EXHIBIT 4.3
SALE AND SERVICING AGREEMENT
among
NISSAN AUTO RECEIVABLES ______-_ OWNER TRUST
as Issuer,
NISSAN AUTO RECEIVABLES CORPORATION II,
as Seller,
and
NISSAN MOTOR ACCEPTANCE CORPORATION,
as Servicer
Dated as of [_______]
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions....................................................1
SECTION 1.02 Usage of Terms................................................22
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.01 Conveyance of Receivables.....................................22
SECTION 2.02 Custody of Receivable Files...................................23
SECTION 2.03 Acceptance by Issuer..........................................24
ARTICLE III
THE RECEIVABLES
SECTION 3.01 Representations and Warranties of the Seller with
Respect to the Receivables....................................24
SECTION 3.02 Repurchase upon Breach........................................28
SECTION 3.03 Duties of Servicer as Custodian...............................29
SECTION 3.04 Instructions; Authority To Act................................29
SECTION 3.05 Custodian's Indemnification...................................29
SECTION 3.06 Effective Period and Termination..............................30
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.01 Duties of Servicer............................................30
SECTION 4.02 Collection of Receivable Payments.............................32
SECTION 4.03 Realization upon Receivables..................................32
SECTION 4.04 Maintenance of Security Interests in Financed Vehicles........32
SECTION 4.05 Covenants of Servicer.........................................32
SECTION 4.06 Purchase of Receivables upon Breach...........................33
SECTION 4.07 Servicing Fee and Expenses....................................33
SECTION 4.08 Servicer's Certificate........................................33
SECTION 4.09 Annual Statement as to Compliance; Notice of Default..........34
SECTION 4.10 Annual Independent Certified Public Accountants' Report.......35
SECTION 4.11 Access to Certain Documentation and Information
Regarding Receivables.........................................35
SECTION 4.12 Appointment of Subservicer....................................35
SECTION 4.13 Amendments to Schedule of Receivables.........................35
SECTION 4.14 Acknowledgement by Servicer of its Obligations under
the Indenture.................................................36
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ARTICLE V
DISTRIBUTIONS; ACCOUNTS; STATEMENTS TO THE
CERTIFICATEHOLDERS AND THE NOTEHOLDERS
SECTION 5.01 Establishment of Accounts.....................................36
SECTION 5.02 Collections...................................................38
SECTION 5.03 Application of Collections....................................40
SECTION 5.04 Advances......................................................40
SECTION 5.05 Additional Deposits...........................................41
SECTION 5.06 Payments and Distributions....................................42
SECTION 5.07 Reserve Account...............................................46
SECTION 5.08 Yield Supplement Account......................................48
SECTION 5.09 Statements to Certificateholders and Noteholders..............50
SECTION 5.10 Net Deposits..................................................51
ARTICLE VI
THE SELLER
SECTION 6.01 Representations of Seller.....................................51
SECTION 6.02 Additional Covenants of the Seller............................53
SECTION 6.03 Liability of Seller; Indemnities..............................55
SECTION 6.04 Merger or Consolidation of, or Assumption of the
Obligations of, Seller........................................56
SECTION 6.05 Limitation on Liability of Seller and Others..................57
SECTION 6.06 Seller May Own Certificates or Notes..........................57
ARTICLE VII
THE SERVICER
SECTION 7.01 Representations of Servicer...................................57
SECTION 7.02 Indemnities of Servicer.......................................59
SECTION 7.03 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer......................................60
SECTION 7.04 Limitation on Liability of Servicer and Others................61
SECTION 7.05 NMAC Not To Resign as Servicer................................61
ARTICLE VIII
DEFAULT
SECTION 8.01 Servicer Default..............................................62
SECTION 8.02 Appointment of Successor......................................63
SECTION 8.03 Repayment of Advances.........................................64
SECTION 8.04 Notification..................................................64
SECTION 8.05 Waiver of Past Defaults.......................................64
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ARTICLE IX
TERMINATION; RELEASE OF RECEIVABLES
SECTION 9.01 Optional Purchase of All Receivables..........................65
SECTION 9.02 Release of Receivables........................................65
SECTION 9.03 Termination...................................................66
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Amendment.....................................................66
SECTION 10.02 Protection of Title to Trust..................................68
SECTION 10.03 Notices.......................................................70
