1
EXHIBIT 4.3
SALE AND SERVICING AGREEMENT
among
NISSAN AUTO RECEIVABLES ______-_ OWNER TRUST
as Issuer,
[NISSAN AUTO RECEIVABLES CORPORATION][NISSAN AUTO RECEIVABLES CORPORATION II],
as Seller,
and
NISSAN MOTOR ACCEPTANCE CORPORATION,
as Servicer
Dated as of [_______]
2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions..............................................................1
SECTION 1.02 Usage of Terms..........................................................21
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.01 Conveyance of Receivables...............................................21
SECTION 2.02 Custody of Receivables Files............................................22
SECTION 2.03 Acceptance by Issuer....................................................23
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.........................................27
SECTION 3.04 Instructions; Authority To Act..........................................28
SECTION 3.05 Custodian's Indemnification.............................................28
SECTION 3.06 Effective Period and Termination........................................28
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.01 Duties of Servicer......................................................29
SECTION 4.02 Collection of Receivable Payments.......................................30
SECTION 4.03 Realization upon Receivables............................................30
SECTION 4.04 Maintenance of Security Interests in Financed Vehicles..................30
SECTION 4.05 Covenants of Servicer...................................................31
SECTION 4.06 Purchase of Receivables upon Breach.....................................31
SECTION 4.07 Servicing Fee and Expenses..............................................32
SECTION 4.08 Servicer's Certificate..................................................32
SECTION 4.09 Annual Statement as to Compliance; Notice of Default....................32
SECTION 4.10 Annual Independent Certified Public Accountants' Report.................33
SECTION 4.11 Access to Certain Documentation and Information
Regarding Receivables...................................................33
SECTION 4.12 Appointment of Subservicer..............................................34
SECTION 4.13 Amendments to Schedule of Receivables...................................34
i
3
SECTION 4.14 Acknowledgement by Servicer of its Obligations
under the Indenture.....................................................34
ARTICLE V
DISTRIBUTIONS; ACCOUNTS; STATEMENTS TO THE CERTIFICATEHOLDERS
AND THE NOTEHOLDERS
SECTION 5.01 Establishment of Accounts...............................................34
SECTION 5.02 Collections.............................................................37
SECTION 5.03 Application of Collections..............................................38
SECTION 5.04 Advances................................................................38
SECTION 5.05 Additional Deposits.....................................................39
SECTION 5.06 Payments and Distributions..............................................39
SECTION 5.07 Reserve Account.........................................................44
SECTION 5.08 Yield Supplement Account................................................46
SECTION 5.09 Statements to Certificateholders and Noteholders........................47
SECTION 5.10 Net Deposits............................................................49
ARTICLE VI
THE SELLER
SECTION 6.01 Representations of Seller...............................................49
SECTION 6.02 Additional Covenants of the Seller......................................50
SECTION 6.03 Liability of Seller; Indemnities........................................52
SECTION 6.04 Merger or Consolidation of, or Assumption of the Obligations
of, Seller..............................................................53
SECTION 6.05 Limitation on Liability of Seller and Others............................54
SECTION 6.06 Seller May Own Certificates or Notes....................................54
ARTICLE VII
THE SERVICER
SECTION 7.01 Representations of Servicer.............................................55
SECTION 7.02 Indemnities of Servicer.................................................56
SECTION 7.03 Merger or Consolidation of, or Assumption of the Obligations of,
Servicer................................................................57
SECTION 7.04 Limitation on Liability of Servicer and Others..........................58
SECTION 7.05 NMAC Not To Resign as Servicer..........................................58
ARTICLE VIII
DEFAULT
SECTION 8.01 Servicer Default........................................................59
SECTION 8.02 Appointment of Successor................................................60
ii
4
SECTION 8.03 Repayment of Advances...................................................61
SECTION 8.04 Notification............................................................61
SECTION 8.05 Waiver of Past Defaults.................................................61
ARTICLE IX
TERMINATION; RELEASE OF RECEIVABLES
SECTION 9.01 Optional Purchase of All Receivables....................................62
SECTION 9.02 Release of Receivables..................................................62
SECTION 9.03 Termination.............................................................63
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Amendment...............................................................63
SECTION 10.02 Protection of Title to Trust............................................65
SECTION 10.03 Notices.................................................................67
SECTION 10.04 Assignment by the Seller or the Servicer................................67
SECTION 10.05 Limitations on Rights of Others.........................................67
SECTION 10.06 Severability............................................................67
SECTION 10.07 Separate Counterparts...................................................68
SECTION 10.08 Headings................................................................68
SECTION 10.09 Governing Law...........................................................68
SECTION 10.10 Assignment by Issuer....................................................68
SECTION 10.11 Nonpetition Covenants...................................................68
SECTION 10.12 Limitation of Liability of Owner Trustee and Indenture Trustee..........68
SCHEDULE A Schedule of Receivables
SCHEDULE B Location of the Receivable Files
EXHIBIT A Form of Yield Supplement Agreement
iii
5
SALE AND SERVICING AGREEMENT, dated as of [_______], among NISSAN AUTO
RECEIVABLES _____-_ OWNER TRUST, a Delaware business trust (the "Issuer"),
[NISSAN AUTO RECEIVABLES CORPORATION][NISSAN AUTO RECEIVABLES CORPORATION II], 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.
