will agree by
their purchase of the Notes, to treat the Notes as debt for federal income tax
purposes. The Seller and the Servicer will agree, and the Certificate Owners
will agree by their purchase of the Certificates, to treat the Trust as a
partnership for purposes of federal and state income tax, franchise tax and any
other tax measured in whole or in part by income, with the assets of the
partnership being the assets held by the Trust, the partners of the partnership
being the Certificate Owners, and the Notes being debt of the partnership.
However, the proper characterization of the arrangement involving the Trust, the
Certificates, the Notes, the Seller and the Servicer is not clear because there
is no authority on transactions closely comparable to the transaction described
in this Prospectus Supplement.
See the discussion under "Material Income Tax Consequences--Tax Treatment of
Owner Trusts" in the accompanying Prospectus.
S-43
<PAGE>
ERISA CONSIDERATIONS
THE NOTES
The Notes may be purchased by an employee benefit plan or an individual
retirement account (a "Plan") subject to ERISA or Section 4975 of the Internal
Revenue Code of 1986, as amended (the "Code"). A fiduciary of a Plan must
determine that the purchase of a Note is consistent with its fiduciary duties
under ERISA and does not result in a nonexempt prohibited transaction as defined
in Section 406 of ERISA or Section 4975 of the Code. For additional information
regarding treatment of the Notes under ERISA, see "ERISA Considerations" in the
accompanying Prospectus.
The Notes may not be purchased with the assets of a Plan if the Seller, the
Servicer, the Indenture Trustee, the Owner Trustee or any of their affiliates:
1. is a "fiduciary" as defined in Section 3(21) of ERISA or Section
4975(e)(3) of the Code with respect to those Plan assets; or
2. is an employer maintaining or contributing to the Plan;
or if a Certificateholder is a fiduciary with respect to those Plan assets and
participates in the decision to acquire the Notes.
THE CERTIFICATES
The Certificates may not be acquired by a Plan or any entity whose
underlying assets include Plan assets by reason of a Plan's investment in the
entity or which uses Plan assets to acquire Certificates (a "Plan Investor"). By
its acceptance of a Certificate, each Certificateholder will be deemed to have
represented and warranted that it is not subject to the foregoing limitation. In
addition, a purchaser of Certificates other than a Plan Investor should be aware
that a prohibited transaction could occur if a Certificateholder (or any of its
affiliates) is or becomes a party in interest or a disqualified person with
respect to a Plan Investor that purchases and holds any Notes unless covered by
one or more applicable exemptions.
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting Agreement
(the "Note Underwriting Agreement"), the Seller has agreed to cause the Trust to
sell to each of the Note Underwriters named below (collectively, the "Note
Underwriters"), and each of the Note Underwriters has severally agreed to
purchase, the principal amount of Notes set forth opposite its name below:
[TABLE]
In the Note Underwriting Agreement, the Note Underwriters have agreed,
subject to the terms and conditions set forth in the Note Underwriting
Agreement, to purchase all of the Notes if any of the Notes are purchased. This
obligation of the Note Underwriters is subject to specified conditions precedent
set forth in the Note Underwriting Agreement. The Seller has been advised by the
Note Underwriters that they propose initially to offer the Notes to the public
at the prices set forth on the cover of this Prospectus Supplement, and to
specified dealers at that price less the initial concession not in excess of
[___%] of the denominations of the Notes per Class A-1 Note, [___%] per Class
A-2 Note, [___%] per Class A-3 Note, and [___%] per Class B Note. The Note
Underwriters may allow, and those dealers may reallow, a concession not in
excess of [___%] per Class A-1 Note, [___%] per Class A-2 Note, [___%] per Class
A-3 Note and [___%] per Class B Note to some other dealers. After the initial
public offering of the Notes, the public offering price and those concessions
may be changed.
S-44
<PAGE>
Subject to the terms and conditions set forth in an Underwriting Agreement
(the "Certificate Underwriting Agreement"), the Seller has agreed to cause the
Trust to sell to each of the Certificate Underwriters named below (the
"Certificate Underwriters" and, together with the Note Underwriters, the
"Underwriters"), and each of the Certificate Underwriters has severally agreed
to purchase, the principal amount of the Class C Certificates set forth opposite
its name below:
[TABLE]
In the Certificate Underwriting Agreement, the Certificate Underwriters have
agreed, subject to the terms and conditions set forth in the Certificate
Underwriting Agreement, to purchase all of the Class C Certificates if any of
the Class C Certificates are purchased. This obligation of the Certificate
Underwriters is subject to specified conditions precedent set forth in the
Certificate Underwriting Agreement. The Seller has been advised by the
Certificate Underwriters that they propose initially to offer the Class C
Certificates to the public at the price set forth on the cover of this
Prospectus Supplement, and to some other dealers at that price less the initial
concession not in excess of [___%] per Class C Certificate. The Certificate
Underwriters may allow, and those dealers may reallow, a concession not in
excess of [___%] per Class C Certificate to some other dealers. After the
initial public offering of the Class C Certificates, the public offering price
and those concessions may be changed.
The Seller and NMAC have agreed to indemnify the Underwriters against
specified liabilities, including liabilities under the Securities Act or to
contribute to payments which the Underwriters may be required to make in respect
thereof. However, in the opinion of the Securities and Exchange Commission (the
"Commission"), certain indemnification provisions 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.
The Notes and the Certificates are new issues of securities with no
established trading markets. The Seller has been advised by the Note
Underwriters that they intend to make a market in the Notes of each class and
has been advised by the Certificate Underwriters that they intend to make a
market in the Certificates, in each case as permitted by applicable laws and
regulations. The Underwriters are not obligated, however, to make a market in
the Notes of any class or the Certificates, and that market-making may be
discontinued at any time without notice at the sole discretion of the
Underwriters. Accordingly, no assurance can be given as to the liquidity of, or
trading markets for, the Notes of any class or the Certificates.
The Trust may, from time to time, invest funds in the Accounts in Eligible
Investments acquired from the Underwriters.
The Underwriters have advised the Seller that, pursuant to Regulation M
under the Securities Act, specified persons participating in this offering may
engage in transactions, including stabilizing bids, syndicate covering
transactions or the imposition of penalty bids, which may have the effect of
stabilizing or maintaining the market price of the Securities of any class at
levels above those that might otherwise prevail in the open market. A
"stabilizing bid" is a bid for or the purchase of the Securities of any class on
behalf of the Underwriters for the purpose of fixing or maintaining the price of
those Securities. A "syndicate covering transaction" is the bid for or the
purchase of those Securities of any class on behalf of the Underwriters to
reduce a short position incurred by the Underwriters in connection with this
offering. A "penalty bid" is an arrangement permitting one of the Underwriters
to reclaim the selling concession otherwise accruing to another Underwriter or
syndicate member in connection with this offering if the Securities of any class
originally sold by the other Underwriter or syndicate member are purchased by
the reclaiming Underwriter in a syndicate covering transaction and has therefore
not been effectively placed by the other Underwriter or syndicate member.
S-45
<PAGE>
Stabilizing bids and syndicate covering transactions may have the effect of
causing the price of the Securities of any class to be higher than it might be
in the absence thereof, and the imposition of penalty bids might also have an
effect on the price of any Security to the extent that it discourages resale of
that Security. Neither the Seller nor the Underwriters makes any representation
or prediction as to the direction or magnitude of any of that effect on the
prices for the Securities. Neither the Seller nor the Underwriters makes any
representation that the Underwriters will engage in any of those transactions or
that, once commenced, any of those transactions will not be discontinued without
notice.
LEGAL OPINIONS
In addition to the legal opinions described in the accompanying Prospectus,
legal matters relating to the Notes and the Certificates and federal income tax
and California state income tax and other matters will be passed upon for the
Trust by O'Melveny & Myers LLP.
S-46
<PAGE>
INDEX OF TERMS
<TABLE>
<S> <C>
Advance.............................. S-39
APR.................................. S-18
Available Amounts.................... S-32
Available Interest................... S-32
Available Principal.................. S-32
Base Servicing Fee................... S-39
Business Day......................... S-26
Certificate Factor................... S-24
Certificate Owners................... S-43
Certificate Underwriters............. S-45
Certificate Underwriting Agreement... S-45
Certificateholders................... S-30
Certificateholders' Distributable
Amount............................. S-34
Certificateholders' Interest
Carryover Shortfall................ S-34
Certificateholders' Interest
Distributable Amount............... S-34
Certificateholders' Monthly Interest
Distributable Amount............... S-34
Certificateholders' Monthly Principal
Distributable Amount............... S-34
Certificateholders' Percentage....... S-34
Certificateholders' Principal
Carryover Shortfall................ S-34
Certificateholders' Principal
Distributable Amount............... S-34
Certificates......................... S-30
Class A Noteholders.................. S-28
Class A Notes........................ S-27
Class B Noteholders.................. S-27
Class C Certificateholders........... S-33
Class D Certificateholders........... S-33
Closing Date......................... S-18
Code................................. S-44
Collection Period.................... S-39
Commission........................... S-45
Cutoff Date.......................... S-18
Dealer Recourse...................... S-17
Dealers.............................. S-18
Defaulted Receivable................. S-32
Determination Date................... S-31
Distribution Date.................... S-26
Eligible Investments................. S-38
Excess Amount........................ S-33
fiduciary............................ S-44
Final Scheduled Distribution Date.... S-22
Financed Vehicles.................... S-18
forward looking statements........... S-26
Global Securities.................... S-49
Indenture Trustee.................... S-18
Initial Certificate Balance.......... S-34
Interest Period...................... S-27
Interest Rate........................ S-26
Net Liquidation Proceeds............. S-32
NMAC................................. S-17
Non-U.S. Person...................... S-52
Note Factor.......................... S-24
Note Underwriters.................... S-44
Note Underwriting Agreement.......... S-44
Noteholders.......................... S-28
Noteholders' Distributable Amount.... S-35
Noteholders' Interest Carryover
Shortfall.......................... S-35
Noteholders' Interest Distributable
Amount............................. S-35
Noteholders' Monthly Interest
Distributable Amount............... S-35
Noteholders' Monthly Principal
Distributable Amount............... S-35
Noteholders' Percentage.............. S-35
Noteholders' Principal Carryover
Shortfall.......................... S-35
Noteholders' Principal Distributable
Amount............................. S-35
Notes................................ S-26
Obligors............................. S-18
Owner Trustee........................ S-17
Pass Through Rate.................... S-30
penalty bid.......................... S-45
Plan................................. S-44
Plan Investor........................ S-44
Pool Factor.......................... S-24
Principal Distributable Amount....... S-36
Receivables.......................... S-18
Redemption Price..................... S-40
Required Rate........................ S-40
Required Yield Supplement Amount..... S-40
Reserve Account Initial Deposit...... S-36
Sale and Servicing Agreement......... S-17
Seller............................... S-17
</TABLE>
S-47
<PAGE>
<TABLE>
<S> <C>
Servicer............................. S-17
Servicing Rate....................... S-39
Specified Reserve Account Balance.... S-37
stabilizing bid...................... S-45
Supplemental Servicing Fee........... S-39
syndicate covering transaction....... S-45
Total Servicing Fee.................. S-39
Transfer and Servicing Agreements.... S-38
Trust................................ S-17
Trust Agreement...................... S-17
Underwriters......................... S-45
Yield Supplement Account............. S-39
Yield Supplement Amount.............. S-39
Yield Supplemented Receivables....... S-40
</TABLE>
S-48
<PAGE>
ANNEX A
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in specified circumstances, the globally offered Class A Certificates
(the "Global Securities") will be available only in book-entry form. Investors
in the Global Securities may hold those Global Securities through DTC, Cedelbank
or Euroclear. The Global Securities will be tradable as home market instruments
in both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities through
Cedelbank and Euroclear will be conducted in the ordinary way in accordance with
their normal rules and operating procedures and in accordance with conventional
eurobond practice (i.e., three calendar day settlement).
Secondary market trading between investors holding Global Securities through
DTC will be conducted according to the rules and procedure applicable to U.S.
corporate debt obligations and prior asset-backed securities issues.
Secondary cross-market trading between Cedelbank or Euroclear and DTC
Participants holding securities will be effected on a delivery-against-payment
basis through the depositaries of Cedelbank and Euroclear (in that capacity) and
as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless those holders meet specified requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will
be represented through financial institutions acting on their behalf as direct
and indirect Participants in DTC. As a result, Cedelbank and Euroclear will hold
positions on behalf of their participants through their depositaries, which in
turn will hold those positions in accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will follow
DTC settlement practice. Investor securities custody accounts will be credited
with their holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedelbank or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to
securities custody accounts on the settlement date against payment in same-day
funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to prior
asset-backed securities issues in same-day funds.
Trading between Cedelbank and/or Euroclear Participants. Secondary market
trading between Cedelbank Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
S-49
<PAGE>
Trading between DTC Seller and Cedelbank or Euroclear Participants. When
Global Securities are to be transferred from the account of a DTC Participant to
the account of a Cedelbank Participant or a Euroclear Participant, the purchaser
will send instructions to Cedelbank or Euroclear through a Cedelbank Participant
or Euroclear Participant at least one business day prior to settlement.
Cedelbank or Euroclear will instruct the respective Depositary, as the case may
be, to receive the Global Securities against payment. Payment will include
interest accrued on the Global Securities from and including the last coupon
payment date to and excluding the settlement date, on the basis of the actual
number of days in that accrual period and a year assumed to consist of 360 days.
For transactions settling on the 31st of the month, payment will include
interest accrued to and excluding the first day of the following month. Payment
will then be made by the respective Depositary to the DTC Participant's account
against delivery of the Global Securities. After settlement has been completed,
the Global Securities will be credited to the respective clearing system and by
the clearing system, in accordance with its usual procedures, to the Cedelbank
Participant's or Euroclear Participant's account. The securities credit will
appear the next day (European time) and the cash debt will be back-valued to,
and the interest on the Global Securities will accrue from, the value date
(which would be the preceding day when settlement occurred in New York). If
settlement is not completed on the intended value date (i.e., the trade fails),
the Cedelbank or Euroclear cash debt will be valued instead as of the actual
settlement date.
Cedelbank Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Cedelbank or Euroclear. Under
this approach, they may take on credit exposure to Cedelbank or Euroclear until
the Global Securities are credited to their accounts one day later.
As an alternative, if Cedelbank or Euroclear has extended a line of credit
to them, Cedelbank Participants or Euroclear Participants can elect not to
preposition funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, Cedelbank Participants or Euroclear
Participants purchasing Global Securities would incur overdraft charges for one
day, assuming they clear the overdraft when the Global Securities are credited
to their accounts. However, interest on the Global Securities would accrue from
the value date. Therefore, in many cases the investment income on the Global
Securities earned during that one-day period may substantially reduce or offset
the amount of those overdraft charges, although this result will depend on each
Cedelbank Participant's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective European Depositary for the benefit of Cedelbank Participants or
Euroclear Participants. The sale proceeds will be available to the DTC seller on
the settlement date. Thus, to the DTC Participants a cross-market transaction
will settle no differently than a trade between two DTC Participants.
TRADING BETWEEN CEDELBANK OR EUROCLEAR SELLER AND DTC PURCHASER. Due to
time zone differences in their favor, Cedelbank Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depositary, to a DTC Participant. The seller will send
instructions to Cedelbank or Euroclear through a Cedelbank Participant or
Euroclear Participant at least one business day prior to settlement. In these
cases, Cedelbank or Euroclear will instruct the Relevant Depositary, as
appropriate, to deliver the Global Securities to the DTC Participant's account
against payment. Payment will include interest accrued on the Global Securities
from and including the last coupon payment to and excluding the settlement date
on the basis of the actual number of days in that accrual period and a year
assumed to consist of 360 days. For transactions settling on the 31st of the
month, payment will include interest accrued to and excluding the first day of
the following month. The
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<PAGE>
payment will then be reflected in the account of the Cedelbank Participant or
Euroclear Participant the following day, and receipt of the cash proceeds in the
Cedelbank Participant's or Euroclear Participant's account would be back-valued
to the value date (which would be the preceding day, when settlement occurred in
New York). Should the Cedelbank Participant or Euroclear Participant have a line
of credit with its respective clearing system and elect to be in debt in
anticipation of receipt of the sale proceeds in its account, the back valuation
will extinguish any overdraft incurred over that one-day period. If settlement
is not completed on the intended value date (i.e., the trade fails), receipt of
the cash proceeds in the Cedelbank Participant's or Euroclear Participant's
account would instead be valued as of the actual settlement date.
Finally, day traders that use Cedelbank or Euroclear and that purchase
Global Securities from DTC Participants for delivery to Cedelbank Participants
or Euroclear Participants should note that these trades would automatically fail
on the sale side unless affirmative action were taken. At least three techniques
should be readily available to eliminate this potential problem:
(1) borrowing through Cedelbank or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedelbank or Euroclear
accounts) in accordance with the clearing system's customary procedures;
(2) borrowing the Global Securities in the U.S. from a DTC Participant
no later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedelbank or Euroclear
account in order to settle the sale side of the trade; or
(3) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at least
one day prior to the value date for the sale to the Cedelbank Participant or
Euroclear Participant.
MATERIAL U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through Cedelbank
or Euroclear (or through DTC if the holder has an address outside the U.S.) will
be subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by U.S.
Persons (as defined in the accompanying Prospectus), unless (1) each clearing
system, bank or other financial institution that holds customers' securities in
the ordinary course of its trade or business in the chain of intermediaries
between that beneficial owner and the U.S. entity required to withhold tax
complies with applicable certification requirements and (2) that beneficial
owner takes one of the following steps to obtain an exemption or reduced tax
rate:
EXEMPTION FOR NON-U.S. PERSONS (FORM W-8). Beneficial owners of Global
Securities that are Non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the information shown on Form W-8 changes, a new Form W-8 must be filed within
30 days of that change.
EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM
4224). A Non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY COUNTRIES
(FORM 1001). Non-U.S. Persons residing in a country that has a tax treaty with
the United States can obtain an exemption or reduced tax rate depending on the
treaty terms) by filing Form 1001 (Ownership, Exemption or Reduced Rate
Certificate). If the treaty provides only for a reduced rate, withholding tax
will be
S-51
<PAGE>
imposed at that rate unless the filer alternatively files Form W-8. Form 1001
may be filed by the Certificate Owners or their agents.
EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. The Certificate Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person though whom it holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar years,
and Form 4224 is effective for one calendar year.
The term "Non-U.S. Person" means any person who is not a U.S. Person (as
defined in the accompanying Prospectus).
Recently, the Treasury Department issued new regulations (the "New
Regulations") which make certain modifications to the withholding rules
described above, and pursuant to which the certification procedures discussed
above will be modified. It is suggested that prospective investors consult their
own tax advisers regarding the New Regulations.
This summary does not deal with all aspects of U.S. federal income tax
withholding that may be relevant to foreign holders of Global Securities. It is
suggested that investors consult their tax advisors for specific tax advice
concerning their holding and disposing of Global Securities.
S-52
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
<TABLE>
<S> <C>
Registration Fee.............................................................. $ 834,000.00
Blue Sky Fees and Expenses.................................................... $ 15,000.00
Printing Expenses............................................................. $ 80,000.00
Trustee Fees and Expenses..................................................... $ 60,000.00
Legal Fees and Expenses....................................................... $ 350,000.00
Accounting Fees and Expenses.................................................. $ 50,000.00
Rating Agencies' Fees......................................................... $ 200,000.00
Miscellaneous................................................................. $ 30,000.00
------------
Total....................................................................... $1,619,000.00
------------
------------
</TABLE>
- ------------------------
* All amounts except registration fee are estimates.
ITEM 15. 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.
Section 145 of the General Corporation Law of Delaware provides as follows:
145. Indemnification of Officers, Directors, Employees and Agents; Insurance--
(a) A corporation shall have power to 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 shall have power to 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
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<PAGE>
good faith and in a manner the person reasonably believed to be in or not
opposed to the best interests of the 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
position under this section
II-2
<PAGE>
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; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references 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 Restated 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
II-3
<PAGE>
and excise taxes imposed on fiduciaries with respect to (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 Restated Certificate of Incorporation, By-Law,
agreement, vote of stockholders or disinterested directors or otherwise.
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<PAGE>
(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 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."
[Remainder of Page Intentionally Left Blank]
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<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS
a. Exhibits:
<TABLE>
<C> <S>
4.1 Form of Amended and Restated Trust Agreement between the Registrant and the Owner
Trustee
4.2 Form of Indenture between the Trust and the Indenture Trustee
4.3 Form of Sale and Servicing Agreement among the Registrant, the Servicer and the
Owner Trust
4.4 Form of Pooling and Servicing Agreement among the Registrant, the Servicer and the
Trustee
4.5 Form of Purchase Agreement between Nissan Acceptance Motor Corporation and the
Registrant
4.6 Form of Administration Agreement among the Trust, the Administrator and the
Indenture Trustee
4.7 Form of Yield Supplement Agreement among the Registrant, the Servicer and the Owner
Trust/Indenture Trustee
5.1(a) Opinion of O'Melveny & Myers LLP regarding Notes
5.1(b) Opinion of O'Melveny & Myers LLP regarding Certificates
8.1 Opinion of O'Melveny & Myers LLP with respect to tax matters
23.1 Consent of O'Melveny & Myers LLP (included as part of Exhibits 5.1(a) and (b))
23.2 Consent of O'Melveny & Myers LLP (included as part of Exhibit 8.1)
25.1 Statement of Eligibility on Form T-1 of Trustee under the Indenture
</TABLE>
ITEM 17. UNDERTAKINGS
(a) As to Rule 415:
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, a post-effective amendment to this
registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of this registration statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement.
PROVIDED, HOWEVER, that the undertakings set forth in clauses (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended, that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment 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.
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<PAGE>
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) As to documents subsequently filed that are incorporated by reference:
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, as amended, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, as amended, that is incorporated by reference
in this registration statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) As to indemnification: Insofar as indemnification for liabilities
arising under the Securities Act of 1933, as amended, may be permitted to
directors, officers and controlling persons of the registrant pursuant to the
provisions described under Item 15 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 Securities Act of
1933, as amended, 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 such Securities
Act of 1933, as amended, and will be governed by the final adjudication of such
issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Torrance, State of California, on
August 13, 1999.
<TABLE>
<S> <C> <C>
NISSAN AUTO RECEIVABLES CORPORATION
By: /s/ YOICHIRO NAGASHIMA
-----------------------------------------
Yoichiro Nagashima
PRESIDENT AND CHAIRMAN OF THE BOARD
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
President, Chairman of the
/s/ YOICHIRO NAGASHIMA Board and Director
- ------------------------------ (principal executive August 13, 1999
Yoichiro Nagashima officer)
Treasurer, Assistant
/s/ TOMOAKI SHIMAZU Secretary and Director
- ------------------------------ (principal financial August 13, 1999
Tomoaki Shimazu officer and principal
accounting officer)
/s/ JOY MURAKAMI CROSE
- ------------------------------ Secretary and Director August 13, 1999
Joy Murakami Crose
</TABLE>
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<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- --------------- ------------------------------------------------------------------------------------------------
<S> <C>
4.1 Form of Amended and Restated Trust Agreement between the Registrant and the Owner Trustee
4.2 Form of Indenture between the Trust and the Indenture Trustee
4.3 Form of Sale and Servicing Agreement among the Registrant, the Servicer and the Owner Trust
4.4 Form of Pooling and Servicing Agreement among the Registrant, the Servicer and the Trustee
4.5 Form of Purchase Agreement between Nissan Acceptance Motor Corporation and the Registrant
4.6 Form of Administration Agreement among the Trust, the Administrator and the Indenture Trustee
4.7 Form of Yield Supplement Agreement among the Registrant, the Servicer and the Owner
Trustee/Indenture Trustee
5.1(a) Opinion of O'Melveny & Myers LLP regarding Notes
5.1(b) Opinion of O'Melveny & Myers LLP regarding Certificates
8.1 Opinion of O'Melveny & Myers LLP with respect to tax matters
23.1 Consent of O'Melveny & Myers LLP (included as part of Exhibits 5.1(a) and (b))
23.2 Consent of O'Melveny & Myers LLP (included as part of Exhibit 8.1)
25.1 Statement of Eligibility on Form T-1 of Trustee under the Indenture
</TABLE>
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<PAGE>
EXHIBIT 4.1
NISSAN AUTO RECEIVABLES ____-_ OWNER TRUST
(a Delaware Business Trust)
AMENDED AND RESTATED TRUST AGREEMENT
between
NISSAN AUTO RECEIVABLES CORPORATION,
as Depositor,
and
[______________],
as Owner Trustee
Dated as of [______________]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I Definitions..........................................................1
SECTION 1.01 Definitions..........................................................1
SECTION 1.02 Usage of Terms.......................................................4
ARTICLE II Creation of Trust....................................................5
SECTION 2.01 Creation of Trust....................................................5
SECTION 2.02 Office...............................................................5
SECTION 2.03 Purposes and Powers..................................................5
SECTION 2.04 Power of Attorney....................................................6
SECTION 2.05 Declaration of Trust.................................................6
SECTION 2.06 Liability of NMAC and the Certificateholders.........................7
SECTION 2.07 Title to Trust Property..............................................7
SECTION 2.08 Situs of Trust.......................................................7
SECTION 2.09 Representations and Warranties of the Depositor......................7
SECTION 2.10 Federal Income Tax Allocations.......................................9
ARTICLE III Certificates and Transfer of Interests...............................9
SECTION 3.01 The Certificates.....................................................9
SECTION 3.02 Authentication of Certificates......................................10
SECTION 3.03 Registration of Transfer and Exchange of
Certificates........................................................10
SECTION 3.04 Mutilated, Destroyed, Lost or Stolen Certificates...................11
SECTION 3.05 Persons Deemed Certificateholders...................................12
SECTION 3.06 Access to List of Certificateholders' Names
and Addresses.......................................................12
SECTION 3.07 Maintenance of Office or Agency.....................................12
SECTION 3.08 Appointment of Paying Agent.........................................13
SECTION 3.09 Ownership by the Depositor of Certificates..........................13
SECTION 3.10 Book-Entry Certificates.............................................13
SECTION 3.11 Notices to Clearing Agency..........................................14
SECTION 3.12 Definitive Certificates.............................................14
SECTION 3.13 Temporary Certificates..............................................15
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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ARTICLE IV Actions By Owner Trustee or Certificateholders......................15
SECTION 4.01 Prior Notice to Certificateholders with Respect to
Certain Matters.....................................................15
SECTION 4.02 Action by Certificateholders with Respect to
Certain Matters.....................................................16
SECTION 4.03 Action with Respect to Bankruptcy...................................16
SECTION 4.04 Restrictions on Certificateholders' Power...........................16
SECTION 4.05 Majority of the Controlling Class of
Certificates Control................................................17
ARTICLE V Application of Trust Funds; Certain Duties..........................17
SECTION 5.01 Establishment of the Trust Collection Account.......................17
SECTION 5.02 Application of Amounts in Trust Accounts............................18
SECTION 5.03 Method of Payment...................................................19
SECTION 5.04 Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue Service and
Others..............................................................19
SECTION 5.05 Signature on Returns; Tax Matter Partner............................19
ARTICLE VI Authority and Duties of Owner Trustee...............................19
SECTION 6.01 General Authority...................................................20
SECTION 6.02 General Duties......................................................20
SECTION 6.03 Duties of the Owner Trustee.........................................20
SECTION 6.04 No Duties Except as Specified in this Agreement or
in Instructions.....................................................21
SECTION 6.05 No Action Except Under Specified Documents or
Instructions........................................................22
SECTION 6.06 Restrictions........................................................22
ARTICLE VII Concerning the Owner Trustee........................................22
SECTION 7.01 Rights of the Owner Trustee.........................................22
SECTION 7.02 Furnishing of Documents.............................................23
SECTION 7.03 Representations and Warranties......................................23
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SECTION 7.04 Reliance; Advice of Counsel.........................................24
SECTION 7.05 Not Actingin Individual Capacity....................................25
SECTION 7.06 Owner Trustee Not Liable for Certificates or
Receivables.........................................................25
SECTION 7.07 Owner Trustee May Own Certificates and Notes........................26
SECTION 7.08 Pennsylvania Motor Vehicle Sales Finance Act and
Maryland License..................................................26
ARTICLE VIII Compensation of Owner Trustee.......................................26
SECTION 8.01 Owner Trustee's Fees and Expenses...................................26
SECTION 8.02 Indemnification.....................................................26
SECTION 8.03 Payments to the Owner Trustee.......................................27
ARTICLE IX Termination of Trust Agreement......................................27
SECTION 9.01 Termination of Trust Agreement......................................27
ARTICLE X Successor Owner Trustees and Additional Owner
Trustees............................................................28
SECTION 10.01 Eligibility Requirements for Owner Trustee..........................28
SECTION 10.02 Resignation or Removal of Owner Trustee.............................28
SECTION 10.03 Successor Owner Trustee.............................................29
SECTION 10.04 Merger or Consolidation of Owner Trustee............................29
SECTION 10.05 Appointment of Co-Trustee or Separate Trustee.......................30
ARTICLE XI Miscellaneous.......................................................31
SECTION 11.01 Supplements and Amendments..........................................31
SECTION 11.02 No Legal Title to Owner Trust Estate in
Certificateholders..................................................32
SECTION 11.03 Limitations on Rights of Others.....................................32
SECTION 11.04 Notices.............................................................32
SECTION 11.05 Severability........................................................33
SECTION 11.06 Counterparts........................................................33
SECTION 11.07 Successors and Assigns..............................................33
SECTION 11.08 No Petition.........................................................33
SECTION 11.09 No Recourse.........................................................33
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SECTION 11.10 Headings............................................................34
SECTION 11.11 GOVERNING LAW.......................................................34
SECTION 11.12 NMAC Payment Obligation.............................................34
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Exhibit A.................................................................Form of Certificates
Exhibit B...........................................Form of Transferee's Representation Letter
Exhibit C...........................................Form of Transferor's Representation Letter
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AMENDED AND RESTATED TRUST AGREEMENT, dated as of [_________________],
between NISSAN AUTO RECEIVABLES Corporation, a Delaware corporation, as
depositor, and [_________________], a [_________________], not in its individual
capacity but solely as Owner Trustee, amending and restating in its entirety the
Trust Agreement, dated as of [_________________] (the "Original Trust
Agreement"), between the same parties, and herein referred to as the "Trust
Agreement" or this "Agreement."
IN CONSIDERATION of the mutual agreements herein contained, and of
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS. Except as otherwise specified herein or if the
context may otherwise require, capitalized terms used but not otherwise defined
herein have the meanings assigned to such terms in the Sale and Servicing
Agreement and the Indenture for all purposes of this Agreement. Except as
otherwise provided in this Agreement, whenever used herein the following words
and phrases, unless the context otherwise requires, shall have the following
meanings:
"ADMINISTRATION AGREEMENT" means the Administration Agreement dated as of
[_______] by and between the Trust, as issuer, NMAC, as Administrator, the
Indenture Trustee and the Owner Trustee pursuant to which NMAC undertakes to
perform certain of the duties and obligations of the Trust and the Owner Trustee
hereunder, under the Sale and Servicing Agreement and under the Indenture.
"ADMINISTRATOR" means NMAC acting in its capacity as Administrator under
the Administration Agreement.
"AGREEMENT" means this Amended and Restated Trust Agreement, which amends
and restates the Original Trust Agreement.
"BASIC DOCUMENTS" means the Purchase Agreement, this Agreement, the
Certificate of Trust, the Sale and Servicing Agreement, the Indenture, the Yield
Supplement Agreement, the Administration Agreement, the Note Depository
Agreement, the Certificate Depository Agreement, the Securities Account Control
Agreement and the other documents and certificates delivered in connection
herewith and therewith.
"BOOK-ENTRY CERTIFICATE" means a beneficial interest in the Certificates of
any Class, ownership and transfers of which shall be made through book entries
by a Clearing Agency as described in Section 3.10.
"BUSINESS TRUST STATUTE" means Chapter 38 of Title 12 of the Delaware Code,
12 Del.
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Code Sections 3801 ET SEQ.
"CERTIFICATE" means a Class C Certificate or a Class D Certificate.
"CERTIFICATE DEPOSITORY AGREEMENT" means the agreement entitled "Letter of
Representations" dated on or before the Closing Date among the Clearing Agency,
the Trust and the Owner Trustee with respect to certain matters relating to the
duties thereof with respect to the Book-Entry Certificates.
"CERTIFICATE OF TRUST" means the Certificate of Trust filed with respect to
the formation of the Trust pursuant to Section 3810(a) of the Business Trust
Statute.
"CERTIFICATE OWNER" means, with respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Book-Entry Certificate, as reflected
on the books and records of the Clearing Agency, or on the books and records of
a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency) and shall mean, with respect
to a Definitive Certificate, the related Certificateholder.
"CERTIFICATE REGISTER" means the register maintained pursuant to Section
3.03.
"CERTIFICATEHOLDER" or "HOLDER" means a Person in whose name a Certificate
is registered in the Certificate Register, except that, solely for the purposes
of giving certain consents, waivers, requests or demands pursuant to this
Agreement, the interest evidenced by any Certificate registered in the name of
NARC or NMAC, or any Person actually known to a Trust Officer of the Owner
Trustee to be controlling, controlled by or under common control with NARC or
NMAC, 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.
"CERTIFICATE REGISTRAR" means the Owner Trustee unless and until a
successor thereto is appointed pursuant to Section 3.03. The Certificate
Registrar initially designates its offices at [______________], as its offices
for purposes of Section 3.03.
"CLASS C CERTIFICATE" means any of the [__%] Certificates, Class C,
executed by the Trust and authenticated by the Owner Trustee, evidencing a
beneficial ownership interest in the Trust, substantially in the form set forth
in EXHIBIT A hereto.
"CLASS C PASS-THROUGH RATE" means [_______] % per annum.
"CLASS D CERTIFICATE" means any of the [__%] Certificates, Class D,
executed by the Trust and authenticated by the Owner Trustee, evidencing a
beneficial ownership interest in the Trust, substantially in the form set forth
in EXHIBIT A hereto.
"CLASS D PASS-THROUGH RATE" means [_______]% per annum.
"CLEARING AGENCY" means an organization registered as a "clearing agency"
pursuant to
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Section 17A of the Exchange Act.
"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.
"CODE" means the Internal Revenue Code of 1986.
"CORPORATE TRUST OFFICE" means, with respect to the Owner Trustee, the
principal corporate trust office of the Owner Trustee located at
[______________]; or at such other address as the Owner Trustee may designate by
notice to the Certificateholders, or the principal corporate trust office of any
successor Owner Trustee (the address of which the successor Owner Trustee will
notify the Certificateholders).
"DEFINITIVE CERTIFICATES" shall have the meaning assigned to such term in
Section 3.12.
"DEPOSITOR" means NARC in its capacity as depositor hereunder.
"ERISA" shall have the meaning assigned to such term in Section 3.03(c).
"EXPENSES" shall have the meaning assigned to such term in Section 8.01.
"INDENTURE" means the Indenture dated as of [______________] entered into
between the Trust and the Indenture Trustee named therein pursuant to which a
series of Notes are issued.
"NMAC" means Nissan Motor Acceptance Corporation, a California corporation.
"NARC" means Nissan Auto Receivables Corporation, a Delaware corporation.
"NON-U.S. PERSON" means any Person who is not (i) a citizen or resident of
the United States who is a natural person, (ii) a corporation or partnership (or
an entity treated as a corporation or partnership) organized in or under the
laws of the United States or any state thereof, including the District of
Columbia (unless, in the case of a partnership, Treasury Regulations are adopted
that provide otherwise), (iii) an estate, the income of which is subject to
United States Federal income taxation, regardless of its source, or (iv) a
trust, if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
persons (as such term is defined in the Code and Treasury Regulations) have the
authority to control all substantial decisions of the trust; except that, to the
extent provided in Treasury Regulations, certain trusts in existence prior to
August 20, 1996 which elected to be treated as United States Persons prior to
such date also shall be United States Persons.
"NOTES" means the notes issued by the Trust pursuant to the Indenture,
having the payment and other terms set forth in the Indenture.
"ORIGINAL CERTIFICATE BALANCE" means, with respect to the Class C
Certificates, $[________], and with respect to the Class D Certificates,
$[________].
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"ORIGINAL TRUST AGREEMENT" shall have the meaning assigned to such term in
the introductory paragraph to this Agreement.
"OWNER TRUST ESTATE" means all right, title and interest of the Trust in
and to the property and rights assigned to the Trust pursuant to Article II of
the Sale and Servicing Agreement, all funds on deposit from time to time in the
accounts created pursuant to Section 5.01 of the Sale and Servicing Agreement
(excluding any net investment income with respect to amounts held in such
accounts) and all other property of the Trust from time to time, including any
rights of the Owner Trustee and the Trust pursuant to the Sale and Servicing
Agreement and the Administration Agreement, and as assignee of the rights and
interests of the Depositor under the Purchase Agreement.
"OWNER TRUSTEE" means [______________], a [________________], not in its
individual capacity but solely as owner trustee under this Agreement, and any
successor Owner Trustee hereunder.
"PAYING AGENT" means any paying agent or co-paying agent appointed pursuant
to Section 3.08, and shall initially be [______________].
"PLAN" shall have the meaning assigned to such term in Section
3.03(c)(1)(ii).
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement,
dated as of the date hereof, among the Trust, NARC, as seller, and NMAC, as
servicer.
"SECRETARY OF STATE" means the Secretary of State of the State of Delaware.
"SECURITIES ACCOUNT CONTROL AGREEMENT" shall have the meaning assigned to
such term in the Sale and Servicing Agreement.
"SECURITYHOLDERS" means the Certificateholders and the Noteholders.
"TREASURY REGULATIONS" means regulations, including proposed or temporary
regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"TRUST" means the Nissan Auto Receivables ____-_ Owner Trust, formed as a
Delaware business trust pursuant to this Agreement and the filing of the
Certificate of Trust.
"TRUST COLLECTION ACCOUNT" shall have the meaning assigned to such term in
Section 5.01(a).
"YIELD SUPPLEMENT AGREEMENT" means the Yield Supplement Agreement dated as
of the date hereof among NMAC, the Depositor and the Trust.
SECTION 1.02 USAGE OF TERMS. With respect to all terms in this Agreement,
the singular includes the plural and the plural the singular; words importing
any gender include the
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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, amendments and restatements and supplements thereto or changes
therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; references to laws include their amendments and
supplements, the rules and regulations thereunder and any successors thereto;
and the term "including" means "including without limitation."
ARTICLE II
CREATION OF TRUST
SECTION 2.01 CREATION OF TRUST. A Delaware business trust known as "Nissan
Auto Receivables ____-_ Owner Trust" was formed in accordance with the
provisions of the Business Trust Statute pursuant to the Original Trust
Agreement. Under the Original Trust Agreement, the Owner Trustee was authorized
and vested with the power and authority to make and execute contracts,
instruments, certificates, agreements and other writings on behalf of the Trust
as set forth herein and to sue and be sued on behalf of the Trust.
The Owner Trustee accepted under the Original Trust Agreement, and does
hereby confirm its acceptance and agreement to hold in trust, for the benefit of
the Certificateholders and such other Persons as may become beneficiaries
hereunder from time to time, all of the Owner Trust Estate conveyed or to be
conveyed to the Trust, and all monies and proceeds that may be received with
respect thereto, subject to the terms of this Agreement.
SECTION 2.02 OFFICE. The principal place of business of the Trust for
purposes of Delaware law shall be in care of the Owner Trustee at the Corporate
Trust Office or at such other address in Delaware as the Owner Trustee may
designate by written notice to the Certificateholders and the Servicer. The
Trust may establish additional offices located at such place or places inside or
outside of the State of Delaware as the Owner Trustee may designate by written
notice to the Certificateholders and the Servicer.
SECTION 2.03 PURPOSES AND POWERS.
(a) The purpose of the Trust is to engage in the following activities:
(i) to issue Notes pursuant to the Indenture and Certificates
pursuant to this Agreement;
(ii) to acquire the Receivables and related property from the
Depositor in exchange for the Notes and Certificates pursuant to the Sale
and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey the
Owner Trust Estate pursuant to, and on the terms and conditions set forth
in, the Indenture and to hold, manage and distribute to the
Certificateholders pursuant to the terms of the Sale and
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Servicing Agreement any portion of the Trust Estate released from the Lien
of, and remitted to the Trust pursuant to, the Indenture as set forth
therein and in the Sale and Servicing Agreement;
(iv) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with conservation of
the Owner Trust Estate and the making of distributions to the
Certificateholders and the Noteholders and in respect of amounts to be
released to the Depositor, the Servicer, the Administrator and third
parties, if any.
The Trust is hereby authorized to engage in the foregoing activities. The
Trust shall not engage in any activity other than in connection with the
foregoing and as required or authorized by the terms of the Basic Documents.
SECTION 2.04 POWER OF ATTORNEY. Pursuant to the Administration Agreement,
the Owner Trustee has authorized the Administrator to perform certain of its
administrative duties hereunder, including duties with respect to the management
of the Owner Trust Estate, and in connection therewith hereby grants the
Administrator its revocable power of attorney. Each Certificateholder by such
Holder's acceptance of any Certificate or beneficial interest therein, as the
case may be, shall be deemed to have granted power of attorney to the
Administrator for purposes of actions taken or to be taken with respect to the
Certificates.
SECTION 2.05 DECLARATION OF TRUST. The Owner Trustee hereby declares that
it will hold the Owner Trust Estate in trust upon and subject to the conditions
set forth herein for the use and benefit of the Certificateholders, subject to
the obligations of the Trust under the Basic Documents. It is the intention of
the parties hereto that the Trust constitute a business trust under the Business
Trust Statute and that this Agreement constitute the governing instrument of
such business trust. It is the intention of the parties hereto that, solely for
income and franchise tax purposes, the Trust shall be treated as a partnership
for any period during which the beneficial ownership interests in the Trust are
held by more than one person, with the assets of the partnership being the
Receivables and other assets held by the Trust, and the Notes being debt of the
partnership. The parties agree that for any such period, unless otherwise
required by appropriate tax authorities, the Trust will file or cause to be
filed annual or other necessary returns, reports and other forms consistent with
the characterization of the Trust as a partnership for such tax purposes.
Effective as of the date hereof, the Owner Trustee shall have all rights, powers
and duties set forth herein and in the Business Trust Statute with respect to
accomplishing the purposes of the Trust. At the direction of the Depositor, the
Owner Trustee caused to be filed the Certificate of Trust pursuant to the
Business Trust Statute, and the Owner Trustee shall file or cause to be filed
such amendments thereto as shall be necessary or
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appropriate to satisfy the purposes of this agreement and as shall be
consistent with the provisions hereof.
SECTION 2.06 LIABILITY OF NMAC AND THE CERTIFICATEHOLDERS .
(a) The Administrator shall be liable directly to and will, in accordance
with the Administration Agreement and the following provisions, indemnify and
hold harmless the Owner Trustee, any co-trustee and the Indenture Trustee for
any loss, liability, claim, action, suit, cost or expense of the Trust
(including Expenses, to the extent not paid out of the Owner Trust Estate) to
the extent that the Administrator would be liable if the Trust were a
partnership under the Delaware Revised Uniform Limited Partnership Act in which
the Administrator were a general partner; PROVIDED, HOWEVER, that the
Administrator shall not be liable for any losses incurred by a Certificateholder
in the capacity of an investor in the Certificates or a Noteholder in the
capacity of an investor in the Notes and will not and shall not be deemed hereby
to have indemnified the Owner Trustee, any co-trustee or Indenture Trustee
against any loss liability or expense resulting from the such trustee's own
willful misfeasance, bad faith or negligence or by reason of a breach of
representation or warranty thereof contained herein or in the Indenture, as the
case may be. In addition, any third party creditors of the Trust (other than in
connection with the obligations described in the provisions in the preceding
sentence for which the Administrator shall not be liable) shall be deemed to be
third party beneficiaries of this paragraph.
(b) No Certificateholder shall have any personal liability for any
liability or obligation of the Trust, solely by reason of it being a
Certificateholder.
SECTION 2.07 TITLE TO TRUST PROPERTY. Legal title to all of the Owner Trust
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Owner Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a
separate trustee, as the case may be.
SECTION 2.08 SITUS OF TRUST. The Trust will be located in Delaware and
administered in the state of [__________]. All bank accounts maintained by the
Owner Trustee on behalf of the Trust shall be located in the State of Delaware
or the State of New York [or ___________]. The Trust shall not have any
employees in any state other than Delaware; PROVIDED, HOWEVER, that nothing
herein shall restrict or prohibit the Owner Trustee from having employees within
or without the State of Delaware. Payments will be received by the Trust only in
Delaware or New York [or__________], and payments will be made by the Trust only
from Delaware or New York [or__________]. The principal office of the Trust will
be at the Corporate Trust Office in Delaware.
SECTION 2.09 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR. The Depositor
hereby represents and warrants to the Owner Trustee that as of the Closing Date:
(a) ORGANIZATION AND GOOD STANDING. The Depositor has been duly organized
and is validly existing as a corporation in good standing under the laws of the
State of Delaware, with corporate power and authority to own its properties and
to conduct its business as such properties
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are currently owned and such business is presently conducted, and had at all
relevant times, and has, corporate power, authority and legal right to
acquire and own the Receivables.
(b) DUE QUALIFICATION. The Depositor 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, and where the
failure to so qualify would have a material adverse effect on the ability of the
Depositor to perform its obligations under this Agreement.
(c) POWER AND AUTHORITY. The Depositor has the corporate power and
authority to execute and deliver this Agreement and to carry out its terms. The
Depositor has full power and authority to sell and assign the property to be
sold and assigned to and deposited as part of the Owner Trust Estate and has
duly authorized such sale and assignment to the Trust and the Owner Trustee by
all necessary corporate action; and the execution, delivery and performance of
this Agreement has been duly authorized by the Depositor by all necessary
corporate action.
(d) BINDING OBLIGATIONS. This Agreement is a legal, valid and binding
obligation of the Depositor enforceable in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general equitable
principles.
(e) NO VIOLATION. The consummation of the transactions contemplated by this
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 certificate of
incorporation or by-laws of the Depositor, or any indenture, agreement or other
instrument to which the Depositor 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 Basic Documents); nor violate any law or, to the best of the
Depositor's knowledge, any order, rule or regulation applicable to the Depositor
of any court or of any federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over the Depositor or
its properties; which breach, default, conflict, Lien or violation in any case
would have a material adverse effect on the ability of the Depositor to perform
its obligations under this Agreement.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending, or,
to the best of the Depositor's knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Depositor or its properties: (i) asserting the
invalidity of this Agreement; (ii) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement; (iii) seeking any determination
or ruling that would materially and adversely affect the performance by the
Depositor of its obligations under, or the validity or enforceability of, this
Agreement; or (iv) relating to the Depositor and that would adversely affect the
federal or any state income tax attributes of the Trust, the Certificates or the
Notes.
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SECTION 2.10 FEDERAL INCOME TAX ALLOCATIONS. Net income of the Trust for
any month as determined for federal income tax purposes (and each item of
income, gain, loss and deduction entering into the computation thereof) shall be
allocated:
(a) in an amount equal to any amount distributed to the Certificateholders
pursuant to the Sale and Servicing Agreement (to the extent not previously
allocated pursuant to this clause); and
(b) to the Depositor, to the extent of any remaining net income.
If the net income of the Trust for any month is insufficient for the allocations
described in clause (a) above, subsequent net income shall first be allocated to
make up such shortfall before being allocated as provided in the preceding
sentence. Net losses of the Trust, if any, for any month as determined for
federal income tax purposes (and each item of income, gain, loss and deduction
entering into the computation thereof) shall be allocated to the Depositor to
the extent the Depositor has agreed hereunder and under the Sale and Servicing
Agreement and the Indenture to bear the economic burden of such net losses, and
any remaining net losses shall be allocated among the Certificateholders as of
the first Distribution Date following the end of such month in proportion to
their ownership of principal amount of Certificates as of the close of business
on such Distribution Date. The Depositor is authorized to modify the allocations
in this paragraph if necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or loss to the Depositor
or to the Certificateholders, or as otherwise required by the Code.
ARTICLE III
CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.01 THE CERTIFICATES. The Certificates shall be issued in minimum
denominations of $[_____] and in integral multiples of $[______] in excess
thereof, provided that one Class D Certificate issued to the Depositor pursuant
to Section 3.09 may be issued in an irregular denomination that includes any
residual amount. The Certificates shall be executed on behalf of the Trust by
manual or facsimile signature of a Trust Officer of the Owner Trustee and
authenticated on behalf of the Owner Trustee by the manual or facsimile
signature of a Trust Officer. Certificates bearing the manual or facsimile
signatures of individuals who were, at the time when such signatures shall have
been affixed, authorized to sign on behalf of the Trust, shall be valid and
binding obligations of the Trust, notwithstanding that such individuals or any
of them shall have ceased to be so authorized prior to the authentication and
delivery of such Certificates or did not hold such offices at the date of
authentication and delivery of such Certificates.
The Certificates may be printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination in the form of EXHIBIT A
hereto.
A transferee of a Certificate shall become a Certificateholder, and shall
be entitled to the
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rights and subject to the obligations of a Certificateholder hereunder, upon
such transferee's acceptance of a Certificate duly registered in such
transferee's name pursuant to Section 3.03.
SECTION 3.02 AUTHENTICATION OF CERTIFICATES. Concurrently with the initial
sale of the Receivables to the Trust pursuant to the Sale and Servicing
Agreement, the Owner Trustee shall cause to be executed, authenticated and
delivered on behalf of the Trust to or upon the written order of the Depositor
Certificates in an aggregate principal amount equal to the Original Certificate
Balance and evidencing the entire ownership of the Trust. No Certificate shall
entitle its holder to any benefit under this Agreement or 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, executed by the
Owner Trustee or the Owner Trustee's authenticating agent, by manual or
facsimile signature of a Trust Officer, and such authentication shall constitute
conclusive evidence, and the only evidence, that such Certificate shall have
been duly authenticated and delivered hereunder. All Certificates shall be dated
the date of their authentication.
SECTION 3.03 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 3.07, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Owner Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Owner Trustee shall be the
initial Certificate Registrar. In the event that the Certificate Registrar shall
for any reason become unable to act as Certificate Registrar, the Certificate
Registrar shall promptly give written notice to such effect to the Depositor,
the Owner Trustee and the Servicer. Upon receipt of such notice, the Servicer
shall appoint another bank or trust company, having an office or agency located
in the Borough of Manhattan, The City of New York, and that shall agree to act
in accordance with the provisions of this Agreement applicable to it, and
otherwise acceptable to the Owner Trustee, to act as successor Certificate
Registrar under this Agreement.
(b) Upon surrender for registration of transfer of any Certificate at the
office or agency maintained pursuant to Section 3.07, the Owner Trustee shall
execute, authenticate and deliver (or shall cause its authenticating agent to
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 Owner Trustee or any
authenticating agent. At the option of a Holder, Certificates may be exchanged
for other Certificates of the same Class of authorized denominations of a like
aggregate amount upon surrender of the Certificates to be exchanged at the
office or agency maintained pursuant to Section 3.07. The preceding provisions
of this Section notwithstanding, the Owner Trustee shall not make and the
Certificate Registrar shall not register transfer or exchanges of Certificates
for a period of 15 days preceding the due date for any payment with respect to
the Certificates.
(c) 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 Owner Trustee and the Certificate Registrar duly executed by
the Holder or his attorney duly authorized
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in writing. Each Certificate surrendered for registration of transfer or
exchange shall be cancelled and disposed of by the Owner Trustee in
accordance with its customary practice.
No transfer of a Certificate shall be made unless the Owner Trustee shall
have received:
(1) a representation from the transferee of such Certificate acceptable to
and in form and substance satisfactory to the Owner Trustee substantially in the
form of EXHIBIT B to the effect that:
(i) such transferee is not a Non-U.S. Person; and
(ii) such transferee is not an employee benefit plan or arrangement
subject to Section 406 of Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or a plan subject to Section 4975 of the Code (a
"Plan"), nor a person acting on behalf of a Plan nor using the assets of a
Plan to effect such transfer;
(2) a representation from the transferor of such Certificate acceptable to
and in form and substance satisfactory to the Owner Trustee substantially in the
form of EXHIBIT C; and
(3) an opinion of counsel to the Owner Trustee that the transfer of such
Certificate is being made pursuant to an effective registration under the
Securities Act or is exempt from the registration requirements of the Securities
Act.
For purposes of the preceding sentence, with respect to a Certificate that
is a Book-Entry Certificate, if the transferee's certificate referred to above
is not furnished, the representations contained in clause (1) above shall be
deemed to have been made to the Owner Trustee by the transferee's (including an
initial acquiror's) acceptance of such Certificate. Notwithstanding anything
else to the contrary herein, any purported transfer of a Certificate to or on
behalf of a Plan or utilizing the assets of a Plan shall be void and of no
effect.
To the extent permitted under applicable law (including, but not limited
to, ERISA), the Owner Trustee shall be under no liability to any Person for any
registration of transfer of any Certificate that is in fact not permitted by
this Section 3.03(c) or for making any payments due on such Certificate to the
Certificateholder thereof or taking any other action with respect to such Holder
under the provisions of this Trust Agreement or the Sale and Servicing Agreement
so long as the transfer was registered by the Certificate Registrar or the Owner
Trustee in accordance with the foregoing requirements.
(d) No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar 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 3.04 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
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shall be delivered to the Certificate Registrar and the Owner 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 Owner Trustee on behalf of the Trust
shall execute and the Owner Trustee, or the Owner Trustee's authenticating
agent, shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of the
same class and like tenor and denomination. In connection with the issuance
of any new Certificate under this Section, the Owner Trustee or 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 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 3.05 PERSONS DEEMED CERTIFICATEHOLDERS. Prior to due presentation
of a Certificate for registration of transfer, the Owner Trustee or the
Certificate Registrar may treat the Person in whose name any Certificate shall
be registered in the Certificate Register as the owner of such Certificate for
the purpose of receiving distributions pursuant to Section 5.02 and for all
other purposes whatsoever, and neither the Owner Trustee nor the Certificate
Registrar shall be bound by any notice to the contrary.
SECTION 3.06 ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES. The
Certificate Registrar shall furnish or cause to be furnished to the Owner
Trustee, the Servicer or the Depositor, as the case may be, within 15 days after
its receipt of a request therefor from the Owner Trustee, the Servicer or the
Depositor in writing, a list, in such form as the Owner Trustee, the Servicer or
the Depositor may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more
Certificateholders of any Class or one or more Holders of Certificates of any
Class evidencing, in the aggregate, not less than 25% of the Certificate Balance
of such Class apply in writing to the Owner Trustee, and such application states
that the applicants desire to communicate with other Certificateholders with
respect to their rights under this Agreement or under the Certificates and such
application is accompanied by a copy of the communication that such applicants
propose to transmit, then the Owner Trustee shall, within five Business Days
after the receipt of such application, afford such applicants 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 not to hold
any of the Depositor, the Servicer, the Certificate Registrar or the Owner
Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 3.07 MAINTENANCE OF OFFICE OR AGENCY. The Owner 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 Owner Trustee
in respect of the Certificates and the Basic Documents may be served. The Owner
Trustee initially designates [______________], [______________], as its
principal corporate trust office for such purposes. The Owner Trustee shall give
prompt written notice to the Depositor and to the Certificateholders of any
change in the location of the Certificate Register or any such office or agency.
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SECTION 3.08 APPOINTMENT OF PAYING AGENT. Except during any period when the
Indenture Trustee is authorized and directed to do so under the Indenture (i.e.
prior to the termination of the Indenture), the Paying Agent shall make
distributions to Certificateholders from the Collection Account pursuant to
Section 5.02 and shall report the amounts of such distributions to the Owner
Trustee. Any Paying Agent shall have the revocable power to withdraw funds from
the Collection Account for the purpose of making the distributions referred to
above. The Owner Trustee may revoke such power and remove the Paying Agent if
the Owner Trustee determines in its sole discretion that the Paying Agent shall
have failed to perform its obligations under this Agreement in any material
respect. The Paying Agent shall initially be the Owner Trustee, and any
co-paying agent chosen by the Owner Trustee, and acceptable to the Owner
Trustee. The Paying Agent shall be permitted to resign as Paying Agent upon 30
days' written notice to the Indenture Trustee and, if the Paying Agent is not
the Owner Trustee, to the Owner Trustee. In the event that the Owner Trustee
shall no longer be the Paying Agent, the Owner Trustee shall appoint a successor
to act as Paying Agent (which shall be a bank or trust company). The Owner
Trustee shall cause such successor Paying Agent or any additional Paying Agent
appointed by the Owner Trustee to execute and deliver to the Owner Trustee an
instrument in which such successor Paying Agent or additional Paying Agent shall
agree with the Owner Trustee that as Paying Agent, such successor Paying Agent
or additional Paying Agent will hold all sums, if any, held by it for payment to
the Certificateholders in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to such Certificateholders. The
Paying Agent shall return all unclaimed funds to the Owner Trustee and upon
removal of a Paying Agent such Paying Agent shall also return all funds in its
possession to the Owner Trustee. The provisions of Sections 7.01, 7.03, 7.04,
8.01 and 8.02 shall apply to the Owner Trustee also in its role as Paying Agent,
for so long as the Owner Trustee shall act as Paying Agent and, to the extent
applicable, to any other Paying Agent appointed hereunder. Any reference in this
Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise.
SECTION 3.09 OWNERSHIP BY THE DEPOSITOR OF CERTIFICATES. The Depositor
shall on the Closing Date purchase, and shall thereafter retain beneficial and
record ownership of, Certificates representing at least [___]% of the
Certificate Balance of the Class D Certificates. Any attempted transfer of any
Certificate that would reduce such interest of the Depositor below [___]% of the
Certificate Balance of the Class D Certificates shall be void. The Owner Trustee
shall cause at least one Class D Certificate issued to the Depositor
(representing at least [___]% of the Certificate Balance of such Class) to bear
a legend stating "THIS CERTIFICATE IS NON-TRANSFERABLE".
SECTION 3.10 BOOK-ENTRY CERTIFICATES. The Certificates, upon original
issuance, will be issued in the form of a typewritten Certificate or
Certificates representing Book-Entry Certificates, to be delivered to The
Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the
Trust; PROVIDED, HOWEVER, that Definitive Certificate may be issued to the
Depositor pursuant to Section 3.12. Such Certificate or Certificates shall
initially be registered on the Certificate Register in the name of Cede & Co.,
the nominee of the initial Clearing Agency, and no Certificate Owner will
receive a Definitive Certificate representing such Certificate Owner's interest
in such Certificate, except as provided in Section 3.12. Unless and
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until definitive, fully registered Certificates (the "Definitive
Certificates") have been issued to Certificate Owners pursuant Section 3.12:
(a) the provisions of this Section shall be in full force and effect;
(b) the Depositor, the Servicer, the Administrator, Certificate Registrar
and the Owner Trustee shall be entitled to deal with the Clearing Agency for all
purposes of this Agreement (including the payment of principal of and interest
on the Certificates and the giving of instructions or directions hereunder) as
the authorized representative of the Certificate Owners;
(c) to the extent that the provisions of this section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control;
(d) the rights of Certificate Owners shall be exercised only through the
Clearing Agency (or through procedures established by the Clearing Agency) and
shall be limited to those established by law and the agreements between the
Depositor, the Owner Trustee or such Certificate Owners and the Clearing Agency
and/or the Clearing Agency Participants. Unless and until Definitive
Certificates are issued pursuant to Section 3.12, the initial Clearing Agency
will make book-entry transfers among the Clearing Agency Participants and
receive and transmit payments of principal of and interest on the Certificates
to such Clearing Agency Participants; and
(e) whenever this Agreement requires or permits actions to be taken based
upon instructions or directions of Holders of Certificates of any Class
evidencing a specified percentage of the Certificate Balance of such Class, 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 the Certificates and has delivered such
instructions to the Owner Trustee.
SECTION 3.11 NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Certificateholders is required under this Agreement, unless
and until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 3.12, the Owner Trustee shall give all such notices and
communications specified herein to be given to Certificateholders to the
Clearing Agency, and shall have no obligations to the Certificate Owners.
SECTION 3.12 DEFINITIVE CERTIFICATES. If (i) the Depositor or the
Administrator advises the Owner Trustee in writing that the Clearing Agency is
no longer willing or able to properly discharge its responsibilities with
respect to the Certificates, and the Depositor, the Owner Trustee or the
Administrator is unable to locate a qualified successor (and if the
Administrator has made such determination, the Administrator has given written
notice thereof to the Owner Trustee), (ii) the Depositor, the Owner Trustee or
the Administrator at its option advises each such other party 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 or a Servicer Default, Certificate
Owners representing beneficial interests aggregating a majority of the
Certificate Balance
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(voting as a single class) advise the Clearing Agency and the Owner Trustee
through the Clearing Agency in writing that the continuation of a book-entry
system through the Clearing Agency is no longer in the best interest of the
Certificate Owners, then the Clearing Agency shall notify all Certificate
Owners and the Owner Trustee of the occurrence of any such event and of the
availability of the Definitive Certificates to Certificate Owners requesting
the same. Upon surrender to the Owner Trustee of the typewritten Certificate
or Certificates representing the Book-Entry Certificates by the Clearing
Agency accompanied by registration instructions, the Owner Trustee shall
execute and authenticate the related temporary Certificates or Definitive
Certificates in accordance with the instructions of the Clearing Agency.
Neither the Certificate Registrar nor the Owner 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, Depositor, the Servicer, the Administrator and the
Owner Trustee shall recognize the Holders of the Definitive Certificates as
Certificateholders. The Definitive Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Owner Trustee, as evidenced by its execution
thereof. The Owner Trustee and Administrator shall have no liability if they
are unable to locate a qualified successor Clearing Agency. From and after
the date of issuance of Definitive Certificates, all notices to be given to
Certificateholders will be mailed thereto at their addresses of record in the
Certificate Register as of the relevant Record Date. Such notices will be
deemed to have been given as of the date of mailing.
SECTION 3.13 TEMPORARY CERTIFICATES. Pending the preparation of Definitive
Certificates, the Owner Trustee, on behalf of the Trust, may execute,
authenticate and deliver, temporary Certificates, printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the Definitive Certificates in lieu of which they
are issued. If temporary Certificates are issued, the Depositor will cause
Definitive Certificates to be prepared without unreasonable delay. After the
preparation of Definitive Certificates, the temporary Certificates shall be
exchangeable for Definitive Certificates upon surrender thereof at the office or
agency to be maintained as provided in Section 3.07 without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Owner Trustee on behalf of the Trust shall execute,
authenticate and deliver in exchange therefor a like principal amount of
Definitive Certificates in authorized denominations. Until so exchanged, the
temporary Certificates shall in all respects be entitled to the same benefits
under this Agreement as the related Definitive Certificates.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE OR CERTIFICATEHOLDERS
SECTION 4.01 PRIOR NOTICE TO CERTIFICATEHOLDERS WITH RESPECT TO CERTAIN
MATTERS. With respect to the following matters, the Owner Trustee shall not take
action unless at least 30 days before the taking of such action (or such shorter
period as shall be agreed to in writing by all Certificateholders), the Owner
Trustee shall have notified the Certificateholders in writing of the proposed
action and the Certificateholders shall not have notified the Owner Trustee in
writing
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prior to the 30th day (or such agreed upon shorter period) after such
notice is given that such Certificateholders have withheld consent or provided
alternative direction:
(a) the initiation of any claim or lawsuit by the Trust (except claims or
lawsuits brought in connection with the collection of the Receivables) and the
compromise of any action, claim or lawsuit brought by or against the Trust
(except with respect to the aforementioned claims or lawsuits for collection of
the Receivables);
(b) the election by the Trust to file an amendment to the Certificate of
Trust (unless such amendment is required to be filed under the Business Trust
Statute);
(c) the amendment of the Indenture, whether or not by a Supplemental
Indenture, in circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture, whether or not by a Supplemental
Indenture, in circumstances where the consent of any Noteholder is not required
but such amendment materially adversely affects the interest of the
Certificateholders;
(e) the amendment, change or modification of the Administration Agreement,
other than to cure any ambiguity or to amend or supplement any provision in a
manner or add any provision that would not materially adversely affect the
interests of the Certificateholders; or
(f) the appointment (i) pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee, (ii) pursuant to this Agreement of
a successor Certificate Registrar or (iii) any consent by the Note Registrar,
Paying Agent or Indenture Trustee or Certificate Registrar to the assignment of
its respective obligations under the Indenture or this Agreement, as applicable.
SECTION 4.02 ACTION BY CERTIFICATEHOLDERS WITH RESPECT TO CERTAIN MATTERS.
The Owner Trustee shall not have the power, except upon the direction of the
Certificateholders, to (a) remove the Administrator pursuant to Section 8 of the
Administration Agreement, (b) appoint a successor Administrator pursuant to
Section 8 of the Administration Agreement, (c) remove the Servicer pursuant to
Section 8.01 of the Sale and Servicing Agreement or (d) except as expressly
provided in the Basic Documents, sell the Receivables after the termination of
the Indenture. The Owner Trustee shall take the actions referred to in the
preceding sentence only upon written instructions signed by the authorized
representative of 100% of the Certificateholders.
SECTION 4.03 ACTION WITH RESPECT TO BANKRUPTCY. The Owner Trustee shall not
have the power to commence a voluntary proceeding in bankruptcy relating to the
Trust without the unanimous prior approval of all Certificateholders and the
delivery to the Owner Trustee by each Certificateholder that such
Certificateholder reasonably believes that the Trust is insolvent.
SECTION 4.04 RESTRICTIONS ON CERTIFICATEHOLDERS' POWER. The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any
obligations of the Trust or of the Owner Trustee under any of the Basic
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Documents or would be contrary to Section 2.03 nor shall the Owner Trustee be
obligated to follow any such direction, if given.
SECTION 4.05 MAJORITY OF THE CONTROLLING CLASS OF CERTIFICATES CONTROL.
Except as otherwise expressly provided herein, any action that may be taken by
the Certificateholders under this Agreement may be taken by the Holders of the
Controlling Class of Certificates evidencing not less than a majority of the
Certificate Balance of such Class. Except as expressly provided herein, any
written notice of the Certificateholders delivered pursuant to this Agreement
shall be effective if signed by Holders of the Controlling Class of Certificates
evidencing not less than a majority of the Certificate Balance of such Class at
the time of the delivery of such notice.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.01 ESTABLISHMENT OF THE TRUST COLLECTION ACCOUNT.
(a) On or prior to the Distribution Date on which the Notes of all Classes
have been paid in full (or substantially all of the Trust Estate is otherwise
released from the lien of the Indenture), the Owner Trustee, for the benefit of
the Certificateholders, shall establish and maintain, or shall cause to be
established and maintained, in the name of the Trust (or in such other name as
shall be specified in the Sale and Servicing Agreement), the trust collection
account (the "Trust Collection Account"). The Trust Collection Account shall be
established and maintained as an Eligible Deposit Account, and, subject to
provisions of the Sale and Servicing Agreement, bearing a designation clearly
indicating that, subject to Section 5.01(b), the funds deposited therein are
held by the Trust for the benefit of the Certificateholders, in each case in
accordance with Section 5.01 of the Sale and Servicing Agreement.
Subject to Section 5.01(b), the Owner Trustee shall possess all right,
title and interest in all funds on deposit from time to time in the Trust
Collection Account and in all proceeds thereof (other than any net investment
earnings on Eligible Investments held therein). Except as otherwise expressly
provided herein, the Trust Collection Account shall be under the sole dominion
and control of the Owner Trustee for the benefit of the Certificateholders. If,
at any time, the Trust Collection Account ceases to be an Eligible Deposit
Account, the Owner Trustee (or the Administrator on behalf of the Owner Trustee,
if the Trust Collection Account is not then held by the Owner Trustee or an
affiliate thereof) shall within 10 Business Days establish a new equivalent
Eligible Deposit Account and shall transfer any cash and/or any investments to
such new account.
(b) Concurrently with the execution and delivery of the Indenture, the
Servicer will establish and maintain, or shall cause to be established and
maintained, at the direction of the Depositor, the Collection Account in the
name of and under the control of the Indenture Trustee for the benefit of the
Securityholders in accordance with Section 5.01 of the Sale and Servicing
Agreement. The Indenture Trustee will be obligated to transfer back to the Trust
Collection Account all funds or investments held in the Collection Account
established pursuant to the Sale
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and Servicing Agreement on the Distribution Date on which the Notes of all
Classes have been paid in full or the Indenture is otherwise terminated
(excluding any amounts to be retained for distribution in respect of Notes
that are not promptly delivered for payment on such Distribution Date), and
to take all necessary or appropriate actions to transfer all right, title and
interest of the Indenture Trustee in such funds or investments and all
proceeds thereof to the Owner Trustee for the benefit of the
Certificateholders.
SECTION 5.02 APPLICATION OF AMOUNTS IN TRUST ACCOUNTS.
(a) For so long as any Notes are outstanding, on each Distribution Date,
the Owner Trustee will take reasonable steps to determine that the Servicer has
properly delivered the Servicer's Certificate identifying how amounts on deposit
in the Collection Account are to be allocated and distributed and will instruct
the Indenture Trustee, or cause the Indenture Trustee to be instructed, to
distribute to Certificateholders, on a pro rata basis, the amounts distributable
thereto pursuant to Section 5.06 of the Sale and Servicing Agreement and Section
3.01 of the Indenture. From and after the date on which the Notes of all Classes
have been paid in full, on each Distribution Date, the Owner Trustee shall
distribute to the Certificateholders amounts on deposit in the Collection
Account that are distributable to the Certificateholders in accordance with the
instructions of the Servicer pursuant to Sections 5.06 of the Sale and Servicing
Agreement. Upon the release from the Lien of the Indenture of amounts on deposit
in the Collection Account or any other portion of the Owner Trust Estate, the
Owner Trustee will cause such property to be properly deposited into the
Collection Account under the control of the Owner Trustee pursuant to Section
5.01(a) or distributed to the Certificateholders in accordance with the
provisions of this Agreement, as the case may be.
(b) On each Distribution Date, the Owner Trustee shall send to each
Certificateholder the statement provided to the Owner Trustee by the Servicer
pursuant to Section 5.09 of the Sale and Servicing Agreement with respect to
such Distribution Date.
(c) In the event that any withholding tax is imposed on the Trust's payment
(or allocations of income) to a Certificateholder, such tax shall reduce the
amount otherwise distributable to the Certificateholder in accordance with this
Section. The Owner Trustee is hereby authorized and directed to retain from
amounts otherwise distributable to the Certificateholders sufficient funds for
the payment of any tax that is legally owed by the Trust (but such authorization
shall not prevent the Owner Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed with
respect to a Certificateholder shall be treated as cash distributed to such
Certificateholder at the time it is withheld by the Trust and remitted to the
appropriate taxing authority. If there is a possibility that withholding tax is
payable with respect to any distribution (such as any distribution to a Non-U.S.