SECTION 10.04 Assignment by the Seller or the Servicer......................70
SECTION 10.05 Limitations on Rights of Others...............................70
SECTION 10.06 Severability..................................................71
SECTION 10.07 Separate Counterparts.........................................71
SECTION 10.08 Headings......................................................71
SECTION 10.09 Governing Law.................................................71
SECTION 10.10 Assignment by Issuer..........................................71
SECTION 10.11 Nonpetition Covenants.........................................71
SECTION 10.12 Limitation of Liability of Owner Trustee and
Indenture Trustee.............................................72
SECTION 10.13 Waivers.......................................................72
SCHEDULE A Schedule of Receivables
SCHEDULE B Location of the Receivable Files
EXHIBIT A Form of Yield Supplement Agreement
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SALE AND SERVICING AGREEMENT, dated as of [_______], among NISSAN AUTO
RECEIVABLES _____-_ OWNER TRUST, a Delaware business trust (the "Issuer"),
NISSAN AUTO RECEIVABLES CORPORATION II, a Delaware corporation, and NISSAN MOTOR
ACCEPTANCE CORPORATION, a California corporation, in its individual capacity (in
such capacity, "NMAC") and as Servicer (in such capacity, the "Servicer").
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.
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"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 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 [minus the Yield Supplement Purchase Price Adjustment Amount].
"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
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Proceeds to the extent allocable to interest due on a Liquidated Receivable in
accordance with the Servicer's customary servicing procedures, [and] (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.
"Bankruptcy Code" means the United States Bankruptcy Code, Title 11
United States Code.
"Base Servicing Fee" means the fee payable to the Servicer on each
Distribution Date 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
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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 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.
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"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 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 [for each Distribution Date,
100% minus the Noteholders' Percentage for such Distribution Date][(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, 100% minus
the sum of the Noteholders' Percentage and the Class D Certificateholders' Pro
Rata Percentage for such Distribution Date, (iii) for each Distribution Date
after the aggregate principal amount of all of the Notes has been paid in full
and until the Distribution Date on which the aggregate principal amount of all
of the Class C Certificates have been paid in full, 100% minus the Class D
Certificateholders' Pro Rata Percentage, and (iv) thereafter, 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.
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"Class A-1 Note" means any of the [__]% Asset Backed Notes, Class A-1,
issued under the Indenture.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note
is registered in the Note Register.
"Class A-2 Interest Rate" means [__]% per annum.
"Class A-2 Note" means any of the [__]% Asset Backed Notes, Class A-2,
issued under the Indenture.
"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 Certificateholders' Pro Rata Monthly Principal Distributable
Amount" means, with respect to any Distribution Date, the Certificateholders'
Percentage of the Allocable Principal for such Distribution Date.]
["Class D Certificateholders' Pro Rata Percentage" means (i) for any
Distribution Date after the Class A-1 Notes are paid in full until the Class C
Certificates are paid in full, the percentage equivalent of a fraction, the
numerator of which is the aggregate of the principal balances of the Class D
Certificates as of the Closing Date, and the denominator of which is the
aggregate of the principal balances of the Class A-2, Class A-3 and Class B
Notes and the Certificates as of the Closing Date, except that following (a) the
cessation of delinquencies or
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chargeoffs exceeding Specified Levels or (b) the rescission of an acceleration
of the Notes after an Event of Default, the Class D Certificateholders' Pro Rata
Percentage for subsequent Distribution Dates is 0%, and (ii) thereafter, 0%.]
"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 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) a Receivable (other than an
Administrative Receivable or a Warranty Receivable), which, by its terms, is
delinquent for 120 or more days, or (b) with respect to Receivables that are
delinquent for less than 120 days, the Servicer has (i) determined,
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in accordance with its customary servicing procedures, that eventual payment in
full is unlikely or (ii) repossessed the Financed Vehicle, or (iii) has received
notification that the related Obligor is subject to proceedings under Chapter 13
of the Bankruptcy Code.