["Accumulation Account" is an account created pursuant to Section
5.01(e).]
"Administration Agreement" means the Administration Agreement, dated as
of [_______], among the Administrator, the Issuer and the Indenture Trustee.
"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.
"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.
"Administrator" means NMAC, or any successor Administrator under the
Administration Agreement.
1
6
"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 with respect to such Distribution
Date.
"Agreement" means this Sale and Servicing Agreement among Nissan Auto
Receivables [___-___] Owner Trust, as Issuer, [NARC][NARC II], as Seller, and
NMAC, as Servicer.
"AICPA" shall have the meaning assigned to such term in Section 4.10.
"Allocable Principal" means, for any Distribution Date, an amount equal
to the excess, if any, of (i) the sum of the Outstanding Amount of the Notes and
the Certificate Balance as of the close of business on the immediately preceding
Distribution Date over (ii) the Pool Balance as of the end of the related
Collection Period.
"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.
"Assignment" shall have the meaning assigned to such term in the
Purchase Agreement.
"Available Amounts" means, with respect to any Distribution Date, the
sum of Available Interest and Available Principal for such Distribution Date.
"Available Interest" means, for any Distribution Date, the sum of the
following amounts received during the related Collection Period: (i) that
portion of all collections on Receivables allocable to interest, (ii) without
duplication of amounts described in clause (i), Net Liquidation Proceeds to the
extent allocable to interest due on a Liquidated Receivable in accordance with
2
7
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 plus the sum of (x) reinvestment income on the
Yield Supplement Account and (y) the amount, if any, deposited into the
Collection Account pursuant to the second or third sentence of Section 5.08(b);
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 attributable to principal, (ii)
without duplication of amounts described in clause (i), Net Liquidation Proceeds
attributable to principal due on a Liquidated 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.
"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 close of business on the
last day of the immediately preceding Collection Period or, with respect to the
first Distribution Date, the Original Pool Balance.
"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.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York, Los Angeles, California,
Wilmington, Delaware or Minneapolis, Minnesota are authorized or obligated by
law, regulation, executive order or governmental decree to remain closed.
"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 allocable to
principal 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 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
3
8
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 the Indenture Trustee, as the case
may be, to be the Seller or the Servicer or any of their Affiliates.
"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 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 Certificate
Balance of such Class of Certificates.
"Certificate of Trust" shall have the meaning assigned to such term in
the Trust Agreement.
"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 Certificate
Registrar pursuant to the Trust Agreement recording the names of the
Certificateholders.
"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 for the related Interest Period.
"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 plus
any outstanding Certificateholders' Interest Carryover
4
9
Shortfall for such Class as of the close of 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
Allocable Principal for such Distribution Date.
"Certificateholders' Percentage" means the following: (i) for each
Distribution Date until the Distribution Date on which the principal amount of
all of the Notes has been paid in full, 0%; (ii) for the Distribution Date on
which the principal amount of all the Notes has been paid in full, the
percentage of Allocable Principal remaining after the Notes have been paid in
full; and (iii) 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 Carryover Shortfall is not used to determine
the amount of principal due on such Class on any Distribution Date, but is used
solely for reporting purposes.
"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, and (ii) on the Final Scheduled Distribution Date for such Class of
Certificates, if any, or upon the termination of the Trust, 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.
"Certificates" shall have the meaning assigned to such term in the Trust
Agreement.
"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.
5
10
"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.
"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 [_______].
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 5.01.
"Collection Period" means, with respect to any Distribution Date, the
preceding calendar month. Any amount stated "as of the close of business of the
last day of a Collection Period" shall give effect to the following calculations
as determined as of the end of the day on such last
6
11
day: (i) all applications of collections, (ii) all Advances and reductions of
Outstanding Advances and (iii) all distributions.
"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.
"Default" shall have the meaning assigned to such term in the Indenture.
"Defaulted Receivable" means a Receivable (other than an Administrative
Receivable or a Warranty Receivable), which, by its terms, is delinquent 120 or
more 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.
"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 succeeding 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 so 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, and for any account in
which deposits in excess of 30 days are to be made, so long as the Indenture
Trustee's or the Owner Trustee's long-term unsecured debt obligations have a
rating of at least "AA-" by Standard & Poor's (such short-term and long-term (if
7
12
applicable) ratings being, 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. Notwithstanding anything to the contrary, as
of the Closing Date, the Indenture Trustee shall be deemed to have met the
requirements in clause (i).
"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
8
13
"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));
(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
9
14
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;
(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 be denominated in U.S. dollars, shall not be purchased at a
premium, shall mature no later than the Business Day prior to the Distribution
Date immediately following the date of purchase, and
10
15
shall be required to be held to such maturity; and provided, further, that
notwithstanding clauses (i) through (viii) above, "Eligible Investments" shall
not include any security having an "r" subscript attached to its Standard &
Poor's rating.