Person), the Owner Trustee may in its sole discretion withhold such amounts in
accordance with this paragraph (c). In the event that a Certificateholder wishes
to apply for a refund of any such withholding tax, the Owner Trustee shall
reasonably cooperate with such Certificateholder in making such claim so long as
such Certificateholder agrees to reimburse the Owner Trustee for any
out-of-pocket expenses incurred.
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SECTION 5.03 METHOD OF PAYMENT. Subject to Section 9.01(c), distributions
required to be made to Certificateholders on any Distribution Date shall be made
to each Certificateholder of record on the related Record Date either by check
mailed to such Certificateholder at the address of such holder appearing in the
Certificate Register or by wire transfer, in immediately available funds, to the
account of any Certificateholder at a bank or other entity having appropriate
facilities therefor, if such Certificateholder shall have provided to the
Certificate Registrar appropriate written instructions at least five Business
Days prior to such Distribution Date.
SECTION 5.04 ACCOUNTING AND REPORTS TO THE NOTEHOLDERS, CERTIFICATEHOLDERS,
THE INTERNAL REVENUE SERVICE AND OTHERS. The Owner Trustee shall (a) maintain
(or cause to be maintained) the books of the Trust on a fiscal year basis (with
a March 31 year end) or a calendar basis on the accrual method of accounting,
(b) deliver to each Certificate Owner, as may be required by the Code and
applicable Treasury Regulations, such information as may be required (including
Schedule K-1) to enable each Certificate Owner to prepare its federal and state
income tax returns, (c) file any tax and information returns, and fulfill any
other reporting requirements, relating to the Trust, as may be required by the
Code and applicable Treasury Regulations (including Treasury Regulation Section
1.6049-7), (d) for any period during which the beneficial ownership interests in
the Trust are held by more than one person, make such elections as may from time
to time be required or appropriate under any applicable state or federal statute
or rule or regulation thereunder so as to maintain the Trust's characterization
as a partnership for federal income tax purposes, (e) cause such tax returns to
be signed in the manner required by law, and (f) collect or cause to be
collected any withholding tax as described in and in accordance with Section
5.02(c) with respect to income or distributions to Certificateholders. The Owner
Trustee shall elect under Section 1278 of the Code to include in income
currently any market discount that accrues with respect to the Receivables. The
Owner Trustee shall not make the election provided under Section 754 of the
Code.
SECTION 5.05 SIGNATURE ON RETURNS; TAX MATTER PARTNER.
(a) The Owner Trustee shall sign on behalf of the Trust the tax returns of
the Trust, unless applicable law requires a Certificateholder to sign such
documents, in which case such documents shall be signed by the Administrator,
pursuant to the power-of-attorney granted thereto pursuant to Section 2.04.
(b) For any period during which the beneficial ownership interests of the
Trust are held by more than one person, the Certificateholder holding the Class
D Certificates evidencing the largest portion of the Original Certificate
Balance of such Class shall be designated the "tax matters partner" of the Trust
pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations, but hereby delegates its powers and duties as such to the
Administrator pursuant to the power-of-attorney granted thereto pursuant to
Section 2.04.
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
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SECTION 6.01 GENERAL AUTHORITY. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Trust is to be
a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is to be a party and any
amendment thereto, and, on behalf of the Trust, to direct the Indenture Trustee
to authenticate and deliver Class A-1 Notes in the aggregate principal amount of
$[______________] , Class A-2 Notes in the aggregate principal amount of
$[______________], Class A-3 Notes in the aggregate principal amount of
$[______________], and Class B Notes in the aggregate principal amount of
$[______________]. In addition to the foregoing, the Owner Trustee is
authorized, but shall not be obligated, to take all actions required of the
Trust, pursuant to the Basic Documents.
SECTION 6.02 GENERAL DUTIES. It shall be the duty of the Owner Trustee to
discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and the Basic Documents to which the Trust is a
party and to administer the Trust in accordance with the provisions hereof and
of the Basic Documents and in the interest of the Certificateholders.
Notwithstanding the foregoing, the Owner Trustee shall be deemed to have
discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Administrator has agreed in the Administration
Agreement to perform any act or to discharge any duty of the Owner Trustee
hereunder or under any Basic Document, and the Owner Trustee shall not be held
liable for the default or failure of the Administrator to carry out such
obligations or fulfill such duties under the Administration Agreement.
SECTION 6.03 DUTIES OF THE OWNER TRUSTEE.
(a) Subject to Article IV and in accordance with the terms of the Basic
Documents, the Certificateholders may by written instruction direct the Owner
Trustee in the management of the Trust. Such direction may be exercised at any
time by written instruction of the Certificateholders pursuant to Article IV.
The Owner Trustee, accepts the trusts hereby created and agrees to perform its
duties hereunder with respect to such trusts but only upon the terms of this
Agreement. The Owner Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Owner Trustee that shall be specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to determine
whether they conform on their face to the requirements of this Agreement.
(b) No provision of this Agreement shall be construed to relieve the Owner
Trustee from liability for its own negligent action, its own negligent failure
to act, its own bad faith or its own willful misfeasance; PROVIDED, HOWEVER,
that:
(i) the duties and obligations of the Owner Trustee shall be
determined solely by the express provisions of this Agreement, the Owner
Trustee shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement against the
Owner Trustee, the permissive right of the Owner Trustee to do things
enumerated in this Agreement shall not be construed as a duty and, in the
absence of bad faith on the part of the Owner Trustee, the Owner Trustee
may conclusively rely, as to the truth of the
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statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Owner Trustee and conforming on
their face to the requirements of this Agreement;
(ii) the Owner Trustee shall not be personally liable for an error of
judgment made in good faith by a Trust Officer, unless it shall be proved
that the Owner Trustee was negligent in performing its duties in accordance
with the terms of this Agreement; and
(iii) the Owner Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken in good faith in
accordance with the direction of the Holders of the Controlling Class of
Certificates representing at least a majority of the Certificate Balance of
such Class (or such larger or smaller percentage of any other Class or
Classes as may be required by any other provision of this Agreement or the
other Basic Documents).
(c) The Owner 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
under this Agreement, or in the exercise of any of its rights or powers, if
there shall be reasonable grounds for believing that the repayment of such funds
or adequate indemnity against such risk or liability is not reasonably assured
to it.
(d) All information obtained by the Owner Trustee regarding the Obligors
and the Receivables contained in the Trust, whether upon the exercise of its
rights under this Agreement or otherwise, shall be maintained by the Owner
Trustee in confidence and shall not be disclosed to any other Person, unless
such disclosure is required by any applicable law or regulation or pursuant to
subpoena.
(e) Pursuant to Section 3.02 of the Sale and Servicing Agreement, in the
event that the Owner Trustee discovers that a representation or warranty made by
the Seller pursuant to Section 3.01 or 6.01 of the Sale and Servicing Agreement
with respect to a Receivable was incorrect as of the time specified with respect
to such representation and warranty and such incorrectness materially and
adversely affects the interests of any Securityholder in such Receivable, the
Owner Trustee shall give prompt written notice to the Servicer, the Depositor
and the Indenture Trustee of such incorrectness. Pursuant to Section 4.06 of the
Sale and Servicing Agreement, in the event that the Owner Trustee discovers that
any covenant of the Servicer set forth in the second sentence of Section 4.01 or
Section 4.02 or 4.05 of the Sale and Servicing Agreement has been breached by
the Servicer, the Owner Trustee shall give prompt written notice to the
Servicer, the Depositor and the Indenture Trustee of such breach.
SECTION 6.04 NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT OR IN
INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any Basic Document to which the
Owner Trustee is a party or otherwise contemplated hereby, except as expressly
provided by the terms of this Agreement, any Basic Document to which the Trust
is a
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party or in any document or written instruction received by the Owner Trustee
pursuant to Section 6.03. No implied duties or obligations shall be read into
this Agreement or any Basic Document against the Owner Trustee. The Owner
Trustee shall have no responsibility for filing any financing or continuation
statement in any public office at any time or otherwise to perfect or
maintain the perfection of any security interest or lien granted to it
hereunder or to prepare or file any Securities and Exchange Commission filing
for the Trust or to record this Agreement or any Basic Document. The Owner
Trustee nevertheless agrees that it will, at its own cost and expense,
promptly take all action as may be necessary to discharge any liens on any
part of the Owner Trust Estate that result from actions by, or claims
against, the Owner Trustee that are not related to the ownership or the
administration of the Owner Trust Estate.
SECTION 6.05 NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Owner Trust Estate except (i) in accordance with the
powers granted to and the authority conferred upon the Owner Trustee pursuant to
this Agreement, (ii) in accordance with the Basic Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.03.
SECTION 6.06 RESTRICTIONS. The Owner Trustee shall not take any action (a)
that is inconsistent with the purposes of the Trust set forth in Section 2.03 or
(b) that, to the actual knowledge of the Owner Trustee, would result in the
Trust's becoming taxable as a corporation for federal income tax purposes. The
Certificateholders shall not have the authority to and, by acceptance of an
ownership interest in any Certificate shall thereby be deemed to have covenanted
not to, direct the Owner Trustee to take action that would violate the
provisions of this Section.
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.01 RIGHTS OF THE OWNER TRUSTEE . Except as otherwise provided in
Article VI:
(a) in accordance with Section 7.04, the Owner Trustee may rely and shall
be protected in acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of an authorized signatory, 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;
(b) the Owner Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in accordance with the instructions of the
Administrator, as provided in the Administration Agreement, or the
Certificateholders, as provided herein;
(c) the Owner Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement or the Sale and Servicing
Agreement, or to institute, conduct or
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defend any litigation under this Agreement, or in relation to this Agreement
or the Sale and Servicing Agreement, at the request, order or direction of
any of the Securityholders pursuant to the provisions of this Agreement or
the Sale and Servicing Agreement, unless such Securityholders shall have
offered to the Owner Trustee reasonable security or indemnity against the
costs, expenses and liabilities that may be incurred therein or thereby;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Notes;
(e) the Owner Trustee shall not be bound to recalculate, reverify, or 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 the Controlling Class of Certificates representing not less
than 25% of the Certificate Balance of such Class; PROVIDED, HOWEVER, that if
the payment within a reasonable time to the Owner Trustee of the costs, expenses
or liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Owner Trustee, not reasonably assured to the Owner
Trustee by the security afforded to it by the terms of this Agreement, the Owner
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 Administrator or, if paid by the Owner Trustee,
shall be reimbursed by the Administrator upon demand; and nothing in this clause
shall derogate from the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors; and
(f) the Owner Trustee shall not be liable for the default or misconduct of
the Administrator, the Servicer, the Depositor or the Indenture Trustee under
any of the Basic Documents or otherwise, and the Owner Trustee shall have no
obligation or liability to perform the obligations of the Trust under the Basic
Documents that are required to be performed by the Administrator under the
Administration Agreement, the Indenture Trustee under the Indenture or the
Servicer under the Sale and Servicing Agreement.
SECTION 7.02 FURNISHING OF DOCUMENTS. The Owner Trustee shall furnish (a)
to the Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Basic Documents and (b) to Noteholders promptly upon written request
therefor, copies of the Sale and Servicing Agreement, the Administration
Agreement and the Trust Agreement.
SECTION 7.03 REPRESENTATIONS AND WARRANTIES. The Owner Trustee hereby
represents and warrants to the Depositor and for the benefit of the
Certificateholders, that:
(a) It is a [_____________] duly organized and validly existing in good
standing under the laws of [_____________]. It has full power, right and
authority to execute, deliver and perform its obligations under this Agreement
and each other Basic Document.
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(b) It has taken all corporate action necessary to authorize the execution
and delivery of this Agreement and each other Basic Document, and this Agreement
and each other Basic Document has been executed and delivered by one of its
officers duly authorized to execute and deliver this Agreement and each other
Basic Document on its behalf.
(c) This Agreement constitutes the legal, valid and binding obligation of
the Owner Trustee, enforceable against it in accordance with its terms except as
the enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity.
(d) It is authorized to exercise trust powers in the State of Delaware as
and to the extent contemplated herein or has appointed a Delaware trustee that
is so authorized and it has a principal place of business in the State of
Delaware or has appointed a Delaware trustee that has such a principal place of
business.
(e) Neither the execution nor the delivery by it of this Agreement nor the
consummation by the Owner Trustee of the transactions contemplated hereby or
thereby nor compliance by it with any of the terms or provisions hereof or
thereof will contravene any federal or Delaware law, governmental rule or
regulation governing the [banking or trust] powers of the Owner Trustee or any
judgment or order binding on it, or constitute any default under its charter
documents or by-laws or any indenture, mortgage, contract, agreement or
instrument to which it is a party or by which any of its properties may be
bound.
SECTION 7.04 RELIANCE; ADVICE OF COUNSEL.
(a) The Owner Trustee shall incur no liability to anyone in acting upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond, or other document or paper believed by it to be genuine
and believed by it to be signed by the proper party or parties. The Owner
Trustee may accept a certified copy of a resolution of the board of directors or
other governing body of any corporate party as conclusive evidence that such
resolution has been duly adopted by such body and that the same is in full force
and effect. As to any fact or matter the method of the determination of which is
not specifically prescribed herein, the Owner Trustee may for all purposes
hereof rely on a certificate, signed by the president or any vice president or
by the treasurer or other authorized officers or agents of the relevant party,
as to such fact or matter and such certificate shall constitute full protection
to the Owner Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under the Basic Documents, the Owner
Trustee (i) may act directly or through its agents or attorneys pursuant to
agreements entered into with any of them, and the Owner Trustee shall not be
liable for the conduct or misconduct of such agents or attorneys if such agents
or attorneys shall have been selected by the Owner Trustee with reasonable care,
and (ii) may consult with counsel, accountants and other skilled persons to be
selected with reasonable care and employed by it. The Owner Trustee shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the written opinion or advice of any
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such counsel, accountants or other such persons and not contrary to this
Agreement or any Basic Document.
SECTION 7.05 NOT ACTING IN INDIVIDUAL CAPACITY. In accepting the trusts
hereby created, [_____________________] acts solely as Owner Trustee hereunder
and not in its individual capacity. Except with respect to a claim based on the
failure of the Owner Trustee to perform its duties under this Agreement or based
on the Owner Trustee's willful misconduct, bad faith or negligence, no recourse
shall be had for any claim based on any provision of this Agreement, the Notes
or Certificates, or based on rights obtained through the assignment of any of
the foregoing, against the institution serving as the Owner Trustee in its
individual capacity. The Owner Trustee shall not have any personal obligation,
liability or duty whatsoever to any Securityholder 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 this
Indenture.
SECTION 7.06 OWNER TRUSTEE NOT LIABLE FOR CERTIFICATES OR RECEIVABLES. The
Owner Trustee makes no representations as to the validity or sufficiency of this
Agreement or of the Certificates or of the Notes (other than the execution by
the Owner Trustee on behalf of the Trust of, and the certificate of
authentication on, the Certificates, and the direction of the Owner Trustee, on
behalf of the Trust, to the Indenture Trustee relating to the execution of the
Notes). The Owner Trustee shall have no obligation to perform any of the duties
of the Servicer or Administrator unless explicitly set forth in this Agreement.
The Owner Trustee shall at no time have any responsibility or liability for
or with respect to the legality, validity and enforceability of the
Certificates, the Notes or any Receivable, any ownership interest in any
Financed Vehicle, or the maintenance of any such ownership interest, or for or
with respect to the efficacy of the Trust or its ability to generate the
payments to be distributed to Securityholders under this Agreement and the
Indenture, including without limitation the validity of the assignment of the
Receivables to the Trust or of any intervening assignment; the existence,
condition, location and ownership of any Receivable or Financed Vehicle; the
existence and enforceability of any physical damage or credit life or credit
disability insurance; the existence and contents of any retail installment sales
contract or any computer or other record thereof; the completeness of any retail
installment sales contract; the performance or enforcement of any retail
installment sales contract; the compliance by the Trust with any covenant or the
breach by the Trust of any warranty or representation made under this Agreement
or in any related document and the accuracy of any such warranty or
representation prior to the Owner Trustee's receipt of notice or other discovery
of any noncompliance therewith or any breach thereof; the acts or omissions of
the Trust or the Servicer; or any action by the Owner Trustee taken at the
instruction of the Certificateholders, PROVIDED, HOWEVER, that the foregoing
shall not relieve the Owner Trustee of its obligation to perform its duties
under this Agreement.
The Owner Trustee shall not be accountable for the use or application by
the Issuer of any of the Certificates or of the proceeds of such Certificates,
of any of the Notes or of the proceeds of such Notes, or for the use or
application of any funds paid to the Servicer in respect of the Certificates.
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SECTION 7.07 OWNER TRUSTEE MAY OWN CERTIFICATES AND NOTES. The Owner
Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates or Notes and may deal with the Depositor, the
Administrator, the Indenture Trustee and the Servicer in banking or other
transactions with the same rights as it would have if it were not Owner
Trustee.
SECTION 7.08 PENNSYLVANIA MOTOR VEHICLE SALES FINANCE ACT AND MARYLAND
LICENSE. The Owner Trustee, in its individual capacity, shall use its best
efforts to maintain, and the Owner Trustee, as Owner Trustee, shall cause the
Trust to use its best efforts to maintain, the effectiveness of all licenses
required under the Pennsylvania Motor Vehicle Sales Finance Act
and Maryland and all other similar applicable state laws in connection with
this Agreement and the Basic Documents and the transactions contemplated
hereby and thereby until such time as the Trust shall terminate in accordance
with the terms hereof.
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.01 OWNER TRUSTEE'S FEES AND EXPENSES. The Trust shall pay or
shall cause the Servicer to pay to the Owner Trustee from time to time
compensation for its services as have been separately agreed upon before the
date hereof. The Administrator shall, pursuant to the Administration
Agreement and the provisions herein, reimburse the Owner Trustee for all
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Owner Trustee's agents, counsel, accountants and experts
directly related to its services hereunder ("Expenses").
SECTION 8.02 INDEMNIFICATION. The Administrator shall indemnify or shall
cause the Servicer to indemnify the Owner Trustee against any and all loss,
liability or Expense (including reasonable attorneys' fees) incurred by it in
connection with the administration of the Trust and the performance of its
duties hereunder. The Owner Trustee shall notify the Administrator and the
Servicer promptly of any claim for which it may seek indemnity. Failure by
the Owner Trustee to so notify the Administrator and the Servicer shall not
relieve the Administrator or the Servicer of its obligations hereunder,
except where such failure shall affect the Administrator's or Servicer's
defenses in respect thereof. In case any such action is brought against the
Owner Trustee under this Section 8.02 and it notifies the Administrator of
the commencement thereof, the Administrator will assume the defense thereof,
with counsel reasonably satisfactory to the Owner Trustee (who may, unless
there is, as evidenced by an opinion of counsel to the Owner Trustee stating
that there is an unwaivable conflict of interest, be counsel to the
Administrator), and the Administrator will not be liable to the Owner Trustee
under this Section for any legal or other expenses subsequently incurred by
the Owner Trustee in connection with the defense thereof, other than
reasonable costs of investigation. Neither the Administrator nor the Servicer
need reimburse any expense or indemnify against any loss, liability or
expense incurred by the Owner Trustee through the Owner Trustee's own willful
misconduct, negligence or bad faith.
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SECTION 8.03 PAYMENTS TO THE OWNER TRUSTEE. Any amounts paid to the
Owner Trustee pursuant to this Article VIII from assets in the Owner Trust
Estate shall be deemed not to be a part of the Owner Trust Estate immediately
after such payment.
ARTICLE IX
Termination of Trust Agreement
SECTION 9.01 TERMINATION OF TRUST AGREEMENT.
(a) This Agreement (other than Article VIII) shall terminate and the
Trust shall dissolve and be of no further force or effect, upon the earliest
of (i) the maturity or other liquidation of the last Receivable (or other
asset) in the Owner Trust Estate and the final distribution by the Owner
Trustee of all moneys or other property or proceeds of the Owner Trust Estate
in accordance with the terms of this Agreement, the Indenture and the Sale
and Servicing Agreement (including, but not limited to, any property and
proceeds to be deposited in the Collection Account pursuant to Sections 3.02,
4.06, 5.02, 5.04, 5.05, 5.07, 5.08 or 9.01 of the Sale and Servicing
Agreement or to be released by the Indenture Trustee from the Lien of the
Indenture pursuant to Section 10.01 or 10.02 of the Indenture), or (ii) the
payment or distribution to all Securityholders of all amounts specified in
Sections 3.02, 4.06, 5.02, 5.04, 5.06 or 9.02 of the Sale and Servicing
Agreement. The bankruptcy, liquidation, dissolution, death or incapacity of
any Certificateholder shall not (x) operate to terminate this Agreement or
the Trust, nor (y) entitle such Certificateholder's legal representatives or
heirs to claim an accounting or to take any action or proceeding in any court
for a partition or winding up of all or any part of the Trust or Owner Trust
Estate, nor (z) otherwise affect the rights, obligations and liabilities of
the parties hereto.
(b) Except as provided in Section 9.01(a), neither the Depositor nor any
Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Distribution
Date upon which the Certificateholders shall surrender their Certificates to
the Paying Agent for payment of the final distributions and cancellation,
shall be given by the Owner Trustee to the Certificateholders mailed within
five Business Days of receipt of notice of such termination from the Servicer
given pursuant to Section 10.03 of the Sale and Servicing Agreement, stating
(i) the Distribution Date upon or with respect to which final payment of the
Certificates shall be made upon presentation and surrender of the
Certificates at the office of the Paying Agent therein designated, (ii) the
amount of any such final payment and (iii) that payment to be made on such
Distribution Date will be made only upon presentation and surrender of the
Certificates at the office of the Paying Agent therein specified. The Owner
Trustee shall give such notice to the Certificate Registrar (if other than
the Owner Trustee) and the Paying Agent (if other than the Owner Trustee) at
the time such notice is given to Certificateholders. Upon presentation and
surrender of the Certificates, the Paying Agent shall cause to be distributed
to Certificateholders amounts distributable on such Distribution Date
pursuant to Section 5.02.
In the event that one or more of the Certificateholders shall not
surrender their
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Certificates for cancellation within six months after the date specified in
the above-mentioned written notice, the Owner 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 Owner 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 this Agreement. Any funds remaining in
the Trust after exhaustion of such remedies shall be distributed by the Owner
Trustee to the Depositor.
(d) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be cancelled by filing a
certificate of cancellation with the Secretary of State in accordance with
the provisions of Section 3820 of the Business Trust Statute.
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.01 ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE. The Owner
Trustee shall at all times be an entity having a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by federal
or state authorities. If such entity 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
10.01, 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 Owner Trustee shall cease
to be eligible in accordance with the provisions of this Section, the Owner
Trustee shall resign immediately in the manner and with the effect specified
in Section 10.02.
SECTION 10.02 RESIGNATION OR REMOVAL OF OWNER TRUSTEE. The Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Depositor, the Servicer and the
Indenture Trustee. [If at any time the Owner Trustee is deemed to have a
conflict of interest under the TIA, because of its roles as both Owner Trustee
hereunder and Indenture Trustee under the Indenture, the Owner Trustee shall
resign as Owner Trustee hereunder.] [[______________], in its capacity as Owner
Trustee, shall also resign as Owner Trustee hereunder if any Event of Default
under the Indenture occurs and is necessary to eliminate any conflict of
interest under the TIA with the Indenture Trustee or any other trustee under
the Indenture.]Upon receiving such notice of resignation, the Servicer shall
promptly appoint a successor Owner Trustee by written instrument, in duplicate,
one copy of which shall be delivered to each of the resigning Owner Trustee and
the successor Owner Trustee. If no successor Owner Trustee shall have been so
appointed or shall not have accepted such appointment within 30 days after the
giving of such notice of resignation, the resigning Owner Trustee may petition
any court of competent jurisdiction for the appointment of a successor Owner
Trustee.
If at any time the Owner Trustee shall cease to be eligible in accordance
with the
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provisions of Section 10.01 and shall fail to resign promptly, or if at any
time the Owner Trustee shall be legally unable to act, or shall be adjudged
bankrupt or insolvent, or a receiver of the Owner Trustee or of its property
shall be appointed, or any public officer shall take charge or control of the
Owner Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the Administrator may
remove the Owner Trustee by written instrument to such effect delivered to
the Owner Trustee, the Depositor and the Indenture Trustee. If the
Administrator shall remove the Owner Trustee under the authority of the
immediately preceding sentence, the Servicer shall promptly appoint a
successor Owner Trustee by written instrument in duplicate, one copy of which
instrument shall be delivered to each of the outgoing Owner Trustee so
removed and the successor Owner Trustee, and pay all fees, expenses and other
compensation owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 10.03 and payment of all fees and expenses
owed to the outgoing Owner Trustee. The Administrator shall provide notice of
such resignation or removal of the Owner Trustee to each of the Rating
Agencies.
SECTION 10.03 SUCCESSOR OWNER TRUSTEE. Any successor Owner Trustee
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Administrator and to its predecessor Owner Trustee an instrument
accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Owner Trustee shall become
effective and such successor Owner Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties,
and obligations of its predecessor under this Agreement, with like effect as
if originally named as Owner Trustee. The predecessor Owner Trustee shall
upon payment of its fees and expenses deliver to the successor Owner Trustee
all documents and statements and monies held by it under this Agreement; and
the Administrator and the predecessor Owner 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 Owner Trustee all
such rights, powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee
shall meet the criteria for eligibility set forth in Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice of the successor of the
Owner Trustee to all Certificateholders, the Indenture Trustee, all
Noteholders and the Rating Agencies. If the Administrator fails to mail such
notice within 10 days after acceptance of appointment by the successor Owner
Trustee, the successor Owner Trustee shall cause such notice to be mailed at
the expense of the Administrator.
SECTION 10.04 MERGER OR CONSOLIDATION OF OWNER TRUSTEE. Any corporation
into which the Owner 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 Owner
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Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Owner Trustee, shall
be the successor of the Owner Trustee hereunder, provided such corporation
shall be eligible pursuant to Section 10.01, 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; PROVIDED, FURTHER,
that the Owner Trustee shall mail notice of such merger or consolidation to
the Rating Agencies.
SECTION 10.05 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any
part of the Owner Trust Estate or any Financed Vehicle may at the time be
located, the Administrator and the Owner Trustee acting jointly shall have
the power and shall execute and deliver all instruments to appoint one or
more Persons approved by the Owner Trustee to act as co-trustee, jointly with
the Owner Trustee, or separate trustee or separate trustees, of all or any
part of the Owner Trust Estate, and to vest in such Person, in such capacity,
such title to the Trust, or any part thereof, and, subject to the other
provisions of this Section, such powers, duties, obligations, rights and
trusts as the Administrator and the Owner Trustee may consider necessary or
desirable. If the Administrator shall not have joined in such appointment
within 25 days after the receipt by it of a request so to do, the Owner
Trustee alone shall have the power to make such appointment. No co-trustee or
separate trustee under this Agreement shall be required to meet the terms of
eligibility as a trustee pursuant to Section 10.01 and no notice of the
appointment of any co-trustee or separate trustee shall be required pursuant
to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provision and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed
by the Owner 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 Owner Trustee joining in such
act), except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed, the Owner 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 Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(iii) the Administrator and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as if given to each of them. Each separate trustee and
co-trustee, upon its acceptance of the powers and duties conferred thereto
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under this Agreement, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Owner Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating
to the conduct of, affecting the liability of, or affording protection to,
the Owner Trustee. Each such instrument shall be filed with the Owner Trustee
and a copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as 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 this 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 Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 SUPPLEMENTS AND AMENDMENTS. This Agreement may be amended
by the Depositor and the Owner Trustee, with prior written notice to the
Rating Agencies, without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions in this
Agreement or of modifying in any manner the rights of the Noteholders or the
Certificateholders; PROVIDED, HOWEVER, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect
the interests of any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the Depositor
and the Owner Trustee, with prior written notice to the Rating Agencies, with
the consent of the Holders of the Controlling Class of Notes evidencing not
less than a majority of the Outstanding Amount of such Class (excluding for
such purpose Notes owned by NARC, NMAC or any of their Affiliates) or if all
of the Notes have been paid in full, the Holders of the Controlling Class of
Certificates evidencing not less than a majority of the Certificate Balance
of such Class (excluding for such purpose Certificates owned by NARC, NMAC or
any of their Affiliates) for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Noteholders or the
Certificateholders; PROVIDED, HOWEVER, that no such amendment shall (a)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Receivables or distributions that shall
be required to be made for the benefit of the Noteholders or the
Certificateholders or (b) reduce the aforesaid percentage of the Outstanding
Amount of the Notes and the Certificate Balance required to consent to any
such amendment, without the consent of the Holders of all the affected Notes
and Certificates.
Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment
or consent to each
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<PAGE>
Certificateholder, the Indenture Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders, the
Noteholders or the Indenture Trustee pursuant to this Section 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 or in any other Basic Document) and of
evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable requirements as the Owner Trustee may
prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner 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 this Agreement. The Owner Trustee may, but shall
not be obligated to, enter into any such amendment which affects the Owner
Trustee's own rights, duties or immunities under this Agreement or otherwise.
SECTION 11.02 NO LEGAL TITLE TO OWNER TRUST ESTATE IN
CERTIFICATEHOLDERS. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their undivided ownership interest
therein only in accordance with Articles V and IX. No transfer, by operation
of law or otherwise, of any right, title or interest of the
Certificateholders to and in their ownership interest in the Owner Trust
Estate shall operate to terminate this Agreement or the trusts hereunder or
entitle any transferee to an accounting or to the transfer to it of legal
title to any part of the Owner Trust Estate.
SECTION 11.03 LIMITATIONS ON RIGHTS OF OTHERS. Except for Section 2.06,
the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Depositor, NMAC, the Certificateholders, the Administrator and,
to the extent expressly provided herein the Indenture Trustee and the
Noteholders, and nothing in this Agreement (other than Section 2.06), whether
express or implied, shall be construed to give to any other Person any legal
or equitable right, remedy or claim in the Owner Trust Estate or under or in
respect of this Agreement or any covenants, conditions or provisions
contained herein.
SECTION 11.04 NOTICES.
(a) Unless otherwise expressly specified or permitted by the terms
hereof, all notices shall be in writing and shall be deemed given upon
receipt by the intended recipient or three Business Days after mailing if
mailed by certified mail, postage prepaid (except that notice to the Owner
Trustee shall be deemed given only upon actual receipt by the Owner Trustee),
if to the Owner Trustee, addressed to the Corporate Trust Office; if to the
Depositor, addressed to Nissan Auto Receivables Corporation, 990 West 190th
Street, Torrance, California 90502, Attention of Secretary; if, to the Trust,
addressed to Nissan Auto Receivables [_____-_] Owner Trust, c/o [____________]
, Attention: [__________], with a copy to Nissan Motor Acceptance
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<PAGE>
Corporation, 990 West 190th Street, Torrance, California 90502, Attention:
Secretary; or, as to each party, at such other address as shall be designated
by such party in a written notice to each other party.
(b) Any notice required or permitted to be given 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 this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice.
SECTION 11.05 SEVERABILITY. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid or unenforceable in any jurisdiction, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 11.06 COUNTERPARTS. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed
to be an original, and all of which shall constitute but one and the same
instrument.
SECTION 11.07 SUCCESSORS AND ASSIGNS. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Depositor, the Owner Trustee and its successors and each Certificate Owner
and its successors and permitted assigns, all as herein provided. Any
request, notice, direction, consent, waiver or other instrument or action by
a Certificate Owner shall bind the successors and assigns of such Certificate
Owner.
SECTION 11.08 NO PETITION. The Owner Trustee (not in its individual
capacity but solely as Owner Trustee), by entering into this Agreement,
hereby covenants and agrees, and each Certificateholder, by accepting a
Certificate, and the Indenture Trustee and any Noteholder by accepting the
benefits of this Agreement, are thereby deemed to covenant and agree that
they will not at any time institute against the Depositor or the Trust, or
join in any institution against the Depositor or the Trust of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state bankruptcy or
similar law. This Section 11.09 shall survive the termination of this
Agreement or the termination of the Owner Trustee under this Agreement.
SECTION 11.09 NO RECOURSE. Each Certificateholder by accepting an
interest in a Certificate acknowledges that such Certificates represent
beneficial interests in the Trust only and do not represent interests in or
obligations of the Depositor, NMAC (in any capacity), the Administrator, the
Owner Trustee, the Indenture Trustee or any Affiliate thereof and no recourse
may be had against such parties or their assets, except as may be expressly
set forth or contemplated in the Certificates or the Basic Documents.
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<PAGE>
SECTION 11.10 HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
SECTION 11.12 NMAC PAYMENT OBLIGATION. The parties hereto acknowledge
and agree that, pursuant to the Sale and Servicing Agreement and the
following provisions, the Servicer shall be responsible for payment of the
Administrator's fees under the Administration Agreement and shall reimburse
the Administrator for all expenses and liabilities of the Administrator
incurred thereunder. In addition, the parties hereto acknowledge and agree
that, pursuant to the Sale and Servicing Agreement and the following
provisions, the Servicer shall be responsible for the payment of all fees and
expenses of the Trust, the Owner Trustee and the Indenture Trustee paid by
any of them in connection with any of their obligations under the Basic
Documents to obtain or maintain any required license under the Pennsylvania
Motor Vehicle Sales Finance Act and Maryland and all other similar
applicable state laws. The parties hereto covenant and agree that neither of
them shall look to the other for payment of any such fees or expenses.
-34-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be
duly executed by their respective officers hereunto duly authorized, as of
the day and year first above written.
NISSAN AUTO RECEIVABLES
CORPORATION,
Depositor
By:
----------------------------------------
Name:
Title:
[_________________________________],
not in its individual capacity but
solely as Owner Trustee
By:
----------------------------------------
Name:
Title:
S-1
<PAGE>
------------
EXHIBIT A
------------
(FORM OF [CLASS C] [CLASS D] CERTIFICATE)
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE 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.
THIS CERTIFICATE DOES NOT CONSTITUTE AN OBLIGATION OF OR AN INTEREST IN
THE DEPOSITOR, THE OWNER TRUSTEE, THE SERVICER, THE ADMINISTRATOR, NMAC,
NARC, NISSAN NORTH AMERICA, INC. OR ANY OF THEIR RESPECTIVE AFFILIATES, AND
WILL NOT BE INSURED OR GUARANTEED BY ANY SUCH ENTITY OR BY ANY GOVERNMENTAL
AGENCY.
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT (A) (1) TO A PERSON THAT THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
1933 ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF
REGULATION S UNDER THE 1933 ACT, (3) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE 1933 ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), OR (4) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1),
(2), (3) OR (7) OF REGULATION D OF THE 1933 ACT AND (B) IN ACCORDANCE WITH
ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION.]
A-1
<PAGE>
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE OWNER TRUSTEE
SHALL HAVE RECEIVED A REPRESENTATION FROM THE TRANSFEREE HEREOF IN FORM AND
SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE TO THE EFFECT THAT SUCH
TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR ARRANGEMENT SUBJECT TO SECTION
406 OF ERISA OR A PLAN SUBJECT TO SECTION 4975 OF THE CODE (A "PLAN"), NOR A
PERSON ACTING ON BEHALF OF A PLAN NOR USING THE ASSETS OF A PLAN TO EFFECT
SUCH TRANSFER. IF THIS CERTIFICATE IS A BOOK-ENTRY CERTIFICATE, THE
REPRESENTATIONS ABOVE SHALL BE DEEMED TO HAVE BEEN MADE TO THE OWNER TRUSTEE
BY THE TRANSFEREE'S (INCLUDING AN INITIAL ACQUIROR'S) ACCEPTANCE OF THIS
CERTIFICATE.
NUMBER $____________
R-_____ CUSIP NO. _________
NISSAN AUTO RECEIVABLES ____-_ OWNER TRUST
[_______]% ASSET BACKED [CLASS C] [CLASS D] CERTIFICATE
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, near-new and used automobiles and light-duty trucks and sold
to the Trust by Nissan Auto Receivables Corporation ("NARC").
(This Certificate does not represent an interest in or obligation of NARC,
Nissan Motor Acceptance Corporation ("NMAC"), Nissan North America, Inc. or
any of their respective affiliates, except to the extent described below.)
THIS CERTIFIES THAT ________________________________________ is the
registered owner of _________________________ DOLLARS nonassessable,
fully-paid, fractional undivided interest in Nissan Auto Receivables ____-_
Owner Trust (the "Trust") formed by NARC.
The Trust was created pursuant to a Trust Agreement, dated as of
[_______](as amended and supplemented from time to time, including the
Amended and Restated Trust Agreement, dated as of [_____________], the "Trust
Agreement"), between NARC, as depositor (the "Depositor"), and
[______________], as owner trustee (the "Owner Trustee"), a summary of
certain of the pertinent provisions of which is set forth below. Capitalized
terms used herein and not otherwise defined have the meanings assigned to
such terms in the Trust Agreement, the Indenture, dated as of [______________]
(the "Indenture"), between the Trust and [______________], as indenture
trustee (the "Indenture Trustee"), or in the Sale and Servicing Agreement,
dated as of [______________] (the "Sale and Servicing Agreement"), among the
Trust, the Depositor and NMAC, as servicer (the "Servicer"), as applicable.
-A-2
<PAGE>
This Certificate is one of the duly authorized Certificates designated
as "Asset Backed Certificates, [Class C] [Class D]" (the "[Class C] [Class D]
Certificates") issued pursuant to the Trust Agreement. Certain debt
instruments evidencing obligations of the Trust have been issued under the
Indenture, consisting of four classes of Notes designated as "Class A-1
[______]% Asset Backed Notes", "Class A-2 [______]% Asset Backed Notes,"
"Class A-3 [______]% Asset Backed Notes" and "Class B [______]% Asset Backed
Notes" (collectively, the "Notes"). This Certificate is issued under and is
subject to the terms, provisions and conditions of the Trust Agreement to
which Trust Agreement the holder of this Certificate by virtue of the
acceptance hereof assents and by which such holder is bound. The property of
the Trust includes a pool of retail installment sale contracts secured by
new, near-new and used automobiles and light-duty trucks (the "Receivables"),
all monies received after such date, security interests in the vehicles
financed thereby, certain bank accounts and the proceeds thereof, proceeds
from claims on certain insurance policies and certain other rights under the
Trust Agreement and the Sale and Servicing Agreement and all proceeds of the
foregoing.
Under the Trust 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,
(each, a "Distribution Date"), commencing on [______], to the person in whose
name this Certificate is registered at the close of business on the related
Record Date, such Certificateholder's pro rata portion of the amounts to be
distributed to Holders of the [Class C] [Class D] Certificates on such
Distribution Date in respect of amounts distributable to the
Certificateholders of the [Class C] [Class D] Certificates pursuant to
Section 5.06 of the Sale and Servicing Agreement.
The holder of this Certificate acknowledges and agrees that its rights
to receive distributions in respect of this Certificate are subordinated to
the rights of the Noteholders as described in the Sale and Servicing
Agreement and the Indenture [and the rights of the Holders of the Class C
Certificates as described in the Trust Agreement and the Sale and Servicing
Agreement].
It is the intent of the Depositor, NMAC and the Certificateholders that,
for purposes of federal income tax, state and local income tax, any state
single business tax and any other income taxes, the Trust will be treated as
a partnership, and the Certificateholders will be treated as partners in that
partnership, for any period during which the beneficial ownership interests
in the Trust are held by more than one person. Each Certificateholder, by
acceptance of a Certificate or any beneficial interest on a Certificate,
agrees to treat, and to take no action inconsistent with the treatment of,
the Certificates as partnership interests in the Trust for such tax purposes.
Each Certificateholder or Certificate Owner, by its acceptance of a
Certificate or any beneficial interest in a Certificate, covenants and agrees
that such Certificateholder or Certificate Owner, as the case may be, will
not at any time institute against the Depositor or the Trust, or join in any
institution against the Depositor or the Trust of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States, federal or state bankruptcy or similar
law in connection with any obligations relating to the Certificates, the
Notes, the Trust Agreement or any of the Basic Documents.
A-3
<PAGE>
Distributions on this Certificate will be made as provided in the Trust
Agreement by the Owner Trustee by wire transfer or check mailed to each
Certificateholder of record without the presentation or surrender of this
Certificate or the making of any notation hereon. Except as otherwise
provided in the Trust Agreement and notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Owner
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency maintained for the
purpose by the Owner Trustee in the Borough of Manhattan, The City of New
York.
Reference is hereby made to the further provisions of this 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 Owner Trustee, by manual signature, this
Certificate shall not entitle the holder hereof to any benefit under the
Trust Agreement or the Sale and Servicing Agreement or be valid for any
purpose.
THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-4
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in
its individual capacity, has caused this Certificate to be duly executed.
NISSAN AUTO RECEIVABLES ____-_ OWNER TRUST
By: [NAME OF OWNER TRUSTEE],
not in its individual capacity but solely
an Owner Trustee
Dated: By:
---------------------------------------
Authorized Signatory
A-5
<PAGE>
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
[---------------------],
as Owner Trustee
By:
---------------------------
Authorized Signatory
A-6
<PAGE>
(REVERSE OF CERTIFICATE)
The Certificates do not represent an obligation of, or an interest in,
NMAC, NARC, Nissan North America, Inc. or any of their Affiliates and no
recourse may be had against such parties or their assets, except as may be
expressly set forth or contemplated herein or in the Trust Agreement or the
Basic Documents. In addition, this Certificate is not guaranteed by any
governmental agency or instrumentality and is limited in right of payment to
certain collections with respect to the Receivables (and certain other
amounts), all as more specifically set forth in the Trust Agreement and in
the Sale and Servicing Agreement. A copy of each of the Sale and Servicing
Agreement and the Trust Agreement may be examined during normal business
hours at the principal office of the Depositor, and at such other places, if
any, designated by the Depositor, by any Certificateholder upon written
request.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of
the Depositor and the rights of the Certificateholders under the Trust
Agreement at any time by the Depositor and the Owner Trustee, with the
consent of the Holders of the Controlling Class of the Notes representing a
majority of the Outstanding Amount of such Class, or, with respect to certain
matters not affecting the interests of the Noteholders, with the consent of
the Holders of the Controlling Class of Certificates representing a majority
of the Certificate Balance of such Class (excluding, in each case, Securities
held by NARC, NMAC or any of their Affiliates). 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 or such replacement
certificate. The Trust Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of the
Certificates.
As provided in the Trust Agreement, and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained
by the Owner Trustee in the Borough of Manhattan in The City of New York,
accompanied by a written instrument of transfer in form satisfactory to the
Owner 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
or transferees. The initial Certificate Registrar appointed under the Trust
Agreement is [______], [City, State].
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 and in integral multiples of $1,000 in
excess thereof. As provided in the Trust Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class of authorized denominations evidencing the
same aggregate denomination, as requested by the holder surrendering the
same. No service charge will be made for any such registration of transfer or
exchange, but the Owner Trustee or the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge payable
in connection therewith.
A-7
<PAGE>
The Owner Trustee, the Certificate Registrar and any agent of the Owner
Trustee or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes and none of
the Owner Trustee, the Certificate Registrar or any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Trust 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
Trust Agreement and the Sale and Servicing Agreement [and the disposition of
all property held as part of the Owner Trust Estate]. NMAC, as servicer of the
Receivables under the Sale and Servicing Agreement, or any successor
servicer, may at its option purchase the corpus of the Trust at a price
specified in the Sale and Servicing Agreement, and any 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 after
the last day of the Collection Period as of which the Pool Balance is less
than or equal to 10% of the Original Pool Balance.
A-8
<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 type name and address, including postal zip code, of assignee)
- -------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- --------------------------------------------------------------------Attorney to
transfer said Certificate on the books of the Certificate Registrar, with full
power of substitution in the premises.
Dated:
*/
--------------------------
Signature Guaranteed:
*/
--------------------------
- ----------------
*/ NOTICE: The signature to this assignment must correspond with the name
as it appears upon the face of the within Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
A-9
<PAGE>
EXHIBIT B
FORM OF TRANSFEREE REPRESENTATION LETTER
Nissan Auto Receivables [___-__] Owner Trust
[NAME OF OWNER TRUSTEE],
not in its individual capacity but solely as Owner Trustee
[ADDRESS]
[NAME OF CERTIFICATE REGISTRAR]
[ADDRESS]
Attention: Corporate Trust Services -- Nissan Auto Receivables [____-__]
Owner Trust
Re: TRANSFER OF NISSAN AUTO RECEIVABLES [____-__] OWNER TRUST
CERTIFICATE, CLASS [C][D]
Ladies and Gentlemen:
This letter is delivered pursuant to Section 3.03 of the Amended
and Restated Trust Agreement, dated as of [____________] (the "Trust
Agreement"), between Nissan Auto Receivables Corporation, as Depositor, and
[_____________], as Owner Trustee (the "Owner Trustee"), in connection with
the transfer by _______________________________________ (the "Seller") to the
undersigned (the "Purchaser") of $__________________________ balance of the
Class [C][D]Certificates (the "Certificates"). Capitalized terms used and not
otherwise defined herein have the meanings assigned to such terms in the
Trust Agreement.
In connection with such transfer, the undersigned hereby represents
and warrants to you and the addressees hereof as follows:
/ / I am not a Non-U.S. Person as defined in the Trust Agreement; and
/ / I am not (i) an employee benefit plan subject to the fiduciary
responsibility provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code"), or a governmental plan (as defined in Section
3(32) of ERISA) subject to any federal, state or local law ("Similar Law")
which is, to a material extent, similar to the foregoing provisions of ERISA
or the Code (each a "Plan") or (ii) a person acting on behalf of or using the
assets of any such Plan (including an entity whose underlying assets include
Plan assets by reason of investment in the entity by such Plan and the
application of Department of Labor Regulation Sections 2510.3-101).
[Signature appears on next page]
B-1
<PAGE>
IN WITNESS WHEREOF, the Purchaser hereby executes this Transferee
Representation Letter on the ___ day of _______________, _____.
Very truly yours,
-----------------------------,
The Purchaser
By: __________________________
Name:
Title:
B-2
<PAGE>
EXHIBIT C
FORM OF TRANSFEROR REPRESENTATION LETTER
Nissan Auto Receivables [___-__]Owner Trust
[NAME OF OWNER TRUSTEE],
not in its individual capacity but solely as Owner Trustee
[ADDRESS]
[NAME OF CERTIFICATE REGISTRAR]
[ADDRESS]
Attention: Corporate Trust Services -- Nissan Auto Receivables [____-__]
Owner Trust
Re: TRANSFER OF NISSAN AUTO RECEIVABLES [____-__] OWNER
TRUST CERTIFICATE, CLASS [C][D]
Ladies and Gentlemen:
This letter is delivered pursuant to Section 3.03 of the Amended
and Restated Trust Agreement, dated as of [__________] (the "Trust
Agreement"), between Nissan Auto Receivables Corporation, as Depositor, and
(________________], as Owner Trustee (the "Owner Trustee"), in connection
with the transfer by _______________________________________ (the
"Purchaser") to the undersigned (the "Seller") of $__________________________
balance of Class [C][D] Certificates (the "Certificates"). Capitalized terms
used and not otherwise defined herein have the meanings ascribed thereto in
the Trust Agreement. The Transferor hereby certifies, represents and warrants
to you, as Certificate Registrar, that:
1. The Transferor is the lawful owner of the Transferred
Certificates with the full right to transfer such Certificates free from
any and all claims and encumbrances whatsoever.
2. Neither the Transferor nor anyone acting on its behalf has (a)
offered, transferred, pledged, sold or otherwise disposed of any
Transferred Certificate, any interest in any Transferred Certificate or
any other similar security to any person in any manner, (b) solicited any
offer to buy or accept a transfer, pledge or other disposition of any
Transferred Certificate, any interest in any Transferred Certificate or
any other similar security from any person in any manner, (c) otherwise
approached or negotiated with respect to any Transferred Certificate, any
interest in any Transferred Certificate or any other similar security with
any person in any manner, (d) made any general solicitation by means of
general advertising or in any other manner, or (e) taken any other action,
which (in the case of any of the acts described in clauses (a) through (e)
hereof)
C-1
<PAGE>
would constitute a distribution of any Transferred Certificate under the
Securities Act of 1933, as amended (the "Securities Act"), or would render
the disposition of any Transferred Certificate a violation of Section 5 of
the Securities Act or any state securities laws, or would require
registration or qualification of any Transferred Certificate pursuant to
the Securities Act or any state securities laws.
Very truly yours,
------------------------------------
(Transferor)
By: ________________________________
Name: ______________________________
Title: _____________________________
C-2
<PAGE>
EXHIBIT 4.2
INDENTURE
NISSAN AUTO RECEIVABLES - OWNER TRUST
----- -
as Issuer
and
[ ],
------------------
as Indenture Trustee and Securities Intermediary
Dated as of
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
I DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions..........................................................2
SECTION 1.02. Usage of Terms.......................................................8
SECTION 1.03. Incorporation by Reference of Trust Indenture Act....................8
II THE NOTES
SECTION 2.01. Form.................................................................8
SECTION 2.02. Execution, Authentication and Delivery...............................9
SECTION 2.03. Temporary Notes......................................................9
SECTION 2.04. Registration; Registration of Transfer and Exchange..................9
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes..........................10
SECTION 2.06. Persons Deemed Owners...............................................11
SECTION 2.07. Payments of Principal and Interest..................................11
SECTION 2.08. Cancellation........................................................12
SECTION 2.09. Release of Collateral...............................................12
SECTION 2.10. Book-Entry Notes....................................................13
SECTION 2.11. Notices to Clearing Agency..........................................13
SECTION 2.12. Definitive Notes....................................................13
SECTION 2.13. Tax Treatment.......................................................14
III COVENANTS
SECTION 3.01. Payment of Principal and Interest...................................14
SECTION 3.02. Maintenance of Office or Agency.....................................15
SECTION 3.03. Money for Payments To Be Held in Trust..............................15
SECTION 3.04. Existence...........................................................16
SECTION 3.05. Protection of Trust Estate..........................................17
SECTION 3.06. Opinions as to Trust Estate.........................................17
SECTION 3.07. Performance of Obligations; Servicing of
Receivables.........................................................18
SECTION 3.08. Negative Covenants..................................................20
SECTION 3.09. Annual Statement as to Compliance...................................20
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain
Terms...............................................................21
SECTION 3.11. Successor or Transferee.............................................22
</TABLE>
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(CONTINUED)
<TABLE>
<CAPTION>
<S> <C>
SECTION 3.12. No Other Business...................................................23
SECTION 3.13. No Borrowing........................................................23
SECTION 3.14. Servicer's Notice Obligations.......................................23
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities...................23
SECTION 3.16. Capital Expenditures................................................23
SECTION 3.17. Removal of Administrator............................................23
SECTION 3.18. Restricted Payments.................................................24
SECTION 3.19. Notice of Events of Default.........................................24
SECTION 3.20. Further Instruments and Actions.....................................24
IV SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture.............................24
SECTION 4.02. Application of Trust Money..........................................25
SECTION 4.03. Repayment of Moneys Held by Paying Agent............................25
V REMEDIES
SECTION 5.01. Events of Default...................................................25
SECTION 5.02. Acceleration of Maturity; Rescission and
Annulment...........................................................27
SECTION 5.03. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee....................................28
SECTION 5.04. Remedies; Priorities................................................30
SECTION 5.05. Optional Preservation of the Receivables............................31
SECTION 5.06. Limitation of Suits.................................................31
SECTION 5.07. Unconditional Rights of Noteholders To Receive
Principal and Interest..............................................32
SECTION 5.08. Restoration of Rights and Remedies..................................32
SECTION 5.09. Rights and Remedies Cumulative......................................32
SECTION 5.10. Delay or Omission Not a Waiver......................................33
SECTION 5.11. Control by Noteholders..............................................33
SECTION 5.12. Waiver of Past Defaults.............................................33
SECTION 5.13. Undertaking for Costs...............................................34
SECTION 5.14. Waiver of Stay or Extension Laws....................................34
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
<S> <C>
SECTION 5.15. Action on Notes.....................................................34
SECTION 5.16. Performance and Enforcement of Certain
Obligations.........................................................34
VI THE INDENTURE TRUSTEE
SECTION 6.01. Duties of Indenture Trustee.........................................35
SECTION 6.02. Rights of Indenture Trustee.........................................36
SECTION 6.03. Individual Rights of Indenture Trustee..............................37
SECTION 6.04. Indenture Trustee's Disclaimer......................................38
SECTION 6.05. Notice of Defaults..................................................38
SECTION 6.06. Reports by Indenture Trustee to Holders.............................38
SECTION 6.07. Compensation and Indemnity..........................................39
SECTION 6.08. Replacement of Indenture Trustee....................................39
SECTION 6.09. Successor Indenture Trustee by Merger...............................40
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee...................................................40
SECTION 6.11. Eligibility; Disqualification.......................................42
SECTION 6.12. Preferential Collection of Claims Against Issuer....................42
SECTION 6.13. Pennsylvania Motor Vehicle Sales Finance Act
Licenses............................................................42
VII NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. Note Registrar To Furnish Names and Addresses of
Noteholders.........................................................42
SECTION 7.02. Preservation of Information; Communications to
Noteholders.........................................................43
SECTION 7.03. Reports by Issuer...................................................43
SECTION 7.04. Reports by Indenture Trustee........................................44
VIII ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. Collection of Money.................................................44
SECTION 8.02. Accounts............................................................44
SECTION 8.03. General Provisions Regarding Accounts...............................45
SECTION 8.04. Release of Trust Estate.............................................46
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
<S> <C>
SECTION 8.05. Release of Receivables Upon Purchase by the Seller
or the Servicer.....................................................47
SECTION 8.06. Opinion of Counsel..................................................47
IX SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of
Noteholders.........................................................47
SECTION 9.02. Supplemental Indentures with Consent of
Noteholders.........................................................48
SECTION 9.03. Execution of Supplemental Indentures................................50
SECTION 9.04. Effect of Supplemental Indenture....................................50
SECTION 9.05. Conformity with Trust Indenture Act.................................50
SECTION 9.06. Reference in Notes to Supplemental Indentures.......................50
X TERMINATION OF THE TRUST
SECTION 10.01. Termination of the Trusts Created by Indenture......................50
SECTION 10.02. Optional Purchase of All Receivables................................51
XI MISCELLANEOUS.
SECTION 11.01. Compliance Certificates and Opinions, etc...........................52
SECTION 11.02. Form of Documents Delivered to Indenture Trustee....................53
SECTION 11.03. Acts of Noteholders.................................................54
SECTION 11.04. Notices, to Indenture Trustee, Issuer and Rating
Agencies............................................................55
SECTION 11.05. Notices to Noteholders; Waiver......................................55
SECTION 11.06. Alternate Payment and Notice Provisions.............................56
SECTION 11.07. Conflict with Trust Indenture Act...................................56
SECTION 11.08. Effect of Headings and Table of Contents............................56
SECTION 11.09. Successors and Assigns..............................................56
SECTION 11.10. Severability........................................................56
SECTION 11.11. Benefits of Indenture...............................................57
SECTION 11.12. Governing Law.......................................................57
SECTION 11.13. Counterparts........................................................57
SECTION 11.14. Recording of Indenture..............................................57
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
<S> <C>
SECTION 11.15. Trust Obligation....................................................57
SECTION 11.16. No Petition.........................................................57
SECTION 11.17. Inspection..........................................................58
</TABLE>
EXHIBIT A - Form of Class A-1 Note, Class A-2 Note, Class A-3 Note and Class B
Note
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<PAGE>
CROSS-REFERENCE TABLE
(not a part of this Indenture)
<TABLE>
<CAPTION>
TIA Indenture
Section Section
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<S> <C>
(Sections)310(a) (1)...................................................................................... 6.11
(a) (2)............................................................................................. 6.11
(a) (3)............................................................................................. N.A.
(a) (4)............................................................................................. N.A.
(a) (5)............................................................................................. 6.11
(b) ................................................................................................ 5.04
6.08
6.11
11.04
(c) ................................................................................................ N.A.
(Sections)311(a) ......................................................................................... 6.12
(b) ................................................................................................ 6.12
(c) ................................................................................................ N.A.
(Sections)312(a) ......................................................................................... 7.02
(b) ................................................................................................ 7.02
(c) ................................................................................................ 7.02
(Sections)313(a) ......................................................................................... 7.04
(b) (1)............................................................................................. N.A.
(b) (2)............................................................................................. 7.04
(c) ................................................................................................ 7.04
11.04
(d) ................................................................................................ 7.04
(Sections)314(a) ......................................................................................... 3.09
7.03
11.04
(b) ............................................................................................... 11.14
(c) (1) ........................................................................................... 3.10
6.02
8.05(b)
6.02
11.01
(c) (2)............................................................................................ 3.06
3.10
6.02
8.05(b)
8.06
(c) (3)............................................................................................ N.A.
(d) ............................................................................................... N.A.
(d) ............................................................................................... N.A.
(e) .............................................................................................. 11.05
(f) .............................................................................................. 4.01.
(Sections)315(a) ........................................................................................ 6.01
(b) ............................................................................................... 6.05
(c) ............................................................................................... 5.02
5.08
(d) ............................................................................................ 6.01(c)
(e) ............................................................................................... 5.13
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
TIA Indenture
Section Section
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<S> <C>
(Sections)316(a) (last sentence)....................................................................... 6.01(c)
(a) (1) (A)...................................................................................... 6.01(c)
(a) (1) (B)......................................................................................... 5.12
(a) (2)............................................................................................. N.A.
(b) ................................................................................................ 5.01
5.04(b)
(c) ................................................................................................ 2.06
(Sections)317(a) (1) ..................................................................................... 5.04
(a) (2) ......................................................................................... 5.03(c)
5.03(d)
(b) ................................................................................................ 4.03
(Sections)318(a) ......................................................................................... 11.07
</TABLE>
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N.A. means not applicable
-vii-
<PAGE>
INDENTURE, dated as of [__________________], between NISSAN AUTO
RECEIVABLES ____-_ OWNER TRUST, a Delaware business trust (the "Issuer"), and
[__________________], a [____________________], as trustee and not in its
individual capacity (the "Indenture Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of (i) the Holders of the Issuer's [__]% Asset
Backed Notes, Class A-1 (the "Class A-1 Notes"), [__]% Asset Backed Notes, Class
A-2 (the "Class A-2 Notes"), [__]% Asset Backed Notes, Class A-3 (the "Class A-3
Notes" and, together with the Class A-1 and the Class A-2 Notes, the "Class A
Notes"), and [__]% Asset Backed Notes, Class B (the "Class B Notes" and,
together with the Class A Notes, the "Notes") and (ii) for the purposes of the
Granting Clause below, the Certificateholders:
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing Date,
as Indenture Trustee for the benefit of the Holders of the Notes and
Certificates, the following:
(i) all right, title and interest of the Issuer in and to
the Receivables and all monies due thereon or paid thereunder or in
respect thereof (including proceeds of the repurchase of Receivables by
the Seller pursuant to Section 3.02 of the Sale and Servicing Agreement
or the purchase of Receivables by the Servicer pursuant to Section 4.06
or 9.01 of the Sale and Servicing Agreement) on or after the Cutoff
Date;
(ii) amounts on deposit in the Accounts;
(iii) the right of the Issuer in the security interests in
the Financed Vehicles granted by the Obligors pursuant to the
Receivables and any related property;
(iv) the right of the Issuer in any proceeds from claims on
any physical damage, credit life, credit disability or other insurance
policies covering the Financed Vehicles or the Obligors;
(v) the right of the Issuer (through the Seller and NMAC)
in any Dealer Recourse;
(vi) the right of the Issuer (through the Seller) under the
Sale and Servicing Agreement, the Purchase Agreement and the Yield
Supplement Agreement;
(vii) the right of the Issuer to realize upon any property
(including the right to receive future Net Liquidation Proceeds) that
shall have secured a Receivable;
(viii) the right of the Issuer in rebates of premiums and
other amounts relating to insurance policies and other items financed
under the Receivables in effect as of the Cutoff Date;
(ix) all other assets comprising the Owner Trust Estate; and
<PAGE>
(x) all proceeds of the foregoing (collectively, the
"Collateral").
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction, and to secure
compliance with the provisions of this Indenture, and subject to the subordinate
claims thereon of the Holders of the Certificates, all as provided in this
Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Holders of
the Notes and for the benefit of the Certificateholders, acknowledges such
Grant, accepts the trusts under this Indenture in accordance with the provisions
of this Indenture and agrees to perform its duties required in this Indenture to
the best of its ability to the end that the interests of the Holders of the
Notes may be adequately and effectively protected and the rights of the
Certificateholders secured.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS. Except as otherwise specified herein or if
the context may otherwise require, capitalized terms used but not otherwise
defined herein have the meanings ascribed thereto in the Trust Agreement, the
Sale and Servicing Agreement and the Securities Account Control Agreement, as
the case may be, for all purposes of this Indenture. Except as otherwise
provided in this Indenture, whenever used herein the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
"ACTION" has the meaning specified in Section 11.03(a).
"ADMINISTRATION AGREEMENT" means the Administration Agreement, dated as
of [___________], among the Administrator, the Issuer and the Indenture Trustee.
"ADMINISTRATOR" means NMAC or any successor Administrator under the
Administration Agreement.
"APPLICANT" has the meaning specified in Section 7.01.
"AUTHORIZED OFFICER" means with respect to the Issuer, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer identified as such on any list of Authorized Officers
delivered by the Owner Trustee to the Indenture Trustee.
"BOOK-ENTRY NOTES" means a beneficial interest in the Class A-1 Notes,
the Class A-2 Notes, the Class A-3 Notes and the Class B Notes, ownership and
transfers of which shall be made through book entries by a Clearing Agency as
described in Section 2.10.
"BUSINESS DAY" means any day except a Saturday, a Sunday or a day on
which banks in New York, New York, or Los Angeles, California are authorized or
obligated by law, regulation, executive order or decree to be closed.
2
<PAGE>
"CERTIFICATES" means the Class C Certificates and the Class D
Certificates.
"CLASS" means any one of the classes of the Notes.
"CLASS A-1 RATE" means [____]% per annum (computed on the basis of
[actual number of days in the related Interest Period and a 360-day year] [a
360-day year consisting of twelve 30-day months]).
"CLASS A-1 NOTES" means the [____]% Asset Backed Notes, Class A-1,
substantially in the form attached hereto as EXHIBIT A.
"CLASS A-2 RATE" means [____]% per annum (computed on the basis of a
360-day year consisting of twelve 30-day months).
"CLASS A-2 NOTES" means the ____% Asset Backed Notes, Class A-2,
substantially in the form attached hereto as EXHIBIT A.
"CLASS A-3 RATE" means [____]% per annum (computed on the basis of a
360-day year consisting of twelve 30-day months).
"CLASS A-3 NOTES" means the ____% Asset Backed Notes, Class A-3,
substantially in the form attached hereto as EXHIBIT A.
"CLASS B RATE" means [____]% per annum (computed on the basis of a
360-day year consisting of twelve 30-day months).
"CLASS B NOTES" means the ____% Asset Backed Notes, Class B,
substantially in the form attached hereto as EXHIBIT A.
"CLASS C CERTIFICATES" means the [____]% Certificates of the Issuer,
Class C, issued under the Trust Agreement.
"CLASS D CERTIFICATES" means the [____]% Certificates of the Issuer,
Class D, issued under the Trust Agreement.
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"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.
"CLOSING DATE" means __________, _____.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder.
"COLLATERAL" has the meaning specified in the Granting Clause of this
Indenture.
3
<PAGE>
"CORPORATE TRUST OFFICE" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this Agreement is located
at [_______________]; Attention: [_______________], or at such other address as
the Indenture Trustee may designate from time to time by notice to the
Noteholders, the Issuer and the Administrator, or the principal corporate trust
office of any successor Indenture Trustee at the address designated by such
successor Indenture Trustee by notice to the Noteholders, the Issuer and the
Administrator.
"DEFAULT" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"DEFINITIVE NOTES" has the meaning specified in Section 2.10.
"EVENT OF DEFAULT" has the meaning specified in Section 5.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXECUTIVE OFFICER" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, the Secretary or the Treasurer of
such corporation; and with respect to any partnership, any general partner
thereof.
"GRANT" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the granting party or otherwise, and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"HOLDER" or "NOTEHOLDER" means the Person in whose name a Note is
registered on the Note Register.
"INDENTURE TRUSTEE" means [_______________], a
[____________________________], as Indenture Trustee under this Indenture, or
any successor Indenture Trustee under this Indenture.
"INDEPENDENT" means, when used with respect to any specified Person,
that the Person is in fact independent of the Seller, the Servicer, the
Administrator, the Issuer or any other obligor on the Notes or any Affiliate of
any of the foregoing Persons because, among other things, such Person (a) is not
an employee, officer or director or otherwise controlled thereby or under common
control therewith, (b) does not have any direct financial interest or any
material indirect financial interest therein (whether as holder of securities
thereof or party to contract therewith or otherwise), and (c) is not and has not
within the preceding twelve months been a promoter,
4
<PAGE>
underwriter, trustee, partner, director or person performing similar
functions therefor or otherwise had legal, contractual or fiduciary or other
duties to act on behalf of or for the benefit thereof.
"INDEPENDENT CERTIFICATE" means a certificate or opinion to be
delivered to the Indenture Trustee, made by an Independent appraiser or other
expert appointed by an Issuer Order and approved by the Indenture Trustee in the
exercise of reasonable care, and such opinion or certificate shall state that
the signer has read the definition of "Independent" in this Indenture and that
the signer is Independent within the meaning thereof.
"INTEREST PERIOD" means, with respect to the Class A-1 Notes, the
period from (and including) any Distribution Date to (but excluding) the next
Distribution Date, except that the first interest period will be from (and
including) the Closing Date to (but excluding) [___________], and, with respect
to the Class A-2 Notes, the Class A-3 Notes and the Class B Notes, the period
from (and including) the 15th day of each calendar month to (but excluding) the
15th day of the succeeding calendar month, except that the first interest period
will be from (and including) the Closing Date to (but excluding) [__________].
"INTEREST RATE" means the Class A-1 Rate, the Class A-2 Rate, the Class
A-3 Rate or the Class B Rate, as indicated by the context.
"ISSUER" means Nissan Auto Receivables ____-_ Owner Trust unless and
until a successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the TIA, each other
obligor on the Notes.
"ISSUER ORDER" and "ISSUER REQUEST" mean a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"NOTE" means a Class A-1 Note, a Class A-2 Note, a Class A-3 Note or a
Class B Note.
"NOTE DEPOSITORY AGREEMENT" means the agreement entitled "Letter of
Representations" dated on or before the Closing Date among the Clearing Agency,
the Issuer and the Indenture Trustee with respect to certain matters relating to
the duties thereof with respect to the Book-Entry Notes.
"NOTE OWNER" means, with respect to a Book-Entry Note, any Person who
is the beneficial owner of such Book-Entry Note, as reflected on the books of
the Clearing Agency or on the books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing Agency).
"NOTE REGISTER" means the Register of Noteholders' information
maintained by the Note Registrar pursuant to Section 2.04.
"NOTE REGISTRAR" means the Indenture Trustee unless and until a
successor Note Registrar shall have been appointed pursuant to Section 2.04.
5
<PAGE>
"OFFICER'S CERTIFICATE" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered to
the Indenture Trustee.
"OPINION OF COUNSEL" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be an employee of
or counsel to the Issuer, the Seller or the Servicer and which counsel shall be
satisfactory to the Owner Trustee, the Indenture Trustee or the Rating Agencies,
as the case may be.
"OUTSTANDING" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(a) Notes theretofore canceled by the Note Registrar or delivered to
the Note Registrar for cancellation;
(b) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture Trustee or
any Paying Agent in trust for the Holders of such Notes; and
(c) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture unless proof satisfactory
to the Indenture Trustee is presented that any such Notes are held by a bona
fide purchaser;
PROVIDED, that in determining whether the Holders of the requisite percentage of
the Outstanding Amount of the Notes, or any Class of Notes, have given any
request, demand, authorization, direction, notice, consent, or waiver hereunder
or under any Basic Document, Notes owned by the Issuer, any other obligor upon
the Notes, the Seller or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent, or waiver, only
Notes that the Indenture Trustee knows to be so owned shall be so disregarded.
Notes so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Indenture
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Issuer, any other obligor upon the Notes, the Seller or any
Affiliate of any of the foregoing Persons.
"OUTSTANDING AMOUNT" means the aggregate principal amount of all Notes,
or, if indicated by the context, all Notes of any Class, outstanding at the date
of determination.
"OWNER TRUSTEE" means [_______________], not in its individual capacity
but solely as Owner Trustee under the Trust Agreement, or any successor Owner
Trustee under the Trust Agreement.
"PAYING AGENT" means the Indenture Trustee or any other Person that
meets the eligibility standards for the Indenture Trustee specified in Section
6.11 that has been authorized by the Issuer to make payments to and
distributions from the Collection Account, including payment of principal of or
interest on the Notes on behalf of the Issuer.
6
<PAGE>
"PREDECESSOR NOTE" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"PROCEEDING" means any suit in equity, action at law or other judicial
or administrative proceeding.
"REGISTERED HOLDER" means the Person in whose name a Note is registered
on the Note Register on the applicable Record Date.
"RESPONSIBLE OFFICER" means, with respect to the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any Vice President, Assistant Vice President, Assistant Treasurer, Assistant
Secretary or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement,
dated as of [_______________], among the Issuer, Nissan Auto Receivables
Corporation, as Seller, and Nissan Motor Acceptance Corporation, as Servicer,
and as to which the Indenture Trustee is a third party beneficiary of certain
provisions.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES ACCOUNT CONTROL AGREEMENT" shall have the meaning assigned
to such term in the Sale and Servicing Agreement.
"SELLER" shall mean Nissan Auto Receivables Corporation, in its
capacity as seller under the Sale and Servicing Agreement, and its successor in
interest.
"SERVICER" shall mean Nissan Motor Acceptance Corporation, in its
capacity as servicer under the Sale and Servicing Agreement, and any Successor
Servicer thereunder.
"SUCCESSOR SERVICER" has the meaning specified in Section 3.07.
"TRUST ESTATE" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security interest of
this Indenture for the benefit of the Noteholders (including, without
limitation, all property and interests Granted to the Indenture Trustee pursuant
to the Granting Clause), including all proceeds thereof.
"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act of 1939 as
in force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction at the relevant time.
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SECTION 1.02. USAGE OF TERMS. With respect to all terms in this
Indenture, 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, amendments and restatements and supplements thereto or
changes therein entered into in accordance with their respective terms and not
prohibited by this Indenture; references to Persons include their permitted
successors and assigns; references to laws include their amendments and
supplements, the rules and regulations thereunder and any successors thereto;
and the term "including" means "including without limitation."
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"COMMISSION" means the Securities and Exchange Commission.
"INDENTURE SECURITIES" means the Notes.
"INDENTURE SECURITY HOLDER" means a Noteholder.
"INDENTURE TO BE QUALIFIED" means this Indenture.
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Indenture
Trustee.
"OBLIGOR" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined in the TIA,
defined in the TIA by reference to another statute or defined by Commission rule
have the meanings so assigned to them.