"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
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;
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(iv) investments in money market funds having a rating from
each of the Rating Agencies in the highest investment category granted
thereby (including funds for which the Owner Trustee, the Indenture
Trustee or any of their respective Affiliates is investment manager or
advisor);
(v) bankers' acceptances issued by any depository institution
or trust company referred to in clause (ii) above;
(vi) repurchase obligations with respect to any security that
is a direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (ii);
(vii) repurchase obligations with respect to any security or
whole loan, entered into with (a) a depository institution or trust
company (acting as principal) described in clause (ii) above (except
that the rating referred to in the proviso in such clause (ii) shall be
"A-1" or higher in the case of Standard & Poor's) (such depository
institution or trust company being referred to in this definition as a
"financial institution"), (b) a broker/dealer (acting as principal)
registered as a broker or dealer under Section 15 of the Exchange Act
(a "broker/dealer"), the unsecured short-term debt obligations of which
are rated "P-1" by Moody's and at least "A-1" by Standard & Poor's at
the time of entering into such repurchase obligation (a "rated
broker/dealer"), (c) an unrated broker/dealer (an "unrated
broker/dealer"), acting as principal that is a wholly-owned subsidiary
of a non-bank holding company the unsecured short-term debt obligations
of which are rated "P-1" by Moody's and at least "A-1" by Standard &
Poor's at the time of entering into such repurchase obligation (a
"Rated Holding Company"), or (d) an unrated 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
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or Guaranteed Counterparty, such rating being that of the
related Rated Holding Company) shall be "A-1+";
(C) the repurchase obligation must mature within 30
days of the date on which the Indenture Trustee or the Owner
Trustee, as applicable, enters into such repurchase
obligation;
(D) the repurchase obligation shall not be
subordinated to any other obligation of the related financial
institution, rated broker/dealer, unrated broker/dealer or
Guaranteed Counterparty;
(E) the collateral subject to the repurchase
obligation is held, in the appropriate form, by a custodial
bank on behalf of the Indenture Trustee or the Owner Trustee,
as applicable;
(F) the repurchase obligation shall require that the
collateral subject thereto shall be marked to market daily;
(G) in the case of a repurchase obligation of a
Guaranteed Counterparty, the following conditions shall also
be satisfied:
(1) the Indenture Trustee or the Owner
Trustee, as applicable, shall have received an
Opinion of Counsel to the effect that the guarantee
of the related Rated Holding Company is a legal,
valid and binding agreement of the Rated Holding
Company, enforceable in accordance with its terms,
subject to the effect of bankruptcy, insolvency,
reorganization and moratorium or other similar laws
affecting creditors' rights generally and to general
equitable principles;
(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;
10
(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 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 [_______].
11
"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 II or NMAC, or any Person
actually known to a Trust Officer to be an Affiliate of 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 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 other assets]].
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a petition seeking entry of a decree or order for relief by a court
having jurisdiction in the premises in respect of such Person or all or
substantially all of its property in an involuntary case under any applicable
federal or state bankruptcy, insolvency or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for all or substantially all
of its property, or ordering the winding-up or liquidation of such Person's
affairs, and such petition 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) [__________].
12
"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 Moody's Investors Service, Inc.
"NARC II" means 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.
"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.
13
"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).
"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% [minus the Class D Certificateholders' Pro
Rata Percentage]: (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.
14
"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.
"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
Indenture Trustee (less liquidation 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.
15
"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; the Collection
Account and all 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 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
(reduced by the principal balance of any 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
16
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 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.
"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
17
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 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.
18
"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 II, as the seller of the Receivables under this
Agreement, and each successor to 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 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 Levels" means (as it relates to an event that has the
effect of changing priorities of certain payments and the applicable
Noteholders' Percentage and Certificateholders' Percentage) the occurrence, on
any Distribution Date, of (i) the annualized average for the preceding three
Collection Periods (or such smaller number of Collection Periods as have elapsed
since the Cut-off 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 Cut-off 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 [__]%.]
"Specified Reserve Account Balance" means initially $[________]with
respect to any Distribution Date, [and thereafter will be the lesser of
$[________] and the outstanding principal balances of the Notes and the
Certificates][, 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
19
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 Rating Services, a division
of The McGraw-Hill 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).