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 Notes.
"Event of Default" shall have the meaning assigned to such term in the
Indenture.
"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][NARC II] or NMAC, or any
Person actually known to a Trust Officer to be an Affiliate of [NARC][NARC II]
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 unless [NARC][NARC II] or NMAC are the only holders.
"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 $[_____________] [in cash] [and
receivables with an aggregate principal balance of $[__________] as of [the
Cutoff Date] or other assets (including vehicle lease contracts)].
"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
11
16
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,
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" means, with respect to any Distribution Date and the
Class A-1 Notes, the period from (and including) the preceding Distribution Date
to (but excluding) such Distribution Date, except that the initial Interest
Period will be from (and including) the Closing Date to (but excluding)
[___________], and, with respect to any Distribution Date and the Class A-2
Notes, the Class A-3 Notes, the Class B Notes and the Certificates, the period
from (and including) the 15th day of the preceding calendar month to (but
excluding) the 15th day of the month in which such Distribution Date occurs,
except that the initial Interest Period will be from (and including) the Closing
Date to (but excluding) [___________].
"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.
"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 as to which the
related Financed Vehicle has been liquidated by the Servicer.
"Monthly Remittance Conditions" shall have the meaning assigned to such
term in Section 5.02.
"Moody's" means Xxxxx'x Investors Service, Inc.
"[NARC][NARC II]" means [Nissan Auto Receivables Corporation][Nissan
Auto Receivables Corporation II], 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.
12
17
"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.
"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 the
last day of the related Collection Period, 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 Noteholders' Monthly
Interest Distributable Amount for such Class plus any outstanding Noteholders'
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).
13
18
"Noteholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date, the Noteholders' Percentage of the Allocable
Principal for such Distribution Date.
"Noteholders' Percentage" means (i) for each Distribution Date until the
Distribution Date on which the aggregate principal amount of all of the Notes
has been paid in full, 100%; (ii) for the Distribution Date on which the Notes
have been paid in full, the percentage of Allocable Principal required to pay
all of the Notes in full; and (iii) 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 Distributable Amount 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 Carryover Shortfall is not used to determine the amount of principal
due on such Class on any Distribution Date, but is used solely for reporting
purposes.
"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, and (ii) 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.
"Notes" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes and the Class B Notes.
"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.
14
19
"Optional Purchase Percentage" means 10.00%.
"Optional Purchase Price" means an amount 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 a purchase pursuant to Section 9.01 is effected), 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 (less liquidated
expenses); provided, however, that the Optional Purchase Price shall be equal to
or greater than 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 of
the Class C Certificates for such Distribution Date.
"Original Certificate Balance" means $[_________] for the Class C
Certificates and $[_________] for the Class D Certificates.
"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" shall have the meaning assigned to that term in the
Indenture.
"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.
"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, after the Cutoff Date; security interests in the
Financed Vehicles and any accessions thereto; funds deposited in the Collection
Account; [the Yield Supplement Account and all funds deposited in the Yield
Supplement 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 right to receive payments in respect of
any Dealer Recourse with respect to the Receivables; all right, title and
interest of the Seller in and to the Purchase Agreement and the Assignment; all
right, title and interest of the Owner Trustee and the Trust pursuant to this
Agreement [, the Yield Supplement Agreement] and the
15
20
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.
"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, unless all of the Certificates or Notes, as the case may be, are
held or beneficially owned by NMAC, [NARC] [NARC II] or any of their Affiliates.
"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.
16
21
"Purchase Agreement" means that certain agreement, dated as of
[______________], between NMAC and the Seller, 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 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 (1) the [Class B Interest Rate] [weighted average Interest Rate of the Notes
and the Class C Pass-Through Rate] and (2) the Servicing Rate.
"Required Yield Supplement Amount" means, with respect to every
Distribution Date, an amount equal to the lesser of (i) the aggregate amount of
Yield Supplement Deposits that would become due for all future Distribution
Dates under the Yield Supplement Agreement, assuming (1) that payments on the
Receivables are made on their scheduled due dates, (2) that no
17
22
Receivable becomes a prepaid Receivable, and (3) a discount rate of [___]%, and
(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 as of [__________], 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.
"Securities Intermediary" shall have the meaning assigned to such term
in the Securities Account Control Agreement.
"Securityholders" has the meaning set forth in this Section 1.01 under
the definition of "Holder."
"Seller" means [NARC][NARC II], as the seller of the Receivables under
this Agreement, and each successor to [NARC][NARC II] (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 Default" means an event specified in Section 8.01.
"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.
"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
18
23
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 or 366, as appropriate.