ARTICLE II
THE NOTES
SECTION 2.01. FORM. The Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes and the Class B Notes, in each case together with the Indenture
Trustee's certificate of authentication, shall be in substantially the form set
forth in EXHIBIT A, with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture, and may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution thereof. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.
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The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in EXHIBIT A are part of the terms of this Indenture.
SECTION 2.02. EXECUTION, AUTHENTICATION AND DELIVERY. The Notes shall
be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile. Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes. The Indenture Trustee shall upon Issuer
Order authenticate and deliver the Class A-1 Notes for original issue in an
aggregate principal amount of $[_______________], the Class A-2 Notes for
original issue in an aggregate principal amount of $[_______________], the Class
A-3 Notes for original issue in an aggregate principal amount of
$[_______________], and the Class B Notes for original issue in an aggregate
principal amount of $[_______________]. The aggregate principal amount of the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class B Notes
outstanding at any time may not exceed such respective amounts except as
provided in Section 2.05. The Notes shall be issuable as registered Notes in the
minimum denomination $1,000. Each Note shall be dated the date of its
authentication.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form included in EXHIBIT A,
executed by the Indenture Trustee by the manual or facsimile signature of one of
its authorized signatories, and such certificate upon any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
SECTION 2.03. TEMPORARY NOTES. Pending the preparation of Definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Indenture
Trustee shall authenticate and deliver, temporary Notes that are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor of
the Definitive Notes in lieu of which they are issued and with such variations
not inconsistent with the terms of this Indenture as the officers executing such
Notes may determine, as evidenced by their execution of such Notes. If temporary
Notes are issued, the Issuer will cause Definitive Notes to be prepared without
unreasonable delay. After the preparation of Definitive Notes, the temporary
Notes shall be exchangeable for Definitive Notes upon surrender of the temporary
Notes at the office or agency of the Issuer to be maintained as provided in
Section 3.02, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Notes of any Class, the Issuer shall execute, and the
Indenture Trustee shall authenticate and deliver in exchange therefor, a like
principal amount of Definitive Notes of such Class of authorized denominations.
Until so exchanged, the temporary Notes shall in all respects be entitled to the
same benefits under this Indenture as Definitive Notes.
SECTION 2.04. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE.
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(a) The Note Registrar shall maintain a Note Register in which, subject
to such reasonable regulations as it may prescribe, the Note Registrar shall
provide for the registration of Notes and transfers and exchanges of Notes as
provided in this Indenture. The Indenture Trustee is hereby initially appointed
Note Registrar for the purpose of registering Notes and transfers and exchanges
of Notes as provided in this Indenture. In the event that, subsequent to the
Closing Date, the Indenture Trustee notifies the Issuer that it is unable to act
as Note Registrar, the Issuer shall appoint another bank or trust company,
having an office or agency located in the Borough of Manhattan, The City of New
York, agreeing to act in accordance with the provisions of this Indenture
applicable to it, and otherwise acceptable to the Indenture Trustee, to act as
successor Note Registrar under this Indenture.
If a Person other than the Indenture Trustee is appointed by the Issuer
as Note Registrar, the Issuer will give the Indenture Trustee prompt written
notice of the appointment of such Note Registrar and of the location, and any
change in the location, of the Note Register, and the Indenture Trustee shall
have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to rely
upon a certificate executed on behalf of the Note Registrar by an Executive
Officer thereof as to the names and addresses of the Holders of the Notes and
the principal amounts and number of such Notes.
(b) Upon the proper surrender for registration of transfer of any Note
at the office or agency of the Issuer to be maintained as provided in Section
3.02, the Issuer shall execute, and the Indenture Trustee shall authenticate in
the name of the designated transferee or transferees, one or more new Notes of
the same Class in authorized denominations of a like aggregate principal amount.
(c) At the option of the Holder, Notes may be exchanged for other Notes
of the same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute,
and the Indenture Trustee shall authenticate and the Noteholder shall obtain
from the Indenture Trustee, the Notes which the Noteholder making the exchange
is entitled to receive. Every Note presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Indenture Trustee and the Note Registrar duly executed
by the Holder thereof or his attorney duly authorized in writing.
(d) No service charge shall be made for any registration of transfer or
exchange of Notes, but the Indenture 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 Notes.
(e) All Notes surrendered for registration of transfer or exchange
shall be canceled and subsequently destroyed by the Indenture Trustee.
SECTION 2.05. MUTILATED, DESTROYED, LOST OR STOLEN NOTES. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by it to hold the Issuer and the Indenture Trustee
harmless, then, in the absence of notice to the Issuer, the Note Registrar or
the
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Indenture Trustee that such Note has been acquired by a bona fide purchaser,
the Issuer shall execute, and upon its request the Indenture Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a replacement Note of the same Class. In
connection with the issuance of any new Note under this Section 2.05, the Issuer
may require payment by the Holder of such Note of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto.
If, after the delivery of such replacement Note or payment of a
destroyed, lost or stolen Note, a bona fide purchaser of the original Note in
lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer and the Indenture Trustee shall be entitled to recover
such replacement Note (or such payment) from the Person to whom it was delivered
or any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer or the Indenture Trustee in connection therewith.
Every replacement Note issued pursuant to this Section 2.05 in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes of the same Class duly issued
hereunder.
The provisions of this Section 2.05 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.06. PERSONS DEEMED OWNERS. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and any
agent of the Issuer or the Indenture Trustee may treat the Person in whose name
any Note is registered (as of the day of determination) as the owner of such
Note for the purpose of receiving payments of principal of and interest, if any,
on such Note and for all other purposes whatsoever, and none of the Issuer, the
Indenture Trustee or any agent of the Issuer or the Indenture Trustee shall be
affected by notice to the contrary.
SECTION 2.07. PAYMENTS OF PRINCIPAL AND INTEREST.
(a) The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and
the Class B Notes shall accrue interest during each Interest Period at the Class
A-1 Rate, the Class A-2 Rate, the Class A-3 Rate and the Class B Rate,
respectively, and such interest shall be payable on each related Distribution
Date as specified in the applicable Note, pursuant to Section 5.06 of the Sale
and Servicing Agreement and to Section 3.01 of this Indenture. Any installment
of interest or principal payable on any Note that is punctually paid or duly
provided for by the Issuer on the applicable Distribution Date shall be paid to
the Person in whose name such Note (or one or more Predecessor Notes) is
registered on the Record Date. With respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payment will be made by wire transfer in immediately
available funds to the
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account designated by such nominee, except for the final installment of
principal payable with respect to such Note on a Distribution Date or on the
applicable Final Scheduled Distribution Date, which shall be payable as
provided below. Such payment will be made by check mailed first-class postage
prepaid to such Person's address as it appears on the Note Register on such
Record Date or by wire transfer to the account specified by the registered
holder of any Note with a face amount of at least $10,000,000. The funds
represented by any such checks returned undelivered shall be held in
accordance with Section 3.03.
(b) The principal of each Note shall be payable in installments on each
Distribution Date pursuant to Section 5.06 of the Sale and Servicing Agreement.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable, if not previously paid, from and after the date on
which the Indenture Trustee or the Holders of the Controlling Class of Notes
representing not less than a majority of the Outstanding Amount of such Class
(excluding for such purpose the outstanding principal amount of any Notes held
of record or beneficially by NARC, NMAC or any of their Affiliates) have
declared the Notes to be immediately due and payable in the manner provided in
Section 5.02 in connection with an Event of Default. All principal payments on
each Class of Notes shall be made pro rata to the Noteholders of such Class
entitled thereto. In accordance with Section 10.01, the Indenture Trustee shall
notify the Person in whose name a Note is registered at the close of business on
the Record Date preceding the Distribution Date on which the final installment
of principal of and interest on such Note will be paid. Such notice shall be
mailed or transmitted by facsimile not less than 15 nor more than 30 days prior
to such final Distribution Date, shall specify that such final installment will
be payable only upon presentation and surrender of such Note and shall specify
the place where such Note may be presented and surrendered for payment of such
installment.
SECTION 2.08. CANCELLATION. All Notes surrendered for payment,
registration of transfer or exchange shall, if surrendered to any Person other
than the Indenture Trustee, be delivered to the Indenture Trustee and shall be
promptly canceled by the Indenture Trustee. The Issuer may at any time deliver
to the Indenture Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly canceled by the Indenture Trustee.
No Notes shall be authenticated in lieu of or in exchange for any Notes canceled
as provided in this Section, except as expressly permitted by this Indenture.
All canceled Notes may be held or disposed of by the Indenture Trustee in
accordance with its standard retention or disposal policy as in effect at the
time unless the Issuer shall direct by an Issuer Order that they be destroyed or
returned to it; PROVIDED, that such Issuer Order is timely and the Notes have
not been previously disposed of by the Indenture Trustee.
SECTION 2.09. RELEASE OF COLLATERAL. Subject to Sections 10.01 and
11.01 and the terms of the Basic Documents, the Indenture Trustee shall release
property from the lien of this Indenture only upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of Counsel and Independent
Certificates in accordance with TIA Sections 314(c) and 314(d)(l) or an Opinion
of Counsel in lieu of such Independent Certificates to the effect that the TIA
does not require any such Independent Certificates.
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SECTION 2.10. BOOK-ENTRY NOTES. The Notes, upon original issuance, will
be issued in the form of typewritten Notes representing the Book-Entry Notes, to
be delivered to The Depository Trust Company, the initial Clearing Agency, or a
custodian therefor, by, or on behalf of, the Issuer. The Book-Entry Notes shall
be registered initially on the Note Register in the name of Cede & Co., the
nominee of the initial Clearing Agency, and no Note Owner thereof will receive a
Definitive Note representing such Note Owner's interest in such Note, except as
provided in Section 2.12. Unless and until definitive, fully registered Notes
(the "Definitive Notes") have been issued to such Note Owners pursuant to
Section 2.12:
(a) the provisions of this Section shall be in full force and effect;
(b) the Note Registrar and the Indenture Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Indenture (including the
payment of principal of and interest on the Notes and the giving of instructions
or directions hereunder) as the authorized representative of the Note Owners;
(c) to the extent that the provisions of this Section conflict with any
other provisions of this Indenture, the provisions of this Section shall
control;
(d) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and agreements
between such Note Owners and the Clearing Agency and/or the Clearing Agency
Participants pursuant to the Note Depository Agreement. Unless and until
Definitive Notes are issued pursuant to Section 2.12, the initial Clearing
Agency will make book-entry transfers among the Clearing Agency Participants and
receive and transmit payments of principal of and interest on the Notes to such
Clearing Agency Participants; and
(e) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Notes evidencing a specified
percentage of the Outstanding Amount of the Notes or of the Notes of any Class,
the Clearing Agency shall be deemed to represent such percentage only to the
extent that it has received instructions to such effect from Note Owners and/or
Clearing Agency Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Notes and has delivered such
instructions to the Indenture Trustee.
SECTION 2.11. NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to such Note Owners pursuant to
Section 2.12, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Notes to the
Clearing Agency and shall be deemed to have been given as of the date of
delivery to the Clearing Agency.
SECTION 2.12. DEFINITIVE NOTES. If (i) the Seller, the Owner Trustee or
the Administrator advises the Indenture Trustee in writing that the Clearing
Agency is no longer willing or able to properly discharge its responsibilities
with respect to the Book-Entry Notes and the Seller, the Owner Trustee and the
Administrator are unable to locate a qualified successor (and if the
Administrator has made such determination, the Administrator has given written
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notice thereof to the Indenture Trustee), (ii) the Seller, the Indenture Trustee
or the Administrator at its option advises each other such party 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 or a Servicer Default, Note
Owners representing beneficial interests aggregating a majority of the
Outstanding Amount of the Notes of all Classes advise the Indenture Trustee and
the Clearing Agency in writing that the continuation of a book-entry system
through the Clearing Agency or a successor thereto is no longer in the best
interests of the Note Owners acting together as a single Class, then the
Clearing Agency shall notify all Note Owners and the Indenture Trustee of the
occurrence of such event and of the availability of Definitive Notes to Note
Owners requesting the same. Upon surrender to the Indenture Trustee of the
typewritten Notes representing the Book-Entry Notes by the Clearing Agency,
accompanied by registration instructions, the Issuer shall execute and the
Indenture Trustee shall authenticate the Definitive Notes in accordance with the
instructions of the Clearing Agency. None of the Issuer, the Note Registrar or
the Indenture 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 Notes, the Indenture Trustee
shall recognize the Holders of the Definitive Notes as Noteholders. The
Indenture Trustee, Issuer and Administrator shall not be liable for any
inability to locate a qualified successor Clearing Agency. From and after the
date of issuance of Definitive Notes, all notices to be given to Noteholders
will be mailed thereto at their addresses of record in the Note Register as of
the relevant Record Date. Such notices will be deemed to have been given as of
the date of mailing.
SECTION 2.13. TAX TREATMENT. The Issuer has entered into this
Indenture, and the Notes will be issued, with the intention that, for federal,
state and local income, single business and franchise tax purposes, the Notes
will qualify as indebtedness of the Issuer secured by the Trust Estate. The
Issuer, by entering into this Indenture, and each Noteholder, by its acceptance
of a Note (and each Note Owner by its acceptance of an interest in the
applicable Book-Entry Note), agree to treat the Notes for federal, state and
local income, single business and franchise tax purposes as indebtedness of the
Issuer.
ARTICLE III
COVENANTS
SECTION 3.01. PAYMENT OF PRINCIPAL AND INTEREST. In accordance with the
terms of this Indenture, the Issuer will duly and punctually (i) pay the
principal of and interest, if any, on the Notes in accordance with the terms of
the Notes and (ii) release from the Collection Account all other amounts
distributable or payable from the Owner Trust Estate under the Trust Agreement,
the Sale and Servicing Agreement and the Administration Agreement. Without
limiting the foregoing and in order to fulfill such obligations, pursuant to
Sections 8.02 and 8.03 hereof, the Issuer will cause the Servicer to direct the
Indenture Trustee to apply all amounts on deposit in the Collection Account, the
Reserve Account and the Yield Supplement Account on a Distribution Date
deposited therein pursuant to the Sale and Servicing Agreement (i) (a) for the
benefit of the Class A-1 Notes, to the Class A-1 Noteholders, (b) for the
benefit of the Class A-2 Notes, to the Class A-2 Noteholders, (c) for the
benefit of the Class A-3 Notes, to the Class A-3 Noteholders, and (d) for the
benefit of the Class B Notes, to the Class B Noteholders, and (ii) for the
benefit of the Certificateholders, to or as directed by the Owner Trustee or the
Administrator,
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as set forth in Section 5.06, 5.07 and 5.08 of the Sale and Servicing
Agreement. Amounts properly withheld under the Code by any Person from a
payment to any Noteholder or Certificateholder of interest and/or principal
shall be considered as having been paid by the Issuer to such Noteholder or
Certificateholder for all purposes of this Indenture.
SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY. The Issuer will maintain
in the Borough of Manhattan, The City of New York, an office or agency where
Notes may be surrendered for registration of transfer or exchange, and where
notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer hereby initially appoints [_____________] to
serve as its agent for the foregoing purposes. The Issuer will give prompt
written notice to the Indenture Trustee of the location, and of any change in
the location, of any such office or agency. If at any time the Issuer shall fail
to maintain any such office or agency or shall fail to furnish the Indenture
Trustee with the address thereof, such surrenders, notices and demands may be
made or served at the Corporate Trust Office, and the Issuer hereby appoints the
Indenture Trustee as its agent to receive all such surrenders, notices and
demands.
SECTION 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST. As provided in
Sections 8.02 and 8.03, all payments of amounts due and payable with respect to
any Notes that are to be made from amounts withdrawn from the Collection
Account, the Reserve Account or the Yield Supplement Account pursuant to
Sections 8.02 and 8.03 shall be made on behalf of the Issuer by the Indenture
Trustee or by the Paying Agent, and no amounts so withdrawn from such accounts
for payments of Notes shall be paid over to the Issuer, the Owner Trustee or the
Administrator except as provided in this Section.
On or before each Distribution Date, the Issuer shall deposit in the
Collection Account or, in accordance with the Sale and Servicing Agreement,
cause to be deposited (including the provision of instructions to the Indenture
Trustee to make any required withdrawals from the Reserve Account or the Yield
Supplement Account and to deposit such amounts in the Collection Account), an
aggregate sum sufficient to pay the amounts then becoming due under the Notes
and the Certificates, such sum to be held in trust for the benefit of the
Persons entitled thereto, and (unless the Paying Agent is the Indenture Trustee)
shall promptly notify the Indenture Trustee of its action or failure so to act.
The Indenture Trustee, as Paying Agent, hereby agrees with the Issuer
that it will, and the Issuer will cause each Paying Agent other than the
Indenture Trustee, as a condition to its acceptance of its appointment as Paying
Agent, to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee, subject to the
provisions of this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of amounts due with
respect to the Notes or Certificates or for release to the Issuer for payment on
the Certificates in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided and pay or release such sums to such Persons as herein provided;
(b) give the Indenture Trustee notice of any default by the Issuer (or
any other obligor upon the Notes) of which it has actual knowledge in the making
of any payment required to be
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made with respect to the Notes or the release of any amounts to the Issuer to
be paid to the Certificateholders;
(c) at any time during the continuance of any such default, upon the
written request of the Indenture Trustee, forthwith pay to the Indenture Trustee
all sums so held in trust by such Paying Agent;
(d) immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes (or for
release to the Issuer) if at any time it ceases to meet the standards required
to be met by a Paying Agent at the time of its appointment; and
(e) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes or Certificates (or
assisting the Issuer to withhold from payment to the Certificateholders) of any
applicable withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed after such
amount has become due and payable and after the Indenture Trustee has taken the
steps described in this paragraph shall be discharged from such trust and be
paid to the Children's Hospital Los Angeles upon presentation thereto of an
Issuer Request; and the Holder of such Note shall thereafter, as an unsecured
general creditor, look only to the Issuer for payment thereof, and all liability
of the Indenture Trustee or such Paying Agent with respect to such trust money
shall thereupon cease. In the event that any Noteholder shall not surrender its
Notes for retirement within six months after the date specified in the written
notice of final payment described in Section 2.07, the Indenture Trustee will
give a second written notice to the registered Noteholders that have not
surrendered their Notes for final payment and retirement. If within one year
after such second notice any Notes have not been surrendered, the Indenture
Trustee shall, at the expense and direction of the Issuer, cause to be published
once, in a newspaper published in the English language, customarily published on
each Business Day and of general circulation in The City of New York, notice
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be paid to Children's
Hospital Los Angeles. The Indenture Trustee shall also adopt and employ, at the
expense and direction of the Issuer, any other reasonable means of notification
of such repayment specified by the Issuer or the Administrator.
SECTION 3.04. EXISTENCE. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless it becomes, or
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any successor Issuer hereunder is or becomes, organized under the laws of any
other State or of the United States of America, in which case the Issuer will
keep in full effect its existence, rights and franchises under the laws of
such other jurisdiction) and will obtain and preserve its qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Collateral and each other instrument or agreement included in the
Trust Estate or the Owner Trust Estate.
SECTION 3.05. PROTECTION OF TRUST ESTATE. The Issuer will from time to
time execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, and will take such other action necessary or advisable
to:
(a) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the purposes
hereof;
(b) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(c) enforce any of the Collateral; or
(d) preserve and defend title to the Trust Estate and the rights of the
Indenture Trustee and the Noteholders in such Trust Estate against the claims of
all persons and parties.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section 3.05.
SECTION 3.06. OPINIONS AS TO TRUST ESTATE.
(a) On the Closing Date, the Issuer shall furnish to the Indenture
Trustee an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the execution, recording and
filing of this Indenture, any indentures supplemental hereto, any requisite
financing statements and continuation statements and any other requisite
documents necessary to perfect and make effective the lien and security interest
of this Indenture or stating that, in the opinion of such counsel, no such
action is necessary to make such lien and security interest effective.
(b) As and when specified in Section 10.02(h) of the Sale and Servicing
Agreement, the Issuer shall furnish to the Indenture Trustee an Opinion of
Counsel either stating that, in the opinion of such counsel, such action has
been taken with respect to the execution, recording, filing or re-recording and
refiling of this Indenture, any indentures supplemental hereto, any financing
statements and continuation statements and any other requisite documents
necessary to maintain the lien and security interest created by this Indenture
or stating that in the opinion of such counsel no such action is necessary to
maintain such lien and security interest. Such Opinion of Counsel shall also
describe the execution, recording, filing or re-recording and refiling of this
Indenture, any indentures supplemental hereto, any financing statements and
continuation statements and any other documents that will, in the opinion of
such counsel, be
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required to maintain the lien and security interest of this Indenture until
the date in the following calendar year on which such Opinion of Counsel must
again be delivered.
SECTION 3.07. PERFORMANCE OF OBLIGATIONS; SERVICING OF RECEIVABLES.
(a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others that would release any Person
from any of such Person's material covenants or obligations under any instrument
or agreement included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in the Basic Documents.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officer's Certificate of
the Issuer shall be deemed to be action taken by the Issuer. Initially, the
Issuer has contracted with the Servicer and the Administrator to assist the
Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in the Basic Documents and in the
instruments and agreements included in the Trust Estate, including but not
limited to filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of the Trust
Agreement, this Indenture and the Sale and Servicing Agreement in accordance
with and within the time periods provided for herein and therein. Except as
otherwise expressly provided therein, the Issuer shall not waive, amend, modify,
supplement or terminate any Basic Document or any provision thereof without the
consent of the Indenture Trustee or the Holders of the Controlling Class of
Notes representing a majority of the Outstanding Amount of such Class (excluding
for such purposes the outstanding principal amount of any Notes of such Class
held of record or beneficially owned by NMAC, NARC or any of their Affiliates).
(d) If an Authorized Officer of the Issuer shall have knowledge of the
occurrence of a Servicer Default under the Sale and Servicing Agreement, the
Issuer shall promptly notify the Indenture Trustee and the Rating Agencies
thereof, and shall specify in such notice the action, if any, the Issuer is
taking with respect of such default. If a Servicer Default shall arise from the
failure of the Servicer to perform any of its duties or obligations under the
Sale and Servicing Agreement with respect to the Receivables, the Issuer shall
take all reasonable steps available to it to remedy such failure.
(e) As promptly as possible after the giving of notice of termination
to the Servicer of the Servicer's rights and powers pursuant to Section 8.01 of
the Sale and Servicing Agreement, the Issuer shall appoint a successor servicer
(the "Successor Servicer"), and such Successor Servicer shall accept its
appointment by a written assumption in a form acceptable to the Indenture
Trustee. In the event that a Successor Servicer has not been appointed and
accepted its appointment as set forth in Section 8.02 the Sale and Servicing
Agreement, the Indenture Trustee without further action shall automatically be
appointed the Successor Servicer and shall thereafter be entitled to the Total
Servicing Fee, unless the Indenture Trustee is then legally unable so to act and
promptly notifies the Owner Trustee of such fact. Upon delivery of any
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such notice to the Owner Trustee, the Owner Trustee shall identify and
appoint a new servicer as the Successor Servicer under the Sale and Servicing
Agreement. The Indenture Trustee may resign as the Servicer by appointing or
petitioning a court of competent jurisdiction to appoint as Successor
Servicer any established institution having a net worth of not less than
$50,000,000 and whose regular business includes the servicing of automobile
sales contract receivables and that will enter into a servicing agreement
with the Issuer having substantially the same provisions as the provisions of
the Sale and Servicing Agreement applicable to the Servicer, and then giving
written notice of such resignation to the Issuer. Upon such appointment, the
Indenture Trustee will be released from the duties and obligations of acting
as Successor Servicer, such release effective upon the effective date of the
servicing agreement entered into between the Successor Servicer and the
Issuer.
In connection with any such appointment, the Indenture Trustee may make
such arrangements for the compensation of such successor as it and such
Successor Servicer shall agree, subject to the limitations set forth below and
in the Sale and Servicing Agreement, and in accordance with Section 8.02 of the
Sale and Servicing Agreement, the Issuer shall enter into an agreement with such
Successor Servicer for the servicing of the Receivables (such agreement to be in
form and substance satisfactory to the Indenture Trustee). If the Indenture
Trustee shall succeed to the Servicer's duties as servicer of the Receivables as
provided herein, it shall do so in its individual capacity and not in its
capacity as Indenture Trustee and, accordingly, the provisions of Article VI
hereof shall be inapplicable to the Indenture Trustee in its duties as Successor
Servicer and the servicing of the Receivables. In case the Indenture Trustee
shall become the Successor Servicer, the Indenture Trustee shall be entitled to
appoint as a subservicer any one of its affiliates, PROVIDED that the Indenture
Trustee, in its capacity as Successor Servicer, shall remain fully liable for
the actions and omissions of such Affiliate.
(f) Upon any termination of the Servicer's rights and powers pursuant
to the Sale and Servicing Agreement, the Issuer shall promptly notify the
Indenture Trustee. As soon as a Successor Servicer is appointed, the Issuer
shall notify the Indenture Trustee of such appointment, specifying in such
notice the name and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer agrees (i) that it will not, without the
prior written consent of the Indenture Trustee and the Holders of the
Controlling Class of Notes representing a majority in Outstanding Amount of such
Class (excluding for such purposes the outstanding principal amount of any Notes
such Class held of record or beneficially owned by NMAC, NARC or any of their
Affiliates), amend, modify, waive, supplement, terminate or surrender, or agree
to any amendment, modification, waiver, supplement, termination or surrender of,
the terms of any Collateral (except to the extent otherwise provided in the Sale
and Servicing Agreement) or the Basic Documents, or waive timely performance or
observance by the Servicer or the Seller under the Sale and Servicing Agreement;
and (ii) that any such amendment shall not (A) increase or reduce in any manner
the amount of, or accelerate or delay the timing of, collections of payments on
the Receivables or distributions that are required to be made for the benefit of
the Noteholders or change the Interest Rate or the Specified Reserve Account
Balance (except as otherwise provided in the Basic Documents), in each case
without the consent of each of the "adversely affected" Noteholders, or (B)
reduce the aforesaid percentage of the Notes that is required to consent to
any such
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amendment, without the consent of the Holders of all the outstanding Notes.
If any such amendment, modification, supplement or waiver shall be so
consented to by the Indenture Trustee or such Holders, the Issuer agrees,
promptly following a request by the Indenture Trustee to agree to such
amendment and to execute and deliver, in its own name and at its own expense,
such agreements, instruments, consents and other documents as the Indenture
Trustee may deem necessary or appropriate in the circumstances to implement
such amendment and to cause the relevant Basic Documents, as amended, to be
enforceable against the Issuer. For the purposes of clause (ii) above, an
amendment will be deemed not to "adversely affect" a Noteholder of any Class
only if each Rating Agency confirms that such amendment will not result in a
reduction or withdrawal of its rating on such Class of Notes.
SECTION 3.08. NEGATIVE COVENANTS. So long as any Notes are Outstanding,
the Issuer shall not:
(a) except as expressly permitted by Basic Documents, sell, transfer,
exchange or otherwise dispose of any of the properties or assets of the Issuer,
including those included in the Trust Estate, unless directed to do so by the
Indenture Trustee;
(b) claim any credit on, or make any deduction from the principal or
interest payable in respect of, the Notes (other than amounts properly withheld
from such payments under the Code) or assert any claim against any present or
former Noteholder by reason of the payment of the taxes levied or assessed upon
any part of the Trust Estate;
(c) except as may be expressly permitted hereby, (A) permit the
validity or effectiveness of this Indenture to be impaired, or permit the lien
of this Indenture to be amended, hypothecated, subordinated, terminated or
discharged, or permit any Person to be released from any covenants or
obligations with respect to the Notes under this Indenture, (B) permit any lien,
charge, excise, claim, security interest, mortgage or other encumbrance (other
than the lien of this Indenture) to be created on or extend to or otherwise
arise upon or burden the Trust Estate or any part thereof or any interest
therein or the proceeds thereof (other than tax liens, mechanics' liens and
other liens that arise by operation of law, in each case on any of the Financed
Vehicles and arising solely as a result of an action or omission of the related
Obligor), (C) permit the lien of this Indenture not to constitute a valid first
priority (other than with respect to any such tax, mechanics' or other lien)
security interest in the Trust Estate, or (D) dissolve or liquidate in whole or
in part; or
(d) assume or incur any indebtedness other than the Notes or as
expressly contemplated by this Indenture (in connection with the obligation to
reimburse Advances from the Trust Estate, or to pay expenses from the Trust
Estate) or by the Basic Documents as in effect on the date hereof.
SECTION 3.09. ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer will cause
the Servicer to deliver to the Indenture Trustee concurrently with its delivery
thereof to the Issuer the annual statement of compliance described in Section
4.09 of the Sale and Servicing Agreement. In addition, on the same date annually
upon which such annual statement of compliance is to be delivered by the
Servicer, the Issuer shall deliver to the Indenture Trustee an Officer's
Certificate stating, as to the Authorized Officer signing such Officer's
Certificate, that:
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(a) a review of the activities of the Issuer during such year and of
its performance under this Indenture has been made under such Authorized
Officer's supervision; and
(b) to the best of such Authorized Officer's knowledge, based on such
review, the Issuer has complied with all conditions and covenants under this
Indenture throughout such year, or, if there has been a default in its
compliance with any such condition or covenant, specifying each such default
known to such Authorized Officer and the nature and status thereof.
SECTION 3.10. ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
(a) The Issuer shall not consolidate or merge with or into any other Person,
unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States of America or any State or
the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Indenture Trustee,
in form satisfactory to the Indenture Trustee, the duty to make due and
punctual payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all as
provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) no Rating Agency shall have notified the Indenture
Trustee and the Owner Trustee that such transaction might or would
result in the removal or reduction of the rating then assigned thereby
to any Class of Notes;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee) to
the effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain each lien and
security interest created by the Trust Agreement, the Sale and
Servicing Agreement or this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel each stating
that such consolidation or merger and any related supplemental
indenture complies with this Article III and that all conditions
precedent provided in this Indenture relating to such transaction have
been complied with (including any filing required by the Exchange Act).
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Trust Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer
such properties and assets of the Issuer shall (A) be a United States
citizen or a Person organized and existing
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under the laws of the United States of America or any state or the
District of Columbia, (B) expressly assume, by an indenture
supplemental hereto, executed and delivered to the Indenture
Trustee, in form satisfactory to the Indenture Trustee, the duty to
make due and punctual payment of the principal of and interest on
all Notes and the performance or observance of every agreement and
covenant of this Indenture on the part of the Issuer to be performed
or observed, all as provided herein, (C) expressly agrees by means
of such supplemental indenture that all right, title and interest so
conveyed or transferred shall be subject and subordinate to the
rights of Holders of the Notes, (D) unless otherwise PROVIDED in
such supplemental indenture, expressly agrees to indemnify, defend
and hold harmless the Issuer, the Owner Trustee and the Indenture
Trustee against and from any loss, liability or expense arising
under or related to this Indenture and the Notes, and (E) expressly
agrees by means of such supplemental indenture that such Person (or
if a group of Persons, then one specified Person) shall make all
filings that counsel satisfactory to such purchaser or transferee
and the Indenture Trustee determines must be made with (1) the
Commission (and any other appropriate Person) required by the
Exchange Act or the appropriate authorities in any state in which
the Notes have been sold pursuant to any qualification or exemption
under the securities or "blue sky" laws of such state, in connection
with the Notes or (2) the Internal Revenue Service or the relevant
state or local taxing authorities of any jurisdiction;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) no Rating Agency shall have notified the Indenture
Trustee and the Owner Trustee that such transaction might or would
result in the removal or reduction of the rating then assigned thereby
to any Class of Notes;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee) to
the effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain each lien and
security interest created by the Trust Agreement, the Sale and
Servicing Agreement or this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel each stating
that such conveyance or transfer and such supplemental indenture comply
with this Article III and that all conditions precedent herein provided
for relating to such transaction have been complied with (including any
filing required by the Exchange Act).
SECTION 3.11. SUCCESSOR OR TRANSFEREE.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.10(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of,
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the Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.10(b), Nissan Auto Receivables [____-_] Owner
Trust will be released from every covenant and agreement of this Indenture to be
observed or performed on the part of the Issuer with respect to the Notes and
the Certificates immediately upon the delivery of written notice to the
Indenture Trustee stating that Nissan Auto Receivables [____-_] Owner Trust is
to be so released.
SECTION 3.12. NO OTHER BUSINESS. Unless and until the Issuer shall have
been released from its duties and obligations hereunder, the Issuer shall not
engage in any business other than financing, purchasing, owning, selling and
managing the Receivables in the manner contemplated by the Basic Documents and
activities incidental thereto
SECTION 3.13. NO BORROWING. Unless and until the Issuer shall have been
released from its duties and obligations hereunder, the Issuer shall not issue,
incur, assume, guarantee or otherwise become liable, directly or indirectly, for
any indebtedness except for the Notes or other obligations permitted hereunder
(including the obligation to reimburse Advances or certain expenses of the
Servicer) or under another Basic Document (including indemnification expenses of
the Issuer and certain fees and expenses of the Administrator) .
SECTION 3.14. SERVICER'S NOTICE OBLIGATIONS. The Issuer shall cause the
Servicer to comply with all of its duties and obligations with respect to the
preparation of reports, the delivery of Officer's Certificates and Opinions of
Counsel and the giving of instructions and notices under the Sale and Servicing
Agreement (including, but not limited to, under Sections 4.08, 4.09, 4.11, 4.13,
5.09 and Article IX thereof).
SECTION 3.15. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES. Unless
and until the Issuer shall have been released from its duties and obligations
hereunder, except as contemplated by the Sale and Servicing Agreement or this
Indenture, the Issuer shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
SECTION 3.16. CAPITAL EXPENDITURES. Unless and until the Issuer shall
have been released from its duties and obligations hereunder, the Issuer shall
not make any expenditure (by long-term or operating lease or otherwise) for
capital assets (either realty or personalty).
SECTION 3.17. REMOVAL OF ADMINISTRATOR. So long as any Notes are
Outstanding, the Issuer shall not remove the Administrator without cause unless
so instructed by the Owner Trustee or the Indenture Trustee and unless each
Rating Agency shall have received 10 days' written notice thereof and shall not
have notified the Indenture Trustee, the Administrator or the
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Owner Trustee that such removal might or would result in the removal or
reduction of the rating then assigned thereby to any Class of Notes or the
Certificates.
SECTION 3.18. RESTRICTED PAYMENTS. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Servicer, the Owner Trustee or any Certificateholders or
otherwise with respect to any ownership or equity interest or security in or of
the Issuer, (ii) redeem, purchase, retire or otherwise acquire for value any
such ownership or equity interest or security or (iii) set aside or otherwise
segregate any amounts for any such purpose; PROVIDED, HOWEVER, that the Issuer
may make, or cause to be made, (x) distributions to the Servicer, the Owner
Trustee and the Certificateholders as contemplated by, and to the extent funds
are available for such purpose under, the Sale and Servicing Agreement or the
Trust Agreement, and (y) payments to the Owner Trustee or the Indenture Trustee
pursuant to the Administration Agreement. The Issuer will not, directly or
indirectly, make payments to or distributions from the Collection Account except
in accordance with the Basic Documents.
SECTION 3.19. NOTICE OF EVENTS OF DEFAULT. The Issuer shall give the
Indenture Trustee and each Rating Agency prompt written notice of each Event of
Default hereunder, each default on the part of the Servicer or the Seller of its
obligations under the Sale and Servicing Agreement (including any Servicer
Defaults) and each default on the part of NMAC of its obligations under the
Purchase Agreement. The Indenture Trustee shall notify each Noteholder of record
in writing of any Event of Default promptly upon a Responsible Officer obtaining
actual knowledge thereof. Such notices will be provided in accordance with
Section 2.11.
SECTION 3.20. FURTHER INSTRUMENTS AND ACTIONS. Upon request of the
Indenture Trustee, the Issuer will execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.05, 3.08,
3.10, 3.12 and 3.13, (v) the rights, obligations and immunities of the Indenture
Trustee hereunder (including the rights of the Indenture Trustee under Section
6.07 and the obligations of the Indenture Trustee under Sections 3.03 and 4.02),
and (vi) the rights of Noteholders and Certificateholders as beneficiaries
hereof with respect to the property so deposited with the Indenture Trustee
payable to all or any of them, and the Indenture Trustee, on demand of and at
the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to the Notes, when:
(a) either (1) all Notes theretofore authenticated and delivered (other
than Notes that have been destroyed, lost or stolen and that have been replaced
or paid as provided in
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Section 2.05 and Notes for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Issuer and thereafter repaid
to the Issuer or discharged from such trust, as provided in Section 3.03)
have been delivered to the Indenture Trustee for cancellation or (2) all
Notes not theretofore delivered to the Indenture Trustee for cancellation
have become due and payable or will become due and payable within one year
(either because the Final Scheduled Distribution Date for the Class B Notes
is within one year or because the Indenture Trustee has received notice of
the exercise of the option granted pursuant to Section 9.01 of the Sale and
Servicing Agreement) and the Issuer has irrevocably deposited or caused to be
irrevocably deposited with the Indenture Trustee cash or direct obligations
of or obligations guaranteed by the United States of America (which will
mature prior to the date such amounts are payable), in trust for such
purpose, in an amount sufficient to pay and discharge the entire indebtedness
on such Notes not theretofore delivered to the Indenture Trustee for
cancellation when due;
(b) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer; and
(c) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the Indenture
Trustee) an Independent Certificate from a firm of certified public accountants,
each meeting the applicable requirements of Section 11.01 and, subject to
Section 11.02, each stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture have been complied
with.
SECTION 4.02. APPLICATION OF TRUST MONEY. All moneys deposited with the
Indenture Trustee pursuant to Section 4.01 hereof shall be held in trust and (a)
applied by it in accordance with the provisions of the Notes and this Indenture
to the payment, either directly or through any Paying Agent, as the Indenture
Trustee may determine, to the Holders of the particular Notes for the payment of
which such moneys have been deposited with the Indenture Trustee, of all sums
due and to become due thereon for principal and interest or (b) released to the
Owner Trustee for distribution to the Certificateholders or application pursuant
to the Trust Agreement or the Sale and Servicing Agreement; but such moneys need
not be segregated from other funds except to the extent required herein or in
the Sale and Servicing Agreement or required by law.
SECTION 4.03. REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Indenture Trustee under
the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Indenture Trustee to be held and applied according
to Section 3.03 or 4.02 and thereupon such Paying Agent shall be released from
all further liability with respect to such moneys.
ARTICLE V
REMEDIES
SECTION 5.01. EVENTS OF DEFAULT. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and
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whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(a) default in the payment of any interest on any Class A Note when the
same becomes due and payable, and such default shall continue for a period of
five days (so long as any Class A Notes are Outstanding, each Holder of any
Class B Note or the Note Owner of any such Note by such Holder's acceptance of
such Note or beneficial interest therein, as the case may be, shall be deemed to
have consented to the delay in payment of interest on such Class of Notes and to
have waived its right to institute suit for enforcement of any such payment);
(b) after the Class A Notes have been paid in full, default in the
payment of any interest on any Class B Note when the same becomes due and
payable, and such default shall continue for a period of five days (so long as
the Class B Notes are Outstanding);
(c) default in the payment of the principal of or any installment of
the principal of any Note when the same becomes due and payable;
(d) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is elsewhere in
this Section specifically dealt with) which shall continue or not be cured for a
period of 90 days after there shall have been given, by registered or certified
mail, to the Issuer by the Indenture Trustee or to the Issuer and the Indenture
Trustee by the Holders of at least 25% of the Outstanding Amount of the Notes,
acting together as a single class, a written notice specifying such default or
incorrect representation or warranty and requiring it to be remedied and stating
that such notice is a notice of Default hereunder;
(e) any representation or warranty of the Issuer made in this Indenture
or in any certificate or other writing delivered pursuant hereto or in
connection herewith shall prove to have been incorrect in any material respect
as of the time when the same shall have been made, and such default shall
continue or not be cured, or the circumstance or condition in respect of which
such misrepresentation or warranty was incorrect shall not have been eliminated
or otherwise cured, for a period of 30 days after there shall have been given,
by registered or certified mail, to the Issuer by the Indenture Trustee or to
the Issuer and the Indenture Trustee by the Holders of at least 25% of the
Outstanding Amount of the Notes, acting together as a single Class, a written
notice specifying such default or incorrect representation or warranty and
requiring it to be remedied and stating that such notice is a notice of Default
hereunder;
(f) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial part
of the Trust Estate in an involuntary case under any applicable federal or
state bankruptcy, insolvency or other similar law now or hereafter in effect,
or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial part of
the Trust Estate, or ordering the winding-up or liquidation of the Issuer's
affairs, and such decree or order shall remain unstayed and in effect for a
period of 90 consecutive days; or
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(g) the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or the consent by the Issuer to the entry of an order
for relief in an involuntary case under any such law, or the consent by the
Issuer to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the Issuer
or for any substantial part of the Trust Estate, or the making by the Issuer
of any general assignment for the benefit of creditors, or the failure by the
Issuer generally to pay its debts as such debts become due, or the taking of
any action by the Issuer in furtherance of any of the foregoing.
The Issuer shall deliver to the Indenture Trustee, within five
Business Days after the occurrence thereof, written notice in the form of an
Officer's Certificate of any Default which with the giving of notice or the
lapse of time would become an Event of Default under clause (d), the status
of such Default and any action the Issuer is taking or proposes to take with
respect thereto.
SECTION 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an
Event of Default should occur and be continuing, then and in every such case the
Indenture Trustee or the Holders of the Controlling Class of Notes representing
not less than a majority of the Outstanding Amount of such Class (excluding for
such purposes the outstanding principal amount of any Notes of such Class held
of record or beneficially owned by NMAC, NARC or any of their Affiliates) may
declare all the Notes to be immediately due and payable, by a notice in writing
to the Issuer (and to the Indenture Trustee if given by Noteholders), and upon
any such declaration the unpaid principal amount of such Notes, together with
accrued and unpaid interest thereon through the date of acceleration, shall
become immediately due and payable.
At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article V provided, the
Holders of the Controlling Class of Notes representing a majority of the
Outstanding Amount of such Class (excluding for such purposes the outstanding
principal amount of any Notes of such Class held of record or beneficially owned
by NMAC, NARC or any of their Affiliates), by written notice to the Issuer and
the Indenture Trustee, may rescind and annul such declaration and its
consequences if:
(a) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
(i) all payments of principal of and interest on the
respective Classes of Notes and all other amounts that would then be
due hereunder or upon such Notes if the Event of Default giving rise to
such acceleration had not occurred; and
(ii) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee and its agents and counsel; and
(b) all Events of Default, other than the nonpayment of the principal
of the Notes that has become due solely by such acceleration, have been cured or
waived as provided in Section 5.12.
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No such rescission shall affect any subsequent default or impair any
right consequent thereto.
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
INDENTURE TRUSTEE.
(a) The Issuer covenants that if (i) default is made (A) in the payment
of any interest on any Class A Note, so long as any amounts remain unpaid with
respect to the Class A Notes, or (B) in the payment of any interest on any Class
B Note, after the Class A Notes have been paid in full, when the same becomes
due and payable, and such default continues for a period of five days, or (ii)
default is made in the payment of the principal of or any installment of the
principal of any Note when the same becomes due and payable, the Issuer will,
upon demand of the Indenture Trustee, pay to the Indenture Trustee, for the
benefit of the Holders of the Notes, the whole amount then due and payable on
such Class of Notes for principal and interest, with interest upon the overdue
principal and, to the extent payment at such rate of interest shall be legally
enforceable, upon overdue installments of interest at the rate borne by the
Notes and in addition thereto such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee and
its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee, in its own name and as trustee of an express
trust, may institute a Proceeding for the collection of the sums so due and
unpaid, and may prosecute such Proceeding to judgment or final decree, and may
enforce the same against the Issuer or other obligor upon such Notes and collect
in the manner provided by law out of the property of the Issuer or other obligor
upon such Notes, wherever situated, the moneys adjudged or decreed to be
payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may, as more particularly provided in Section 5.04, in its discretion,
proceed to protect and enforce its rights and the rights of the Noteholders and,
incidentally thereto, the Certificateholders, by such appropriate Proceedings as
the Indenture Trustee shall deem most effective to protect and enforce any such
rights, whether for the specific enforcement of any covenant or agreement in
this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy or legal or equitable right vested in the
Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, then, irrespective of whether the principal of any Notes
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Indenture Trustee shall have made any
demand
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pursuant to the provisions of this Section, the Indenture Trustee shall be
entitled and empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole
amount of principal and interest owing and unpaid in respect of the
Notes and the Certificates, and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the
Indenture Trustee (including any claim for reasonable compensation to
the Indenture Trustee and each predecessor Indenture Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of all
expenses and liabilities incurred, and all advances made, by the
Indenture Trustee and each predecessor Indenture Trustee, except as a
result of negligence or bad faith) and of the Noteholders or the
Certificateholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations,
to vote on behalf of the Holders of Notes in any election of a trustee,
a standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders or the
Certificateholders and of the Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee or the Holders of Notes allowed in any
judicial proceedings relative to the Issuer, its creditors and its
property; and any trustee, receiver, liquidator, custodian or other
similar official in any such Proceeding is hereby authorized by each of
such Noteholders to make payments to the Indenture Trustee and, in the
event that the Indenture Trustee shall consent to the making of
payments directly to such Noteholders, to pay to the Indenture Trustee
such amounts as shall be sufficient to cover reasonable compensation to
the Indenture Trustee, each predecessor Indenture Trustee and their
respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee
and each predecessor Indenture Trustee except as a result of negligence
or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture,
or under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or Proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee
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and their respective agents and attorneys, shall be for the ratable benefit
of the Holders of the Notes and, incidentally thereto, for the benefit of the
Certificateholders.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make any
Noteholder a party to any such Proceedings.
SECTION 5.04. REMEDIES; PRIORITIES.
(a) If an Event of Default shall have occurred and be continuing and
result in the acceleration of the Notes, the Indenture Trustee shall make
payments on the Notes and the Certificates as set forth in Section 5.06(d) of
the Sale and Servicing Agreement, rather than pursuant to Section 5.06(c)
thereof.
(b) If the Indenture Trustee, in compliance with Section 5.04(a) is
deemed to have a conflict of interest under the TIA and is required to resign as
Indenture Trustee hereunder, the Indenture Trustee, pursuant to Section 6.10,
may appoint one or more indenture trustees to act separately hereunder for each
Class of Notes. In the event separate indenture trustees are appointed for one
or more Classes of Notes:
(i) so long as any amounts remain unpaid with respect to
the Class A Notes, only the Indenture Trustee for the Class A
Noteholders shall be entitled to exercise any remedies under this
Indenture; and
(ii) after the Class A Notes have been paid in full, only
the Indenture Trustee for the Class B Noteholders shall be entitled to
exercise any remedies under this Indenture.
(c) In accordance with Section 5.04(b), if an Event of Default shall
have occurred and be continuing, the Indenture Trustee may do one or more of the
following (subject to Section 5.05):
(i) institute Proceedings in its own name and as trustee
of an express trust for the collection of all amounts then payable on
the Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer and any other obligor upon such Notes moneys adjudged
due;
(ii) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture with respect to the
Trust Estate;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the rights
and remedies of the Indenture Trustee and the Noteholders; and
(iv) sell the Trust Estate or any portion thereof or rights
or interest therein, at one or more public or private sales called and
conducted in any manner permitted by law; PROVIDED, HOWEVER, that the
Indenture Trustee may not sell or otherwise liquidate the
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Trust Estate following an Event of Default, other than an Event of
Default described in Section 5.01(a) or (b), unless (A) the Holders
of 100% of the Outstanding Amount of the Controlling Class of Notes
consent thereto, or (B) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to discharge in full
all amounts then due and unpaid upon such Notes for principal and
interest, or (C) the Indenture Trustee determines that the Trust
Estate may not continue to provide sufficient funds on an ongoing
basis to make all payments of principal of and interest on the Notes
as they would have become due if the Notes had not been declared due
and payable, and the Indenture Trustee obtains the consent of
Holders of a 66 2/3% of the Outstanding Amount of the Controlling
Class of Notes. In determining such sufficiency or insufficiency
with respect to clause (B) and (C), the Indenture Trustee may, but
need not, obtain and rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as to
the feasibility of such proposed action and as to the sufficiency of
the Trust Estate for such purpose.
(d) The Indenture Trustee may fix a record date and payment date for
any payment to Noteholders pursuant to this Section. At least 15 days before
such record date, the Issuer shall mail to each Noteholder and the Indenture
Trustee a notice that states the related record date, payment date and amount to
be paid.
SECTION 5.05. OPTIONAL PRESERVATION OF THE RECEIVABLES. If the Notes
have been declared to be due and payable under Section 5.02 following an Event
of Default and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee may, unless otherwise directed by the Holders of
the Controlling Class of Notes representing at least a majority of the
Outstanding Amount such Notes (excluding from such action and calculation any
Notes of such Class held by NMAC, NARC or any of their Affiliates), but need
not, elect to maintain possession of the Trust Estate and direct the Issuer,
Servicer and Administrator not to take steps to liquidate the Receivables. It is
the desire of the parties hereto and the Noteholders that there be at all times
sufficient funds for the payment of principal of and interest on the Notes, and
the Indenture Trustee shall take such desire into account when determining
whether or not to maintain possession of the Trust Estate. In determining
whether to maintain possession of the Trust Estate, the Indenture Trustee may,
but need not, obtain and rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Trust Estate for such purpose.
SECTION 5.06. LIMITATION OF SUITS. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture or for the appointment of a receiver or trustee, or for any other
remedy hereunder unless such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default, and:
(a) the Event of Default arises from the Servicer's failure to remit
payments when due; or
(b) the Holders of the Controlling Class of Notes representing not less
than 25% of the Outstanding Amount of such Class (excluding for such purpose the
outstanding principal amount of any Notes held of record or beneficially by
NARC, NMAC or any of their Affiliates)
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have made written request to the Indenture Trustee to institute such
Proceeding in respect of such Event of Default in its own name as Indenture
Trustee hereunder and have offered to the Indenture Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
complying with such request and the Indenture Trustee for 60 days after its
receipt of such notice, request and offer of indemnity has failed to
institute such Proceedings.
It is understood and intended that no one or more Holders of Notes
shall have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes or to obtain or to seek to obtain priority or preference
over any other Holders or to enforce any right under this Indenture, except in
the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Outstanding Amount of the Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.07. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL
AND INTEREST. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Note on or
after the respective due dates thereof expressed in such Note and in this
Indenture (in each case with reference to the calculations to be made pursuant
to the Sale and Servicing Agreement) and to institute suit for the enforcement
of any such payment, and such right shall not be impaired without the consent of
such Holder; PROVIDED that each Holder or Note Owner of a Class B Note will be
deemed to have consented to any delay in the payment thereto of any interest due
thereon that is in accordance with the payment of amounts pursuant to Section
5.06 of the Sale and Servicing Agreement for so long as any Class A Note is
Outstanding.
SECTION 5.08. RESTORATION OF RIGHTS AND REMEDIES. If the Indenture
Trustee or any Noteholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Indenture
Trustee and the Noteholders shall continue as though no such Proceeding had been
instituted.
SECTION 5.09. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
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SECTION 5.10. DELAY OR OMISSION NOT A WAIVER. No delay or omission of
the Indenture Trustee or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Indenture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
SECTION 5.11. CONTROL BY NOTEHOLDERS. The Holders of the Controlling
Class of Notes representing a majority of the Outstanding Amount of such Class
(excluding for such purpose the outstanding principal amount of any Notes held
of record or beneficially by NARC, NMAC or any of their Affiliates) shall have
the right to direct the time, method and place of conducting any Proceeding for
any remedy available to the Indenture Trustee with respect to the Notes or
exercising any trust or power conferred on the Indenture Trustee; PROVIDED that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture; and
(b) any direction to the Indenture Trustee to sell or liquidate the
Trust Estate shall be by Holders of Notes representing not less than the
percentage of the Outstanding Amount of the relevant Class set forth in Section
5.04(c)(iv); and
(c) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of Noteholders set forth in this Section,
subject to Section 6.01, the Indenture Trustee need not take any action that it
determines might involve it in liability or might materially adversely affect
the rights of any Noteholders not consenting to such action.
SECTION 5.12. WAIVER OF PAST DEFAULTS. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.02 or the
liquidation or sale of the Trust Estate pursuant to Section 5.04, the Holders of
the Controlling Class of Notes representing a majority of the Outstanding Amount
of such Class (excluding for such purposes the outstanding principal amount of
any Notes of such Class held of record or beneficially owned by NMAC, NARC or
any of their Affiliates) may waive any past Default, Event of Default or
Servicer Default and its consequences except (a) a Servicer Default in making
any deposits into the Collection Account or (b) a Servicer Default or an Event
of Default in respect of a covenant or provision hereof that cannot be modified
or amended without the consent of the Holder of each Note. In the case of any
such waiver, the Issuer, the Indenture Trustee and the Holders of the Notes
shall be restored to their former positions and rights hereunder, respectively.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
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SECTION 5.13. UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Note or Note Owner by such Holder's acceptance of
such Note or beneficial interest therein, as the case may be, shall be deemed to
have agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by any Noteholder of the Controlling
Class of Notes, or a group of Noteholders of such Class, in each case holding in
the aggregate more than 10% of the Outstanding Amount of such Class, (c) any
suit instituted by any Noteholder for the enforcement of the payment of
principal of or interest on any Note on or after the respective due dates
expressed in such Note and in this Indenture.
SECTION 5.14. WAIVER OF STAY OR EXTENSION LAWS. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
SECTION 5.15. ACTION ON NOTES. The Indenture Trustee's right to seek
and recover judgment on the Notes or under this Indenture shall not be affected
by the seeking, obtaining or application of any other relief under or with
respect to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Indenture Trustee or the Noteholders shall be impaired by the
recovery of any judgment by the Indenture Trustee against the Issuer or by the
levy of any execution under such judgment upon any portion of the Trust Estate
or upon any of the assets of the Issuer. Any money or property collected by the
Indenture Trustee shall be applied in accordance with Section 5.04(a).
SECTION 5.16. PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS.
(a) Promptly following a request from the Indenture Trustee to do so
and at the Administrator's expense, the Issuer shall take all such lawful action
as the Indenture Trustee may request to compel or secure the performance and
observance by the Seller and the Servicer, as applicable, of each of their
obligations to the Issuer or to each other under or in connection with the Sale
and Servicing Agreement or by the Seller of its remedies under or in connection
with the Purchase Agreement, and to exercise any and all rights, remedies,
powers and privileges lawfully available to the Issuer under or in connection
with the Sale and Servicing Agreement or the Purchase Agreement to the extent
and in the manner directed by the Indenture Trustee, including the transmission
of notices of default on the part of the Seller or the Servicer thereunder and
the institution of legal or administrative actions or proceedings to compel or
secure performance by
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the Seller or the Servicer of each of their respective obligations under the
Sale and Servicing Agreement or the Purchase Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and at the direction (which direction shall be in writing
or by telephone, confirmed in writing promptly thereafter) of the Holders of the
Controlling Class of Notes representing a majority of the Outstanding Amount of
such Class (excluding for such purposes the outstanding principal amount of any
Notes held of record or beneficially owned by NMAC, NARC or any of their
Affiliates) shall, exercise all rights, remedies, powers, privileges and claims
of the Issuer against the Seller or the Servicer under or in connection with the
Sale and Servicing Agreement or the Purchase Agreement, or against the
Administrator under the Administration Agreement, including the right or power
to take any action to compel or secure performance or observance by the Seller,
the Servicer or the Administrator, of each of their obligations to the Issuer
thereunder and to give any consent, request, notice, direction, approval,
extension, or waiver thereunder and any right of the Issuer to take such action
shall be suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. DUTIES OF INDENTURE TRUSTEE. The Indenture Trustee, both
prior to and after the occurrence of a Servicer Default under the Sale and
Servicing Agreement, undertakes to perform such duties and only such duties as
are specifically set forth in this Indenture.
(a) The Indenture Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Indenture Trustee that shall be specifically
required to be furnished pursuant to any provision of this Indenture, shall
examine them to determine whether they conform on their face to the requirements
of this Indenture.
(b) No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own negligent action, its own negligent
failure to act, its own bad faith or its own willful misfeasance; PROVIDED,
HOWEVER, that:
(i) the duties and obligations of the Indenture Trustee
shall be determined solely by the express provisions of this Indenture,
the Indenture Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this
Indenture, no implied covenants or obligations shall be read into this
Indenture against the Indenture Trustee, the permissive right of the
Indenture Trustee to do things enumerated in this Indenture shall not
be construed as a duty and, in the absence of bad faith on the part of
the Indenture Trustee, the Indenture Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the
Indenture Trustee and conforming on their face to the requirements of
this Indenture;
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(ii) the Indenture Trustee shall not be personally liable
for an error of judgment made in good faith by a Responsible Officer,
unless it shall be proved that the Indenture Trustee was negligent in
performing its duties in accordance with the terms of this Indenture;
and
(iii) the Indenture Trustee shall not be personally liable
with respect to any action taken, suffered or omitted to be taken in
good faith in accordance with the direction of (i) the Holders of at
least a majority of the Outstanding Amount of the Controlling Class of
Notes (excluding for such purposes the outstanding principal amount of
any Notes held of record or beneficially owned by NARC, NMAC or any of
their Affiliates) relating to the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred upon the Indenture Trustee
under this Indenture.
(c) The Indenture 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 under this Indenture, or in the exercise of any of its rights or
powers, if there shall be reasonable grounds for believing that the repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(d) All information obtained by the Indenture Trustee regarding the
Obligors and the Receivables contained in the Trust, whether upon the exercise
of its rights under this Indenture or otherwise, shall be maintained by the
Indenture Trustee in confidence and shall not be disclosed to any other Person,
unless such disclosure is required by any applicable law or regulation or
pursuant to subpoena.
(e) If (i) pursuant to Section 3.02 of the Sale and Servicing
Agreement, a Responsible Officer of the Indenture Trustee discovers that a
representation or warranty with respect to a Receivable was incorrect as of the
time specified with respect to such representation and warranty and such
incorrectness materially and adversely affects such Receivable, or (ii) pursuant
to Section 4.06 of the Sale and Servicing Agreement, a Responsible Officer of
the Indenture Trustee discovers that a covenant of the Servicer has been
breached with respect to a Receivable that would materially and adversely affect
such Receivable, the Indenture Trustee shall give prompt written notice to the
Servicer and the Owner Trustee of such incorrectness.
SECTION 6.02. RIGHTS OF INDENTURE TRUSTEE.
(a) Except as otherwise provided in Section 6.01:
(i) the Indenture Trustee may rely and shall be protected
in acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of an authorized signatory, 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 Indenture Trustee may consult with counsel and any
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action
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taken or suffered or omitted by it under this Indenture in good faith
and in accordance with such Opinion of Counsel;
(iii) the Indenture Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture or
the Sale and Servicing Agreement, or to institute, conduct or defend
any litigation under this Indenture, or in relation to this Indenture
or the Sale and Servicing Agreement, at the request, order or direction
of any of the Noteholders pursuant to the provisions of this Indenture
or the Sale and Servicing Agreement, unless such Noteholders shall have
offered to the Indenture Trustee reasonable security or indemnity
against the costs, expenses and liabilities that may be incurred
therein or thereby;
(iv) the Indenture Trustee shall not be personally 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 this Indenture;
(v) the Indenture Trustee shall not be bound to
recalculate, reverify, or 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 Notes evidencing not less than 25% of the aggregate
Outstanding Amount of the (1) Class A Notes, so long as any Class A
Notes remain Outstanding (acting together as a single class) or (2)
Class B Notes, after the Class A Notes have been paid in full, or (3)
Class C Notes, after the Class B Notes have been paid in full;
PROVIDED, HOWEVER, that if the payment within a reasonable time to the
Indenture Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion
of the Indenture Trustee, not reasonably assured to the Indenture
Trustee by the security afforded to it by the terms of this Indenture,
the Indenture 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
Administrator or, if paid by the Indenture Trustee, shall be reimbursed
by the Administrator upon demand; and nothing in this clause shall
derogate from the obligation of the Servicer to observe any applicable
law prohibiting disclosure of information regarding the Obligors; and
(vi) the Indenture Trustee may execute any of the trusts or
powers under this Indenture or perform any duties under this Indenture
either directly or by or through agents or attorneys or a custodian.
(b) No Noteholder will have any right to institute any proceeding with
respect to this Indenture except upon satisfying the conditions set forth in
Section 5.06.
SECTION 6.03. INDIVIDUAL RIGHTS OF INDENTURE TRUSTEE. The Indenture
Trustee in its individual or any other capacity may become the Holder,
beneficial owner or pledgee of Notes and may otherwise deal with the Issuer or
its Affiliates with the same rights it would have if it were not Indenture
Trustee. Any Paying Agent, Note Registrar, co-registrar or co-paying agent may
do the same with like rights. However, in so doing the Indenture Trustee must
comply with Sections 6.11 and 6.12.
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SECTION 6.04. INDENTURE TRUSTEE'S DISCLAIMER. The Indenture Trustee
makes no representations as to the validity or sufficiency of this Indenture or
of the Notes (other than the execution by the Indenture Trustee on behalf of the
Trust of, and the certificate of authentication on, the Notes), or of the
Certificates. The Indenture Trustee shall have no obligation to perform any of
the duties of the Servicer or the Administrator unless explicitly set forth in
this Indenture. The Indenture Trustee shall at no time have any responsibility
or liability for or with respect to the legality, validity and enforceability of
the Notes or any Receivable, any ownership interest in any Financed Vehicle, or
the maintenance of any such ownership interest, or for or with respect to the
efficacy of the Trust or its ability to generate the payments to be distributed
to Noteholders under this Indenture, including without limitation the validity
of the assignment of the Receivables to the Trust or of any intervening
assignment; the existence, condition, location and ownership of any Receivable
or Financed Vehicle; the existence and enforceability of any physical damage or
credit life or credit disability insurance; the existence and contents of any
retail installment sales contract or any computer or other record thereof; the
completeness of any retail installment sales contract; the performance or
enforcement of any retail installment sales contract; the compliance by the
Issuer with any covenant or the breach by the Issuer, Seller or Servicer of any
warranty or representation made under this Indenture or in any Basic Document or
other related document and the accuracy of any such warranty or representation
prior to the Indenture Trustee's receipt of notice or other discovery of any
noncompliance therewith or any breach thereof; the acts or omissions of the
Issuer, Seller or the Servicer; or any action by the Indenture Trustee taken at
the instruction of the Servicer, provided, however, that the foregoing shall not
relieve the Indenture Trustee of its obligation to perform its duties under this
Indenture. Except with respect to a claim based on the failure of the Indenture
Trustee to perform its duties under this Indenture or based on the Indenture
Trustee's willful misconduct, bad faith or negligence, no recourse shall be had
for any claim based on any provision of this Indenture, the Notes or Certificate
or assignment thereof against the institution serving as the Indenture Trustee
in its individual capacity. The Indenture Trustee shall not have any personal
obligation, liability or duty whatsoever to any Noteholder 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
this Indenture. The Indenture Trustee shall not be accountable for the use or
application by the Issuer of any of the Notes or of the proceeds of such Notes,
or for the use or application of any funds paid to the Servicer in respect of
the Notes.
SECTION 6.05. NOTICE OF DEFAULTS. If a Responsible Officer of the
Indenture Trustee knows that a Default has occurred and is continuing, the
Indenture Trustee shall mail to each Noteholder notice of such Default within 10
days of the occurrence thereof. Except in the case of a Default in payment of
principal of or interest on any Note, the Indenture Trustee may withhold such
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Noteholders.
SECTION 6.06. REPORTS BY INDENTURE TRUSTEE TO HOLDERS. The Indenture
Trustee shall deliver or cause to be delivered annually to each Noteholder of
record such information as may be required to enable such holder to prepare its
federal and state income tax returns. The Indenture Trustee shall also deliver
or cause to be delivered annually to each Noteholder of record a report relating
to its eligibility and qualification to continue as Indenture Trustee under this
Indenture, any amounts advanced by it under this Indenture, the amount, interest
rate and maturity date of certain indebtedness owed by the Trust to such
Indenture Trustee, in its individual capacity, the property and funds physically
held by such Indenture Trustee in its
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capacity as such, and any action taken by it that materially affects the Notes
and that has not been previously reported.
SECTION 6.07. COMPENSATION AND INDEMNITY. The Issuer shall pay or shall
cause the Servicer to pay to the Indenture Trustee from time to time reasonable
compensation for its services. The Indenture Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Issuer
shall reimburse or shall cause the Servicer to reimburse the Indenture Trustee
for all reasonable out-of-pocket expenses incurred or made by it, including
costs of collection, in addition to the compensation for its services. Such
expenses shall include the reasonable compensation and expenses, disbursements
and advances of the Indenture Trustee's agents, counsel, accountants and
experts. The Administrator shall indemnify or shall cause the Servicer to
indemnify the Indenture Trustee against any and all loss, liability or expense
(including reasonable attorneys' fees) incurred by it in connection with the
administration of this trust and the performance of its duties hereunder. The
Indenture Trustee shall notify the Administrator and the Servicer promptly of
any claim for which it may seek indemnity. Failure by the Indenture Trustee to
so notify the Administrator and the Servicer shall not relieve the Administrator
or the Servicer of its obligations hereunder. The Administrator shall defend or
shall cause the Servicer to defend any such claim, and the Indenture Trustee may
have separate counsel and the Administrator shall pay or shall cause the
Servicer to pay the fees and expenses of such counsel. Neither the Administrator
nor the Servicer need reimburse any expense or indemnify against any loss,
liability or expense incurred by the Indenture Trustee through the Indenture
Trustee's own willful misconduct, negligence or bad faith.
The Administrator's payment obligations to the Indenture Trustee
pursuant to this Section shall survive the discharge of this Indenture. When the
Indenture Trustee incurs expenses after the occurrence of a Default specified in
Section 5.01(f) or (g) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or similar law.
SECTION 6.08. REPLACEMENT OF INDENTURE TRUSTEE. The Indenture Trustee
may resign at any time by providing written notice of its resignation to the
Issuer. The Administrator may remove the Indenture Trustee if:
(a) the Indenture Trustee fails to comply with Section 6.11;
(b) the Indenture Trustee is adjudged a bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the Indenture
Trustee or its property; or
(d) the Indenture Trustee otherwise becomes legally or practically
incapable of fulfilling its duties hereunder.
If the Indenture Trustee resigns or is removed or if a vacancy exists
in the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Servicer
shall promptly appoint a successor Indenture Trustee. No resignation or removal
of the Indenture Trustee and no appointment of a successor
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Indenture Trustee shall become effective until the acceptance of appointment
by the successor Indenture Trustee pursuant to this Section 6.08.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee, to the Servicer and to the
Administrator. Thereupon the resignation or removal of the retiring Indenture
Trustee shall become effective, and the successor Indenture Trustee shall have
all the rights, powers and duties of the Indenture Trustee under this Indenture.
The successor Indenture Trustee shall mail a notice of its succession to
Noteholders. The retiring Indenture Trustee shall promptly transfer all property
held by it as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 30 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Administrator or the Holders of a majority in Outstanding
Amount of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may at any time thereafter petition any court of competent
jurisdiction for the removal of the Indenture Trustee and the appointment of a
successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's and the Administrator's obligations under Section
6.07 shall continue for the benefit of the retiring Indenture Trustee.
SECTION 6.09. SUCCESSOR INDENTURE TRUSTEE BY MERGER. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another Person, the
resulting, surviving or transferee corporation without any further act shall be
the successor Indenture Trustee if such surviving Person or transferee
corporation or banking shall be otherwise qualified and eligible under Section
6.11. The Indenture Trustee shall provide the Issuer, the Servicer and the
Rating Agencies reasonable prior written notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
SECTION 6.10. APPOINTMENT OF CO-INDENTURE TRUSTEE OR SEPARATE INDENTURE
TRUSTEE.
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust Estate may at the time be located, the Indenture
Trustee shall have the power and may execute
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and deliver all instruments to appoint one or more Persons to act as a
co-trustee or co-trustees, or separate trustee or separate trustees, of all
or any part of the Trust, and to vest in such Person or Persons, in such
capacity and for the benefit of the Noteholders, such title to the Trust
Estate, or any part hereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Indenture
Trustee may consider necessary or desirable. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
trustee under Section 6.11 and no notice to Noteholders of the appointment of
any co-trustee or separate trustee shall be required under Section 6.08
hereof.
(b) Every 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 Indenture Trustee shall be conferred or imposed
upon and exercised or performed by the Indenture 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 Indenture Trustee joining in and/or directing such act),
except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed the Indenture 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 Estate 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 Indenture
Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture 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 this Agreement and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts thereupon conferred, shall be vested with the
estates or property specified in its instrument of appointment, either jointly
with the Indenture Trustee or separately, as may be provided therein, subject to
all the provisions of this Indenture, including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture 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
this 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
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Indenture Trustee, to the extent permitted by law, without the appointment of a
new or successor trustee.
SECTION 6.11. ELIGIBILITY; DISQUALIFICATION. The Indenture Trustee
shall at all times satisfy the requirements of TIA Section 310(a). The Indenture
Trustee shall have a combined capital and surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition and it or its
parent shall have a long-term debt rating of "Baa3" or better by Moody's or
shall otherwise be acceptable to Moody's. The Indenture Trustee shall comply
with TIA Section 310(b), including the optional provision permitted by the
second sentence of TIA Section 310(b)(9); PROVIDED, HOWEVER, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or indentures
under which other securities of the Issuer are outstanding if the requirements
for such exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
SECTION 6.13. PENNSYLVANIA MOTOR VEHICLE SALES FINANCE ACT LICENSES.
The Indenture Trustee shall use its best efforts to maintain the effectiveness
of all licenses required under the Pennsylvania Motor Vehicle Sales Finance Act
and Maryland and all other similar applicable state laws in connection with
this Indenture and the transactions contemplated hereby until the lien and
security interest of this Indenture shall no longer be in effect in accordance
with the terms hereof.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. NOTE REGISTRAR TO FURNISH NAMES AND ADDRESSES OF
NOTEHOLDERS. The Note Registrar shall furnish or cause to be furnished to the
Indenture Trustee, the Owner Trustee, the Servicer or the Administrator, within
15 days after receipt by the Note Registrar of a written request therefrom, a
list of the names and addresses of the Noteholders of any Class as of the most
recent Record Date. If three or more Noteholders of any Class, or one or more
Holders of such Class evidencing not less than 25% of the Outstanding Amount of
such Class (hereinafter referred to as "Applicants"), apply in writing to the
Indenture Trustee, and such application states that the Applicants desire to
communicate with other Noteholders with respect to their rights under this
Indenture or under the Notes and such application is accompanied by a copy of
the communication that such Applicants propose to transmit, then the Indenture
Trustee shall, within five Business Days after the receipt of such application,
afford such Applicants access, during normal business hours, to the current list
of Noteholders. Such Indenture Trustee may elect not to afford the requesting
Noteholders access to the list of Noteholders if it agrees to mail the desired
communication by proxy, on behalf of and at the expense of the requesting
Noteholders, to all Noteholders of such series. Every Noteholder, by receiving
and holding a Note, agrees with the Indenture Trustee and the Issuer that none
of the Indenture Trustee, the Owner Trustee, the Issuer, the Servicer or the
Administrator shall be held accountable by reason
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of the disclosure of any such information as to the names and addresses of
the Noteholders under this Indenture, regardless of the source from which
such information was derived.