"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
20
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 Purchase Price Adjustment Amount" means, with
respect to any Distribution Date, the amount specified below with respect to
that Distribution Date:
[INSERT TABLE]]
["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 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 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.]
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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 promises 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;
(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;
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(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 Receivable Files. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Issuer, upon
the execution and delivery of this Agreement, appoints the Servicer, and the
Servicer accepts such appointment, to act as the agent of the Issuer as
custodian of the following documents or instruments that are hereby
constructively delivered to the Issuer with respect to each Receivable:
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(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 and other property 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 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
24
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
Magnuson-Moss Warranty Act, the Soldiers and Sailors Civil Relief Act
of 1940, the Federal Reserve Board's Regulations B and Z, and state
adaptations of the National Consumer Credit Protection Act and of the
Uniform Consumer Credit Code, state "Lemon Laws" designed to prevent
fraud in the sale of automobiles and other consumer credit laws and
equal credit opportunity and disclosure laws.
(d) Binding Obligation. Each Receivable represents the
genuine, legal, valid and binding payment obligation in writing of the
Obligor, enforceable by the holder thereof in accordance with its terms
subject to the effect of bankruptcy, insolvency, 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 the possession thereof 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
25
to fail to meet all of the other requirements and warranties made by
the Seller herein with respect thereto.
(h) No Defenses. No Receivable is subject to any right of
rescission, setoff, counterclaim or defense, including the defense of
usury, and the operation of any of the terms of any Receivable, or the
exercise of any right thereunder, will not render such Receivable
unenforceable in whole or in part or subject such Receivable to any
right of rescission, setoff, counterclaim or defense, including the
defense of usury, and no such right of rescission, setoff, counterclaim
or defense has been asserted with respect thereto.
(i) No Liens. To the Seller's knowledge, no liens have been
filed for work, labor or materials relating to a Financed Vehicle that
shall be liens prior to, or equal or coordinate with, the security
interest in the Financed Vehicle granted by the Receivable.
(j) No Default. Except for payment defaults continuing for a
period of not more than 29 days as of the Cutoff Date, no default,
breach, violation or event permitting acceleration under the terms of
any Receivable has occurred; and no continuing condition that with
notice or the lapse of time would constitute a default, breach,
violation or event permitting acceleration under the terms of any
Receivable has arisen (other than deferrals and waivers of late payment
charges or fees permitted hereunder).
(k) Insurance. NMAC, in accordance with its customary
procedures, has determined at the time of origination of each
Receivable that the related Obligor has agreed to obtain physical
damage insurance covering the Financed Vehicle and the Obligor is
required under the terms of the related Receivable to maintain such
insurance.
(l) Title. It is the intention of the Seller that the transfer
and assignment herein contemplated constitute a sale of the Receivables
from the Seller to the Trust and that the beneficial interest in and
title to the Receivables not be part of the Seller's estate in the
event of the filing of a bankruptcy petition by or against the Seller
under any bankruptcy law. Immediately prior to the transfer and
assignment herein contemplated, 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. To the extent the transfer and
assignment contemplated under this Agreement is deemed to be other than
a sale, this Agreement and all filings described under this Agreement
create a valid and continuing security interest (as defined in the
applicable UCC) in the Receivables in favor of the Issuer, which
security interest is prior to all other Liens, and is enforceable as
such as against creditors of and purchasers from the Seller.
(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.
26
(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 in a form suitable for filing.
(o) Chattel Paper. Each Receivable constitutes "tangible
chattel paper," as such term is defined in the UCC.
(p) Simple Interest Receivables. All of the Receivables are
Simple Interest Receivables.
(q) One Original. There is only one original executed copy of
each Receivable.
(r) No Amendments. No Receivable has been amended such that
the amount of the Obligor's Scheduled Payments has been increased.
(s) APR. The APR of each Receivable equals or exceeds [__%].
(t) Maturity. As of the Cutoff Date, each Receivable had a
remaining term to maturity of not less than [______] payments and not
greater than [______] payments.