"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 $______________, provided, however, that
in the event that on any Distribution Date (i) the annualized average for the
preceding three Collection Periods (or such smaller number of Collection Periods
as have elapsed since the Cutoff Date) of the percentage equivalents of the
ratios of net losses (i.e., the net balances of all Liquidated Receivables, less
any Net Liquidation Proceeds with respect to such Liquidated Receivables from
that or prior Collection Periods) to the Pool Balance as of the first day of
each such Collection Period exceeds [ ]% or (ii) the average for the preceding
three Collection Periods (or such smaller 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 Reserve 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 the greater of (i) $[__________] and (ii) [ ]% of the Outstanding
Amount of the Notes and the Certificate Balance as of the preceding Distribution
Date (after giving effect to payments of principal made on such Distribution
Date).
"Standard & Poor's" means Standard & Poor's Ratings Services, a Division
of the XxXxxx-Xxxx Companies Inc.
"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) during the related Collection Period.
"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).
19
24
"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.
["VPTN Proceeds Account" is an account created pursuant to Section
5.01(f).]
"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 such
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).
"Yield Supplement Agreement means that certain agreement, dated as of
[______________], among [NARC] [NARC II], NMAC, the Indenture Trustee and the
Trust, 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 (a) the aggregate amount of interest that would have been
due during the related Collection Period on all Yield Supplemented Receivables
if such Yield Supplemented
20
25
Receivables bore interest at the Required Rate exceeds (b) 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 Issuer, without
recourse (but subject to the Seller's obligations in this Agreement):
(i) all right, title and interest of the Seller in and to
the Receivables (including all related Receivable Files) 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 4.06 or 9.01) 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 the Financed Vehicles or the Obligors;
(iv) the right of the Seller through NMAC to receive
payments in respect of any Dealer Recourse with respect to the
Receivables;
(v) the rights of the Seller under the Purchase Agreement
and the Assignment;
21
26
(vi) 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;
(vii) 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;
(viii) all other assets comprising the Owner Trust Estate;
and
(ix) all proceeds of the foregoing.
On the Closing Date, the Seller shall deliver to, or to the order
of, the Issuer all property conveyed pursuant to this Section 2.01(a) except for
monies received in respect of the Receivables after the Cutoff Date and before
the Closing Date which shall be deposited by NMAC (in its individual capacity or
as the Servicer) into the Collection Account no later than the first Record Date
after the Closing Date. 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 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 Issuer, and
the Issuer shall have all the rights, powers and privileges of a secured party
under the UCC.
(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 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 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 between the Issuer and
the Indenture Trustee (on behalf of the Noteholders and the 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 Issuer, upon
the execution and delivery of
22
27
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 Issuer
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 Issuer. The Issuer acknowledges its
acceptance 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 Issuer holds
and shall hold such right, title and interest, upon the terms and conditions set
forth in this Agreement.
ARTICLE III
The Receivables
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 validly assigned pursuant to the Purchase Agreement by NMAC to
the Seller, which in turn has been validly assigned by the Seller to the
23
28
Issuer 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, (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 (v) provides for 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 [or Hawaii]) meeting the criteria of the Trust set forth in this
Agreement; and no selection procedures believed to be adverse to the
Securityholders were utilized in selecting the Receivables.
(c) Compliance with Law. Each Receivable, the origination of such
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 Xxxxxxxx-Xxxx 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, 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 Issuer, 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.
24
29
(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, the Seller
had good and marketable title to each Receivable free and clear of all Liens,
and immediately upon the transfer thereof, the Issuer, 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. Each
Receivable File contains the original certificate of title (or a photocopy or
image thereof) or evidence that an application for a certificate of title has
been filed.
(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 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.
25
30
(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.
(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.
(dd) No Further Amounts Owed on the Receivables. No further amounts are
owed by the Seller to any Obligor under the Receivables.
SECTION 3.02 Repurchase upon Breach. The Seller, the Servicer or the
Issuer, 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 the interests of the
26
31
Securityholders in 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 Issuer 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 the Securityholders' interest in which was 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 Trust,
the Indenture Trustee (by operation of the assignment of the Issuer'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, 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 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
27
32
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 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 Notes held or beneficially owned by NMAC,
[NARC][NARC II] or any of their Affiliates unless all of the Notes are held or
beneficially owned by NMAC, [NARC][NARC II] 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 Certificates, held or
beneficially owned by NMAC, [NARC][NARC II] or any of their Affiliates unless
all of the Certificates are held or beneficially owned by NMAC, [NARC][NARC II]
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
Issuer 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
28
33
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, but only if (i) 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, and (ii) the rescheduling or extension would
not modify the terms of such Receivable in a manner which would
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 an Obligor's 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 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.
29
34
(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 Issuer
(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 Issuer 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 Issuer 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, including those required under the Pennsylvania Motor Vehicle
Sales Finance Act and the Maryland Financial Institutions Article, 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 Maintenance of Security Interests in Financed Vehicles. The
Servicer shall, in accordance with its customary servicing procedures, take such
steps as are necessary to
30
35
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) The Servicer shall not do anything to impair the rights of
the Securityholders in the Receivables.