If the Indenture Trustee shall cease to be the Note Registrar, then
thereafter the Administrator will furnish or cause to be furnished to the
Indenture Trustee not more than five days after the most recent Record Date or
at such other times as the Indenture Trustee reasonably may request in writing,
a list, in such form as the Indenture Trustee reasonably may require, of the
names and addresses of the Holders of Notes as of such Record Date.
SECTION 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO
NOTEHOLDERS.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as provided
in Section 7.01 and the names and addresses of Holders of Notes received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.01 upon receipt
of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA Section 3.12(c).
SECTION 7.03. REPORTS BY ISSUER.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after
the Issuer is required to file the same with the Commission, copies of
the annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the Commission
may from time to time by rules and regulations prescribe) that the
Issuer may be required to file with the Commission pursuant to Section
13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with the rules and regulations prescribed from time to time
by the Commission such additional information, documents and reports
with respect to compliance by the Issuer with the conditions and
covenants of this Indenture as may be required from time to time by
such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA
Section 313(c)) such summaries of any information, documents and
reports required to be filed by the Issuer pursuant to clauses (i) and
(ii) of this Section 7.03(a) and by rules and regulations prescribed
from time to time by the Commission.
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(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on March 31 of each year.
SECTION 7.04. REPORTS BY INDENTURE TRUSTEE. If required by TIA Section
313(a), within 60 days after each [_______________] beginning with
[_______________], the Indenture Trustee shall mail to each Noteholder as
required by TIA Section 313(c) a brief report dated as of such date that
complies with TIA Section 313(a). The Indenture Trustee also shall comply with
TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Indenture Trustee with the Commission and each stock exchange,
if any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. COLLECTION OF MONEY. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Trust Estate, the Indenture Trustee may take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
SECTION 8.02. ACCOUNTS.
(a) On or prior to the Closing Date, the Issuer shall cause the
Servicer to establish and maintain, in the name of the Indenture Trustee, for
the benefit of the Noteholders and, to the extent set forth herein, the
Certificateholders, the Collection Account as provided in Section 5.01 of the
Sale and Servicing Agreement.
(b) On or prior to the Closing Date, the Issuer will cause the Seller
to, pursuant to the Securities Account Control Agreement, establish and maintain
with the Indenture Trustee, for the benefit of the Noteholders, the Reserve
Account and the Yield Supplement Account as provided in Section 5.07 and Section
5.08, respectively, of the Sale and Servicing Agreement.
(c) The Indenture Trustee shall transfer all amounts remaining on
deposit in the Collection Account on the Distribution Date on which the Notes
of all Classes have been paid in full (or substantially all of the Trust
Estate is otherwise released from the lien of this Indenture) to the Trust
Collection Account and shall take all necessary or
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appropriate actions to transfer all of its right, title and interest in the
Collection Account, all funds or investments held therein and all proceeds
thereof, whether or not on behalf of the Securityholders, to the Owner Trustee
for the benefit of the Certificateholders, subject to the limitations set forth
herein with respect to amounts held for payment to Noteholders that do not
promptly deliver a Note for payment on such Distribution Date.
SECTION 8.03. GENERAL PROVISIONS REGARDING ACCOUNTS.
(a) So long as no Default or Event of Default shall have occurred and
be continuing, all or a portion of the funds in the Collection Account shall be
invested in Eligible Investments and reinvested by the Indenture Trustee at the
written direction of the Servicer, subject to the provisions of Section 5.01 of
the Sale and Servicing Agreement. All income or other gain from investments of
moneys deposited in the Collection Account shall be deposited by the Indenture
Trustee in the Collection Account and paid to the Servicer as servicing
compensation on each Distribution Date, and any loss resulting from such
investments shall be charged to such account. The Servicer will not direct the
Indenture Trustee, and the Issuer shall cause the Servicer not, to make any
investment of any funds or to sell any investment held in the Collection Account
unless the security interest Granted and perfected in such account will continue
to be perfected in such investment or the proceeds of such sale, in either case
without any further action by any Person, and, in connection with any direction
to the Indenture Trustee to make any such investment or sale, if requested by
the Indenture Trustee, the Servicer shall deliver to the Indenture Trustee an
Opinion of Counsel, acceptable to the Indenture Trustee, to such effect.
(b) So long as no Default or Event of Default shall have occurred and
be continuing, all or a portion of the funds in the Reserve Account and the
Yield Supplement Account shall be invested in Eligible Investments and
reinvested by the Indenture Trustee at the written direction of the Seller,
subject to the provisions of Section 5.07 and Section 5.08, respectively, of the
Sale and Servicing Agreement and the provisions of the Securities Account
Control Agreement. All income or other gain from investments of moneys deposited
in the Reserve Account and the Yield Supplement Account shall be paid by the
Indenture Trustee to the Seller on each Distribution Date. Subject to the right
of the Indenture Trustee to make withdrawals therefrom, as directed by the
Servicer, for the purposes and in the amounts set forth in Section 5.06 of the
Sale and Servicing Agreement, the Reserve Account and the Yield Supplement
Account and all funds held therein shall be the property of the Seller and not
the property of the Trust, the Owner Trustee or the Indenture Trustee. The
Seller will grant to the Indenture Trustee, for the benefit of the Noteholders
and the Class C Certificateholders, a security interest in all funds (including
Eligible Investments) in the Reserve Account and the Yield Supplement Account
(including the Reserve Account Initial Deposit and the Initial Yield Supplement
Amount) and the proceeds thereof, and the Indenture Trustee shall have all of
the rights of a secured party under the UCC with respect thereto; PROVIDED that
all income from the investment of funds in the Reserve Account and the Yield
Supplement Account and the right to receive such income are retained by the
Seller and are not transferred, assigned or otherwise conveyed hereunder. The
Seller will not direct the Indenture Trustee to make any investment of any funds
or to sell any investment held in the Reserve Account or the Yield Supplement
Account unless the security interest granted and perfected in such account will
continue to be perfected in such investment or the proceeds of such sale, in
either case without any further action by any Person, and, in connection with
any direction to the Indenture Trustee to make any such investment or sale, if
requested by the
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Indenture Trustee, the Seller shall deliver to the Indenture Trustee an
Opinion of Counsel, acceptable to the Indenture Trustee, to such effect.
(c) Subject to Section 6.01(c), the Indenture Trustee shall not in any
way be held liable by reason of any insufficiency in the Collection Account, the
Reserve Account or the Yield Supplement Account resulting from any loss on any
Eligible Investment included therein at the direction of the Servicer or the
Seller, as the case may be, except for losses attributable to the Indenture
Trustee's failure to make payments on such Eligible Investments issued by the
Indenture Trustee, in its commercial capacity as principal obligor and not as
trustee, in accordance with the terms thereof.
(d) If (i) the Servicer or the Seller shall have failed to give
investment directions for any funds on deposit in the Collection Account, the
Reserve Account or the Yield Supplement Account, as the case may be, to the
Indenture Trustee by 5:00 p.m. Eastern Time (or such other time as may be agreed
by the Servicer and Indenture Trustee) on any Business Day or (ii) a Default or
Event of Default shall have occurred and be continuing with respect to the Notes
but the Notes shall not have been declared due and payable pursuant to Section
5.02 or (iii) if such Notes shall have been declared due and payable following
an Event of Default, amounts collected or receivable from the Trust Estate are
being applied in accordance with Section 5.05 as if there had not been such a
declaration, then the Indenture Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Accounts in one or more Eligible
Investments specified in clauses (i), (iv) or (vi) of the definition of Eligible
Investments provided in the Sale and Servicing Agreement.
SECTION 8.04. RELEASE OF TRUST ESTATE.
(a) Subject to the payment of its fees and expenses pursuant to Section
6.07, the Indenture Trustee may, and when required by the provisions of this
Indenture shall, execute instruments to release property from the lien of this
Indenture, or convey the Indenture Trustee's interest in the same, in a manner
and under circumstances that are not inconsistent with the provisions of this
Indenture. No party relying upon an instrument executed by the Indenture Trustee
as provided in this Article VIII shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
outstanding and all sums due the Indenture Trustee pursuant to Section 6.07 have
been paid, release any remaining portion of the Trust Estate that secured the
Notes from the lien of this Indenture and release to or to the order of the
Issuer, or, in the case of the Reserve Account or the Yield Supplement Account,
to the Seller, any funds entitled thereto then on deposit in the Collection
Account, the Reserve Account and the Yield Supplement Account, as the case may
be. The Indenture Trustee shall release property from the lien of this Indenture
pursuant to this Section 8.04(b) only upon receipt of an Issuer Request
accompanied by an Officer's Certificate and (if required by the TIA) Independent
Certificates in accordance with TIA Sections 314(c) and 314(d)(1) meeting the
applicable requirements of Section 11.01.
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SECTION 8.05. RELEASE OF RECEIVABLES UPON PURCHASE BY THE SELLER OR THE
SERVICER .
(a) Upon repurchase of any Receivable by the Seller pursuant to Section
3.02 of the Sale and Servicing Agreement or any purchase of any Receivable by
the Servicer pursuant to Section 4.06 or Section 9.01 of the Sale and Servicing
Agreement, the Indenture Trustee, on behalf of the Noteholders, shall, without
further action, be deemed to release, transfer, assign, set-over and otherwise
convey to the Seller or the Servicer, as the case may be, all right, title and
interest in, to and under such repurchased Receivable, all monies due or to
become due with respect thereto and all proceeds thereof and the other property
with respect to such Receivable, and all security and any documents relating
thereto, such assignment being an assignment outright and not for security; and
the Seller or the Servicer, as applicable, shall thereupon own each such
Receivable, and all such related security and documents, free of any further
obligation to the Issuer, the Indenture Trustee or the Noteholders with respect
thereto.
(b) The Indenture Trustee shall execute such documents and instruments
of transfer and assignment and take such other actions as shall be reasonably
requested by the Seller or the Servicer, as the case may be, to effect the
conveyance of such Receivable pursuant to Sections 3.02, 4.06 and 9.01 of the
Sale and Servicing Agreement.
SECTION 8.06. OPINION OF COUNSEL. The Indenture Trustee shall receive
at least seven days notice when requested by the Issuer to take any action
pursuant to Section 8.04(a), accompanied by copies of any instruments involved,
and the Indenture Trustee shall also require, except in connection with any
action contemplated by Section 8.04(b), as a condition to such action, an
Opinion of Counsel, in form and substance satisfactory to the Indenture Trustee,
stating the legal effect of any such action, outlining the steps required to
complete the same, and concluding that all conditions precedent to the taking of
such action have been complied with and such action will not materially and
adversely impair the security for the Notes or the rights of the Noteholders in
contravention of the provisions of this Indenture; PROVIDED, HOWEVER, that such
Opinion of Counsel shall not be required to express an opinion as to the fair
value of the Trust Estate. Counsel rendering any such opinion may rely, without
independent investigation, on the accuracy and validity of any certificate or
other instrument delivered to the Indenture Trustee in connection with any such
action.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.
(a) Without the consent of the Holders of any Notes but with prior
notice to the Rating Agencies, the Issuer and the Indenture Trustee, when
authorized by an Issuer Order, at any time and from time to time, may enter into
one or more indentures supplemental hereto (which shall conform to the
provisions of the TIA as in force at the date of the execution thereof), in form
satisfactory to the Indenture Trustee, for any of the following purposes:
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(i) to correct or amplify the description of any property
at any time subject to the lien of this Indenture, or to better assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer
contained herein and in the Notes;
(iii) to add to the covenants of the Issuer, for the benefit
of the Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture that may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental indenture
to the extent such action shall not adversely affect the interests of
the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the
execution of any such supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Holders of the Notes, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; PROVIDED, HOWEVER, that such action
shall not materially and adversely affect the interests of any Noteholder.
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with prior notice to the Rating Agencies and with the consent of the Holders of
the Controlling Class of Notes representing a majority of the Outstanding Amount
of such Class (excluding for such purpose the outstanding principal amount of
any Notes held of record or beneficially owned by NARC, NMAC or any of their
Affiliates), by Action of such Holders delivered to the Issuer
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and the Indenture Trustee, enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to, or changing in any manner
or eliminating any of the provisions of, this Indenture or of modifying in
any manner the rights of the Holders of the Notes under this Indenture;
PROVIDED, HOWEVER, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Note affected thereby:
(a) change the due date of any installment of principal of or interest
on any Note, or reduce the principal amount thereof, the Interest Rate thereon
or redemption price therefor, or change any place of payment where, or the coin
or currency in which, any Note or the interest thereon is payable;
(b) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of funds available
therefor, as provided in Article V, to the payment of any such amount due on the
Notes on or after the respective due dates thereof;
(c) reduce the percentage of the Outstanding Amount of the Notes, the
consent of the Holders of which is required for any such supplemental indenture,
or the consent of the Holders of which is required for any waiver of compliance
with certain provisions of this Indenture or certain defaults hereunder and
their consequences provided for in this Indenture;
(d) modify or alter the provisions of the proviso to the definition of
the term "Outstanding";
(e) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Indenture Trustee to sell or liquidate the Trust Estate
if the proceeds of that sale would be insufficient to pay the principal amount
of and accrued but unpaid interest on the Notes pursuant to Section 5.04(c)(iv);
(f) reduce any percentage required to amend the sections of the
Indenture that specify the applicable percentage of Outstanding Amount of the
Notes necessary to amend the Indenture; or
(g) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Trust Estate or,
except as otherwise permitted or contemplated herein, terminate the lien of this
Indenture on any property at any time subject hereto or deprive the Holder of
any Note of the security provided by the lien of this Indenture.
The Indenture Trustee may in its discretion determine whether or not
any Notes would be adversely affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Action of Noteholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Action shall approve the substance thereof.
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Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Holders of the Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.01 and 6.02, shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and shall be deemed to be modified and amended in accordance therewith
with respect to the Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the Issuer and the Holders of the Notes
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.06. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
ARTICLE X
TERMINATION OF THE TRUST
SECTION 10.01. TERMINATION OF THE TRUSTS CREATED BY INDENTURE.
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(a) The trusts created hereby and the respective obligations and
responsibilities of the Issuer, the Administrator and the Indenture Trustee
shall terminate upon (i) the purchase as of any Distribution Date by the Seller
or Servicer, or any successor to the Servicer, at its option of the Receivables
primarily comprising the corpus of the Owner Trust Estate as described in
Section 10.02, (ii) the payment to the Noteholders of all amounts required to be
paid to them pursuant to this Agreement and the release to the Owner Trustee of
all remaining amounts or investments on deposit in the Accounts, or (iii) the
maturity or liquidation of the last Receivable and the disposition of all
property held as part of the Owner Trust Estate; PROVIDED, HOWEVER, that in no
event shall the trust created by this Indenture 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 this Indenture. The
Owner Trustee shall promptly notify the Indenture Trustee and each Rating Agency
of any prospective termination pursuant to this Section.
(b) Notice of any termination, specifying the Distribution Date upon
which the Noteholders must surrender their Notes to the Indenture Trustee for
payment of the final distribution and retirement of the Notes, shall be given
promptly by the Indenture Trustee (at the written direction of the
Administrator) by letter to the Noteholders mailed not later than the 15th day
and not earlier than the 25th day prior to the date on which such final
distribution is expected to occur specifying (i) the Distribution Date upon
which final payment of the Notes shall be made upon presentation and surrender
of Notes at the office of the Indenture Trustee therein specified, (ii) the
amount of any such final payment, and (iii) 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 Notes at the office of the
Indenture Trustee therein specified. The Indenture Trustee shall give such
notice to the Note Registrar (if other than the Indenture Trustee) at the time
such notice is given to Noteholders. In the event such notice is given, the
Seller, the Servicer, or any successor to the Servicer, or the Trustee, as the
case may be, shall make deposits into the Collection Account in accordance with
Section 5.02 of the Sale and Servicing Agreement, or, in the case of an optional
purchase of Receivables, pursuant to Section 10.02, shall deposit the amount
specified in Section 10.02. Upon presentation and surrender of the Notes, the
Indenture Trustee shall cause to be distributed to Noteholders amounts
distributable on such Distribution Date pursuant to Section 5.06 of the Sale and
Servicing Agreement.
SECTION 10.02. OPTIONAL PURCHASE OF ALL RECEIVABLES. If the Servicer or
any successor to the Servicer shall notify the Owner Trustee and the Indenture
Trustee of its intention to exercise the option granted to it in the Sale and
Servicing Agreement to repurchase the outstanding Receivables primarily
comprising the Owner Trust Estate, then the Owner Trustee and the Indenture
Trustee shall give written notice thereof to each Securityholder and the Rating
Agencies as soon as practicable after their receipt of notice from the Servicer.
Upon deposit by the Servicer or any successor to the Servicer of the amount
necessary to effect such purchase of the corpus of the Owner Trust Estate, the
Indenture Trustee shall make the final distributions to the Noteholders and
Certificateholders as set forth in Section 5.06 of the Sale and Servicing
Agreement and Section 10.01 and shall promptly transfer all of its right, title
and interest in and to any amounts or investments remaining on deposit in the
Accounts (excluding any portion thereof necessary to make distributions to
Noteholders described in Section 3.03) to the Owner Trustee for the benefit of
the Certificateholders and release from the lien of this Indenture all of
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the remaining Collateral. The Indenture Trustee shall execute, deliver and
file all agreements, certificates, instruments or other documents necessary
or reasonably requested by the Owner Trustee in order to effect such release
and the transfer to the Owner Trustee of the Collateral.
ARTICLE XI
MISCELLANEOUS.
SECTION 11.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC.
(a) Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture, the Issuer
shall, upon written request therefor from the Indenture Trustee, furnish to the
Indenture Trustee (i) an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with, (ii) an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with, and (iii) (if required by the TIA) an Independent Certificate
from a firm of certified public accountants meeting the applicable requirements
of this Section, except that, in the case of any such application or request as
to which the furnishing of such documents is specifically required by any
provision of this Indenture, no such written request from the Indenture Trustee
need be furnished (and only such expressly required documents need be delivered
in connection therewith).
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such
signatory, such signatory has made such examination or investigation as
is necessary to enable such signatory to express an informed opinion as
to whether or not such covenant or condition has been complied with;
and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture, the
Issuer shall, in addition to any obligation imposed in Section 11.01(a) or
elsewhere in this Indenture, furnish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such deposit) to the Issuer
of the Collateral or other property or securities to be so deposited.
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(ii) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the
opinion of any signatory thereof as to the matters described in clause
(i) above, the Issuer shall also deliver to the Indenture Trustee an
Independent Certificate as to the same matters, if the fair value to
the Issuer of the securities to be so deposited and of all other such
securities made the basis of any such withdrawal or release since the
commencement of the then-current calendar year of the Issuer, as set
forth in the certificates delivered pursuant to clause (i) above and
this clause (ii), is 10% or more of the Outstanding Amount of the
Notes, but such a certificate need not be furnished with respect to any
securities so deposited, if the fair value thereof to the Issuer as set
forth in the related Officer's Certificate is less than $25,000 or less
than one percent of the Outstanding Amount of the Notes.
(iii) Whenever any property or securities are to be released
from the lien of this Indenture, the Issuer shall also furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the
opinion of each person signing such certificate as to the fair value
(within 90 days of such release) of the property or securities proposed
to be released and stating that in the opinion of such person the
proposed release will not impair the security under this Indenture in
contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the
opinion of any signatory thereof as to the matters described in clause
(iii) above, the Issuer shall also furnish to the Indenture Trustee an
Independent Certificate as to the same matters if the fair value of the
property or securities and of all other property, other than property
as contemplated by clause (v) below or securities released from the
lien of this Indenture since the commencement of the then-current
calendar year, as set forth in the certificates required by clause
(iii) above and this clause (iv), equals 10% or more of the Outstanding
Amount of the Notes, but such certificate need not be furnished in the
case of any release of property or securities if the fair value thereof
as set forth in the related Officer's Certificate is less than $25,000
or less than one percent of the then Outstanding Amount of the Notes.
(v) Notwithstanding Section 2.09 or any other provision of
this Section, the Issuer may, without compliance with the requirements
of the other provisions of this Section, (A) collect, liquidate, sell
or otherwise dispose of Receivables and Financed Vehicles as and to the
extent permitted or required by the Basic Documents and (B) make cash
payments out of the Accounts as and to the extent permitted or required
by the Basic Documents so long as the Issuer shall deliver to the
Indenture Trustee every six months, commencing [________], an Officer's
Certificate of the Issuer stating that all such dispositions of
Collateral that occurred during the preceding six calendar months were
in the ordinary course of the Issuer's business and that the proceeds
thereof were applied in accordance with the Basic Documents.
SECTION 11.02. FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
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Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer's
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Servicer, the Seller, the Issuer or the
Administrator, stating that the information with respect to such factual matters
is in the possession of the Servicer, the Seller, the Issuer or the
Administrator, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
SECTION 11.03. ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "ACTION" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in
favor of the Indenture Trustee and the Issuer, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
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(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
SECTION 11.04. NOTICES, TO INDENTURE TRUSTEE, ISSUER AND RATING
AGENCIES. Any request, demand, authorization, direction, notice, consent, waiver
or Action of Noteholders or other documents provided or permitted by this
Indenture shall be in writing and if such request, demand, authorization,
direction, notice, consent, waiver or Action of Noteholders is to be made upon,
given or furnished to or filed with:
(a) the Indenture Trustee by any Noteholder or by the Issuer, it shall
be sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Indenture Trustee at its Corporate Trust Office, or
(b) the Issuer by the Indenture Trustee or by any Noteholder, it shall
be sufficient for every purpose hereunder if in writing and mailed first-class,
postage prepaid to the Issuer addressed to: Nissan Auto Receivables [____-_]
Owner Trust, c/o [______________________], Attention: [____________], with a
copy to Nissan Motor Acceptance Corporation, 990 West 190th Street, Torrance,
California 90502, Attention: Secretary, or at any other address previously
furnished in writing to the Indenture Trustee by the Issuer or the
Administrator. The Issuer shall promptly transmit any notice received by it from
the Noteholders to the Indenture Trustee.
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally delivered
or mailed by certified mail, return receipt requested, to (i) in the case of
Moody's, at the following address: Moody's Investors Service, Inc., ABS
Monitoring Department, 99 Church Street, New York, New York 10007, and (ii) in
the case of Standard & Poor's, at the following address: Standard & Poor's
Ratings Group, 55 Water Street, New York, New York 10041-0003, Attention:
Asset Backed Surveillance Department, or as to each of the foregoing, at such
other address as shall be designated by written notice to the other parties.
SECTION 11.05. NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed
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with the Indenture Trustee but such filing shall not be a condition precedent
to the validity of any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
SECTION 11.06. ALTERNATE PAYMENT AND NOTICE PROVISIONS. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Indenture Trustee or any Paying Agent to such Holder,
that is different from the methods provided for in this Indenture for such
payments or notices. The Issuer will furnish to the Indenture Trustee a copy of
each such agreement and the Indenture Trustee will cause payments to be made and
notices to be given in accordance with such agreements.
SECTION 11.07. CONFLICT WITH TRUST INDENTURE ACT. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 11.09. SUCCESSORS AND ASSIGNS. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors, co-trustees and agents.
SECTION 11.10. SEVERABILITY. If any one or more of the covenants,
agreements, provisions or terms of this Indenture shall be for any reason
whatsoever held invalid or unenforceable in any jurisdiction, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Indenture and shall
in no way affect the validity or enforceability of the other provisions of this
Indenture or of the Notes or the Certificates or the rights of the Holders
thereof.
56
<PAGE>
SECTION 11.11. BENEFITS OF INDENTURE. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other Person with an ownership interest in any part
of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
SECTION 11.12. GOVERNING LAW. This indenture shall be governed by and
construed in accordance with the laws of the state of New York, without
reference to its conflict of law provisions, and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.
SECTION 11.13. COUNTERPARTS. This Indenture may be executed
simultaneously in any number of counterparts, each of which shall be deemed to
be an original, and all of which shall constitute but one and the same
instrument.
SECTION 11.14. RECORDING OF INDENTURE. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee) to the effect that such recording is
necessary either for the protection of the Noteholders or any other Person
secured hereunder or for the enforcement of any right or remedy granted to the
Indenture Trustee under this Indenture.
SECTION 11.15. TRUST OBLIGATION. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or Certificates or under this Indenture or
any certificate or other writing delivered in connection herewith or therewith,
against (i) the Indenture Trustee or the Owner Trustee in its individual
capacity, (ii) any Certificateholder or other owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director,
employee or agent of the Indenture Trustee or the Owner Trustee in its
individual capacity, any Certificateholder or other owner of a beneficial
interest in the Issuer, the Owner Trustee or the Indenture Trustee or of any
successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Article VI, VII and VIII of the Trust Agreement.
SECTION 11.16. NO PETITION. The Indenture Trustee, by entering into
this Indenture, and each Noteholder, by accepting a Note, hereby covenant and
agree that they will not at any time institute against the Issuer, or join in
any institution against the Seller or the Issuer of any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law,
in
57
<PAGE>
connection with any obligations relating to the Notes, the Certificates or
any of the Basic Documents.
SECTION 11.17. INSPECTION. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee, during the
Issuer's normal business hours, to examine all the books of account, records,
reports and other papers of the Issuer, to make copies and extracts therefrom,
to cause (at the expense of the requesting party) such books to be audited by
Independent certified public accountants, and to discuss the Issuer's affairs,
finances and accounts with the Issuer's officers, employees, and Independent
certified public accountants, all at such reasonable times and as often as may
be reasonably requested. The Indenture Trustee shall and shall cause its
representatives to hold in confidence all such information except to the extent
disclosure may be required by law (and all reasonable applications for
confidential treatment are unavailing) and except to the extent that the
Indenture Trustee may reasonably determine that such disclosure is consistent
with its obligations hereunder.
58
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers, thereunto duly
authorized and duly attested, all as of the day and year first above written.
NISSAN AUTO RECEIVABLES ____-_ OWNER TRUST
By: [ ],
-----------------------------
not in its individual capacity but
solely as Owner Trustee
By:
-----------------------------
Name:
Title:
[ ],
------------------------------
not in its individual capacity but
solely as Indenture Trustee
By:
--------------------------------
Name:
Title:
S-1
<PAGE>
STATE OF CALIFORNIA
COUNTY OF __________
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared , known to me to be the person
and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said [NAME OF OWNER
TRUSTEE], not in its individual capacity but as Owner Trustee of the NISSAN AUTO
RECEIVABLES ____-_ OWNER TRUST, a Delaware business trust, and that such person
executed the same as the act of said business trust for the purpose and
consideration therein expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of __________,
199__.
--------------------------------------------------
Notary Public in and for the State of [California]
(Seal)
My commission expires:
- -------------------------
<PAGE>
STATE OF CALIFORNIA
COUNTY OF___________
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared __________, known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of __________, a banking
corporation, not in its individual capacity but as Indenture Trustee and
Securities Intermediary in connection with the Nissan Auto Receivables [___-___]
Owner Trust, a Delaware business trust, and that such person executed the same
as the act of said corporation for the purpose and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of __________,
199__.
--------------------------------------------------
Notary Public in and for the State of [California]
(Seal)
My commission expires:
- ----------------------
<PAGE>
EXHIBIT A
(Form of Class A-1 Note, Class A-2 Note, Class A-3 Note and Class B Note)
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE 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.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS NOTE IS NOT AN OBLIGATION OF, AND WILL NOT BE INSURED OR
GUARANTEED BY, ANY GOVERNMENTAL AGENCY OR NISSAN AUTO RECEIVABLES CORPORATION,
NISSAN MOTOR ACCEPTANCE CORPORATION, NISSAN NORTH AMERICA, INC., NISSAN MOTOR
CO., LTD., ANY TRUSTEE OR ANY OF THEIR AFFILIATES. THE PRINCIPAL AND INTEREST ON
THIS NOTE IS PAYABLE SOLELY FROM PAYMENTS ON THE RECEIVABLES AND AMOUNTS ON
DEPOSIT IN THE RESERVE ACCOUNT AND THE YIELD SUPPLEMENT ACCOUNT.
A-1
<PAGE>
No._____ $__________
NISSAN AUTO RECEIVABLES ___-___ OWNER TRUST
CLASS [A-1][A-2][A-3] [B] ___% ASSET BACKED NOTES
Nissan Auto Receivables Owner Trust, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to ____________________,
or registered assigns, the principal sum of _______________ DOLLARS
($__________) payable on each Distribution Date in an aggregate amount, if any,
payable from the Collection Account in respect of the principal on the Class
[A-1][A-2][A-3][B] Notes pursuant to Section 3.01 of the Indenture dated as of
__________, _____ (the "Indenture"), between the Issuer and [________], a
___________________, as Indenture Trustee (the "Indenture Trustee") and Sections
5.06(c) and (d) of the Sale and Servicing Agreement dated as of [_________]
among the Issuer, NARC, as Seller, and NMAC, as Servicer (which amounts shall be
limited to the portion of Available Amounts specified in such sections);
PROVIDED, HOWEVER, that the entire unpaid principal amount of this Note shall be
due and payable on the earlier of the Distribution Date occurring in [________]
(the "Class [A-1][A-2][A-3][B] Final Scheduled Distribution Date") and the
Distribution Date described in Section 10.01 of the Indenture. Capitalized terms
used but not defined herein have the meanings ascribed thereto in the Indenture
and the Sale and Servicing Agreement, as the case may be.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in Section 3.01 of the Indenture. Interest on this Note will accrue
for each Distribution Date during the calendar month preceding such Distribution
Date (or in the case of the first Distribution Date, from the Closing Date).
Interest will be computed on the basis specified in the Indenture for each
Interest Period. Such principal of and interest on this Note shall be paid in
the manner specified on the reverse hereof.
The principal of and interest on this Note is payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
A-2
<PAGE>
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date:
-----------
NISSAN AUTO RECEIVABLES _____-_
OWNER TRUST
By:
--------------------------------------
not in its individual capacity but
solely as Owner Trustee under the
Trust Agreement,
By:
--------------------------------------
Authorized Signatory
A-3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date:
------------------
( ),
--------------------------------------------
not in its individual capacity but
solely as Indenture Trustee,
By:
--------------------------------------
Authorized Signatory
A-4
<PAGE>
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as [____]% Asset Backed Notes, Class [A-1][A-2][A-3][B] (herein
called the "Class [A-1][A-2][A-3][B] Notes"), all issued under the Indenture, to
which Indentures and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights and obligations thereunder of the
Issuer, the Indenture Trustee and the Holders of the Notes. The Class
[A-1][A-2][A-3][B] Notes are subject to all terms of the Indenture.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class B Notes (collectively, the "Notes") are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal of the Class [A-1][A-2][A-3] [B] Notes will be payable on
each Distribution Date in an amount described in the Indenture. "Distribution
Date" means the [________] day of each month, or, if any such date is not a
Business Day, the next succeeding Business Day, commencing [________].
Notwithstanding the foregoing, the entire unpaid principal amount of
the Notes shall be due and payable on the date on which an Event of Default
shall have occurred and be continuing and the Indenture Trustee or the Holders
of the Controlling Class of Notes representing not less than a majority of the
Outstanding Amount of such Class (excluding for such purpose the outstanding
principal amount of any Notes held of record or beneficially by NARC, NMAC or
any of their Affiliates) have declared the Notes to be immediately due and
payable in the manner provided in Section 5.02 of the Indenture or following the
termination or liquidation of the Trust Estate in connection with the exercise
by the Servicer of its option to purchase the Receivables pursuant to Section
9.01 of the Sale and Servicing Agreement and Section 10.02 of the Indenture. All
principal payments on the Class [A-1][A-2][A-3] [B] Notes shall be made pro rata
to the Class [A-1][A-2][A-3] [B] Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be paid to the Person in whose name of such
Note (or one or more Predecessor Notes) is registered on the Record Date. With
respect to Notes registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payments will be
made by wire transfer in immediately available funds to the account designated
by such nominee, except for the final installment of principal payable with
respect to such Note on a Distribution Date or on the applicable Final Scheduled
Distribution Date, which shall be payable as provided below. Such payment will
be made by check mailed first-class postage prepaid to such Person's address as
it appears on the Note Register on such Record Date or by wire transfer to the
account specified by the registered holder of any Note with a face amount of at
least $10,000,000. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) effected by any payments made on any Distribution
Date shall be binding upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Distribution Date, then the Indenture
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Registered Holder hereof as of the Record Date preceding such
Distribution Date by notice mailed or transmitted by
A-5
<PAGE>
facsimile prior to such Distribution Date, and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's principal Corporate Trust Office or at the office of
the Indenture Trustee's agent appointed for such purposes located in The City
of New York.
The Issuer shall pay interest on overdue installments of interest at
the Class [A-1][A-2][A-3][B] Rate to the extent lawful.
[FOR CLASS B NOTES] Default in the payment of interest on this Class
[B] Note is not an Event of Default under the Indenture so long as any Class [A]
Notes are Outstanding. By acceptance of this Class [B] Note or any beneficial
interest herein, you are deemed to have consented to the delay in payment of
interest on such Class [B] Note and waived your rights to institute suit for
enforcement of any such payment to the extent described in the Indenture.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee as set forth in Section 2.04 of the Indenture, and thereupon
one or more new Notes of authorized denominations and in the same aggregate
principal amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange of
this Note, but the transferor may be required to pay a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that the Indenture Trustee and the Owner
Trustee have no such obligations in their individual capacity) and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
The Holder of this Note by its acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; PROVIDED, HOWEVER, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
A-6
<PAGE>
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Seller or the Issuer, or join in any
institution against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Note Owner by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer and the Indenture Trustee, when authorized by an Issuer
Order, with prior notice to the Rating Agencies and with the consent of the
Holders of the Controlling Class of Notes representing a majority of the
Outstanding Amount of such Class (excluding for such purpose the outstanding
principal amount of any Notes held of record or beneficially by NARC, NMAC or
any of their Affiliates). Section 5.12 of the Indenture also contains provisions
permitting the Holders of the Controlling Class of Notes representing a majority
of the Outstanding Amount of such Class (excluding for such purpose the
outstanding principal amount of any Notes held of record or beneficially owned
by NARC, NMAC or any of their Affiliates), on behalf of the Holders of all the
Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one or more
Predecessor Notes) shall be conclusive and binding upon such Holder and upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
A-7
<PAGE>
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Indenture Trustee and the
Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
A-8
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
----------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints , attorney, to transfer said Note on the books kept for
registration thereof, with full power of substitution in the premises.
Dated: */
---------------------
Signature Guaranteed:
*/
- ---------------------------
*/ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within Note in
every particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A-9
<PAGE>
EXHIBIT 4.3
SALE AND SERVICING AGREEMENT
among
NISSAN AUTO RECEIVABLES ______-_ OWNER TRUST
as Issuer,
NISSAN AUTO RECEIVABLES CORPORATION,
as Seller,
and
NISSAN MOTOR ACCEPTANCE CORPORATION,
as Servicer
Dated as of [_______]
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1.01 Definitions.....................................................................1
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.01 Conveyance of Receivables......................................................20
SECTION 2.02 Custody of Receivables Files...................................................22
SECTION 2.03 Acceptance by Owner Trustee....................................................22
ARTICLE III
THE RECEIVABLES
SECTION 3.01 Representations and Warranties of the Seller with Respect to
the Receivables................................................................23
SECTION 3.02 Repurchase upon Breach.........................................................26
SECTION 3.03 Duties of Servicer as Custodian................................................26
SECTION 3.04 Instructions; Authority To Act.................................................27
SECTION 3.05 Custodian's Indemnification....................................................27
SECTION 3.06 Effective Period and Termination...............................................27
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.01 Duties of Servicer.............................................................28
SECTION 4.02 Collection of Receivable Payments..............................................29
SECTION 4.03 Realization upon Receivables...................................................29
SECTION 4.04 Maintenance of Security Interests in Financed Vehicles.........................30
SECTION 4.05 Covenants of Servicer..........................................................30
SECTION 4.06 Purchase of Receivables upon Breach............................................30
SECTION 4.07 Servicing Fee and Expenses.....................................................31
SECTION 4.08 Servicer's Certificate.........................................................31
SECTION 4.09 Annual Statement as to Compliance; Notice of Default...........................31
SECTION 4.10 Annual Independent Certified Public Accountants' Report........................32
SECTION 4.11 Access to Certain Documentation and Information Regarding
Receivables...................................................................32
SECTION 4.12 Appointment of Subservicer.....................................................33
SECTION 4.13 Amendments to Schedule of Receivables..........................................33
</TABLE>
i
<PAGE>
ARTICLE V
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO
CERTIFICATEHOLDERS AND NOTEHOLDERS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 5.01 Establishment of Accounts......................................................33
SECTION 5.02 Collections....................................................................34
SECTION 5.03 Application of Collections.....................................................36
SECTION 5.04 Advances.......................................................................36
SECTION 5.05 Additional Deposits............................................................37
SECTION 5.06 Payments and Distributions.....................................................37
SECTION 5.07 Reserve Account................................................................41
SECTION 5.08 Yield Supplement Account.......................................................43
SECTION 5.09 Statements to Certificateholders and Noteholders...............................44
SECTION 5.10 Net Deposits...................................................................45
ARTICLE VI
THE SELLER
SECTION 6.01 Representations of Seller......................................................45
SECTION 6.02 Additional Covenants of the Seller.............................................47
SECTION 6.03 Liability of Seller; Indemnities...............................................48
SECTION 6.04 Merger or Consolidation of, or Assumption of the Obligations
of, Seller.....................................................................50
SECTION 6.05 Limitation on Liability of Seller and Others...................................50
SECTION 6.06 Seller May Own Certificates or Notes...........................................51
ARTICLE VII
THE SERVICER
SECTION 7.01 Representations of Servicer....................................................51
SECTION 7.02 Indemnities of Servicer........................................................52
SECTION 7.03 Merger or Consolidation of, or Assumption of the Obligations
of, Servicer...................................................................53
SECTION 7.04 Limitation on Liability of Servicer and Others.................................54
SECTION 7.05 NMAC Not To Resign as Servicer.................................................54
ARTICLE VIII
DEFAULT
SECTION 8.01 Servicer Default...............................................................55
SECTION 8.02 Appointment of Successor.......................................................56
SECTION 8.03 Repayment of Advances..........................................................57
SECTION 8.04 Notification...................................................................57
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 8.05 Waiver of Past Defaults........................................................57
ARTICLE IX
TERMINATION; RELEASE OF RECEIVABLES
SECTION 9.01 Optional Purchase of All Receivables...........................................58
SECTION 9.02 Release of Receivables.........................................................58
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Amendment......................................................................59
SECTION 10.02 Protection of Title to Trust...................................................61
SECTION 10.03 Notices........................................................................63
SECTION 10.04 Assignment by the Seller or the Servicer.......................................63
SECTION 10.05 Limitations on Rights of Others................................................63
SECTION 10.06 Severability...................................................................63
SECTION 10.07 Separate Counterparts..........................................................63
SECTION 10.08 Headings.......................................................................63
SECTION 10.09 Governing Law..................................................................64
SECTION 10.10 Assignment by Issuer...........................................................64
SECTION 10.11 Nonpetition Covenants..........................................................64
SECTION 10.12 Limitation of Liability of Owner Trustee and Indenture Trustee.................64
</TABLE>
SCHEDULE A Schedule of Receivables
SCHEDULE B Location of Receivable Files
EXHIBIT A Form of Yield Supplement Agreement
iii
<PAGE>
SALE AND SERVICING AGREEMENT, dated as of [_______], among NISSAN AUTO
RECEIVABLES _____-_ OWNER TRUST, a Delaware business trust (the "Issuer"),
NISSAN AUTO RECEIVABLES CORPORATION, a Delaware corporation, and NISSAN MOTOR
ACCEPTANCE CORPORATION, a California corporation. Capitalized terms used herein
without definition shall have the respective meanings assigned to such terms in
Article I.
WHEREAS, the Issuer desires to purchase a portfolio of receivables
arising in connection with retail installment sales contracts secured by new,
near-new or used automobiles and light-duty trucks generated by NMAC in the
ordinary course of business and sold to the Seller;
WHEREAS, the Seller is willing to sell such receivables to the
Issuer; and
WHEREAS, the Servicer is willing to service such receivables.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS. Except as otherwise provided in this
Agreement, whenever used herein, the following words and phrases, unless the
context otherwise requires, shall have the following respective meanings:
"ACCOUNTS" means the Collection Account, the Yield Supplement Account
and the Reserve Account.
"ACTUAL PAYMENT" means, with respect to a Receivable and a Collection
Period, all payments received by the Servicer from or for the account of the
related Obligor on such Receivable during such Collection Period (and, in the
case of the first Collection Period, all payments received by the Servicer from
or for the account of such Obligor since the Cutoff Date through the last day of
such Collection Period), net of any Supplemental Servicing Fees attributable to
such Receivable.
"ADMINISTRATIVE PURCHASE PAYMENT" for any Administrative Receivable as
of the last day 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 related APR, after giving effect to the receipt of monies collected (from
whatever source other than the Advances) on such Administrative Receivable, if
any, during such Collection Period.
"ADMINISTRATION AGREEMENT" means the Administration Agreement, dated as
of [_______], among the Administrator, the Issuer and the Indenture Trustee.
"ADMINISTRATIVE RECEIVABLE" means a Receivable purchased as of the
close of business on the last day of a Collection Period by the Servicer
pursuant to Section 4.06 or Section 9.01.
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"ADMINISTRATOR" means NMAC, or any successor Administrator under the
Administration Agreement.
"ADVANCE" means the amount, as of the last day of a Collection Period,
that the Servicer is required to advance on the respective Receivable pursuant
to Section 5.04.
"AFFILIATE" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control," when used with respect
to any specified Person, means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the term "controlling" and
"controlled" have meanings correlative to the foregoing.
"AGGREGATE CERTIFICATEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means,
with respect to any Distribution Date, the sum of the Certificateholders'
Interest Distributable Amount for all Classes of Certificates for such
Distribution Date.
"AGGREGATE NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, the sum of the Noteholders' Interest
Distributable Amount for all Classes of Notes for such Distribution Date.
"AGREEMENT" means this Sale and Servicing Agreement among Nissan Auto
Receivables [___-___] Owner Trust, as Issuer, NARC, as Seller, and NMAC, as
Servicer.
"AICPA" shall have the meaning assigned to such term in Section 4.10.
"AMOUNT FINANCED" with respect to any Receivable, means the amount
advanced under the Receivable toward the purchase price of the related Financed
Vehicle and any related costs, including but not limited to accessories,
insurance premiums, service and warranty contracts and other items customarily
financed as part of retail automobile and light-duty truck installment sale
contracts.
"ANNUAL PERCENTAGE RATE" or "APR" of a Receivable means the annual rate
of finance charges stated in such Receivable.
"ANNUAL USAP REPORT" shall have the meaning specified in Section 4.10.
"AVAILABLE AMOUNTS" means, with respect to any Distribution Date, the
sum of Available Interest and Available Principal.
"AVAILABLE INTEREST" means, for any Distribution Date, the sum of the
following amounts received during the related Collection Period: (i) that
portion of all collections on Receivables other than Defaulted Receivables
allocable to interest, (ii) Net Liquidation Proceeds to the extent allocable to
interest due on a Defaulted 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 Administrative Purchase Payment of each Receivable
that became an Administrative Receivable during the related Collection Period to
the extent attributable to interest thereon, (v) without duplication of
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any amounts described above in clauses (i) and (ii), the Warranty Purchase
Payment of each Receivable that became a Warranty Receivable during the
related Collection Period to the extent attributable to interest thereon, and
(vi) the Yield Supplement Deposit; PROVIDED, HOWEVER, that in calculating
Available Interest, amounts to be paid to the Servicer as reimbursement for
Advances pursuant to Sections 5.06(c)(i), 5.06(c)(ii), 5.06(d)(i) and
5.06(d)(ii) on such Distribution Date 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 other than Defaulted Receivables
allocable to principal, (ii) Net Liquidation Proceeds attributable to principal
due on a Defaulted Receivable in accordance with the Servicer's customary
servicing procedures, (iii) without duplication of any amounts described above
in clauses (i) and (ii), the Administrative Purchase Payment of each Receivable
that became an Administrative Receivable during the related Collection Period to
the extent attributable to principal, and (iv) without duplication of any
amounts described above in clauses (i) and (ii), the Warranty Purchase Payment
of each Receivable that became a Warranty Receivable during the related
Collection Period to the extent attributable to principal.
"BASIC DOCUMENTS" means the Purchase Agreement, the Trust Agreement,
the Certificate of Trust, this Agreement, the Indenture, the Administration
Agreement, the Securities Account Control Agreement, the Yield Supplement
Agreement, the Note Depository Agreement, the Certificate Depository Agreement
and the other documents and certificates delivered in connection herewith and
therewith.
"BASE SERVICING FEE" means the fee payable to the Servicer on each
Distribution Date, calculated pursuant to Section 4.07, for services rendered
during the related Collection Period, which shall be equal to one-twelfth of the
Servicing Rate multiplied by the Pool Balance as of the first day of the related
Collection Period or, with respect to the first Distribution Date, the Original
Pool Balance.
"BOOK-ENTRY CERTIFICATES" and "BOOK-ENTRY NOTES" mean, respectively,
beneficial interests in Certificates or Notes, as the case may be, ownership and
transfers of which shall be made through book entries by a Clearing Agency as
described in the Trust Agreement and the Indenture, respectively.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York, or Los Angeles, California
are authorized or obligated by law, regulation, executive order or governmental
decree to remain closed.
"CERTIFICATE OF TRUST" shall have the meaning assigned to such term in
the Trust Agreement.
"CERTIFICATES" shall have the meaning assigned to such term in the
Trust Agreement.
"CERTIFICATE BALANCE" means, as of any Distribution Date and for each
Class of Certificates, the Original Certificate Balance of such Class, reduced
by all amounts distributed to the Certificateholders of such Class pursuant to
Section 5.06(c) and/or (d) hereof (but in no event less than zero). When the
term "Certificate Balance" is not used in respect of any Class of
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Certificates, then it shall mean the sum of the Certificate Balance of the
Class C Certificates and the Class D Certificates. For the purposes of
determining whether the vote of the requisite percentage of
Certificateholders necessary to effect any consent, waiver, request or demand
shall have been obtained, the Certificate Balance shall be deemed to be
reduced by the amount equal to the balance (without giving effect to this
provision) evidenced by any Certificate registered in the name of the Seller,
the Servicer or any Person actually known to a Trust Officer of the Owner
Trustee or Indenture Trustee, as the case may be, to be the Seller or the
Servicer or any of their Affiliates.
"CERTIFICATE DEPOSITORY AGREEMENT" shall have the meaning assigned to
such term in the Trust Agreement.
"CERTIFICATE FACTOR" means, with respect to any Class of Certificates
and any Distribution Date, a seven-digit decimal figure obtained by dividing the
Certificate Balance of such Class of Certificates as of the close of business on
such Distribution Date by the Original Certificate Balance of such Class of
Certificates.
"CERTIFICATEHOLDERS" shall have the meaning assigned to such term in
the Trust Agreement.
"CERTIFICATEHOLDERS' DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Aggregate Certificateholders' Interest
Distributable Amount and the Certificateholders' Principal Distributable Amount,
if any, for the most senior Class of Certificates for such Distribution Date.
"CERTIFICATEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, with respect
to any Distribution Date and a Class of Certificates, the excess, if any, of the
sum of the Certificateholders' Monthly Interest Distributable Amount for such
Class for the preceding Distribution Date plus any outstanding
Certificateholders' Interest Carryover Shortfall for such Class on such
preceding Distribution Date, over the amount in respect of interest that is
actually paid on the Certificates of such Class on such preceding Distribution
Date, plus, to the extent permitted by applicable law, interest on the
Certificateholders' Interest Carryover Shortfall at the related Pass-Through
Rate for such Class.
"CERTIFICATEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with respect
to any Distribution Date and a Class of Certificates, the sum of the
Certificateholders' Monthly Interest Distributable Amount for such Class and the
Certificateholders' Interest Carryover Shortfall for such Class for the
immediately preceding Distribution Date.
"CERTIFICATEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date and a Class of Certificates, interest accrued
for the related Interest Period at the related Pass-Through Rate for such Class
of Certificates on the Certificate Balance of such Class on the immediately
preceding Distribution Date, after giving effect to all payments of principal to
Certificateholders of such Class on or prior to such Distribution Date (or, in
the case of the first Distribution Date, on the Original Certificate Balance of
such Class of Certificates).
"CERTIFICATEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means,
with respect to any Distribution Date, the Certificateholders' Percentage of the
Available Principal for such
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Distribution Date.
"CERTIFICATEHOLDERS' PERCENTAGE" means the following: (i) for each
Distribution Date until the principal amount of all of the Notes has been paid
in full, 0%; and (ii) for each Distribution Date after the Distribution Date on
which the principal amount of all of the Notes is reduced to zero, 100%.
"CERTIFICATEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, with respect
to any Distribution Date and a Class of Certificates, the excess, if any, of the
Certificateholders' Monthly Principal Distributable Amount for such Class plus
any outstanding Certificateholders' Principal Carryover Shortfall for such Class
for the preceding Distribution Date over the amount in respect of principal that
is actually distributed to the Certificateholders on such current Distribution
Date.
"CERTIFICATEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date and a Class of Certificates, the sum of (i) the
Certificateholders' Monthly Principal Distributable Amount for such Distribution
Date, (ii) any outstanding Certificateholders' Principal Carryover Shortfall for
such Class as of the close of the immediately preceding Distribution Date, and
(iii) on the Final Scheduled Distribution Date for such Class of Certificates,
the amount necessary to reduce the outstanding principal amount of such Class of
Certificates to zero; PROVIDED, HOWEVER, that the Certificateholders' Principal
Distributable Amount with respect to a Class of Certificates shall not exceed
the Certificate Balance of such Class of Certificates.
"CERTIFICATE POOL FACTOR" means, with respect to any Class of
Certificates and any Distribution Date, a seven-digit decimal figure obtained by
dividing the Certificate Balance of such Class of Certificates as of the close
of business on the last day of the related Collection Period by the Original
Pool Balance.
"CERTIFICATE REGISTER" means the register maintained by the Owner
Trustee pursuant to the Trust Agreement recording the name of each
Certificateholder.
"CLASS" means any one of the classes of Notes or Certificates, as the
case may be.
"CLASS A-1 INTEREST RATE" means ___% per annum.
"CLASS A-1 NOTE" means any of the [__%] Asset Backed Notes, Class A-1,
issued under the Indenture.
"CLASS A-1 NOTEHOLDER" means the Person in whose name a Class A-1 Note
is registered in the Note Register.
"CLASS A-2 INTEREST RATE" means ___% per annum.
"CLASS A-2 NOTE" means any of the [__%] Asset Backed Notes, Class A-2,
issued under the Indenture.
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"CLASS A-2 NOTEHOLDER" means the Person in whose name a Class A-2 Note
is registered in the Note Register.
"CLASS A-3 INTEREST RATE" means ___% per annum.
"CLASS A-3 NOTE" means any of the [__%] Asset Backed Notes, Class A-3,
issued under the Indenture.
"CLASS A-3 NOTEHOLDER" means the Person in whose name a Class A-3 Note
is registered in the Note Register.
"CLASS B INTEREST RATE" means ___% per annum.
"CLASS B NOTE" means any of the [__%] Asset Backed Notes, Class B,
issued under the Indenture.
"CLASS B NOTEHOLDER" means the Person in whose name a Class B Note is
registered in the Note Register.
"CLASS C CERTIFICATEHOLDER" means the holder of any Class C Certificate
as evidenced by the Certificate Register.
"CLASS C PASS-THROUGH RATE" means [_______]% per annum.
"CLASS D CERTIFICATEHOLDER" means the holder of any Class D Certificate
as evidenced by the Certificate Register.
"CLASS D PASS-THROUGH RATE" means [_______]% per annum.
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"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.
"CLOSING DATE" means [_______].
"CODE" means the Internal Revenue Code of 1986.
"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, or, in the case of the initial Distribution Date, the
period from the Cutoff Date to [__________]. 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:
(i) all applications of collections, (ii) all Advances and reductions of
Outstanding Advances and (iii) all distributions.
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"COMMISSION" means the Securities and Exchange Commission, and any
successor thereto.
"CONTROLLING CLASS OF CERTIFICATES" means, on any date of
determination, until the Class C Certificates have been paid in full, the Class
C Certificates, and thereafter, the Class D Certificates.
"CONTROLLING CLASS OF NOTES" means, on any date of determination, until
the Class A Notes have been paid in full, the Class A Notes, and thereafter, the
Class B Notes.
"CORPORATE TRUST OFFICE" shall have the meaning assigned to such term
in the Indenture.
"CUTOFF DATE" means [_______].
"DAMAGES" shall have the meaning assigned to such term in Section 7.02.
"DEALER" means the dealer who sold a Financed Vehicle and who
originated and assigned the related Receivable to NMAC under an existing
agreement between such dealer and NMAC.
"DEALER RECOURSE" means, with respect to a Receivable, all recourse
rights against the Dealer which originated the Receivable, and any successor
Dealer.
"DEFAULTED RECEIVABLE" means a Receivable (other than an Administrative
Receivable or a Warranty 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.
"DEFINITIVE CERTIFICATES" and "DEFINITIVE NOTES" shall have the
meanings ascribed thereto in the Trust Agreement and the Indenture,
respectively.
"DEPOSITOR" means the Seller in its capacity as Depositor under the
Trust Agreement.
"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
calendar day of the following calendar month, or if the 15th day is not a
Business Day, the next following Business Day, commencing [_______].
"DTC" means The Depository Trust Company.
"ELIGIBLE DEPOSIT ACCOUNT" means an account maintained (i) with the
Indenture Trustee or the Owner Trustee as long as the Indenture Trustee's or the
Owner Trustee's short-term unsecured debt obligations have a rating of "P-1" by
Moody's and a rating of "A-1+" by Standard & Poor's (the "REQUIRED DEPOSIT
RATING"), or (ii) in a segregated trust account in the trust department of the
Indenture Trustee or the Owner Trustee, as the case may be.
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"ELIGIBLE INVESTMENTS" means, at any time, any one or more of the
following obligations and securities:
(i) direct obligations of, and obligations fully
guaranteed as to timely payment of principal and interest by, the
United States of America;
(ii) demand deposits, time deposits or certificates of
deposit of any depository institution or trust company incorporated
under the laws of the United States of America or any state thereof (or
any domestic branch of a foreign bank) and subject to supervision and
examination by Federal or State banking or depository institution
authorities; PROVIDED, HOWEVER, that at the time of the investment or
contractual commitment to invest therein, the commercial paper or other
short-term unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a Person other than such
depository institution or trust company) thereof shall have a credit
rating from each of the Rating Agencies in the highest investment
category granted thereby;
(iii) commercial paper having, at the time of the investment
or contractual commitment to invest therein, a rating from each of the
Rating Agencies in the highest investment category granted thereby;
(iv) investments in money market funds having a rating from
each of the Rating Agencies in the highest investment category granted
thereby (including funds for which the Owner Trustee, the Indenture
Trustee or any of their respective Affiliates is investment manager or
advisor);
(v) bankers' acceptances issued by any depository
institution or trust company referred to in clause (ii) above;
(vi) 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
(ii);
(vii) 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 (ii) above (except
that the rating referred to in the proviso in such clause (ii) shall be
"A-1" or higher in the case of Standard & Poor's) (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 Exchange Act
(a "broker/dealer"), the unsecured short-term debt obligations of which
are rated "P-1" by Moody's and at least "A-1" by Standard & Poor's 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 and at least "A-1" by Standard &
Poor's at the time of entering into such repurchase obligation (a
"Rated Holding Company"), or (d) an unrated
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wholly-owned subsidiary of a direct or indirect parent Rated Holding
Company, which guarantees such subsidiary's obligations under such
repurchase agreement (a "Guaranteed Counterparty"); 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 a Guaranteed
Counterparty in respect of which the unsecured short-term
ratings of Standard & Poor's 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 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 Reserve Account and the
Yield Supplement Account, the rating from Standard & Poor's 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 Indenture Trustee or the
Owner Trustee, 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 Indenture Trustee or the Owner Trustee,
as applicable;
(F) the repurchase obligation shall require that
the collateral subject thereto shall be marked to market
daily;
(G) in the case of a repurchase obligation of a
Guaranteed Counterparty, the following conditions shall also
be satisfied:
(1) the Indenture Trustee or the Owner
Trustee, 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 to the effect of bankruptcy, insolvency,
reorganization and moratorium or other similar laws
affecting creditors' rights generally and to general
equitable principles;
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(2) the Indenture Trustee or the Owner
Trustee, 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;
(3) 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 Indenture Trustee or the
Owner Trustee, as applicable, shall make a demand on
the Rated Holding Company to make the payment due
under such guarantee;
(4) the guarantee of the Rated Holding
Company shall be irrevocable with respect to such
repurchase obligation and shall not be subordinated
to any other obligation of the Rated Holding Company;
and
(5) each of the Rating Agencies has
confirmed in writing to the Indenture Trustee or the
Owner Trustee, 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 Notes or
the Class C 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 unsatisfied portion of the repurchase
obligation; and
(viii) any other investment with respect to which the Servicer
has received written notification from the Rating Agencies that the
acquisition of such investment as an Eligible Investment will not
result in a withdrawal or downgrading of the ratings on the Notes or
the Class C Certificates;
provided that, unless otherwise expressly stated herein, each of the foregoing
investments shall mature no later than the Business Day prior to the
Distribution Date immediately following the date of purchase, and shall be
required to be held to such maturity.
For purposes of this definition, any reference to the highest available
credit rating of an obligation shall mean the highest available credit rating
for such obligation (excluding any "+" signs associated with such rating), or
such lower credit rating (as approved in writing by each
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Rating Agency) as will ont result in the qualification, downgrading or
withdrawal of the rating then assigned by such Rating Agency to any of
the Notes.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in the
Indenture.
"EXCESS PROCEEDS" shall have the meaning assigned to such term in
Section 6.02(b).
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"FINAL SCHEDULED DISTRIBUTION DATE" means, with respect to the Class
A-1 Notes, the Distribution Date in [_______]; with respect to the Class A-2
Notes, the Distribution Date in [_______]; with respect to the Class A-3 Notes,
the Distribution Date in [_______]; with respect to the Class B Notes, the
Distribution Date in [_______]; with respect to the Class C Certificates, the
Distribution Date in [_______]; and with respect to the Class D Certificates,
the Distribution Date in [_______].
"FINANCED VEHICLE" means a new, near-new or used automobile or
light-duty truck, together with all accessions thereto, securing an Obligor's
indebtedness under the related Receivable.
"HOLDER" or "SECURITYHOLDER" means the registered holder of any
Certificate or Note as evidenced by the Certificate Register (as defined in the
Trust Agreement) or Note Register (as defined in the Indenture) except that,
solely for the purposes of giving certain consents, waivers, requests or demands
pursuant to the Trust Agreement or the Indenture, the interest evidenced by any
Certificate or Note registered in the name of NARC or NMAC, or any Person
actually known to a Trust Officer to be an Affiliate of NARC or NMAC, 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.
"INDENTURE" means the Indenture dated as of [_______], between the
Issuer and the Indenture Trustee.
"INDENTURE TRUSTEE" means the Person acting as Indenture Trustee under
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"INITIAL YIELD SUPPLEMENT AMOUNT" means $[_____________].
"INSOLVENCY EVENT" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or all or substantially all of its property
in an involuntary case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for all or substantially all of its property, or
ordering the winding-up or liquidation of such Person's affairs, and such decree
or order shall remain unstayed and in effect for a period of 90 consecutive
days; or (b) the commencement by such Person of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by such Person to the entry of an order for
relief in an involuntary case under any such law, or the consent by such Person
to the appointment of or taking possession by a receiver,
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liquidator, assignee, custodian, trustee, sequestrator or similar official
for such Person or for all or substantially all of its property, or the
making by such Person of any general assignment for the benefit of creditors.
"INTEREST PERIOD" with respect to any Distribution Date and (i) the
Class A-1 Notes, means the period from, and including, the preceding
Distribution Date (or, in the case of the initial Interest Period, from and
including the Closing Date) to, but excluding, such Distribution Date; and (ii)
in the case of each other Class of Notes or Certificates, means the period from,
and including, the 15th day of the preceding calendar month (or, in the case of
the initial Interest Period, from and including the Closing Date) to, but
excluding, the 15th day of the month in which such Distribution Date occurs.
"INTEREST RATE" means the Class A-1 Interest Rate, the Class A-2
Interest Rate, the Class A-3 Interest Rate or the Class B Interest Rate.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940.
"ISSUER" means Nissan Auto Receivables ____-_ Owner Trust.
"LIEN" means any 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 that attach to such Financed Vehicle by
operation of law.
"LIQUIDATED RECEIVABLE" means a Defaulted Receivable that has been
liquidated by the Servicer.
"MONTHLY REMITTANCE CONDITIONS" shall have the meaning assigned to such
term in Section 5.02.
"MOODY'S" means Moody's Investors Service, Inc.
"NARC" means Nissan Auto Receivables Corporation, a Delaware
corporation.
"NET LIQUIDATION PROCEEDS" means the monies collected from whatever
source 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.
"NISSAN" means Nissan Motor Co., Ltd.
"NMAC" means Nissan Motor Acceptance Corporation, in its individual
capacity and not as Servicer.
"NONRECOVERABLE ADVANCE" means any Outstanding Advance with respect to
(i) any Defaulted Receivable or (ii) any Receivable as to which the Servicer
determines that any recovery from payments made on or with respect to such
Receivable is unlikely.
"NOTE" means any one of the notes issued under the Indenture.
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"NOTE DEPOSITORY AGREEMENT" shall have the meaning assigned to such
term in the Indenture.
"NOTE FACTOR" means, with respect to any Class of Notes and any
Distribution Date, a seven-digit decimal figure obtained by dividing the
Outstanding Amount of such Class of Notes, as of the close of business on such
Distribution Date, by the initial Outstanding Amount of that Class of Notes.
"NOTEHOLDER" shall have the meaning assigned to such term in the
Indenture.
"NOTEHOLDERS' DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the Aggregate Noteholders' Interest Distributable Amount with
respect to such Distribution Date plus the Noteholders' Principal Distributable
Amount with respect to such Distribution Date for the most senior Class of
Notes.
"NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, with respect to any
Distribution Date and a Class of Notes, the excess, if any, of the sum of the
Noteholders' Monthly Interest Distributable Amount for such Class for the
preceding Distribution Date plus any outstanding Noteholders' Interest Carryover
Shortfall for such Class on such preceding Distribution Date, over the amount in
respect of interest that is actually paid on the Notes of such Class on such
preceding Distribution Date, plus, to the extent permitted by applicable law,
interest on the Noteholders' Interest Carryover Shortfall at the related
Interest Rate for the related Interest Period (calculated on the same basis as
interest on that Class of Notes for the same period).
"NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date and a Class of Notes, the sum of the Noteholder's Monthly
Interest Distributable Amount for such Class plus any outstanding Noteholder's
Interest Carryover Shortfall for such Class as of the close of the immediately
preceding Distribution Date.
"NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date and a Class of Notes, interest accrued for the
related Interest Period (calculated on the basis of, in the case of Class A-1
Notes, the actual number of days in such Interest Period and a year assumed to
consist of 360 days, and in the case of all other Classes of Notes, such
Interest Period being assumed to consist of 30 days and a year assumed to
consist of 360 days) at the related Interest Rate for such Class of Notes on the
outstanding amount of the Notes of such Class on the immediately preceding
Distribution Date, after giving effect to all payments of principal to
Noteholders of such Class on or prior to such Distribution Date (or, in the case
of the first Distribution Date, on the original principal amount of such Class
of Notes).
"NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, the Noteholders' Percentage of the Available
Principal for such Distribution Date.
"NOTEHOLDERS' PERCENTAGE" means (i) for each Distribution Date until
the aggregate principal amount of all of the Notes has been paid in full, 100%;
and (ii) thereafter, 0%.
"NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any
Distribution Date and a Class of Notes, the excess, if any, of the Noteholders'
Monthly Principal
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Distributable Amount for such Class plus any outstanding Noteholders'
Principal Carryover Shortfall for such Class for the preceding Distribution
Date over the amount in respect of principal that is actually paid as
principal on such Class on such current Distribution Date.
"NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date and a Class of Notes, the sum of (i) the Noteholders'
Monthly Principal Distributable Amount for such Distribution Date, (ii) any
outstanding Noteholders' Principal Carryover Shortfall for such Class as of the
close of the immediately preceding Distribution Date, and (iii) on the Final
Scheduled Distribution Date for such Class of Notes, the amount necessary to
reduce the outstanding principal amount of such Class of Notes to zero;
PROVIDED, HOWEVER, that the Noteholders' Principal Distributable Amount with
respect to a Class of Notes shall not exceed the outstanding amount of such
Class of Notes.
"NOTE OWNER" shall have the meaning assigned to such term in the
Indenture.
"NOTE POOL FACTOR" means, with respect to any Class of Notes and any
Distribution Date, a seven-digit decimal figure obtained by dividing the
Outstanding Amount of such Class of Notes as of the close of business on the
last day of the related Collection Period by the Original Pool Balance.
"NOTE REGISTER" means the register maintained by the Indenture Trustee
pursuant to the Indenture recording the name of each Noteholder.
"OBLIGOR" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle or any other Person who owes payments under the Receivable (but
excluding 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 the case may be.
"OPINION OF COUNSEL" means one or more written opinions of counsel who
may, except as otherwise provided herein, be an employee of or counsel to the
Issuer, the Seller or the Servicer, which counsel shall be reasonably acceptable
to the Indenture Trustee, the Owner Trustee or the Rating Agencies, as the case
may be.
"OPTIONAL PURCHASE PERCENTAGE" means 10.00%.
"OPTIONAL PURCHASE PRICE" means, with respect to any Distribution Date,
the sum of (i) the Outstanding Amount of all Classes of Notes, (ii) the
Noteholders' Interest Distributable Amount for all Classes of Notes for such
Distribution Date, (iii) the Certificate Balance of the Class C Certificates,
and (iv) the Certificateholders' Interest Distributable Amount for the Class C
Certificates for such Distribution Date.
"ORIGINAL CERTIFICATE BALANCE" means $[_________] for the Class C
Certificates and $[_________] for the Class D Certificates.
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"ORIGINAL POOL BALANCE" means the aggregate Principal Balance of the
Receivables on the Cutoff Date.
"ORIGINAL PRINCIPAL AMOUNT " means $[_________] for the Class A-1
Notes, $[_________] for the Class A-2 Notes, $[_________] for the Class A-3
Notes and $[_________] for the Class B Notes.
"OUTSTANDING ADVANCES" means, with respect to a Receivable and the last
day of a Collection Period, the sum of all Advances made as of or prior to such
date, minus all payments or collections as of or prior to such date that are
specified in Sections 5.04(b) and 5.04(d) as applied to reimburse all unpaid
Advances with respect to such Receivable.
"OUTSTANDING AMOUNT" means the aggregate principal amount of all Notes,
or, if indicated by the context, all Notes of any Class, outstanding at the date
of determination; PROVIDED that for the purposes of determining whether the vote
of the requisite percentage of Noteholders necessary to effect any consent,
waiver, request or demand shall have been obtained, the Outstanding Amount shall
be deemed to be reduced by the amount equal to the principal amount (without
giving effect to this provision) evidenced by any Note registered in the name of
the Seller, the Servicer or any Person actually known to a Trust Officer of the
Owner Trustee or Indenture Trustee, as the case may be, to be an Affiliate of
the Seller or the Servicer.
"OWNER TRUST ESTATE" means all right, title and interest of the Trust
in and to the Receivables (other than the Warranty Receivables for which the
Seller has paid the Warranty Purchase Payment in accordance with Section 3.02
and Administrative Receivables for which the Servicer has paid the
Administrative Purchase Payment in accordance with Section 4.06), and all monies
paid thereon, and all monies accrued thereon, on or after the Cutoff Date;
security interests in the Financed Vehicles and any accessions thereto; funds
deposited in the Collection Account; all property (including the right to
receive Net Liquidation Proceeds) that shall have secured a Receivable and that
shall have been acquired by or on behalf of the Owner Trustee; proceeds from
claims on any physical damage, credit life or disability insurance policies
covering the Financed Vehicles or the Obligors; all Dealer Recourse; all right,
title and interest of the Seller in and to the Purchase Agreement and the Yield
Supplement Agreement; all right, title and interest of the Owner Trustee and the
Trust pursuant to this Agreement and the Administration 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.
"OWNER TRUSTEE" means the Person acting as Owner Trustee under the
Trust Agreement, its successors in interest and any successor owner trustee
under the Trust Agreement.
"PASS-THROUGH RATE" means the Class C Pass-Through Rate or the Class D
Pass-Through Rate.
"PAYING AGENT" shall have the meaning assigned to such term in the
Indenture.
"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.
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"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 Administrative Receivables, Warranty Receivables and Defaulted
Receivables) as of the close of business on such day; PROVIDED, HOWEVER, that
where the Pool Balance is relevant in determining whether the requisite
percentage of Certificateholders or Noteholders (or relevant Class or Classes of
Certificates or Notes, as the case may be) 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 applicable Certificate or Note registered in the name of the Seller, the
Servicer or any Person actually known to a Trust Officer of the Owner Trustee or
the Indenture Trustee, as the case may be, to be an Affiliate of the Seller or
the Servicer.
"POOL FACTOR" for a particular Class of Notes or Certificates on any
Distribution Date means a seven-digit decimal figure indicating the principal
amount of such Class of Notes or the Certificate Balance of such Class of
Certificates, as the case may be, as of the close of business on the last day of
the related Collection Period as a fraction of the Original Pool Balance.
"PREPAYMENT" means, with respect to any Receivable, any prepayment,
whether in part or in full, in respect of such Receivable.
"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
allocable 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 Administrative Purchase Payment or the Warranty Purchase Payment with
respect to the Receivable allocable to principal and (iv) any Net Liquidation
Proceeds allocable to principal.
"PURCHASE AGREEMENT" means that certain agreement, dated as of
[______________]. among ___________, relating to the purchase by the Seller from
NMAC of the Receivables.
"RATING AGENCY" means, as of any date, any of the nationally recognized
statistical rating organizations that has been requested by the Seller or one of
its Affiliates to rate any Class of Certificates or Notes and that is rating
such Class of Certificates or Notes, as the case may be, on such date.
"RECEIVABLE" means any retail installment sale contract that appears on
Schedule A to this Agreement (which Schedule A may be in the form of microfiche,
CD, datatape or paper) and that has not been released by the Owner Trustee from
the Trust.
"RECEIVABLE FILE" means the documents specified in Section 2.02
pertaining to a particular Receivable.