(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) Receivable Files. The Receivable Files shall be kept at
one or more of the locations listed in Schedule B hereto. The
Receivable Files that constitute or evidence the Receivables do not
have any marks or notations indicating that they have been pledged,
assigned or otherwise conveyed by the Seller to any Person other than
the Issuer. All financing statements filed or to be filed against the
Seller in favor of the Issuer in connection herewith describing the
Receivables contain a statement to the
27
following effect: "A purchase of or security interest in any collateral
described in this financing statement, except as permitted in the Sale
and Servicing Agreement, will violate the rights of the Issuer."
(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.
(ee) No Pledge or Assignment of Receivables. Other than the
security interest granted to the Issuer pursuant to this Agreement, the
Seller has not pledged, assigned, sold, granted a security interest in,
or otherwise conveyed any of the Receivables. The Seller has not
authorized the filing of and is not aware of any financing statements
against the Seller that include a description of collateral covering
the Receivables other than any financing statement relating to the
security interest granted to the Issuer hereunder or a financing
statement as to which the security interest covering the Receivables
has been released. The Seller is not aware of any judgment or tax lien
filings against the Seller.
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 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.
28
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
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
29
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 II or any of their Affiliates unless all of the Notes are held or
beneficially owned by NMAC, 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 II or any of their Affiliates unless all of the Certificates
are held or beneficially owned by NMAC, 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 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
30
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 that 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.
(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.
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(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 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.
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(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 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
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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 the
last day of the third month after the end of each fiscal year of the
Servicer, beginning [________, ____], with respect to the prior fiscal
year (or with respect to the initial Officer's Certificate, the period
from the date of the initial issuance of the Securities to [_________,
_____]), stating that (i) a review of the activities of the Servicer
during the preceding 12-month (or shorter) period and of its
performance under this Agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on
such review, the Servicer has fulfilled all its obligations under this
Agreement throughout such twelve-month (or shorter) period, or, if
there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and
status thereof. A copy of such Officer's Certificate may be obtained by
any Certificateholder or Noteholder by a request in writing to the
Owner Trustee or the Indenture Trustee addressed as set forth in
Section 10.03 hereof.
(b) The Servicer shall deliver to the Owner Trustee, the
Indenture Trustee and each Rating Agency, promptly after having
obtained knowledge thereof, but in no event later than five Business
Days thereafter, written notice in an Officer's Certificate of any
event that with the giving of notice or lapse of time, or both, would
become a Servicer Default under Section 8.01. The Seller shall deliver
to the Owner Trustee, the Indenture Trustee and to each such Rating
Agency, promptly after having obtained knowledge thereof, but in no
event later than five Business Days thereafter, written notice in an
Officer's Certificate of any event that with the giving of notice or
lapse of time, or both,
34
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 the last day of the third month after the end of each
fiscal year of the Servicer, beginning [________, ____], with respect to the
prior fiscal year (or with respect to the initial reports, the period from the
date of the initial issuance of the Securities to [________, ____]) 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.
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
35
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 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; 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; provided, however, that such
investment shall be sold not later than the Business Day preceding the
next 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
36
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 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
37
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.]
SECTION 5.02 Collections.
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(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).
39
(d) Notwithstanding the foregoing, if a Monthly Remittance
Condition is not satisfied, the Servicer may utilize an alternative
remittance schedule (which may include the remittance schedule utilized
by the Servicer before the Monthly Remittance Condition became
unsatisfied), if the Servicer provides to the Owner Trustee and the
Indenture Trustee written confirmation from each Rating Agency that
such alternative remittance schedule will not result in the downgrading
or withdrawal by such Rating Agency of the ratings then assigned to any
Class of Notes or the Class C Certificates.
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.
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(b) The Servicer shall be entitled to reimbursement for
Outstanding Advances, without interest, with respect to a Receivable
from the following sources with respect to such Receivable pursuant to
Section 5.06(c)(i) or Section 5.06(d)(i): (i) subsequent payments made
by or on behalf of the related Obligor, (ii) Net Liquidation Proceeds,
and (iii) the Warranty Purchase Payments.