(c) Except with respect to Defaulted Receivables, Administrative
Receivables or Warranty Receivables, the Servicer shall not alter the APR of any
Receivable or forgive payments on a Receivable. Except as provided in Section
4.01, the Servicer shall not modify the number of payments under a Receivable,
increase the amount financed under a Receivable or extend the due date for any
payment on a Receivable.
(d) 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
Issuer 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
against the Servicer with respect to a breach by the Servicer of its obligations
under the second sentence of
31
36
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. 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, [the Swap Counterparty]
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 the 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 (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
32
37
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.
(a) 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 would result
in any lowering of the ratings described in Section 5.02(a)(ii)(A).
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
Certificateholder or Note Owner, the Owner Trustee or the Indenture Trustee, as
the case may be, shall promptly provide such Certificateholder 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 Certificateholder 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 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.
33
38
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.
SECTION 4.14 Acknowledgement by Servicer of its Obligations under the
Indenture. The Servicer hereby agrees and consents to the provisions of the
Indenture applicable to it (including, without limitation, Sections 8.03(a) and
8.03(b) thereof) and agrees to be bound by such provisions.
ARTICLE V
Distributions; Accounts;
Statements to the Certificateholders and the 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; provided that if (x) the Servicer shall have failed to give investment
directions for any funds on deposit in the Collection Account to the Indenture
Trustee by 5:00 p.m. Eastern Time (or such other time as may be agreed by the
Servicer and the Indenture Trustee) on any Business Day, or (y) 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 the
Indenture, or (z) if the 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 of the Indenture 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 Collection Account
in one or more
34
39
Eligible Investments specified in clauses (i), (iv) or (vi) of the definition of
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 distributions on the
Distribution Date. 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. 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.
(b) Earnings on investment of funds in the Collection Account shall be
paid to the Servicer 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 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 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
35
40
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.
[(e) The Servicer shall, prior to the Closing Date, establish and
maintain a segregated trust account in the name of the Indenture Trustee, which
shall be designated as the "Accumulation Account." The Accumulation Account
shall be held in trust for the benefit of the Noteholders. The Accumulation
Account shall be under the sole dominion and control of the Indenture Trustee;
provided that the Servicer may make deposits to and direct the Indenture Trustee
in writing to make withdrawals from the Accumulation Account in accordance with
the Basic Documents. All monies deposited from time to time in the Accumulation
Account shall be held by the Indenture Trustee as part of the Trust Property and
all deposits to and withdrawals from the Accumulation Account shall be made only
upon the terms and conditions of the Basic Documents.
All amounts held in the Accumulation Account shall, to the extent
permitted by applicable law, rules and regulations, be invested, as directed in
writing by the Servicer, by the bank or trust company then maintaining the
Accumulation Account in Eligible Investments that mature not later than the
Business Day immediately prior to the Distribution Date for the Collection
Period to which such amounts relate and such Eligible Investments shall be held
to maturity. All interest and other income on funds on deposit in the
Accumulation Account shall be withdrawn and deposited in the Collection Account
for distribution on each Distribution Date.
(f) The Servicer shall, prior to the Closing Date, establish and
maintain a segregated trust account in the name of the Indenture Trustee, which
shall be designated as the "VPTN Proceeds Account." The VPTN Proceeds Account
shall be held in trust for the benefit of the holders of the subclass of the
Class A Notes to be paid on its Targeted Scheduled Distribution Date from the
proceeds of issuance after the Closing Date of VPTNs deposited to such account
from time to time. The VPTN Proceeds Account shall be under the sole dominion
and control of the Indenture Trustee; provided that the Servicer may make
deposits to and direct the Indenture Trustee in writing to make withdrawals from
the VPTN Proceeds Account in accordance with the Basic Documents. All monies
deposited from time to time in the VPTN Proceeds Account shall be held by the
Indenture Trustee as part of the Trust Property and all deposits to and
withdrawals from the VPTN Proceeds Account shall be made only upon the terms and
conditions of the Basic Documents.]
36
41
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. 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. Notwithstanding the foregoing, for so long as (i) NMAC
is 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.
(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
37
42
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.
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
38
43
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 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) Notwithstanding anything to the contrary in this Agreement, for so
long as NMAC is the Servicer, 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, plus
reinvestment income on the Yield Supplement Account (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 12:00 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.
39
44
(b) On each Determination Date, the Servicer shall calculate the
Available Interest, the Available Principal, the Allocable Principal, the Yield
Supplement Deposit, 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 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 to be reimbursed
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 to
be reimbursed 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 the Distribution Date on which the Class A-1 Notes have
been paid in full and on each Distribution Date thereafter, 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
40
45
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 the Distribution Date on which the Class A-2 Notes have
been paid in full and on each Distribution Date thereafter, 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 the Distribution Date on which the Class A-3 Notes have
been paid in full and on each Distribution Date thereafter, 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 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 with respect to such Distribution Date, 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.