"RECORD DATE" means, with respect to the Notes or Certificates of any
Class and each Distribution Date, the 14th day of the calendar month in which
such Distribution Date occurs, or, if Definitive Notes representing any Class of
Notes or Definitive Certificates representing any Class of Certificates have
been issued, the last day of the Collection Period preceding the related
Distribution Date. Any amount stated "as of a Record Date" or "on a Record Date"
shall give
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effect to (i) all applications of collections, and (ii) all distributions to
any party under this Agreement, the Indenture and the Trust Agreement or to
the related Obligor, as the case may be, in each case as determined as of the
opening of business on the related Record Date.
"RELEVANT TRUSTEE" means (i) with respect to the control over or
appropriate designation denoting ownership or control over any property
comprising a portion of the Owner Trust Estate that either is not conveyed or
pledged to the Indenture Trustee for the benefit of the Noteholders pursuant to
the Granting Clause of the Indenture or that has been released from the lien of
the Indenture, the Owner Trustee, and (ii) with respect to any property
comprising a portion of the Trust Estate (as defined in the Indenture) that has
not been released from the lien of the Indenture, the Indenture Trustee;
PROVIDED, HOWEVER, that with respect to any property that is under the joint or
separate control of a co-trustee or separate trustee under the Trust Agreement
or the Indenture, respectively, "Relevant Trustee" shall refer to either or both
of the Owner Trustee and such co-trustee or separate trustee or to either or
both of the Indenture Trustee and such co-trustee or separate trustee, as the
case may be.
"REQUIRED DEPOSIT RATING" shall have the meaning assigned to such term
in the definition of "Eligible Deposit Account."
"REQUIRED RATE" means, with respect to each Collection Period, the sum
of the Servicing Rate and [specify rate].
"REQUIRED YIELD SUPPLEMENT AMOUNT" means, with respect to any
Distribution Date, an amount equal to the lesser of (i) the maximum aggregate
Yield Supplement Deposit that will become due under the Yield Supplement
Agreement, assuming that payments on the Receivables are made on their scheduled
due dates and no Receivable becomes a prepaid Receivable, or (ii) the Initial
Yield Supplement Amount.
"RESERVE ACCOUNT" means the account designated as such, established and
maintained pursuant to Section 5.07.
"RESERVE ACCOUNT INITIAL DEPOSIT" means $[_______].
"SCHEDULE OF RECEIVABLES" means the schedule of receivables attached as
Schedule A to this Agreement, as it may be amended from time to time.
"SCHEDULED PAYMENT" on a Receivable means the payment required to be
made by the Obligor during each Collection Period that is sufficient to amortize
the related Principal Balance under the Simple Interest Method over the term of
the Receivable and to provide interest at the related APR.
"SECURITIES ACCOUNT CONTROL AGREEMENT" means the Securities Account
Control Agreement dated [__________], among the Seller, [___________], as
Securities Intermediary thereunder, [__________], as Indenture Trustee, and
[___________], as Owner Trustee, pursuant to which the Reserve Account and the
Yield Supplement Account will be established and maintained.
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"SECURITIES INTERMEDIARY" shall have the meaning assigned to such term
in the Securities Account Control Agreement.
"SECURITIES ACT" means the Securities Act of 1933.
"SECURITYHOLDERS" - see the definition of "Holder."
"SELLER" means NARC, as the seller of the Receivables under this
Agreement, and each successor to NARC (in the same capacity) pursuant to Section
6.04.
"SERVICER" means NMAC, as the servicer of the Receivables, and each
successor to NMAC (in the same capacity) pursuant to Section 7.03 or 8.02.
"SERVICER'S CERTIFICATE" means a certificate completed and executed on
behalf of the Servicer by the president, any executive vice president, any vice
president, the treasurer, any assistant treasurer, the controller or any
assistant controller of the Servicer pursuant to Section 4.08.
"SERVICER DEFAULT" means an event specified in Section 8.01.
"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.
"SPECIFIED RESERVE ACCOUNT BALANCE" means with respect to any
Distribution Date, an amount equal to [INSERT FORMULA].
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a
Division of the McGraw-Hill Companies.
"SUCCESSOR SERVICER" means any entity appointed as a successor to the
Servicer pursuant to Section 8.02.
"SUPPLEMENTAL SERVICING FEE" means, with respect to any Distribution
Date, all late fees, prepayment charges and other administrative fees and
expenses or similar charges allowed by applicable law with respect to the
Receivables received by the Servicer during the related Collection Period and
any interest earned from the investment of monies in the Accounts (other than
the Yield Supplement Account and the Reserve Account) during the related
Collection Period.
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"TOTAL SERVICING FEE" means the sum of the Base Servicing Fee and the
Supplemental Servicing Fee.
"TRUST" means the Issuer.
"TRUST AGREEMENT" means the Amended and Restated Trust Agreement, dated
as of [_______], between the Seller and the Owner Trustee.
"TRUST COLLECTION ACCOUNT" shall have the meaning assigned to such term
in Section 5.01(c).
"TRUST ESTATE" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security interest of
the Indenture for the benefit of the Noteholders (including, without limitation,
all property and interests granted to the Indenture Trustee pursuant to the
Granting Clause of the Indenture), including all proceeds thereof.
"TRUST OFFICER" means, in the case of the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any Vice President, Assistant Vice President, Secretary, Assistant Secretary or
any other officer of the Indenture Trustee customarily performing functions
similar to those performed by any of the above designated officers and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject and, with respect to the Owner Trustee, any officer in the
Corporate Trust Administration Department of the Owner Trustee with direct
responsibility for the administration of the Trust Agreement and the Basic
Documents on behalf of the Owner Trustee.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction.
"USAP" shall have the meaning assigned to such term in Section 4.10.
"UNITED STATES" means the United States of America.
"WARRANTY PURCHASE PAYMENT" for any Warranty Receivable as of the last
day 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 related
APR, after giving effect to the receipt of monies collected (from whatever
source other than Advances) on such Warranty Receivable, if any, during
Collection Period.
"WARRANTY RECEIVABLE" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Seller pursuant to
Section 3.02.
"YIELD SUPPLEMENT ACCOUNT" means the segregated trust account
established and maintained for the benefit of the Noteholders and the Class C
Certificateholders pursuant to Section 5.08(a).
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"YIELD SUPPLEMENT AGREEMENT" means the agreement, dated as of the date
of this agreement, between [___________________], substantially in the form
attached hereto as EXHIBIT A.
"YIELD SUPPLEMENT AMOUNT" means, with respect to any Distribution Date,
the aggregate amount on deposit in the Yield Supplement Account after giving
effect to the withdrawal therefrom of the related Yield Supplement Deposit and
without regard to any amounts on deposit therein in respect of interest or
investment earnings earned on the investment of amounts on deposit therein in
Eligible Investments for any period.
"YIELD SUPPLEMENT DEPOSIT" means, with respect to any Distribution
Date, the amount by which (i) the aggregate amount of interest that would have
been due during the related Collection Period on all Yield Supplemented
Receivables if such Yield Supplemented Receivables bore interest at the Required
Rate exceeds (ii) the amount of interest accrued on such Yield Supplemented
Receivables at their respective APRs and due during such Collection Period.
"YIELD SUPPLEMENTED RECEIVABLE" means any Receivable that has an APR
less than the Required Rate.
SECTION 1.02 USAGE OF TERMS. With respect to all terms in this
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, amendments and restatements and supplements thereto or
changes therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; references to laws include their amendments and
supplements, the rules and regulations thereunder and any successors thereto;
and the term "including" means "including without limitation."
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.01 CONVEYANCE OF RECEIVABLES.
(a) In consideration of the premises and the agreements, provisions and
covenants herein contained and other good and valuable consideration to be
delivered to the Seller hereunder, on behalf of the Issuer, the Seller does
hereby sell, transfer, assign and otherwise convey to the Owner Trustee on
behalf of the Issuer, without recourse (but subject to the Seller's obligations
in this Agreement), in trust for the benefit of the Noteholders and the
Certificateholders:
(i) all right, title and interest of the Seller in and to
the Receivables listed in SCHEDULE A hereto and all monies due thereon
or paid thereunder or in respect thereof (including proceeds of the
repurchase of Receivables by the Seller pursuant to
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Section 3.02 or the purchase of Receivables by the Servicer pursuant
to Section 4.06 or 9.01) on or after the Cutoff Date;
(ii) amounts on deposit in the Accounts;
(iii) the right of the Seller in the security interests in
the Financed Vehicles granted by the Obligors pursuant to the
Receivables and any related property;
(iv) the right 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;
(v) the right of the Seller through NMAC in any Dealer
Recourse;
(vi) the right of the Seller under this Agreement, the
Purchase Agreement and the Yield Supplement Agreement;
(vii) the right of the Seller to realize upon any property
(including the right to receive future Net Liquidation Proceeds) that
shall have secured a Receivable;
(viii) the right of the Seller in rebates of premiums and
other amounts relating to insurance policies and other items financed
under the Receivables in effect as of the Cutoff Date;
(ix) all other assets comprising the Owner Trust Estate; and
(x) all proceeds of the foregoing.
Concurrently therewith and in exchange therefor, the Issuer shall
deliver to, or to the order of, the Seller the Notes and the Certificates.
(b) It is the intention of the Seller that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Receivables from
the Seller to the Issuer and the beneficial interest in and title to the
Receivables shall 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. The
Seller agrees to execute and file all filings (including filings under the UCC)
necessary in any jurisdiction to provide third parties with notice of the sale
of the Receivables pursuant to this Agreement and to perfect such sale under the
UCC.
(c) Although the parties hereto intend that the transfer and assignment
contemplated by this Agreement be a sale, if such transfer and assignment is
deemed to be other than a sale, the parties intend that all filings described in
the foregoing paragraph shall give the Owner Trustee on behalf of the Issuer a
first priority perfected security interest in, to and under the Receivables, and
other property conveyed hereunder and all proceeds of any of the foregoing. This
Agreement shall be deemed to be the grant of a security interest from the Seller
to the Owner Trustee on behalf of the Issuer, and the Owner Trustee on behalf of
the Issuer shall have all the rights, powers and privileges of a secured party
under the UCC.
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(d) In connection with the foregoing conveyance, the Servicer shall
maintain its computer system so that, from and after the time of sale of the
Receivables to the Owner Trustee on behalf of the Issuer under this Agreement,
the Servicer's master computer records that refer to any Receivable indicate
clearly the interest of the Issuer in such Receivables and that such Receivable
is owned by the Issuer and controlled by the Owner Trustee on behalf of the
Issuer. Indication of the Issuer's ownership of a Receivable shall be deleted
from or modified on the Servicer's computer systems when, and only when, the
Receivable has been paid in full, repurchased or assigned pursuant to this
Agreement.
(e) Ownership and control of the Receivables, as among the Issuer, the
Owner Trustee and the Indenture Trustee (on behalf of the Noteholders and
Certificateholders) shall be governed by the Indenture.
SECTION 2.02 CUSTODY OF RECEIVABLES FILES. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Owner Trustee
on behalf of the Issuer, upon the execution and delivery of this Agreement,
appoints the Servicer, and the Servicer accepts such appointment, to act as the
agent of the Issuer as custodian of the following documents or instruments that
are hereby constructively delivered to the Owner Trustee with respect to each
Receivable:
(a) the original of such Receivable (or a photocopy or other image
thereof that the Servicer shall keep on file in accordance with its customary
procedures) fully executed by the Obligor;
(b) the original credit application fully executed by the related
Obligor (or a photocopy or other image thereof that the Servicer shall keep on
file in accordance with its customary procedures);
(c) the original certificate of title (or a photocopy or other image
thereof or such documents that the Servicer shall keep on file in accordance
with its customary procedures), evidencing the security interest of the Servicer
in the related Financed Vehicle; and
(d) any and all other documents that the Servicer shall keep on file,
in accordance with its customary procedures, relating to such Receivable, the
related Obligor or Financed Vehicle.
SECTION 2.03 ACCEPTANCE BY OWNER TRUSTEE. The Owner Trustee hereby
acknowledges its acceptance, on behalf of the Issuer, pursuant to this
Agreement, of all right, title and interest in and to the Receivables conveyed
by the Seller pursuant to this Agreement and declares and shall declare from and
after the date hereof that the Owner Trustee holds and shall hold such right,
title and interest, upon the terms and conditions set forth in this Agreement.
ARTICLE III
THE RECEIVABLES
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SECTION 3.01 REPRESENTATIONS AND WARRANTIES OF THE SELLER WITH RESPECT
TO THE RECEIVABLES. The Seller makes the following representations and
warranties as to the Receivables on which the Issuer is deemed to have relied in
acquiring the Receivables. Such representations and warranties speak as of the
execution and delivery of this Agreement and as of the Closing Date, but shall
survive the sale, transfer and assignment of the Receivables to the Issuer and
the pledge thereof to the Indenture Trustee pursuant to the Indenture.
(a) CHARACTERISTICS OF RECEIVABLES. Each Receivable (i) 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, (ii) created a valid, subsisting and
enforceable security interest in favor of NMAC in such 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 Owner Trustee in accordance with the
terms hereof, (iii) 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
(iv) 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 [___] months and
yield interest at the related APR.
(b) 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 (other than contracts originated in Alabama) 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.
(c) 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 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.
(d) 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, moratorium or other similar laws affecting creditors'
rights generally and by general equitable principles.
(e) SECURITY INTEREST IN FINANCED VEHICLE. (i) Immediately
prior to the sale, assignment and transfer thereof to the Owner
Trustee, 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 (ii) as of the Cutoff Date, according to the records of
NMAC, no Financed Vehicle has been repossessed and not reinstated.
(f) 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.
(g) NO WAIVER. No provision of a Receivable has been waived in
a manner that is prohibited by the provisions of Section 4.01 or that
would cause such Receivable to fail to meet all of the other
requirements and warranties made by the Seller herein with respect
thereto.
(h) 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.
(i) 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.
(j) 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 (other than deferrals and waivers of late payment
charges or fees permitted hereunder).
(k) INSURANCE. NMAC, in accordance with its customary
procedures, has determined at the time of origination of each
Receivable that the related Obligor has agreed to obtain physical
damage insurance covering the Financed Vehicle and the Obligor is
required under the terms of the related Receivable to maintain such
insurance.
(l) 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. Immediately prior to the transfer and
assignment herein contemplated,
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the Seller had good and marketable title to each Receivable free and
clear of all Liens and immediately upon the transfer thereof, the
Owner Trustee, for the benefit of the Noteholders and the
Certificateholders, shall have good and marketable title to each
Receivable, free and clear of all Liens and rights of others.
(m) 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 Notes or the Certificates are unlawful,
void or voidable.
(n) ALL FILINGS MADE. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the
Relevant Trustee a first priority perfected ownership interest in the
Receivables have been made or have been delivered in form suitable for
filing to the Relevant Trustee.
(o) CHATTEL PAPER. Each Receivable constitutes "chattel
paper," as such term is defined in the UCC.
(p) SIMPLE INTEREST RECEIVABLES. All of the Receivables are
Simple Interest Receivables.
(q) ONE ORIGINAL. There is only one original executed copy of
each Receivable.
(r) NO AMENDMENTS. No Receivable has been amended such that
the amount of the Obligor's Scheduled Payments has been increased.
(s) APR. The APR of each Receivable equals or exceeds [__%].
(t) MATURITY. As of the Cutoff Date, each Receivable had a
remaining term to maturity of not less than [____] months and not
greater than [____] months.
(u) BALANCE. Each Receivable had an original Principal Balance
of not more than $[_______] and, as of the Cutoff Date, had a principal
balance of not less than $[_______] and not more than $[_______].
(v) 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.
(w) BANKRUPTCY. No Obligor was the subject of a bankruptcy
proceeding (according to the records of NMAC) as of the Cutoff Date.
(x) TRANSFER. Each Receivable prohibits the sale or transfer
of the Financed Vehicle without the consent of NMAC.
(y) NEW, NEAR-NEW AND USED VEHICLES. Each Financed Vehicle was
a new, near-new or used automobile or light-duty truck at the time the
related Obligor executed the retail installment sale contract.
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(z) ORIGINATION. Each Receivable has an origination date on or
after [_______].
(aa) LOCATION OF RECEIVABLE FILES. The Receivable Files shall
be kept at one or more of the locations listed in SCHEDULE B hereto.
(bb) FORCED-PLACED INSURANCE PREMIUMS. No contract
relating to any Receivable has had forced-placed insurance premiums
added to the amount financed.
(cc) NO FRAUD OR MISREPRESENTATION. To the 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
Owner Trustee, as the case may be, shall inform the other parties to this
Agreement and the Indenture Trustee promptly, in writing, upon the discovery of
any breach of the Seller's representations and warranties pursuant to Section
3.01 that materially and adversely affects any Receivable. Unless the breach
shall have been cured by the last day of the second Collection Period following
such discovery (or, at the Seller's election, the last day of the first
Collection Period following such discovery), the Seller shall be obligated
(whether or not such breach was known to the Seller on the Closing Date), and
the Owner 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. A breach of the
representation in Section 3.01(a)(iv), (t) or (u) shall be deemed to affect
materially and adversely the related Receivable. In consideration of the
purchase of the Receivables, the Seller shall remit the Warranty Purchase
Payment in the manner specified in Section 5.05. For purposes of this Section
3.02, the Warranty Purchase Payment of a Receivable that is not consistent with
the Seller's warranty pursuant to Section 3.01(a)(iv) 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 Owner
Trustee, the Trust, the Indenture Trustee (by operation of the assignment of the
Owner Trustee's rights hereunder pursuant to the Indenture) or any
Securityholder 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 and to enforce the obligation of NMAC to
the Seller to repurchase such Receivables pursuant to the Purchase Agreement.
SECTION 3.03 DUTIES OF SERVICER AS CUSTODIAN.
(a) SAFEKEEPING. The Servicer shall hold the Receivable Files as
custodian for the benefit of the Issuer and maintain such accurate and complete
accounts, records and computer systems pertaining to each Receivable File as
shall enable the Issuer to comply with this 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
this Agreement and of the related accounts, records and computer systems,
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in such a manner as shall enable the Issuer, the Owner Trustee or the
Indenture Trustee to verify the accuracy of the Servicer's record keeping.
The Servicer shall promptly report to the Issuer and the Indenture Trustee
any material failure on its part to hold the Receivable Files and maintain
its accounts, records and computer systems as herein provided in all material
respects and shall promptly take appropriate action to remedy any such
material failure. Nothing herein shall be deemed to require an initial review
or any periodic review by the Issuer, the Owner Trustee or the Indenture
Trustee of the Receivable Files.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall maintain
each Receivable File at one of its offices specified in SCHEDULE B or at such
other office as shall be specified to the Owner Trustee and the Indenture
Trustee by written notice from the Servicer not later than 90 days after any
change in location. The Servicer shall make available to the Owner Trustee and
the Indenture Trustee or their respective duly authorized representatives,
attorneys or auditors a list of locations of the Receivable Files and the
related accounts, records and computer systems maintained by the Servicer at
such times during normal business hours as the Owner Trustee or the Indenture
Trustee shall instruct. The Servicer shall permit the Owner Trustee, the
Indenture Trustee and their respective agents at any time during normal business
hours upon reasonable prior notice to inspect, audit and make copies of and
abstracts from the Servicer's records regarding any Receivable.
(c) RELEASE OF DOCUMENTS. Upon the occurrence and during the
continuation of a Servicer Default or to the extent necessary for the Indenture
Trustee to comply with its obligations under this Agreement, the Servicer shall,
upon instruction from the Indenture Trustee, release any Receivable File to the
Indenture Trustee, the Indenture Trustee's agent or the Indenture Trustee's
designee, as the case may be, at such place or places as the Indenture Trustee
may designate, as soon as practicable.
SECTION 3.04 INSTRUCTIONS; AUTHORITY TO ACT. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by a Trust Officer of the Owner
Trustee or the Indenture Trustee.
SECTION 3.05 CUSTODIAN'S INDEMNIFICATION. The Servicer, as custodian,
shall indemnify the Issuer, the Owner Trustee and the Indenture Trustee for any
and all liabilities, obligations, losses, compensatory damages, payments, costs
or expenses of any kind whatsoever that may be imposed on, incurred by or
asserted against any of them 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
to the Owner Trustee for any portion of any such amount resulting from the
willful misfeasance, bad faith or negligence of the Owner Trustee and the
Servicer shall not be liable to the Indenture Trustee for any portion of any
such amount resulting from the willful misfeasance, bad faith or negligence of
the Indenture Trustee.
SECTION 3.06 EFFECTIVE PERIOD AND TERMINATION. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date, and
shall continue in full force and effect until terminated pursuant to this
Section. If NMAC shall resign as Servicer in accordance with the provisions
of this Agreement or if all of the rights and obligations of any Servicer
shall have been terminated under Section 8.01, the appointment of NMAC as
custodian may be terminated
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by the Indenture Trustee or by the Holders of Notes evidencing not less than
25% of the Outstanding Amount of the Notes (but excluding for purposes of
such calculation and action all Securities held or beneficially owned by
NMAC, NARC or any of their Affiliates) or, with the consent of Holders of the
Notes evidencing not less than 25% of the Outstanding Amount of the Notes, by
the Owner Trustee or by the Certificateholders evidencing not less than 25%
of the Certificate Balance (but excluding for purposes of such calculation
and action all Securities held or beneficially owned by NMAC, NARC or any of
their Affiliates), in the same manner as the Indenture Trustee or such
Holders may terminate the rights and obligations of the Servicer under
Section 8.01. The Indenture Trustee or, with the consent of the Indenture
Trustee, the Owner Trustee may terminate the Servicer's appointment as
custodian, with cause, at any time upon written notification to the Servicer,
and without cause upon 30 days' prior written notification to the Servicer.
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 Relevant Trustee or the agent
thereof at such place or places as the Relevant Trustee may reasonably
designate.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.01 DUTIES OF SERVICER.
(a) 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 Defaulted
Receivables, Administrative Receivables or Warranty Receivables, the Servicer
shall not change the amount of or reschedule the due date of any Scheduled
Payment, change the APR of, or extend any Receivable except as provided herein
or change any material term of a Receivable; PROVIDED, HOWEVER, that:
(1) 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 (A) extend such Receivable for credit related reasons that would be
acceptable to the Servicer with respect to comparable new, near-new or
used automobile or light-duty truck receivables that it services for
itself, if the final scheduled payment date of such Receivable as
extended would not be later than the last day of the Collection Period
preceding the Final Scheduled Distribution Date for the Class C
Certificates; or (B) 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; or
(2) if 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
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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
last day of the Collection Period preceding the Final Scheduled
Distribution Date for the Class C Certificates; and
(3) 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.
(b) The Servicer's duties shall include collection and posting of all
payments, responding to inquiries of Obligors on the Receivables, investigating
delinquencies, sending remittance advises to Obligors, reporting tax information
to Obligors, accounting for collections, furnishing monthly and annual
statements to the Owner Trustee and the Indenture Trustee with respect to
distributions and making Advances pursuant to Section 5.04.
(c) Without limiting the generality of the foregoing, the Servicer is
authorized and empowered to execute and deliver, on behalf of itself, the Trust,
the Owner Trustee, the Indenture Trustee and the Securityholders 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 the
Receivables or to the Financed Vehicles securing the Receivables. If the
Servicer shall commence a legal proceeding to enforce a Receivable, the Owner
Trustee (in the case of a Receivable other than an Administrative Receivable or
a Warranty 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 Owner 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 Indenture Trustee or the
Securityholders. The Owner 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.
(d) 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. Nothing in the foregoing or in any other section of this Agreement
shall be construed to prevent the Servicer from implementing new programs,
whether on an intermediate, pilot or permanent basis, or on a regional or
nationwide basis, or from modifying its standards, policies and procedures as
long as, in each case, the Servicer does or would implement such programs or
modify its standards, policies and procedures in respect of comparable assets
serviced for itself in the ordinary course of business.
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 the Receivables as and when the same shall become due and shall
follow such collection procedures as it follows with respect to all comparable
receivables that it services for itself or others.
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
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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 related 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 Net Liquidation Proceeds.
SECTION 4.04 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 Servicer is
hereby authorized to take such steps as are necessary to re-perfect such
security interest on behalf of the Issuer and the Indenture Trustee in the event
of the relocation of a Financed Vehicle or for any other reason. If the
assignment of a Receivable to the Trust is insufficient, without a notation on
the related Financed Vehicle's certificate of title, to grant to the Trust a
first priority perfected security interest in the related Financed Vehicle, the
Servicer hereby agrees to serve as the agent of the Trust for the purpose of
perfecting the security interest of the Trust in such Financed Vehicle and
agrees that the Servicer's listing as the secured party on the certificate of
title is in this capacity as agent of the Trust.
SECTION 4.05 COVENANTS OF SERVICER.
(a) The Servicer shall not release the Financed Vehicle securing any
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.
(b) If the Servicer shall determine not to make an Advance related to
delinquency or non-payment of any Receivable pursuant to Section 5.04 because it
determines that such Advance would not be recoverable from subsequent
collections on such Receivable, such Receivable shall be designated by the
Servicer to be a Defaulted Receivable, provided that such Receivable otherwise
meets the definition of a Defaulted Receivable.
SECTION 4.06 PURCHASE OF RECEIVABLES UPON BREACH. The Servicer or the
Owner Trustee shall inform the other party and the Indenture Trustee promptly,
in writing, upon the discovery of any breach by the Servicer of its obligations
under the second sentence of Section 4.01 or under Section 4.02, 4.04 or 4.05
that would materially and adversely affect any Receivable. 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 discovery), the Servicer shall (whether or not such
breach was known to the Servicer on the Closing Date) purchase any Receivable
materially and adversely affected by such breach as of such last day. In
consideration of such Receivable, the Servicer shall remit the Administrative
Purchase Payment (as reduced by any Outstanding Advances with respect to such
Receivable) in the manner specified in Section 5.05. For the purposes of this
Section 4.06, the Administrative Purchase Payment shall consist in part of a
release by the Servicer of all rights of reimbursement with respect to
Outstanding Advances with respect to the purchased Receivable. The sole remedy
of the Indenture Trustee, the Owner Trustee, the Trust or the Securityholders
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against the Servicer with respect to a breach by the Servicer of its obligations
under the second sentence of Section 4.01 or under Section 4.02, 4.04 or 4.05
shall be to require the Servicer to purchase Receivables pursuant to this
Section 4.06.
SECTION 4.07 SERVICING FEE AND EXPENSES. As compensation for the
performance of its obligations hereunder, the Servicer shall be entitled to
receive on each Distribution Date the Total Servicing Fee. The Base Servicing
Fee in respect of a Collection Period shall be calculated based on a 360 day
year comprised of twelve 30-day months. Except to the extent otherwise provided
herein, the Servicer shall be required to pay all expenses incurred by it in
connection with its activities under this Agreement (including fees and
disbursements of the Indenture Trustee and independent accountants, taxes
imposed on the Servicer, expenses incurred in connection with distributions and
reports to Securityholders and all other fees and expenses not expressly stated
under this Agreement to be for the account of the Securityholders).
SECTION 4.08 SERVICER'S CERTIFICATE.
(a) On or before the tenth day of each month (or, if such tenth day is
not a Business Day, then on the next succeeding Business Day), the Servicer
shall deliver to the Owner Trustee, each Paying Agent, and the Indenture
Trustee, with a copy to each Rating Agency, a Servicer's Certificate containing
all information necessary to make the distributions pursuant to Sections 5.06,
5.07 and 5.08 (including the amount of the aggregate collections on the
Receivables, the aggregate Advances to be made by the Servicer, if any, the
aggregate Administrative Purchase Payments for any Administrative Receivables to
be purchased by the Servicer, and the aggregate Warranty Purchase Payments for
any Warranty Receivables to be purchased by the Seller) for the Collection
Period preceding the date of such Servicer's Certificate, all information
necessary for the Owner Trustee to send statements to Certificateholders and the
Indenture Trustee to send statements to the Noteholders pursuant to the Trust
Agreement or Indenture, as the case may be. Each of the Owner Trustee and the
Indenture Trustee may conclusively rely on the information in any Servicer's
Certificate and shall have no duty to confirm or verify the contents thereof.
(b) Concurrently with delivery of the Servicer's Certificate in each
month, the Servicer shall deliver to the underwriters of the Class A Notes,
the Class B Notes, the Class C Certificates and, if any Class D Certificate
is held by a Person other than the Seller or any Affiliate of the Seller, to
such Class D Certificateholder, the Note Factor for each Class of Notes, the
Certificate Factor for each Class of Certificates, and the Pool Factor for
each Class of Notes and Certificates, in each case as of the close of
business on the Distribution Date occurring in such month.
SECTION 4.09 ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT. (a)
The Servicer shall deliver to the Owner Trustee, the Indenture Trustee and each
of the Rating Agencies, on or before June 30 of each year, beginning June 30,
_____, an Officers' Certificate with respect to the prior twelve months ended on
March 31 of such calendar year (or with respect to the initial Officer's
Certificate, the period from the date of the initial issuance of the Securities
to March 31, ______), stating that that (1) a review of the activities of the
Servicer during the preceding 12-month (or shorter) period and of its
performance under this Agreement has been made under such officer's supervision
and (2) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout such
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twelve-month (or shorter) period, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof. A copy of such Officer's Certificate
may be obtained by any Certificateholder or Noteholder by a request in writing
to the Owner Trustee or the Indenture Trustee addressed as set forth in Section
10.03 hereof.
(b) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and each Rating Agency, 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 that with the giving of notice
or lapse of time, or both, would become a Servicer Default under Section 8.01.
The Seller shall deliver to the Owner Trustee, the Indenture Trustee and to each
such Rating Agency, 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 that with the giving of notice or lapse of time, or
both, would become an Event of Default under Section 8.01(a)(ii) or of any
lowering of the rating described in clause (ii)(A) of the definition of "Monthly
Remittance Condition."
SECTION 4.10 ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT.
The Servicer shall cause a firm of independent certified public accountants, who
may also render other services to the Servicer, the Seller or their Affiliates,
to deliver to the Owner Trustee, the Indenture Trustee and each of the Rating
Agencies, on or before June 30 of each year, beginning June 30, ______, with
respect to the prior 12 months ended on March 31 of such year (or with respect
to the initial reports, the period from the date of the initial issuance of the
Securities to March ______) 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 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-duty
truck loans serviced for others, and expressing such firm's opinion on such
management assertion (the "Annual USAP Report"). Upon the request of any
Certificate Owner or Note Owner, the Owner Trustee or the Indenture Trustee, as
the case may be, shall promptly provide such Certificate Owner or Note Owner
with a copy of such Annual USAP Report. For all purposes of this Agreement, the
Owner Trustee and the Indenture Trustee may rely on the representation of any
Person that it is a Certificate Owner or a Note Owner, as the case may be.
SECTION 4.11 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
RECEIVABLES. The Servicer shall provide to the Owner Trustee and the Indenture
Trustee access to the Receivable Files in such cases where the Securityholders
shall be required by applicable statutes or regulations to review such
documentation. In each case, such 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 Section shall affect the
obligation of the Servicer to observe any applicable law prohibiting disclosure
of information regarding the
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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.
SECTION 4.12 APPOINTMENT OF SUBSERVICER. So long as NMAC acts as the
Servicer, the Servicer may at any time without notice or consent subcontract
substantially all its duties under this Agreement to any corporation more than
50% of the voting stock of which is owned, directly or indirectly, by Nissan.
The Servicer may at any time perform specific duties as servicer under this
Agreement through other subcontractors; PROVIDED, HOWEVER, that no such
delegation or subcontracting shall relieve the Servicer of its responsibilities
with respect to such duties as to which the Servicer shall remain primarily
responsible with respect thereto.
SECTION 4.13 AMENDMENTS TO SCHEDULE OF RECEIVABLES. If the Servicer,
during any Collection Period, assigns to a Receivable an account number that
differs from the original account number identifying such Receivable on the
Schedule of Receivables, the Servicer shall deliver to the Owner Trustee and the
Indenture Trustee, on or before the Distribution Date relating to such
Collection Period, an amendment to the Schedule of Receivables reporting the
newly assigned account number, together with the old account number of each such
Receivable. The first such delivery of amendments to the Schedule of Receivables
shall include monthly amendments reporting account numbers appearing on the
Schedule of Receivables with the new account numbers assigned to such
Receivables during any prior Collection Period.
ARTICLE V
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 5.01 ESTABLISHMENT OF ACCOUNTS.
(a) The Servicer, on behalf of the Owner Trustee and the Indenture
Trustee, shall establish the Collection Account in the name of the Indenture
Trustee for the benefit of the Securityholders. The Collection Account shall be
a segregated trust account initially established with the Indenture Trustee and
maintained with the Indenture Trustee as long as (i) the deposits of the
Indenture Trustee have the Required Deposit Rating or (ii) the Collection
Account is maintained in a segregated trust account in the trust department of
the Indenture Trustee; PROVIDED, HOWEVER, that all amounts held in the
Collection Account shall, to the extent permitted by applicable laws, rules and
regulations and as directed by the Servicer, be invested by the Indenture
Trustee in Eligible Investments; otherwise, such amounts shall be maintained in
cash. All 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.
Should the short-term unsecured debt obligations of the Indenture Trustee no
longer have the Required Deposit Rating then, unless the Collection Account is
maintained in segregated trust accounts in the trust department of the Indenture
Trustee, the Servicer shall, with the Indenture Trustee's assistance as
necessary and within ten Business Days of receipt of notice from the Indenture
Trustee that the Indenture Trustee no longer has the Required Deposit Rating,
cause the Collection 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 Indenture Trustee.
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(b) Earnings on investment of funds in the Collection Account shall be
paid to the Servicer on each Distribution Date as servicing compensation, and
any losses and investment expenses shall be charged against the funds on deposit
in the Collection Account.
(c) Subject to the foregoing, the Servicer, on behalf of the Owner
Trustee and the Indenture Trustee, shall establish and maintain the Collection
Account as an Eligible Deposit Account in the name of and under the exclusive
control of the Indenture Trustee, bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the Securityholders. The
Indenture Trustee will be obligated to transfer all amounts remaining on deposit
in the Collection Account on the Distribution Date on which the Notes of all
Classes have been paid in full (or substantially all of the Trust Estate is
otherwise released from the lien of the Indenture) to another Eligible Deposit
Account established pursuant to the Trust Agreement for the benefit of the
Certificateholders (the "Trust Collection Account"), and to take all necessary
or appropriate actions to transfer all of its right, title and interest in the
Collection Account, all funds or investments held therein and all proceeds
thereof, whether or not on behalf of the Securityholders, to the Owner Trustee
for the benefit of the Certificateholders, subject to the limitations set forth
in the Indenture with respect to amounts held for payment to Noteholders that do
not promptly deliver a Note for payment on such Distribution Date. After the
transfer to the Trust Collection Account described in the immediately preceding
sentence, references in this Agreement to "Collection Account" shall be deemed
to be references to the "Trust Collection Account."
(d) With respect to the Collection Account and all property held
therein, the Owner Trustee agrees, by its acceptance hereof that, on the terms
and conditions set forth in the Indenture, for so long as Notes of any Class
remain outstanding, the Indenture Trustee shall possess all right, title and
interest therein (excluding interest or investment income thereon payable to the
Servicer or the Seller, as the case may be), and the Accounts shall be under the
sole dominion and control of the Indenture Trustee for the benefit of the
Noteholders and the Certificateholders, as the case may be, as set forth in the
Indenture. The parties hereto agree that the Issuer, the Owner Trustee and the
Holders of the Class D Certificates have no right, title or interest in the
Reserve Account or any amounts on deposit therein at any time. The parties
hereto agree that the Servicer shall have the power, revocable by the Indenture
Trustee or by the Owner Trustee with the consent of the Indenture Trustee, to
instruct the Indenture Trustee to make withdrawals and payments from the
Collection Account for the purpose of permitting the Servicer, Indenture Trustee
or the Owner Trustee to carry out its respective duties hereunder or under the
Indenture or the Trust Agreement, as the case may be.
Notwithstanding the foregoing, the Servicer shall be entitled
to withhold, 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 posting.
SECTION 5.02 COLLECTIONS. (a) Except as otherwise provided in this
Agreement, the Servicer shall remit daily to the Collection Account all payments
received by or on behalf of the Obligors on or in respect of the Receivables
(excluding payments on the Warranty Receivables or the Administrative
Receivables) and all Net Liquidation Proceeds not later than the first Business
Day after receipt thereof. Notwithstanding the foregoing, for so long as (i)
NMAC is
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the Servicer, (ii) (A) NMAC's short-term unsecured debt obligations are rated
at least "P-1" by Moody's and NMAC's short-term unsecured debt obligations
(or, if NMAC is the Servicer and the Servicer then has no short-term rating
from Standard & Poor's, Nissan Capital of America, Inc.'s short-term
unsecured debt obligations) are rated "A-1" by Standard & Poor's (so long as
Moody's and Standard & Poor's are Rating Agencies), or (B) certain
arrangements are made that are acceptable to the Rating Agencies, and (iii)
no Event of Default or Servicer Default shall have occurred and be continuing
(unless waived by the appropriate Securityholders), except that the
requirement in clause (ii) shall not apply if only the Class C Certificates
are outstanding and the Class C Certificates do not have an investment grade
rating, (collectively, the "Monthly Remittance Conditions"); the Servicer
shall not be required to remit such collections to the Collection Account on
the foregoing daily basis but shall be entitled to retain such collections,
without segregation from its other funds, until the Business Day before each
Distribution Date at which time the Servicer shall remit all such collections
in respect of the related Collection Period to the Collection Account in
immediately available funds. Commencing with the first day of the first
Collection Period that begins at least two Business Days after the day on
which any Monthly Remittance Condition ceases to be satisfied and for so long
as any Monthly Remittance Condition is not satisfied, all collections then
held by the Servicer shall be immediately deposited into the Collection
Account and all future collections on or in respect of the Receivables (other
than payments on Warranty Receivables and the Administrative Receivables) and
all Net Liquidation Proceeds shall be remitted by the Servicer to the
Collection Account on a daily basis not later than the first Business Day
after receipt thereof.
(b) The Indenture Trustee or the Owner Trustee shall not be deemed to
have knowledge of any event or circumstances under clause (iii) of the
definition of the Monthly Remittance Condition unless the Indenture Trustee or
the Owner Trustee has received notice of such event or circumstance from the
Seller or the Servicer in an Officer's Certificate or from the Holders of Notes
or Certificates evidencing not less than 25% in principal amount of the
outstanding amount of the Notes and the aggregate balance of the Certificates,
acting together as a single class, or a Trust Officer of the Indenture Trustee
or the Owner Trustee with knowledge hereof or familiarity herewith has actual
knowledge of such event or circumstances. For purposes of this Article V, the
phrase "payments received by or on behalf of the Obligors" shall mean payments
made by Persons other than the Servicer.
(c) The Servicer shall give the Owner Trustee, the Indenture Trustee
and each Rating Agency written notice of the failure of any Monthly Remittance
Condition (and any subsequent curing of a failed Monthly Remittance Condition)
as soon as practical after the occurrence thereof but in no event later than 10
Business Days after obtaining knowledge thereof (it being understood that if the
Monthly Remittance Condition is not satisfied as of the Closing Date, no such
notice shall be required in connection therewith).
(d) Notwithstanding the foregoing, if a Monthly Remittance Condition is
not satisfied, the Servicer may utilize an alternative remittance schedule
(which may include the remittance schedule utilized by the Servicer before the
Monthly Remittance Condition became unsatisfied), if the Servicer provides to
the Owner Trustee and the Indenture Trustee written confirmation from each
Rating Agency that such alternative remittance schedule will not result in the
downgrading or withdrawal by such Rating Agency of the ratings then assigned to
any Class of Notes or the Class C Certificates.
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SECTION 5.03 APPLICATION OF COLLECTIONS. As of the Business Day
immediately preceding the related Distribution Date, all collections for the
related Collection Period with respect to each Receivable shall be applied by
the Servicer as follows:
(a) First, to interest accrued to date on such Receivable;
(b) Second, to principal until the Principal Balance of such Receivable
is brought current;
(c) Third, to reduce the unpaid late charges (if any) as provided in
such Receivable; and
(d) Fourth, to prepay principal on such Receivable.
SECTION 5.04 ADVANCES.
(a) The Servicer shall make a payment with respect to each Receivable
(other than an Administrative Receivable, a Warranty Receivable or a Liquidated
Receivable) (each, an "Advance") 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 one-twelfth of 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 Administrative Purchase Payment or the Warranty Purchase
Payment, as the case may be, during such Collection Period. The Servicer will
not be obligated to make an Advance in respect of a Receivable (other than an
Advance in respect of an interest shortfall arising from the prepayment of a
Receivable) to the extent that the Servicer, in its sole discretion, shall
determine that the Advance constitutes a Nonrecoverable Advance. With respect to
each Receivable, the Advance shall increase the Outstanding Advances. No
Advances will be made with respect to the Principal Balance of the Receivables.
The Servicer shall deposit all such Advances into the Collection Account in
immediately available funds no later than 5:00 p.m., New York City time, on the
Business Day immediately preceding the related Distribution Date. To the extent
that the amount set forth in clause (y) above with respect to a Receivable is
greater than the amount set forth in clause (x) above with respect thereto, such
amount shall be distributed to the Servicer pursuant to Section 5.06; 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) The Servicer shall be entitled to reimbursement for Outstanding
Advances, without interest, with respect to a Receivable from the following
sources with respect to such Receivable pursuant to Section 5.06(c)(i) or
Section 5.06(d)(i): (i) subsequent payments made by or on behalf of the related
Obligor, (ii) Net Liquidation Proceeds, and (iii) the Warranty Purchase
Payments.
(c) To the extent that the Servicer has determined that any Outstanding
Advance is a Nonrecoverable Advance, the Servicer may provide to the Owner
Trustee and the Indenture Trustee an Officer's Certificate setting forth the
amount of such Nonrecoverable Advance, and on the related Distribution Date, the
Relevant Trustee shall remit to the Servicer from funds on
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deposit in the Collection Account an amount equal to the amount of such
Nonrecoverable Advance pursuant to Section 5.06(c)(ii) or Section 5.06(d)(ii).
(d) For so long as the Monthly Remittance Conditions are satisfied, in
lieu of causing the Servicer first to deposit and then the Relevant Trustee to
remit to the Servicer the amounts described in clauses (i) through (iii) in
Section 5.04(b) reimbursable in respect on Outstanding Advances, or the amounts
described in Section 5.04(c) applicable in respect of Nonrecoverable Advances,
the Servicer may deduct such amounts from deposits otherwise to be made into the
Collection Account.
(e) Notwithstanding the provisions of Section 5.04(a), no Successor
Servicer, including the Indenture Trustee, shall be obligated to make Advances
unless it has expressly agreed to do so in writing.
SECTION 5.05 ADDITIONAL DEPOSITS. (a) The following additional deposits
shall be made to the Collection Account: (i) the Seller shall remit the
aggregate Warranty Purchase Payments with respect to Warranty Receivables
pursuant to Section 3.02; (ii) the Servicer shall remit (A) the aggregate
Advances pursuant to Section 5.04(a), (B) the aggregate Administrative Purchase
Payments with respect to Administrative Receivables pursuant to Section 4.06,
and (C) the amount required upon any optional purchase of the Receivables by the
Servicer, or any Successor Servicer, pursuant to Section 9.01; and (iii) the
Indenture Trustee shall transfer (A) the Yield Supplement Deposit from the Yield
Supplement Account to the Collection Account pursuant to Section 5.08 (in
assuring the availability therein of the related Available Interest) and (B) the
amounts described in Sections 5.06 and 5.07 from the Reserve Account to the
Collection Account pursuant to Section 5.07.
(b) All deposits required to be made pursuant to this Section 5.05 by
the Seller or the Servicer, as the case may be, may be made in the form of a
single deposit and shall be made in immediately available funds, no later than
5:00 P.M., New York City time, on the Business Day immediately preceding the
related Distribution Date. At the direction of the Servicer, the Relevant
Trustee shall invest such amounts in Eligible Investments maturing not later
than 3:00 P.M. New York City Time, on the related Distribution Date.
SECTION 5.06 PAYMENTS AND DISTRIBUTIONS.
(a) The rights of the Certificateholders to receive distributions in
respect of the Certificates shall be and hereby are subordinated to the rights
of the Noteholders to receive distributions in respect of the Notes to the
extent provided in this Section 5.06.
(b) On each Determination Date, the Servicer shall calculate the
Available Interest, the Available Principal, the Noteholders' Distributable
Amount, the Certificateholders' Distributable Amount, the amount to be
distributed to Noteholders and Certificateholders of each Class pursuant to
Section 5.06(c) or (d), and all other distributions, deposits and withdrawals to
be made on the related Distribution Date.
(c) Subject to Section 5.06(d), on each Distribution Date, the Relevant
Trustee shall make the following payments and distributions from the Collection
Account (after payment of the Supplemental Servicing Fee to the extent not
previously retained by the Servicer) in the
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following order of priority and in the amounts set forth in the Servicer's
Certificate for such Distribution Date; PROVIDED, HOWEVER, that such payments
and distributions shall be made only from those funds deposited in the
Collection Account for the related Collection Period:
(i) to the Servicer, from amounts on deposit in the
Collection Account, any payments in respect of Advances required and to
the extent set forth in Section 5.04(b);
(ii) to the Servicer, from amounts on deposit in the
Collection Account, any payments in respect of Nonrecoverable Advances
required and to the extent set forth in Section 5.04(c);
(iii) to the Servicer, from Available Amounts, the Base
Servicing Fee (including any unpaid Base Servicing Fees from one or
more prior Collection Periods);
(iv) on a pro rata basis (based on the amounts distributable
pursuant to this clause to each such Class), to the Class A-1
Noteholders, the Noteholders' Interest Distributable Amount for such
Class, to the Class A-2 Noteholders, the Noteholders' Interest
Distributable Amount for such Class, and to the Class A-3 Noteholders,
the Noteholders' Interest Distributable Amount for such Class; such
amounts to be paid from Available Amounts (after giving effect to any
reduction in Available Amounts described in clause (iii) above);
(v) to the Class B Noteholders, the Noteholders' Interest
Distributable Amount for such Class; such amounts to be paid from
Available Amounts (after giving effect to any reduction in Available
Amounts described in clauses (iii) and (iv) above);
(vi) to the Class A-1 Noteholders, an amount equal to the
Noteholders' Principal Distributable Amount for such Class, such amount
to be paid from Available Amounts (after giving effect to any reduction
in Available Amounts described in clauses (iii) through (v) above),
until the principal amount of the Class A-1 Notes is reduced to zero;
(vii) on each Distribution Date after the Class A-1 Notes
have been paid in full, to the Class A-2 Noteholders, an amount equal
to the Noteholders' Principal Distributable Amount for such Class, such
amount to be paid from Available Amounts (after giving effect to any
reduction in Available Amounts described in clauses (iii) through (vi)
above), until the principal amount of the Class A-2 Notes is reduced to
zero;
(viii) on each Distribution Date after the Class A-2 Notes
have been paid in full, to the Class A-3 Noteholders, an amount equal
to the Noteholders' Principal Distributable Amount for such Class, such
amount to be paid from Available Amounts (after giving effect to any
reduction in Available Amounts described in clauses (iii) through (vii)
above), until the principal amount of the Class A-3 Notes is reduced to
zero;
(ix) on each Distribution Date after the Class A-3 Notes
have been paid in full, to the Class B Noteholders, an amount equal to
the Noteholders' Principal Distributable Amount for such Class, such
amount to be paid from Available Amounts (after giving
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effect to any reduction in Available Amounts described in clauses
(iii) through (viii) above), until the principal amount of the Class B
Notes is reduced to zero;
(x) to the Class C Certificateholders, an amount equal to
the Certificateholders' Interest Distributable Amount for such Class,
such amount to be paid from Available Amounts (after giving effect to
any reduction in Available Amounts described in clauses (iii) through
(ix) above);
(xi) on each Distribution Date after the Class B Notes have
been paid in full, to the Class C Certificateholders, an amount equal
to the Certificateholders' Principal Distributable Amount for such
Class, such amount to be paid from Available Amounts (after giving
effect to any reduction in Available Amounts described in clauses (iii)
through (x) above), until the principal amount of the Class C
Certificates is reduced to zero;
(xii) to the Reserve Account, the amount, if any, necessary
to cause the balance of funds therein to equal the Specified Reserve
Account Balance, such amounts to be paid from Available Amounts (after
giving effect to any reduction in Available Amounts described in
clauses (iii) through (xi) above);
(xiii) to the Class D Certificateholders, an amount equal to
the Certificateholders' Interest Distributable Amount for such Class,
such amounts to be paid from Available Amounts (after giving effect to
any reduction in Available Amounts described in clauses (iii) through
(xii) above);
(xiv) after the Class C Certificates have been paid in full,
to the Class D Certificateholders, an amount equal to the
Certificateholders' Principal Distributable Amount for such Class, such
amount to be paid from Available Amounts (after giving effect to the
reduction in Available Amounts described in clauses (iii) through
(xiii) above); and
(xv) any Available Amounts remaining after giving effect to
the foregoing, to the Seller.
(d) Notwithstanding the provisions of Section 5.06(c), after the
occurrence of an Event of Default that results in the acceleration of any
Notes, on each Distribution Date, the Relevant Trustee shall make the
following payments and distributions from the Collection Account (after
payment of the Supplemental Servicing Fee to the extent not previously
retained by the Servicer) in the following order of priority and in the
amounts set forth in the Servicer's Certificate for such Distribution Date;
PROVIDED, HOWEVER, that such payments and distributions shall be made only
from Available Amounts deposited in the Collection Account for the related
Collection Period:
(i) to the Servicer, from amounts on deposit in the
Collection Account, any payments in respect of Advances required and to
the extent set forth in Section 5.04(b);
(ii) to the Servicer, from amounts on deposit in the
Collection Account, any payments in respect of Nonrecoverable Advances
required and to the extent set forth in Section 5.04(c);
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(iii) to the Servicer, from Available Amounts, the Base
Servicing Fee (including any unpaid Base Servicing Fees from one or
more prior Collection Periods);
(iv) on a pro rata basis (based on the amounts distributable
pursuant to this clause to each such Class), to the Class A-1
Noteholders, the Noteholders' Interest Distributable Amount for such
Class, to the Class A-2 Noteholders, the Noteholders' Interest
Distributable Amount for such Class, and to the Class A-3 Noteholders,
the Noteholders' Interest Distributable Amount for such Class; such
amounts to be paid from Available Amounts (after giving effect to any
reduction in Available Amounts described in clause (iii) above);
(v) to the Class A-1 Noteholders, the Class A-2 Noteholders
and the Class A-3 Noteholders, on a pro rata basis (based on the
Outstanding Amount of each Class), until the total amount paid to such
Noteholders in respect of principal from the Closing Date is equal to
the Original Principal Amount for such Class of Notes, such amounts to
be paid from Available Amounts (after giving effect to any reduction in
Available Amounts described in clauses (iii) and (iv) above);
(vi) to the Class B Noteholders, the Noteholders' Interest
Distributable Amount for such Class; such amounts to be paid from
Available Amounts (after giving effect to any reduction in Available
Amounts described in clauses (iii) through (v) above);
(vii) on each Distribution Date after the Class A Notes have
been paid in full, to the Class B Noteholders, until the total amount
paid to the Class B Noteholders in respect of principal from the
Closing Date is equal to the Original Principal Amount for the Class B
Notes, such amount to be paid from Available Amounts (after giving
effect to any reduction in Available Amounts described in clauses (iii)
through (vi) above);
(viii) to the Class C Certificateholders, an amount equal to
the Certificateholders' Interest Distributable Amount for such Class,
such amount to be paid from Available Amounts (after giving effect to
any reduction in Available Amounts described in clauses (iii) through
(vii) above);
(ix) on each Distribution Date after the Class B Notes have
been paid in full, to the Class C Certificateholders, until the total
amount paid to the Class C Certificateholders in respect of principal
from the Closing Date is equal to the Original Certificate Balance of
the Class C Certificates, such amount to be paid from Available Amounts
(after giving effect to any reduction in Available Amounts described in
clauses (iii) through (viii) above);
(x) to the Class D Certificateholders, an amount equal to
the Certificateholders' Interest Distributable Amount for such Class,
such amounts to be paid from Available Amounts (after giving effect to
any reduction in Available Amounts described in clauses (iii) through
(ix) above);
(xi) after the Class C Certificates have been paid in full,
to the Class D Certificateholders, an amount equal to the
Certificateholders' Principal Distributable
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Amount for such Class, such amount to be paid from Available Amounts
(after giving effect to the reduction in Available Amounts described in
clauses (iii) through (x) above); and
(xii) any Available Amounts remaining after giving effect to
the foregoing, to the Seller.
(e) For purposes of determining whether an Event of Default pursuant to
Section 5.01(c) of the Indenture has occurred, the amount of principal required
to be paid to the Holders of any Class of Notes on any Distribution Date is the
amount available to be paid thereto pursuant to Section 5.06(c); PROVIDED,
HOWEVER, that (i) the Class A-1 Notes are required to be paid in full on or
before the Final Scheduled Distribution Date for such Class, meaning that the
Class A-1 Noteholders are entitled to have received on or before such date
payments in respect of principal in an aggregate amount equal to the Original
Principal Amount for such Class, together with all interest accrued thereon
through such date; (ii) the Class A-2 Notes are required to be paid in full on
or before the Final Scheduled Distribution Date for such Class, meaning that the
Class A-2 Noteholders are entitled to have received on or before such date
payments in respect of principal in an aggregate amount equal to the Original
Principal Amount for such Class, together with all interest accrued thereon
through such date; (iii) the Class A-3 Notes are required to be paid in full on
or before the Final Scheduled Distribution Date for such Class, meaning that the
Class A-3 Noteholders are entitled to have received on or before such date
payments in respect of principal in an aggregate amount equal to the Original
Principal Amount for such Class, together with all interest accrued thereon
through such date; and (iv) the Class B Notes are required to be paid in full on
or before the Final Scheduled Distribution Date for such Class, meaning that the
Class B Noteholders are entitled to have received on or before such date
payments in respect of principal in an aggregate amount equal to the Original
Principal Amount for such Class, together with all interest accrued thereon
through such date.
(f) Except with respect to the final payment upon retirement of a Note
or Certificate, the Servicer shall on each Distribution Date instruct the
Relevant Trustee to pay or distribute to each Securityholder of record on the
related Record Date by check mailed to such Securityholder at the address of
such Holder appearing in the Certificate Register or Note Register, as the case
may be, (or, if DTC, its nominee or a Clearing Agency is the relevant Holder, by
wire transfer of immediately available funds or pursuant to other arrangements),
the amount to be paid or distributed to such Securityholder pursuant to such
Holder's Note or Certificate. With respect to the final payment upon retirement
of a Note or Certificate, the Servicer shall on the relevant final Distribution
Date instruct the Relevant Trustee to pay or distribute the amounts due thereon
only upon delivery for cancellation of the certificate representing such Note or
Certificate in accordance with the Indenture or the Trust Agreement, as the case
may be.
SECTION 5.07 RESERVE ACCOUNT.
(a) In order to assure that certain amounts will be available to make
required payments to Noteholders, the Seller will, pursuant to the Securities
Account Control Agreement and the Indenture, establish and maintain with the
Relevant Trustee a segregated trust account (the "RESERVE ACCOUNT") which will
include the money and other property deposited and held therein pursuant to
Sections 5.06(c), 5.06(d) and this Section 5.07. On or prior to the Closing
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Date, the Seller shall deposit an amount equal to the Reserve Account Initial
Deposit into the Reserve Account. As and to the extent set forth in Section
5.06(c) or (d), the Relevant Trustee will deposit Available Amounts into the
Reserve Account on each Distribution Date as provided in the Servicer's
Certificate, until the amount on deposit therein equals the Specified Reserve
Account Balance. On each Distribution Date, to the extent that Available Amounts
are insufficient to fully fund the payments and distributions described in
clauses (i) through (x) of Section 5.06(c) or clauses (i) through (viii) of
Section 5.06(d), the Relevant Trustee will withdraw amounts then on deposit in
the Reserve Account (excluding net investment income on Eligible Investments,
which amounts are payable to the Seller therefrom), up to the amounts of any
such deficiencies, and deposit such amounts into the Collection Account for
application pursuant to such clauses. On each Distribution Date, as provided in
the Servicer's Certificate, the Relevant Trustee will release to the Seller any
amounts remaining on deposit in the Reserve Account in excess of the Specified
Reserve Account Balance. Upon the termination of the trusts established under
the Trust Agreement and the Indenture, as directed in writing by the Servicer,
the Relevant Trustee will release to the Seller any amounts remaining on deposit
in the Reserve Account. Upon any such distribution to the Seller, the Issuer,
Owner Trustee, Certificateholders, Indenture Trustee and Noteholders will have
no further rights in, or claims to, such amounts.
(b) All amounts held in the Reserve Account shall be invested by the
Relevant Trustee, as directed in writing by the Servicer, in Eligible
Investments. All 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 deposits on the
Distribution Date; provided that if permitted by the Rating Agencies, monies on
deposit therein may be invested in Eligible Investments that mature later than
the Business Day preceding the next Distribution Date. Earnings, if any, on
investment of funds in the Reserve Account shall be paid to the Seller on each
Distribution Date, and losses and any investment expenses shall be charged
against the funds on deposit therein. The Relevant Trustee shall incur no
liability for the selection of investments or for losses thereon absent its own
negligence or willful misfeasance. The Relevant Trustee shall have no liability
in respect of losses incurred as a result of the liquidation of any investment
prior to its stated maturity date or the failure of the Servicer to provide
timely written investment directions.
(c) Subject to the right of the Relevant Trustee to make withdrawals
therefrom, as directed by the Servicer, for the purposes and in the amounts set
forth in Section 5.06, the Reserve Account and all funds held therein shall be
the property of the Seller and not the property of the Issuer, the Owner Trustee
or the Indenture Trustee. The Issuer, the Owner Trustee, the Seller and the
Indenture Trustee will treat the Reserve Account, all funds therein and all net
investment income with respect thereto as assets of the Seller for federal
income tax and all other purposes.
(d) The Seller will grant to the Relevant Trustee for the benefit of
the Noteholders and the Class C Certificateholders a security interest in all
funds (including Eligible Investments) in the Reserve Account (including the
Reserve Account Initial Deposit) and the proceeds thereof, and the Relevant
Trustee shall have all of the rights of a secured party under the UCC with
respect thereto; provided that all income from the investment of funds in the
Reserve Account and the right to receive such income are retained by the Seller
and are not transferred, assigned or otherwise conveyed hereunder. If for any
reason the Reserve Account is no longer an Eligible
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Deposit Account, the Relevant Trustee shall promptly cause the Reserve
Account to be moved to another institution or otherwise changed so that the
Reserve Account becomes an Eligible Deposit Account.
(e) Neither the Owner Trustee nor the Indenture Trustee shall enter
into any subordination or intercreditor agreement with respect to the Reserve
Account.
SECTION 5.08 YIELD SUPPLEMENT ACCOUNT.
(a) In order to assure that sufficient amounts to make required
distributions of interest to Noteholders and the Class C Certificateholders will
be available, the Seller will, pursuant to the Securities Account Control
Agreement, the Yield Supplement Agreement and the Indenture, establish and
maintain with the Relevant Trustee a segregated trust account (the "YIELD
SUPPLEMENT ACCOUNT") which will include the money and other property deposited
and held therein pursuant to Section 5.06 and this Section 5.08.
(b) On or prior to the Closing Date, the Seller shall deposit an amount
equal to the Initial Yield Supplement Amount into the Yield Supplement Account
pursuant to the Yield Supplement Agreement. On each Distribution Date, to the
extent amounts on deposit in the Yield Supplement Account are sufficient
therefor, the Relevant Trustee will withdraw amounts then on deposit in the
Yield Supplement Account (excluding net investment income on Eligible
Investments, which amounts are payable to the Seller therefrom) and deposit such
amounts into the Collection Account for application pursuant to Section 5.06. On
each Distribution Date, if the amount on deposit in the Yield Supplement Account
(after giving effect to all deposits thereto or withdrawals therefrom on such
Distribution Date) is greater than the Required Yield Supplement Amount, the
Relevant Trustee will distribute such excess to the Seller. Upon the termination
of the trusts established under the Trust Agreement and the Indenture, as
directed in writing by the Servicer, the Relevant Trustee will release to the
Seller any amounts remaining on deposit in the Yield Supplement Account. Upon
any such distribution to the Seller, the Issuer, Owner Trustee, Indenture
Trustee and Certificateholders will have no further rights in, or claims to,
such amounts.
(c) All amounts held in the Yield Supplement Account shall be invested
by the Relevant Trustee, as directed in writing by the Servicer, in Eligible
Investments. All 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 deposits on the
Distribution Date; provided that if permitted by the Rating Agencies, monies on
deposit therein may be invested in Eligible Investments that mature later than
the Business Day preceding the next Distribution Date. Earnings, if any, on
investment of funds in the Yield Supplement Account shall be paid to the Seller
on each Distribution Date, and losses and any investment expenses shall be
charged against the funds on deposit therein. The Relevant Trustee shall incur
no liability for the selection of investments or for losses thereon absent its
own negligence or willful misfeasance. The Relevant Trustee shall have no
liability in respect of losses incurred as a result of the liquidation of any
investment prior to its stated maturity date or the failure of the Servicer to
provide timely written investment directions.
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(d) Subject to the right of the Relevant Trustee to make withdrawals
therefrom, as directed by the Servicer, for the purposes and in the amounts set
forth in Section 5.06, the Yield Supplement Account and all funds held therein
shall be the property of the Seller and not the property of the Issuer, the
Owner Trustee or the Indenture Trustee. The Issuer, the Owner Trustee, the
Seller and the Indenture Trustee will treat the Yield Supplement Account, all
funds therein and all net investment income with respect thereto as assets of
the Seller for federal income tax and all other purposes.
(e) The Seller will grant to the Relevant Trustee, for the benefit of
the Noteholders and the Class C Certificateholders, a security interest in all
funds (including Eligible Investments) in the Yield Supplement Account
(including the Initial Yield Supplement Amount) and the proceeds thereof, and
the Relevant Trustee shall have all of the rights of a secured party under the
UCC with respect thereto; provided that all income from the investment of funds
in the Yield Supplement Account and the right to receive such income are
retained by the Seller and are not transferred, assigned or otherwise conveyed
hereunder. If for any reason the Yield Supplement Account is no longer an
Eligible Deposit Account, the Relevant Trustee shall promptly cause the Yield
Supplement Account to be moved to another institution or otherwise changed so
that the Yield Supplement Account becomes an Eligible Deposit Account.
(f) Neither the Owner Trustee nor the Indenture Trustee shall enter
into any subordination or intercreditor agreement with respect to the Yield
Supplement Account.
SECTION 5.09 STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS.
(a) On each Distribution Date, the Indenture Trustee shall include with
each distribution to each Noteholder and the Owner Trustee shall include with
each distribution to each Certificateholder a statement (which statement shall
also be provided to each Rating Agency) based on information in the Servicer's
Certificate furnished pursuant to Section 4.08, setting forth for the Collection
Period relating to such Distribution Date the following information:
(i) the amount of the payment allocable to the principal
amount of each Class of Notes and to the Certificate Balance of each
Class of Certificates;
(ii) the amount of the payment allocable to interest on or
with respect to each Class of Notes and Certificates;
(iii) the amount of the distribution allocable to the Yield
Supplement Deposit, if any;
(iv) the Pool Balance as of the close of business on the
last day of the related Collection Period;
(v) the amount of the Base Servicing Fee paid to the
Servicer with respect to the related Collection Period, the amount of
any unpaid Base Servicing Fees and the change in such amount from that
of the prior Distribution Date;
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(vi) the Interest Rate or the Pass-Through Rate for the
Interest Period relating to the succeeding Distribution Date for any
Class of Notes or Certificates with variable or adjustable rates;
(vii) the Noteholders' Interest Carryover Shortfall, the
Noteholders' Principal Carryover Shortfall, the Certificateholders'
Interest Carryover Shortfall, the Certificateholders' Principal
Carryover Shortfall, if any, with respect to each Class of Notes and
Certificates, and the change in such amounts from the preceding
Distribution Date;
(viii) the Outstanding Amount, the Note Factor and the Note
Pool Factor with respect to each Class of Notes; the aggregate
Certificate Balance, the Certificate Balance, Certificate Factor and
Certificate Pool Factor with respect to each Class of Certificates, in
each case after giving effect to all payments in respect of principal
on such Distribution Date;
(ix) the amount of Advances made in respect of the
Receivables during the related Collection Period and the amount of
unreimbursed Advances on such Distribution Date; and
(x) the balance of the Reserve Account and the Yield
Supplement Account on such Distribution Date, after giving effect to
changes thereto on such Distribution Date and the amount of such
changes.
(b) Copies of such statements may be obtained by Certificate Owners or
Note Owners from the Owner Trustee or the Indenture Trustee, as the case may be,
by a request in writing. The Owner Trustee or the Indenture Trustee, as the case
may be, shall provide such copies promptly after such requests.
SECTION 5.10 NET DEPOSITS. For so long as each Monthly Remittance
Condition is satisfied (or the rating agency confirmation described in Section
5.02(d) 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.
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.
ARTICLE VI
THE SELLER
SECTION 6.01 REPRESENTATIONS OF SELLER. The Seller makes the following
representations on which the Issuer is deemed to have relied in acquiring the
Receivables. The representations speak as of the execution and delivery of this
Agreement and as of the Closing Date, and shall survive the sale of the
Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
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(a) ORGANIZATION AND GOOD STANDING. The Seller has been duly organized
and is validly existing as a corporation in good standing under the laws of the
State of Delaware, with corporate 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, corporate power,
authority and legal right to acquire and own the Receivables.
(b) DUE QUALIFICATION. The Seller is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of property
or the conduct of its business shall require such qualifications and where the
failure to so qualify would have a material adverse effect on the ability of the
Seller to perform its obligations under this Agreement.
(c) POWER AND AUTHORITY. The Seller has the corporate power and
authority to execute and deliver this 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 as part of the Owner Trust Estate or the Trust
Estate, as the case may be, and has duly authorized such sale and assignment to
the Trust, the Owner Trustee or the Indenture Trustee, as the case may be, by
all necessary corporate action; and the execution, delivery and performance of
this Agreement has been duly authorized by the Seller by all necessary corporate
action.
(d) VALID SALE; BINDING OBLIGATIONS. This 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 this Agreement is a legal, valid and binding obligation of the
Seller enforceable in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general equitable principles.
(e) NO VIOLATION. The consummation of the transactions contemplated by
this 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 certificate 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 Basic Documents); 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; which breach, default, conflict, Lien or violation in any case would
have a material adverse effect on the ability of the Seller to perform its
obligations under this Agreement.
(f) 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: (i) asserting the
invalidity of this Agreement, the Trust Agreement, the Indenture, the Securities
Account Control Agreement, the Yield Supplement Agreement, the Certificates or
the Notes; (ii) seeking to prevent the issuance of the Certificates or the Notes
or the consummation of any
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of the transactions contemplated by this Agreement, the Trust Agreement, the
Indenture, the Securities Account Control Agreement or the Yield Supplement
Agreement; (iii) seeking any determination or ruling that would materially
and adversely affect the performance by the Seller of its obligations under,
or the validity or enforceability of, this Agreement, the Trust Agreement,
the Indenture, the Securities Account Control Agreement, the Yield Supplement
Agreement, the Certificates or the Notes; or (iv) relating to the Seller and
that would adversely affect the federal or any state income tax attributes of
the Issuer, the Certificates or the Notes.
SECTION 6.02 ADDITIONAL COVENANTS OF THE SELLER.
(a) The Seller agrees with the Certificate Owners, the Note Owners and
each Rating Agency that the Seller shall not issue any additional securities
that could reasonably be expected to materially and adversely affect the rating
of any Class of Notes or the Class C Certificates issued pursuant to the Basic
Documents unless it shall have first obtained the written consent of each Rating
Agency to the effect that such issuance will not materially adversely affect
such rating; provided that, the issuance of another series of certificates or
notes pursuant to an agreement with terms substantially similar to the terms of
the Basic Documents shall not be deemed to materially and adversely affect the
ratings on the Certificates or the Notes. The Seller shall provide a copy of any
such consent to the Owner Trustee and the Indenture Trustee.
(b) The Seller shall not do any of the following (without the prior
written consent of each Rating Agency (which consent shall be to the effect that
the acts set forth below shall not affect materially adversely the rating on any
Class of Notes or the Class C Certificates) and, upon the Seller's receipt of
such written consent from each Rating Agency, the Owner Trustee and the
Indenture Trustee shall, without any exercise of its own discretion, also
provide its written consent to the Seller):
(1) engage in any business or activity other than those set
forth in Article Three of the Seller's Certificate of Incorporation, as
amended;
(2) 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
statistical rating organization 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
statistical rating organization that has rated the outstanding
certificates or notes that the ratings of the outstanding certificates
or notes will not be adversely affected by the issuance of such future
indebtedness and (B) any indebtedness to NMAC or any of its Affiliates
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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(3) 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:
(i) 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 the Basic Documents, 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
(ii) 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
(iii) 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 space separate
from any direct or ultimate parent of such entity; and
(iv) each nationally recognized statistical rating
organization that has rated any issue of certificates or notes
pursuant to any agreement or any series of class of
certificates or notes shall confirm in writing that the rating
of such certificates or notes shall not be adversely affected
by such consolidation or merger; or
(4) without the affirmative vote of 100% of the members of the
Board of Directors of the Seller, 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
appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of the corporation or all or substantially
all of its property, or make any assignment for the benefit of
creditors.
SECTION 6.03 LIABILITY OF SELLER; INDEMNITIES. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
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(a) The Seller shall indemnify, defend and hold harmless the Trust, the
Owner Trustee, the Indenture Trustee from and against any taxes that may at any
time be asserted against any such Person with respect to, as of the date hereof,
the sale of the Receivables to the Trust or the issuance and original sale of
the Notes and 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 this Agreement and the Basic Documents) and costs and expenses
in defending against the same.
(b) The Seller shall indemnify, defend and hold harmless the Owner
Trustee and the Indenture Trustee, the Trust, the Certificateholders and the
Noteholders from and against any loss, liability or expense incurred by reason
of (i) the Seller's willful misfeasance, bad faith or negligence in the
performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement and (ii) the
Seller's or the Issuer's violation of federal or state securities laws in
connection with the registration or the sale of the Certificates and the Notes.
Indemnification under this Section 6.03 shall survive the
termination of this Agreement and shall include reasonable fees and expenses of
counsel and expenses of litigation. If the Seller shall have made any indemnity
payment to any Person entitled thereto pursuant to this Section 6.03 and such
Person thereafter shall collect any of such amounts from others, such Person
shall promptly repay such amounts to the Seller, without interest (except to the
extent the recipient collects interest from others).