(c) To the extent that the Servicer has determined that any
Outstanding Advance is a Nonrecoverable Advance, the Servicer may
provide to the Owner Trustee and the Indenture Trustee an Officer's
Certificate setting forth the amount of such Nonrecoverable Advance,
and on the related Distribution Date, the Relevant Trustee shall remit
to the Servicer from funds on 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
41
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 [Class A-1] Noteholders to receive
distributions in respect of the [Class A-1] Notes to the extent
provided in this Section 5.06.
(b) On each Determination Date, the Servicer shall calculate
the Available Interest, the Available Principal, the 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);
42
(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, such amount to be paid from Available
Amounts (after giving effect to any reduction in Available Amounts
described in clauses (iii) through (vi) above), until the principal
amount of the Class A-2 Notes is reduced to zero;
(viii) on 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, 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) 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 (viii) above);
(x) 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 (ix) above), until the principal amount of the Class C
Certificates is reduced to zero;
(xi) 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 (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) [to the Class D Certificateholders, an amount
equal to the Class D Certificateholders' Pro Rata Monthly Principal
Distributable Amount, such amount to be paid from Available Amounts
(after giving affect to the reduction in Available Amounts described in
clauses (iii) through (xii) above);]
43
(xiv) after the Class C Certificates have been paid
in full, to the Class D Certificateholders, an amount equal to the
Certificateholders' Principal Distributable Amount for such Class, such
amount to be paid from Available Amounts (after giving effect to the
reduction in Available Amounts described in clauses (iii) through
(xiii) above); and
(xv) any Available Amounts remaining after giving
effect to the foregoing, to the Seller.
(d) Notwithstanding the provisions of Section 5.06(c), after
the occurrence of an Event of Default that results in the acceleration
of any Notes, on each Distribution Date, the Relevant Trustee shall
make the following payments and distributions from the Collection
Account (after payment of the Supplemental Servicing Fee to the extent
not previously retained by the Servicer) in the following order of
priority and in the amounts set forth in the Servicer's Certificate for
such Distribution Date; provided, however, that such payments and
distributions shall be made only from 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);
44
(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 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
45
be paid thereto pursuant to Section 5.06(c); provided, however, that
(i) the Class A-1 Notes are required to be paid in full on or before
the Final Scheduled Distribution Date for such Class, meaning that the
Class A-1 Noteholders are entitled to have received on or before such
date payments in respect of principal in an aggregate amount equal to
the Original Principal Amount for such Class, together with all
interest accrued thereon through such date; (ii) the Class A-2 Notes
are required to be paid in full on or before the Final Scheduled
Distribution Date for such Class, meaning that the Class A-2
Noteholders are entitled to have received on or before such date
payments in respect of principal in an aggregate amount equal to the
Original Principal Amount for such Class, together with all interest
accrued thereon through such date; (iii) the Class A-3 Notes are
required to be paid in full on or before the Final Scheduled
Distribution Date for such Class, meaning that the Class A-3
Noteholders are entitled to have received on or before such date
payments in respect of principal in an aggregate amount equal to the
Original Principal Amount for such Class, together with all interest
accrued thereon through such date; and (iv) the Class B Notes are
required to be paid in full on or before the Final Scheduled
Distribution Date for such Class, meaning that the Class B Noteholders
are entitled to have received on or before such date payments in
respect of principal in an aggregate amount equal to the Original
Principal Amount for such Class, together with all interest accrued
thereon through such date.
(f) Except with respect to the final payment upon retirement
of a Note or Certificate, the Servicer shall on each Distribution Date
instruct the Relevant Trustee to pay or distribute to each
Securityholder of record on the related Record Date by check mailed to
such Securityholder at the address of such Holder appearing in the
Certificate Register or Note Register, as the case may be, (or, if DTC,
its nominee or a Clearing Agency is the relevant Holder, by wire
transfer of immediately available funds or pursuant to other
arrangements), the amount to be paid or distributed to such
Securityholder pursuant to such Holder's Note or Certificate. With
respect to the final payment upon retirement of a Note or Certificate,
the Servicer shall on the relevant final Distribution Date instruct the
Relevant Trustee to pay or distribute the amounts due thereon only upon
delivery for cancellation of the certificate representing such Note or
Certificate in accordance with the Indenture or the Trust Agreement, as
the case may be.