41
46
(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 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 to be reimbursed
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 to
be reimbursed 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) to the Class A-1 Noteholders, the Noteholders' Interest
Distributable Amount for such Class after giving effect to any reduction
in Available Amounts described in clause (iii) above;
(v) to the Class A-1 Noteholders, 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) on the Distribution Date on which the Class A-1 Notes have
been paid in full and on each Distribution Date thereafter, on a pro
rata basis (based on the amounts distributable pursuant to this clause
to each 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 clauses (iii)
through (v) above);
(vii) to 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) through (vi) above);
(viii) to the Class B Noteholders, the Noteholders' Interest
Distributable Amount for such Class; such amounts to be paid from
Available Amounts (after giving
42
47
effect to any reduction in Available Amounts described in clauses (iii)
through (vii) above);
(ix) 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 (viii)
above);
(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, 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 (x) above);
(xii) 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 (xi)
above);
(xiii) 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 (xii)
above); and
(xiv) 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
43
48
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, establish and maintain with the Securities
Intermediary a segregated trust account (the "Reserve Account") in the name of
the Indenture Trustee 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 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 amounts
in the Collection Account and/or Available Amounts, as the case may be, are
insufficient to fully fund the payments and distributions described in clauses
(i) through (x) of Section 5.06(c) or clauses (i) through (xi) of Section
5.06(d), the Relevant Trustee will withdraw amounts then on deposit in the
Reserve Account, 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
payment in full of the Notes under 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, and all rights to the Reserve Account and all
other collateral registered or held therein shall revert to the Seller in
accordance with the Securities Account Control Agreement. Upon any such
distribution to the Seller, the Issuer, Owner Trustee,
44
49
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; provided that if (x) the Servicer shall have failed to give
investment directions for any funds on deposit in the Reserve Account to the
Indenture Trustee by 5:00 p.m. Eastern Time (or such other time as may be agreed
by the Servicer and the Indenture Trustee) on any Business Day, or (y) 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 the
Indenture, or (z) the Notes shall have been declared due and payable following
an Event of Default, but amounts collected or receivable from the Trust Estate
are being applied pursuant to Section 5.05 of the Indenture 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 Reserve Account in one or more
Eligible Investments specified in clauses (i), (iv) or (vi) of the definition of
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. The Servicer will not
direct the Relevant Trustee to make any investment of any funds or to sell any
investment held in the Reserve 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 Relevant Trustee to make
any such investment or sale, if requested by the Relevant Trustee, the Servicer
shall deliver to the Relevant Trustee an Opinion of Counsel, acceptable to the
Relevant Trustee, to such effect. Earnings, if any, on investment of funds in
the Reserve Account shall be paid to the Seller, 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 hereby grants 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 to secure the payment
of interest on and principal of the Notes, 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
45
50
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 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 Owner Trustee will, pursuant to the Securities Account Control
Agreement and the Yield Supplement Agreement, establish and maintain with the
Securities Intermediary a segregated trust account (the "Yield Supplement
Account") in the name of the Indenture Trustee which will include the money and
other property deposited and held therein pursuant to the Yield Supplement
Agreement and this Section 5.08.
(b) On or prior to the Closing Date, the Seller shall [[make a capital
contribution to the Trust by depositing an amount equal to $___________]
[deposit an amount equal to $_________] [in cash] into the Yield Supplement
Account][, transfer retail installment sales contracts with an aggregate
principal balance, as of the Cut-Off Date, of $_________ to the Trust] [and
transfer receivables or other assets (including vehicle lease contracts) in an
amount, collectively, equal to $__________ to the Trust] ([the][collectively,]
"Initial Yield Supplement Amount"). [On each Distribution Date, the Servicer
will deposit payments received with respect to the retail installment sales
contracts referred to above into the Yield Supplement Account.] [On each
Distribution Date, the Servicer will deposit payments received with respect to
those receivables or other assets referred to above into the Yield Supplement
Account.] On each Distribution Date, to the extent amounts then on deposit in
the Yield Supplement Account are sufficient therefor, the Relevant Trustee will
withdraw amounts then on deposit in the Yield Supplement Account in an amount
equal to the Yield Supplement Deposit with respect to such Distribution Date 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 deposit such excess into the
Collection Account for distribution by the Relevant Trustee in accordance with
the terms of Section 5.06(c). Upon payment in full of the Notes under the
Indenture, as directed in writing by the Servicer, the Indenture Trustee will
release any amounts remaining on deposit in the Yield Supplement Account and all
other Collateral registered or held therein to the Owner Trustee for the benefit
of the Certificateholders, which amounts the Owner Trustee shall deposit into
the Trust Collection Account.