Promptly after receipt by a party indemnified under this Section 6.03
(for purposes of this paragraph, an "Indemnified Party") of notice of the
commencement of any action, such Indemnified Party will, if a claim is to be
made in respect thereof against the Seller under this Section 6.03, notify the
Seller of the commencement thereof. If any such action is brought against any
Indemnified Party under this Section 6.03 and it notifies the Seller of the
commencement thereof, the Seller will assume the defense thereof, with counsel
reasonably satisfactory to such Indemnified Party (who may, unless there is, as
evidenced by an Opinion of Counsel to the Indemnified Party stating that there
is an unwaivable conflict of interest, be counsel to the Seller), and the Seller
will not be liable to such Indemnified Party under this Section 6.03 for any
legal or other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof, other than reasonable costs of
investigation. The obligations set forth in this Section 6.03 shall survive the
termination of this Agreement or the resignation or removal of the Owner Trustee
or the Indenture Trustee and shall include reasonable fees and expenses of
counsel and expenses of litigation. If the Seller shall have made any indemnity
payments pursuant to this Section 6.03 and the Person to or on behalf of whom
such payments are made thereafter collects any of such amounts from others, such
Person shall promptly repay such amounts to the Seller, without interest (except
to the extent received by such Person).
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SECTION 6.04 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SELLER. Subject to Section 6.02, 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, which Person in any of
the foregoing cases executes an agreement of assumption to perform every
obligation of the Seller under this Agreement, will be the successor to the
Seller under this Agreement without the execution or filing of any document or
any further act on the part of any of the parties to this Agreement; PROVIDED,
HOWEVER, that (x) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 6.01 shall have been
breached and no Servicer Default, and no event that, after notice or lapse of
time, or both, would become a Servicer Default, shall have occurred and be
continuing, (y) the Seller shall have delivered to the Owner Trustee and the
Indenture Trustee an Officer's Certificate stating that such consolidation,
merger or succession and such agreement or assumption comply with this Section
6.04 and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with and (z) the Seller shall
have delivered to the Owner Trustee and the Indenture Trustee an Opinion of
Counsel either (A) stating that, in the opinion of such counsel, based on
customary qualifications and assumptions, all financing statements and
continuation statements and amendments thereto have been executed and filed that
are necessary fully to perfect the interest of the Owner Trustee and the
Indenture Trustee, respectively, in the Receivables, and reciting the details of
such filings, or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest. The Seller
shall provide notice of any merger, consolidation or succession pursuant to this
Section 6.04 to each Rating Agency. 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 6.05 LIMITATION ON LIABILITY OF SELLER AND OTHERS.
(a) Neither the Seller nor any of the directors, officers, employees or
agents of the Seller shall be under any liability to the Trust, the
Certificateholders or the Noteholders, except as provided under this Agreement,
for any action taken or for refraining from the taking of any action pursuant to
this Agreement or for errors in judgment; PROVIDED, HOWEVER, that this provision
shall not protect the Seller or any such person against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties under this Agreement. The Seller and any director, officer, 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 under this Agreement.
(b) The Seller shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may 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 this
Agreement and the rights and duties of the parties to this Agreement and the
interests of the Certificateholders and the Noteholders under this Agreement. In
such event, the legal expenses
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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 6.06 SELLER MAY OWN CERTIFICATES OR NOTES. The Seller and any
Affiliate of the Seller may in its individual or any other capacity become the
owner or pledgee of Certificates or Notes with the same rights as it would have
if it were not the Seller or an Affiliate thereof, except as otherwise provided
in the Basic Documents. Certificates or Notes 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 this Agreement, without
preference, priority or distinction as among all of the Certificates or the
Notes, as the case may be, except as otherwise expressly provided in the Basic
Documents.
ARTICLE VII
THE SERVICER
SECTION 7.01 REPRESENTATIONS OF SERVICER. The Servicer makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date.
(a) 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 corporate 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, corporate 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 Owner Trustee and the Indenture Trustee.
(b) DUE QUALIFICATION. The Servicer is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of property
or the conduct of its business relating to the servicing of the Receivables as
required by this Agreement shall require such qualifications and where the
failure to so qualify would have a material adverse effect on the ability of the
Servicer to perform its obligations under this Agreement.
(c) POWER AND AUTHORITY. The Servicer has the power and authority to
execute and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this Agreement have been duly authorized
by the Servicer by all necessary corporate action.
(d) BINDING OBLIGATION. This Agreement constitutes a legal, valid and
binding obligation of the Servicer enforceable in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and by general
equitable principles.
(e) NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of
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any of the terms and provisions of, nor constitute (with or without notice or
lapse of time) a default under, the articles of incorporation or by-laws of
the Servicer, or any indenture, agreement or other instrument to which the
Servicer is a party or by which it shall be bound; nor result in the creation
or imposition of any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement or other instrument (other than the Basic
Documents); 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; which breach, default,
conflict, Lien or violation in any case would have a material adverse effect
on the ability of the Seller to perform its obligations under this Agreement.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending,
or, to the best of the Servicer's knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or its properties: (i) asserting the
invalidity of this Agreement, the Trust Agreement, the Indenture, the
Certificates or the Notes; (ii) seeking to prevent the issuance of the
Certificates or the Notes or the consummation of any of the transactions
contemplated by this Agreement, the Trust Agreement or the Indenture; (iii)
seeking any determination or ruling that would materially and adversely affect
the performance by the Servicer of its obligations under, or the validity or
enforceability of, this Agreement, the Trust Agreement, the Indenture, the
Certificates or the Notes ; or (iv) relating to the Servicer and that would
adversely affect the federal or any state income tax attributes of the
Certificates or the Notes.
SECTION 7.02 INDEMNITIES OF SERVICER. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement:
(a) The Servicer shall defend, indemnify and hold harmless the
Owner Trustee, the Indenture Trustee, the Trust, the Certificateholders and the
Noteholders 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 of its Affiliates
(other than the Trust) of a Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the
Owner Trustee, the Indenture Trustee, the Trust, the Certificateholders and the
Noteholders from and against any and all Damages to the extent that such Damage
arose out of, or was imposed upon the Owner Trustee, the Indenture Trustee, the
Trust, the Certificateholders or the Noteholders through the negligence, willful
misfeasance or bad faith of the Servicer in the performance of its duties under
this Agreement or by reason of reckless disregard of its obligations and duties
under this Agreement.
(c) The Servicer shall indemnify, defend and hold harmless the
Owner Trustee and the Indenture Trustee from and against all Damages arising out
of or incurred in connection with the acceptance or performance of the trusts
and duties herein contained, except to the extent that such Damage: (i) shall be
due to the willful misfeasance, bad faith, or negligence (except for errors in
judgment) of the Owner Trustee or the Indenture Trustee, as the case may be;
(ii) relates to any tax other than the taxes with respect to which the Seller
shall be required to
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indemnify the Owner Trustee or the Indenture Trustee; (iii) shall arise from
the breach by the Owner Trustee or the Indenture Trustee of any of their
respective representations or warranties set forth in the Basic Documents;
(iv) shall be one as to which the Seller is required to indemnify the Owner
Trustee or the Indenture Trustee and as to which such Person has received
payment of indemnity from the Seller; or (v) shall arise out of or be
incurred in connection with the performance by the Owner Trustee or the
Indenture Trustee of the duties of Successor Servicer hereunder.
Promptly after receipt by a party indemnified under this
Section 7.02 (for purposes of this paragraph, an "Indemnified Party") of notice
of the commencement of any action, such Indemnified Party will, if a claim in
respect thereof is to be made against the Servicer under this Section 7.02,
notify the Servicer of the commencement thereof. If any such action is brought
against any Indemnified Party under this Section 7.02 and it notifies the
Servicer of the commencement thereof, the Servicer will assume the defense
thereof, with counsel reasonably satisfactory to such Indemnified Party (who
may, unless there is, as evidenced by an opinion of counsel to the Indemnified
Party stating that there is an unwaivable conflict of interest, be counsel to
the Servicer), and the Servicer will not be liable to such Indemnified Party
under this Section 7.02 for any legal or other expenses subsequently incurred by
such Indemnified Party in connection with the defense thereof, other than
reasonable costs of investigation. The obligations set forth in this Section
7.02 shall survive the termination of this Agreement or the resignation or
removal of the Servicer, the Owner Trustee or the Indenture Trustee and shall
include reasonable fees and expenses of counsel and expenses of litigation. If
the Servicer shall have made any indemnity payments pursuant to this Section
7.02 and the Person to or on behalf of whom such payments are made thereafter
collects any of such amounts from others, such Person shall promptly repay such
amounts to the Servicer, without interest (except to the extent received by such
Person).
Indemnification under this Section 7.02 by NMAC (or any
successor thereto pursuant to Section 7.03) 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 this 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 7.02 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 7.03 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 NMAC acts as Servicer, that is a corporation more
than 50% of the voting stock of which is owned directly or indirectly by Nissan,
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 Servicer Default, and no event which, after notice or lapse of
time, or both, would become a Servicer Default, shall have occurred and be
continuing, (y) the
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Servicer shall have delivered to the Owner Trustee and the Indenture Trustee
an Officer's Certificate stating that such consolidation, merger or
succession and such agreement of assumption comply with this Section 7.03 and
that all conditions precedent provided for in this Agreement relating to such
transaction have been complied with and (z) the Servicer shall have delivered
to the Owner Trustee and the Indenture Trustee an Opinion of Counsel either
(A) stating that, in the opinion of such counsel, based on customary
qualifications and assumptions, 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 Owner Trustee and
the Indenture 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 prefect such interest. The Servicer shall provide
notice of any merger, consolidation or succession pursuant to this Section
7.03 to each Rating Agency. 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 7.04 LIMITATION ON LIABILITY OF SERVICER AND OTHERS.
(a) Neither the Servicer nor any of the directors, officers, employees
or agents of the Servicer shall be under any liability to the Trust, the
Certificateholders or the Noteholders, except as provided under this Agreement,
for any action taken or for refraining from the taking of any action pursuant to
this Agreement or for errors in judgment; PROVIDED, HOWEVER, that this provision
shall not protect the Servicer or any such person against any liability that
would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Servicer and any director,
officer, employee or agent of the Servicer 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 under this Agreement.
(b) Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Receivables in accordance
with this Agreement, and that in its opinion may 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 Basic Documents
and the rights and duties of the parties to the Basic Documents and the
interests of the Certificateholders under this Agreement and the Noteholders
under the Indenture. 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 7.05 NMAC NOT TO RESIGN AS SERVICER. Subject to the provisions
of Section 7.03, NMAC 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 NMAC shall be communicated to the Owner Trustee and the
Indenture 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
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shall be evidenced by an Opinion of Counsel to such effect delivered to the
Owner Trustee and the Indenture Trustee concurrently with or promptly after
such notice. No such resignation shall become effective until the Indenture
Trustee or a Successor Servicer shall (i) have taken the actions required by
Section 8.01 of this Agreement to effect the termination of the
responsibilities and rights of the predecessor Servicer under this 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, (ii) have assumed the responsibilities and
obligations of NMAC as Servicer under this Agreement in accordance with
Section 8.02 of this Agreement (other than the initial Servicer's obligation
to make Advances), and (iii) become the Administrator under the
Administration Agreement in accordance with Section 8 of such Agreement.
ARTICLE VIII
DEFAULT
SECTION 8.01 SERVICER DEFAULT. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer (or the Seller, so long as NMAC is the
Servicer) to deliver to the Relevant Trustee for deposit in any of the Accounts
any required payment or to direct the Relevant Trustee to make any required
distributions therefrom, which failure continues unremedied for a period of
three Business Days after (i) receipt by the Servicer (or the Seller, so long as
NMAC is the Servicer) of written notice of such failure given by the Owner
Trustee or the Indenture Trustee, (ii) receipt by the Servicer (or the Seller,
so long as NMAC is the Servicer), the Owner Trustee or the Indenture Trustee of
written notice of such failure given by the holders of Notes or Certificates
evidencing not less than 25% of the sum of the Outstanding Amount and the
Certificate Balance, acting together as a single class, or (iii) discovery of
such failure by any officer of the Servicer;
(b) any failure by the Servicer (or the Seller, as long as NMAC is the
Servicer) to duly observe or perform in any material respect any other covenants
or agreements of the Servicer (or the Seller, as long as NMAC is the Servicer)
set forth in this Agreement, which failure shall materially and adversely affect
the rights of Certificateholders or Noteholders and shall continue unremedied
for a period of 90 days after giving of written notice of the failure to (i) the
Servicer (or the Seller, as long as NMAC is the Servicer) by the Owner Trustee
or the Indenture Trustee, or (ii) the Servicer (or the Seller, as long as NMAC
is the Servicer) and the Owner Trustee or the Indenture Trustee by the holders
of Notes or Certificates evidencing not less than 25% of the sum of the
Outstanding Amount and the Certificate Balance, acting together as a single
class; or
(c) the occurrence of an Insolvency Event with respect to the Servicer;
then, and in each and every case, so long as the Servicer Default shall not have
been remedied, either the Indenture Trustee or the Holders of Notes evidencing a
majority of the Outstanding Amount of the Notes (but excluding for purposes of
such calculation and action all Securities
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held or beneficially owned by NMAC, NARC or any of their Affiliates), by
notice then given in writing to the Servicer (and to the Indenture Trustee
and the Owner Trustee if given by the Noteholders) may terminate all of the
rights and obligations (other than the obligations set forth in Section 7.02
hereof) of the Servicer under this Agreement. On or after the receipt by the
Servicer of such written notice, all authority and power of the Servicer
under this Agreement, whether with respect to the Notes, the Certificates or
the Receivables or otherwise, shall, without further action, pass to and be
vested in the Indenture Trustee or such Successor Servicer as may be
appointed under Section 8.02; and, without limitation, the Indenture Trustee
and the Owner Trustee are hereby authorized and empowered to execute and
deliver, for the benefit 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. The
predecessor Servicer shall cooperate with the Successor Servicer and the
Owner Trustee in effecting the termination of the responsibilities and rights
of the predecessor Servicer under this Agreement, including, without
limitation, 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 have been deposited by the predecessor Servicer, in
the Accounts or thereafter received with respect to the Receivables that
shall at that time be held by the predecessor Servicer and the delivery of
the Receivables Files and the related accounts and records maintained by the
predecessor Servicer. All reasonable costs and expenses (including attorneys'
fees) incurred in connection with transferring the Receivable Files to the
Successor Servicer and amending this Agreement to reflect such succession as
Servicer pursuant to this Section 8.01 shall be paid by the predecessor
Servicer upon presentation of reasonable documentation of such costs and
expenses. Notwithstanding the foregoing, in the event the predecessor
Servicer is the Owner Trustee, the original Servicer hereunder shall
reimburse the Owner Trustee for all reasonable costs and expenses as
described in the immediately preceding sentence. Upon receipt of notice of
the occurrence of a Servicer Default, the Owner Trustee shall give notice
thereof to the Rating Agencies.
SECTION 8.02 APPOINTMENT OF SUCCESSOR.
(a) Upon the Servicer's receipt of notice of termination pursuant to
Section 8.01 or the Servicer's resignation in accordance with the terms of this
Agreement, the predecessor Servicer shall continue to perform its functions as
Servicer under this 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 earlier of (i) the date 45 days from the delivery to the
Owner Trustee and the Indenture Trustee of written notice of such resignation
(or written confirmation of such notice) in accordance with the terms of this
Agreement and (ii) 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 Indenture Trustee shall appoint a Successor Servicer,
and the Successor Servicer shall accept its appointment (including its
appointment as Administrator under the Administration Agreement as set forth in
Section 8.02(b)) by a written assumption in form acceptable to the Owner Trustee
and the Indenture Trustee. If 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 8.02, the Indenture Trustee without further action shall
automatically be
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appointed the Successor Servicer and the Indenture Trustee shall be entitled
to the Total Servicing Fee. Notwithstanding the above, the Indenture Trustee
shall, if it shall be legally unable so to act, appoint or petition a court
of competent jurisdiction to appoint, and the predecessor Servicer, if no
successor Servicer has been appointed at the time the predecessor Servicer
has ceased to act, may 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 automobile and/or
light-duty truck receivables, as the successor to the Servicer under this
Agreement.
(b) Upon appointment, the Successor Servicer (including the Indenture
Trustee acting as Successor Servicer) shall (i) 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 (except the initial Servicer's obligation to make Advances)
and shall be entitled, subject to the arrangements referred to in paragraph (c)
below, to the servicing fee and all the rights granted to the predecessor
Servicer by the terms and provisions of this Agreement and (ii) become the
Administrator under the Administration Agreement in accordance with Section 8 of
such Agreement.
(c) In connection with such appointment, the Owner 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 this Agreement. The Owner Trustee and such Successor
Servicer shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession.
SECTION 8.03 REPAYMENT OF ADVANCES. If the Servicer shall resign or be
terminated, the Servicer shall continue to be entitled to receive, to the extent
of available funds, reimbursement for Outstanding Advances pursuant to Sections
5.03 and 5.04 with respect to all Advances previously made thereby.
SECTION 8.04 NOTIFICATION . Upon any termination of, or appointment of
a successor to, the Servicer pursuant to this Article VIII, the Owner Trustee
shall give prompt written notice thereof to Certificateholders, and the
Indenture Trustee shall give prompt written notice thereof to Noteholders and
the Rating Agencies.
SECTION 8.05 WAIVER OF PAST DEFAULTS. The Holders of Notes evidencing a
majority of the Outstanding Amount of the Controlling Class of Notes, or, in the
case of any Servicer Default which does not adversely affect the Indenture
Trustee or the Noteholders, the Holders of Certificates evidencing a majority of
the Certificate Balance of the Controlling Class of Certificates, in each case
excluding for purposes of such calculation and action all Securities held or
beneficially owned by NMAC, NARC or any of their Affiliates, may, on behalf of
all Noteholders and Certificateholders, waive in writing 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 in accordance with this Agreement. Upon any such waiver of a
past default, such default shall cease to exist, and any Servicer Default
arising therefrom shall be deemed to have been remedied for every purpose of
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this Agreement. No such waiver shall extend to any subsequent or other
default or impair any right consequent thereto.
ARTICLE IX
TERMINATION; RELEASE OF RECEIVABLES
SECTION 9.01 OPTIONAL PURCHASE OF ALL RECEIVABLES.
(a) On each Distribution Date following the last day of a Collection
Period as of which the Pool Balance shall be less than or equal to the Optional
Purchase Percentage multiplied by the Original Pool Balance, the Servicer or any
successor to the Servicer shall have the option to purchase the corpus of the
Owner Trust Estate (whether or not such assets then comprise all or a portion of
the Trust Estate) for an amount equal to the Optional Purchase Price. To
exercise such option, the Servicer or any successor to the Servicer shall notify
the Owner Trustee and the Indenture Trustee of its intention to do so in
writing, no later than the tenth day of the month preceding the month in which
the Distribution Date as of which such purchase is to be effected and shall, on
or before the Distribution Date on which such purchase is to occur, deposit
pursuant to Section 5.05 in the Collection Account an amount equal to the
Optional Purchase Price, and shall succeed to all interests in and to the Trust
Estate and the Owner Trust Estate; PROVIDED, HOWEVER, that the Servicer shall
not effect any such purchase so long as the rating of NMAC by Moody's, or if
NMAC shall then be unrated by Moody's, then the rating of Nissan Capital of
America, Inc., is less than "Bal" by Moody's, and the Seller shall not effect
any such purchase so long as the rating of NARC by Moody's, or if NARC shall
then be unrated by Moody's, then the rating of Nissan Capital of America, Inc.,
is less than "Ba1" by Moody's, in each case unless the Owner Trustee and the
Indenture 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. Amounts so
deposited will be paid and distributed as set forth in Section 5.06 of this
Agreement. Upon such deposit of the amount necessary to purchase the corpus of
the Owner Trust Estate, the Servicer shall for all purposes of this Agreement be
deemed to have released all claims for reimbursement of Outstanding Advances
made in respect of the Receivables.
(b) Notice of any such purchase of the Owner Trust Estate shall be
given by the Owner Trustee and the Indenture Trustee to each Securityholder as
soon as practicable after their receipt of notice thereof from the Servicer.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder other
than Section 5.06 and the Owner Trustee will succeed to the rights of, and
assume the obligations of, the Indenture Trustee provided for in this Agreement.
SECTION 9.02 RELEASE OF RECEIVABLES.
(a) Upon repurchase of any Receivable by the Seller pursuant to Section
3.02 or by the Servicer pursuant to Section 4.06 or Section 9.01, the Owner
Trustee on behalf of the Issuer and the Certificateholders, and the Indenture
Trustee on behalf of the Noteholders, shall, without
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further action, be deemed to transfer, assign, set-over and otherwise convey
to the Seller or the Servicer, as the case may be, all right, title and
interest of the Owner Trustee on behalf of the Issuer in, to and under such
repurchased Receivable, all monies due or to become due with respect thereto
and all proceeds thereof and the other property conveyed to the Issuer
hereunder pursuant to Section 2.01 with respect to such Receivable, and all
security and any documents relating thereto, such assignment being an
assignment outright and not for security; and the Seller or the Servicer, as
applicable, shall thereupon own each such Receivable, and all such related
security and documents, free of any further obligation to the Issuer, the
Owner Trustee, the Certificateholders, the Indenture Trustee or the
Noteholders with respect thereto.
(b) The Owner Trustee and Indenture Trustee shall execute such
documents and instruments of transfer and assignment and take such other actions
as shall be reasonably requested by the Seller or the Servicer, as the case may
be, to effect the conveyance of such Receivable pursuant to Sections 3.02, 4.06
and 9.01.
(c) If in any enforcement suit or legal proceeding it is held that the
Seller or the Servicer may not enforce a repurchased Receivable on the ground
that it is not a real party in interest or a holder entitled to enforce the
Receivable, the Owner Trustee on behalf of the Issuer and the
Certificateholders, and the Indenture Trustee on behalf of the Noteholders,
shall, at the written direction and expense of the Seller or Servicer, as the
case may be, take such reasonable steps as the Seller or the Servicer deems
necessary to enforce the Receivable, including bringing suit in the name or
names of the Issuer, Certificateholders or Noteholders.
ARTICLE X
MISCELLANEOUS
SECTION 10.01 AMENDMENT.
(a) This Agreement may be amended by the Seller, the Servicer and the
Issuer, with the consent of the Indenture Trustee, but without the consent of
any of the Noteholders or the Certificateholders,
(1) to cure any ambiguity, correct or supplement any
provision herein that may be inconsistent with any other provision
herein, or make any other provisions with respect to matters or
questions arising hereunder that are not inconsistent with the
provisions herein; provided that (i) the amendment will not materially
and adversely affect the interest of any Noteholder or
Certificateholder and (ii) the Servicer shall have delivered an
Officer's Certificate to the Indenture Trustee and the Owner Trustee
stating that such amendment will not materially and adversely affect
the interest of any Noteholder or Certificateholder; and
(2) to change the formula for determining the required
amount for the Specified Reserve Account Balance upon (i) confirmation
from each Rating Agency that such amendment will not result in the
qualification, reduction or withdrawal of any rating it currently
assigns to any Class of Notes or Certificates, and (ii) delivery by the
Servicer to the Indenture Trustee and the Owner Trustee of an Officer's
Certificate stating that
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such amendment will not materially and adversely affect the interest of
any Noteholder or Certificateholder.
An amendment will be deemed not to materially and adversely affect the
interests of any Noteholder or Certificateholder of any Class if (x) the
amendment does not adversely affect the Trust's status as a partnership for
federal income tax purposes, and (y) each Rating Agency confirms that that
amendment will not result in a reduction or withdrawal of its rating on the
Certificates or the Notes of that Class.
(b) This Agreement may also be amended from time to time by the Seller,
the Servicer and the Issuer, with the consent of the Indenture Trustee and the
consent of:
(1) the holders of Notes evidencing a majority
of the Outstanding Amount of the Controlling Class of Notes;
or
(2) in the case of any amendment that does not
adversely affect the Indenture Trustee or the Noteholders, the
Holders of the Certificates evidencing a majority of the
outstanding Certificate Balance of the Controlling Class of
Certificates (but excluding for purposes of calculation and
action all Certificates held by the Seller, the Servicer or
any of their Affiliates), for the purpose of adding any
provisions to or changing in any manner or eliminating any of
the provisions of this Agreement or of modifying in any manner
the rights of those Noteholders or Certificateholders;
PROVIDED, HOWEVER, that no amendment shall:
(x) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on
the Receivables or distributions that are required to be made
for the benefit of those Noteholders or Certificateholders or
change the Interest Rate or the Pass-Through Rate or the
Specified Reserve Account Balance (except as described above
under clause (2) of subsection (a) above) without the consent
of each "adversely affected" Noteholder or Certificateholder;
or
(y) reduce the aforesaid percentage of the Outstanding Amount
of the Notes or Certificate Balance of the Certificates which
is required to consent to any amendment, without the consent
of the holders of all the then outstanding Notes or
Certificates.
An amendment referred to in clause (x) above will be deemed not to
"adversely affect" a Certificateholder or Noteholder of any Class only if each
Rating Agency confirms that that amendment will not result in a reduction or
withdrawal of its rating on the Certificates or Notes of that Class. In
connection with any amendment referred to in clause (x) above, the Servicer
shall deliver an Officer's Certificate to the Indenture Trustee and the Owner
Trustee stating that those Noteholders and Certificateholders whose consents
were not obtained were not adversely affected by such amendment.
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Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and
each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section 10.01 to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Indenture Trustee shall be entitled to receive and rely upon 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
10.02. The Owner Trustee and the Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Owner Trustee's or
the Indenture Trustee's, as applicable, own rights, duties or immunities under
this Agreement or otherwise.
SECTION 10.02 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 Issuer and of the Indenture Trustee in the
Receivables and in the proceeds thereof. The Seller shall deliver (or cause to
be delivered) to the Owner Trustee and the Indenture Trustee file-stamped copies
of, or filing receipts for, any document filed as provided above, as soon as
available following such filing.
(b) The Seller and the Servicer shall notify the Owner Trustee and the
Indenture Trustee within 30 days after any change of its name, identity or
corporate structure in any manner that would, could or might make any financing
statement or continuation statement filed in accordance with paragraph (a) above
seriously misleading within the meaning of Section 9-402(7) of the UCC, and
shall promptly file appropriate amendments to all previously filed financing
statements or continuation statements.
(c) Each of the Seller and the Servicer shall notify the Owner Trustee
and the Indenture Trustee of any relocation of its principal executive office
within 30 days after such relocation, 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 or new financing statement.
The Servicer shall at all times maintain each office from which it shall service
Receivables, and its principal executive office, within the United States of
America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
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(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the Trust, the
Servicer's master computer records that refer to any Receivable shall indicate
clearly the interest of the Issuer, the Owner Trustee and the Indenture Trustee
in such Receivable and that such Receivable is owned by the Issuer and has been
pledged to the Indenture Trustee. Indication of these respective interests in a
Receivable shall be deleted from or modified on the Servicer's computer systems
when, and only when, the related Receivable shall have become a Liquidated
Receivable or been 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 printouts that, if they shall refer in any manner
whatsoever to any Receivable, shall indicate clearly that such Receivable has
been sold and is owned by the Issuer and has been pledged to the Indenture
Trustee.
(g) Upon receipt of a written request from the Owner Trustee or the
Indenture Trustee, which request shall be made no more frequently than annually,
the Servicer shall furnish to the Owner Trustee or the Indenture Trustee, as the
case may be, within 20 Business Days after receipt of such request, 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. The Servicer
shall permit the Indenture Trustee and its agents at any time during normal
business hours upon reasonable prior notice to inspect, audit and make copies of
and abstracts from the Servicer's records regarding any Receivable.
(h) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee:
(A) upon the execution and delivery of this Agreement and
of each amendment hereto, an Opinion of counsel, based on customary
assumptions and qualifications, stating that, in the opinion of such
counsel, either (A) all financing statements and continuation
statements have been executed and filed that are necessary to perfect
the interest of the Owner Trustee and the Indenture Trustee in the
Receivables, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B) no
such action shall be necessary to preserve and protect such interest;
and
(B) if requested by the Indenture Trustee or the Owner
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, based on customary assumptions and
qualifications, all financing statements and continuation statements
have been executed and filed that are necessary to perfect the interest
of the Owner Trustee and the Indenture Trustee in the Receivables, and
reciting the details of such filings or referring to prior Opinions of
Counsel in which such details are given, or (B) no such action shall be
necessary to preserve and protect such interest.
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(i) Each Opinion of Counsel referred to in clause (h)(A) or (B) above
shall specify any action necessary (as of the date of such Opinion of Counsel)
to be taken in the following year to preserve and protect such interest.
SECTION 10.03 NOTICES. All demands, notices, communications and
instructions upon or to the Seller, the Servicer, the Owner Trustee, the
Indenture Trustee or the Rating Agencies under this Agreement shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) in
the case of the Seller, to Nissan Auto Receivables Corporation, 990 West
190th Street, Torrance, California 90502, Attention of Secretary ((310)
719-8013), (b) in the case of the Servicer, to Nissan Motor Acceptance
Corporation, 990 West 190th Street, Torrance, California 90502, Attention of
Secretary ((310) 719-8000), (c) in the case of the Issuer or the Owner
Trustee, at the Corporate Trust Office, (d) in the case of the Indenture
Trustee, at the Corporate Trust Office, (e) in the case of Moody's, to
Moody's Investors Service, Inc., ABS Monitoring Department, 99 Church Street,
New York, New York 10007, and (f) in the case of Standard & Poor's, to
Standard & Poor's Ratings Group, 55 Water Street, New York, New York
10041-0003, Attention: Asset Backed Surveillance Department; or, as to each
of the foregoing, at such other address as shall be designated by written
notice to the other parties.
SECTION 10.04 ASSIGNMENT BY THE SELLER OR THE SERVICER. Notwithstanding
anything to the contrary contained herein, except as provided in Sections 6.04
and 7.03 of this Agreement and as provided in the provisions of this Agreement
concerning the resignation or termination of the Servicer, this Agreement may
not be assigned by the Seller or the Servicer without the prior written consent
of the Indenture Trustee, the Owner Trustee, the Holders of the Certificates and
Notes evidencing not less than 66 2/3% of the Outstanding Amount and the
Certificate Balance, voting as a single class.
SECTION 10.05 LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the Seller, the Servicer, the Issuer,
the Owner Trustee, the Certificateholders, the Indenture Trustee and the
Noteholders, and nothing in this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 10.06 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.07 SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 10.08 HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
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SECTION 10.09 GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 10.10 ASSIGNMENT BY ISSUER. The Seller hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest by
the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of
the Noteholders of all right, title and interest of the Issuer in, to and under
the Receivables and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.
SECTION 10.11 NONPETITION COVENANTS.
(a) Notwithstanding any prior termination of this Agreement, the
Servicer and the Seller shall not, prior to the date which is one year and one
day after the termination of this Agreement with respect to the Issuer,
acquiesce, petition or otherwise invoke or cause the Issuer to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Issuer under any federal or state bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement, the
Servicer shall not, prior to the date which is one year and one day after the
termination of this Agreement with respect to the Seller, acquiesce, petition or
otherwise invoke or cause the Seller to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Seller under any federal or state bankruptcy, insolvency or similar law,
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Seller or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Seller.
SECTION 10.12 LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE
TRUSTEE. Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by [________________], not in its individual
capacity, but solely in its capacity as Owner Trustee of the Issuer, and by
[________________], not in its individual capacity, but solely in its capacity
as Indenture Trustee under the Indenture. In no event shall [______________] or
[________________] have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered by the Seller or the Servicer,
or prepared by the Seller or the Servicer for delivery by the Owner Trustee on
behalf of the Issuer, pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer. For all purposes of this Agreement, in the
performance of its duties or obligations hereunder or in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective officers as of the day and year first above
written.
NISSAN AUTO RECEIVABLES [___-___]
OWNER TRUST
By: ___________________________________,
not in its individual capacity but solely as
Owner Trustee on behalf of the Trust
By: ___________________________________
Name: _________________________________
Title: ________________________________
NISSAN AUTO RECEIVABLES CORPORATION, Seller
By:
Name:
Title:
NISSAN MOTOR ACCEPTANCE
CORPORATION, Servicer
By:
Name:
Title:
ACKNOWLEDGED AND ACCEPTED AS OF
THE DAY AND YEAR FIRST ABOVE WRITTEN:
___________________________________, not in its
individual capacity but solely as Indenture Trustee
By: _______________________________
Name: _____________________________
Title: ____________________________
S-1
<PAGE>
SCHEDULE A
Schedule of Receivables
(To be Delivered to the Trust on the Closing Date)
<PAGE>
SCHEDULE B
LOCATION OF THE RECEIVABLES
1. NISSAN MOTOR ACCEPTANCE CORPORATION
2901 Kinwest Parkway
Irving, Texas 75063
2. NISSAN MOTOR ACCEPTANCE CORPORATION
990 W. 190th Street
Torrance, California 90502
3. KESTREL RECORDS MANAGEMENT
1235 N. Union Bower
Irving, Texas 75061
4. DATA LOK DATA STORAGE CENTER
727 Kingswill Place
Carson, California 90746
<PAGE>
EXHIBIT 4.4
- -------------------------------------------------------------------------------
NISSAN AUTO RECEIVABLES ______ GRANTOR TRUST
_____% ASSET BACKED CERTIFICATES
NISSAN AUTO RECEIVABLES CORPORATION
Seller
NISSAN MOTOR ACCEPTANCE CORPORATION
Servicer and in its individual capacity
-------------------------------------------------------
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of ______________
<PAGE>
ARTICLE I
INTRODUCTION
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Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Usage of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 1.03. Cutoff Date and Record Date. . . . . . . . . . . . . . . . . . . . . . . . 19
Section 1.04. Section References . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE II
THE TRUST
Section 2.01. Creation of Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.02. Conveyance of Receivables. . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.03. Acceptance by Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.04. Characterization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE III
THE RECEIVABLES
Section 3.01. Representations and Warranties of Seller . . . . . . . . . . . . . . . . . 20
Section 3.02. Repurchase Upon Breach . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.03. Custody of Receivable Files. . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.04. Duties of Servicer as Custodian. . . . . . . . . . . . . . . . . . . . . . 24
Section 3.05. Instructions; Authority to Act . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.06. Custodian's Indemnification. . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.07. Effective Period and Termination . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 4.01. Duties of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.02. Collection of Receivable Payments. . . . . . . . . . . . . . . . . . . . . 27
Section 4.03. Realization Upon Receivables . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.04. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.05. Maintenance of Security Interests in Financed Vehicles . . . . . . . . . . 27
Section 4.06. Covenants of Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.07. Purchase of Receivables Upon Breach. . . . . . . . . . . . . . . . . . . . 28
Section 4.08. Total Servicing Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.09. Servicer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.10. Annual Statement as to Compliance; Notice of Default . . . . . . . . . . . 29
Section 4.11. Annual Independent Certified Public Accountant's Report. . . . . . . . . . 30
Section 4.12. Access to Certain Documentation and Information Regarding Receivables. . . 30
Section 4.13. Appointment of Subservicer . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
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Section 4.14. Servicer Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE V
DISTRIBUTIONS; SUBORDINATION SPREAD ACCOUNTS; STATEMENTS TO CERTIFICATEHOLDERS
Section 5.01. Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.02. Collections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.03. Application of Collections . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.04. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.05. Additional Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.06. Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.07. Net Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.08. Statements to Certificateholders . . . . . . . . . . . . . . . . . . . . . 37
Section 5.09. No Petition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.01. Yield Supplement Account . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.02. Custody and Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . 39
Section 6.03. Limitations on the Trust . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VII
THE CERTIFICATES
Section 7.01. The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.02. Authentication of Certificates . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.03. Registration of Transfer and Exchange of Certificates. . . . . . . . . . . 39
Section 7.04. Mutilated, Destroyed, Lost, or Stolen Certificates . . . . . . . . . . . . 42
Section 7.05. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 7.06. Access to List of Certificateholders' Names and Addresses. . . . . . . . . 42
Section 7.07. Maintenance of Office or Agency. . . . . . . . . . . . . . . . . . . . . . 42
Section 7.08. Book-Entry Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 7.09. Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 7.10. Definitive Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VIII
THE SELLER
Section 8.01. Representations of Seller. . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 8.02. Liability of Seller; Indemnities . . . . . . . . . . . . . . . . . . . . . 45
Section 8.03. Merger or Consolidation of, or Assumption of the Obligations of, Seller. . 46
Section 8.04. Limitation on Liability of Seller and Others . . . . . . . . . . . . . . . 47
</TABLE>
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<S> <C> <C>
Section 8.05. Seller May Own Certificates. . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.06. Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE IX
THE SERVICER
Section 9.01. Representations of Servicer. . . . . . . . . . . . . . . . . . . . . . . . 49
Section 9.02. Indemnities of Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 9.03. Merger or Consolidation of, or Assumption of the Obligations of, Servicer. 52
Section 9.04. Limitation on Liability of Servicer and Others . . . . . . . . . . . . . . 52
Section 9.05. Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.06. NMAC Not to Resign as Servicer . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE X
DEFAULT
Section 10.01. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 10.02. Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.03. Repayment of Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.04. Notification to Certificateholders . . . . . . . . . . . . . . . . . . . . 56
Section 10.05. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE XI
THE TRUSTEE
Section 11.01. Duties of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 11.02. Trustee's Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 11.03. Trustee's Assignment of Administrative Receivables
and Warranty Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 11.04. Certain Matters Affecting the Trustee. . . . . . . . . . . . . . . . . . . 59
Section 11.05. Trustee Not Liable for Certificates or Receivables . . . . . . . . . . . . 60
Section 11.06. Trustee May Own Certificates . . . . . . . . . . . . . . . . . . . . . . . 61
Section 11.07. Trustee's Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . 61
Section 11.08. Indemnity of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 11.09. Eligibility Requirements for Trustee . . . . . . . . . . . . . . . . . . . 62
Section 11.10. Resignation or Removal of Trustee. . . . . . . . . . . . . . . . . . . . . 62
Section 11.11. Successor Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 11.12. Merger or Consolidation of Trustee . . . . . . . . . . . . . . . . . . . . 63
Section 11.13. Appointment of Co-Trustee or Separate Trustee. . . . . . . . . . . . . . . 63
Section 11.14. Representations and Warranties of Trustee. . . . . . . . . . . . . . . . . 65
Section 11.15. Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 11.16. Trustee May Enforce Claims Without Possession of Certificates. . . . . . . 65
Section 11.17. Suits for Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 11.18. Rights of Certificateholders to Direct Trustee . . . . . . . . . . . . . . 65
Section 11.19. Appointment of Custodian . . . . . . . . . . . . . . . . . . . . . . . . . 66
</TABLE>
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ARTICLE XII
TERMINATION; RELEASE OF RECEIVABLES
Section 12.01. Termination of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 12.02. Optional Purchase of All Receivables . . . . . . . . . . . . . . . . . . . 67
Section 12.03. Release of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 13.02. Protection of Title to Trust . . . . . . . . . . . . . . . . . . . . . . . 70
Section 13.03. Limitation on Rights of Certificateholders . . . . . . . . . . . . . . . . 71
Section 13.04. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 13.05. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 13.06. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 13.07. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 13.08. Certificates Nonassessable and Fully Paid. . . . . . . . . . . . . . . . . 73
Section 13.09. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 13.10. No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . 73
Section 13.11. Third-Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 13.12. Actions by Certificateholders. . . . . . . . . . . . . . . . . . . . . . . 73
Section 13.13. Qualification as Grantor Trust; Separate Assets. . . . . . . . . . . . . . 73
Section 13.14. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
</TABLE>
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<TABLE>
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EXHIBITS
Exhibit A Form of Class A Certificate
Exhibit B Form of Class B Certificate
Exhibit C Form of Class C Certificate
Exhibit D Form of Depository Agreement
Exhibit E Form of Custody and Pledge Agreement
Exhibit F-1 Form of Trustee's Certificate to Seller
Exhibit F-2 Form of Trustee's Certificate to Servicer
Exhibit G Form of Yield Supplement Agreement
Exhibit H-1 Form of Representation Letter for the Class A Certificates
Exhibit H-2 Form of Representation Letter for the Class [B] [C] Certificates
SCHEDULES
Schedule A List of Receivables
Schedule B Location of Receivables
</TABLE>
v
<PAGE>
This Pooling and Servicing Agreement, dated as of _______________,
is made with respect to the formation of the Nissan Auto Receivables _______
Grantor Trust, among NISSAN AUTO RECEIVABLES CORPORATION, a Delaware
corporation, as Seller, NISSAN MOTOR ACCEPTANCE CORPORATION, a California
corporation, as Servicer and in its individual capacity, and
___________________________________, a _____________________________.
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 this Agreement, the
following words and phrases, unless the context otherwise requires, shall
have the following meanings:
"ADMINISTRATIVE PURCHASE PAYMENT" for any Administrative Receivable
as of the last day 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 related APR, after giving effect to the receipt of
monies collected (from whatever source other than Advances) on such
Administrative Receivable, if any, during such Collection Period.
"ADMINISTRATIVE RECEIVABLE" means a Receivable purchased as of the
close of business on the last day of a Collection Period by the Servicer
pursuant to Section 4.07 or Section 12.02.
"ADVANCE" means the amount, as of the last day of a Collection
Period, that the Servicer is required to advance on the respective Receivable
pursuant to Section 5.04(a).
"AFFILIATE" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control," when used
with respect to any specified Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
term "controlling" and "controlled" have meanings correlative to the
foregoing.
"AGREEMENT" means this Pooling and Servicing Agreement.
"AICPA" shall have the meaning assigned to such term in Section 4.11.
"AMOUNT FINANCED" with respect to any Receivable, means the amount
advanced under the Receivable toward the purchase price of the Financed
Vehicle and any related costs, including but not limited to accessories,
insurance premiums, service and warranty contracts and other items
customarily financed as part of retail automobile and light-duty truck
installment sale contracts.
1
<PAGE>
"ANNUAL PERCENTAGE RATE" or "APR" of a Receivable means the annual
rate of finance charges stated in such Receivable.
"ANNUAL USAP REPORT" shall have the meaning assigned to such term
in Section 4.11.
"AVAILABLE INTEREST" means, for any Distribution Date, the sum of
the following amounts received during the related Collection Period: (i)
that portion of all collections on Receivables other than Defaulted
Receivables allocable to interest, (ii) Net Liquidation Proceeds to the
extent allocable to interest due on a Defaulted 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 Administrative Purchase Payment
of each Receivable that became an Administrative Receivable during the
related Collection Period to the extent attributable to interest thereon, (v)
without duplication of any amounts described above in clauses (i) and (ii),
the Warranty Purchase Payment of each Receivable that became a Warranty
Receivable during the related Collection Period to the extent attributable to
interest thereon, and (vi) the Yield Supplement Deposit received by the
Trustee; PROVIDED, HOWEVER, that in calculating Available Interest, amounts
to be paid to the Servicer as reimbursement for Advances pursuant to Section
5.06(a)(ii) on such Distribution Date 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 other than Defaulted
Receivables allocable to principal, (ii) Net Liquidation Proceeds
attributable to principal due on a Defaulted Receivable in accordance with
the Servicer's customary servicing procedures, and (iii) without duplication
of any amounts described above in clauses (i) and (ii), the Administrative
Purchase Payment of each Receivable that became an Administrative Receivable
during the related Collection Period to the extent attributable to principal,
and (iv) without duplication of any amounts described above in clauses (i)
and (ii), the Warranty Purchase Payment of each Receivable that became a
Warranty Receivable during the related Collection Period to the extent
attributable to principal.
"BASE 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 or, with
respect to the first Distribution Date, the Original Pool Balance.
"BASIC DOCUMENTS" means the Purchase Agreement, this Agreement,
the Depository Agreement, the Custody and Pledge Agreement, the Yield
Supplement Agreement and the other documents and certificates delivered in
connection herewith and therewith.
"BOOK-ENTRY CERTIFICATES" means a beneficial interest in the Class
A Certificates or Class B 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,
or Los Angeles, California
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shall be authorized or obligated by law, regulation, executive order or
governmental decree to remain closed.
"CERTIFICATE" means a Class A Certificate, a Class B Certificate or
a Class C Certificate.
"CERTIFICATES" means the Class A Certificates, the Class B
Certificates and the Class C Certificates.
"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 this Agreement, the interest evidenced by any Class A Certificate
or Class B Certificate registered in the name of the Seller, the Servicer, or
any Person actually known to a Trustee Officer to be an Affiliate of 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.
"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 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; PROVIDED, HOWEVER,
that on any Distribution Date on or after the Distribution Date on which the
Class B Certificate Balance and the Class C Certificate Balance are reduced
to zero, the Class A Certificate Balance on any Distribution Date will equal
the Pool Balance as of the last day of the related Collection Period after
all required distributions, deposits and withdrawals have been made.
"CLASS A CERTIFICATE 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 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.
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"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 Class A Pass-Through Rate from such
preceding Distribution Date to but not including such current Distribution
Date, over the amount of interest that the holders of the Class A
Certificates actually received on such current Distribution Date.
"CLASS A INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) thirty (30) days of interest or, in the
case of the initial Distribution Date, the number of days in the related
Collection Period, at the Class A 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, and (ii) the Class A Interest Carryover
Shortfall, if any, for the preceding Distribution Date.
"CLASS A PASS-THROUGH RATE" means ___% per annum.
"CLASS A PERCENTAGE" means ___%.
"CLASS A POOL FACTOR" means, as of the last day of a Collection
Period, a seven-digit decimal figure equal to the Class A Certificate Balance
as of the close of business on such day 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 Administrative Receivables or Warranty Receivables
under obligations that arose during the 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 Defaulted Receivables during
the related Collection Period (without duplication of amounts referred to in
clauses (i) or (ii) above).
"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 Original Class B
Certificate Balance, reduced by all amounts previously distributed to the
Class B Certificateholders and allocable to principal; PROVIDED, HOWEVER,
that on any Distribution Date on or after the Distribution Date on which the
Class C Certificate Balance is reduced to zero, the Class B Certificate
Balance on any
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Distribution Date will equal the excess of the Pool Balance as of the last
day of the related Collection Period over the Class A Certificate Balance as
of such Distribution Date after all required distributions, deposits and
withdrawals have been made.
"CLASS B CERTIFICATE FACTOR" means, as of any Distribution Date, a
seven-digit decimal figure equal to the Class B Certificate Balance as of the
close of business on such Distribution Date divided by the Original Class B
Certificate Balance.
"CLASS B DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Class B Principal Distributable Amount and
the Class B Interest Distributable Amount.
"CLASS B INTEREST CARRYOVER SHORTFALL" means, as of the close of
business on any Distribution Date, the excess, if any, of the Class B
Interest Distributable Amount for such Distribution Date plus any outstanding
unpaid interest owed to holders of Class B Certificates from the preceding
Distribution Date plus interest on such outstanding unpaid interest amount,
to the extent permitted by law, at the Class B 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 current Distribution Date.
"CLASS B INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) thirty (30) days of interest or, in the
case of the initial Distribution Date, the number of days in the related
Collection Period, at the Class B Pass-Through Rate on the Class B
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, and (ii) the Class B Interest Carryover
Shortfall, if any, for the preceding Distribution Date.
"CLASS B PASS-THROUGH RATE" means ___% per annum.
"CLASS B PERCENTAGE" means ___%.
"CLASS B POOL FACTOR" means, as of the last day of a Collection
Period, a seven-digit decimal figure equal to the Class B Certificate Balance
as of the close of business on such day divided by the Original Pool Balance.
"CLASS B PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of
any Distribution Date, the excess, if any, of the Class B Principal
Distributable Amount plus 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 actually 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 Administrative Receivables or Warranty Receivables
under an obligation that arose during the related Collection Period (without
duplication of amounts included in clause (i) above), and (iii) the aggregate
outstanding principal balance as of
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the beginning of the related Collection Period of all Receivables that become
Defaulted Receivables during the related Collection Period (without
duplication of amounts included in clauses (i) or (ii) above).
"CLASS C CERTIFICATE" means any one of the Certificates executed by
the Trust and authenticated by the Trustee, in substantially the form set
forth in EXHIBIT C hereto.
"CLASS C CERTIFICATE BALANCE" shall equal, initially, the Original
Class C Certificate Balance and, thereafter, shall equal the amount by which
the Pool Balance as of the last day of the related Collection Period exceeds
the sum of the Class A Certificate Balance and the Class B Certificate
Balance as of such Distribution Date after all required distributions,
deposits and withdrawals have been made.
"CLASS C DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Class C Principal Distributable Amount and
the Class C Interest Distributable Amount.
"CLASS C INTEREST CARRYOVER SHORTFALL" means, as of the close of
business on any Distribution Date, the excess, if any, of the Class C
Interest Distributable Amount for such Distribution Date plus any outstanding
unpaid interest owed to holders of Class C Certificates from the preceding
Distribution Date plus interest on such outstanding unpaid interest amount,
to the extent permitted by law, at the Class C 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 C Certificates actually
received on such current Distribution Date.
"CLASS C INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) thirty (30) days of interest or, in the
case of the initial Distribution Date, the number of days in the related
Collection Period, at the Class C Pass-Through Rate on the Class C
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, and (ii) the Class C Interest Carryover
Shortfall, if any, for the preceding Distribution Date.
"CLASS C PASS-THROUGH RATE" means __% per annum.
"CLASS C PERCENTAGE" means __%.
"CLASS C PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of
any Distribution Date, the excess, if any, of the Class C Principal
Distributable Amount plus any outstanding unpaid principal owed to holders of
Class C Certificates from the preceding Distribution Date over the amount of
principal that the holders of the Class C Certificates actually received on
such current Distribution Date.
"CLASS C PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the Class C 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 Administrative Receivables or Warranty Receivables
under an obligation that arose during the related Collection Period (without
duplication of
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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 Defaulted Receivables during the related Collection
Period (without duplication of amounts included in clauses (i) or (ii) above).
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934.
"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.
"CODE" the Internal Revenue Code.
"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, or, in the case of the initial Distribution
Date, the period from the Cutoff Date to _____________. 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.
"CONTROLLING CLASS OF CERTIFICATES" means, with respect to the
Certificates, (i) first, until the Class A Certificate Balance has been
reduced to zero, the Class A Certificates, (ii) second, until the Class B
Certificate has been reduced to zero, the Class B Certificates, and (iii)
thereafter, the Class C Certificates.
"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, dated as of the
date of this Agreement, between ________________________, substantially in
the form attached hereto as EXHIBIT E.
"CUTOFF DATE" means ___________________.
"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 related Receivable to NMAC under an existing
agreement between such dealer and NMAC.
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"DEALER RECOURSE" means, with respect to a Receivable, all recourse
rights against the Dealer which originated the Receivable, and any successor
Dealer.
"DEFAULTED RECEIVABLE" means a Receivable (other than an
Administrative Receivable or a Warranty Receivable) that, 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.
"DEFINITIVE CERTIFICATES" shall have the meaning specified in
Section 7.08.
"DELIVERY" when used with respect to Subordination Spread Account
Property means:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9-105(1)(i) of the UCC and are susceptible of
physical delivery, transfer thereof to the Custodian by physical delivery to
the Custodian indorsed to, or registered in the name of, the Custodian or
indorsed in blank, and, with respect to a certificated security (as defined
in Section 8-102 of the UCC), transfer thereof (i) by delivery of such
certificated security to the Custodian or by delivery of such certificated
security to a 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
Subordination Spread Account Property to an appropriate book-entry account
maintained with a Federal
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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 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 dated as of the date of
this Agreement, among the Seller, the Custodian and the initial Clearing
Agency, substantially in the form attached hereto as EXHIBIT D.
"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 __________________.
"ELIGIBLE INVESTMENTS" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(i) direct obligations of, and obligations fully guaranteed
as to timely payment of principal and interest by, the United States of
America;
(ii) demand deposits, time deposits or certificates of
deposit of any depository institution or trust company incorporated
under the laws of the United States of America or any state thereof (or
any domestic branch of a foreign bank) and subject to supervision and
examination by Federal or State banking or depository institution
authorities; PROVIDED, HOWEVER, that at the time of the investment or
contractual commitment to invest therein, the commercial paper or other
short-term unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a Person other than such
depository institution or trust company) thereof shall have a credit
rating from each of the Rating Agencies in the highest investment
category granted thereby;
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(iii) commercial paper having, at the time of the investment
or contractual commitment to invest therein, a rating from each of
the Rating Agencies in the highest investment category granted
thereby;
(iv) investments in money market funds having a rating from
each of the Rating Agencies in the highest investment category granted
thereby (including funds for which the Trustee or any of its affiliates
is investment manager or advisor);
(v) bankers' acceptances issued by any depository
institution or trust company referred to in clause (ii) above;
(vi) 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 (ii) above;
(vii) 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 (ii) above (except
that the rating referred to in the proviso in such clause (ii) shall be
A-1 or higher in the case of Standard & Poor's) (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 (a "broker/dealer"), the unsecured short-term debt
obligations of which are rated P-1 by Moody's and at least A-1 by
Standard & Poor's 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 and at least A-1 by
Standard & Poor's at the time of entering into such repurchase
obligation (a "Rated Holding Company") or (d) an unrated wholly-owned
subsidiary of a direct or indirect parent Rated Holding Company, which
guarantees such subsidiary's obligations under such repurchase
agreement (a "Guaranteed Counterparty"); 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 a Guaranteed Counterparty in respect of
which the unsecured short-term ratings of Standard & Poor's 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 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));
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(B) in the case of the Subordination Spread Account and
the Yield Supplement Account, the rating from Standard & Poor's 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 or the Custodian, 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 or the Custodian, as applicable;
(F) the repurchase obligation shall require that the
collateral subject thereto shall be marked to market daily;
(G) in the case of a repurchase obligation of a
Guaranteed Counterparty, the following conditions shall also be
satisfied:
(1) the Trustee or the Custodian, 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, to the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and to
general equitable principles;
(2) the Trustee or the Custodian, 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;
(3) 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
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of the Guaranteed Counterparty is necessary) and that
the Trustee or the Custodian, as applicable, shall make
a demand on the Rated Holding Company to make the
payment due under such guarantee;
(4) the guarantee of the Rated Holding Company
shall be irrevocable with respect to such repurchase
obligation and shall not be subordinated to any other
obligation of the Rated Holding Company; and
(5) each of the Rating Agencies has confirmed in
writing to the Trustee or the Custodian, 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 unsatisfied portion of the
repurchase obligation; and
(viii) any other investment with respect to which the
Servicer has received written notification from the Rating Agencies that
the acquisition of such investment as an Eligible Investment will not
result in a withdrawal or downgrading of the ratings on the Certificates;
provided that, unless otherwise expressly stated herein, each of the
foregoing investments shall mature no later than the Business Day prior to
the Distribution Date immediately following the date of purchase of such
investment and shall be required to be held to such maturity.
For purposes of this definition, any reference to the highest available
credit rating of an obligation shall mean the highest available credit rating
for such obligation (excluding any "+" signs associated with such rating), or
such lower credit rating (as approved in writing by each Rating Agency) as
will not result in the qualification, downgrading or withdrawal of the rating
then assigned by such Rating Agency to any of the Certificates.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"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).
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"EXCESS PROCEEDS" shall have the meaning assigned to such term in
Section 8.06(b)(ii).
"FINAL SCHEDULED DISTRIBUTION DATE" means _______________.
"FINANCED VEHICLE" means a new, near-new or used automobile or
light-duty truck, together with all accessions thereto, securing an Obligor's
indebtedness under the respective Receivable.
"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 that attach to such Financed Vehicle by
operation of law.
"LIQUIDATED RECEIVABLE" means a Defaulted Receivable that has been
liquidated by the Servicer.
"MONTHLY REMITTANCE CONDITION" shall have the meaning assigned to
such term in Section 5.02.
"MOODY'S" means Moody's Investors Service, Inc.
"NET LIQUIDATION PROCEEDS" means the monies collected from whatever
source 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.
"NISSAN" means Nissan Motor Co., Ltd.
"NONRECOVERABLE ADVANCE" means any Outstanding Advance with respect
to (i) any Defaulted Receivable or (ii) any Receivable as to which the
Servicer determines that any recovery from payments made on or with respect
to such Receivable is unlikely.
"NMAC" means Nissan Motor Acceptance Corporation, 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 (but excluding 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 reasonably
acceptable to the Trustee.
"OPTIONAL PURCHASE PERCENTAGE" shall be 10.00%.
"ORIGINAL CLASS A CERTIFICATE BALANCE" means $_________________.
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"ORIGINAL CLASS B CERTIFICATE BALANCE" means $_________________.
"ORIGINAL CLASS C CERTIFICATE BALANCE" mans $__________________.
"ORIGINAL POOL BALANCE" means $_________________, the aggregate
Principal Balance of the Receivables on the Cutoff Date.
"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 Sections 5.04(a), 5.04(b) and
5.04(c), as applied to reimburse all unpaid Advances with respect to such
Receivable.
"PASS-THROUGH RATE" means the Class A Pass-Through Rate, the Class
B Pass-Through Rate or the Class C Pass-Through Rate.
"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.
"PLAN" shall have the meaning assigned to such term in Section
7.03(b).
"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 Administrative Receivables, Warranty Receivables and Defaulted
Receivables) as of the close of business on such day; PROVIDED, HOWEVER, that
where the Pool Balance is relevant in determining whether the requisite
percentage of Class A Certificateholders or Class B 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 or Class B
Certificate, as applicable, registered in the name of the Seller, the
Servicer or any Person actually known by a Trust Officer to be an Affiliate
of the Seller or the Servicer.
"POOL FACTOR" for a particular Class of Certificates and any
Distribution Date means a seven-digit decimal figure indicating the principal
amount of the Certificate Balance of such Class of Certificates as of the
close of business on the last day of the related Collection Period as a
fraction of 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 allocable 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 Administrative Purchase Payment or the Warranty
Purchase Payment with respect to the Receivable allocable to principal and
(iv) any Net Liquidation Proceeds allocable to principal.
"PURCHASE AGREEMENT" means the agreement, dated as of the date of
this Agreement, among _________________________, relating to the purchase by
the Seller from NMAC of the Receivables.
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"RATING AGENCY" means, as of any date, any of the nationally
recognized statistical rating organizations that has been requested by the
Seller or one of its Affiliates to rate any of the Certificates and that is
rating such Certificates on such date.
"RECEIVABLE" means any retail installment sale contract that
appears on Schedule A to this Agreement (which Schedule A may be in the form
of microfiche, CD, datatape or paper) and that has not been released by the
Trustee from the Trust.
"RECEIVABLE FILES" means the documents specified in Section 3.03.
"RECEIVABLES SYSTEMS" shall have the meaning assigned to such term
in Section 9.01(vii).
"RECORD DATE" means, with respect to any Distribution Date, the
fourteenth day of the calendar month in which such Distribution Date occurs
or, if Definitive Certificates have been issued, the last day of the
Collection Period preceding the related Distribution Date. Any amount stated
"as of a Record Date" or "on a Record Date" shall give effect to (i) all
applications of collections, and (ii) all distributions to any party under
this Agreement and the Trust Agreement or to the related Obligor, as the case
may be, in each case as determined as of the opening of business on the
related Record Date.
"REQUIRED DEPOSIT RATING" for so long as the Certificates shall be
outstanding, shall mean a rating on (i) short-term unsecured debt obligations
of P-1 by Moody's and (ii) short-term unsecured debt obligations of A-1+ by
Standard & Poor's; 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" shall have the meaning assigned to such term
in Section 7.01.
"REQUIRED RATE" means, with respect to each Collection Period, the
sum of the Servicing Rate and [specify rate].
"SECURITIES ACT" means the Securities Act of 1933.
"SCHEDULED PAYMENT" on a Receivable means the payment required to
be made by the Obligor during each Collection Period that is sufficient to
amortize the related 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 this Agreement, and each successor to Nissan Auto
Receivables Corporation (in the same capacity) pursuant to Section 8.03.
"SERVICER" means NMAC, as the servicer of the Receivables, and each
successor to NMAC (in the same capacity) pursuant to Section 9.03 or Section
10.02.
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"SERVICER'S CERTIFICATE" means a certificate completed and executed
on behalf of the Servicer by the president, 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 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.
"SPECIFIED SUBORDINATION SPREAD ACCOUNT BALANCE" with respect to
any Distribution Date shall mean $_____________; PROVIDED, HOWEVER, that if
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 Defaulted Receivables, less any Net
Liquidation Proceeds with respect to such Defaulted 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 more to
the outstanding number of Receivables exceeds ___%, then the Specified
Subordination Spread Account Balance for such Distribution Date (and for each
succeeding Distribution Date until the relevant averages have not exceeded
the specified percentages in clauses (i) and (ii) above for three successive
Distribution Dates) shall be a dollar amount equal to (x) __% 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 as of the
opening of business of the first day of such Collection Period, but in no
event shall the 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
and the Class B Certificates is $______________ 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
and $______________.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a
Division of the McGraw-Hill Companies.
"STATE" means any state or commonwealth of the United States of
America or the District of Columbia.
"SUBORDINATION INITIAL DEPOSIT" means $_______________.
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"SUBORDINATION SPREAD ACCOUNT PROPERTY" shall have the meaning set
forth in the Custody and Pledge Agreement.
"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 and the Class B Certificates.
"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" means, for each Distribution Date, the sum
of the Available Interest and the Available Principal.
"TOTAL SERVICING FEE" means the sum of the Base Servicing Fee and
the Supplemental Servicing Fee.
"TRUST" means the Nissan Auto Receivables _______ Grantor Trust
created hereunder, the estate of which shall consist of the Receivables
(other than Warranty Receivables for which the Seller has paid the Warranty
Purchase Payment in accordance with Section 3.02 and Administrative
Receivables for which the Servicer has paid the Administrative Purchase
Payment in accordance with Section 4.07), and all monies paid thereon, and
all monies accrued thereon, 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; all property (including the
right to receive Net 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; all 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 this Agreement
(which initially shall be ______________________________________), its
successor in interest, and any successor trustee appointed pursuant to
Section 11.11.
"TRUSTEE OFFICER" means, with respect to the Trustee, any officer
assigned to the Corporate Trust Division (or any successor thereto),
including any Vice President, Assistant Vice President, Trust Officer, any
Assistant Secretary, or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above
designated officers and having direct responsibility for the administration
of the Trust.
"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 F-1 and, in the case of an assignment to the Servicer, EXHIBIT F-2.
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"UCC" means the Uniform Commercial Code as in effect in the
relevant jurisdiction.
"USAP" shall have the meaning assigned to such term in Section 4.11.
"WARRANTY PURCHASE PAYMENT" for any Warranty Receivable as of the
last day 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 Warranty Receivable, if
any, during Collection Period.
"WARRANTY RECEIVABLE" means a Receivable purchased as of the close
of business on the last day of a Collection Period by the Seller pursuant to
Section 3.02.
"YIELD SUPPLEMENT ACCOUNT" shall have the meaning assigned to such
term in Section 6.01.
"YIELD SUPPLEMENT AGREEMENT" means the agreement, dated as of the
date of this Agreement, between _________________________, substantially in
the form attached hereto as EXHIBIT G.
"YIELD SUPPLEMENT AMOUNT" means, with respect to any Distribution
Date, the aggregate amount on deposit in the Yield Supplement Account after
giving effect to the withdrawal therefrom of the related Yield Supplement
Deposit and without regard to any amounts on deposit therein in respect of
interest or investment earnings earned on the investment of amounts on
deposit therein in Eligible Investments for any period.
"YIELD SUPPLEMENT DEPOSIT" means, with respect to any Distribution
Date, the amount by which (i) the aggregate amount of interest that would
have been due during the related Collection Period on all Yield Supplemented
Receivables if such Yield Supplemented Receivables bore interest at the
Required Rate exceeds (ii) the amount of interest accrued on such Yield
Supplemented Receivables at their respective APRs and due during such
Collection Period.
"YIELD SUPPLEMENTED RECEIVABLE" means any Receivable that has an
APR less than the Required Rate.
SECTION 1.02. USAGE OF TERMS. With respect to all terms in this
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, amendments and restatements and
supplements thereto or changes therein entered into in accordance with their
respective terms and not prohibited by this Agreement; references to Persons
include their permitted successors and assigns; references to laws include
their amendments and supplements, the rules and regulations thereunder and
any successors thereto; and the term "including" means "including without
limitation."
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SECTION 1.03. CUTOFF DATE AND RECORD DATE. All references to the Record
Date prior to the first Record Date in the life of the Trust shall be to the
Cutoff Date.
SECTION 1.04. SECTION REFERENCES. All section references shall be to
Sections in this Agreement.
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.
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 due thereon or paid
thereunder or in respect thereof (including proceeds of the repurchase of
Receivables by the Seller pursuant to Section 3.02 or the purchase of
Receivables by the Servicer pursuant to Section 4.07 or 12.02) on or after
the Cutoff Date;
(ii) amounts on deposit in the accounts established for the
Trust;
(iii) the right of the Seller in the security interests in the
Financed Vehicles granted by Obligors pursuant to the Receivables and any
related property;
(iv) the right of the Seller in all proceeds from claims on any
physical damage, credit life, credit disability or other insurance policies
covering the Financed Vehicles or the Obligors;
(v) the right of the Seller through NMAC in any Dealer
Recourse;
(vi) the right of the Seller under this Agreement, the Yield
Supplement Agreement, the Purchase Agreement and the Custody and Pledge
Agreement;
(vii) the right of the Seller to realize upon any property
(including the right to receive future Net Liquidation Proceeds) that shall
have secured a Receivable;
(viii) the right of the Seller in rebates of premiums and other
amounts relating to insurance policies and other items financed under the
Receivables in effect as of the Cutoff Date;
(ix) all other assets comprising the corpus of the Trust; and
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(x) all proceeds of the foregoing.
Concurrently therewith and in exchange therefor, the Trustee shall
deliver to, or to the order of, the Seller the Certificates.
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.
SECTION 2.04. CHARACTERIZATION. Although the parties hereto intend that
the transfer and assignment contemplated by this Agreement be a sale, if such
transfer and assignment is deemed to be other than a sale, the parties intend
that all filings described in this Agreement shall give the Trustee on behalf of
the Trust a first priority perfected security interest in, to and under the
Receivables and other property conveyed hereunder and all proceeds of any of the
foregoing. This Agreement shall be deemed to be the grant of a security
interest from the Seller to the Trustee on behalf of the Trust, and the Trustee
on behalf of the Trust shall have all the rights, powers and privileges of a
secured party under the UCC.
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 this 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 security interest in favor of
NMAC in such 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
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original term of no greater than ____ months and yield interest at the
related 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 (other
than contracts originated in Alabama) 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 this Agreement complies in all material respects with all
requirements of applicable federal, state and local laws, and regulations
thereunder, including usury laws, the Federal Truth-in-Lending Act, the
Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt
Collection Practices Act, the Federal Trade Commission Act, the
Magnuson-Moss Warranty Act, the Soldiers and Sailors Civil Relief Act of
1940, the Federal Reserve Board's Regulations B and Z, and state
adaptations of the National Consumer Credit Protection Act and of the
Uniform Consumer Credit Code, state "Lemon Laws" designed to prevent fraud
in the sale of automobiles and other consumer credit laws and equal credit
opportunity and disclosure laws.
(iv) BINDING OBLIGATION. Each Receivable represents the
genuine, legal, valid and binding payment obligation in writing of the
Obligor, enforceable by the holder thereof in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally and by general
equitable principles.
(v) SECURITY INTEREST IN FINANCED VEHICLE. (a) Immediately
prior to the sale, assignment and transfer thereof to the Trustee, 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
in a manner that is prohibited by the provisions of Section 4.01 or that
would cause such Receivable to fail to meet all of the other requirements
and warranties made by the Seller herein with respect thereto.
(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
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of the terms of any Receivable, or the exercise of any right thereunder,
will not render such Receivable unenforceable in whole or in part or
subject such Receivable to any right of rescission, setoff, counterclaim
or defense, including the defense of usury, and no such right of
rescission, setoff, counterclaim or defense has been asserted with respect
thereto.
(ix) NO LIENS. To the Seller's knowledge, no liens have been
filed for work, labor or materials relating to a Financed Vehicle that
shall be liens prior to, or equal or coordinate with, the security interest
in the Financed Vehicle granted by the Receivable.
(x) NO DEFAULT. Except for payment defaults continuing for
a period of not more than 29 days as of the Cutoff Date, no default,
breach, violation or event permitting acceleration under the terms of any
Receivable has occurred; and no continuing condition that with notice or
the lapse of time would constitute a default, breach, violation or event
permitting acceleration under the terms of any Receivable has arisen (other
than deferrals and waivers of late payment charges or fees permitted
hereunder).
(xi) INSURANCE. NMAC, in accordance with its customary
procedures, has determined at the time of origination of each Receivable
that the related Obligor has agreed to obtain physical damage insurance
covering the Financed Vehicle and the Obligor is required under the terms
of the related 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. 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, 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.
(xiii) LAWFUL ASSIGNMENT. No Receivable has been originated
in, or shall be subject to the laws of, any jurisdiction under which the
sale, transfer and assignment of such Receivable under this Agreement or
pursuant to transfers of the Certificates are unlawful, void or voidable.
(xiv) ALL FILINGS MADE. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the Trustee
a first priority perfected ownership interest in the Receivables have been
made or have been delivered in form suitable for filing to the Trustee.
(xv) CHATTEL PAPER. Each Receivable constitutes "chattel
paper", as such term is 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 ___%.
(xx) MATURITY. As of the Cutoff Date, each Receivable had a
remaining term to maturity of not less than _____ months and not greater
than _____ months.
(xxi) BALANCE. Each Receivable had an original Principal
Balance of not more than $____________ and, as of the Cutoff Date, had a
Principal Balance of not less than $______ and not more than $_________.
(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, NEAR-NEW AND USED VEHICLES. Each Financed Vehicle
was a new, near-new or used automobile or light-duty truck at the time the
related Obligor executed the retail installment sale contract.
(xxvi) ORIGINATION. Each Receivable has an origination date on
or after _____________.
(xxvii) LOCATION OF RECEIVABLE FILES. The Receivable Files
shall be kept at one or more of the locations listed in SCHEDULE B hereto.
(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 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 this Agreement
promptly, in writing, upon the discovery of any breach of the Seller's
representations and warranties pursuant to Section 3.01 that materially and
adversely affects any Receivable. Unless the breach shall have been cured by
the last day of the second Collection Period following such discovery (or, at
the Seller's election, the last day of the first Collection Period following
such discovery), the Seller shall be obligated
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(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. A breach of the representation in Section 3.01(i)(d), (xx)
or (xxi) shall be deemed to affect materially and adversely the related
Receivable. In consideration of the purchase of the Receivables, the Seller
shall remit the Warranty Purchase Payment in the manner specified in Section
5.05. For purposes of this Section 3.02, the Warranty Purchase Payment of a
Receivable that 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 and 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 this 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 that are
hereby constructively delivered to the Trustee with respect to each Receivable:
(a) The original of the Receivable (or a photocopy or other image thereof
that the Servicer shall keep on file in accordance with its customary
procedures) fully executed by the Obligor;
(b) 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);
(c) The original certificate of title (or a photocopy or other image
thereof or such documents that the Servicer shall keep on file, in accordance
with its customary procedures), evidencing the security interest of NMAC in the
Financed Vehicle; and
(d) Any and all other documents that the Servicer shall keep on file, in
accordance with its customary procedures, relating to a Receivable, the related
Obligor or a Financed Vehicle.