SECTION 5.07 Reserve Account.
(a) In order to assure that certain amounts will be available
to make required payments to Noteholders, the Seller will, pursuant to
the Securities Account Control Agreement, 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
46
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,
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.
47
(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 Owner Trustee and the
Indenture Trustee for the benefit of the Noteholders and the Class C
Certificateholders a security interest in the Reserve Account and 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 Owner Trustee and the Indenture Trustee shall have all
of the rights of a secured party under the UCC with respect thereto;
provided that all income from the investment of funds in the Reserve
Account and the 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]
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.] 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
48
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 rights to the Yield Supplement
Account and all other collateral registered or held therein to the
Seller.
(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 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.
49
(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.
(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;
50
(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;
(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; [and]
(xiii) [the Yield Supplement Purchase Price
Adjustment Amount.]
(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
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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.
(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.
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(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.
(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 Moody's 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
53
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 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
54
(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 the "Restricted
Articles," as defined in the Seller's Certificate of Incorporation, 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 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.
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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 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
56
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
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.
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(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 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 Purchase Agreement, the
Certificates or the Notes; (ii) seeking to prevent the issuance of the
Certificates or the Notes or the consummation
58
of any of the transactions contemplated by this Agreement, the Trust
Agreement or the Indenture or the Purchase Agreement; (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 Purchase Agreement, 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.
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
59
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 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)
60
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 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.
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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
II or any of their Affiliates unless all of the Notes are held or beneficially
owned by NMAC, 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 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
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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 Receivable 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 established institution
having a net worth of not less than $100,000,000 and whose regular
business shall include the servicing of
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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 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 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.
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ARTICLE IX
Termination; Release of Receivables
SECTION 9.01 Optional Purchase of All Receivables.
(a) On each Distribution Date following the last day of a
Collection Period as of which the Pool Balance shall be less than or
equal to the Optional Purchase Percentage multiplied by the Original
Pool Balance, the Servicer or any successor to the Servicer shall have
the option to purchase the corpus of the Owner Trust Estate (whether or
not such assets then comprise all or a portion of the Trust Estate) for
an amount equal to the Optional Purchase Price. To exercise such
option, the Servicer or any successor to the Servicer shall notify the
Owner Trustee and the Indenture Trustee of its intention to do so in
writing, no later than the tenth day of the month preceding the month
in which the Distribution Date as of which such purchase is to be
effected and shall, on or before the Distribution Date on which such
purchase is to occur, deposit pursuant to Section 5.05 in the
Collection Account an amount equal to the Optional Purchase Price, and
shall succeed to all interests in and to the Trust Estate and the Owner
Trust Estate; provided, however, that the Servicer shall not effect any
such purchase so long as the rating of NMAC by Moody's, or if NMAC
shall then be unrated by Moody's, then the rating of Nissan Capital of
America, Inc., is less than "Bal" by Moody's, 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
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Receivable, and all security and any documents relating thereto, such
assignment being an assignment outright and not for security; and the
Seller or the Servicer, as applicable, shall thereupon own each such
Receivable, and all such related security and documents, free of any
further obligation to the Issuer, the Owner Trustee, the
Certificateholders, the Indenture Trustee or the Noteholders with
respect thereto.
(b) The 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
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any Noteholder or Certificateholder and (ii) the Servicer shall have delivered
an Officer's Certificate to the Indenture Trustee and the Owner Trustee stating
that such amendment will not materially and adversely affect the interest of any
Noteholder or Certificateholder; and
(2) to change the formula for determining the
required amount for the Specified Reserve Account Balance upon (i) confirmation
from each Rating Agency that such amendment will not result in the
qualification, reduction or withdrawal of any rating it currently assigns to any
Class of Notes or Certificates, and (ii) delivery by the Servicer to the
Indenture Trustee and the Owner Trustee of an Officer's Certificate stating that
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:
(1) 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
(2) reduce the aforesaid percentage of the
Outstanding Amount of the Notes or Certificate Balance of the Certificates which
is required to consent to any amendment, without the consent of the Holders of
all the then outstanding Notes or Certificates.