(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 ; provided that if (x) the Servicer shall have failed to give
investment directions for any funds on deposit in the
46
51
Yield Supplement Account to the Indenture Trustee by 5:00 p.m. Eastern Time (or
such other time as may be agreed by the Servicer and the Indenture Trustee) on
any Business Day, or (y) 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 the Indenture, or (z) the Notes shall have
been declared due and payable following an Event of Default, but amounts
collected or receivable from the Trust Estate are being applied pursuant to
Section 5.05 of the Indenture 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 Yield Supplement Account in one or more Eligible
Investments specified in clauses (i), (iv) or (vi) of the definition of 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. The Servicer will not
direct the Relevant Trustee to make any investment of any funds or to sell any
investment held in 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 Relevant
Trustee to make any such investment or sale, if requested by the Relevant
Trustee, the Servicer shall deliver to the Relevant Trustee an Opinion of
Counsel, acceptable to the Relevant Trustee, to such effect. Earnings, if any,
on investment of funds in the Yield Supplement Account shall be deposited in the
Collection Account 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.
(d) [The Trust, 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 Trust for federal income
tax and all other purposes.]
(e) Pursuant to the Yield Supplement Agreement and the Securities
Account Control Agreement, the Trust 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 Yield Supplement
Account (including the Initial Yield Supplement Amount) and the proceeds thereof
to secure the payment of interest on the Notes, and the Indenture Trustee shall
have all of the rights of a secured party under the UCC with respect thereto. 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.
47
52
(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 plus reinvestment income, if any, on the
Yield Supplement Account;
(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;
(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 the 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 the
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, and the aggregate
Certificate Balance, the Certificate Balance, the Certificate Factor and
the 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;
(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;
48
53
(xi) the amount of defaults and net losses on the Receivables for
the related Collection Period; and
(xii) the number of delinquencies on the Receivables as a
percentage of the number of Receivables.
(b) Copies of such statements may be obtained by the Certificateholders
or the 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. So long as NMAC is the Servicer, 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.
(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. The location of
the Seller's chief executive office and principal place of business is Torrance,
California.
(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 and has duly
authorized such sale and assignment to the Trust 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.
49
54
(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 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 Certificateholders, the Note Owners and
each Rating Agency that the Seller shall not issue any securities or deposit
assets into a trust that issues any securities, the issuance of which could
reasonably be expected to materially and adversely affect the rating of any
Class of Notes or the Class C Certificates 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 agreements 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.
50
55
(b) The Seller shall not do any of the following (without the prior
written consent of each Rating Agency (other than Moody's) (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 (other
than Moody's), the Owner Trustee and the Indenture Trustee shall, without any
exercise of its own discretion, also provide its written consent to the Seller
(promptly after the occurrence of any of the following, the Seller shall provide
notice of such occurrence to Moody's, so long as Xxxxx'x is then rating any
outstanding Notes or Certificates)):
(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 the issuance of any certificates or notes
(as defined in the Seller's Certificate of Incorporation), provided that
any such future indebtedness incurred in connection with the issuance of
any certificates or notes must be rated at least with the same ratings
given the outstanding certificates or notes secured or supported by
assets acquired by the Seller from NMAC by each nationally recognized
statistical rating organization that has rated such outstanding
certificates or notes or, prior to the issuing of such future
indebtedness incurred in connection with such certificates or notes, the
Seller shall have received confirmation from each nationally recognized
statistical rating organization that has rated such outstanding
certificates or notes that the ratings of such outstanding certificates
or notes will not be adversely affected by the issuance of such future
indebtedness; and (B) (i) any indebtedness to NMAC or any of its
Affiliates incurred in connection with the acquisition of receivables,
which indebtedness shall be fully subordinated (and which shall provide
for payment only after payment in respect of all outstanding rated debt)
and nonrecourse against any assets of the Seller other than the assets
pledged to secure such indebtedness, (ii) such indebtedness does not
constitute a claim against the Seller in the event the assets pledged to
secure such indebtedness are insufficient to pay such indebtedness,
(iii) holders of such indebtedness agree that they have no rights in any
assets of the Seller other than the assets pledged to secure such
indebtedness, and (iv) to the extent that any holder of such
indebtedness is deemed to have any interest in any assets of the Seller
other than the assets pledged to secure such indebtedness, holders of
such indebtedness agree that their interest is subordinate to claims or
rights of holders of other indebtedness issued by the Seller, and that
such agreement constitutes a subordination agreement for purposes of
Section 510(a) of the Bankruptcy Code;
(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 all obligations of the Seller, including those
obligations of the Seller under this Agreement and the Basic
Documents, and has
51
56
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
secured or supported by assets acquired by the Seller from NMAC
shall confirm in writing that the rating of such certificates or
notes shall not be adversely affected by such consolidation or
merger;
(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.
(5) cease to have an "Independent Director," as defined in the
Seller's charter;
(6) without the affirmative vote of at least one "Independent
Director," as defined in the Seller's charter, enter into any
transactions with the Servicer not in the ordinary course of business;
or
(7) modify any provision of Article Three, Article Four or
Article Fifteen of the Seller's Certificate of Incorporation, as
amended, in any material respect.
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.
(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
52
57
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 a 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).
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
53
58
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
Issuer and the Indenture Trustee, respectively, in the Receivables, and reciting
the details of such filings, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to 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 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
54
59
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 and shall survive the sale
of the Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(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 Trust and the Indenture Trustee. The location of the Servicer's chief
executive office and principal place of business is Torrance, California.