SECTION 3.04. DUTIES OF SERVICER AS CUSTODIAN.
(a) 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 this 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
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conducted, periodic audits of the Receivable Files held by it under this
Agreement, and of the related accounts, records and computer systems, in such a
manner as shall enable the Trustee to verify the accuracy of the Servicer's
record keeping. The Servicer shall promptly report to the Trustee any material
failure on its part to hold the Receivable Files and maintain its accounts,
records and computer systems as herein provided in all material respects and
promptly take appropriate action to remedy any such material failure. Nothing
herein shall be deemed to require an initial review or any periodic review by
the Trustee of the Receivable Files.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall maintain
each Receivable File at one of its offices specified in SCHEDULE B to this
Agreement, or at such other office as shall be specified to the Trustee by
written notice from the Servicer not later than 90 days after any change in
location. The Servicer shall make available to the Trustee or its duly
authorized representatives, attorneys or auditors a list of locations of the
Receivable Files and the related accounts, records and computer systems
maintained by the Servicer at such times as the Trustee shall instruct. The
Servicer shall permit the Trustee and its agents at any time during normal
business hours upon reasonable prior notice to inspect, audit and make copies of
and abstracts from the Servicer's records regarding any Receivable.
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 by 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 NMAC shall resign as Servicer in accordance
with the provisions of this 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
evidencing not less than 25% of the Controlling Class of Certificates, 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.
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ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.01. DUTIES OF SERVICER. (a) 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 Defaulted Receivables, Administrative
Receivables or Warranty Receivables, the Servicer shall not change the amount
of or reschedule the due date of any Scheduled Payment, change the Annual
Percentage Rate of, or extend any Receivable, except as provided herein, or
change any material term of a Receivable; PROVIDED, HOWEVER, that:
(i) 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 (A) extend such Receivable for credit related reasons that would be
acceptable to the Servicer with respect to comparable new, near-new or
used automobile or light-duty truck receivables that it services for
itself, if the final scheduled payment date of such Receivable as
extended would not be later than the last day of the Collection Period
preceding the Final Scheduled Distribution Date, and 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 (B) 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; or
(ii) if 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 last day of the Collection
Period preceding the Final Scheduled Distribution Date; and
(iii) 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.
(b) The Servicer's duties shall include collection and posting of all
payments, responding to inquiries of Obligors on the 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.
(c) 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
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respect to the Receivables or to the Financed Vehicles securing the
Receivables. If the Servicer shall commence a legal proceeding to enforce a
Receivable, the Trustee (in the case of a Receivable other than an
Administrative Receivable or a Warranty 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.
(d) 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. Nothing in the foregoing or in any other section of this
Agreement shall be construed to prevent the Servicer from implementing new
programs, whether on an intermediate, pilot or permanent basis, or on a
regional or nationwide basis, or from modifying its standards, policies and
procedures as long as, in each case, the Servicer does or would implement
such programs or modify its standards, policies and procedures in respect of
comparable assets serviced for itself in the ordinary course of business.
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 the Receivables as and when the same shall become due and
shall follow such collection procedures as it follows with respect to all
comparable receivables that it services for itself or others.
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 related 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 Net Liquidation Proceeds.
SECTION 4.04. [RESERVED].
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. If the assignment
of a Receivable to the Trust is insufficient,
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without a notation on the related Financed Vehicle's certificate of title, to
grant to the Trust a first priority perfected security interest in the
related Financed Vehicle, the Servicer hereby agrees to serve as the agent
of the Trust for the purpose of perfecting the security interest of the Trust
in such Financed Vehicle and agrees that the Servicer's listing as the
secured party on the certificate of title is in this capacity as agent of the
Trust.
SECTION 4.06. COVENANTS OF SERVICER.
(a) The Servicer shall not release the Financed Vehicle securing any
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.
(b) If the Servicer shall determine not to make an Advance related to
delinquency or non-payment of any Receivable pursuant to Section 5.04 because
it determines that such Advance would not be recoverable from subsequent
collections on such Receivable, such Receivable shall be designated by the
Servicer to be a Defaulted Receivable, provided that such Receivable
otherwise meets the definition of a Defaulted Receivable.
SECTION 4.07. PURCHASE OF RECEIVABLES UPON BREACH. The Servicer or
the Trustee shall inform the other party promptly, in writing, upon the
discovery of any breach by the Servicer of its obligations under the second
sentence of Section 4.01 or Section 4.02, 4.05 or 4.06 that would materially
and adversely affect any Receivable. 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 as of such last day. In consideration of the purchase of such
Receivable, the Servicer shall remit the Administrative Purchase Payment (as
reduced by any Outstanding Advances with respect to such Receivable) in the
manner specified in Section 5.05. For the purposes of this Section 4.07, the
Administrative Purchase Payment shall consist in part of a release by the
Servicer of all rights of reimbursement with respect to Outstanding Advances
with respect to the purchased Receivable. The sole remedy of the Trustee,
the Trust or the Certificateholders with respect to a breach by the Servicer
of its obligations under 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. TOTAL SERVICING FEE. The Servicer shall be entitled to
the Base Servicing Fee, as provided herein. 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 an amount that may be retained by
the Servicer consisting of all late fees, prepayment charges and other
administrative fees and expenses or similar charges allowed by applicable law
(and which comply with Prohibited Transaction Exemption 97-34) with respect
to Receivables, collected (from whatever source) on the Receivables during
such Collection Period (collectively, the "Supplemental Servicing Fee").
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SECTION 4.09. SERVICER'S CERTIFICATE.
(a) On or before the tenth day of each month (or, if such tenth day is
not a Business Day, then on the next succeeding Business Day), the Servicer
shall deliver to (i) the Trustee (with a copy to each of the Rating
Agencies), (ii) for so long as the Custody and Pledge Agreement is in
existence, the Custodian, and (iii) if any Class C Certificate is held by a
Person other than the Seller or any Affiliate of the Seller, such Class C
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, the aggregate Administrative
Purchase Payments for any Administrative Receivables to be purchased by the
Servicer, and the aggregate Warranty Purchase Payments for any Warranty
Receivables to be purchased by the Seller) 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
5.08 and, for so long as the Custody and Pledge Agreement or a related
agreement is in existence, all information necessary for the Custodian to
determine the amounts necessary to be deposited in the Subordination Spread
Account 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). The Trustee
and the Custodian may conclusively rely on the information in any Servicer's
Certificate, and shall have no duty to confirm or verify the contents thereof.
(b) Concurrently with delivery of the Servicer's Certificate in each
month, the Servicer shall deliver to the underwriters of the Class A
Certificates and the Class B Certificates and, if any Class C Certificate is
held by a Person other than the Seller or any Affiliate of the Seller, to
such Class C Certificateholder, the Class A Certificate Factor and the Class
B 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 on or before June 30th of each year, beginning June 30, ______, an
Officer's Certificate with respect to the prior twelve months ended on March
31 of such calendar year (or with respect to the initial Officer's
Certificate, the period from the date of the initial issuance of Certificates
hereunder to March 31, ______), stating that (i) a review of the activities
of the Servicer during the preceding 12-month (or shorter) period and of its
performance under this Agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such twelve-month (or shorter) period, or, if there has been a
default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof. A copy of
such Officer's Certificate may be obtained by any Certificateholder by a
request in writing to the Trustee addressed to the Corporate Trust Office.
(b) The Servicer shall deliver to the Trustee and to each of the Rating
Agencies 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 that with the giving of notice
or lapse of time, or both, would become an Event of Default under Section
10.01. The
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Seller shall deliver to the Trustee and to each such Rating Agency, 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 that with the giving of notice or lapse of time, or both, would become
an Event of Default under Section 10.01(a)(ii) or of any lowering of the
rating described in clause (ii) of the definition of "Monthly Remittance
Condition".
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, on or before June 30
of each year, beginning June 30, _______, with respect to the prior twelve
months ended on March 31 of such year (or with respect to the initial
reports, the period from the date of the initial issuance of Certificates
hereunder to March 31, _______) 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-duty 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 this Agreement, the Trustee may rely on the
representation of any Person that it is a Certificate Owner.
SECTION 4.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING RECEIVABLES. The Servicer shall provide to the Certificateholders
access to the Receivable 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. APPOINTMENT OF SUBSERVICER. So long as NMAC acts as the
Servicer, the Servicer may at any time without notice or consent subcontract
substantially all its duties under this Agreement to any corporation more
than 50% of the voting stock of which is owned, directly or indirectly, by
Nissan. The Servicer may at any time perform specific duties as servicer
under this Agreement through other subcontractors; PROVIDED, HOWEVER, that no
such delegation or subcontracting shall relieve the Servicer of its
responsibilities with respect to such duties as to which the Servicer shall
remain primarily responsible with respect thereto.
SECTION 4.14. 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
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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 (a) the deposits of the
Trustee have the Required Deposit Rating or (b) 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 the Certificate Account shall, to the
extent permitted by applicable laws, rules and regulations and as directed by
the Servicer, be invested by the Trustee in Eligible Investments and such
Eligible Investments shall mature not later than the Business Day preceding the
next Distribution Date, in such manner that such amounts invested shall be
available to make the required distributions on the Distribution Date. Should
the short-term unsecured debt obligations of the Trustee no longer have the
Required Deposit Rating then, unless the Collection Account and the Certificate
Account are maintained in segregated trust accounts in the trust department of
the Trustee, the Servicer shall, with the Trustee's assistance as necessary and
within ten Business Days of receipt of notice from the Trustee that the Trustee
no longer has the Required Deposit Rating, cause the Collection Account and the
Certificate Account (a) 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 (b) 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, and any losses and investment
expenses shall be charged against the funds on deposit in the Collection Account
or the Certificate Account, as the case may be.
SECTION 5.02. COLLECTIONS. The Servicer shall remit to the Collection
Account (a) all payments by or on behalf of the Obligors in respect of the
Receivables (excluding payments on Administrative Receivables or Warranty
Receivables and amounts constituting Supplemental Servicing Fees) and (b) all
Net Liquidation Proceeds, not later than the first Business Day after receipt
thereof. 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 Subordination Spread Account the lesser of (i) the amount of
the Subordination Spread Account, (ii) the amounts, if any, required to be
distributed to Class A Certificateholders from the Subordination Spread Account
pursuant to Sections 5.06(c)(ii) and 5.06(c)(iii), and (iii) the amounts, if
any, required to be distributed to Class B Certificateholder, from the
Subordination Spread Account pursuant to Sections 5.06(c)(iv) and 5.06(c)(v).
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. Accordingly,
notwithstanding the provisions of the first sentence of this Section 5.02, the
Servicer shall remit collections received during a
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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) NMAC is the Servicer, (ii) the rating of the Servicer's short-term
unsecured debt obligations is at least "P-1" by Moody's 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, Nissan Capital of America, Inc.'s)
short-term unsecured debt obligations is at least "A-1" by Standard & Poor's
(so long as Moody's and Standard & Poor's are Rating Agencies), and (iii) no
Event of Default shall have occurred and be continuing (each, a "Monthly
Remittance Condition"); except that the requirement in clause (i) above shall
not apply if the Class A Certificates and the Class B Certificates are not
then outstanding and the Class C Certificates do not have an investment grade
rating. Notwithstanding the foregoing, if a Monthly Remittance Condition is
not satisfied, the Servicer may utilize an alternative remittance schedule
(which may include the remittance schedule utilized by the Servicer before
the Monthly Remittance Condition became unsatisfied), if the Servicer
provides to the Trustee written confirmation from each Rating Agency 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 Servicer shall give the Trustee and each Rating Agency
written notice of the failure of any Monthly Remittance Condition (and any
subsequent curing of a failed Monthly Remittance Condition) as soon as
practical after the occurrence thereof but in no event later than 10 Business
Days after obtaining knowledge thereof (it being understood that if the
Monthly Remittance Condition is not satisfied as of the Closing Date no such
notice shall be required in connection therewith). The Trustee shall not be
deemed to have knowledge of any event or circumstance under clause (ii) 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 Certificates evidencing
not less than 25% of the Class A Certificate Balance or the Class B
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.
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 on such Receivable, second to principal until the Principal
Balance of that Receivable 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 an Administrative Receivable, a Warranty Receivable or a
Defaulted 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 one-twelfth of 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 Administrative Purchase Payments or the
Warranty Purchase Payments, as the case may be, during such Collection
Period. The Servicer will not be obligated to make an Advance in respect of
a Receivable (other than an Advance in respect of an interest shortfall
arising from the prepayment
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of a Receivable) to the extent that the Servicer, in its sole discretion,
shall determine that the Advance constitutes a Nonrecoverable Advance. 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 5:00 p.m., New York City time, on
the Business Day immediately preceding the related Distribution Date. To the
extent that the amount set forth in clause (y) above with respect to a
Receivable is greater than the amount set forth in clause (x) above with
respect thereto, such amount shall be distributed to the Servicer pursuant to
Section 5.06(a)(ii); 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) The Servicer shall be entitled to reimbursement for Outstanding
Advances, without interest, with respect to a Receivable from the following
sources with respect to such Receivable pursuant to Section 5.06(a)(ii): (i)
subsequent payments made by or on behalf of the related Obligor, (ii) Net
Liquidation Proceeds, and (iii) the Warranty Purchase Payments.
(c) To the extent that the Servicer has determined that any Outstanding
Advance is a Nonrecoverable Advance, the Servicer may provide to the Trustee an
Officer's Certificate setting forth the amount of such Nonrecoverable Advance,
and on the related Distribution Date, the Trustee shall remit to the Servicer
from funds on deposit in the Collection Account an amount equal to the amount of
such Nonrecoverable Advance pursuant to Section 5.06(a)(iii).
(d) For so long as the Monthly Remittance Conditions are satisfied, in
lieu of causing the Servicer first to deposit and then the Trustee to remit to
the Servicer the amounts described in clauses (i) through (iii) of Section
5.04(b) reimbursable in respect on Outstanding Advances, or the amounts
described in Section 5.04(c) applicable in respect of Nonrecoverable Advances,
the Servicer may deduct such amounts from deposits otherwise to be made into the
Collection Account.
(e) Notwithstanding the provisions of Section 5.04(a), no successor
servicer, including the Trustee, shall be obligated to make Advances unless it
has expressly agreed to do so in writing.
SECTION 5.05. ADDITIONAL DEPOSITS.
(a) The Servicer shall deposit into the Collection Account the aggregate
amount of Advances pursuant to Section 5.04(a). The Servicer and the Seller
shall deposit in the Collection Account the aggregate Administrative Purchase
Payments with respect to Administrative Receivables pursuant to Section 4.07 and
the aggregate Warranty Purchase Payments with respect to Warranty Receivables
pursuant to Section 3.02, and the Servicer shall deposit therein all amounts to
be paid under Section 12.02. 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.
(b) All deposits required to be made pursuant to this Section 5.05 by the
Seller or the Servicer, as the case may be, may be made in the form of a single
deposit and shall be made in immediately available funds, no later than 5:00
P.M., New York City time, on the Business Day
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immediately preceding the related Distribution Date. At the direction of the
Servicer, the Trustee shall invest such amounts in Eligible Investments
maturing not later than 3:00 P.M. New York City Time, on the related
Distribution Date.
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 if 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 or amounts received
from Obligors and allocable to interest, the amount payable in respect of
Outstanding Advances pursuant to the last sentence of Section 5.04(a) and
Section 5.04(b).
(iii) From the Certificate Account to the Servicer, in
immediately available funds, any payments in respect of Nonrecoverable
Advances required and to the extent set forth in Section 5.04(c).
(b) The Servicer shall calculate on each Determination Date the Total
Available Amount, the Available Interest, the Available Principal, the Class A
Distributable Amount, the Class B Distributable Amount and the Class C
Distributable Amount and, based on the Total Available Amount and the other
distributions to be made on such Distribution Date, determine the amount
distributable to Certificateholders of each class.
(c) The rights of the Class B Certificateholders and the Class C
Certificateholders to receive distributions in respect of the Class B
Certificates and the Class C 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 as provided below. In addition, the rights
of the Class C Certificateholders to receive distributions in respect of the
Class C Certificates shall be and hereby are subordinated to the rights of the
Class B Certificateholders to receive distributions in respect of the Class B
Certificates 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
not previously retained by the Servicer) from the Certificate Account in the
following order of priority:
(i) first, to the Servicer, from Available Interest, the Base
Servicing Fee and all unpaid Base Servicing Fees from prior Collection
Periods, if any;
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(ii) second, to the Class A Certificateholders, from Available
Interest (as such Available Interest has been reduced as described in
clause (i) above), 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 such Available Interest is insufficient, the Class A
Certificateholders will receive such shortfall first, from monies on
deposit in the Subordination Spread Account, and second, if such amounts
are insufficient, from the Class C Percentage of Available Principal, and
third, if such amounts are insufficient, from the Class B Percentage of
Available Principal;
(iii) third, to the Class A Certificateholders, from Available
Principal, 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 such Available Principal is insufficient, the Class A
Certificateholders will receive such shortfall first, from monies on
deposit in the Subordination Spread Account, and second, if such amounts
are insufficient, from Available Interest (as such Available Interest has
been reduced as described in clauses (i) and (ii) above);
(iv) fourth, to the Class B Certificateholders, from Available
Interest (as such Available Interest has been reduced by the distributions
described above in clauses (i), (ii) and (iii) above), an amount equal to
the sum of the Class B Interest Distributable Amount and any outstanding
Class B Interest Carryover Shortfall as of the close of business on the
preceding Distribution Date; and if such Available Interest is
insufficient, the Class B Certificateholders will receive such shortfall
first, from monies on deposit in the Subordination Spread Account, and
second, if such amounts are insufficient, from the Class C Percentage of
Available Principal;
(v) fifth, to the Class B Certificateholders, from Available
Principal (as such Available Principal has been reduced as described in
clauses (iii) and (iv) 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, the
Class B Certificateholders will receive such shortfall first, from monies
on deposit in the Subordination Spread Account, and second, if such amounts
are insufficient, from Available Interest (as such Available Interest has
been reduced as described in clauses (i), (ii), (iii) and (iv) above);
(vi) sixth, to the Class C Certificateholders, from Available
Interest (as such Available Interest has been reduced as described in
clauses (i), (ii), (iii), (iv) and (v) above), an amount equal to the sum
of the Class C Interest Distributable Amount and any outstanding Class C
Interest Carryover Shortfall as of the close of business on the preceding
Distribution Date;
(vii) seventh, to the Class C Certificateholders, from
Available Principal (as such Available Principal has been reduced as
described in clauses (iii), (iv) and (v) above), an amount equal to the sum
of the Class C Principal Distributable Amount
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and any outstanding Class C Principal Carryover Shortfall as of the close
of business on the preceding Distribution Date; and if such Available
Principal is insufficient, the Class C Certificateholders will receive
such shortfall from Available Interest (as such Available Interest has
been reduced as described in clauses (i), (ii), (iii), (iv), (v) and (vi)
above); and
(viii) eighth, to the Seller, any Excess Amounts, except to the
extent required to be deposited in the Subordination Spread Account
pursuant to the Custody and Pledge Agreement;
PROVIDED, HOWEVER, that amounts otherwise distributable to the holders of Class
C Certificates pursuant to clauses (vi) and (vii) above shall be deposited by
the Trustee on behalf of such holders in the Subordination Spread Account to the
extent of any deficiency in the Specified Subordination Spread Account Balance.
For purposes of all of the provisions of this Agreement, all such amounts
deposited in the Subordination Spread Account shall be deemed to have been
distributed pro rata to the holders of Class C Certificates and contributed by
such holders to the 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 Deposit with
respect to a Receivable, except to the extent of amounts withdrawn from the
Yield Supplement 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
Account would result in a shortfall of interest, the amount of such shortfall
shall be withdrawn from the Subordination Spread Account and deposited in the
Certificate Account prior to such Distribution Date. Other withdrawals and
deposits into the Subordination Spread Account shall be made as provided in the
Custody and Pledge Agreement.
(d) 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. NET DEPOSITS. For so long as each Monthly Remittance
Condition is satisfied (or the rating agency confirmation described in the fifth
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(a)(ii), Section 5.06(a)(iii) or Section 5.06(c). 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
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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 5.08. STATEMENTS TO CERTIFICATEHOLDERS.
(a) On each Distribution Date, the Trustee shall include with each
distribution to each Class A Certificateholder and Class B Certificateholder,
and, if the Class C Certificateholder is not the Seller or an Affiliate of the
Seller, to the Class C Certificateholder, a statement (which statement shall
also be provided to each Rating Agency) based on information in the Servicer's
Certificate furnished pursuant to Section 4.09, setting forth for the Collection
Period relating to such Distribution Date the following information:
(i) the amount of such distribution allocable to principal;
(ii) the amount of such distribution allocable to interest;
(iii) the amount of such distribution allocable to the Yield
Supplement Deposit;
(iv) the amount on deposit in the Yield Supplement 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 Base Servicing Fee paid to the Servicer
with respect to the related Collection Period, the Class A
Certificateholder's, the Class B Certificateholder's, or the Class C
Certificateholder's Class A Percentage, Class B Percentage, or Class C
Percentage, as the case may be, of the Base Servicing Fees, the amount of
any unpaid Base Servicing Fees and the change in such amount from that of
the prior Distribution Date;
(vii) the amount of the Class A Interest Carryover Shortfall,
the Class A Principal Carryover Shortfall, the Class B Interest Carryover
Shortfall, the Class B Principal Carryover Shortfall, the Class C Interest
Carryover Shortfall and the Class C Principal Carryover Shortfall, 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, the Class B Certificate Balance, the
Class B Certificate Factor, the Class B Pool Factor and the Class C
Certificate Balance as of such Distribution Date;
(ix) the amounts otherwise distributable to the Class B
Certificateholders and Class C Certificateholders that are distributed to
Class A Certificateholders on such Distribution Date, and the amount
otherwise distributable to the Class C Certificateholders that is
distributed to the Class B Certificateholders or deposited in the
Subordination Spread Account on such Distribution Date;
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(x) for so long as the Custody and Pledge Agreement or a
related agreement is in existence, the balance of the Subordination Spread
Account, as the case may be, on such Distribution Date, after giving effect
to distributions made on such Distribution Date, and the change in such
balance from the preceding Distribution Date; and
(xi) the amount of Advances made in respect of the related
Collection Period and the amount of the unreimbursed Advances on such
Distribution Date.
(b) 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.
(c) Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of this Agreement, but not later
than the latest date permitted by law, the Trustee shall make available with the
Clearing Agency holding Book-Entry Certificates or, if Definitive Certificates
have been issued, mail to each Person who at any time during such calendar year
shall have been a holder of a Definitive Certificate (other than the Seller or
any Affiliate of 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 5.08(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, if 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 5.09. 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 5.09 shall survive the termination of this Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. YIELD SUPPLEMENT ACCOUNT. Pursuant to the Yield Supplement
Agreement, the Seller shall establish and maintain with the Trustee for the
benefit of the Class A Certificateholders and the Class B Certificateholders a
separate trust account in the name of the Trustee (the "Yield Supplement
Account"), or such other account as may be acceptable to the Rating Agencies.
The Yield Supplement Account (or such other account acceptable to the Rating
Agencies) 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) the Yield Supplement Account, all
funds on deposit therein and all proceeds thereof.
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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 to provide those ratings necessary to
satisfy the related condition precedent to the underwriters' obligation to
purchase the Class A Certificates and the Class B 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 this
Agreement.
ARTICLE VII
THE CERTIFICATES
SECTION 7.01. THE CERTIFICATES. The Class A Certificates and the Class
B Certificates shall be issued in denominations of $1,000 and integral
multiples thereof; the Class C 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, one Class B Certificate and one Class C Certificate may
be issued in a denomination equal to the residual amount (the "Residual
Certificate"). The Certificates shall be executed on behalf of the Trust by
manual or facsimile signature of a Trustee Officer of the Trustee.
Certificates bearing the manual or facsimile signatures of individuals who
were, at the time when such signatures shall have been affixed, authorized to
sign on behalf of the Trust, shall be valid and binding obligations of the
Trust, notwithstanding that such individuals or any of them shall have ceased
to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such Certificates.
SECTION 7.02. AUTHENTICATION OF CERTIFICATES. The Trustee shall cause
the Certificates to be executed on behalf of the Trust, authenticated and
delivered to or upon the written order of the Seller, signed by its chairman
of the board, its president or any vice president, without further corporate
action by the Seller, in authorized denominations, pursuant to this
Agreement. No Certificate shall entitle its holder to any benefit under this
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, EXHIBIT B or EXHIBIT C 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.
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(b) The Class C Certificates shall initially be retained by the Seller.
No transfer of a Class C Certificate shall be made unless (i) the
registration requirements of the Securities Act, and any applicable State
securities laws are complied with, (ii) such transfer is exempt from the
registration requirements under the Securities Act and any applicable State
securities laws or (iii) the prospective transferee of the Class C
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 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. If a transfer is to be made in reliance upon an exemption from
the Securities Act or any applicable State securities laws to a Person other
than a Qualified Institutional Buyer, the Class C Certificateholder desiring
to effect such transfer and such Certificateholder's prospective transferee
must each certify in writing to the Seller and the Trustee the facts
surrounding such transfer and, at the request of the Seller, provide both the
Seller and the Trustee with an Opinion of Counsel in form and substance
satisfactory to the Seller that such transfer may be made pursuant to an
exemption from the Securities Act or any applicable State securities 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 C Certificates under the
Securities Act or any other securities law.
(c) No transfer of a Class A Certificate, or beneficial interest
therein, shall be made unless the Trustee shall have received a
representation from the transferee thereof substantially in the form of
Exhibit H-1 to the effect that:
(i) such transferee is not an employee benefit plan or an
arrangement subject to Section 406 of ERISA or a plan subject to Section
4975 of the Code (a "Plan"), nor a person acting on behalf of a Plan nor
using the assets of a Plan to effect such transfer; or
(ii) if such transferee is a Plan, then:
(A) such Plan is an "accredited investor" as defined in Rule
501(a)(1) of Regulation D under the Securities Act;
(B) such Plan's investment in the Class A Certificates does
not exceed 25% of all of the Class A Certificates outstanding at
the time of such transfer; and
(C) immediately after the acquisition, no more than 25% of
the assets of the Plan with respect to which a person has
discretionary authority or renders investment advice are invested
in certificates representing interests in trusts containing assets
sold or serviced by the same entity.
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(d) Without limiting the generality of Section 7.03(b), no transfer of
a Class B Certificate or Class C Certificate, or beneficial interest therein,
shall be made unless the Trustee shall have received a representation from
the transferee thereof substantially in the form of Exhibit H-2 to the effect
that such transferee (A) is not a Plan nor a person acting on behalf of a
Plan nor using the assets of a Plan to effect such transfer, or (B) is an
insurance company purchasing a Class B Certificate or Class C Certificate
with funds contained in an "insurance company general account" (as defined in
Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60"))
as to which there is a Plan with respect to which the amount of such general
account's reserves and liabilities for the contracts held by or on behalf of
such Plan and all other Plans maintained by the same employer (or affiliate
thereof as defined in Section V(a)(1) of PTCE 95-60) or by the same employee
organization does not exceed 10% of the total of all reserves and liabilities
of such general account (as such amounts are determined under Section I(a) of
PTCE 95-60) at the date of acquisition.
(e) For purposes of Sections 7.03(c) and (d), with respect to any
Certificate that is a Book-Entry Certificate, the representations contained
therein shall be deemed to have been made to the Trustee by the transferee's
(including an initial acquirer's) acceptance of an interest in such
Certificate. Notwithstanding anything else to the contrary herein, any
purported transfer of a Certificate, or a beneficial interest therein, to or
on behalf of a Plan or a person acting on behalf of a Plan or using the
assets of a Plan to effect such transfer not exempt pursuant to PTCE 97-34 or
to an insurance company purchasing with funds from a general account not
exempt pursuant to PTCE 95-60 shall be void and of no effect.
(f) To the extent permitted under applicable law (including, but not
limited to, ERISA), the Trustee shall be under no liability to any Person for
any registration of transfer of any Certificate that is in fact not permitted
by this Section 7.03 or for making any payments due on such Certificate to
the Certificateholder thereof or taking any other action with respect to such
Certificateholder under the provisions of this Agreement so long as the
transfer was registered by the Trustee in accordance with the foregoing
requirements. 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.
(g) 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.
(h) 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.
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SECTION 7.04. MUTILATED, DESTROYED, LOST, OR STOLEN CERTIFICATES. If
(a) any mutilated Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and (b)
there shall be delivered to the Certificate Registrar and the Trustee such
security or indemnity as may be required by them to save each of them
harmless, then in the absence of notice that such Certificate shall have been
acquired by a bona fide purchaser, the Trustee on behalf of the Trust shall
execute and the Trustee shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and denomination. In connection with the issuance
of any new Certificate under this Section 7.04, the Trustee and the
Certificate Registrar may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Certificate issued pursuant to this Section 7.04
shall constitute conclusive evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
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 Certificates aggregating not less than 25% of the Class A
Certificate Balance or the Class B Certificate Balance, apply in writing to
the Trustee, and such application states that the applicants desire to
communicate with other Certificateholders of their class with respect to
their rights under this 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 of such class. 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 this 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 the Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
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SECTION 7.08. BOOK-ENTRY CERTIFICATES. The Class A Certificates and
the Class B Certificates, upon original issuance, 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 and the Class B Certificates delivered to The Depository Trust
Company shall initially be registered on the Certificate Register in the name
of CEDE & Co., the nominee of the initial Clearing Agency, and no Certificate
Owner will receive a definitive certificate representing such Certificate
Owner's interest in the Class A Certificates or the Class B 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 and
the Class B 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 and the Class B 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 evidencing a
specified percentage of the Controlling Class of Certificates, 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 Controlling Class of
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 or the Class B
Certificateholders are required under this Agreement, 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 and the Class B 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 a majority of the Class A
Certificate Balance or Class B Certificate Balance, as applicable, 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 of such
class, then the Trustee shall notify the Clearing Agency and request that the
Clearing Agency notify all Certificate Owners of such class of the occurrence
of any such event and of the availability of Definitive Certificates to
Certificate Owners of such class requesting the same. Upon surrender to the
Trustee of the Certificates of such class by the Clearing Agency, accompanied
by registration instructions from the Clearing Agency for registration, the
Trustee shall issue the applicable Definitive Certificates of such class 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
each 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.
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 this 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 corporate 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, corporate power, authority and legal right to
acquire and own the Receivables.
(ii) DUE QUALIFICATION. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall require
such qualifications and where the failure to so qualify would have a
material adverse effect on the ability of the Seller to perform its
obligations under this Agreement.
(iii) POWER AND AUTHORITY. The Seller has the corporate power
and authority to execute and deliver this 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
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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 this Agreement has been
duly authorized by the Seller by all necessary corporate action.
(iv) VALID SALE; BINDING OBLIGATIONS. This 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 this Agreement is a
legal, valid and binding obligation of the Seller enforceable in accordance
with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and by general equitable principles.
(v) NO VIOLATION. The consummation of the transactions
contemplated by this 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 certificate 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 Basic Documents);
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;
which breach, default, conflict, Lien or violation in any case would have a
material adverse effect on the ability of the Seller to perform its
obligations under this Agreement.
(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 this Agreement, the Yield
Supplement Agreement, the Custody and Pledge Agreement or the Certificates;
(B) seeking to prevent the issuance of the Certificates or the consummation
of any of the transactions contemplated by this Agreement, , the Yield
Supplement Agreement, the Custody and Pledge Agreement; (C) seeking any
determination or ruling that would materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement, the Yield Supplement Agreement, the
Custody and Pledge Agreement or the Certificates; or (D) relating to the
Seller and which would 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 this Agreement.
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(i) The Seller shall indemnify, defend and hold harmless the
Trustee, the Trust and the Certificateholders 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 this 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 in the
performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this 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 this
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 promptly repay such amounts
to the Seller, without interest (except to the extent the recipient collects
interest from others).
Promptly after receipt by a party indemnified under this Section 8.02
(for purposes of this paragraph, an "Indemnified Party") of notice of the
commencement of any action, such Indemnified Party will, if a claim is to be
made in respect thereof against the Seller under this Section 8.02, notify the
Seller of the commencement thereof. If any such action is brought against any
Indemnified Party under this Section 8.02 and it notifies the Seller of the
commencement thereof, the Seller will assume the defense thereof, with counsel
reasonably satisfactory to such Indemnified Party (who may, unless there is, as
evidenced by an opinion of counsel to the Indemnified Party stating that there
is an unwaivable conflict of interest, be counsel to the Seller), and the Seller
will not be liable to such Indemnified Party under this Section 8.02 for any
legal or other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof, other than reasonable costs of
investigation. The obligations set forth in this Section 8.02 shall survive the
termination of this Agreement or the resignation or removal of the Trustee and
shall include reasonable fees and expenses of counsel and expenses of
litigation. If the Seller shall have made any indemnity payments pursuant to
this Section 8.02 and the Person to or on behalf of whom such payments are made
thereafter collects any of such amounts from others, such Person shall promptly
repay such amounts to the Seller, without interest (except to the extent
received by such Person).
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
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than 50% of the voting stock of which is owned directly or indirectly by
Nissan Motor Co., Ltd., which Person in any of the foregoing cases executes
an agreement of assumption to perform every obligation of the Seller under
this Agreement, will be the successor to the Seller under this Agreement
without the execution or filing of any document or any further act on the
part of any of the parties to this Agreement; PROVIDED, HOWEVER, that (x)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.01 shall have been breached and no Event
of Default, and no event that, after notice or lapse of time, or both, would
become an Event of Default, shall have occurred 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 this 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,
based on customary qualifications and assumptions, all financing statements
and continuation statements and amendments thereto have been executed and
filed that are necessary fully to perfect 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. 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.
(a) Neither the Seller nor any of the directors, officers, employees or
agents of the Seller shall be under any liability to the Trust or the
Certificateholders, except as provided under this Agreement, for any action
taken or for refraining from the taking of any action pursuant to this
Agreement; PROVIDED, HOWEVER, that this provision shall not protect the Seller
or any such person against any liability that would otherwise be imposed by
reason of willful misfeasance, bad faith or negligence in the performance of
duties or by reason of reckless disregard of obligations and duties under this
Agreement. The Seller and any director, officer, 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 under this Agreement.
(b) The Seller shall not be under any obligation to appear in, prosecute
or defend any legal action that shall not be incidental to its obligations under
this Agreement, and that in its opinion may cause it to incur any expense or
liability; PROVIDED, HOWEVER, that the Seller may undertake any reasonable
action that it may deem necessary or desirable in respect of this Agreement and
its obligations under this Agreement. In such event, the legal expenses and
costs of such action and any liability resulting therefrom shall be expenses,
costs and liabilities of the Seller and the Seller will not be entitled to be
reimbursed therefor.
SECTION 8.05. SELLER MAY OWN CERTIFICATES. The Seller and any Affiliate
of 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
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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 this Agreement,
without preference, priority or distinction as among all of the Certificates,
except as otherwise expressly provided in this Agreement.
SECTION 8.06. ADDITIONAL COVENANTS.
(a) The Seller agrees with the Certificate Owners and each Rating Agency
that the Seller shall not issue any additional securities that could reasonably
be expected to affect materially and adversely the rating of the Certificates
issued pursuant to this Agreement unless it shall have first obtained the
written consent of each Rating Agency to the effect that such issuance will not
materially 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 Rating Agency (which consent shall be to the effect that
the acts set forth below shall not affect materially 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 statistical rating organization 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
statistical rating organization 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 NMAC or any of its Affiliates 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;
(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:
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(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 space separate from any direct or
ultimate parent of such entity; and
(D) each nationally recognized statistical rating
organization that has rated any issue of certificates or notes
pursuant to any agreement or any series or class of certificates or
notes shall confirm in writing that the rating of such certificates or
notes 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
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of the corporation or substantially all of its
property, or make any assignment for the benefit of creditors.
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 this Agreement and
shall survive the sale of the Receivables to the Trust:
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(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 corporate 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, corporate 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 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 relating to
the servicing of the Receivables as required by this Agreement shall
require such qualifications and where the failure to so qualify would have
a material adverse effect on the ability of the Servicer to perform its
obligations under this Agreement.
(iii) POWER AND AUTHORITY. The Servicer has the power and
authority to execute and deliver this Agreement and to carry out its terms;
and the execution, delivery and performance of this Agreement have been
duly authorized by the Servicer by all necessary corporate action.
(iv) BINDING OBLIGATION. This Agreement constitutes a legal,
valid and binding obligation of the Servicer enforceable in accordance with
its terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
to general equitable principles.
(v) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do
not conflict with, result in any breach of any of the terms and provisions
of, nor constitute (with or without notice or lapse of time) a default
under, the articles of incorporation or by-laws of the Servicer, or any
indenture, agreement or other instrument to which the Servicer is a party
or by which it shall be bound; nor result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than this 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; which breach, default, conflict, Lien or
violation in any case would have a material adverse effect on the ability
of the Servicer to perform its obligations under this Agreement.
(vi) NO PROCEEDINGS. There are no proceedings
or investigations pending, or, to the best of the Servicer's 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 this Agreement or the
Certificates; (B) seeking to prevent the issuance of the Certificates or
the consummation of any of the transactions contemplated by this Agreement;
(C) seeking any determination or ruling that would materially and adversely
affect the
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performance by the Servicer of its obligations under, or the
validity or enforceability of, this Agreement or the Certificates; or
(D) relating to the Servicer and that would 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 this 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 of its Affiliates thereof (other than the Trust) 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 this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
(iii) The Servicer shall indemnify, defend and hold harmless the
Trustee from and against all Damages arising out of or incurred in
connection with the acceptance or performance of the trusts and duties
herein contained, except to the extent that such Damage: (A) shall be due
to the willful misfeasance, bad faith, or negligence 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.
Promptly after receipt by a party indemnified under this Section 9.02
(for purposes of this paragraph, an "Indemnified Party") of notice of the
commencement of any action, such Indemnified Party will, if a claim in respect
thereof is to be made against the Servicer under this Section 9.02, notify the
Servicer of the commencement thereof. If any such action is brought against any
Indemnified Party under this Section 9.02 and it notifies the Servicer of the
commencement thereof, the Servicer will assume the defense thereof, with counsel
reasonably satisfactory to such Indemnified Party (who may, unless there is, as
evidenced by an opinion of counsel to the Indemnified Party stating that there
is an unwaivable conflict of interest, be counsel to the Servicer), and the
Servicer will not be liable to such Indemnified Party under this Section 9.02
for any legal or other expenses subsequently incurred by such Indemnified Party
in connection with the defense thereof, other than reasonable costs of
investigation. The obligations set forth in this Section 9.02 shall survive the
termination of this Agreement or the resignation or removal of the Servicer or
the Trustee and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Servicer shall have
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made any indemnity payments pursuant to this Section 9.02 and the Person to
or on behalf of whom such payments are made thereafter collects any of such
amounts from others, such Person shall promptly repay such amounts to the
Servicer, without interest (except to the extent received by such Person).
Indemnification under this Section 9.02 by NMAC (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 this 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 9.02 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 NMAC 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 occurred 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 this Agreement relating to such transaction have been
complied with and (z) the Servicer shall have delivered to the Trustee an
Opinion of Counsel either (A) stating that, in the opinion of such counsel,
based on customary qualifications and assumptions, all financing statements
and continuation statements and amendments thereto have been executed and
filed that are necessary fully to perfect the interest of the Trustee in the
Receivables, and reciting the details of such filings, or (B) stating that,
in the opinion of such counsel, no such action shall be necessary to preserve
and protect such interest. The Servicer shall provide notice of any merger,
consolidation or succession pursuant to this Section 9.03 to each Rating
Agency. 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, officers, employees or
agents of the Servicer shall be under any liability to the Trust or the
Certificateholders, except as provided under this Agreement, for any action
taken or for refraining from the taking of any action pursuant to this
Agreement; PROVIDED, HOWEVER, that this provision shall not protect the Servicer
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or any such person against any liability that would otherwise be imposed by
reason of willful misfeasance, bad faith or negligence in the performance of
duties or by reason of reckless disregard of obligations and duties under this
Agreement. The Servicer and any director, officer, employee or agent of the
Servicer 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 under this Agreement.
(b) Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action that shall not
be incidental to its duties to service the Receivables in accordance with this
Agreement, and that in its opinion may 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 this Agreement and
the rights and duties of the parties to this Agreement and the interests of the
Certificateholders under this Agreement. In such event, the legal expenses and
costs of such action and any liability resulting therefrom shall be expenses,
costs and liabilities of the Servicer and the Servicer will not be entitled to
be reimbursed therefor.
SECTION 9.05. DELEGATION OF DUTIES. So long as NMAC acts as Servicer,
the Servicer may at any time without notice or consent subcontract substantially
all its duties under this 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
this Agreement through other subcontractors; PROVIDED, HOWEVER, that no such
delegation or subcontracting shall relieve the Servicer of its responsibilities
with respect to such duties as to which the Servicer shall remain primarily
responsible with respect thereto.
SECTION 9.06. NMAC NOT TO RESIGN AS SERVICER. Subject to Section 9.03
hereof, NMAC 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 NMAC 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 this
Agreement to effect the termination of the responsibilities and rights of the
predecessor Servicer under this 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 NMAC as Servicer under this
Agreement in accordance with Section 10.02 of this Agreement (other than the
initial Servicer's obligation to make Advances).
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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 Account
any proceeds or payment required to be so delivered under the terms of the
Certificates, this Agreement or the Custody and Pledge Agreement, as the
case may be, that shall continue unremedied for a period of three Business
Days after (1) 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, (2) discovery of such failure by an officer of the Servicer or
the Seller, as the case may be, or (3) written notice of such failure is
received by the Servicer or the Seller, as the case may be, from the
Holders of Certificates evidencing not less than a majority of the Class A
Certificate Balance or the Class B Certificate Balance; or
(ii) Failure on the part of the Servicer or, so long as the
Servicer is NMAC, 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 this 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 Certificates
evidencing not less than a majority of the Class A Certificate Balance or
the Class B 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;
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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 evidencing not less
than a majority of the Controlling Class of Certificates, 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 this Agreement. On or after the receipt by the Servicer of
such written notice, all authority and power of the Servicer under this
Agreement, whether with respect to the 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.
(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 this 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 this 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.
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 this
Agreement, the predecessor Servicer shall continue to perform its functions as
Servicer under this 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 earlier 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 this 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. If 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, and the predecessor Servicer, if no successor
Servicer has been appointed at the time the predecessor Servicer has ceased to
act, may petition a court of competent jurisdiction to appoint, any established
institution, having a net worth of not less than $100,000,000 and whose regular
business shall
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include the servicing of automotive receivables, as the successor to the
Servicer under this 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 (except the initial Servicer's obligation to
make Advances), and shall be entitled, subject to the arrangements referred to
in paragraph (c) below, to the Total Servicing Fees and all of the rights
granted to the predecessor Servicer by the terms and provisions of this
Agreement.
(c) In connection with such appointment, the Trustee may make such
arrangements for the compensation of such successor Servicer out of payments on
Receivables as it and such successor Servicer shall agree; PROVIDED, HOWEVER,
that no such compensation shall be in excess of that permitted the predecessor
Servicer under this Agreement. The Trustee and such successor Servicer shall
take such action, consistent with this 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 CERTIFICATEHOLDERS. 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.
SECTION 10.05. WAIVER OF PAST DEFAULTS. The Holders of Certificates
evidencing not less than a majority of the Controlling Class of Certificates
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 this 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 this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
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 this 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 this Agreement, and shall use the same degree
of care and skill in their exercise,
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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. If the Trustee becomes the successor
servicer, the Trustee shall not be obligated to make Advances pursuant to
Section 5.04.
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 this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
The Trustee shall take and maintain custody of the list of Receivables included
as Schedule A to this Agreement and shall retain all Servicer's Certificates
identifying Receivables that become Administrative Receivables or Warranty
Receivables.
No provision of this Agreement shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act 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 this Agreement, (B) the
Trustee shall not be liable except for the performance of such duties and
obligations as shall be specifically set forth in this Agreement, (C) no
implied covenants or obligations shall be read into this Agreement against
the Trustee and (D) in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely on the truth of the statements and the
correctness of the opinions expressed upon any certificates or opinions
furnished to the Trustee and conforming to the requirements of this
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
this Agreement or at the direction of the Holders of Certificates
evidencing not less than a majority of the Controlling Class of
Certificates 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 this 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
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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
Certificates evidencing not less than a majority of the Class A Certificate
Balance or the Class B Certificate Balance; and
(v) Without limiting the generality of this Section 11.01 or
Section 11.04, the Trustee shall have no duty (A) to see to any recording,
filing or depositing of this Agreement, any agreement referred to herein,
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
re-recording, refiling or redepositing of any thereof, (B) to see to any
insurance of the Financed Vehicles or Obligors or to effect or maintain any
such insurance, (C) 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, (D) to confirm or verify the contents of any reports or certificates
of the Servicer delivered to the Trustee pursuant to this Agreement
believed by the Trustee to be genuine and to have been signed or presented
by the proper party or parties, or (E) to inspect the Financed Vehicles at
any time or ascertain or inquire as to the performance or observance of any
of the Seller's or the Servicer's representations, warranties or covenants
or the Servicer's duties and obligations as Servicer and as custodian of
the Receivable Files under this 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 this 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 this 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
this 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 this 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 (other than
that the Trustee has good and marketable title to such Receivables on behalf of
the Trust)
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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 ADMINISTRATIVE RECEIVABLES AND
WARRANTY 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 (other than that the Trustee has good and marketable
title to such Receivables on behalf of the Trust), 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 or the
Servicer may reasonably request to enforce the Receivable, including bringing
suit in its name or in the name of the Certificateholders.
SECTION 11.04. CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as
otherwise provided in Section 11.01:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
Servicer's Certificate, certificate of auditors, or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in respect
of any action taken or suffered or omitted by it under this 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 this Agreement, or to institute,
conduct or defend any litigation under this Agreement or in relation to
this Agreement, at the request, order or direction of any of the
Certificateholders pursuant to the provisions of this 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 this 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 this
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 in accordance with its standard of
care and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement;
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(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 Certificates evidencing not less than a
majority of the Class A Certificate Balance or the Class B Certificate
Balance; PROVIDED, HOWEVER, that if the payment within a reasonable time to
the Trustee of the costs, expenses or liabilities likely to be incurred by
it in the making of such investigation shall be, in the reasonable opinion
of the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this 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 within 30 days after 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 this 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; and
(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 this 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 this 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 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 this 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
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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 this Agreement or in any related document and the
accuracy of any such warranty or representation prior to the Trustee's
receipt of notice or other discovery of any noncompliance therewith or any
breach thereof; (ix) any investment of monies by the Servicer or any loss
resulting therefrom (other than monies invested in obligations of the Trustee
in its individual capacity) (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 this Agreement. Except with respect to a claim based on the
failure of the Trustee to perform its duties under this Agreement or based on
the Trustee's bad faith, negligence or willful misconduct, no recourse shall
be had for any claim based on any provision of this 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 this 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.
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, the compensation separately
agreed upon between the Servicer and the Trustee for all services rendered by it
in the execution of the trusts created by this Agreement and in the exercise and
performance of any of the Trustee's powers and duties under this 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 this 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 or breach of
representations and warranties contained in Section 11.14 on the Trustee's part,
arising out of or in connection with the acceptance or administration of the
Trust, including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties under this 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 this Agreement.
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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 this 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 contained in Section 11.14.
SECTION 11.09. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee under
this 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 this
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 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. If 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 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.
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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.
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
this 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 this 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 this
Agreement; and the Servicer and the predecessor Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor Trustee all such
rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this Section 11.11
unless at the time of such acceptance such successor Trustee shall be eligible
pursuant to Section 11.09.
Upon acceptance of appointment by a successor Trustee pursuant to this
Section 11.11, the Servicer shall mail notice of such successor Trustee to all
Certificateholders at their addresses as shown in the Certificate Register and
to the Rating Agencies. 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 this 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
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appointment within 15 days after the receipt by it of a request to do so, or
if 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 this Agreement shall be required to meet the terms of
eligibility as a successor trustee pursuant to Section 11.09 and no notice of
a successor trustee shall be required pursuant to Section 11.11.
Each separate trustee and co-trustee shall, to the extent permitted by law, be
appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred upon and exercised or performed
by the Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to
act separately without the Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee under this Agreement or as
successor to the Servicer under this 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 this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this 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 this 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 this Agreement,
specifically including every provision of this 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 this 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
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contained in this 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
hereby makes the following representations and warranties on which the
Seller, the Servicer and the Certificateholders shall rely:
(i) The Trustee is a [_______________] duly organized, and
validly existing, under the laws of the State of __________ 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 this Agreement, and has
taken all necessary action to authorize the execution, delivery and
performance by it of this Agreement; and
(iii) This 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 Certificates evidencing not less than a majority of the
Controlling Class of Certificates shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee; PROVIDED,
HOWEVER, that, subject to Section 11.01, the Trustee shall have the right to
decline to follow any such direction if
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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
that the Custodian must satisfy the requirements for eligibility of the
Trustee pursuant to Section 11.09. The Custodian may, but is not required
to, be the Trustee. If 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; RELEASE OF RECEIVABLES
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 5.08(c) and 11.15) created hereby and
the Trust created by this 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
this 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
this 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 this Agreement. The Servicer shall
promptly notify the Trustee of any prospective termination pursuant to this
Section 12.01.
Notice of any termination, specifying the Distribution Date upon
which the Certificateholders may surrender their Certificates to the Trustee
for payment of the final distribution and cancellation, shall be given
promptly by the Trustee by letter to Certificateholders mailed not earlier
than the 15th day and not later than the 25th day of the month next preceding
the specified Distribution Date stating (A) the Distribution Date upon which
final payment of the Certificates shall be made upon presentation and
surrender of the Certificates at the office of the Trustee therein
designated, (B) the amount of any such final payment and (C) if applicable,
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Trustee therein specified. The Trustee
shall give such notice to 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.
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If fewer than all of the Certificateholders shall 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 fewer than all the Certificates 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 this 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 Children's Hospital Los Angeles.
SECTION 12.02. OPTIONAL PURCHASE OF ALL RECEIVABLES.
On each Distribution Date following the last day of a Collection
Period as of which the Pool Balance shall be less than or equal to the
Optional Purchase Percentage multiplied by the Original Pool Balance, the
Servicer or any successor to the Servicer shall have the option to purchase
the corpus of the Trust (whether or not such assets then comprise all or a
portion of the Trust). To exercise such option, the Servicer, or any
successor to the Servicer, as the case may be, shall notify the Trustee of
its intention to do so in writing, no later than the tenth day of the month
preceding the month in which the Distribution Date as of which such purchase
is to be effected and shall, on or before the Distribution Date on which such
purchase is to occur, deposit pursuant to Section 5.05 in the Collection
Account an amount equal to the aggregate Administrative Purchase Payments 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 NMAC by Moody's, or if NMAC shall then be
unrated by Moody's, then the rating of Nissan Capital of America, Inc., is
less than "Bal" by Moody's, and the Seller shall not effect any such purchase
so long as the rating of NARC by Moody's, or if NARC shall then be unrated by
Moody's, then the rating of Nissan Capital of America, Inc., is less than
"Bal" by Moody's, in each case 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. Amounts so deposited will be paid and distributed
as set forth in Section 5.06 of this Agreement. Upon such deposit of the
amount necessary to purchase the corpus of the Trust, the Servicer shall for
all purposes of this Agreement be deemed to have released all claims for
reimbursement of Outstanding Advances made in respect of the Receivables.
Notice of any such purchase of the corpus of the Trust shall be
given by the Trustee to each Certificateholder as soon as practicable after
their receipt of notice thereof from the Servicer.
SECTION 12.03. RELEASE OF RECEIVABLES.
(a) Upon repurchase of any Receivable by the Seller pursuant to Section
3.02 or the Servicer pursuant to Section 4.07 or 12.02, the Trustee on behalf
of the Certificateholders shall, without further action, be deemed to
transfer, assign, set-over and otherwise convey to the Seller or the
Servicer, as the case may be, all right, title and interest of the Trustee
in, to and under such
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repurchased Receivable, all monies due or to become due with respect thereto
and all proceeds thereof and the other property conveyed to the Trustee
hereunder pursuant to Section 2.02 with respect to such Receivable, and all
security and any documents relating thereto, such assignment being an
assignment outright and not for security; and the Seller or the Servicer, as
applicable, shall thereupon own each such Receivable, and all such related
security and documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto.
(b) The Trustee shall execute such documents and instruments of
transfer and assignment and take such other actions as shall be reasonably
requested by the Seller or the Servicer, as the case may be, to effect the
conveyance of such Receivable pursuant to Sections 3.02, 4.07 and 12.02.
(c) If in any enforcement suit or legal proceeding it is held that the
Seller or Servicer may not enforce a repurchased Receivable on the ground
that it is not a real party in interest or a holder entitled to enforce the
Receivable, the Trustee on behalf of the Certificateholders shall, at the
written direction and expense of the Seller or Servicer, as the case may be,
take such reasonable steps as the Seller or the Servicer deems necessary to
enforce the Receivable, including bringing suit in the name or names of the
Certificateholders.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. AMENDMENT. This 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 this Agreement that may be inconsistent with any other provision
herein, 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 (1) such action shall
not materially and adversely affect the interests of any Certificateholder
and (2) the Servicer shall have delivered an Officer's Certificate to the
Trustee stating that such amendment will not materially and adversely affect
the interests of any Certificateholder; and (ii) to change the formula for
determining the Specified Subordination Spread Account Balance, provided that
(1) each Rating Agency 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 Certificates and (2) the
Servicer delivers to the Trustee an Officer's Certificate stating that such
amendment will not materially and adversely affect the interests of any
Certificateholder. An amendment shall be deemed to not materially and
adversely affect the interests of the Class A Certificateholders or the Class
B Certificateholders if (x) such amendment does not adversely affect the
Trust's status as a grantor trust for federal income tax purposes and (y)
each Rating Agency confirms in writing that such amendment will not result in
a qualification, reduction or withdrawal of its then current rating of the
Certificates.
This Agreement may also be amended from time to time by the Seller,
the Servicer, NMAC (so long as NMAC has any rights or obligations hereunder)
and the Trustee with the consent of the Holders of Class A Certificates, the
Class B Certificates and the Class C
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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 a majority of the Class A Certificate Balance, the Class B
Certificate Balance and the Class C Certificates, respectively, for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement, or of modifying in any manner the
rights of the Holders of Certificates; PROVIDED, HOWEVER, that no such
amendment shall (a) increase or reduce in any manner the 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 Class A Pass-Through Rate, the Class B Pass-Through Rate or the Class C
Pass-Through Rate or the Specified Subordinated Spread Account Balance
(except as described in clause (ii) above) without the consent of each
adversely affected Certificateholder or (b) reduce the aforesaid percentage
of the Class A Certificate Balance, the Class B Certificate Balance or the
Class C 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 confirms that such amendment will not result in a reduction or
withdrawal of its rating of the Certificates of such class. In connection
with any amendment referred to in clause (a) above, the Servicer shall
deliver an Officer's Certificate to the Trustee stating that those
Certificateholders whose consents were not obtained were not adversely
affected by such amendment.
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 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 this 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
this Agreement and the Opinion of Counsel referred to in Section 13.02(h)(i).
The Trustee may, but shall not be obligated to, enter into any such
amendment that affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
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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.
(b) The Seller and the Servicer shall notify the Trustee within 30 days
after any change of 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, and
shall promptly file appropriate amendments to all previously filed financing
statements or continuation statements.
(c) The Seller and the Servicer shall notify the Trustee of any
relocation of its principal executive office within 30 days after such
relocation, 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 this Agreement of the Receivables to the Trust,
the Servicer's master computer records that refer to a Receivable shall
indicate clearly the interest of the 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 that, if they shall
refer in any manner whatsoever to any Receivable, shall indicate clearly that
such Receivable has been sold to and is owned by the Trust.
(g) Upon receipt of a written request from the Trustee, which request
shall be made no more frequently than annually, the Servicer shall furnish to
the Trustee, within 20 Business Days after receipt of such request, a list of
all Receivables (by contract number and name of Obligor)
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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. The Servicer shall permit the Trustee and its agents at any
time during normal business hours to inspect, audit and make copies and
abstracts from the Servicer's records regarding any Receivable.
(h) The Servicer shall deliver to the Trustee:
(i) upon the execution and delivery of this Agreement and
of each amendment thereto, an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, based on customary assumptions and
qualifications, all financing statements and continuation statements
have been executed and filed that are necessary to perfect 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
(ii) 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, based
on customary assumptions and qualifications, all financing statements
and continuation statements have been executed and filed that are
necessary to perfect 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 (h)(i) or (h)(ii)
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 this
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 this Agreement or any of them.
No Certificateholder shall have any right to vote (except as
specifically provided herein) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties to
this Agreement, nor shall anything in this 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 this
Agreement.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the
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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
Certificates evidencing not less than a majority of the Controlling Class of
Certificates shall have made written request upon the Trustee to institute
such action, suit or proceeding in its own name as Trustee under this
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 this Agreement to
affect, disturb or prejudice the rights of the Holders of any of the other
Certificates, or to obtain or seek to obtain priority over or preference to
any other such Holder, or to enforce any right under this Agreement except in
the manner provided in this Agreement and for the equal, ratable and common
benefit of all Certificateholders of that class. 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 this
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 Nissan Motor Acceptance
Corporation, 990 West 190th Street, Torrance, CA 90502, Attention:
Secretary, telephone: (310) 719-8000, facsimile: (310) 515-6750, (b) in the
case of the Trustee, at the Corporate Trust Office, (c) in the case of
Moody's, at the following address: Moody's Investors Service, Inc., ABS
Monitoring Department, 99 Church Street, New York, New York 10007, and (d) in
the case of Standard & Poor's, at the following address: Standard & Poor's
Ratings Services, 55 Water Street, New York, New York 10041-0003, 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 this 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 this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
72
<PAGE>
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 this Agreement concerning the resignation of
the Servicer, this Agreement may not be assigned by the Seller or the
Servicer without the prior written consent of the Trustee and the Holders of
Certificates evidencing not less than 66-2/3% of the Controlling Class of
Certificates.
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 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 provided herein 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
73
<PAGE>
the Custody and Pledge Agreement and pursuant to the Yield Supplement
Agreement shall not be considered to be owned by the Trust but instead, (i)
with respect to the Custody and Pledge Agreement, shall be considered to be
owned by the Seller 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 this Agreement and for other purposes, this Agreement may be
executed in any number of counterparts, each of which counterparts shall be
deemed to be an original, and all of which counterparts shall constitute but
one and the same instrument.
74
<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 ___________________________.
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:
----------------------------------
,
----------------------------------
as Trustee
By:
----------------------------------
Name:
Title:
S 1
<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
990 W. 190th Street
Torrance, California 90502
3. KESTREL RECORDS MANAGEMENT
1235 N. Union Bower
Irving, Texas 75061
4. DATA LOK DATA STORAGE CENTER
727 Kingswill Place
Carson, California 90746
<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 _______ 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, near-new and used automobiles and light-duty 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
US$_____________
THIS CERTIFIES THAT is the registered owner of a
dollars nonassessable, fully-paid, fractional undivided interest in
the Nissan Auto Receivables _______ 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
[_____________], __________ (the "Agreement"), among the Seller, Nissan Motor
Acceptance Corporation ("NMAC"), as Servicer (the "Servicer") and in its
individual capacity, and ______________________________________, 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 this 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 this Agreement are Certificates designated as
A-1
<PAGE>
"[_]% Asset Backed Certificates, Class B" (the "Class B Certificates")
and "[_]% Asset Backed Certificates, Class C" (the "Class C Certificates"). The
Class C 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 this 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
this Agreement) a pool of retail installment sale contracts of new, near-new and
used automobiles and light-duty trucks (the "Receivables"), certain monies paid
thereon on or after ____________, security interests in the vehicles financed
thereby, certain bank accounts and the proceeds thereof, property (including the
right to receive Net 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 this 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 _____________________, 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 this Agreement), such Class A
Certificateholder's fractional undivided interest of the amounts to be
distributed to the Class A Certificateholders as determined pursuant to this
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 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 this 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
this Agreement or be valid for any purpose.
A-2
<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
GRANTOR TRUST
BY ,
---------------------------------
as Trustee
By:
---------------------------------
DATED:
[SEAL]
ATTEST:
- ---------------------------------
Authorized Officer
This is one of the Class A Certificates referred to in the
within-mentioned Agreement.
---------------------------------
,
---------------------------------
as Trustee
By:
---------------------------------
Authorized Officer
A-3
<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 this Agreement. A copy of this 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.
This 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 this Agreement at any time
by the Seller, the Servicer, NMAC and the Trustee with the consent of the
Holders of Class A Certificates, Class B Certificates and Class C Certificates,
each voting as a Class, evidencing not less than a majority of the Class A
Certificate Balance, the Class B Certificate Balance and the Class C 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. This Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in this 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 this Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of
authorized denomination evidencing the same aggregate denomination, as requested
by the holder surrendering the same. No service charge will be made for any
such registration of transfer or exchange, but the Trustee may require payment
of a sum sufficient to cover any tax or governmental charges payable in
connection therewith.
The Trustee, the Certificate Registrar and any agent of the Trustee or
the Certificate Registrar shall treat the person in whose name this Class A
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by this Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to
A-4
<PAGE>
be paid to them pursuant to this 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 this
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 or equal to 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-5
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
____________________________________________________________ Attorney to
transfer said Certificate on the books of the Certificate Registrar, with full
power of substitution in the premises.
Dated:
*
---------------------------------
Signature Guaranteed:
*
---------------------------------
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
A-6
<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 THIS AGREEMENT (AS DEFINED BELOW).
NISSAN AUTO RECEIVABLES _______ 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, near-new and used automobiles and light-duty 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 US$___________________
THIS CERTIFIES THAT _______________________ is the registered owner of
a _____________ dollars nonassessable, fully-paid, fractional undivided interest
in the Nissan Auto Receivables _______ 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
[__________], ____ (the "Agreement"), among the Seller, Nissan Motor Acceptance
Corporation ("NMAC"), as Servicer (the "Servicer") and in its individual
capacity, and ______________________________________, 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 this 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 this 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
B-1
<PAGE>
Certificate is issued under and is subject to the terms, provisions, and
conditions of this 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 this Agreement) a pool of retail installment sale contracts for new,
near-new and used automobiles and light-duty trucks (the "Receivables"),
certain monies paid thereon on or after ________________, security interests
in the vehicles financed thereby, certain bank accounts and the proceeds
thereof, property (including the right to receive Net 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 this Agreement.
Under this 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 _________________, 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 this Agreement), such Class B
Certificateholder's fractional undivided interest in the amounts to be
distributed to the Class B Certificateholders as determined pursuant to this
Agreement.
Distributions on this Class B Certificate will be made by the
Trustee by wire transfer, check or money order mailed to the Class B
Certificateholder of record in the Certificate Register without the
presentation or surrender of this Class B Certificate or the making of any
notation hereon. Except as otherwise provided in this 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
this Agreement or be valid for any purpose.
B-2
<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
GRANTOR TRUST
BY ,
----------------------------------
as Trustee
DATED: BY
----------------- ----------------------
[SEAL]
ATTEST:
- ----------------------------
Authorized Officer
This is one of the Class B Certificates referred to in the
within-mentioned Agreement.
---------------------------------
---------------------------------
as Trustee
By
---------------------------------
Authorized Officer
B-3
<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 this Agreement. A copy of this 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.
This 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 this Agreement at any time
by the Seller, the Servicer, NMAC and the Trustee with the consent of the
Holders of Class A Certificates, Class B Certificates and Class C Certificates,
each voting as a Class, evidencing not less than a majority of the Class A
Certificate Balance, the Class B Certificate Balance and the Class C 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. This Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in this 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 $1,000 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 this Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Trustee may require payment of a sum sufficient to cover any tax or governmental
charges payable in connection therewith.
The Trustee, the Certificate Registrar and any agent of the Trustee or
the Certificate Registrar shall treat the person in whose name this Class B
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
B-4
<PAGE>
The obligations and responsibilities created by this Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to this 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 this 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 or equal to 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-5
<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-6
<PAGE>
EXHIBIT C: FORM OF CLASS C 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 THIS AGREEMENT (AS DEFINED BELOW).
NISSAN AUTO RECEIVABLES _______ GRANTOR TRUST
[_]% ASSET BACKED CERTIFICATE
CLASS C
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, near-new and used automobiles and light-duty 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 US$_______________
THIS CERTIFIES THAT _______________________ is the registered owner of
a _____________ dollars nonassessable, fully-paid, fractional undivided interest
in the Nissan Auto Receivables _______ 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
[__________], _____ (the "Agreement"), among the Seller, Nissan Motor Acceptance
Corporation("NMAC"), as Servicer (the "Servicer") and in its individual
capacity, and ______________________________________, 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 this Agreement. This
Certificate is one of the duly authorized Certificates designated as "[_]% Asset
Backed Certificates, Class C" (herein called the "Class C Certificates"). Also
issued under this Agreement are Certificates designated as "[__]% Asset Backed
Certificates, Class A" (the "Class A Certificates") and [_]% Asset Backed
Certificates, Class B. The Class C Certificates, the Class B Certificates and
the Class A Certificates are hereinafter collectively called the "Certificates."
The aggregate undivided interest in the Trust
C-1
<PAGE>
evidenced by all Class C Certificates is [__]%. This Class C Certificate is
issued under and is subject to the terms, provisions, and conditions of this
Agreement, to which Agreement the holder of this Class C 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 this
Agreement) a pool of retail installment sale contracts for new, near-new and
used automobiles and light-duty trucks (the "Receivables"), certain monies
paid thereon on or after ______________, security interests in the vehicles
financed thereby, certain bank accounts and the proceeds thereof, property
(including the right to receive Net 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 C
Certificates are subordinated to the rights of the holders of the Class A
Certificates and the Class B Certificates, as set forth in this Agreement.
Under this 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 _______________, to the person in whose name
this Class C Certificate is registered at the close of business on the Record
Date (as determined pursuant to this Agreement), such Class C
Certificateholder's fractional undivided interest in the amounts to be
distributed to the Class C Certificateholders as determined pursuant to this
Agreement; PROVIDED, HOWEVER, that under certain circumstances specified in this
Agreement, amounts otherwise distributable to the Class C Certificateholders
will be deposited in the Subordination Spread Account.
Distributions on this Class C Certificate will be made by the Trustee
by wire transfer, check or money order mailed to the Class C Certificateholder
of record in the Certificate Register without the presentation or surrender of
this Class C Certificate or the making of any notation hereon. Except as
otherwise provided in this Agreement and notwithstanding the above, the final
distribution on this Class C 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 C 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 C
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 C Certificate shall not entitle the holder hereof to any benefit under
this Agreement or be valid for any purpose.
C-2
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class C Certificate to be duly executed.
NISSAN AUTO RECEIVABLES
GRANTOR TRUST
BY ,
-------------------------------
as Trustee
DATED: BY
--------------- ------------------
[SEAL]
ATTEST:
- ----------------------------
Authorized Officer
This is one of the Class B Certificates referred to in the
within-mentioned Agreement.
---------------------------------
---------------------------------
as Trustee
By
-------------------------------
Authorized Officer
C-3
<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 this Agreement. A copy of this 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.
This 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 this Agreement at
any time by the Seller, the Servicer, NMAC and the Trustee with the consent
of the Holders of Class A Certificates, Class B Certificates and Class C
Certificates, each voting as a Class, evidencing not less than a majority of
the Class A Certificate Balance, the Class B Certificate Balance and the
Class C 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. This Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in this 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 C 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 this Agreement
and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of authorized denominations evidencing the
same aggregate denomination, as requested by the holder surrendering the
same. No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar and any agent of the Trustee
or the Certificate Registrar shall treat the person in whose name this Class
C 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.
C-4
<PAGE>
The obligations and responsibilities created by this Agreement and
the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to
this 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 this 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 or equal to 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.
C-5
<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.
C-6
<PAGE>
Exhibit F-1
Trustee's Certificate
pursuant to Section 11.03
of the Pooling and Servicing
Agreement
______________________________________, as trustee (the "Trustee") of
the Nissan Auto Receivables _______ Grantor Trust created pursuant to the
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement") dated as
of
[__________________], ____, 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 "Warranty 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
__________ , ____.
<PAGE>
Exhibit F-2
Trustee's Certificate
pursuant to Section 11.03
of the Pooling and Servicing
Agreement
______________________________________, as trustee (the "Trustee") of
the Nissan Auto Receivables _______ Grantor Trust created pursuant to the
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement") dated as
of [__________], ____, 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 "Administrative 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
_________ , ____.
<PAGE>
EXHIBIT H-1
FORM OF
REPRESENTATION LETTER
Nissan Auto Receivables [____-___] Grantor Trust
___% Asset Backed Certificates, Class A
I [Name], hereby represent and warrant to [____________], as trustee
(the "Trustee") of the above-named trust, as follows:
1. I am [an officer of [Name of the Transferee],] the proposed
transferee (the "Transferee") of an ownership interest in the Class A
Certificates (the "Certificates") issued pursuant to the Pooling and
Servicing Agreement (the "Agreement"), dated as of [_________],
relating to the above-referenced securities, among Nissan Auto
Receivables Corporation, as seller, Nissan Motor Acceptance
Corporation, as servicer, and the Trustee. Capitalized terms used but
not defined herein shall have the meanings ascribed thereto in the
Agreement. [The Transferee has authorized me to make the following
representations and warranties on behalf of the Transferee.]
2. The Transferee agrees to require a Representation Letter
substantially in the form of this Representation Letter from any
Person to whom the Transferee attempts to transfer its interest in
the Certificates and in connection with any transfer by a Person for
whom the Transferee is acting as nominee, trustee or agent. The
Transferee will not transfer its interest or cause any interest to
be transferred to any Person that the Transferee knows cannot
truthfully complete such a Representation Letter.
3. CHECK APPROPRIATE BOX:
[ ] The Transferee is not an employee benefit plan or arrangement
subject to Section 406 of the Employee Retirement Income Security
Act of 1974, as amended, or a plan subject to Section 4975 of the
Internal Revenue Code of 1986, as amended (a "Plan"), nor a
person acting on behalf of a Plan nor using the assets of a Plan
to effect such transfer; or
[ ] if such Transferee is a Plan, then
(D) such Plan is an "accredited investor" as defined in Rule
501(a)(1) of Regulation D under the Securities Act;
(E) such Plan's investment in the Certificates does not exceed
25% of all of the Certificates outstanding at the time of such
transfer; and
(F) immediately after the acquisition, no more than 25% of the
assets of the Plan with respect to which a person has
discretionary authority or renders
II-1-1
<PAGE>
investment advice are invested in certificates
representing interests in trusts containing assets sold or
serviced by the same entity.
IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed
this [___] day of [________, __].