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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 9-507(c) 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 or state of incorporation within 30 days after such
relocation, if, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new
financing statement and shall promptly file any such amendment or new
financing statement. The Servicer
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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:
(i) 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
69
are given, or (B) no such action shall be necessary to preserve and
protect such interest; and
(ii) 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 II, 990 West 190th
Street, Torrance, California 90502, Attention of Secretary ([(310) 719-8013)]
[(310) 719-8583], (b) in the case of the Servicer, to Nissan Motor Acceptance
Corporation, 990 West 190th Street, Torrance, California 90502, Attention of
Secretary ((310) 719-8000), (c) in the case of the Issuer or the Owner Trustee,
at the Corporate Trust Office, (d) in the case of the Indenture Trustee, at the
Corporate Trust Office, (e) in the case of Moody's, to Moody's Investors
Service, Inc., ABS Monitoring Department, 99 Church Street, New York, New York
10007, and (f) in the case of Standard & Poor's, to Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc., 55 Water Street, New
York, New York 10041-0003, Attention: Asset Backed Surveillance Department; or,
as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
SECTION 10.04 Assignment by the Seller or the Servicer. Notwithstanding
anything to the contrary contained herein, except as provided in Sections 6.04
and 7.03 of this Agreement and as provided in the provisions of this Agreement
concerning the resignation or termination of the Servicer, this Agreement may
not be assigned by the Seller or the Servicer without the prior written consent
of the Indenture Trustee, the Owner Trustee, the Holders of the Certificates and
Notes evidencing not less than 66 2/3% of the Outstanding Amount and the
Certificate Balance, voting as a single class.
SECTION 10.05 Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Seller, the Servicer, the Issuer,
the Owner Trustee, the Certificateholders, the Indenture Trustee and the
Noteholders, and nothing in this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
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SECTION 10.06 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.07 Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 10.08 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
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.
71
SECTION 10.12 Limitation of Liability of Owner Trustee and Indenture
Trustee. Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by [________________], not in its individual
capacity, but solely in its capacity as Owner Trustee of the Issuer, and by
[________________], not in its individual capacity, but solely in its capacity
as Indenture Trustee under the Indenture. In no event shall [______________] or
[________________] have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered by the Seller or the Servicer,
or prepared by the Seller or the Servicer for delivery by the Owner Trustee on
behalf of the Issuer, pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer. For all purposes of this Agreement, in the
performance of its duties or obligations hereunder or in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
SECTION 10.13 Waivers. No failure or delay on the part of the Issuer in
exercising any power, right or remedy under this Agreement or the Assignment
shall operate as a waiver hereof or thereof, nor shall any single or partial
exercise of any such power, right or remedy preclude any other or further
exercise hereof or thereof or the exercise of any such power, right or remedy
preclude any other or further exercise hereof or thereof or the exercise of any
other power, right or remedy. Notwithstanding anything to the contrary, the
Issuer shall not waive any breach of representations and warranties as set forth
in Sections 3.01(e), (l), (n), (o), (aa) or (ee) without the written consent of
at least a majority of the Outstanding Amount of the Controlling Class of Notes,
voting as a single class (excluding for such purposes the outstanding principal
amount of any Controlling Class of Notes held of record or beneficially owned by
NMAC, NARC II or any of their Affiliates, unless at such time all of the
Controlling Class of Notes are held of record or beneficially owned by NMAC,
NARC II or any of their Affiliates.)
72
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 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
SCHEDULE A
SCHEDULE OF RECEIVABLES
(Delivered to the Trust on CD-ROM on the Closing Date)
SCHEDULE B
LOCATION OF THE RECEIVABLES FILES
1. Nissan Motor Acceptance Corporation,
including its Infiniti Financial Services Division
2901 Kinwest Parkway
Irving, Texas 75063
2. Iron Mountain, Inc.
1235 N. Union Bower
Irving, Texas 75061
3. Nissan North America, Inc.
Denver Data Center
106 Inverness Circle
East Englewood, Colorado 80112-5312
4. Arcus
15505 East Hinsdale Circle
Englewood, Colorado 80112
[EXHIBIT A
FORM OF YIELD SUPPLEMENT AGREEMENT]