(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 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
55
60
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 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 Indenture Trustee of the duties of
Successor Servicer hereunder.
56
61
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 a 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 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 Issuer
57
62
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 perfect 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 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
58
63
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 or Holders of
Certificates evidencing not less than 25% of the Certificate Balance, 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 (including its obligation to purchase Receivables
pursuant to Section 4.06), which failure shall materially and adversely affect
the rights of the Certificateholders or the 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 or Holders of Certificates evidencing not less than 25%
of the Certificate Balance; 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 Notes held or beneficially owned by NMAC,
[NARC][NARC II] or any of their Affiliates unless all of the Notes are held or
beneficially owned by NMAC, [NARC][NARC II] or any of their Affiliates), acting
together as a single Class, 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
59
64
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 Indenture Trustee, the original Servicer hereunder
shall reimburse the Indenture 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 Indenture 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 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
60
65
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 Issuer 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 Issuer, the Indenture 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 the Certificateholders, and the
Indenture Trustee shall give prompt written notice thereof to Noteholders[, the
Swap Counterparty] 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][NARC II] or any of their Affiliates (unless
all of the Notes of such Class or the Certificates of such Class, as the case
may be, are held by NMAC, [NARC][NARC II] and their Affiliates), may, on behalf
of all the Noteholders and the 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 this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto.
61
66
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 Xxxxx'x, or if
NMAC shall then be unrated by Xxxxx'x, then the rating of Nissan Capital of
America, Inc., is less than "Bal" by Xxxxx'x, 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 under Section 5.06 and the Issuer will succeed to the rights 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 Issuer,
and the Indenture Trustee on behalf of the Noteholders, 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
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
62
67
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 Issuer 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
9.02.
(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 Issuer, 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, the Certificateholders or the Noteholders.
SECTION 9.03 Termination.
(a) The respective obligations of the Seller, the Servicer, NMAC (so
long as NMAC has rights or obligations hereunder), the Owner Trustee, and the
Indenture Trustee, as the case may be, pursuant to this Agreement shall
terminate upon the earliest of (i) the maturity or other liquidation of the last
Receivable and the final disposition of all amounts received upon liquidation of
any remaining Receivables, or (ii) the election by the Servicer to purchase the
corpus of the Trust as described in Section 9.01 and the payment or distribution
to Securityholders of all amounts required to be paid to them under the
Indenture or the Trust Agreement, as the case may be.
(b) Notice of any such termination under this Section 9.03 shall be
given by the Indenture Trustee or the Owner Trustee to each Securityholder of
record as specified in the Indenture or the Trust Agreement, as appropriate.
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
63
68
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 such amendment will not materially and adversely affect the
interest of any Securityholder.
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 (or, for
any period during which there is not more than one beneficial owner of a
Certificate, the Trust's status as an entity that is disregarded as an entity
separate from the Certificateholder) for federal income tax purposes, (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, and (z)
the Servicer has delivered the Officer's Certificate described in this Section
10.01(a).
(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,
unless all of the Certificates of such Class are 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
64
69
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.
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 the Certificateholders or
the 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
65
70
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.
(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 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
Trust 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
66
71
(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 Trust 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.
(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][Nissan Auto
Receivables Corporation II], 000 Xxxx 000xx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000,
Attention of Secretary ([(000) 000-0000)] [(000) 000-0000], (b) in the case of
the Servicer, to Nissan Motor Acceptance Corporation, 000 Xxxx 000xx Xxxxxx,
Xxxxxxxx, Xxxxxxxxxx 00000, Attention of Secretary ((000) 000-0000), (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 Xxxxx'x Investors Service, Inc., ABS Monitoring Department,
00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and (f) in the case of Standard &
Poor's, to Standard & Poor's Ratings Services, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000-0000, 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
67
72
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.
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 (other than Section 5-1401 of the General Obligations
Law of the State of New York), 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 the related property acquired hereunder 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, each of the
Servicer and the Owner Trustee (not in its individual capacity but solely as
Owner Trustee), prior to the date which is one year and one day after the Notes
are paid in full, covenants and agrees that it will not at any time file, join
in any filing of, or cooperate with or encourage others to file any bankruptcy,
reorganization arrangement, insolvency or liquidation proceeding, or other
proceeding 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
68
73
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.
69
74
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][NISSAN AUTO
RECEIVABLES CORPORATION II], 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
75
SCHEDULE A
SCHEDULE OF RECEIVABLES
(Delivered to the Trust on CD-ROM on the Closing Date)
76
SCHEDULE B
LOCATION OF THE RECEIVABLES FILES
1. NISSAN MOTOR ACCEPTANCE CORPORATION
0000 Xxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
2. NISSAN MOTOR ACCEPTANCE CORPORATION
000 X. 000xx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
3. IRON MOUNTAIN, INC.
0000 X. Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000
77
EXHIBIT A
FORM OF YIELD SUPPLEMENT AGREEMENT