------------------------------
Print Name of the Transferee
[By:
-------------------------
Name:
Title:]
II-1-2
<PAGE>
EXHIBIT H-2
FORM OF
REPRESENTATION LETTER
Nissan Auto Receivables [_____-__] Grantor Trust
___% Asset Backed Certificates, Class [B][C]
I [Name], hereby represent and warrant to [_____________], as trustee
(the "Trustee") of the above-named trust, as follows:
1. I am [an officer of [Name of Transferee],] the proposed
transferee (the "Transferee") of an ownership interest in the
Class [B][C] Certificates (the "Certificates") issued pursuant to
the Pooling and Servicing Agreement (the "Agreement"), dated as
of [_________], relating to the above-referenced securities,
among Nissan Auto Receivables Corporation, as seller, Nissan
Motor Acceptance Corporation, as servicer, and the Trustee.
Capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Agreement. [The Transferee has
authorized me to make the following representations and
warranties on behalf of the Transferee.]
2. The Transferee agrees to require a Representation Letter
substantially in the form of this Representation Letter from any
Person to whom the Transferee attempts to transfer its interest
in the Certificates and in connection with any transfer by a
Person for whom the Transferee is acting as nominee, trustee or
agent. The Transferee will not transfer its interest or cause any
interest to be transferred to any Person that the Transferee
knows cannot truthfully complete such a Representation Letter.
3. CHECK APPROPRIATE BOX:
[ ] The Transferee is not an employee benefit plan or
arrangement subject to Section 406 of the Employee Retirement
Income Security Act of 1974, as amended, or a plan subject to
Section 4975 of the Internal Revenue Code of 1986, as amended
(a "Plan"), nor a person acting on behalf of a Plan nor using
the assets of a Plan to effect such transfer; or
[ ] The Transferee is an insurance company purchasing the
Certificates or beneficial interest therein with funds
contained in an "insurance company general account" (as
defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) as to which there is the Plan
with respect to which the amount of such general account's
reserves and liabilities for the contracts held by or on
behalf of such Plan and all other Plans maintained by the same
employer (or affiliate thereof as defined in Section V(a)(1)
of PTCE 95-60) or by the same employee organization does not
exceed 10% of the total of all reserves and liabilities of
such general account (as such amounts are determined under
Section I(a) of PTCE 95-60) at the date of acquisition.
II-2-1
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed
this [___] day of [________, __].
------------------------------
Print Name of the Transferee
[By:
-------------------------
Name:
Title:]
II-1-2
<PAGE>
EXHIBIT 4.5
PURCHASE AGREEMENT
This PURCHASE AGREEMENT is made as of this ______ day of
____________, 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 installment 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)] [Sale and Servicing Agreement (as hereinafter defined)], to the
NISSAN AUTO RECEIVABLES - [GRANTOR] [OWNER] TRUST to be created thereunder,
which Trust will issue [notes backed by such Receivables and the other property
of the Trust (the "Notes") and] 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 respective meanings
assigned such terms set forth in the [Pooling and Servicing Agreement] [Sale
and Servicing Agreement or Trust Agreement, as the case may be]. 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" means this Purchase Agreement and all amendments hereof
and supplements hereto.
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<PAGE>
"Assignment" means 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 2.2.
"Closing Date" means -.
"Collections" means all amounts collected by the Servicer (from
whatever source) on or with respect to the Receivables.
"Damages" shall have the meaning specified in Section 5.4(a).
"Distribution Date" means, 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.
["Notes" shall have the meaning specified in the introductory
paragraphs of this Agreement.]
["Pooling and Servicing Agreement" means the Pooling and Servicing
Agreement by and among the Seller, as servicer and in its individual capacity,
the Purchaser, and -, as trustee, dated as of -, as the same may be amended,
amended and restated, supplemented or modified.]
"Prospectus" has the meaning assigned to such term in the Underwriting
Agreement.
"Purchaser" means Nissan Auto Receivables Corporation, a Delaware
corporation, and its successors and assigns.
"Rating Agency" means - or any successors thereto.
"Receivable" means any retail installment sale contract that appears
on the Schedule of Receivables.
"Receivables Purchase Price" means $-.
"Repurchase Event" shall have the meaning specified in Section 6.2.
["SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement
by and among Nissan Auto Receivables Corporation, as seller, Nissan Motor
Acceptance Corporation, as servicer, and the Trust dated as of -, as the same
may be amended, amended and restated, supplemented or modified.]
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<PAGE>
"Schedule of Receivables" means the list of Receivables annexed to the
Assignment as SCHEDULE A thereto.
["Securities" means the Notes and the Certificates.]
"Seller" means Nissan Motor Acceptance Corporation, a California
corporation, and its successors and assigns.
"Trust" means the Nissan Auto Receivables - [Grantor] [Owner] Trust.
["Trust Agreement" means the Amended and Restated Trust Agreement by
and between Nissan Auto Receivables Corporation, as seller, and -, as trustee,
dated as of -, as the same may be amended, amended and restated, supplemented
or modified.]
"Underwriting Agreement" means the Underwriting Agreement by and
between - and the Purchaser, dated -.
With respect to all terms in this 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, amendments and restatements and supplements thereto or
changes therein entered into in accordance with their respective terms and
not prohibited by this Agreement; references to Persons include their
permitted successors and assigns; references to laws include their amendments
and supplements, the rules and regulations thereunder and any successors
thereto; and the term "including" means "including without limitation."
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.1 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] [Sale 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 due thereon or paid thereunder or in
respect thereof on or after the Cutoff Date;
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<PAGE>
(ii) the right of the Seller in the security interests in
the Financed Vehicles granted by the Obligors pursuant to the
Receivables and any related property;
(iii) the right 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 right of the Seller in any Dealer Recourse;
(v) the right of the Seller to realize upon any property
(including the right to receive future Net Liquidation Proceeds) that
shall have secured a Receivable;
(vi) the right of the Seller in 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
(vii) all proceeds of the foregoing.
(b) RECEIVABLES PURCHASE PRICE. In consideration for the
Receivables and other properties described in Section 2.1(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 [Certificates]
[Securities], 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.
2.2 THE CLOSING. The sale and purchase of the Receivables shall
take place at a closing (the "Closing") at the offices of - on the Closing
Date, simultaneously with the closings under: (a) the [Pooling and Servicing
Agreement] [Sale 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 2.1(a) to the Trustee for the
benefit of the [Certificateholders] [Securityholders]; and (ii) the Purchaser
will deposit the foregoing into the Trust in exchange for [the Certificates]
[the Securities]; and (b) the Underwriting Agreement, pursuant to which the
Purchaser will sell to the underwriters named therein [the Class A Certificates
and the Class B Certificates] [the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes, the Class B Notes, and the Class C Certificates].
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<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 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 organized
and is validly existing as a corporation in good standing under the laws of
the State of Delaware, with 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 constitutes a
legal, valid and binding obligation of the Purchaser, enforceable in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and to general equitable principles. The consummation of the
transactions contemplated by this Agreement and the fulfillment of the terms
hereof do not conflict with, result in a breach of any of the terms or
provisions of, nor constitute (with or without notice or lapse of time) a
default under, or result in the creation or imposition of any Lien 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; which breach, default, conflict, Lien or violation
in any case would have a material adverse effect on the ability of the Seller
to perform its obligations under this Agreement.
(c) NO LITIGATION. There are no proceedings or investigations
pending to which the Purchaser is a party or of which any property of the
Purchaser is the subject, and, to the best of the Purchaser's knowledge, no
such proceedings are threatened or contemplated by governmental authorities
or threatened by others; other than such proceedings that would not have a
material adverse effect upon the ability of the Purchaser to perform its
obligations under, or the validity and enforceability of, this Agreement.
3.2 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
organized 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 and where the failure to so qualify would have a
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<PAGE>
material adverse effect on the ability of the Seller to perform its
obligations under this Agreement.
(ii) POWER AND AUTHORITY. The Seller has the corporate
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 constitutes a legal, valid and binding
obligation of the Seller, enforceable in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights
generally and by general equitable principles.
(iii) NO VIOLATION. The consummation of the transaction
contemplated by this Agreement, and the fulfillment of the terms
hereof, do not conflict with, or result in a breach of any of the
terms or provisions of, nor constitute (with or without notice or
lapse of time) a default under, or result in the creation or
imposition of any Lien 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; which breach, default, conflict, Lien or violation in any case
would have a material adverse effect on the ability of the Seller to
perform its obligations under this Agreement.
(iv) NO PROCEEDINGS. There are no proceedings or
investigations pending to which the Seller is a party or of which any
property of the Seller is the subject, and, to the best of the
Seller's knowledge, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others, other than such
proceedings that would not have a material adverse effect upon the
ability of the Seller to perform 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] [Sale and Servicing Agreement]:
(i) CHARACTERISTICS OF RECEIVABLES. Each Receivable (a)
has been originated in the United States of America by a Dealer for
the retail sale of a Financed Vehicle in the ordinary course of such
Dealer's business, has been fully and properly executed by the parties
thereto, has been purchased by the Seller from such Dealer under an
existing dealer agreement with the Seller, and has been validly
assigned by such Dealer to the Seller, (b) created a valid, subsisting
and enforceable security interest in favor of the Seller in such
Financed Vehicle,
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<PAGE>
(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 ____ months and
yield interest at the related 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 the Seller's retail
installment sale contracts (other than contracts originated in
Alabama) meeting the criteria of the Trust set forth in the [Pooling
and Servicing Agreement] [Sale and Servicing Agreement]; and no
selection procedures believed to be adverse to the
[Certificateholders] [Securityholders] 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 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, moratorium or other similar laws affecting creditors'
rights generally and by general equitable principles.
(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 or all 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.
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<PAGE>
(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 in such a manner that is prohibited by the provisions of the
[Pooling and Servicing Agreement] [Sale and Servicing Agreement] or
that would cause such Receivable to fail to meet all of the other
requirements and warranties made by the Seller herein with respect
thereto.
(viii) NO DEFENSES. No Receivable is subject to any right
of rescission, setoff, counterclaim or defense, including the defense
of usury, and the operation of any of the terms of any Receivable, or
the exercise of any right thereunder, will not render such Receivable
unenforceable in whole or in part or subject such Receivable to any
right of rescission, setoff, counterclaim or defense, including the
defense of usury, and no such right of rescission, setoff,
counterclaim or defense has been asserted with respect thereto.
(ix) NO LIENS. To the Seller's knowledge, no liens have
been filed for work, labor or materials relating to a Financed Vehicle
that shall be liens prior to, or equal or coordinate with, the
security interest in the Financed Vehicle granted by the Receivable.
(x) NO DEFAULT. Except for payment defaults continuing
for a period of not more than 29 days as of the Cutoff Date, no
default, breach, violation or event permitting acceleration under the
terms of any Receivable has occurred; and no continuing condition that
with notice or the lapse of time would constitute a default, breach,
violation or event permitting acceleration under the terms of any
Receivable has arisen (other than deferrals and waivers of late
payment charges or fees permitted under the [Pooling and Servicing
Agreement] [Sale and Servicing Agreement]).
(xi) INSURANCE. The Seller, in accordance with its
customary procedures, has determined at the time of origination of
each Receivable that the related Obligor has agreed to obtain physical
damage insurance covering the Financed Vehicle and the Obligor is
required under the terms of related 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. 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,
immediately upon the transfer thereof, the Purchaser shall have good
and
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<PAGE>
marketable title to each Receivable, free and clear of all Liens
and rights of others.
(xiii) LAWFUL ASSIGNMENT. No Receivable has been originated
in, or shall be subject to the laws of, any jurisdiction under which
the sale, transfer and assignment of such Receivable under this
Agreement or pursuant to transfers of the Certificates are unlawful,
void or voidable.
(xiv) ALL FILINGS MADE. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the
Purchaser a first priority perfected ownership interest in the
Receivables have been made or have been delivered in form suitable for
filing to the Purchaser .
(xv) CHATTEL PAPER. Each Receivable constitutes "chattel
paper", as such term is 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 ___%.
(xx) MATURITY. As of the Cutoff Date, each Receivable had
a remaining term to maturity of not less than _____ months and not
greater than _____ months.
(xxi) BALANCE. Each Receivable had an original principal
balance of not more than $____________ and, as of the Cutoff Date, had
a principal balance of not less than $______ and not more than
$_________.
(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 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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<PAGE>
(xxv) NEW, NEAR-NEW AND USED VEHICLES. Each Financed
Vehicle was a new, near-new or used automobile or light-duty truck at
the time the related Obligor executed the retail installment sale
contract.
(xxvi) ORIGINATION. Each Receivable has an origination date
on or after ____________.
(xxvii) FORCED-PLACED INSURANCE PREMIUMS. No contract
relating to any Receivable has had forced-placed insurance premiums
added to the amount financed.
(xxviii) NO FRAUD OR MISREPRESENTATION. To the 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
4.1 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 in all
material respects on the Closing Date with the same effect as if then made,
and the Seller shall have performed in all material respects all obligations
to be performed by it hereunder on or prior to the Closing Date.
(b) COMPUTER FILES MARKED. The Seller shall, at its own
expense, on or prior to the Closing Date, indicate in its computer files that
the Receivables have been sold to the Purchaser pursuant to this Agreement
and shall deliver to the Purchaser the Schedule of Receivables certified by
an officer of the Seller to be true, correct and complete in all material
respects.
(c) DOCUMENTS TO BE DELIVERED BY THE SELLER AT THE CLOSING.
(i) THE ASSIGNMENT. At the Closing, the Seller shall
execute and deliver the Assignment.
(ii) EVIDENCE OF UCC FILING. On or prior to the Closing
Date, the Seller shall record and file, or deliver in a form suitable
for filing to the Purchaser, 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, and the [Trustee][Owner Trustee], as
assignee of the Purchaser, naming the Receivables and the other
property conveyed hereunder as collateral, meeting the requirements of
the laws
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<PAGE>
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.
(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] [Sale and Servicing Agreement] shall be
consummated on the Closing Date.
4.2 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 in all
material respects on the Closing Date with the same effect as if then made,
and the Purchaser shall have performed in all material respects 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 2.1(b).
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]
[Sale and Servicing Agreement], the [Pooling and Servicing Agreement]
[Sale and Servicing Agreement]shall govern:
5.1 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 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 notify the Purchaser within 30 days after
any change of 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, and shall
promptly file appropriate amendments to all previously filed financing
statements or continuation statements.
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<PAGE>
(c) The Seller shall notify the Purchaser of any relocation of
its principal executive office within 90 days after such relocation, 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 its principal executive
office within the United States of America.
(d) 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 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.
(e) 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 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.
(f) The Seller shall permit the Purchaser and its agents at any
time during normal business hours upon reasonable advance notice to inspect,
audit and make copies of and abstracts from the Seller's records regarding
any Receivable.
5.2 OTHER LIENS OR INTERESTS. Except for the conveyances
hereunder and contemplated pursuant to the [Pooling and Servicing Agreement]
[Sale and Servicing Agreement], the Seller shall 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 5.2 shall
terminate upon the termination of the Trust pursuant to the
[Pooling and Servicing Agreement] [Sale and Servicing Agreement].
5.3 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.
5.4 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.
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<PAGE>
(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 (but not
including any taxes asserted with respect to ownership of the Receivables or
federal or other taxes arising out of the transactions contemplated by this
Agreement and any related documents) 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]
[Sale 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.
(f) Promptly after receipt by a party indemnified under this
Section 5.4 (an "Indemnified Party") of notice of the commencement of any
action, such Indemnified Party will, if a claim in respect thereof is to be
made against the Seller under this Section 5.4, notify the Seller of the
commencement thereof. If any such action is brought against any Indemnified
Party under this Section 5.4 and it notifies the Seller of the commencement
thereof, the Seller will assume the defense thereof, with counsel reasonably
satisfactory to such Indemnified Party (who may, unless there is, as
evidenced by an opinion of counsel to the Indemnified Party stating that
there is an unwaivable conflict of interest, be counsel to the Indemnifying
Party), and the Seller will not be liable to such Indemnified Party under
this Section 5.4 for any legal or other expenses subsequently incurred by
such Indemnified Party in connection with the defense thereof, other than
reasonable costs of investigation. The obligations set forth in this Section
5.4 shall survive the termination of this Agreement and shall include
reasonable fees and expenses of counsel and expenses of litigation. If the
Seller shall have made any indemnity payments pursuant to this Section 5.4
and the Person to or on behalf of whom such payments are made thereafter
collects any of such amounts from others, such Person shall promptly repay
such amounts to the Seller, without interest (except to the extent received
by such Person).
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<PAGE>
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.1 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.
6.2 REPURCHASE EVENTS. The Seller hereby covenants and agrees
with the Purchaser for the benefit of the Purchaser, the [Owner Trustee]
[Trustee]and the holders of the [Securities] [Certificates], that the
occurrence of a breach of any of the Seller's representations and warranties
contained in Section 3.2(b) shall constitute events obligating the Seller to
repurchase Receivables hereunder ("Repurchase Events"), at the amount of the
Warranty Purchase Payment from the Purchaser or, as described in Section 6.4
below, from the Trust. The repurchase obligation of the Seller shall
constitute the sole remedy of the holders of the [Securities] [Certificates],
the [Owner Trustee][Trustee] and the Purchaser against the Seller with
respect to any Repurchase Event.
6.3 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 (other than that it has
good and marketable title to such Receivables), to the Seller all the
Purchaser's right, title and interest in and to such Receivables, and all
security and documents relating thereto.
6.4 TRUST. The Seller acknowledges that the Purchaser will,
pursuant to the [Pooling and Servicing Agreement]
[Sale and Servicing Agreement], sell the Receivables to the Trust and assign
its rights under this Agreement to the
[Owner Trustee and the Indenture Trustee] [Trustee] for the benefit of the
holders of the [Securities] [Certificates], and that the representations and
warranties contained in this Agreement and the rights of the Purchaser under
Section 6.2 and the obligations under 6.3 are intended to benefit the Trust
and the holders of the [Securities] [Certificates]. The Seller hereby
consents to such sales and assignments.
6.5 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 Certificates evidencing a majority of the Voting Interests]
[Holders of Notes representing a majority of the Outstanding Amount of the
Controlling Class of Notes, or, in the case of any amendment that does not
adversely affect the Indenture Trustee or the Noteholders, the Holder of the
Controlling Class of Certificates].
6.6 ACCOUNTANTS' LETTERS.
(a) The Seller will cause Deloitte & Touche LLP to review the
characteristics of the Receivables described in the Schedule of Receivables
and to
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<PAGE>
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 6.6(a) and to deliver the letters required of them under the
Underwriting Agreement.
6.7 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.
6.8 NOTICES. All communications and notices pursuant hereto to
either party shall be in writing (including via telecopy) and addressed or
delivered to it at its address (or in the case of telecopy, at its telecopy
number at such address) shown in the opening portion of this Agreement or at
such other address as may be designated by it by notice to the other party
and, if mailed or delivered, shall be deemed given when mailed or delivered,
or transmitted by telecopy.
6.9 COSTS AND EXPENSES. The Seller agrees to 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 SURVIVAL. The respective agreements, representations,
warranties and other statements by the Seller and the Purchaser set forth in
or made pursuant to this Agreement shall remain in full force and effect and
will survive the Closing.
6.11 HEADINGS AND CROSS-REFERENCES. The various headings in this
Agreement are included for convenience only and shall not affect the meaning
or interpretation of any provision of this Agreement. References in this
Agreement to Section names or numbers are to such Sections of this Agreement.
6.12 GOVERNING LAW. This Agreement and the Assignment shall be
governed by and construed in accordance with the internal laws of the State
of New York and the obligations, rights and remedies of the parties under
this Agreement shall be determined in accordance with such laws.
6.13 COUNTERPARTS. This Agreement may be executed in two
counterparts and by different parties on separate counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
6.14 SALE. Each party hereto agrees to treat the conveyance
under this Agreement for all purposes (including, without limitation, tax and
financial accounting
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<PAGE>
purposes) as a sale of the Receivables on all of its relevant books, records,
tax returns, financial statements and other applicable documents. Although
the parties hereto intend that the transfer and assignment contemplated by
this Agreement be a sale, in the event such transfer and assignment is deemed
to be other than a sale, the parties intend that all filings described in
this Agreement shall give the Purchaser a first priority perfected security
interest in, to and under the Receivables and other property conveyed
hereunder and all proceeds of any of the foregoing. This Agreement shall be
deemed to be the grant of a security interest from the Seller to the
Purchaser, and the Purchaser shall have all the rights, powers and privileges
of a secured party under the UCC.
IN WITNESS WHEREOF, the parties hereto hereby have caused this
Agreement to be executed by their respective officers thereunto duly
authorized as of the - day of -.
NISSAN MOTOR ACCEPTANCE CORPORATION
By:
--------------------------------
Name:
Title:
NISSAN AUTO RECEIVABLES CORPORATION
By:
--------------------------------
Name:
Title:
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<PAGE>
EXHIBIT A
ASSIGNMENT
For value received, in accordance with the Purchase Agreement dated
as of ____________, between the undersigned (the "Seller") 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, the following:
(i) all right, title and interest of the Seller in and
to the Receivables listed on Schedule A hereto and all monies due
thereon or paid thereunder or in respect thereof on or after the
Cutoff Date;
(ii) the right of the Seller in the security interests in
the Financed Vehicles granted by the Obligors pursuant to the
Receivables and any related property;
(iii) the right 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 right of the Seller in any Dealer Recourse;
(v) the right of the Seller to realize upon any property
(including the right to receive future Net Liquidation Proceeds) that
shall have secured a Receivable;
(vi) the right of the Seller in 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
(vii) all proceeds 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, Receivable 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 respective meanings assigned to such terms in the Purchase Agreement.
Exhibit A
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of the ___ day of ____________.
NISSAN MOTOR ACCEPTANCE
CORPORATION
By:
--------------------
Name:
Title:
Exhibit B
<PAGE>
SCHEDULE A
Schedule of Receivables
See schedule attached to the [Pooling and Servicing Agreement][Sale and
Servicing Agreement].
Annex A
<PAGE>
ADMINISTRATION AGREEMENT
among
NISSAN AUTO RECEIVABLES [____-___] OWNER TRUST,
as Issuer
NISSAN MOTOR ACCEPTANCE CORPORATION,
as Administrator
[____________________],
as Indenture Trustee
and
[____________________],
as Owner Trustee
Dated as of [__________]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. DUTIES OF THE ADMINISTRATOR.. . . . . . . . . . . . . . . . . . . . .2
2. RECORDS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3. COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
4. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER. . . . . . . . .8
5. INDEPENDENCE OF THE ADMINISTRATOR.. . . . . . . . . . . . . . . . . .8
6. NO JOINT VENTURE. . . . . . . . . . . . . . . . . . . . . . . . . . .8
7. OTHER ACTIVITIES OF ADMINISTRATOR.. . . . . . . . . . . . . . . . . .8
8. TERM OF AGREEMENT; RESIGNATION AND REMOVAL OF
ADMINISTRATOR.. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
9. ACTION UPON TERMINATION, RESIGNATION OR REMOVAL.. . . . . . . . . . 10
10. NOTICES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11. AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12. SUCCESSOR AND ASSIGNS.. . . . . . . . . . . . . . . . . . . . . . . 11
13. GOVERNING LAW.. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
14. HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
15. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
16. SEVERABILITY OF PROVISIONS. . . . . . . . . . . . . . . . . . . . . 12
17. NOT APPLICABLE TO NMAC IN OTHER CAPACITIES. . . . . . . . . . . . . 12
18. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE TRUSTEE. . . 12
</TABLE>
-i-
<PAGE>
ADMINISTRATION AGREEMENT, dated as of [__________], among NISSAN AUTO
RECEIVABLES [_________-___________] OWNER TRUST, a Delaware business trust (the
"Issuer"), NISSAN MOTOR ACCEPTANCE CORPORATION, a California corporation, as
administrator (the "Administrator"), [____________________], a
[______________________], not in its individual capacity but solely as Indenture
Trustee (as defined below), and [____________________], a
[__________________________], not in its individual capacity but solely as Owner
Trustee (as defined below).
W I T N E S S E T H:
WHEREAS, beneficial ownership interests in the Issuer represented by the
Nissan Auto Receivables [_________-_________] Owner Trust Asset Backed
Certificates, Class C and Class D (the "Certificates") have been issued in
connection with the formation of the Issuer pursuant to the Trust Agreement,
dated as of [__________] (the "Trust Agreement"), between Nissan Auto
Receivables Corporation ("NARC"), a Delaware corporation, as depositor, and
[____________________], as owner trustee (the "Owner Trustee") to the owners
thereof (the "Owners");
WHEREAS, the Issuer is issuing the Nissan Auto Receivables [___-__] Owner
Trust [___]% Asset Backed Notes Class A-1, the Nissan Auto Receivables [___-__]
Owner Trust [___]% Asset Backed Notes Class A-2, the Nissan Auto Receivables
[___-__] Owner Trust [___]% Asset Backed Notes Class A-3, and the Nissan Auto
Receivables [___-__] Owner Trust [___]% Asset Backed Notes Class B
(collectively, the "Notes") pursuant to the Indenture, dated as of [__________]
(as amended and supplemented from time to time, the "Indenture"), between the
Issuer and [_________], as indenture trustee (the "Indenture Trustee";
capitalized terms used herein and not defined herein shall have the meanings
ascribed thereto in the Indenture, the Trust Agreement or the Sale and Servicing
Agreement, dated as of [__________], among the Issuer, Nissan Motor Acceptance
Corporation ("NMAC"), as servicer, and NARC, as seller (the "Sale and Servicing
Agreement"), as the case may be);
WHEREAS, the Issuer has entered into certain agreements in connection with
the issuance of the Certificates and the Notes, including the Purchase
Agreement, dated as of [__________] (the "Purchase Agreement"), between NMAC, as
seller, and NARC, as purchaser, the Trust Agreement, the Indenture, this
Agreement, the Securities Account Control Agreement, the Yield Supplement
Agreement, the Note Depository Agreement, the Certificate Depository Agreement,
and the Sale and Servicing Agreement (collectively, the "Basic Documents");
WHEREAS, pursuant to the Basic Documents, the Issuer, the Owner Trustee and
the Indenture Trustee are required to perform certain duties in connection with
the Certificates, the Notes and the Collateral;
WHEREAS, the Issuer, the Owner Trustee and the Indenture Trustee desire to
appoint NMAC as administrator to perform certain of the duties of the Issuer,
the Owner Trustee and the Indenture Trustee under the Basic Documents and to
provide such additional services consistent
<PAGE>
with the terms of this Agreement and the Basic Documents as the Issuer and
the Owner Trustee may from time to time request; and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer, the
Owner Trustee and the Indenture Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
1. DUTIES OF THE ADMINISTRATOR.
(a) DUTIES WITH RESPECT TO THE NOTE DEPOSITORY AGREEMENT AND THE
INDENTURE.
(i) The Administrator agrees to perform all its duties as
Administrator and the duties of the Issuer under the Note Depository
Agreement. In addition, the Administrator shall consult with the
Owner Trustee regarding the duties of the Issuer under the
Indenture and the Depository Agreement. The Administrator shall
monitor the performance of the Issuer and shall advise the Owner
Trustee when action by the Issuer or the Owner Trustee is necessary
to comply with the Issuer's duties under the Indenture and the Note
Depository Agreement. The Administrator shall prepare for
execution by the Issuer or shall cause the preparation by other
appropriate persons of all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of
the Issuer to prepare, file or deliver pursuant to the Indenture
and the Note Depository Agreement. In furtherance of the
foregoing, the Administrator shall take all appropriate action that
is the duty of the Issuer to take pursuant to the Indenture
including, without limitation, such of the foregoing as are
required with respect to the following matters under the Indenture
(references are to sections of the Indenture):
(A) preparing or obtaining the documents and instruments
required for the proper authentication of Notes and delivering
the same to the Indenture Trustee (Section 2.02);
(B) appointing the Note Registrar and giving the Indenture
Trustee notice of any appointment or a new Note Registrar and
the location, or change in location, of the Note Register
(Section 2.04);
(C) preparing the notification to Noteholders of the final
principal payment on their Notes (Section 2.07(b));
(D) preparing, obtaining and/or filing of all instruments,
opinions and certificates and other documents required for the
release of Collateral (Section 2.09);
2
<PAGE>
(E) maintaining an office in the Borough of Manhattan, City
of New York, for the registration of transfer or exchange of
Notes (Section 3.02);
(F) causing newly appointed Paying Agents, if any, to
deliver to the Indenture Trustee the instrument specified in the
Indenture regarding funds held in trust (Section 3.03);
(G) directing the Indenture Trustee to deposit moneys with
Paying Agents, if any, other than the Indenture Trustee (Section
3.03);
(H) obtaining and preserving or causing the Owner Trustee
to obtain and preserve the Issuer's qualification to do business
in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the
Indenture, the Notes, the Collateral and each other instrument
and agreement included in the Trust Estate (Section 3.04);
(I) preparing all supplements, amendments, financing
statements, continuation statements, instruments of further
assurance and other instruments, in accordance with Section 3.05
of the Indenture, necessary to protect the Trust Estate
(Section 3.05);
(J) furnishing the required Opinions of Counsel on the
Closing Date and at such other times, in accordance with Section
3.06 of the Indenture, and delivering the annual Officer's
Certificates and certain other statements as to compliance with
the Indenture, in accordance with Section 3.09 of the Indenture
(Sections 3.06 and 3.09);
(K) identifying to the Indenture Trustee in an Officer's
Certificate any Person with whom the Issuer has contracted to
perform its duties under the Indenture (Section 3.07);
(L) notifying the Indenture Trustee and the Rating Agencies
of any Servicer Default pursuant to the Sale and Servicing
Agreement and, if such Servicer Default arises from the failure
of the Servicer to perform any of its duties under the Sale and
Servicing Agreement, taking all reasonable steps available to
remedy such failure (Section 3.07(d));
(M) preparing and obtaining documents and instruments
required in connection with the consolidation, merger or transfer
of assets of the Issuer (Section 3.10);
(N) delivering notice to the Indenture Trustee of each
Event of Default and each other default by the Servicer or the
Seller under the Sale and Servicing Agreement (Section 3.19);
3
<PAGE>
(O) monitoring the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation
of an Officer's Certificate and obtaining the Opinion of Counsel
and the Independent Certificate (as defined in the Indenture)
related thereto (Section 4.01);
(P) fixing or causing to be fixed any specified record
date and the notification of the Indenture Trustee and
Noteholders with respect to special payment dates, if any
(Section 5.04(d));
(Q) removing the Indenture Trustee and petitioning a court
of competent jurisdiction for the appointment of a successor
Indenture Trustee (Section 6.08);
(R) furnishing the Indenture Trustee with the names and
addresses of the Noteholders during any period when the Indenture
Trustee is not the Note Registrar (Section 7.01);
(S) preparing and, after execution by the Issuer and the
Indenture Trustee, filing with the Commission and any applicable
state agencies of documents required to be filed on a periodic
basis with the Commission and any applicable state agencies
(including any summaries thereof required by rules and
regulations prescribed thereby), and transmitting of such
summaries to the Noteholders (Section 7.03);
(T) preparing any Issuer Request and Officer's Certificates
and obtaining any Opinions of Counsel and Independent
Certificates necessary for the release of the Trust Estate
(Section 8.04);
(U) preparing Issuer Orders and obtaining Opinions of
Counsel with respect to the execution of any supplemental
indentures, and mailing notices to the Noteholders with respect
thereto (Sections 9.01, 9.02 and 9.03);
(V) executing and delivering new Notes conforming to the
provisions of any supplemental indenture, as appropriate
(Section 9.06);
(W) notifying Noteholders of any redemption of the Notes
or causing the Indenture Trustee to provide such notice (Sections
10.01 and 10.02);
(X) preparing all Officer's Certificates, Opinions of
Counsel and Independent Certificates with respect to any requests
by the Issuer to the Indenture Trustee to take any action under
the Indenture (Section 11.01(a));
4
<PAGE>
(Y) preparing and delivering Officer's Certificates and
obtaining Independent Certificates, if necessary, for the release
of property from the lien of the Indenture (Section 11.01(b));
(Z) notifying the Rating Agencies, upon any failure of the
Indenture Trustee to give such notification, of the information
required pursuant to Section 11.04 of the Indenture (Section
11.04);
(AA) preparing and delivering to the Noteholders and the
Indenture Trustee any agreements with respect to alternate
payment and notice provisions (Section 11.06); and
(BB) recording the Indenture, if applicable (Section 11.14).
(ii) The Administrator also will:
(A) pay the Indenture Trustee from time to time the
reasonable compensation provided for in the Indenture with
respect to services rendered by the Indenture Trustee under the
Indenture (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an
express trust);
(B) reimburse the Indenture Trustee upon its request for
lal reasonable expenses, disbursements and advances incurred
or made by the Indenture Trustee in accordance with any
provision of the Indenture (including the reasonable
compensation, expenses and disbursements of its agents and
counsel) to the extent the Indenture Trustee is entitled to
such reimbursement by the Issuer under the Indenture;
(C) indemnify the Indenture Trustee for, and hold it
harmless against, any losses, liability or expense incurred
without negligence or bad faith on the part of the Indenture
Trustee, arising out of or in connection with the acceptance
or administration of the trusts and duties contemplated by the
Indenture, including the reasonable costs and expenses of
defending themselves against any claim or liability in
connection therewith to the extent the Indenture Trustee is
entitled to such indemnification from the Issuer under the
Indenture; and
(D) indemnify the Owner Trustee for, and hold it harmless
against, any loss, liability or expense incurred without
negligence or bad faith on the part of the Owner Trustee,
arising out of or in connection with the acceptance or
administration of the transactions contemplated by the Basic
Documents, including the reasonable costs and expenses of
defending themselves against any claim or liability in
connection with the exercise or performance of any of their
powers or duties under the Trust Agreement.
5
<PAGE>
(b) ADDITIONAL DUTIES.
(i) In addition to the duties of the Administrator set forth
above, the Administrator shall perform such calculations, and shall
prepare for execution by the Issuer or the Owner Trustee or shall
cause the preparation by other appropriate persons of all such
documents, reports, filings, instruments, certificates and opinions as
it shall be the duty of the Issuer or the Owner Trustee to prepare,
file or deliver pursuant to the Basic Documents, and at the request of
the Owner Trustee shall take all appropriate action that it is the
duty of the Issuer or the Owner Trustee to take pursuant to the Basic
Documents. Subject to Section 5 of this Agreement, and in accordance
with the reasonable written directions of the Owner Trustee, the
Administrator shall administer, perform or supervise the performance
of such other activities in connection with the Collateral (including
the Basic Documents) as are not covered by any of the foregoing
provisions and as are expressly requested by the Owner Trustee and are
reasonably within the capability of the Administrator.
(ii) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Administrator shall be responsible for
promptly notifying the Owner Trustee in the event that any withholding
tax is imposed on the Issuer's payments (or allocations of income) to
a Certificateholder as contemplated in Section 5.02(c) of the Trust
Agreement. Any such notice shall specify the amount of any
withholding tax required to be withheld by the Owner Trustee pursuant
to such provision.
(iii) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Administrator shall be responsible for
performance of the duties of the Owner Trustee set forth in Section
5.04(a), (b), (c) and (d) of the Trust Agreement with respect to,
among other things, accounting and reports to the Certificate Owners;
PROVIDED, HOWEVER, that the Owner Trustee shall remain exclusively
responsible for the distribution of the Schedule K-1s necessary to
enable each Certificate Owner to prepare its federal and state income
tax returns.
(iv) The Administrator shall satisfy its obligations with
respect to clauses (ii) and (iii) above by retaining, at the expense
of the Issuer payable by the Administrator, a firm of independent
public accountants (the "Accountants") acceptable to the Owner Trustee
which shall perform the obligations of the Administrator thereunder.
In connection with paragraph (ii) above, the Accountants will provide
prior to [_________________], a letter in form and substance
satisfactory to the Owner Trustee as to whether any tax withholding is
then required and, if required, the procedures to be followed with
respect thereto
6
<PAGE>
to comply with the requirements of the Code. The Accountants shall be
required to update the letter in each instance that any additional tax
withholding is subsequently required or any previously required tax
withholding shall no longer be required.
(v) The Administrator shall perform the duties of the
Administrator specified in Section 10.02 of the Trust Agreement
required to be performed in connection with the resignation or removal
of the Owner Trustee, and any other duties expressly required to be
performed by the Administrator under the Trust Agreement.
(vi) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into
transactions with or otherwise deal with any of its Affiliates;
PROVIDED, HOWEVER, that the terms of any such transactions or dealings
shall be in accordance with any directions received from the Issuer
and shall be, in the Administrator's opinion, no less favorable to the
Issuer than would be available from unaffiliated parties.
(c) NON-MINISTERIAL MATTERS.
(i) With respect to matters that in the reasonable judgment of
the Administrator are non-ministerial, the Administrator shall not
take any action unless within a reasonable time before the taking of
such action the Administrator shall have notified the Owner Trustee of
the proposed action and the Owner Trustee shall not have withheld
consent or provided an alternative direction. For the purpose of the
preceding sentence, "non-ministerial matters" shall include, without
limitation:
(A) the amendment of the Indenture or execution of any
supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the
Issuer and the compromise of any action, claim or lawsuit brought
by or against the Issuer (other than in connection with the
collection of the Receivables);
(C) the amendment, change or modification of any of
the Basic Documents;
(D) the appointment of successor Note Registrars,
successor Paying Agents or successor Indenture Trustees pursuant
to the Indenture or the appointment of successor Administrators
or Successor Servicers, or the consent to the assignment by the
Note Registrar, Paying Agent or Indenture Trustee of its
obligations, in each case under the Indenture; and
(E) the removal of the Indenture Trustee.
7
<PAGE>
(ii) Notwithstanding anything to the contrary in this
Agreement, the Administrator shall not be obligated to, and shall not
(x) make any payments to the Noteholders under the Basic Documents,
(y) sell the Trust Estate pursuant to Section 5.04 of the Indenture or
(z) take any other action that the Issuer directs the Administrator
not to take on its behalf.
2. RECORDS. The Administrator shall maintain appropriate books of
account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Issuer, the Owner
Trustee and the Indenture Trustee at any time during normal business hours upon
reasonable advance written notice.
3. COMPENSATION. As compensation for the performance of the
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Administrator shall be entitled to a fee of
$200.00 per month which shall be solely an obligation of the Servicer.
4. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER. The
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
5. INDEPENDENCE OF THE ADMINISTRATOR. For all purposes of this
Agreement, the Administrator shall be an independent contractor and shall not be
subject to the supervision of the Issuer, the Owner Trustee or the Indenture
Trustee with respect to the manner in which it accomplishes the performance of
its obligations hereunder. Unless expressly authorized by the Issuer hereunder
or otherwise, the Administrator shall have no authority to act for or represent
the Issuer, the Owner Trustee or the Indenture Trustee, and shall not otherwise
be or be deemed an agent of the Issuer, the Owner Trustee or the Indenture
Trustee.
6. NO JOINT VENTURE. Nothing contained in this Agreement shall (i)
constitute the Administrator and any of the Issuer, the Owner Trustee or the
Indenture Trustee as members of any partnership, joint venture, association,
syndicate, unincorporated business or other separate entity, (ii) be construed
to impose any liability as such on any of them or (iii) be deemed to confer on
any of them any express, implied or apparent authority to incur any obligation
or liability on behalf of the others.
7. OTHER ACTIVITIES OF ADMINISTRATOR. Nothing herein shall prevent the
Administrator or its Affiliates from engaging in other businesses or, in its or
their sole discretion, from acting as an administrator for any other person or
entity, or in a similar capacity therefor, even though such person or entity may
engage in business activities similar to those of the Issuer, the Owner Trustee
or the Indenture Trustee.
8. TERM OF AGREEMENT; RESIGNATION AND REMOVAL OF ADMINISTRATOR.
(a) This Agreement shall continue in force until the dissolution of
the Issuer, upon which event this Agreement shall automatically terminate.
8
<PAGE>
(b) Subject to Sections 8(e) and 8(f), the Administrator may resign
by providing the Issuer with at least 30 days' prior written notice.
(c) Subject to Sections 8(e) and 8(f), the Issuer may remove the
Administrator without cause by providing the Administrator at least 30
days' prior written notice.
(d) Subject to Sections 8(e) and 8(f), at the sole option of the
Issuer, the Administrator may be removed immediately upon written notice of
termination from the Issuer to the Administrator if any of the following
events shall occur:
(i) the Administrator shall fail to perform in any material
respect any of its duties under this Agreement and, after notice of
such default, shall not cure such default within 10 days (or, if such
default cannot be cured in such time, shall not give within such 10
days such assurance of timely and complete cure as shall be reasonably
satisfactory to the Issuer);
(ii) 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 trustee in bankruptcy, conservator, receiver or
liquidator for the Administrator in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of their respective
affairs, and the continuance of any such decree or order unstayed and
in effect for a period of 90 consecutive days; or
(iii) the consent by the Administrator to the appointment of a
trustee in bankruptcy, conservator or receiver or liquidator in any
bankruptcy, insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or relating to the
Administrator of or relating to substantially all of their property,
or the Administrator 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.
The Administrator agrees that if any of the events specified in
clauses (ii) or (iii) of this Section shall occur, it shall give written
notice thereof to the Issuer, the Owner Trustee and the Indenture Trustee
within seven days after the occurrence of such event.
(e) No resignation or removal of the Administrator pursuant to this
Section shall be effective until (i) a successor Administrator shall have
been appointed by the Issuer and (ii) such successor Administrator shall
have agreed in writing to be bound by the terms of this Agreement on
substantially the same terms as the Administrator is bound hereunder.
(f) The appointment of any successor Administrator shall be effective
only after each Rating Agency has provided to the Owner Trustee and the
Indenture Trustee
9
<PAGE>
written notice that the proposed appointment will not result in the
reduction or withdrawal of any rating then assigned by such
Rating Agency to any Class of Notes or the Class C Certificates.
(g) Subject to Section 8(e) and 8(f), the Administrator acknowledges
that upon the appointment of a Successor Servicer pursuant to the Sale and
Servicing Agreement, the Administrator shall immediately resign and such
Successor Servicer shall automatically succeed to the rights, duties and
obligations of the Administrator under this Agreement.
9. ACTION UPON TERMINATION, RESIGNATION OR REMOVAL. Promptly upon the
effective date of termination of this Agreement pursuant to Section 8(a) or the
resignation or removal of the Administrator pursuant to Section 8(b) or (c) or
(d), the Administrator shall be entitled to be paid all fees and reimbursable
expenses accruing to it to the date of such termination, resignation or removal.
The Administrator shall forthwith upon such termination pursuant to Section 8(a)
deliver to or to the order of the Issuer all property and documents of or
relating to the Collateral then in the custody of the Administrator. In the
event of the resignation or removal of the Administrator pursuant to Section
8(b) or (c) or (d), the Administrator shall cooperate with the Issuer and take
all reasonable steps requested to assist the Issuer in making an orderly
transfer of the duties of the Administrator.
10. NOTICES. Any notice, report or other communication given hereunder
shall be in writing and addressed as follows:
(a) if to the Issuer or the Owner Trustee, to:
Nissan Auto Receivables [_____-___] Owner Trust
In care of: ________________________
[_________________________________]
Attention: Nissan Auto Receivables [_____-___] Owner Trust
with a copy to
Nissan Auto Receivables [_____-___] Owner Trust
In care of: Nissan Motor Acceptance Corporation
990 West 190th Street
Torrance, California 90502
Attention: Joy Crose, General Counsel
(b) if to the Administrator, to:
Nissan Motor Acceptance Corporation
990 West 190th Street
Torrance, California 90502
Attention: Joy Crose, General Counsel
(c) if to the Indenture Trustee, to:
10
<PAGE>
[_________________________________]
[_________________________________]
[_________________________________]
Attention: Nissan Auto Receivables [___-___] Owner Trust
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed
given if such notice is mailed by certified mail, postage prepaid, or hand
delivered to the address of such party as provided above.
11. AMENDMENTS. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Issuer, the Administrator,
the Owner Trustee and the Indenture Trustee, without the consent of any
Noteholders or the Certificateholders, for the purpose of adding any provisions
to or modifying or changing in any manner or eliminating any of the provisions
of this Agreement; PROVIDED that such amendment does not and will not, in the
Opinion of Counsel satisfactory to the Indenture Trustee, materially and
adversely affect the interest of any Noteholder or Certificateholder. This
Agreement may also be amended from time to time by the Issuer, the
Administrator, the Owner Trustee and the Indenture Trustee with the consent of
(i) the holders of Notes evidencing a majority of the Outstanding Amount of the
Controlling Class of Notes; or (ii) in the case of any amendment that does not
adversely affect the Indenture Trustee or the Noteholders (as evidenced by an
Opinion of Counsel satisfactory to the Indenture Trustee), the holders of the
Certificates evidencing a majority of the outstanding Certificate Balance of the
Controlling Class of Certificates (but excluding for purposes of calculation
and action all Certificates held by the Seller, the Servicer or any of their
Affiliates), for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of those Noteholders or Certificateholders which are not
covered by the immediately preceding sentence.
12. SUCCESSOR AND ASSIGNS. This Agreement may not be assigned by the
Administrator unless such assignment is consented to in writing by the Issuer,
the Owner Trustee and the Indenture Trustee, and the conditions precedent to
appointment of a successor Administrator set forth in Section 8 are satisfied.
An assignment with such consent and satisfaction, if accepted by the assignee,
shall bind the assignee hereunder in the same manner as the Administrator is
bound hereunder. Notwithstanding the foregoing, this Agreement may be assigned
by the Administrator without the consent of the Issuer, the Owner Trustee and
the Indenture Trustee to a corporation or other organization that is a successor
(by merger, consolidation or purchase of assets) to the Administrator, provided
that such successor organization executes and delivers to the Issuer, the Owner
Trustee and the Indenture Trustee an agreement in which such corporation or
other organization agrees to be bound hereunder by the terms of said assignment
in the same manner as the Administrator is bound hereunder. Subject to the
foregoing, this Agreement shall bind any successors or assigns of the parties
hereto.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
11
<PAGE>
14. HEADINGS. The section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
15. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which when so executed shall together constitute but one and the same agreement.
16. SEVERABILITY OF PROVISIONS. If any one or more of the agreements,
provisions or terms of this Agreement shall be for any reason whatsoever held
invalid or unenforceable in any jurisdiction, then such agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or the other rights of
the parties hereto.
17. NOT APPLICABLE TO NMAC IN OTHER CAPACITIES. Nothing in this Agreement
shall affect any obligation, right or benefit NMAC may have in any other
capacity or under any Basic Document.
18. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE TRUSTEE.
Notwithstanding anything contained herein to the contrary, this instrument has
been countersigned by [_________________], not in its individual capacity but
solely in its capacity as Owner Trustee of the Issuer, and [_________________],
not in its individual capacity but solely in its capacity as Indenture Trustee
under the Indenture and in no event shall [_________________] in its individual
capacity, [________________], in its individual capacity, or any
Certificateholder have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
12
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
NISSAN AUTO RECEIVABLES [____-___]
OWNER TRUST
By: [ ]
----------------------------
not in its individual capacity but solely as Owner
Trustee
By:
-----------------------------
Name:
Title:
[ ], not in its
------------------------------
individual capacity but solely as Indenture Trustee
By:
----------------------------
Name:
Title:
NISSAN MOTOR ACCEPTANCE
CORPORATION,
as Administrator
By:
----------------------------
Name:
Title:
S-1
<PAGE>
[ ]
------------------------------
, not in its individual capacity but solely as Owner
Trustee
By:
------------------------------
Name:
Title:
S-2
<PAGE>
EXHIBIT 4.7
Nissan Auto Receivables Corporation
990 West 190th Street
Torrance, California 90502
Dated as of
[______________]
YIELD SUPPLEMENT AGREEMENT
[NAME OF [INDENTURE] TRUSTEE]
[__________________]
[__________________]
Ladies and Gentlemen:
Nissan Auto Receivables Corporation (the "Company") hereby confirms
arrangements made as of the date hereof with you, as [Indenture] Trustee for the
benefit of [the Noteholders] [and] [the Class [__] Certificateholders], to be
effective upon (i) receipt by the Company of the enclosed copy of this letter
agreement (the "Yield Supplement Agreement"), executed by the [Indenture
Trustee] [Trustee], (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 [Sale] [Pooling] and Servicing Agreement, dated as of the
date hereof, among NMAC, in its individual capacity and as Servicer, the
Company, and [Nissan Auto Receivables ____-_____ Owner Trust, as Issuer] [[NAME
OF TRUSTEE], in its capacity as Trustee] (the "[Sale] [Pooling] and Servicing
Agreement").
1. On or prior to the [____] calendar day before each
Distribution Date, the Servicer shall notify the Company of the "Yield
Supplement Deposit" (as defined below) for such Distribution Date and the amount
on deposit in the Yield Supplement Account (as defined below). The "Yield
Supplement Deposit" means, with respect to any Distribution Date, the amount by
which (i) the aggregate amount of interest that would have been due during the
related Collection Period on all Yield Supplemented Receivables (as defined
below) if such Yield Supplemented Receivables bore interest at the Required Rate
(as defined below) exceeds (ii) the amount of interest accrued on such Yield
Supplemented Receivables at their respective APRs and due during such Collection
Period. "Required Rate" means, with respect to each Collection Period, [SPECIFY
RATE.] "Yield Supplemented Receivable" means any Receivable that has an APR less
than the Required Rate.
2. On or before the date hereof, the Company shall establish and
maintain with the [Indenture] Trustee for the benefit of [the Noteholders] [and]
[the Class [__] Certificateholders] a
<PAGE>
segregated trust account in the name of the [Indenture] Trustee (the "Yield
Supplement Account") [in accordance with the Securities Account Control
Agreement and the Indenture], or such other account as may be acceptable to
the Rating Agencies, and the Company hereby grants to the [Indenture] Trustee
for the benefit of [the Noteholders] [and] [the Class [__]
Certificateholders] a first priority security interest in the monies on
deposit and the other property that from time to time comprise the Yield
Supplement Account (including the Initial Yield Supplement Amount), and any
and all proceeds thereof (collectively, the "Yield Supplement Account
Property"). The [Relevant] Trustee shall possess all of the rights of a
secured party under the UCC with respect thereto; provided that income from
the investment of funds in the Yield Supplement Account and the right to
receive such income are retained by the Company and not transferred, assigned
or otherwise conveyed hereunder or under the [Sale] [Pooling] and Servicing
Agreement. The Yield Supplement Account Property and the Yield Supplement
Account shall be under the sole dominion and control of the [Relevant]
Trustee. Neither the Company nor any Person claiming by, through or under the
Company 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 Account
Property or the Yield Supplement Account (other than income from the
investment of funds in the Yield Supplement Account). All Yield Supplement
Account Property in the Yield Supplement Account shall be applied by the
[Relevant] Trustee as specified in this Yield Supplement Agreement and the
[Sale] [Pooling] and Servicing Agreement. The [Relevant]Trustee shall, not
later than 5:00 P.M., New York City time on the Business Day preceding each
Distribution Date, withdraw from the Yield Supplement Account (excluding net
investment income on Eligible Investments, which amounts are payable to the
Company therefrom) and deposit in the [Collection Account]
[Certificate Account] an amount equal to the Yield Supplement Deposit for
such Distribution Date.
On or prior to the date hereof, the Company shall deposit
$[___________] (the "Initial Yield Supplement Amount") into the Yield Supplement
Account. The amount required to be on deposit in the Yield Supplement Account on
the date of issuance of [the Notes] [and] [the Certificates] and for any
Distribution Date (the "Required Yield Supplement Amount"), as determined by the
Servicer and notified to the [Relevant] Trustee, means an amount equal to the
lesser of (i) the maximum aggregate Yield Supplement Deposit that will become
due hereunder, assuming that payments on the Receivables are made on their
scheduled due dates and no Receivable becomes a prepaid Receivable, or (ii) the
Initial Yield Supplement Amount. The [Relevant] Trustee shall have no duty or
liability to determine the Required Yield Supplement Amount and may fully rely
on the determination thereof by the Servicer. If, on any Distribution Date, the
funds in the Yield Supplement Account are in excess of the Required Yield
Supplement Amount for such Distribution Date after giving effect to all
distributions to be made on such Distribution Date, the [Relevant] Trustee shall
pay the Company the amount of such excess. The Yield Supplement Account shall
not be part of the Trust. It is the intent of the parties that the Yield
Supplement Account 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 Account Property and the Yield Supplement Account.
3. All or a portion of the Yield Supplement Account may be
invested and reinvested in the manner specified in Section [5.08] [5.01] of the
[Sale] [Pooling] and Servicing Agreement
2
<PAGE>
[with respect to monies in the Collection Account] in accordance with written
instructions from the Servicer; PROVIDED that, if permitted by the Rating
Agencies, monies on deposit therein may be invested in Eligible Investments
that mature later than the Business Day preceding the next Distribution Date.
All such investments shall be made in the name of the [Relevant] Trustee.
Earnings on investment of funds in the Yield Supplement Account shall be paid
to the Company on each Distribution Date, and losses and any investment
expenses shall be charged against the funds on deposit therein. Upon
termination of the trusts established under the [Trust Agreement and the
Indenture] [Pooling and Servicing Agreement], as directed in writing by
the Servicer, the [Relevant] Trustee will release to the Company any amounts
remaining on deposit in the Yield Supplement Account. If for any reason the
Yield Supplement Account [is no longer an Eligible Deposit Account] [no longer
satisfies the requirements relating to eligibility of accounts set forth in
Section 5.01 of the Pooling and Servicing Agreement], the [Relevant] Trustee
shall promptly cause the Yield Supplement Account to be moved to another
institution or otherwise changed so that the Yield Supplement Account [becomes
an Eligible Deposit Account] [complies with such requirements].
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 [Relevant] Trustee, prior to the
relevant Distribution Date.
5. Our agreements set forth in this Yield Supplement Agreement
are our primary obligations and such obligations are irrevocable, absolute and
unconditional, shall not be subject to any counterclaim, setoff or defense
(other than full and strict compliance by us with our obligations hereunder) and
shall remain in full force and effect without regard to, and shall not be
released, discharged or in any way affected by, any circumstances or condition
whatsoever.
6. In order to more fully protect the interests of [the
Noteholders] [and] [the Certificateholders], the Company will transfer, assign
and convey its interest in this Yield Supplement Agreement to the Nissan Auto
Receivables [____-____] [Owner] [Grantor] Trust established under the [Trust
Agreement] [Pooling and Servicing Agreement] (the "Trust"). Following such
transfer, assignment and conveyance, this Yield Supplement Agreement shall not
be amended, modified or terminated except in accordance with the provisions for
amendments, modifications and terminations of the [Sale] [Pooling] and Servicing
Agreement as set forth in Section [10.01] [13.01] of the [Sale] [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
3
<PAGE>
number or to the attention of such other person as the relevant party shall
have designated for such purpose in a written notice.
The Company:
Nissan Auto Receivables Corporation
990 West 190th Street
Torrance, California 90502
Attention: Treasurer
Facsimile No.: 310-324-2542
[Indenture] Trustee:
[_______________]
[_______________]
[_______________]
[_______________]
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.
[10. Each of the parties hereto agrees and acknowledges that all of
the rights and interests of the Indenture Trustee hereunder shall be
automatically transferred to the Owner Trustee, and the Owner Trustee shall
succeed to all such rights and interests, upon the payment in full of the Notes
in accordance with the terms of the Indenture and the Sale and Servicing
Agreement.]
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 [_________,____]
NISSAN MOTOR ACCEPTANCE CORPORATION
By: _____________________________________
4
<PAGE>
Name:
Title:
[INDENTURE TRUSTEE] [TRUSTEE]
AS [INDENTURE] TRUSTEE
By: _____________________________________
Name:
Title:
5
<PAGE>
EXHIBIT 5.1(a)
[LETTERHEAD OF O'MELVENY & MYERS LLP]
August 13, 1999
Nissan Auto Receivables Corporation
Nissan Motor Acceptance Corporation
Nissan Auto Receivables Trusts
990 West 190th Street
Torrance, California 90502
Re: Nissan Auto Receivables Corporation
Nissan Motor Acceptance Corporation
Nissan Auto Receivables Trusts
Registration Statement on Form S-3
Registration No. 333-82763
Ladies and Gentlemen:
We have acted as special counsel to Nissan Auto Receivables
Corporation ("NARC"), a Delaware corporation and wholly owned limited purpose
subsidiary of Nissan Motor Acceptance Corporation, a California corporation,
and certain trusts, all of the beneficial ownership of which will initially
be owned by NARC (together with NARC, each an "Issuer"), in connection with
the proposed issuance of $3,000,000,000 aggregate principal amount of
asset-backed notes (the "Notes") to be offered pursuant to a registration
statement on Form S-3 (such registration statement, as amended, the
"Registration Statement") relating to the Notes. The Registration Statement
has been filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "1933 Act"), and the rules and
regulations promulgated thereunder. The Notes for each series will be issued
under and pursuant to an indenture between the applicable Issuer and the
Indenture Trustee (as defined therein). The indenture in the form filed with
the Securities and Exchange Commission on August 13, 1999, as an exhibit to
the Registration Statement, is herein referred to as the "Indenture."
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of the organizational documents of the
Issuers, the Indenture, the form of Notes included as an exhibit to the
Indenture, and such other records, documents and certificates of the Issuers
and public officials and other instruments as we have deemed necessary for
the purpose of this opinion. In addition, we have assumed that the Indenture
as completed for each series will be duly executed and delivered by the
parties thereto; that the Notes as completed for each series will be duly
executed and delivered substantially in the forms contemplated by the
<PAGE>
Indenture; and that the Notes for each series will be sold as described in
the Registration Statement.
Based upon the foregoing, we are of the opinion that:
The Notes are in due and proper form and, assuming the due
authorization, execution and delivery of the Indenture by the applicable Issuer
and the Indenture Trustee, and the due authorization of the Notes for each
series by all necessary action on the part of the applicable Issuer, when the
Notes for each series have been validly executed, authenticated and issued in
accordance with the applicable Indenture and delivered against payment therefor,
the Notes for each series will be valid and binding obligations of the
applicable Issuer, enforceable against the applicable Issuer in accordance with
their terms, subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally
(including, without limitation, fraudulent conveyance laws), and general
principles of equity, including without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
The opinions expressed above are limited to the federal laws of the
United States of America and the laws of the State of New York (excluding choice
of law principles therein). We express no opinion herein as to the laws of any
other jurisdiction and no opinion regarding the statutes, administrative
decisions, rules, regulations or requirements of any county, municipality,
subdivision or local authority of any jurisdiction.
We consent to the filing of this letter as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Opinions" in the Prospectus and the Prospectus Supplement, without
admitting that we are "experts," within the meaning of the 1933 Act or the rules
or regulations of the Securities and Exchange Commission thereunder, with
respect to any part of the Registration Statement, including this exhibit.
Respectfully submitted,
/s/ O'MELVENY & MYERS LLP
<PAGE>
EXHIBIT 5.1(b)
[LETTERHEAD OF O'MELVENY & MYERS LLP]
August 13, 1999
Nissan Auto Receivables Corporation
Nissan Motor Acceptance Corporation
Nissan Auto Receivables Trusts
990 West 190th Street
Torrance, California 90502
Re: Nissan Auto Receivables Corporation
Nissan Motor Acceptance Corporation
Nissan Auto Receivables Trusts
Registration Statement on Form S-3
Registration No. 333-82763
Ladies and Gentlemen:
We have acted as special counsel to Nissan Auto Receivables
Corporation ("NARC"), a Delaware corporation and wholly owned limited purpose
subsidiary of Nissan Motor Acceptance Corporation, a California corporation
("NMAC"), and certain trusts, all of the beneficial ownership of which will
initially be owned by NARC (together with NARC, each an "Issuer"), in
connection with the proposed issuance of $3,000,000,000 aggregate principal
amount of asset-backed certificates (the "Certificates") to be offered
pursuant to a registration statement on Form S-3 (such registration
statement, as amended, the "Registration Statement") relating to the
Certificates. The Registration Statement has been filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"1933 Act"), and the rules and regulations promulgated thereunder.
The Certificates for each series will be issued under and pursuant
to a pooling and servicing agreement among the applicable Issuer, NMAC and
the Trustee (as defined therein) or a trust agreement between the applicable
Issuer and the Owner Trustee (as defined therein). The pooling and servicing
agreement in the form filed with the Securities and Exchange Commission on
August 13, 1999, as an exhibit to the Registration Statement, is herein
referred to as the "Pooling and Servicing Agreement." The trust agreement in
the form filed with the Securities and Exchange Commission on August 13,
1999, as an exhibit to the Registration Statement, is herein referred to as
the "Trust Agreement."
<PAGE>
We have examined originals or copies, certified or otherwise
identified to our satisfaction of the organizational documents of the
Issuers, the form of Pooling and Servicing Agreement, the Trust Agreement ,
the forms of Certificates included as exhibits to the Pooling and Servicing
Agreement and the Trust Agreement, and such other records, documents and
certificates of the Issuers and public officials and other instruments as we
have deemed necessary for the purpose of this opinion. In addition, we have
assumed that each of the Pooling and Servicing Agreement and the Trust
Agreement, as applicable, as completed for each series will be duly executed
and delivered by each of the respective parties thereto; that the
Certificates as completed for each series will be duly executed and delivered
substantially in the forms contemplated by the Pooling and Servicing
Agreement and the Trust Agreement, as applicable; and that the Certificates
for each series will be sold as described in the Registration Statement.
Based upon the foregoing, we are of the opinion that:
The Certificates are in due and proper form and, assuming the due
authorization, execution and delivery of the Pooling and Servicing Agreement and
the Trust Agreement, as applicable, by the parties thereto, and the due
authorization of the Certificates for each series by all necessary action on the
part of the applicable Issuer, when the Certificates for each series have been
validly executed, authenticated and issued in accordance with the Pooling and
Servicing Agreement or the Trust Agreement, as applicable, and delivered against
payment therefor, the Certificates for each series will be validly issued and
outstanding, fully paid and nonassessable, and entitled to the benefits of the
Pooling and Servicing Agreement or the Trust Agreement, as applicable, in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally (including, without limitation, fraudulent conveyance laws), and
general principles of equity, including without limitation, concepts of
materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
The opinions expressed above are limited to the federal laws of the
United States of America and the laws of the State of New York (excluding choice
of law principles therein). We express no opinion herein as to the laws of any
other jurisdiction and no opinion regarding the statutes, administrative
decisions, rules, regulations or requirements of any county, municipality,
subdivision or local authority of any jurisdiction.
We consent to the filing of this letter as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Opinions" in the Prospectus and the Prospectus Supplement, without
admitting that we are "experts," within the meaning of the 1933 Act or the rules
or regulations of the Securities and Exchange Commission thereunder, with
respect to any part of the Registration Statement, including this exhibit.
Respectfully submitted,
/s/ O'MELVENY & MYERS LLP
<PAGE>
EXHIBIT 8.1
[LETTERHEAD OF O'MELVENY & MYERS LLP]
August 13, 1999
Nissan Auto Receivables Corporation
Nissan Motor Acceptance Corporation
Nissan Auto Receivables Trusts
990 West 190th Street
Torrance, California 90502
Re: Nissan Auto Receivables Corporation
Nissan Motor Acceptance Corporation
Nissan Auto Receivables Trusts
Registration Statement on Form S-3
Registration No. 333-82763
Ladies and Gentlemen:
We have acted as special counsel to Nissan Auto Receivables
Corporation ("NARC"), a Delaware corporation and wholly owned limited purpose
subsidiary of Nissan Motor Acceptance Corporation, a California corporation
("NMAC"), and certain trusts, all of the beneficial ownership of which will
initially be owned by NARC (together with NARC, each an "Issuer"), in
connection with the proposed issuance of $3,000,000,000 aggregate principal
amount of asset-backed notes (the "Notes") and/or asset-backed certificates
(the "Certificates") to be offered pursuant to a registration statement on
Form S-3 (such registration statement, as amended, the "Registration
Statement") relating to the Notes and Certificates. The Registration
Statement has been filed with the Securities and Exchange Commission under
the Securities Act of 1933, as amended (the "1933 Act"), and the rules and
regulations promulgated thereunder.
The Notes for each series will be issued under and pursuant to an
indenture between the applicable Issuer and the Indenture Trustee (as defined
therein). The indenture in the form filed with the Securities and Exchange
Commission on August 13, 1999, as an exhibit to the Registration Statement, is
herein referred to as the "Indenture." The Certificates for each series will be
issued under and pursuant to a pooling and servicing agreement among the
applicable Issuer, NMAC and the Trustee (as defined therein) or a trust
agreement between the applicable Issuer and the Owner Trustee (as defined
therein). The pooling and servicing agreement in the form filed with the
Securities and Exchange Commission on August 13, 1999, as an exhibit to the
Registration Statement, is herein referred to as the "Pooling and Servicing
Agreement." The trust agreement in the form filed with the Securities and
Exchange
<PAGE>
Commission on August 13, 1999, as an exhibit to the Registration Statement,
is herein referred to as the "Trust Agreement."
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of the organizational documents of the Issuers, the
Indenture, the Pooling and Servicing Agreement, the Trust Agreement, the form of
Notes included as an exhibit to the Indenture, the forms of Certificates
included as exhibits to the Pooling and Servicing Agreement and the Trust
Agreement, and such other records, documents and certificates of the Issuers and
public officials and other instruments as we have deemed necessary for the
purpose of this opinion. In addition, we have assumed that each of the
Indenture, the Pooling and Servicing Agreement and the Trust Agreement, as
applicable, as completed for each series will be duly executed and delivered by
each of the respective parties thereto; that the Notes and Certificates as
completed for each series, as applicable, will be duly executed and delivered
substantially in the forms contemplated by the Indenture, the Pooling and
Servicing Agreement or the Trust Agreement, as applicable; and that the Notes
and Certificates for each series will be sold as described in the Registration
Statement.
In rendering this opinion letter, we express no opinion as to the laws
of any jurisdiction other than the United States Internal Revenue Code of 1986,
as amended (the "Code"), nor do we express any opinion, either implicitly or
otherwise, on any issue not expressly addressed below. In rendering this opinion
letter, we have not passed upon and do not pass upon the application of "doing
business" or the securities laws of any jurisdiction.
As special tax counsel to NARC and the Issuer, we have advised NARC and
the Issuer with respect to certain federal income tax aspects of the proposed
issuance of the Notes and the Certificates after the date hereof as described in
the Registration Statement. Such advice has formed the basis for the description
of selected federal income tax consequences for holders of the Notes and
Certificates that appears under the heading "Material Income Tax Consequences"
in the Prospectus. Such description does not purport to discuss all possible
income tax ramifications of the proposed issuance of the Notes and Certificates,
but with respect to those federal income tax consequences which are discussed,
in our opinion, the description is accurate.
The opinion expressed above is based on relevant provisions of the
Code, Treasury Regulations thereunder, and interpretations of the foregoing as
expressed in court decisions, administrative determinations, and legislative
history as of the date hereof. These provisions and interpretations are subject
to change, which may or may not be retroactive in effect, that might result in
modifications of our opinion.
We consent to the filing of this letter as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Material Income Tax Consequences" in the Prospectus and the Prospectus
Supplement, without admitting that we are "experts," within the meaning of the
1933 Act or the rules or regulations of the Securities and Exchange Commission
thereunder, with respect to any part of the Registration Statement, including
this exhibit.
Respectfully submitted,
/s/ O'MELVENY & MYERS LLP
<PAGE>
Filing pursuant to Registration
Statement number 333-82763
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
-----------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
- --- SECTION 305(b) (2)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
A U.S. NATIONAL BANKING ASSOCIATION 41-1592157
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national Identification No.)
bank)
SIXTH STREET AND MARQUETTE AVENUE
MINNEAPOLIS, MINNESOTA 55479
(Address of principal executive offices) (Zip code)
STANLEY S. STROUP, GENERAL COUNSEL
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
SIXTH STREET AND MARQUETTE AVENUE
MINNEAPOLIS, MINNESOTA 55479
(612) 667-1234
(Name,address and telephone number of Agent for Service)
-----------------------------
NISSAN AUTO RECEIVABLES 1999-A OWNER TRUST
(Exact name of obligor as specified in its charter)
DELAWARE APPLIED FOR
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
C/O CHASE MANHATTAN BANK DELAWARE
1201 MARKET STREET
WILMINGTON, DE 19801
(Address of principal executive offices) (Zip code)
-----------------------------
ASSET BACKED NOTES OF NISSAN AUTO RECEIVABLES 1999-A OWNER TRUST
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Item 1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve System
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
Item 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the
trustee, describe each such affiliation.
None with respect to the trustee.
No responses are included for Items 3-14 of this Form T-1, pursuant to General
Instruction B, because the obligor is not in default as provided under Item 13.
Item 15. FOREIGN TRUSTEE. Not applicable.
Item 16. LIST OF EXHIBITS. List below all exhibits filed as a part of this
Statement of Eligibility.
Exhibit 1. a. A copy of the Articles of Association of the
trustee now in effect.*
Exhibit 2. a. A copy of the certificate of authority of the
trustee to commence business issued June 28,
1872, by the Comptroller of the Currency to
The Northwestern National Bank of
Minneapolis.*
b. A copy of the certificate of the Comptroller
of the Currency dated January 2, 1934,
approving the consolidation of The
Northwestern National Bank of Minneapolis
and The Minnesota Loan and Trust Company of
Minneapolis, with the surviving entity being
titled Northwestern National Bank and Trust
Company of Minneapolis.*
c. A copy of the certificate of the Acting
Comptroller of the Currency dated January
12, 1943, as to change of corporate title of
Northwestern National Bank and Trust Company
of Minneapolis to Northwestern National Bank
of Minneapolis.*
d. A copy of the letter dated May 12, 1983 from
the Regional Counsel, Comptroller of the
Currency, acknowledging receipt of notice of
name change effective May 1, 1983 from
Northwestern National Bank of Minneapolis to
Norwest Bank Minneapolis, National
Association.*
<PAGE>
e. A copy of the letter dated January 4, 1988
from the Administrator of National Banks for
the Comptroller of the Currency certifying
approval of consolidation and merger
effective January 1, 1988 of Norwest Bank
Minneapolis, National Association with
various other banks under the title of
"Norwest Bank Minnesota, National
Association."*
Exhibit 3. A copy of the authorization of the trustee to exercise
corporate trust powers issued January 2, 1934, by the
Federal Reserve Board.*
Exhibit 4. Copy of By-laws of the trustee as now in effect.*
Exhibit 5. Not applicable.
Exhibit 6. The consent of the trustee required by Section 321(b)
of the Act.
Exhibit 7. Consolidated Reports of Condition and Income of the
trustee as of June 30, 1999.
Exhibit 8. Not applicable.
Exhibit 9. Not applicable.
* Incorporated by reference to the corresponding numbered
exibits to the form T-1 filed as Exhibit 25 to registration
statement number 33-66026.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, Norwest Bank Minnesota, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Minneapolis and State of Minnesota on the 9th day of August, 1999.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
\s Marianna C. Stershic
Marianna C. Stershic
Assistant Vice President
<PAGE>
EXHIBIT 6
August 9, 1999
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal, State, Territorial, or District authorities
authorized to make such examination may be furnished by such authorities to the
Securities and Exchange Commission upon its request therefor.
Very truly yours,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
\s\ Marianna C. Stershic
Marianna C. Stershic
Assistant Vice President
